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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

Cabinet to Reward Favorites

1 December, 1998 - 00:00

The State Property Fund says it is ready to sell a 24.4% interest
in Bila Tserkva's joint stock tire-making enterprise, Valsa, at the 47th
(final) certificate auction. It is interesting to note that another, 25%,
block of shares is still to be sold at a compensation certificate auction
suspended by Parliament.

The Verkhovna Rada Privatization Committee feels sure that the 29th
and 30th Compensation Certificate auctions, known for secret Cabinet lists
of enterprises, with only two state companies, Finprom (Finance Industry)
and Derzhinvest (State Committee on Investment), admitted, will be resumed
after the ado surrounding them blows over, since quite a number of compensation
vouchers remain unredeemed, are held in powerful hands, and their legitimate
life is to end on January 1, 1999. In other words, 49.9% of the shares
of this enterprise producing tires for cars, trucks, and farm machinery
will be sold not for money but for privatization papers. Getting a 1.6%
interest plus one share to have full control over this enterprise will
not be difficult; 2.8% interest was previously sold by subscription on
preferential terms and 10.33% at certificate auctions. In addition, the
SPF plans to put up for sale another 25% block of shares by June 1, 1999,
this time subject to commercial bidding.

The remarkable thing is that if these plans come true the next summer
will see more than 70% of Valsa shares in private hands and the Cabinet's
newly adopted program to "stop production decline and organize its growth"
spells it out in the chapter titled "Light and Chemical Industries" - "...material
resources worth Hr 6 million (sic) shall be provided from the national
reserve to restore the output of automobile tires at Bila Tserkva's VALSA
Enterprise." Note: money from the national reserve are to be allocated
after most of the shares will no longer be public property and the rest
will be awaiting their turn to be sold. Why is the government determined
to help this particular enterprise which, by the time this help comes,
will not be entirely a state one?

The parliamentary commission has its own suspicions, of which the prevalent
one concerns Russian business ("every time Berezovsky visits something
is sure to get privatized...") as an established buyer for whom the Valsa
privatization program was written), or that it is all because of the other
local tire plant, Rosava, which decided to expand and expand its share
of domestic and foreign consumer markets. Whatever the reason, the interesting
fact remains that the whole affair is not likely to benefit the budget,
at least at the privatization stage. SPF head Oleksandr Bondar declared
publicly that the final 47th certificate privatization auction will be
the best over the years of privatization. Of course it will, offering from
December 1 to 30 blocks of shares in 62 monopoly and strategic enterprises
at nominal cost.

 

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