While watching the extensive media coverage of the current Russian military activities in the Ukraine I have been constantly reminded of my own small activities over the years in the same places as they mention on their maps. While it is tempting and salutary to commend the actions taken by the Zelensky Government in defending the Ukrainian homeland, the actions of the Ukrainian governments which preceded this government posed a terrible burden on the lives of ordinary Ukrainians.
I learned this first-hand by dealing with Ukrainian national and regional officials who took power after Ukraine’s separation from the USSR as it deconstructed into Russia and its former captured states in the Baltics and Eastern Europe. The high hopes of the Ukrainian people at the time of the separation were dashed by their experiences with the new, independent, governments, oligarchs and bandits who rose to power in the new Ukraine.
It wasn’t democrats who inherited or seized the levers of power in the Ukraine. It became a contest among political hacks like Kravchuk, “Princess Leah” Tymoshenko, Yanukovych, Poroshenko, Vakarchuk, and their oligarch backers and partners, like Firtash, Ihor Kolomoysky, Viktor Medvedchuk, Viktor Pinchuk, Renat Akhmetov and Vadim Rabinovitch. These were also joined together with important international figures like the Russian oil and gas mafias, the American ‘neocons’ like Nuland, and several leading figures in the European Union. The government and the Verkovna Rada (parliament) was a “republic of oligarchs.”
Unfortunately, the already weakened Ukrainian labour movement was largely taken over by the oligarchs who used captive unions to enforce discipline. Free unions were rare and relatively powerless. Many of the country’s wealthiest businesspeople controlled the country’s unions. The head of the union of employers, for example, was Dmytro Firtash, the Group DF head who remained in exile in Vienna, Austria, avoiding a US extradition request. The Ukrainian people suffered because their only choices were choosing the lesser of two evils. This new sense of unity and nationalism after the Russian invasion has introduced hope and aspiration once again in the Ukrainian people. It is a remarkable development
Initially, I had nothing much to do with the Ukraine, other than trying to assist to international trade union groups active in supporting the Ukrainian free unions. I then got more directly involved. I had done some initial consulting with TransWorld Metals in establishing the logistics for the Soviet aluminium industry and had taken several long trips to Russia in late 1992. I was charged with developing the system for TransWorld’s logistics in the aluminium trade. My company, International Bulk Trade(‘IBT’) became an ‘implant’ inside Trans World and we handled the chartering of vessels and the delivery of sintered alumina, coke, cryolite, etc. to the Russian aluminium smelters and the shipping of the finished aluminium from these smelters through the port we developed in Vanino in the Russian Far East, as well as through the Baltics.
Bauxite Through Nikolayev
One of the earliest challenges to the post-USSR system was the delivery of bauxite from Guinea in West Africa to the port of Nikolayev in the Ukraine, where it was transformed into alumina, the building block of aluminium. TransWorld asked me to do two things. The first was to work with the Guineans to make sure we could get regular deliveries of Boke and Kindia bauxite to ship to the Nikolayev smelter. I was well-known to the Guinean political leadership from before. While I was the Research Director of the United Auto Workers Union in Washington, I was one of the two people who worked with Sergeant Shriver, the head of the US Peace Corps Program, in setting up the first “blue-collar” Peace Corps group in Africa: in Guinea. Henry Norman was the key guy and Victor Reuther played an important role in conceiving the plan. The Russians had assisted Guinea in improving its port facility in Conakry, but the equipment provided needed servicing. Victor suggested that we had a lot of UAW retirees who had built the equipment originally so it might be an idea if they would go to Conakry to repair the US equipment as well as the Russian equipment. My secretary was the daughter of the Guinean ambassador to the US, Karim Bangoura, and he was excited at the idea. It worked out well and we sent a Peace Corps group to Guinea. I went down to supervise the early stage as I was friendly with Ishmael Touré, Sekou Touré’s brother and head of the Guinean labour movement. It all worked out well. While we were there, the UAW also arranged for the publishing of Sekou Touré’s autobiography.
When I travelled to Guinea for TransWorld and the supply of bauxite I had to check that the long-term relations between Guinea and the Russian smelters were still in force. The end of the USSR a political construct also ended the era of the giant Russian state trading companies which did international business for the USSR economy. These state trading companies were abandoned in the shuffle. Yuri Schliefstein, of Bratsk smelter, had a specific request; that I renew and secure the Russian supply source at Dian-Dian. We got this confirmed and the others who had tried to muscle in on the supply to Russia were eased out. I then set up a shipping charter between TransWorld and IBT, using mainly Gearbulk freighters of around 37,500 tons each to make two or three voyages each week to Nikolayev to deliver bauxite from Guinea. That was done and the system stabilised and functioned
Once the regular supply of Guinean bauxite was established, the bauxite was delivered to Nikolayev. Some went on from there to another smelter in Semipalatinsk in Kazakhstan.
