In the 1990s, the Black Sea Shipping Company (CHMP) was one of the largest shipping companies in the world, with an annual revenue of $1 billion and a net profit of $160 million. The company had 295 cargo and pumping vessels on its balance sheet, as well as 1,100 ships. auxiliary fleet units. Such scales painted excellent prospects for the development of exports. Ukraine could become a leader in global maritime logistics. However, it did not work out.
Money blocked in accounts in Moscow, corruption in Ukrainian power circles, the desire of foreign companies to get ships for next to nothing — all this ruined the enterprise with almost two hundred years of history.
At the beginning of Ukraine’s independence, the state shipping company came under the control of persons with not entirely honest intentions. As a result of the actions of several unscrupulous managers, who were constantly changing, the number of ships on the balance sheet of the shipping industry decreased from 255 in 1992 to one in 2008.
Despite several attempts to save the shipping industry over the past two decades (the question of its fate has repeatedly been brought before the parliament), the looting of Europe’s oldest and largest shipping company has continued unabated. As a result, the company, which was once the pride of the Soviet and Ukrainian fleet, found itself in an extremely deplorable state.
History of merchant shipping
The company has almost two hundred years of history and was quite successful until the “bad 90s”. The company was founded in 1833 as the “Black Sea Steamship Company”. From the very beginning, the government of the Russian Empire gave her three state steamships free of charge: “Neva”, “Emperor Nikolay” and “Empress Alexandra”, which were built in Mykolaiv (total cost – up to 1 million rubles in appropriations). Two of these ships provided regular flights between Odessa and Constantinople (weekly), and the third served as a reserve or for other purposes as decided by the company.
The society received significant benefits from the government. Steamboats were exempted from paying dues (anchor, buoy and fin depending on capacity), had annual passports for navigation from customs, and were serviced in quarantine facilities without delays. The company could buy coal in any quantity duty-free and received money from the transportation of mail (except for government packages, which were transported free of charge). It was also allowed to hire foreign crews.
The Black Sea Steamship Company was founded for 10 years, after which it had the right to petition for the continuation of its activities. The company’s capital was 250,000 rubles in bonds (500 shares of 500 rubles each). Despite the merchants’ caution regarding new cases, funds were collected quickly.
Such starting conditions gave a good impetus to the development of shipping.
The management of affairs was carried out by the directorate, elected by the general meeting of shareholders, which consisted of three directors. The government refused to participate in the management of the enterprise, but the profits were shared equally between the shareholders and the government, with the exception of 10% for reserve capital. At the end of 1835, the government gave up its share of the profit and allowed the capital to be increased to 500,000 rubles through appropriations. The first directors of the company were representatives of large merchants.
The Black Sea Shipping Company (CHMP) was the largest shipping company in the Soviet Union, providing a quarter of the country’s foreign trade shipments. It ranked fifth among similar companies in the network. The fleet consisted of about three hundred ships. The structure of the ChMP included ports, recreation centers and foreign missions. The value of his property was estimated at billions of dollars.
At the peak of its development, ChMP owned 295 merchant and passenger ships, more than a thousand units of the auxiliary fleet, assets in the amount of 7 billion dollars, and received an annual income of up to a billion dollars. 80,000 people worked in shipping, which provided the USSR with 10% of the total currency revenue.
Pavlo Kudyukin was the first president of the shipping industry during the time of independent Ukraine.
As of 1992, there were 255 ships in the composition of the ChMP. The Prime Minister of Ukraine at that time, Leonid Kuchma, proposed to transfer the vessels of the ChMP to offshore companies, turning the company into a joint-stock company. This proposal was supported by the President of Ukraine, Leonid Kravchuk.
In 1992, 28 vessels were decommissioned, and the Russian Navy was left with a fleet of 227 units. As of December 1992, the debt amounted to 170 million dollars. In 1993, 160 vessels were transferred to offshore companies.
After the arrest of Pavel Kudyukin, the mass sale and theft of the company’s property began: from 1994 to 1997, the number of Black Sea Shipping vessels decreased by more than 200, including 171 vessels were lost in 1995-1997.
As of 2004, ChMP had only 6 vessels left, and the debt on loans amounted to 11.1 million dollars.
In 2008, there was only one self-propelled flatboat “Parutine” left in the Black Sea shipping industry.
Real estate was also looted
However, even the complete destruction of the fleet due to theft and confiscation for debts did not mean the complete end of the company. In the early 2000s, ChMP owned significant assets on land, including real estate.
The total book value of real estate, which included 54 objects, including land plots in the Arcadia area, several kindergartens, warehouses, two meat and dairy complexes, the training and training ship “Lisozavodsk”, the inter-ship base of sailors and shares in joint enterprises exceeded UAH 270 million. According to experts, the market value of this property was ten times higher.
At that time, the assets of ChMP significantly exceeded the creditors’ liabilities that were “hanging” on the company. According to the register of creditors’ claims, these obligations amounted to about UAH 170 million. Therefore, the sale of part of the property could completely cover the debts.
In 2003, the Commercial Court of the Odesa region passed a decision on the rehabilitation of the enterprise, which meant the transfer of power in the company from the president to the arbitration manager appointed by the court with a committee of creditors. This led to the loss of state control over decision-making in shipping.
One of the leaders of the rehabilitation, under the pretext of the need to repay debts to creditors, decided to use the financial assistance of commercial structures. The scheme provided that private companies repay the debt and receive a certain object in return. However, these amounts were ten times lower. As a result, the richest Odessa businessmen actually took the company’s property for almost nothing.
This is how one of the largest Ukrainian companies of the 1990s disappeared. It took 10-15 years to lose all the property of ChMP.
No one was found guilty of looting the fleet
According to the “Privatization Information” of the State Property Fund of Ukraine, released in 2000, the last three packages consisting of 145 vessels were sold to a Cypriot company. Soon, a criminal case about the theft of property of “Blasko-ChMP” broke out.
Then Admiral Pavlo Kudyukin, the director of the Black Sea Shipping Company in 1992–1994, became the “goat of the scapegoat”. A fifth-generation Odesa resident, engineer-pilot by profession, began his career as a captain’s assistant.
The court sentenced him to 10 years of imprisonment with confiscation of property. For four years, Kudyukin was in Lukyanivskyi SIZO, as well as in colonies in Mykolaiv, Odesa, Kharkiv, and Zhytomyr. In places of deprivation of liberty, he had certain privileges: a separate room, office and hallway, as well as respectful treatment. Four years later, Leonid Kuchma signed a decree pardoning him. 10 years after these events, the case was closed under Article 6.2 – “absence of a crime”.
In 2013, Kravchuk recognized the transformation of the Black Sea Maritime Company into a joint-stock company as a mistake.
What’s next?
Before the full-scale war, attempts were made to restore the work of the State Shipping Company “Black Sea Shipping Company” (DSK “ChMP”). According to the order of the Ministry of Infrastructure of Ukraine dated April 30, 2021, Volodymyr Smetanin was appointed acting president of the company.
Work was carried out to restore the documentation of the “ChMP” DSK, including the audit of payables and receivables. The search for lost assets has begun both in Ukraine and abroad. The decisions of the State Property Fund of Ukraine regarding the privatization of DSC “ChMP” at an undervalued price were contested. Lawsuits for debt collection and property return have also begun, and criminal proceedings have been opened.
However, a full-scale invasion halted this process, as did shipping in general due to the danger of attacks on ships in the Black Sea. It is important that after the war the topic of restoration of the CMP is not forgotten, because it was the war that once again demonstrated what an important role maritime logistics plays for the economy.
