Prosecutor General opens 54 criminal cases concerning privatization offenses

The grain theme dominated last week, happily coinciding with the annual September battle for the harvest, the presidential election campaign in general, and the IMF Board of Governors session (on granting Ukraine a new EFF installment) in particular. Last week the State Property Fund pored over a Cabinet-approved list of 304 grain receipt and storage enterprises whose state-owned shares are planned to be sold in the next few months. And the Verkhovna Rada Privatization Monitoring Commission received an official answer from the Prosecutor General's Office to the July statement by People's Deputy Cherenkov about the illegal privatization of grain elevators.

The Prosecutor General's Office, having carefully checked what Mr. Cherenkov said, did not expose any facts of the privatization of Ukrainian grain facilities (which are so far banned from privatization by a number of privatization laws and presidential decrees). However, the commission found many other, no less interesting, things. According to the official report signed by Ukraine's Prosecutor General Mykhailo Potebenko, the inspection uncovered «forged documents, doctored minutes of meetings on placing shares, cases of underpricing of property, etc.» In particular, the Prosecutor General's Office claims, when privatizing the Hubykhyna and Pereshchepyne grain silos (Dnipropetrovsk oblast), executives of the Progress, Ukrayina (Novomoskovsk district), Shevchenko, and Frunze (Mahdalynivka district) agricultural enterprises recorded in general meeting minutes false information on the distribution of shares among enterprise workers. At the same time, UAH 370,650,000 worth of shares were sold under fictitious contracts to the Dnipropetrovsk- based Hepard-Ukrayina firm. Similar offenses were committed during the denationalization of the Devladiv, Brahynivka, and Apostolove elevators.

When verifying privatization of the Karlivka elevator, the inspectors found obvious fraud in the selling of privileged shares to the employees (silo manager V. Myrny helped involve in the stock sales Kyiv-based GPI-Brok Brokerage, which bought shares at prices much lower than their nominal value).

Managers of the Lenin, Svitanok, and Promin collective agricultural enterprises in Hadiach district, Poltava oblast, sold previously state-owned shares of the Hadiach silo at undervalued prices without even they being paid. When selling the privileged shares of the Yavkiv silo, Mykolayiv oblast, the managers of Slavutych, Belarus, and Komintern collective farms distributed the shares among unauthorized persons, which, as the Prosecutor General's Office reports, inflicted a loss of over UAH 30,000 on the state. And when privatizing the Varvary elevator (Mykolayiv oblast), the elevator manager and the director of Regional Registrar Co. submitted to the local State Property Fund branch forged privatization documents prepared for fictitious shareholders, and thus illegally acquired a UAH 19,000 block of shares.

Similar violations of the securities law were detected at the Orekhiv Bakery Combine, the Fisak Grain Receipt Enterprise, some Zaporizhzhia oblast bakeries, and a number of elevators in Kherson, Vinnytsia, Kirovohrad, and Donetsk oblasts. In addition, the Prosecutor General's Office discovered that some elevators in Poltava and Zhytomyr oblasts, when selling their shares, underrated the overall cost of their property by about UAH 200,000.

As a result of the inspection, the Prosecutor-General's Office has contested 15 illegal decisions, brought 24 legal actions for compensation for losses and invalidating contracts signed previously. 45 criminal cases have been opened.

INCIDENTALLY

Late last week, Parliament Speaker Oleksandr Tkachenko said that «bread must not be taken outside Ukraine at all» because Ukraine «is on the brink of a food-grain disaster.» According to the Speaker, 20 million tons of grain have been harvested so far, while a minimum gross harvest of 35-37 million tons is required to sustain the food supply.

Last year, Interfax-Ukraine reports, 26.5 million tons of grain were harvested. In July 1998-June 1999 Ukraine exported about five million tons of grain, including four million tons of wheat.