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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

Vitaly MIESHYN: "Redistribution involves powerful state structures"

27 April, 1999 - 00:00

On Tuesday, the State Property Fund sold on the stock exchange
a 5.3% block of shares in the Mykolayiv Alumina Plant (MAP) at a nominal
par value of 20 million hryvnias.As reported by Interfax-Ukraine, the shares
were purchased by a buyer who did not go through a broker.

Today, MAP Workforce Unit Ltd. remains one of the most lucrative enterprises,
with its equity being the coveted target of certain powerful consortia.
Meanwhile, the struggle for this enterprise continues on the domestic market,
a place where one can manage free of charge. The enterprise is in the gun-sights
of some quite well-known and influential people. People's Deputy Inna Bohoslovska
stated at a press conference that she had seen at the Cabinet of Ministers
a "paper signed by [Verkhovna Rada Speaker] Tkachenko, where it was written:
'In order to consolidate society's democratic forces, I request hand over
controlling shares in MAP..." to a certain Verkhovna Rada division. But,
as is known, the controlling packet (25% + 1 share) has been transferred
to the Mykolayiv Oblast State Administration.

Meanwhile, it was recalled in Mykolayiv itself and, in particular, in
the local State Property Fund office, that the Cabinet resolution on transferring
the controlling shares to the oblast and city administration has not yet
been canceled. Branch head Yevhen Kazansky thinks that "these shares should
be managed on the regional level, for many problems are more evident from
here. The more so that Kyiv began to show concern for MAP only now that
the plant got into the blockade of Russian enterprises. Earlier, neither
the ministries nor the government would support the plant. The plant management
had to solve all its problems on its own."

Verkhovna Rada is to hear the report of a parliamentary fact-finding
group that studied the way MAP was privatized.

In his interview with The Day MAP General Director Vitaly MIESHYN
spoke about the current state of affairs at the plant.

"Why does the government intend to repeal its own recent decision
and change the arrangements concerning the transfer of the state share
in the MAP?"

"Because of continuous attempts by various entities to get ownership
of the plant. After the decision to transfer the state share to the Mykolayiv
Oblast State Administration, the Agency for Corporate Management of the
State Property was supposed to fulfill the appropriate procedures and secure
the irrevocable transfer of stock. However, this was never done, and the
process was deliberately delayed for over two months under various pretexts.
And the scheme is quite simple: if the Oblast Administration fails to receive
its share, this will create the real possibility of concentrating about
60% of the stock in one hand (which Mr. Zhovtis tried to do recently through
the Iren Joint Venture). This will be followed by an extraordinary shareholders'
meeting, dismissal of the current director, and introducing new rules of
the game. What is now happening is beneficial to the current owners of
the Russian alumina complex, the TWG and Sibirsky Aluminy companies. And
powerful governmental structures, deliberately or not, are helping them."

"Can you name these entities?"

"Of late, a very interesting position has been taken by Verkhovna Rada
with its Speaker Oleksandr Tkachenko, who actually was the initiator of
the state package reallocation. Many things have been done through the
SBU (Ukrainian Security Service), first of all, attempts to discredit,
defame the enterprise managers, and dismiss them. And this means the loss
of the plant."

"The initiation of criminal proceedings by the SBU last December,
followed by charges against seven MAP managers, had a major public response.
What progress has been made so far in the matter?"

"As you know, I and my colleagues were charged with smuggling alumina,
allegedly in 1992, and with illegal foreign exchange operations. The bias
of the investigation was revealed from the very beginning: for example,
two accused employees have nothing to do with the case whatever - the financial
director was then on a long business trip in Mongolia, and the current
head of the privatization department held a ground-level position and had
no involvement in business activity outside the plant. The investigation
itself was accompanied with numerous legal violations, attempts to trip
the interrogated, and distortions of the facts. We and our lawyers have
more than once filed protests against the investigation procedure, but
they were never satisfied. Incidentally, the case as such was initiated
as far back as 1992, it was closed twice and then reopened, and now they
have decided to revive it again."

"But the major points of the new case include operations with foreign
exchange and illegal credits."

