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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Two polarized approaches to public property do not help foreign investment

14 December, 1999 - 00:00

President Kuchma proposed Verkhovna Rada repeal the law on the State Property Fund as running counter to the Constitution and other laws of Ukraine.

Mr. Kuchma drew the legislature’s attention to the fact that the law at issue is based on the assumption that the SPF is a body acting as owner and manager of public property. The President considers this in violation of the Constitution, reports Interfax Ukraine. Therefore, the SPF should be regarded as a central executive authority, the chief executive insists, rather than an agency with a special status as is laid down in the law. In addition, the Constitutional Court’s ruling of July 1, 1999, says the SPF is accountable to and must obey Verkhovna Rada. In view of this, the President suggested that the lawmakers cancel the law and instructed the Cabinet to prepare an appropriate bill. Incidentally, the SPF law has been submitted for the President’s signature for the fourth time.

Commenting on the law’s shortcomings, Olena Koval, first deputy chairman of the National Agency for the Management of State Corporate Rights of Ukraine, said, “This law has a lot of flaws. For example, it still has a clause on the use of privatization papers while mass privatization using privatization certificates is practically complete. Another aspect: we constantly talk about the deregulation of business, stipulating reductions in licensed businesses, and the law reads that SPF issues permits (licenses) to appraise public property.” Ms. Koval believes that this contradicts not only the law in force but also common sense.

The President’s veto triggered off another round of the drawn-out confrontation between the agency and SPF. At an international conference on structural adjustment reform in Ukraine, SPF chairman Oleksandr Bondar emphasized the National Agency’s negative role in the process of privatization of public property, Interfax Ukraine reports.

Oleksandr Riabchenko, chairman of the ad hoc special privatization oversight committee, agrees: “We have two parallel structures handling the privatization process. They often quarrel, and such conflicts have serious consequences. Not so long ago, the government signed an agreement with the IMF to sell the Crimean Soda Plant. A councilor was even appointed to supervise the transaction. But then it transpired that the National Agency had authorized Ukrsotsbank to manage that plant. IMF officials are confused. I think that the National Agency should be made part of the SPF. This would be the right in view of the planned administrative reform, because it would make possible major reductions in the bureaucratic apparatus.”

The agency, however, must have understood the President’s veto as a move supporting of their stand, so they are sticking to their guns. Olena Koval told The Day, “When the SPF went around managing public property they didn’t even have proper registers of enterprises. Today, we should not have different priorities in terms of sales and management. We should sell only when there is no alternative. Management is a long-term process aimed at economic progress. The state must take a conscious stand in determining what property has to be sold and what is best left under its management. Besides, any privatizable enterprise must first be revived and improved. A Russian analyst said that an investment upsurge is always preceded by economic growth. No one will invest in ruins.”

In other words, both sides stick to their views. The battle continues.

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