How a Pakistani came to Ukraine and became a millionaire. The story of Mohammad Zahoor

Brian Bonner: Hello, everybody out there. This is Brian Bonner, host of Hromadske Radio’s Ukraine Calling. We are potentially broadcasting to billions of people around the world. So I hope you tune in, especially to this episode, because it will be a lot of fun and very interesting because we have one of Ukraine’s leading businessmen, Mohammad Zahoor, here. Welcome, Mr. Zahoor.

Mohammad Zahoor: Thank you. Thanks for inviting me.

Brian Bonner: He is the chairman of the ISTIL Group and probably one of the most astute business people in Ukraine. He owned a steel mill in Donetsk that he sold for a peak price in 2008. I do not know what the final price was, but it was hundreds of millions of dollars. But then he lost most of his fortune because Ukraine is a rough place. And he actually had one of his steel mills taken away from him in the rough and tumble 1990s of Donetsk.

More to the point, he was my boss for nine years. He owned the Kyiv Post from 2009 until he sold it to Adnan Kivan in 2018. He saved the Kyiv Post basically from closing because, after the global financial crisis, we went from profitable to unprofitable. And the founding owner, American Jed Sunden, sold it. And fortunately, we had a very good nine years with Mohammad Zahoor. But he fired me twice. And we’re going to talk about that too. But he had the good judgment to bring me back.

Last but definitely not least, he is the husband of Kamaliya, a singer-actress with wide-ranging talents. He is the father of twin daughters, Arabella and Mirabella. His background is that he was born in Pakistan and is a UK citizen. I reread the story when we first met. He came to Soviet Ukraine in 1974 as a 19-year-old teenager from a well-to-do family, I guess we’d say, in Pakistan. And there, his business took off.

Impact of the war on business

Brian Bonner: With all that said, I have to start with the war. It’s the question everybody asks everybody. How are you holding up now? We’re three years into a war that looks very dangerous with no end in sight. What have you been doing? I know you’ve been doing some volunteer work. And where have you been? I hope everything is going well.

Mohammad Zahoor: Well, in the beginning, when the war started, actually, everybody was much more active than today. We have started our foundations in Poland and Germany. We already had one in Ukraine. We also visited and helped all those refugees in Romania, Hungary, Poland, Germany, and Belgium. We have been doing that work. We have been sending whatever was possible to Ukraine at that time. Slowly, slowly, things went cold. Everything has changed. It was not like the first day of the war when everybody wanted to go to the border and fight the Russians. So things have changed.

The business definitely suffered a lot. We had to take one of our business centers, which was 100 percent capacity and fully occupied, and in three months, it went from 100 to zero. Then, after a year or so, it started picking up. But the prices are now. The rent is one-third of what it used to be. And we still need help to fill it to capacity. We are halfway.

Brian Bonner: So it is Rialto Center, we’re talking about. One of the former homes of the Kyiv Post. We had many. We were peripatetic and would move every two or three years. So it’s at least half full. And that was where Kamaliya had a nightclub, too.

Mohammad Zahoor: No, it’s a cafe, actually. Then, the other thing is that you try to help Ukraine, but Ukraine does not help you back. That’s one thing. Everybody, every businessman must be complaining. Actually, we took credit for a loan from Alpha Bank. And to be very frank, we had a very nice relationship with them, and we were very businesslike, etc. They understood the problem of you needing tenants. Okay, don’t pay now, pay later, whatever.

Then, the bank was nationalized, and things changed completely. For the National Bank of Ukraine or Sense Bank, the war is over. They want everything backtracked to just before the war when everything was good when we were paying them hundreds of thousands of dollars in interest and paying back the principal.

Actually, during wartime, everybody is suffering. So they also need to listen to us. If war is finished, okay, it’s good. But the country is going toward bankruptcy. They think that our loan is not very good or that it’s not a non-performing loan. How could it be non-performing if you are getting your interest and you are getting some principal? But if you want to have your principal at 100,000, 150,000, we are not making that kind of money. And it’s not our fault, actually. I didn’t start this war.

Brian Bonner: Well, you once told me if you go into business in Ukraine and you think it’s going to be easy, forget about it. And you would know this better than most business people in Ukraine.