The delivery of bauxite to Nikolayev was important to the Siberian smelters but required a long rail trip from Nikolayev to the Siberian smelters thousands of kilometres away. It was clear that we also needed to develop a Far Eastern source of alumina for the Siberian smelters to cut down the long rail journeys.
I returned to London to work on a major long-term project of delivering alumina directly into the Russian Far East port of Vanino. I spent a lot of time going back and forth to Vanino and visiting railroad stops on the Baikal-Amur Railroad. With some Swedish and Scottish engineers, we began to create a ship unloading system I had designed for Vanino to import alumina for the Siberian smelters. Construction took quite a while.
The deliveries of bauxite to Nikolayev were slow as the port had not been equipped to handle such volumes. David Reuben of TransWorld and Lev Chernoy of Trans-Cis Commodities said they were going down to Nikolayev to meet with the head of the Nikolayev plant, Vitaly Meshin. They asked if I wanted to come. I could discuss the technical needs for deliveries with the port authorities while they did business with Meshin. I agreed and went with them. That is where I got my first big lesson in Ukrainian business and its practices.
I went with them, and we had a quick look at the port and the smelter. It was quite large, but one could see numerous inefficiencies. The next morning, I was delivered to the port and introduced to the Port Director, a very pleasant man who spoke good English. He started showing me around and we saw what was necessary. The port was what we used to call a “KKL” establishment (“Kolkhoz Krasnaya Lapas” – difficult to translate – “A collective farm of Red primitivism”). However, setting it right would be relatively easy and I proposed a system which would allow them to discharge vessels without using ship’s gear at a rate four or more times faster than the current rate; similar to a system I had installed in NY for cement. It was environmentally-secure and avoided the “red mud” associated with bauxite transfer. It was relatively inexpensive. The port director and his engineers were very happy. We then returned to Meshin’s office.
When we got to Meshin’s office we had discussions with Meshin, David and Lev. They seemed happy. However, when I was asked what I found, David kept telling me to be quiet; to say nothing. I was not to tell them anything. I said that I had just spent three hours explaining the system to the engineers and the port director. David and Lev were both angry, so I kept quiet and answered in vague generalities. We then went to lunch. At the lunch David explained why they were cross. They liked and respected my suggestions, but this was Ukraine. It worked differently.
When the USSR broke up, the Ukrainians at Nikolayev found that they had US$25 million worth of bauxite in the port which they hadn’t paid for. Meshin and Ukrainian President Kravchuk agreed to split the windfall between them. Meshin had decided to introduce to the port a pneumatic system of delivery designed and built by the firm Vigan in Belgium, It would cost USD$12.5 million to install, to be paid for by the abandoned bauxite. I told David and Lev that I knew the equipment being discussed. I had been to the factory, and I even had copies of their brochure with me, and a price quote. What Meshin was proposing would actually cost USD$250,000 and he’d keep the rest. David and Lev said they knew that but the advantage to them was that they could say that the USD$12.5 million was an investment made by TransWorld. It would look good in the news and wouldn’t cost them anything and President Kravchuk would be happy with his windfall. That’s why I should shut up and let them get on with it.
The kicker in the tail of this was, because of the need for investing in the port, the wages of the port workers, already three months in arears, would be frozen for two years as the workers’ contribution for improving their workplace. The workers had no consultation or means of protest. That was my first exposure to Ukrainian business practices.
In the years after I ran into scores of similar projects which sucked the funds from worthwhile and necessary projects into the hands of the oligarchs and their parasites. There really was nothing which could be done to stop it or punish it as any purported political opposition would happily take it over and steal it for themselves if informed.
Azov Steel in Mariupol
My second lesson in Ukrainian business was a little different. I remember it well because all the current maps and charts of the war include familiar landmarks and I am reminded of the problem I faced. A colleague of mine who lived in St. Petersburg came to me and asked if I could help his friend who was looking for transport. I met him and he had 10,000 metric tons of wire rod in coils which had to be moved from the Azov steel plant in Mariupol to Fangcheng in China. He asked me if I could ship it for them. I said it would be no problem. I pointed out that it would be expensive to ship such a small amount that distance, but the depth of the Kerch Canal was sufficiently small as to limit the draught of the vessel. Additionally, we’d have to use Russian or Ukrainian crews because of security concerns in accessing the Sea of Azov.