"True, we did receive loans, $500,000 each of the seven of us. There
is nothing special or surprising about this: the loan was granted against
our shares in the MAP for a total of $3.5 million. We received those shares
quite legally, according to privatization legislation. And buying out the
shares required money. The shares were deposited in the First Ukrainian
International Bank (FUIB), and a bank in Geneva opened a credit line for
these shares. Nobody opened bank accounts abroad, and there was no reason
to, because the money from the FUIB immediately was transferred to the
State Property Fund account. On our part there was no misuse of any kind
or violations, and this was officially confirmed by the FUIB and the National
Bank. These documents are now in the Mykolayiv Oblast SBU Department, to
this same department the Oblast Prosecutor sent a protest that the accusation
was unfounded, and demanded the investigation be stopped."

"Why don't they close the case then?"

"Head of the SBU Department Mytroshkin told the press that the case
would be brought to the court by all means. In addition, during the President's
visit to the plant in late December, an SBU Central Apparatus senior official
addressing the plant employees portrayed us as criminals, presenting charges
as if they were proven crimes. Now the SBU has no way back: it must, using
various methods, bring the case to court. And the further scenario is simple.
The SBU washes its hands, saying it has fulfilled its mission. The case
goes to court, which, finding no evidence, will acquit the accused. And
then they will disseminate information that Mieshyn bribed the court, while
the SBU remained incorruptible. Incidentally, when the criminal case began
to collapse, they employed other methods against us. One month ago, a comprehensive
audit started on the plant, aiming to reveal any kind of abuse. I do not
rule out that there may be some infringements caused by imperfect legislation,
but one can hardly imagine any offenses of a criminal nature. In abstract
terms, Mieshyn is mainly charged with not willing to share anything with
anyone. But one can share something if one steals. If you steal something,
you have to share it with someone. I have nothing to share."

"You were Kuchma's aide in the 1994 presidential campaign. Have your
relations changed?"

"He gave us protection with regard to the property of the personnel,
a 30% share in the plant. Though I am annoyed with his current mistrust
toward me personally, not believing that I am not a criminal or thief.
In this case the President preferred to isolate himself, giving a free
hand to the SBU and futile checks."

"How have the latest events affected the plant's economic activity?"

"The situation is complicated. Because of all these clashes over the
MAP our partners do not see stability, any guarantees that the plant administration
will be preserved and economic policy of the enterprise will not be changed.
They all began to demand prepayment (though previously payments were effected
on delivery), and the creditors began to feel uneasy. For the first time
in 19 years the plant was cut off from electricity for two days. Our arrears
were only one month, but the losses incurred by us totaled Hr 1.5 million.
Also, there was a problem related to the timely payment of wages, though
we found a way to raise wages from April. One of the negative impacts of
all this fuss over the MAP was the dramatic flushing-out of working capital.
Nonetheless, we manage to keep a positive balance, we will pay our debts,
and I am sure, reach our projected annual output."

"Not long ago they announced strategic partnership between the MAP
and Tadzhikistan Alumina Plant, to which 700,000 tons of alumina will be
shipped annually, starting in 2000. Do you intend to continue business
with your former partners, Russian plants?"

"Of course. Even now we can produce up to 150,000 tons a year. Thus,
we plan to maintain our supplies to Russia at the current level of 450,000."

"What is your attitude towards the Sibirsky Aluminy project to combine
several Ukrainian plants, including the MAP?"

"It is subtle and cunning. Sibirsky Aluminy wants none of the specified
enterprises more than the Mykolayiv Alumina Plant. Neither Zaporizhzhia
Alumina Plant nor Pivdenmash, to which they can supply only a dozen railroad
cars of alumina. We can do this as well, but they represent it as the only
proper form of cooperation. All this is a political game and attempts to
get the MAP by another route and at lower cost. It is so transparent, and
at the same time wrapped in a nice paper in order to distract one's opinion
from the essence of the situation."

"Last December you gave a written undertaking not to leave your place
of residence. However, they allow you not only to travel within Ukraine,
but to go abroad as well. Did you have a desire to stay there?

"Yes, I have been abroad several times since then. I have been in Turkey
to meet with the Tadzhikistan Alumina Plant managers, and also attended
negotiations in Vienna and London, where the MAP operation was discussed.
Of course, I could have stayed there, if that had been the purpose. But
there is no reason to, and, in principle, I would like to keep the plant.

 

The Mykolayiv Alumina Plant remains one of the most attractive facilities for privatization in Ukraine 
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