CAOBO Russian Land “Restitution” Plan
by John Konrad, Chair MBS BC

The Proposal

Solicitations have been made to persons with “Mennonite” names inviting them to participate in a plan for restitution and development of Mennonite lands in Ukraine. The project is driven by Paul H. Willms, chief executive officer of a company CAOBO, and a Ukrainian associate, Boris Tankhilevich, president. Both are shareholders of this Everett, Washington real estate development company, incorporated in Delaware for this specific purpose.

The plan is to negotiate with the Ukrainian government the conveyance to CAOBO all of the lands generally in the Chortitza and Molotschna colonies (over  one million acres) on the basis that they were forcefully confiscated from Mennonite landowners by the Soviet Regime.

Subscribers are required to subscribe to a minimum of 1000 shares (US $ 1,000), thus becoming shareholders in the corporation with the right to participate in any future profits. Additional subscriptions will be required to carry the development forward if CAOBO is successful in obtaining the lands. There is to be no tie between specific lands and individual subscribers. As we read the proposal, any one can subscribe regardless of whether or not they are Mennonites, former land owners or their descendants.

Our Analysis

This proposal is characterized as a restitution project, yet it is difficult to reconcile the proposal with any notion of restitution from the perspective of the descendants of former land owners. We believe that the plan is mischaracterized and should be seen as a highly risky business venture that does not have any direct economic benefits to former land owners.

The promoter purports to represent the descendants of former Mennonite land owners and will need to sustain this notion in any negotiation for the lands. We believe it would take many years to compile, qualify and obtain the consent of former land owners to allow CAOBO to represent them.  There would be a need to trace land titles to specific former owners and to tie them to descendants in Canada, US, Russia, Paraguay and other countries. The plan simply assumes that CAOBO can step into the shoes of the descendants of former land owners without their specific identification or consent.

The plan does not recognize the sensitivity of land privatization in this former Soviet state, where land ownership and exploitation have been linked since the 1917 revolution.  The plan is silent on what would happen to the thousands of people who now occupy these lands. Many of the large collective and government farms have been turned into corporate farms which are now owned by the former workers. Some village properties with a few acres of attached garden land have been sold to individuals. As far as we know there is no enabling legislation in place to handle restitution of private lands to descendants of former owners, let alone to an American real estate developer. It is difficult to imagine that a land transfer of this magnitude could be negotiated by way of political or legal process without in some way resorting to the purchase of influence, or the sharing of proceeds from the transfer with senior government officials, a practice not uncommon in former Soviet countries in the privatization of major assets.

Subscribers are warned in the subscription agreement that the investment carries substantial risks and that the investment should be considered extremely speculative. Given that the company does not own the assets and has no authority or right to represent the descendants of former land owners in any negotiations, this warning is an extreme understatement.

Perhaps most significant, the proposal is naïve in that it fails to recognize an important tenet of Mennonite faith which is to forgive and move on rather than resort to legal means of redress. Among those who have contacted us for clarification or are otherwise aware of the CAOBO plan, none have been sympathetic to the “restitution” idea.

Recommendation

The board of directors of the Mennonite Historical Society of BC at a meeting on March 23, 2006, accepted a resolution unanimously recommending that descendants of former Mennonite land owners reject any appeal for subscriptions by CAOBO to invest in the proposed business venture as the scheme is inconsistent with Mennonite values and will harm humanitarian efforts currently underway by our Mennonite institutions in the region.

John Konrad, President jikonrad@telus.net
 

Press Release: Friends of the Mennonite Centre Ukraine.  January 3, 2006

 
Just after Christmas 15,000 Mennonites in Canada received a prospectus from the “CAOBO Company,” a newly-incorporated U.S. start-up, selling stock in a highly speculative venture to reclaim former Mennonite lands in the Ukraine. The title of the twenty-eight-page prospectus is: “CAOBO Company: A Plan for the Restitution and Development of the Mennonite Lands of Ukraine.”

We encourage you to read the article in the Winnipeg Free Press on Monday, 26 December, “Land speculator stirs up memories. Plan to reclaim Ukraine farmland questioned” (http://www.winnipegfreepress.com/subscriber/local/story/3235420p-3745912c.html).

FOMCU board members have been following this story both in the United States and in Ukraine. We have spoken directly with Paul Willms, the U.S. real-estate developer who created this venture, and his advisor, Boris Tankhilevich, and have expressed our opposition. We are also in communication with sister Mennonite agencies in Ukraine.

Neither FOMCU nor other Mennonite humanitarian agencies in Ukraine endorse the “CAOBO Company” offering.

This is a project with many difficulties. We think it is important to distinguish between the notion of “restitution” as a way of exploiting an old injustice to acquire huge tracts of land for free, to which we are strongly opposed, and genuine economic investment for the benefit of Ukrainians, which we support. Ukraine needs both internal economic reforms and foreign investment, but of the kind suited to the Ukraine social and economic environment.

FOMCU continues to analyze the CAOBO Plan and will provide further statements. We are troubled, however, by both practical and ethical issues.

These include but are not limited to the following:

1) for the Willms plan to work, the Ukraine Parliament must pass a Restitution Law specifically granting CAOBO Company ownership of more than 500,000 acres of prime farmland. Such a law would be unprecedented. Moreover CAOBO is selling stock even before such a law has been drafted. And if the CAOBO Plan fails, investors will almost certainly lose their money;

2) the “restored” lands would be owned by the CAOBO Company, a U.S. for-profit development company, not by individual Ukrainians and not by Mennonite descendants of former owners. The land would therefore not be restored in the true sense of the word.

3) Crimean Tatars, German Lutherans and Catholics, Jews, Bulgarians, and Swedes, among other ethnic groups, also lost their property under communism but would receive no restitution under this plan.

At its Annual General Meeting in Toronto on Dec 28, 2005, FOMCU members approved the following motion:

The Annual General Meeting of the Friends of the Mennonite Centre in Ukraine unanimously expresses grave reservations about the initiative of the CAOBO Company of Everett, Washington, USA to acquire gratis large areas of land that once belonged to Mennonites.