I asked if he didn’t mind my making a second port call after Mariupol to pick up additional freight to help keep the cost down. I arranged to pick up 5,000 tons of steel bars in Varna, Bulgaria going to China after loading the coil in Mariupol. He agreed and I got on with the fixing of the vessel.
We went to the Monday lunch meeting at the Baltic Exchange and picked up whatever we could find on a suitable vessel to do the trade. We found a vessel belonging to Black Seas Shipping Company (BLASCO), the largest Ukrainian ship owner, a state enterprise. The vessel was the Kapitan Dzhurashevich and we chartered her for the voyage from Nikolayev to Fangcheng, after completing loading at Varna. We had finished with TransWorld earlier and moved out of the office and they had nothing to do with this charter.
The word in the Baltic Exchange was that BLASCO was a little difficult to work with, so we took care. We arranged a time charter of the vessel to commence when the vessel passed through the Bosporus into the Black Sea. After some difficulties contacting the vessel, we were able to inspect the vessel and took it on charter. They set sail for Mariupol. We had appointed a port agent in Mariupol to arrange berthing, victualling, and bunkering of the vessel for its journey. The agent informed me that he had difficulty contacting the vessel and that we had lost a day before being able to tender our Notice of Readiness to start loading. The vessel arrived at the berth and the entire Ukrainian crew and officers (except the ship’s doctor) just abandoned their jobs and had left the ship. Apparently BLASCO had not paid them, and the Ukrainian Government had told them that they could do nothing to assist them, so they abandoned the vessel. I now had a ship at the berth with the cargo ready, but no crew. I tried to reach the BLASCO offices in London and our port agent in Mariupol but had long delays in getting answers. The port agent said that he would get the stevedores to start loading the cargo while we tried to find the crew, officers and BLASCO. BLASCO said I shouldn’t worry; they were hiring a new crew. There were four days lost before they found a crew and officers. Loading had been going on slowly as the stevedores wanted to know who was paying them from an abandoned ship. They then sent us a notice that loading was completed and that the crew was mainly assembled. Our port agent sent me the Mates’ receipt for the cargo as there was no captain to sign the bill of lading. More importantly the stevedores had “drop-stowed” the cargo willy-nilly in the holds and we couldn’t risk sailing with unsecured, unstowed and untrimmed cargo. I refused to issue a bill of lading and I announced that the vessel was off-hire until BLASCO fixed the problem. They moved the vessel off the berth to the roads and spent three days stowing the cargo properly and trimming the vessel. By then I had lost several days and missed the date for the pickup of the additional cargo in Varna. I tried to complain but they said they were Ukrainians operating in the Ukraine on a Ukrainian ship and that there was nothing we could do.
With the inability to load the extra tonnage at Varna I arranged to pick up around 4,000 tons of bagged yellow lentils at Mersin, Turkey on our way to the Suez Canal. It was to be dropped off at Colombo, Sri Lanka. I was worried about the gross inefficiencies of the Ukrainians and asked my insurers for advice. They said I had the right to put a “supercargo” on board as a witness and act as my personal agent to protect the vessel and the cargo. He joined the ship at Mersin to co-ordinate the loading of the lentils.
The supercargo called me from Mersin. The new crew and officers of the vessel were hired by BLASCO in a hurry and had come on board with no money. I had told the supercargo that he could give the crew a small advance so they could go onshore for a meal. He did so and almost the entire crew disappeared into the nightlife of Mersin. Some stayed behind to load the lentils. No good deed goes unpunished. The Turks loaded the lentils quickly and we made ready to leave for Suez. The supercargo called me urgently that the crew had not returned to the vessel, so we couldn’t sail.
I had arranged with our Suez agents, GAC, that they arrange a place for us in the next convoy through the Suez Canal and I had to postpone the booking. I had to pay USD$250 for the supercargo to send out ‘beaters’ to roust our crew from the Mersin bordellos and get them back aboard. This they did and, finally, set sail for Suez. I had been trying, with some urgency, to contact BLASO but with no luck. I rebooked a place in a convoy. The next day I received the news from BLASCO that the vessel would have to delay entering Suez because it was having engine problems and was awaiting spare parts. I gave notice that vessel was ‘off-hire’ for the time awaiting repairs. BLASCO said nothing.
Two days later BLASCO informed me that the vessel was ready to pass through Suez. I rebooked a convoy, and the vessel entered the Suez Canal. All seemed to be going well until I received an urgent message from GAC that the ship had left the convoy and was at anchor in the Bitter Lakes.