The Russian influence in Donbas

Brian Bonner: I have always wanted to ask you many things about your experience in Moscow, in the Donbas. Looking back, you spent a lot of time in Donetsk. You got to know the people, the culture, and what people were thinking. Why is it that that region became so susceptible to being taken over by Russia, and other places like Kharkiv and Odesa fought back and fought off the Russians? Did you see that this was possible back then, in the wild 1990s?

Mohammad Zahoor: I never thought about that, actually. There were sympathies toward Russia, but it was like a German had sympathy for some German-speaking people in Zurich. It’s that kind. Nobody would expect that Switzerland would take over part of Germany or vice versa. That was a kind of friendship.

Things were different in Crimea. They considered themselves to be Russian, but never in Donbas. I spent half of my life there as a student, living in a dormitory, and I never heard that they wanted to annex themselves to Russia.

How did it happen? Well, I don’t know. It happened due to this lady—I don’t remember the name. She recently came back and talked about the Russian-speaking soldiers in the Ukrainian army and tried to undermine them as well. So, at that time, she came back immediately after the revolution, the second revolution. She told me that all the Russian-speaking people are, I don’t know, perverts or bandits or whoever they are.

But they are not. In fact, people thought that Western Ukraine was overtaking them and that Eastern Ukraine had no place. Some of the people—not everybody, but a lot of people—just ran away from there. A lot of my friends, my people. The only people I know who are left there had old mothers or fathers or something, or they were not able to travel or whatever. But all the people who had sympathies for Ukraine just moved off from there.

Brian Bonner: When was the last time you were in Donetsk?

Mohammad Zahoor: Maybe 2009, 2010.

Brian Bonner: You lost some businesses.

Mohammad Zahoor: I lost a lot of business. I lost a hotel and a business center. I had a lot of land, my flat. I also had other businesses and a lot of real estate. And in the Lugansk area, I had a coal-beneficial plant. So quite a lot.

Brian Bonner: Oh, my God. My blood would boil, but I’ve never had the money you had. It all seems like a dream to me.

Doing business in Donbas in the 1990s

 Brian Bonner: At your peak, I don’t know what your fortune was, you can tell us if you want. But I assume it was after you sold the steel mill in 2008. Before we get to what happened after that sale, what was it really like in Donetsk in the 1990s? I mean, we heard it was wild, lawless violence, gang war, businesses stealing from other people. We know Yanukovych, Akhmetov, all those Donbas people running around there. How did you manage to rise up to the top in that environment?

Mohammad Zahoor: Well, I was lucky. Actually, I was in a capital-intensive business, and the payback period was very long. So, at that time, everybody there was interested in getting into casinos or the liquor-making factories and things like that, where overnight they could make their returns. So that’s why, till we invested in turning that mill into a piece of art, nobody actually paid attention to us. What the hell are we doing in that region? Once that thing was done, they started looking at us as an object for a raid or whatever.

Brian Bonner: And you had two. One was stolen?

Mohammad Zahoor: No, it was one in the same case actually.

Brian Bonner: It was the same. Okay. But you were able to sell it. And of course, you told me that you saw Chinese who would flood the global market with steel so you got out at such a high price. I forgot what the sale price is, you can tell us. But the guy who bought it from you or the company that bought it from you went bankrupt, right?

Mohammad Zahoor: Yeah. Mr. Vadim Varshavsky was a Russian parliament member who used some of the bank’s money to buy the steel mill. When I hired people, I brought my friends, Abid and Farooq, and all those people. I worked with them at Pakistan Steel, and I knew how good they were. And I paid them a very high price at that time. I’ve been paying each of them about $15,000 a month.

When I sold the steel mill, I told this guy that these are the people who can actually run it for you. And they are not cheap, so you have to keep them. But he was penny wise and pound foolish. So he started looking for some cheap replacements. He got some from Moscow and other places for two to three thousand dollars. But what these guys started doing was they started stealing the money from him. And he never saw even a penny of profit because they were just getting the cuts from the buyers.

Brian Bonner: That’s interesting. You also spent a lot of time living in Moscow, right? How many years altogether?

Mohammad Zahoor: About 13 years.

Brian Bonner: Did you ever see this attitude towards Ukraine? That it’s not a real country?

Mohammad Zahoor: Never. It was very normal.

Brian Bonner: So both shocked you?

Mohammad Zahoor: Yeah.

