The State Is Being Robbed
Life, as we know, is not always a bed of roses. On February 27 President Leonid Kuchma, escorted by Russian Ambassador to Ukraine Viktor Chernomyrdin, took part in festivities marking the seventieth anniversary of the creation of Odesa oblast. Oddly, some important enterprises vital for Ukrainian-Russian relations were missing from the itinerary of the head of state’s visit. In all probability, the hosts did not want to annoy their high guests by focusing on two Odesa-based oil terminals, the old one through which the powerful stream of the Russian oil goes to Europe, and the new one in Pivdenny, built with the noble objective of decreasing our country’s dependence on its northern neighbor’s oil. Incidentally, the first tanker with process oil for the newly-built Odesa-Brody oil pipeline was expected (albeit without result) to arrive at the terminal during the incumbent’s visit. The mood of employees of the old terminal owned by Eksimnaftoprodukt headed by the Hero of Ukraine Volodymyr Filipchuk is far from festive.
It became known recently that the Kyiv Appellate Court has abolished the decision of the capital’s arbitration court of December 7, 2001 ordering the nationalization of a previously denationalized 51% interest in the Eksimnaftoprodukt company, as well as 50%+1 stake in Kyivnaftoprodukt and Krymnaftoprodukt, which had been earlier sold in a dubious transaction to Cyprus-based Bevalo Investments Ltd.
Let us recapitulate the history of the whole saga. Ukrnaftoprodukt took out a one month loan of $3 million from the Cyprus company using as collateral its share in Eksimprodukt, a highly profitable blue-chip company. Quite clearly, the loan was deliberately taken in order not to repay it, reimbursing it with the stake. Thus, the Ukrainian state-run entity with a market value of no less than one billion dollars was sold to an offshore company for pennies on the dollar.
The key to understanding this financial maneuver can be found in media reports (also confirmed to The Day by Ukraine’s first President Leonid Kravchuk) saying that People’s Deputy Andriy Derkach was the prime mover of the whole affair, with the companies in which this lawmaker has a finger virtually selling Eksimnaftoprodukt to themselves. Meanwhile, an investigation by National Defense and Security Council experts revealed numerous violations of Ukrainian laws made by the State Property Fund and government during sharing and privatization of oil supplying companies. These violations made it possible to sell Eksimnaftoprodukt illegally, despite a protest from President Kuchma in March 2000 when he instructed the then Prime Minister Viktor Yushchenko to reconsider the sale of the state-owned interest in Eksimnaftoprodukt. However, Mr. Yushchenko did not react.
As Eksimnaftoprodukt legal department director Yevhen Rybalko told The Day, he feels utter frustration after the court decision. Eksimnaftoprodukt employees do not pin much hope even on the Kyiv’s Pechersk Court that will consider today an appeal by the Prosecutor General to cancel the government’s decision to create the Eksimnaftoprodukt Holding Company. If sustained by the court, the cancellation will automatically render all subsequent transactions involving the firm illegal. Courts treat the relations of the state with offshore entities very strangely, the lawyer admitted bitterly. The position of the State Property Fund on the Eksimnaftoprodukt issue is unclear, while precisely the SPF has contributed much to blue-chip property slipping into offshore hands and continued, in the person of SPF Deputy Head Mykhailo Chechetov, to insist on its privatization even after the December ban by the court. Recall that Prime Minister Anatoly Kinakh stopped any further moves by the SPF, the day of his decision. According to Yevhen Rybalko, the SPF did everything it could to influence the court decision. Mr. Chechetov, who is acting head of the SPF for the term of Oleksandr Bondar’s election campaign (the latter is running for parliament on the For A United Ukraine ticket jointly with Andriy Derkach), when asked by The Day whether he thinks the SPF had a part in robbing the state, answered, “The fund cannot be blamed for anything in this case. With clenched teeth, we stand up for the state’s interests.”
Given the outcome, someone’s clenched teeth obviously cracked.
