Interview – Julia Kiryanova with Nicole Bastian, Head of the Foreign Affairs Department, Handelsblatt (translated from German)


Interview on Handelsblatt at the link

Julia Kiryanova is traveling a lot these weeks. London, Brussels, Munich. The CEO of Ukrainian Smart Holding is campaigning for support for Ukraine - and for future investors there. But at home in Kiev, where Smart Holding is based, Kiryanova has to deal with two crises at once - the war and a dispute between the Ukrainian government and the founder of the company she is responsible for.

Her company, Smart Holding, is one of the country's largest investment groups with majority and minority stakes in the oil and gas sector, metal mining, agriculture, shipbuilding and real estate. Among other things, the company owns 24 percent of the steel group Metinvest, whose Azov steelworks in Mariupol was contested for months. On the fringes of the Munich Security Conference, Kiryanova takes time to talk about the challenges of running such a company during a war.

Ms. Kiryanova, what is the mood in Kiev two years after the major Russian invasion?

The mood in Kiev fluctuates with what is happening on the battlefield. At the end of 2022, we were all very optimistic, convinced that 2023 would be the year of the end of the war. Now nobody knows what the horizon is for this nightmare.

How are you and your employees doing?

People's mental state is very strained by the missile attacks. If you can't sleep properly for several nights, it affects your health and your mind. But Ukrainians have a special trait: despite all this, people find the energy to carry on. It is a furious conviction that we will get through this. And now that the situation on the front is difficult, we are all asking ourselves why there is not enough military help. And since we can't do anything physically, we pray. And we help.

How do you help?

We donate. In the past two years, including our minority shareholdings, we have donated more than 54 million dollars to the army and the civilian population throughout the Group. More than $22 million has been allocated to medical support and the purchase of protective equipment. After massive attacks on Ukrainian energy infrastructure facilities, we purchased almost 300 generators of various capacities for the military, hospitals, and invincibility points..More than 300,000 daily food rations for the soldiers of the Armed Forces of Ukraine and residents of the Kherson Region, who suffered after Kakhovska HPP has been destroyed. Despite critical situation with the business, we continue to support as much as we can.

How do you run a company in times of war?

It may seem impossible fr om the outside. But it is possible. Our group alone has filed 19 lawsuits with the International Court of Human Rights against Russia for all the damage to our factories. But we were able to survive the losses.

You have plants in the east and south of Ukraine - places that were occupied by Russian troops, some of which still are.

If we only look at the companies in our Group in which we have majority shareholdings, our production volume has fallen by around 50 percent. Some plants were destroyed, some are located in areas that Russia is currently occupying, some plants did not produce for a long time during the war and some no longer had any logistical connections. However, because the price of gas has risen so much, we have been able to keep sales more or less stable back in 2022.

What do you tell your employees?

You have to talk to people about how hard it is and how they see the future, because everyone here has their own personal story and tragedy. Nobody here is mentally healthy, including me.

In all this uncertainty, it's important to provide as much clarity as possible. And to give people operational tasks so that they don't think so much. And then it's about setting an example, exuding self-confidence, investing time. And about trust.

How much has your workforce shrunk?

Around ten percent of our employees are currently mobilized in the military. At the end of 2022, we had 4500 employees in our majority shareholdings. Initially, we maintained this figure, even though we had 1,200 people in Kherson in Russian-occupied territory. We helped the people as best we could. And before the Ukrainian counter-offensive in Kherson, we gave people there the choice of staying or leaving with a severance package.


Because it was unclear how the security situation in Kherson would develop. 1000 people left. Some have gone abroad. We had 3,000 employees in April last year. Since spring 2023, however, we have been subject to domestic sanctions. We are now down to 2,200 employees.

You travel to drum up support for Ukraine. But the investigating authorities shut down large parts of your company ten months ago. How are you dealing with this?

I'm trying to pay taxes and keep jobs wh ere we can still operate. Donate to the military from our reserves. We continue to operate our shopping malls and our polycarbonate factories. But the gas business was a stable pillar for the entire group. I think these are politically motivated sanctions that have nothing to do with the business itself. Our founder had previously transferred all his shares to trusts. But the Ukrainian authorities do not recognize EU foundations.

One accusation is that the foundation transfer could benefit Russia in a roundabout way.

That is nonsense. In my opinion, the business is collateral damage of a political conflict. I believe that the government should let the economy work during the war. Why stop gas production in the country? And if it needs supervision, please. Now that everything is blocked, we can no longer pay the taxes the country needs. Business associations have already complained about the case, but nothing is happening. In my view, it is an abuse of sanctions. Our case is an example of the problems Ukraine has in terms of the rule of law.

What do you hope will happen next?

I'm trying to keep the knowledge in the group. But by law we have to reduce wages by a third because the factories are at a standstill. During the war, politicians and the private sector should stand together and talk constructively. Perhaps there should be moratoriums on certain processes during this time. Because the longer the war lasts, the more difficult it will be to run the business. And the more difficult it will be for the government to keep the economy running. It must not just see the economy as a source of tax revenue. Furthermore, in the war economy that Ukraine has become, we need a high level of transparency in public tenders - and fair treatment of all stakeholders in the private sector.

Do you believe that the voice of business in Ukraine has become quieter?

Absolutely. We have a new landscape in times of war, centralized control structures, and fewer opportunities for us in the private sector to speak publicly. But politicians and the private sector need to rebuild the trust that has been lost. It is also important to convince foreign investors to come to the country after the war. I am concerned about the future of Ukraine. We need better rules of the game, better rule of law. And not just for the 50 billion euros in aid that is now coming from the EU. We need an economic strategy, a sector strategy and a regional strategy for Ukraine.

A major investment conference is planned in Berlin in June. You have been promoting plans for two years for when peace returns to Ukraine. Isn't that frustrating?

It is inspiring. Many investors say they will look at Ukraine as an investment case when the war is over. I encourage them to look now. And Ukraine, for its part, must also prepare itself and build up a systematic project pipeline. I would like to see a roadmap from the government for the conference in Berlin. And then the private sector should present its proposals. We need to get back into dialog on this.

What about your company? Do you have proposals in the drawer for what you will do when the war ends?

Yes, for now it's a matter of getting our operations up and running again, settling the legal disputes and stabilizing the company in Ukraine. But we are also looking at completely new initiatives, new partnerships for investments in Europe.

Which countries are of interest to you?

The core countries that we have identified are Germany and Poland. Poland, as our neighbor, will be one of the first investors after the war. Germany is a more strategic partnership with which we hope to achieve technological progress in our investments. First we want to invest in Poland and Germany in the sectors we are familiar with: energy, agriculture, food processing, mechanical engineering. But we are also interested in expanding into the pharmaceutical industry. And when the war ends, we want to invest with our partners in Ukraine.

And which partners do you have in mind?

We are looking for strategic investors, not portfolio investors. These could be private equity firms or family offices.

What is your vision for Ukraine in five years' time?

Our business plan would be the same as before the war. But I hope Ukraine will be a member of the EU and that together we can further develop Ukraine as a business location and thus contribute to the economic growth of the EU.”