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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

SECRET DEPOSITS IN POVERTY Denationalization in Ukraine has ignored the laws

13 November, 2012 - 00:00

I am sure that there will be multi-volume studies dedicated to privatization in Ukraine. But even now, hot on the trail of events, one feels safe to assume that this process is deadlocked, and not because it started spontaneously or because it was something new and unprecedented (those at the helm could use the experience of many countries). This process was driven down the proverbial blind alley quite on purpose and those who did it knew the consequences and considered all the possible options.

Findings received by the Special Privatization Oversight Committee show that there were no proper feasibility studies behind the national privatization programs developed by the State Property Fund and approved under presidential edicts, which is against the law. In particular, SPOC has established that SPF worked out such programs not in accordance with the laws of Ukraine, but following demands from certain foreign companies specializing in this field.

Mistakes were made at every step, always on purpose. Thus, property privatization certificates, being government securities, were unlawfully issued by the State Property Fund and Ministry of Finance, and not by the National Bank. In other words, the NBU has no register of their serial and ordinal numbers. In additional, also contrary to the law, the certificates were not issued in the form of coupon books, thus violating citizens' right to bid in privatization auctions with parts of their certificates or in privatizing several objects. Under the law such issuance and circulation of privatization certificates are constituent elements of a criminal case, but the Prosecutor General's Office looks the other way.

The State Property Fund does not accept housing checks as payment for privatization objects, yet these checks are a type of privatization papers, and the state guarantees that every citizen can use such checks as legal tender. As a result, people living in private homes and condominiums cannot use them. And this despite the fact that there is a legal officially adopted framework. As it is, they can only use them when privatizing state-owned apartments and when buying stocks of enterprises at their par value.

SPOC has further determined that SPF is using compensation certificates in the privatization process contrary to the law, in that they reduce the share of property due the owners of privatization certificates and housing checks. In addition, the decision to stop the issuance of compensation certificates and transfer those unused to firms set up by the Ministry of Industrial Policy is a purposeful act aimed at cheating the citizens and concentrating property not so much in the hands of the state as in private structures in a parasitizing on it.

SPF-instituted housing lease patents and their sale look very problematic from the standpoint of legitimacy. Such a patent cannot be considered as a tax bill or a normative document. SPOC experts believe that the forceful sale of such patents is a blatant violation of the Ukrainian law.

The fact that practically none of the enterprises privatized as public joint stock companies issues shares in paper or electronic form is a violation of human and property rights.

SPOC considers that there is actually no privatization in the legal and economic sense of the word, because of multiple transgressions of the law by executive authorities and the State Property Fund.

For example, such blatant transgressions, fraud, and misuse of funds and privatization papers largely result from the vague legal status of trust partnerships. SPOC has established that there are two different versions of the Cabinet decree On Trust Partnerships, both signed by Prime Minister Leonid Kuchma, and that this provided unlimited opportunities for fraudulent practices.

SPOC experts are of the opinion that such opportunities were programmed in the privatization process itself by legislative acts that were often worked out jointly with and under pressure from foreign consultants. Apparently, Ukrainian property will continue being sold to foreigners on preferential terms when transferring to the sale of shares of government-run enterprises in return for money. SPF adopted the procedures of the competitive selection of legal entities (consultants) for organizations and terms and conditions of such contests. Under these procedures, private firms, mostly foreign entities, will be delegated SPF powers like a government institution. The Fund will pay for all services rendered such consultants, but there is no responsibility envisioned for them in case of improper professional performance.

In a word, the State Property Fund has made its tangible contribution to the mounting poverty which is characteristic of Ukrainian society as a whole.

 

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