Posted on 02/09/2005 3:43:28 PM PST by Tailgunner Joe
resident Viktor Yushchenko and the new government of Ukraine headed by Yulia Timoshenko are not planning to confine themselves to reprivatizing the Krivorozhstal steel works. The day before her appointment, Timoshenko announced that companies of the level or type of Krivorozhstal would be subject to return to state ownership. This may apply to several mining companies acquired mainly by Donetsk businessman Rinat Akhmetov.
During his election campaign, President Viktor Yushchenko named Krivorozhstal when talking about reprivatizing companies that in his opinion had been illegally sold. He also recalled Ukrtelecom and the Odessa Port Factory, which Viktor Yanukovich's government had only intended to sell. The sale was planned for October; i.e., it would have taken place only a few days before the start of the first round of elections. But it had to be postponed. “There was too much political speculation around these two facilities,” former President of Ukraine Leonid Kuchma said, and prohibited their privatization.
Yulia Timoshenko believes that strategically important companies that may have been sold within the law but were sold too cheaply “must be reevaluated”. The present owners first of all have the right to pay the additional amount. If they do not, there will be a new tender. Finally, the prime minister is looking separately at a group of companies like Krivorozhstal. “The question of returning Krivorozhstal to state ownership or holding a new tender for the sale of 93.02 percent of the company's shares may be resolved through the courts or by passing a separate law. The political decision has already been made; now we have to find an appropriate legal procedure. Everything must be done in the proper legal manner,” said Mikhail Chechetov, the chairman of Ukraine's State Property Fund.
“The government has set itself the goal of inventorying the legality of the privatization of Ukraine's strategic companies. This is not about reversing previous decisions but simply about putting things in order. On no account will the review process be a political campaign that threatens business. This is about transparent and carefully considered actions oriented towards creating a new market infrastructure. The most important thing for the government is to have confidence that investment flows work in the interests of the country, and that economic entities function transparently and effectively, fulfill all budget obligations, clearly adhere to the law, and create new jobs,” said Anatoly Kinakh, the first deputy prime minister.
The former opposition includes ten companies of the state holding Ukrrudprom in the group of strategic companies. The previous government mobilized all its political forces in order to privatize the mining and concentrating plants in the shortest possible time (i.e., before the elections). As a result, in April 2004, parliament passed a law on the special features of privatizing Ukrrudprom and the president signed this document on June 28. Within three weeks, most of the companies were sold, quietly and without scandal, in contrast to Krivorozhstal. They were clearly sold at less than fair value and mainly to one person – Rinat Akhmetov – who still owns Krivorozhstal jointly with Viktor Pinchuk, the former president's son-in-law.
In June 2004, the government of Ukraine sold the state holding Pavlogradugol. Kuchma then gave high marks to the fact that “92 percent of the holding's shares were sold at auction for 1.4 billion hryvnas [more than $260 million]. This is a record; you might say that no one expected this amount.” The buyer of the holding was the Avdeev Coke Chemical Plant, 57.93 percent of the shares of which are owned by System Capital Management belonging to Rinat Akhmetov.
On July 19, 2004, the Smart Group, registered in Dnipropetrovsk but owned by Russian businessman Vadim Novinsky, bought 37.57 percent of the shares in the Inguletsky Mining and Concentrating Plant for 163 million hryvnas [$30 million]. By that time, Smart Group already owned 25 percent of the plant's shares. Before the sale, the plant was part of the state corporation Ukrrudprom, which supplies metallurgical plants with raw materials.
On the very same day, the interests of Privat (Dnipropetrovsk), another Ukrainian financial and industrial group, were satisfied. Through its company Solime, it acquired 25.1 percent of the Sukhaya Balka mine management company for 18.13 million hryvnas [$3.3 million]. It is noteworthy that other companies affiliated with Privat already owned 24.5 percent of Sukhaya Balka by that time.
At the same time [July 19], the State Property Fund made another deal, also with Rinat Akhmetov's System Capital Management. The Donetsk company paid 106 million hryvnas [$20 million] for 50 percent plus one share of the Tsentralny Mining and Concentrating Plant, which was also part of Ukrrudprom.