I asked why the vessel was laid up in the Bitter Lakes and BLASCO said it was “awaiting spare parts for the engine”. I repeated that the vessel was ‘off-hire’ until it was fixed. Two days later the master of the vessel, who is obliged to send the noon report of fuel, food and water (ROB-remaining on board), informed me that the vessel was heading for Colombo. It went to Colombo and discharged the lentils without incident and gave notice that it was on the way to Fangcheng.
Once the vessel left Colombo there was total radio and telex silence. BLASCO said that they didn’t know where the vessel was or its condition or if it had sufficient fuel or water. I could not get any answer or information. Eight days later I was contacted by BLASCO and the master to say that the ship was leaving the roads outside Hong Kong bound for Fangcheng. I had no idea why they were off Hong Kong. I contacted Fangcheng and the receiver said we had lost our berth in Fengcheng so we should go to the nearby port of Hainan to discharge.
The vessel made it to Hainan and delivered the Ukrainian steel wire rods. The voyage was over, but the financial settlement was not settled. I deducted the time the vessel was ‘off-hire’ and in repair. That left BLASCO with a hefty balance owing to me. BLASCO refused to refund me the difference. I went to the Admiralty Court to see if I could institute proceedings against BLASCO and a friendly barrister told me to not waste my time. If I sued BLASCO I would be the 237th in line of suits against the company. They did not have the money to pay the first two, so the money available for the 238th would not be much. BLASCO soon went out of business and private companies took over their assets.
It was as bit later that I found out where my mysterious ship had disappeared during the voyage. I was visiting the Eremet ferromanganese plant in the Saudafjord in Norway on a different project. There was a BLASCO ship in the port delivering manganese from Australia to the factory. I asked the Eremet people about it and they told me that they were taking a delivery of manganese from Australia which was over two months delayed. I asked if they minded if I went on board for a chat with the master. They said they would welcome that as they were preparing to sue BLASCO for the delay and anything I could find out would be welcome. I went on board and chatted to the master. He said he was delayed because he had a serious problem with the engine liners and had to wait for spare parts off Hong Kong. He was waiting for them to be dropped off by another ship which was delayed. That vessel had to wait for some time at Suez and the Bitter Lakes for the spare parts delivery which made it late. That vessel delivered the spare parts to his ship off Hong Kong and left. I asked if that vessel was the Kapitan Dzhurashevich. He seemed very surprised and asked me how I knew. I told him that I was the charterer of the disappearing ship. I gave an affidavit to Eremet for their suit against BLASCO. I don’t think they got anything from the suit.
I was out of pocket in the transaction. However, the original Russians who contracted with me owed me USD$56,000 for demurrages (payments for delays) on the voyage. They were responsible for the ‘drop-stowage’ and the berth delays. I went to St. Petersburg and sat down with them and explained that they owed me USD$56,000. Sergei and Leon told me that that was too much for them to pay. They said “We are not sure if Russian law and English Law are the same on demurrage. Perhaps we should check on that. Moreover, it will cost you at least USD$15,000 to sue us here in Russia. For that kind of money, we can buy a judge who will let us off. Why don’t you think about it and give us a better offer?” I smiled and said “You are Russians. You should know better. I would like my USD$56,000 in full. Don’t make up funny numbers or rules of what it will cost me to sue you in Russia. I am not going to sue you. You live in Russia. You know that I can hire a guy down at the bar, who will kill you for USD$200. When that is done, I shall make the same offer to your wife the next day” They paid me in three days.
The Ukraine And The Future
The recounting of my experiences in dealing with Ukrainian politicians and businesspeople is not special or unique. I had troubles later with Ilyushin-76 aircraft I chartered from Ukrainian Cargo Airways owned by the State Property Fund of the Ukraine. That airline was shut down by the Ukrainian civil aviation authority over safety concerns in 2009. The carrier had also been blacklisted by the European Union. The institutions of the Ukrainian state were not designed to provide democracy, equality or opportunity for Ukrainian citizens. The whole system was rigged. The Russian invasion of the Donbas, Luhansk and Crimea shook the foundations of the Ukrainian model, and the recent invasion of the Ukraine by Russia has toppled it beyond rebuilding. Despite the death, horror, destruction and displacement there has been a wave of nationalism, mutual support and hope which has rejuvenated Ukrainian society. One can only hope that this will continue with the Ukrainian victory over Russian aggression.
Note: My book on Russia goes into much of this in detail. I put it on the internet for free access