Question of <I>The Day</I>

Vitaliy MELNYCHUK, vice president of the asset management company Kinto:

“The limits of reprivatization can be established only if we consider all the circumstances surrounding privatization, i.e., social, political, legal, and economic. One of them is a fundamental mistake made in determining the value of assets, which was not determined on the stock market but by appraisers who, even though they are professionals, tend to make subjective judgments, like all people. We must also take into account all the risks stemming from this reverse process. This is where risk assessment experts must have their say. What is more important to us today — a certain amount of money that may be obtained or the investment climate and peace in society, which may be undermined by this situation? Today the decision about the limits, or degree, of privatization lies in a completely different dimension, and it is up to politicians to resolve this problem. They must determine what is of greater value to us. In my view, the reprivatization process should be concluded immediately. The deeper it goes, the greater the potential abyss at whose edge we may eventually find ourselves. After all, this problem is preventing people from working normally and is agitating society.”

Tetiana ARTYMCHUK, executive director of the Kyiv-based industrial company Vesta:

“I am all for enforcing legality in the country. If violations have been proven in court, especially violations at major enterprises on which the country’s annual budget depends, something has to be done about this. But it is impossible to revise all the privatization decisions — that’s for sure. This would be a task for the long haul. Therefore, I oppose reprivatization, but I’m a stickler for honoring investment commitments. I have personal knowledge of cases where enterprises were bought exclusively with the aim of selling off assets instead of developing production. Therefore, I am all for restricting reprivatization only according to the framework of monitoring the implementation of investment commitments.”

Markiyan DATSYSHYN, director of the Institute for Reforms:

“Reprivatization must be preceded by court hearings to prove that ownership rights were established illegitimately. We should also not forget about the legal notion ‘statute of limitations’ — the period after which cases are no longer examined by the courts. May I remind you that, most importantly, current legislation does not provide for any intervals during which privatization processes may be revised. I think that discussing them today is out of the question, because discussions of this subject were conducted for half a year; and we all know where they led. The question of ownership can no longer be considered within the context of filtering honest owners from dishonest ones. The law has such a notion as a bona fide buyer, and based on court rulings this principle can now be applied to both Mr. Akhmetov and Mr. Pinchuk, because the illegality of the sale of Kryvorizhstal was determined exclusively on the basis of an analysis of the State Property Fund’s actions, not some violations on the buyers’ part. But after seeing the six-fold difference between the prices from the first and second sales of this asset, one is tempted to carry on with reprivatization. But we must never forget that the price of a certain asset is formed at a certain time and under certain circumstances, which largely accounts for the major increase in the price of Kryvorizhstal. Without a doubt, all privatized enterprises now cost several percentage points more or maybe even several times more. But this is no reason to revise their privatization. Buyers’ investment commitments are a different matter. Monitoring their implementation is crucial, but I’m not certain that this is receiving adequate attention. But even here a degree of subjectivity may be at work when it comes to determining the level of non-fulfillment of these commitments and deciding whether to prosecute investors. Let’s say investors should be taken to court for not fulfilling 30 percent of their commitments, while 10 percent of unfulfilled commitments may not be reason enough to file a lawsuit. This question is still unanswered today, but it must be resolved before launching an extensive campaign to check how investors are honoring their commitments.”