But the day did not end there. The Donetsk company Artanik transferred 208 million hryvnas [$40 million] to the budget for 50 percent plus one share of the Severny Mining and Concentrating Plant (part of Ukrrudprom). Artanik itself is part of Akhmetov's System Capital Management holding.
It is not inconceivable that, as in the case of Krivorozhstal, Timoshenko will start reversing all decisions of the previous cabinet of ministers regarding the privatization of Ukrrudprom's companies. However, the return of the property must occur only through the courts. The president of Ukraine sees this as the only way out of the situation. Ukraine has no reprivatization laws. Yushchenko has already said he will reimburse the present owners of all disputed facilities, but only after a resale, since there is currently no such expense item in the federal budget. A precedent based on Krivorozhstal is being prepared. It will show how far Ukraine's new government can go.
“Calls for reprivatization are hazardous for Ukraine's investment climate,” Andrey Blinov, a senior economist at the International Center for Prospective Studies (Kiev), told Kommersant yesterday. He believes that a review of the conditions and results of the so-called election privatization of 2004 should not become a systemic element in government–business relations.
“In any case, a re-examination of property rights or prices of facilities already sold must be carried out as legitimately as possible,” Blinov said. He did not rule out that reprivatization might be extended to facilities privatized even earlier.
I realize that some of the privatization was probably done under rather murky circumstances, and if anyone can show that direct kick-backs were part of the process, they should be reversed.
But if its just a matter of someone deciding the asset was undervalued, I would say it should be left alone. An aging coal mine in a recently communist country would be a very dubious asset. Buying it would be a risk for anyone without a crystal ball, and without considerable funds to inject into modernization projects.
The mere fact that the government might change its mind and take it back from you reduces its value as an investment to almost nil. Anyone investing money under these circumstances is throwing the dice, and had better have friends in high places. To discover that the only men who would risk buying these "assets" happened to be men with friends in high places should not be a surprise.
But the natural progression of such an investment is that, if the new private owners are allowed to maximize their investment, they will either inject capital and grow it, which is a good thing, or if they can't, they will invite partners to invest, which will require some maturing of business law, which is a good thing, followed by the growth of the investment.
Take the asset back from its new owners, and then go looking for new owners willing to risk the next change of administration in Kiev, and you have done damage to the economy. Who in their right mind is going to invest new capital in these mines knowing it could be taken away from him at any time?
If there is one thing about Tailgunner, reality and hypocracy are two things that make no dents on his mind. He's very flexible with his positions, as long as it leads back towards his hatred.
I wonder how long until a civil war breaks out. Ukraine was on the verge of one in 2001 when Yushchenko was shown the door.
Orange Yulia is IMITATING Outin. Or maybe it is a retaliation for Yukos?
Orange Yulia is IMITATING Putin. Or maybe it is a retaliation for Yukos?
This is just one more in a long list of your contemptible smears, like when you accused me of supporting Chechens. You're nothing but a lying POS. You can't ever prove any of your allegations against me and you always fall silent, looking like the lying bastard that you are.
This time you will do it again.
No, this time I'm heading through and collecting all your lieing, yelping statements to make a nice little chart: statements like you don't believe in a free press or democracy, the later you made yesterday. Don't worry, it might take a few more days to make a nice long one but you'll get to see it and everyone else too. You're no different then TTS, just a bit less wacked.
You always defend Putin from these same charges from the same groups. That makes you a lying hypocrite. I never criticized Putin for rolling back "democracy," cracking down on oligarch controlled "free" press, Chechnya or any other Russian domestic matter. It's is Putin's anti-US foreign policy and his alliances with our worst enemies like the communists Hugo Chavez and Kim- Jong-Il which concern me.
Your typical lies. Now they're Soros sponsored? What's the matter, you tongue get to long and you start dancing on it and now you're worried. So far you're against democracy and a free media. Wonder what else you're against. Back to searching your past posts....hehehehehe.
You see, when I accuse you of something, I can prove it, unlike you. That's because I'm not a lying scumbag like you are.
I don't even bother citing groups like human rights watch when they denounce Communist China. Why? Because they say even worse things about America.
You on the other hand, have no compunction about citing these groups when they denounce Russia's rival Saakashvili, even though you dismiss them if they ever say anything bad about Russia. This proves that it is in fact you who is guilty of the inconsistency and hypocrisy that you love to accuse others of.
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