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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

“Business Has No Nationality,”Believes AvtoVAZ CEO Vladimir Kadannikov

29 May, 2001 - 00:00

Vladimir Kadannikov, elected chairman of the ZALK board the week before last, proposed that the work’s former manager Ivan Bastryha be appointed chairman of the board. Yet, he set a number of conditions. “Seventy million dollars invested in the works must be returned,” Mr. Kadannikov emphasized. “And to return it, the enterprise should establish a different kind of financial discipline. Among other things, we are going to raise the question of nonindustrial losses. These are mainly caused by pilferage estimated at $200,000 a month. This amounts to an annual $1,500,000!” Mr. Kadannikov also seems to have understood later that he should not have raised the matter of theft, brandishing specific extravagant figures, for the workers simply cannot carry away this quantity of aluminum through the factory door. Thus, answering a repeated question on the mechanism and methods of controlling aluminum theft, which The Day put to Mr. Kadannikov after the board meeting, the AvtoVAZ boss said in an evasive and simultaneously straightforward way, “We should punch thieves in the nose. There is also pilferage in our country, Russia. If you don’t cut this short, they’ll grab everything.” Moreover, Mr. Kadannikov’s claim about $200,000- worth monthly losses the works suffers through the thieves’ fault was denied by ZALK spokeswoman Olha Zdendiak. She said the enterprise had revenues of UAH 111 million last year. “If they had been stealing like this, I don’t think the plant would still exist,” Ms. Zdendiak emphasized. The topic of pilferage was no longer touched upon.

As to its plans, the new management is unambiguous. The integrated works will be developed on the basis of the ZALK management privatization proposals and the approved investment program. The list will be topped by the basic production reconstruction program presented a year ago by Kaiser-Aluminum. It deals with modernizing the electroplating production lines and adopting baked-anode technology. In addition, AvtoVAZ intends to speed up the construction and commissioning of a aluminum foil plant and finish preparations for the manufacture of sheet aluminum. “We’ve got clear plans for this year,” Mr. Kadannikov said.

“We need liquid capital, which we now lack for objective reasons (one of which, Mr. Bastryha thinks, is that tax authorities failed to rebate UAH 32-million in VAT as required by law — Author ). Production modernization is a long-term program, but we believe that putting out more overall tonnage and finished items, such as rolled metal, will bring us additional profits. The point is that a ton of rolled metal costs twice as much as primary aluminum.”

Moreover, the new owners have promised to solve ZALK’s power problems. In particular, they have in mind a Russian contribution to the purchase of nuclear fuel for and the disposal of uranium wastes from the Zaporizhzhia Nuclear Power Plant in exchange for reduced rates. Last year’s unjustified power outages cost ZALK 68 million hryvnias. As to gas supply, Mr. Bastryha is also full of optimism. “We will find the ways to solve the energy-related problems with due account of the fact that Viktor Chernomyrdin, quite knowledgeable about the fuel and energy complex, has been appointed Russia’s ambassador in Ukraine. Our combine is able and ready to work toward cooperation with Russian gas companies,” he stressed. Yevhen Kartashov, Zaporizhzhia oblast governor, is also pinning great hopes on Mr. Chernomyrdin.

He held talks recently with Mr. Chernomyrdin. “Chernomyrdin,” Mr. Kartashov said, “took an optimistic view of the necessity to actively restore disrupted ties in order to develop not only our domestic market but also that of the former USSR. In this connection, we have proposals to resume the work of a titanium-magnesium plant and other enterprises that present interest and can serve as suppliers to both the Ukrainian AvtoZAZ and the Russian AvtoVAZ. We discussed the delivery of our new automobile engines and introduced a number of proposals about building farm machinery. We now have a wide range of economic ties to restore. And the fact that such high-profile entities as AvtoVAZ and the USSR Foreign Economic Bank are coming to us with the best foot forward is a positive sign for our joint work,” the governor emphasized.

First Deputy Governor of the USSR Foreign Economic Bank Nikolai Kosov, also shared with The Day his views on ZALK. “Our participation in the ZALK privatization project was caused, first of all, by the fact that we have been servicing AvtoVAZ, our largest customer. Thanks to our loan, it has mastered and put on the production line practically all the latest car makes. We are interested in the development of this kind of cooperation. Secondly, we proceed from the policy of restoring complementary production ties between the CIS states. In this respect, we are tremendously interested in Ukraine. Especially in an industry that correlates so well with and successfully complements its Russian counterpart. We not only issued a loan to buy ZALK’s controlling share but are also going to enlist additional credit resources for plant development. We have the experience of directly funding a number of Ukrainian businesses, including those in Zaporizhzhia oblast. I think that by utilizing our capacities and attracting foreign lenders we will be able to render assistance to ZALK and, accordingly, Zaporizhzhia oblast.”

The conversation was summed up by Mr. Kadannikov, “Claiming that business belongs to a certain nationality surely means there will be no money at all. Business has no nationality. This is what people pay money for, the money they earn themselves. Only then does money appear. And where it appears, in Ukraine or in Russia, doesn’t matter.” Yet, the Russian could not deny that it is better for Ukrainians if money appears precisely in Ukraine.

By Dmytro BROVKIN, The Day
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