Arrests of Mykolayiv Aluminum Plant Managers Presage its "Big Privatization"

Certainly, the President was disappointed with the MAP: "I once told both Mieshyn and the oblast management that the plant should be laying golden eggs for the Ukrainian economy. And when it is up to its neck in debts, any reference to high politics is irrelevant," he told a seminar of regional journalists. He agreed, however, that the plant is being closely looked at by people who want to buy it. To observe justice and legality is "the task of the authorities, plant, and oblast administration, for if the plant's development requires investment, then privatization should be considered, and if not, all talk about it should stop."

As we know, Mr. Mieshyn spent four days trying to get access to Mr. Kuchma. Perhaps, the director would have told the President that the plant's accounts receivable exceed its accounts payable; that its annual profit is measured in tens of millions of dollars, and it pays an enormous amount to the budget; that the MAP actually maintains one of the four Mykolayiv districts; that the initial privatization plan provided for investments in the plant, and according to the existing, amended plan, a 30% share in the plant will be sold not under investment guarantees, but via commercial bidding, and the money will go not to the rehabilitation of production facilities, but to the treasury; and that the authorities are actually hindering privatization, even under the approved plan... Mr. Mieshyn never got his audience with the man at the top: he was told, "the President is aware of the situation."

However, thanks to Leonid Kuchma, those accused in the MAP case will be treated with justice: "I gave serious instructions to the SBU not to play to somebody's interests and not make persons look guilty when they are not." But it still looks like someone's interests are involved? And in order not to punish the innocent, does the SBU need special instructions from the President?

Incidentally

Volodymyr Horbulin, Secretary of the National Security and Defense Council, told Interfax-Ukraine that he has "no information that would permit making a clear-cut conclusion to what extent the MAP director exceeded his powers during the privatization of the enterprise".

"All the initial privatization, that was conducted at the plant, raised serious legal doubts, since there was no relevant legislation then, which would spell out the rights of the plant managers, workers, and the state," he said.

Mr. Horbulin also emphasized that "during the privatization of large enterprises as the whole, not only in the MAP case, our imperfect legislation allowed a very interesting approach to be applied to the very process of privatization, and a quite a few mistakes were made. This will be a subject for discussion at the next Council meeting."

This all started on December 10, when the Mykolayiv oblast SBU released information about opening of criminal proceedings against individual managers of the Mykolayiv Aluminum Plant Joint Stock Company. The criminal proceedings were initiated in accordance with Clause 70 (contraband) and 80-1 (concealment of foreign currency revenues) of Ukraine's Criminal Code.

Mykolayiv Aluminum Plant General Director Vitaly Mieshyn and two other managers remain in their work places and continue to perform their official duties.

Commentary

Yevhen MARCHUK (Chairman of the Verkhovna Rada Committee on Social Policy and Labor):

As far back as April and May 1996, when I was Premier, I approached the Security Service with a recommendation to set up strict supervision over the privatization process at some strategic facilities, in particular, the Mykolayiv Aluminum Plant. There was some information according to which this plant had become an object for some powerful foreign entities. These entities had a very broad position on the world aluminum market, controlling a substantial part of its production worldwide. There was a great danger that having privatized the plant we would lose it forever. I know what entities and what personalities are very interested in privatizing this facility. On the other hand, even then (two and a half years ago) I thought, not without foundation, that this aluminum plant could become the object of very serious speculation. The fact that this situation has now been brought up to the nationwide level and parliamentary examination, testifies to its importance.

On the other hand, Mykolayiv Aluminum is not an enterprise working with non-liquid products or which is idle. The problems relating to the privatization of this facility show that the accent with regard to the reasonability of privatization has been shifted somewhat.

In principle, the facility could be privatized. But only on condition that its efficiency be enhanced. Actually, this is what was supposed to happen to other facilities: restructuring, cutting-off already dead production structures, bringing efficiency up to the world levels. But I do not think that the need to totally privatize the plant is that urgent. The very fact that the six-year-old affair was revived and used as basis for various measures by law enforcement bodies also gives rise to a host of questions and doubts concerning the real meaning of these proceedings. As far as I know, now several entities, in particular, clans including non-Ukrainian ones, have aimed at Mykolayiv Aluminum. I cannot judge Mieshyn's overall performance, but the very fact that he obstructs privatization by entities, whose interests are far from Ukraine's and who want to lay their hands on the strategic block of shares, deserves respect. And if he had a feeling of sin, he would not be haunting thresholds in Kyiv, trying to get access to the President and other officials. It is a very demonstrative situation. If I am not mistaken, Mieshyn was presidential candidate Leonid Kuchma's aide.

All this sharpening of the situation is a typical example of the policy and tactics of the privatization of large enterprises in Ukraine. I think there is an urgent need for Parliament to get down to the nitty-gritty of everything happening there. If we go down there, we will receive many answers to all the questions related to its privatization. This will be very useful for the privatization of other large enterprises in the future, Ukrtelekom in particular. Some very powerful clans, and even some People's Deputies, representatives of law enforcement, along with Ukrainian and foreign business entities have been drawn into this whirlpool. There are twenty or thirty such serious facilities left in Ukraine, of which shadow or semi-shadow entities have not yet got their tidbits. What will be the response of the President and his administration is very important. It seems that it is rather difficult for them to come up with a definite position on this issue, for that involves a lot of things which some Administration employees are concerned with.

Recorded by Vyacheslav YAKUBENKO, The Day