| The new Ukrainian authorities intend to re-sell Krivorozhstal The new leadership of Ukraine has launched the process of redistribution of property. President Viktor Yushchenko has already prepared a draft decree “On urgent measures to ensure the return of lost savings of citizens,” which states his intention to check the results of privatization in 2004. And last Friday, the Pechersky District Court of Kyiv began to consider the case on the legality of the privatization of the country’s largest metallurgical asset, Krivorozhstal, which supporters of the country’s former president Leonid Kuchma called “the most profitable deal” in the history of Ukrainian privatization.
However, for independent observers the sale of 93.02% of the steel plant's shares in June last year was remembered rather as the most scandalous transaction. Although there was strong competition at the auction, Krivorozhstal was sold for $800 million to the Investment and Metallurgical Union (IMU), which is controlled by Leonid Kuchma’s son-in-law, Rada deputy Victor Pinchuk and entrepreneur Rinat Akhmetov. People's deputies of the Verkhovna Rada, who were in opposition to Mr. Kuchma, rebelled against the transfer of state property to those close to the then-government financial industrial group. However, officials were not embarrassed either by the fact that the other bidders (among whom were the Russian Evrazholding and Severstal) offered more than twice as much as the auction winner, nor by the fact that the privatization took place in violation of the laws. The authorities are in a hurry to distribute the property before they leave, the oppositionists explained, but they did not have the administrative resources to block the process. Thus, Viktor Yushchenko insisted on introducing a moratorium on the privatization of large enterprises “until the change of political power” in Ukraine, naming, in particular, the Krivorozhstal plant and the Pavlogradugol holding. At the same time, he insisted that in general he did not support the idea of re-privatization and considered possible initiatives in this regard to be an “economic mistake” - after all, to buy out already privatized enterprises, according to him, it would be necessary to provide a separate line item in the state budget, which would lead to to economic and political destabilization. However, in one of his interviews he said that “such obvious thefts of state property as Krivorozhstal should be reviewed in accordance with the law, since here we are talking about the theft of Ukraine.”
After the elections, the opposition had the opportunity to carry out its threats. A few days after Yushchenko’s victory and Yanukovych’s defeat became obvious, the former head of the State Property Fund of Ukraine (SPF) and the current chairman of the Rada Committee on Industry and Entrepreneurship, Yuriy Yekhanurov, in an interview with Vremya Novostey, said that since the privatization of Krivorozhstal passed “with flagrant violations”, “the company will be sold again.” According to him, “the money paid will be returned to the former owners (IMS. - Ed. ), the difference in price after fair privatization will go to the budget... A pragmatic approach will appear: whoever pays more will get the object. Yushchenko intends to ensure maximum openness of privatization. The previous authorities wrote the terms of competitions for a specific investor and at the same time dressed themselves up as defenders of the interests of Ukrainian business, although everyone understood that privatization was being carried out by the nomenklatura.”
Last Friday, the Pechersky District Court of Kyiv began to consider the case on the claims of MP Pavel Ignatenko and lawyer Irina Nazarova against the State Property Fund (the statement of claim was filed on January 11). They demand that the purchase and sale agreement for the state stake in OJSC Krivorozhstal, concluded between the State Property Fund and IMS on June 14, be declared invalid. However, on Friday the court decided to postpone the hearing of the case to January 27 in order to study the new demands of the plaintiffs. And they, Interfax-Ukraine reports, demand that the actions of the SPF when considering the supporting documents of a potential buyer be recognized as unlawful, since the documents were submitted by them and reviewed by the SPF fund during the period when the actions of all the main acts of the fund in relation to the competition were suspended by the court.
Finally, on Friday it became known that Mr. Yushchenko intends to recommend that the Prosecutor General's Office, together with the security service and the state tax administration, conduct an audit of the decisions of the State Property Fund regarding the privatization of state property in 2004 for compliance with the law and ensuring the interests of the state. “Based on the results of the audit, determine the volume of lost funds, implement the necessary legal measures regarding their return to the state budget of Ukraine and bring to justice persons involved in the adoption of relevant decisions by the SPF,” Ukrainian media quote the draft decree “On urgent measures to ensure the return of lost funds.” (depreciated) savings of citizens.” The funds received, the draft document says, will be used to pay off depreciated deposits of the population.
It is not yet known how wide the list of enterprises whose privatization may be revised will be. However, it is clear that the new political leadership is interested in this process. For Russian companies, this means an additional opportunity to compete for a Ukrainian asset. But it is also possible that Krivorozhstal will remain with the previous owners. Donetsk oligarch Rinat Akhmetov has already stated that he is ready to cooperate with the new government. And as Victor Pinchuk said the day before the elections, if it is confirmed that the Russians at the tender were ready to pay 5 billion hryvnia (almost $1 billion) more for Krivorozhstal, then he is ready to return this difference to the treasury of Ukraine. Severstal and Evrazholding are so far refraining from commenting. Yana GODOVANAYA |
|
