KYIV, June 17 – A Chinese company that tried to secretly acquire a controlling stake in Ukraine’s aircraft engine manufacturer has strong connections to the Chinese military, South China Morning Post reported Sunday.

Ukraine’s security service SBU stopped in April what it had called an ‘enemy plot’ to acquire the Zaporizhia-based Motor Sich. It was later revealed that Beijing Skyrizon Aviation had tried to acquire assets.

Skyrizon, which is jointly owne d by businessmen Wang Jing and Du Tao, has strong connections with the Communist Party of China and is considered by some to be a proxy for the People’s Liberation Army, or PLA, the newspaper reported.

At least one of the subsidiaries that form Skyrizon’s network of aerospace companies – Chongqing Skyrizon – is 45 percent owned by trusts and Chinese government entities, according to company filings and court documents.

Ukrainian approval of Skyrizon’s acquisition of a majority stake in Motor Sich would create a new company: Chongqing Motor Sich Skyrizon Aviation – a firm that would be partly Chinese state-owned.

In May, Chinese officials told Ukrainian ministers that they want a quick resolution to the situation, citing the importance of continued cooperation between the countries.

Officials including trade minister Stepan Kubiv met China’s Ambassador to Ukraine Du Wei and representatives from Skyrizon.

Speaking to Interfax Ukraine news agency after the meetings, officials said they were confident Skyrizon planned to continue its “cooperation” with Motor Sich.

“I think that in the near future the situation around Motor Sich will be solved … taking into account the interests of Ukrainian-Chinese cooperation in the aviation industry,” one minister told reporters. The SBU said its criminal investigation is still going on.

Motor Sich could not be reached for comment.

Skyrizon tried in September 2017 to acquire the controlling stake by buying $100 million worth of shares. It said it planned to invest a further $250 million in Ukrainian factories and move additional manufacturing to China.

Court documents show Skyrizon used a subsidiary company in the British Virgin Islands to acquire a 56 per cent stake in Motor Sich.

Under the initial agreement between Motor Sich and Skyrizon, some Ukrainian engineers would move to the south-western Chinese province of Chongqinq to help assemble state-of-the-art engines for planes and helicopters.

But Ukraine’s highest courts have indefinitely delayed the plan by freezing the Chinese shares and authorising a criminal investigation.

They cited serious national security concerns and fears that vital and sensitive Ukrainian technology could be lost to China, resulting in the “destruction” of Ukraine’s aerospace industry.

Wang’s foreign business moves – including a failed $10 billion deep water port in Crimea and a $50 billion Nicaraguan shipping canal to compete with Panama have often been seen as heavily aligned with Beijing’s foreign policy objectives.

“His access to financing and the fact that his projects are often in line with Chinese government objectives have led to speculation that, in some of his ventures, he may be acting on behalf of the state,” Bloomberg BusinessWeek reported in a recent profile of Wang.

Chinese state actors have already concluded several successful purchases and acquisitions that may have benefited the Chinese army.

Despite concerns about the possible reverse-engineering and mass reproduction of the aircraft, China and Ukraine have formalized a deal for two Ukrainian Antonov An-225s – the world’s largest cargo planes – to be shipped in parts to state-owned factories in Chengdu and Shaanxi for assembly.

The Antonovs are expected to end up in the hands of the PLA. It would not be the first time defense equipment has been repurposed by China for military use, the newspaper reported.

In 1998, the Soviet cruiser Varyag was sold by Ukraine to Chinese businessmen supposedly to be used as a floating hotel and casino. Today, it is the Liaoning aircraft carrier. (cmp/ez)