Second step in the right direction

Dnipropetrovsk Governor Ihor Kolomoisky has taken an important public step. At a session of parliament’s ad hoc privatization commission, he called upon MPs to revise the results of state property privatization in order to return to the country what was illegally stolen.

In his view, the one to begin with is Ukrrudprom which was sold at a price that is many times lower than the facility’s real value. According to Kolomoisky, a special law was drawn up for this to benefit Viktor Pinchuk, but, after all, Akhmetov’s companies became the main beneficiaries. “They drew up the law to suit themselves. In other words, everybody plays soccer in our country, but the winner is Germany. Everybody takes part in privatization, but it is exclusively Akhmetov who buys,” Kolomoisky explained. The Dnipropetrovsk governor promised to tell more in detail about that auction, for he was also its beneficiary. And should any violations (also on his part) be found in the acquisition of state-owned assets, Kolomoisky agrees to give these shares back to the state.

He also added that two former State Property Fund chairpersons had died because they knew the history and particularities of Ukrainian privatization. “Let the police investigate into what happened to Valentyna Semeniuk and Mykhailo Chechetov, but it is at least the case of driving to suicide, for they knew all the secrets of privatization. Moreover Semeniuk was going to testify as a witness on my side in a London court [the Pinchuk-Kolomoisky dispute is being judicially heard in London now. – Author],” the Dnipropetrovsk governor emphasized.

OLIGARCHY BEGAN TO FORM IN UKRAINE WHEN LEONID KUCHMA CAME TO POWER IN 1994 / Photo by Ruslan KANIUKA, The Day

So, Kolomoisky has taken a second step in the right direction – he called for setting things right in privatization. The first step was to assume the office of governor and ward off separatist sentiments in Dnipropetrovsk oblast.

His idea found support among the MPs. As The Day was told after a session of the parliamentary ad hoc privatization commission, it was finally decided to form two task forces. One will inquire into the privatization of Ukrrudprom facilities, and the other into that of energy sector facilities (regional energy companies, generating companies, and regional gas companies). It was suggested that the former task force be headed by Petro Poroshenko Bloc MP Pavlo Rizonenko, deputy chair of the parliamentary ad hoc privatization commission, and the latter by Samopomich MP Viktoria Voitsitska.

“I will most likely agree. It is interesting to me. I’ve been into steelmaking. I have experience and I know what was happening at the time,” Rizonenko comments to The Day. In his words, there were situations when the state sold an interesting business asset for, say, 50 million dollars, whereas the facility’s real value was dozens of times higher. Rizonenko says it is planned to hear his group’s report as early as in April. What practical consequences will this have for the current owners of the facilities being examined? The MP explains that if the task force detects violations of the privatization law, the commission will turn to executive bodies, the State Property Fund, the Cabinet, and the prosecution service so that the violations can be handled judicially. “If a court proves that the privatization was illegal, this property will be supposed to be renationalized on payment basis. The state will have to refund the paid money,” he says. In Rizonenko’s opinion, there are two approaches to this kind of situations in the world: either the facility is returned to the state or the owner pays the difference to the budget.

THE BENEFITS OF PUBLICITY. WE HAVE NEVER KNOWN A KOLOMOISKY LIKE THIS BEFORE / Photo by Mykhailo MARKIV

“This is an absolutely right idea. I just wonder how MPs will be evading it and explaining why they cannot support this initiative,” says Ihor Lutsenko, Fatherland MP, member of the Parliamentary Committee for the Prevention of and Counteraction to Corruption.

Will revising the 1990s privatization turn out to be a Pandora’s Box?

“Re-privatization is not a positive thing for Ukraine, for it reduces the country’s investment attraction. No country has seen this kind of initiatives end up positively,” says Aivaras Abromavicius, Minister for Economic Development and Trade, commenting to The Day on the parliamentary commission session.

However, Lutsenko thinks otherwise. In his view, redistribution is obviously needed today. “Renationalizing Kryvorizhstal was also redistribution. But there can be transparent and opaque redistributions. Our task is to adhere to transparent principles,” he explains. Lutsenko disagrees that this will all boil down to a showdown between certain oligarchs. “It was decided at the session that the inquiry commission for Ukrrudprom will at the same time deal with Ukrnafta (dividend payment, extraction and sales of oil and gas). Kolomoisky claims that the state (in the person of Naftohaz Ukrainy) owes Ukrnafta very much, while the state is saying just the opposite. This ad hoc inquiry commission is to look into this dispute and find out to what extent effectively the state manages its property,” he stressed.

After such a strong statement by Kolomoisky, MPs ventured to stir up the hornet’s nest of Ukrainian privatization. What will this result in? At first glance, it is quite obvious that the assets of all major oligarchs, who owe their wealth to the 1990s privatization, and those who devised shady schemes, will be subject to analysis. It will be clear in April who may be the first to come under the scrutiny of law enforcers. According to members of the parliamentary ad hoc privatization commission, both task forces are expected to report in April.