Running a business: lose some, gain some

Brian Bonner: If you had the Midas touch in steel, you did not have the Midas touch when you were investing in other things. What happened now that you have the ability to reflect and look back? You told me you lost most of your fortune, but you’re still pretty well off. What happened? You just got into areas that you didn’t know about or the market? How do you look back on that now?

Mohammad Zahoor: If I look back and if I had the chance to turn the time machine back, of course, I would have taken the money and run. That I would have done.

But I invested in items that were ahead of their time. So I invested $60 million in this Poverkhnost TV. My partner was not very clean. He must have stolen half of the money. And we were buying these, the Champions League rights, etc., for top dollar.

Well, we don’t have any subscriptions, so people were watching it for free, almost free. So we lost. We also lost Savik Shuster Studios. It was a loss-making thing. It turned out to be a place selling ventures when people were paying money just to be on the show.

Brian Bonner: So Savik Shuster Studios, that’s no longer yours?

Mohammad Zahoor: No, we sold it later just to get rid of it. And we had the best studio actually. We spent $15 million on that studio, but nobody came to us to do things over there because we were different from the others. We were not offering them under-the-table kickbacks, payback money, or other things like that.

Ukraine is a place where you need to be Ukrainian, or you need to be corrupt. Then you are a successful businessman. But if you want to do your business normally, this is not the place for you.

Brian Bonner: You speak from experience. Xtra TV. Did that make you any money?

Mohammad Zahoor: No. We lost money there as well.

Brian Bonner: Mohammad Zahoor also owns arguably the most beautiful building in Kyiv. It is a Renaissance Hotel. It is still out there. It’s Renaissance architecture, built in 1900. It used to be called Leipzig. We wrote about it. Some people think it’s cursed, so we’ll talk to the owner himself. But I remember this building when I first came to Ukraine in 1996. I said to myself, my God, if I were rich, I would buy that building and remodel it and make it into the best hotel that the world has ever seen. I failed. But I did work for the guy who bought it and started the renovation. What went wrong there? And how long will it sit empty?

Mohammad Zahoor: We bought the building. Like you, I was dreaming about that building. Once I was in Geneva, BNP Paribas actually showed me this building. It was for sale, but at that time, the price tag was $120 million. And then in 2009 or 2010, it was  $36 million. So it was a good deal, so I bought it. Then, we went to EBRD [European Bank for Reconstruction and Development], and with EBRD, we agreed to make it a hotel. And EBRD agreed to give us $30 million. And then we invested all our money, which was more than $60 million. We invested and then turned out this 2014 [EuroMaidan Revolution and the start of Russia’s war.]

And EBRD, by that time, would give us only $5 million. They asked us to return that $5 million. And they just backed out and said that the Ukrainian hotel market is not as good. And they suddenly became a commercial organization, which looked for profit as well. So they just walked out. Since then, because we had spent all our money, we were looking to either sell this thing or have a partner. We have yet to find one. Nobody is willing to invest there.

Since then, things have been going from bad to worse. And then came COVID, then came this war. So we are still looking for a partner. Or we are still looking for a buyer for the building. Because this is such a brilliant piece of art, actually, in the middle of the town and just standing there.

Brian Bonner: How long has it been empty now?

Mohammad Zahoor: At least with us, it’s now for 13 years or 14 years.

Brian Bonner: Don’t buildings deteriorate inside?

Mohammad Zahoor: Inside it is okay. It deteriorates mostly from the outside, in fact.

Brian Bonner: And you’ve been inside? Is it still okay?

Mohammad Zahoor: Yeah.

Brian Bonner: Well, I speak for everybody. We hope you get that back on track. You’re a businessman at heart. What parts of your businesses are still making you money?

Mohammad Zahoor: Well, our business center was doing well just before the war. It wasn’t doing very well in the early days, but it was doing very well when we built it. We bought everything very expensive, in fact. We bought the ruins for $25 million, and we put $35 million in there.

And not all of the money went into the construction. Because either our partners or somebody else, somebody was spending the money as well. Which is quite normal in this part of the world. Everything we made, we have discounted, actually, those things. If I had spent $60 million on the business center, then today its value could be $30 million. So, things have gone down a lot.

