The Krivorizhstal Steel Mill
The BBC has the story on the announced re-sale of the Krivorizhstal steel mill. (See post with additional links below.)
3 Responses to “Update on Ukrainian Re-Privatization”
Charles N. Steele
A few details omitted from the BBC article are worth noting.
According to Olexander Paskhaver, one of Yuschenko’s economic advisors, Kryvorizhstal is a special case, and is being treated separately from other cases. First, the court challenge to the legality of the original privatization began before Yuschenko was in power and has been successful. Second, the privatization was a particularly egregious example of theft. (Financial Times, 4 June)
Yuschenko himself has said that other cases will likely be treated differently. He’s suggested that assets under question be re-auctioned in a genuinely transparent manner, and then current owners be given the opportunity to keep the assets by paying the difference. (FT, 31 May)
And here’s Tymoshenko on Kryvorizhstal (3 June 05, translated by BBC Monitoring Service):
“As soon as we abandon transparent privatization mechanisms, which are understandable for society, society may begin to ask questions. Only a tender, only an open auction with participation of all professional companies of the world can give an answer about the real price of the
facility,” Tymoshenko said.
This week the discussion on re-privatization has once again become very vigorous. A very good source that covers the discussion is Dzerkalo Tyzhnya/Zerkalo Nedeli (available in Ukr/Rus and also later in English).
Last week Kryvorizhstal’s shares were arrested so that Pinchuk/Akmetov do not resell the enterprise. There have been rumours that the oligarchs were considering selling some of their assets before they lose their ownership rigts they had acquired at ridicuolus prices.
I agree that Kryvorizhstal is a very special case and the fact that the deal was murky was obvious at the time it was conducted. Yushchenko and his team are perhaps trying to turn Kryvorizhstal into a positive Ukrainian version of Yukos trial – the oligarchs should learn not to steal. Hopefully this is the way the case will be treated by the international community.
I hope that the international community doesn’t see this as a Ukrainian version of the Yukos affair (although Pinchuk is calling it that). In the case of Yukos, the tax evasion case was almost certainly politically motivated, the taxes imposed exceeded Yukos’ revenues, and the company was seized and “reprivatized” in a completely opaque deal to state insiders.
In the case here, there’s hardly any doubt that the original privatization was simply a matter of Kuchma giving state assets to his family members and supporters, and a reprivatization would be correcting this theft.
A few details omitted from the BBC article are worth noting.
According to Olexander Paskhaver, one of Yuschenko’s economic advisors, Kryvorizhstal is a special case, and is being treated separately from other cases. First, the court challenge to the legality of the original privatization began before Yuschenko was in power and has been successful. Second, the privatization was a particularly egregious example of theft. (Financial Times, 4 June)
Yuschenko himself has said that other cases will likely be treated differently. He’s suggested that assets under question be re-auctioned in a genuinely transparent manner, and then current owners be given the opportunity to keep the assets by paying the difference. (FT, 31 May)
And here’s Tymoshenko on Kryvorizhstal (3 June 05, translated by BBC Monitoring Service):
“As soon as we abandon transparent privatization mechanisms, which are understandable for society, society may begin to ask questions. Only a tender, only an open auction with participation of all professional companies of the world can give an answer about the real price of the
facility,” Tymoshenko said.
This week the discussion on re-privatization has once again become very vigorous. A very good source that covers the discussion is Dzerkalo Tyzhnya/Zerkalo Nedeli (available in Ukr/Rus and also later in English).
Last week Kryvorizhstal’s shares were arrested so that Pinchuk/Akmetov do not resell the enterprise. There have been rumours that the oligarchs were considering selling some of their assets before they lose their ownership rigts they had acquired at ridicuolus prices.
I agree that Kryvorizhstal is a very special case and the fact that the deal was murky was obvious at the time it was conducted. Yushchenko and his team are perhaps trying to turn Kryvorizhstal into a positive Ukrainian version of Yukos trial – the oligarchs should learn not to steal. Hopefully this is the way the case will be treated by the international community.
I hope that the international community doesn’t see this as a Ukrainian version of the Yukos affair (although Pinchuk is calling it that). In the case of Yukos, the tax evasion case was almost certainly politically motivated, the taxes imposed exceeded Yukos’ revenues, and the company was seized and “reprivatized” in a completely opaque deal to state insiders.
In the case here, there’s hardly any doubt that the original privatization was simply a matter of Kuchma giving state assets to his family members and supporters, and a reprivatization would be correcting this theft.