Ukraine’s authorities have confirmed plans to review the results of privatization
Last week, a Kiev court began considering a case over the privatization of the country’s largest metal works, the Krivorozhstal steel company, Vremya Novostei has reported. Yesterday, the court imposed a freeze on a 93.02 stake in the company.
The freeze is designed to prevent the current owners of the company – Donetsk-based oligarch Renat Akhmetov, and Viktor Pinchuk, a deputy of Ukraine’s lower parliament chamber and son-in-law of ex-President Leonid Kuchma, - from selling the stock to affiliated companies. According to the newspaper, the court hearing is scheduled for February 18.
Even prior to his election as Ukrainian President, whilst leader of the Our Ukraine party, Viktor Yushchenko insisted on a moratorium on the privatization of the country’s largest companies “until Ukraine’s political authorities are changed.” However, at that point, he did not have the necessary administrative methods at his disposal to impose the moratorium. As a presidential candidate, Yushchenko again announced his intention to review “such obvious theft of state property as the privatization of Krivorozhstal, carried out by the country’s previous administration headed by Leonid Kuchma.” On winning the election, Yushchenko began to put his threats into action.
Krivorozhstal was privatized in the summer of 2004. A 93.02 percent stake was purchased by Investment and Metal Union, in which Akhmetov’s System Capital Management has a 56.25 percent stake, and Pinchuk’s Interpipe owns another 43.75 percent.
While Investment and Metal Union offered only $800 million for the stake, rival bids, including offers from Russian companies, exceeded $1 billion, Vremya Novostei reported.
When it became obvious that Yushchenko had won the election, Pinchuk issued a statement saying that if reports were confirmed that any Russian company had been ready to pay 5 billion hryvnas (about $1 billion) more than Investment and Metal Union paid for Krivorozhstal at the privatization auction, he would pay the difference to Ukraine’s state budget.
Meanwhile, Alexander Pilipenko, deputy chairman of Investment and Metal Union, estimates the controlling stake in the steel company’s price at more than $2.5 billion.