And it’s basically due to the corruption problem. Because everybody goes after you. You remember the case of that land which we bought. The Ministry of Defense has sold it to someone, and he sold it to us. After that, we had three or four raids. We have all the court cases, etc. We fought them, and it should be clean now. But then recently we heard that somebody else is now eyeing that piece of land. So, in Ukraine, you have to be on alert all the time.

Brian Bonner: And you have to have good lawyers. So, if you’re rich, wealthy, and you have something somebody wants, you’re a target?

Mohammad Zahoor: Yes.

Brian Bonner: There’s a good argument for being poor. There’s nothing to steal. You also told me once that you can’t be emotional about any business. But when you bought the Leipzig, the Hotel Renaissance, you were a little emotional.

Mohammad Zahoor: Well, not emotional actually. We did our calculation, and at that time I thought the face value of the hotel would have gone up. Because I live in London and I know the hotel market there. They are hardly making a 1% yield. But the face value keeps on going up and up and up. Qatar investment buys from the UAE fund this and that. So, they have been playing this ping pong among themselves. And prices are going up and up. The Grosvenor House in London was sold for $700 or $800 million. If you look at the income, they need 10 generations to make money as a business, and that is the hotel. There is something else. People buy this thing, make it work for someone who is looking for a trophy asset, and sell it to them. They make money on the sale rather than on the day-to-day operation. Unfortunately, we don’t have these things in Ukraine right now. But I’m sure that once we finish this hotel, its face value will increase. I will never get my $95 million, which I have put in there.

Brian Bonner: You will get it back.

Mohammad Zahoor: I will not. Maybe in those days when the Party of Regions (the political party of Viktor Yanukovych – ed.), they were stealing money here and there. Then maybe some prosecutor might have bought it from me for $100 or $150 million. But I think things are not like that today.

Brian Bonner: I mean do you have a profitable business now?

Mohammad Zahoor: Well, we have. We have a couple of businesses.

Brian Bonner: Manufacturing in Ukraine?

Mohammad Zahoor: Yeah.

The purchase of Kyiv Post

Brian Bonner: And then the rest is the investments that you’ve had. Speaking of emotional investments. I think it must have been the Kyiv Post when you bought us in 2009. It was the first year we were unprofitable. So, you were unlucky there. But I remember you saying that we’re not in it to make money. Why did you buy it in 2009? And thank God you kept the team, including me. In nine years, were you happy with the way everything went? And why did you sell it in 2018?

Mohammad Zahoor: Well, first of all, in 2009, I bought it because it was purely a community service. Because to me, Kyiv Post was just like the building at Prorizna. We have our hearts attached to this newspaper. When I heard that they were planning to close it or whatever, that was the time I said this thing should not be closed.

That was purely for the community, for the expat community that has been reading that newspaper—and who has done nothing wrong, actually. So it was a payback to the community, which has been good to me all the time. When I had problems with my steel mill, Kyiv Post wrote articles, news, etc. at that time.

Brian Bonner: I think you even told me, hurt my feelings a little bit. You said it was better before I came back. They did a lot of good investigations in the beginning. From 1995 to 2008. I was an avid reader myself.

Mohammad Zahoor: And then we tried actually to expand it. That may not be the right thing to do. Into other languages and try to increase the readership. That may not be correct, but we did it. Actually, we wanted to do it once again for the community. And for the local people who have been reading some crappy newspapers. So, we also wanted them to read some quality news and investigative journalism. So, that was then.

And so, of course, we have been hit hard by all the governments. All the governments, whether they were first in the opposition and then went to the government or vice versa, everybody disliked us. And everybody wanted us to write something good for them. And we have been writing everything which was bad. Of course, we were writing well about whatever was happening in the country. But naturally, I bought this newspaper, and I gave all the liberty to the newsroom, to the editor: write. If you see something wrong, go ahead.  We had a problem with Mr. (Dmytro) Firtash (Ukrainian businessman – ed.) also. We fought with him.

Brian Bonner: Let’s talk about that. And as the chief editor under Mr. Zahoor, that was true. We had more independence and freedom than most newspapers worldwide, including in America. As a publisher, he could have interfered in our opinions, the coverage we chose, and the people we hired. He didn’t.

That’s to his everlasting credit. That’s why the Kyiv Post, during his watch, won international acclaim and many awards. It was here to be a reliable source for the Revolution of Dignity and for the start of Russia’s war, which is going on 10 years later.

