Motor Sich head Boguslayev charged with treason and working for Russia. Who is he?

23 October 2022, 04:08 PM
Vyacheslav Boguslaev, president of Motor Sich (Photo:facebook)

Vyacheslav Boguslaev, president of Motor Sich (Photo:facebook)

Ukraine’s SBU security service has detained one of the richest citizens of Ukraine – Vyacheslav Boguslayev. He’s devoted his entire life to the development and production of aircraft engines. What is the owner of the Zaporizhzhya-based company Motor Sich known for and to whom did he sell his products?

Nearly all of 83-year-old Vyacheslav Boguslayev (he will turn 84 on Oct. 28) is connected with aviation, namely with the engine manufacturing giant Motor Sich. For many years he was the main owner of the company, which figured as one of the largest aircraft engine manufacturers in Europe. While he hasn’t been the main owner for a few years now, in the position of “honorary president,” he’s retained a great deal of control over Motor Sich. The company, in addition to the production of aircraft engines and gas turbines, develops helicopters, and controls several subsidiaries for the production of components, as well as an airline sharing the Motor Such name.

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In the 2010s, Motor Sich began a geographical expansion. Joint ventures were created to produce and maintain aircraft engines in Russia, China, and Belarus. But the Belarusian and Russian projects had to be curtailed due to the ban on military-technical cooperation between Ukraine and Russia imposed by the Ukrainian authorities in 2014. The company banked on China, where in 2017 the construction of an enterprise for the production of aircraft engines began, and large-scale investments in the Zaporizhzhya plant were expected.

However relations with China are often fraught – and the SBU, the Chinese government, and the U.S. special services have indicated an interest in the deal. Yet cooperation with China turned out to be not just a partnership. By mid-2017, a controlling stake in Motor Sich was sold to several companies that happened to be controlled by Chinese investors. In the fall of 2017, a share fraction in the Zaporizhzhya-based company was seized at the SBU’s request. According to the official line of the security service, the seizure was connected with an attempt to sell a strategic Ukrainian enterprise to a Chinese citizen who planned to move Motor Sich's production facilities outside Ukraine.

These events were accompanied by cooling relations with Russia and Belarus. In May 2018, the media reported the seizure of Boguslayev's private jet in Belarus. And he himself was forced to return to Ukraine – on a commercial flight. Most likely, the event was linked to an attempt by Boguslayev to resolve an issue connected to the nationalization of the an aircraft repair plant in the Belarusian city of Orsha, which was announced by the Belarusian dictator Alexander Lukashenko. But his attempts came to naught: in July of that year, the plant, 60% of the authorized capital of which belonged to Motor Sich, was expropriated by the Lukashenko regime.

The Chinese project also did not take off. After lengthy deliberations and negotiations, in July 2019 it was reported that Chinese investors could still become the main owners of the company. But they would have a partner — the state defense concern Ukroboronprom.

After that, John Bolton, at that time an adviser to U.S. President Donald Trump, during a visit to Kyiv, sharply warned Ukraine about the risks of the so-called "debt diplomacy", which Beijing likes to conduct.

And in November, the American media reported that Motor Sich could be bought by an investor from the United States — Trump's unofficial adviser Erik Prince.

After such strong American pressure on Ukraine, Ukroboronprom decided to pull out of the deal.

Boguslayev himself admitted in 2019 that ultimately, shares were sold to a Chinese investor. According to him, this was a step the the company had been forced to take due to the ban on cooperation with Russia. But the still-unknown Chinese investor has not yet received access to either the shares or the management of Motor Sich. To this day, Motor Such is still run by Boguslayev and his protégés.

In the summer of 2020, Kharkiv businessman Oleksandr Yaroslavskyi volunteered to help the Chinese investors gain control of their shares and influence over company affairs. But even his business experience has not yet helped gain the approval of Ukraine’s Antimonopoly Committee, to formally complete the sale of Motor Sich. Moreover, at the beginning of 2021, the United States and Ukraine imposed sanctions on a number of individuals and legal entities from China that are associated with this case.

Currently, it is not known what share in Motor Sich is controlled by Boguslayev and his family members, who were also previously registered with large stakes, nor what shares have been sold to Chinese interests.

After a failure in the 2019 parliamentary elections (Boguslayev lost his bid in a constituency to wedding photographer Serhiy Shtepa, who ran from the Servant of the People party), he, despite his advanced age, fully devoted himself to business activities. These initially boiled down to optimization: from cutting costs to reducing the route network of Motor Sich Airlines.

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His efforts seemed to pay off: for 9 months of 2020, the Zaporizhzhya-based enterprise received a net profit of more than UAH 900 million ($24,650,000).

But the main concern of the Ukrainian aircraft industry veteran was the struggle for the ownership of the enterprise, in which he seemed to have quite a say. Among his opponents are:

  • the Chinese government, which supports its investor;
  • U.S. intelligence services, which are trying to prevent the transfer of Ukrainian aircraft technologies to China;
  • Ukrainian authorities trying to maneuver between the interests of the United States and China.

It appears that he was unable to manage this balancing act. Additionally, it’s likely that Ukrainian special services have been working on the Motor Sich case for a while, and at scale. For example, in September, the State Bureau of Investigations announced the seizure of an aircraft, which, according to NV’s sources, belonged to the Motor Sich airline. The seizure was accompanied by the arrest of a director of a civil aviation enterprise for collaboration. Photos of the seized aircraft showed an An-140-100 aircraft in the livery of the long-liquidated Ilyich-Avia airline.

In 2021, Boguslayev continued to fall in the ranking of the richest Ukrainians from NV and Dragon Capital. This time he dropped from 45th to 69th place, while his estimated wealth dropped to $152 million. But he remained among the richest Ukrainians despite the formal sale of his main asset, which almost took place a few years earlier.

The detention of a well-known industrialist by the SBU is a clear illustration that having a foot in two camps during a full-scale war with Russia is a bad idea.

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