Two days after the president of Ukraine, Volodymyr Zelensky, signed a decree enacting sanctions against Chinese investors seeking to gain control of Motor Sich, the Security Service of Ukraine unleashed “investigative and operational actions in the city of Zaporizhzhia” where the Ukrainian engine manufacturer had been due to hold a shareholders’ meeting on January 31.

Security service officers “are recording possible illegal activity” of DCH Group, a Ukrainian investment firm, and Skyrizon Aircraft Holdings, an offshore company based in the British Virgin Islands but linked to China, in their attempts to control Motor Sich, the Security Service of Ukraine said in a brief statement.

The service said it was acting to “document facts preparing for the destruction of the joint-stock company's production facilities, which has important defence and economic importance. The investigation is ongoing.”

Via the presidential decree, No. 36/2021, the government in Kyiv placed sanctions for three years on several companies and individuals to take over the manufacturer and jeopardise national security by allowing valuable technology to fall into foreign hands.

These include Chinese citizen Du Tao, president of Beijing Skyrizon Aviation Industry Investment; Cheng Huisheng, Beijing Skyrizon’s general representative in Ukraine; the company Twinstar Holdings, registered in Belize; and the airlines JET4U SRL, registered in Moldova, and JET4U LDA, registered in Portugal, part of the JET4U group of companies that manages a fleet of private jets for lease and charter.

Beijing Skyrizon had sought to buy a stake in Motor Sich in partnership with DHC Group, which belongs to oligarch Oleksandr Yaroslavsky. Kyiv’s move came after the United States Department of Commerce on January 14 added Skyrizon to a list of companies classified as prohibited military end-users, warning that its activities threaten US national security.

DCH insisted in its own statement on January 31 that it “had deeply studied the situation before taking part in the fate of PJSC Motor Sich,” concluding that the Chinese investors were “conscientious buyers.” So, “the introduction of sanctions surprised us.”

Motor Sich’s supervisory board said in a statement that the planned January 31 meeting had been illegal. Meanwhile, its subsidiary Motor Sich Airlines (M9, Zaporizhzhia) has continued to operate scheduled and charter passenger and cargo services.

An open letter attributed to Skyrizon criticised Motor Sich’s management for not recognising the Chinese investors as the company’s lawful owners. It claimed that this would seriously undermine the company’s future.

Skyrizon had tried to buy Motor Sich in 2016, but the United States opposed the deal. The shares were frozen the following year pending a probe by the Security Service of Ukraine. The US has warned that China would obtain Ukraine’s advanced helicopter technology, amongst other things, which could be used to try to dominate the South China Sea region and could also be sold to Russia.

Motor Sich also produces the ZMBK Ivchenko-Progress D-18 turbofan, which powers variants of the An-124 and An-225 freighters. China had attempted to buy the programme from Ukraine's Antonov Design Bureau through the Aerospace Industry Corporation of China (AICC), which has publically admitted to wanting to restart An-225 production.