But we had our rough times. And I’ll let you decide how much you want to discuss that. And we can talk freely about Yanukovych because they’re all in Russia. And Mykola Prysyazhnyuk, who precipitated my firing on April 15, 2011, I remember that very well. The agricultural minister under Yanukovych is also fleeing corruption charges for stealing hundreds of millions of dollars. They’re all gone. Do you recall the time leading up to that? When they started putting pressure on you because of what we were doing? Walk us through how bad it got. What did you feel you had to do about it? Did you feel like you were going to lose all your business because of this?

Mohammad Zahoor: Well, basically, all those guys were bandits. It’s a bunch of dacoits actually. At that time running the country. We were very brave, myself included, that I didn’t listen to them. They have asked so many times through Michael Morozov or other people that this thing is not good. I remember one of the articles on (Yanukovych’s) son’s Ph.D. or so. He was a friend of Michael Morozov’s, and they tried to start something.

And so I’ve been getting all these threats —you can call them threats—that your business will suffer, this and that. Not directly from someone, but maybe Michael, through some other people—that this is not good, that is not good.

Coming back to the incident, both of us think that we were right. Everybody thinks that I fired you because you published that article. And you should not have published it. And that was not the case. My case was that these guys called me to say that Prysyazhnyuk was in China and would come back and reply to certain things. And to me, the story was not complete. It was our side of the truth, and there was nothing from their side.

So we should have waited one more week, and then you can publish the story. We agreed on that in the night. But something happened during the night, I don’t know. People think that the CIA called you, Mr. Brian Borner, and said, ‘Go ahead with the story.’ I don’t believe that, but people do talk like that.

Brian Bonner: We should have only been so lucky to have the CIA behind us. And I didn’t discourage that rumor because if people thought powerful people were behind us, it would have been better for us. But you and I know that nobody was behind us.

Mohammad Zahoor: And that was the reason. That was the only reason for the firing. It has nothing to do with that article, it was just an office matter. When a boss tells his subordinate not to do something, and the subordinate does it at his own will, that’s it. But it became such a huge scandal that I even bought into it. And I wanted this thing to continue. If I wanted to eliminate those problems and Kyiv Post, that was the right time to do that. I said, okay, they don’t want to work, let’s finish it. But I really wanted things to continue. And that’s why I went ahead. Sorry if you didn’t get me correctly then; this was the reason. And the comeback, so everybody came back.

Brian Bonner: We’ve talked about that. I felt I did the only thing I could do, and you felt you did the only thing you could do. But as gentlemen, within five days, we had achieved the compromise and made an agreement, and the paper never stopped coming out. The next edition came out. So that’s to your credit because, as we learned later, the owner could crush the Kyiv Post.

Now, I know that you were looking to keep the oligarchs away, people who would want to suppress our freedom of speech, away from this. You didn’t want to sell it to anybody like that. And you found a good buyer in Adnan Kivan. And I agree that we had pretty good years. It ended very badly. Were you surprised by the way it ended, firing the entire staff?

Mohammad Zahoor: Just before Kivan actually, everybody wanted to buy this newspaper from me. Just to kill it. And I did not want that thing. Everybody who came to me and asked: you want to sell this. People are coming from different areas, and I said – no. Well, okay, I want to sell it, it’s a business. If you want to buy, okay. But why do you want to buy it? And then, of course, that person didn’t tell me.

But some people told me they wanted to buy it in order just to turn it into something else. And even with [Serhiy] Kurchenko, our things went quite ahead, and he offered something. And I didn’t sell. And then, the latest one, somebody wanted to buy this newspaper and present it to [ex-President Petro] Poroshenko. That’s how it was presented to me. Because Poroshenko was not very happy. Although he used our platform to become the president. He used us. We have called him many times, and he has been a speaker at our conferences.

The problem with opposition is that when you are in opposition, you show that you are a reformist. Once you just cross the table and go to the other side, you are a totally different person. You are doing the same thing against the newspaper, myself, or you. We were all so vocal, and when we told these things about the people who had moved to the other side, he (Poroshenko—ed.) became offended. And that’s what happened to Poroshenko.

Brian Bonner: Yeah, he did not like us. He wanted me fired under you and under Kivan. What about Kivan?

Mohammad Zahoor: So I had an offer, quite a good offer. But I learned that this is just to give it to Poroshenko as a gift on his birthday or whatever. And then, I still don’t know what will happen with the newspaper, of course. And then, out of the blue, Kivan came out, and he wanted to buy the newspaper. And he was a businessman. I didn’t know him, and my first thing was, why are you buying? Because I just thought that this was somebody sending someone again just to buy it and kill it.

And so, we sat down. He understood that he had been followed by the SBU (Security Service of Ukraine)  and cases were being created against him. And so, he wasn’t the happiest person on Earth then. He thought that with the help of Kyiv Post and because the American embassy, UK embassy, and other embassies like Kyiv Post very much, he might get some support for his business. To me, that was the only reason that he bought it. Although he has other news channels, TV channels, etc. These are small channels. But he wanted it.

We agreed that he wouldn’t do anything bad with the Kyiv Post. He kept his promise for some time and invested a lot. I was happy that I had passed it on into good hands. You were there, so it was another guarantee. Everything is going well. And like for everyone else, firing the whole team was as shocking as for anybody else in the community.

Brian Bonner: I don’t know if I could have changed history. I probably should have called you and told you that he was planning to do this. That was another long story, but it continues today. It’s not the paper we had, but it does continue today. And you also know it could have been smoother sailing. He continued to get political pressure. He even offered to sell it back to you once, and you didn’t want it back.

Mohammad Zahoor: Yeah, because I was out of it. I had nine years of stress, which I took. I thought that I was not the only person because whenever we had problems, I wanted to do my business cleanly. And I was actually looking forward to help from any of these diplomatic missions. Nobody came, and nobody told me that. And everybody knows that the problems I’m having are because of the Kyiv Post. If I had sold it to them, I might not have had any problem at all.

Brian Bonner: So would you ever buy it under any circumstance?

Mohammad Zahoor: I will not, I’m out of it.

Brian Bonner: Why do you think that all of Kyiv Post’s three owners are foreigners? We have an American, Pakistani, and Syrian. And no Ukrainians.

Mohammad Zahoor: Well, first of all, in Ukraine, there are many other newspapers in Ukrainian or Russian, and there is a lot more readership. I would not suggest that some Ukrainian will come out and become such a revolutionary that he will try to say something against his own government.

The problem is that he might take it over and tell the government about these things. But when he comes to power, this paper will say something totally different. So it was maybe a short-lived newspaper that might be doing the same thing we have been doing for years. But later on, it will become part of the government, and it will become their mouthpiece.

Brian Bonner: I have that theory, too. Maybe these foreigners had a deeper appreciation of freedom of speech and were slightly more protected from pressure. I don’t know if it’s true or not, but that’s history. You know, we saw some of our best days under you. As you mentioned, Dmytro Firtash took us to London for a libel suit, and we won. We defeated him, he’s also another one in exile on bribery charges in America. But he’s managed to play the Austrian legal system to stay in Austria. So we had our battles, and we won a lot of them. And we lost some.

In wrapping up, you’ve done a lot of community things. And one of them is YUNA. Will we ever see that again? This is the Yearly Ukrainian National Awards, the music Awards.

Mohammad Zahoor: Well, we did it last year. There was a YUNA last year. And this year, on the 23rd of May, we are doing it again at the October Palace.

How is the war in Ukraine going to end?

Brian Bonner: Finally, I know you spend time in London, Dubai, and Ukraine. How do you think this war is going to end?

Mohammad Zahoor: You know, this is something I’ve been asked about by BBC, Voice of America, Arab News, and all these things. I really don’t know. I don’t know. With such kind of, let’s say, help coming to you, today it’s coming, tomorrow it’s not coming. Today, Congress is in your favor, tomorrow the Republicans are against it. This is not the kind of thing that one would expect.

I’m not fully justifying the Ukrainian system either. There were also wrong things on their part, such as when the Americans tried to tell them not to spread all the things on the huge border, to go systematically from one place to another, and so on. And they decided that they were the generals and nobody else knew how to fight the war, etc. So they are also at fault.

And if the aid is not coming, there is no way, no way, no matter how zealous we might be or how patriotic we might be. But we are not going to win this war without the support of the West and America and NATO and other countries.