A Corporate “Call”

This week the State Property Fund will forward to the cabinet a list of enterprises where the agreements on the management of corporate rights have to be abrogated in keeping with President Leonid Kuchma’s directive of January 20 (Premier Viktor Yanukovych must report its implementation before March 1).

Interfax Ukraine informs that SPF First Deputy Chairman Mykhailo Chechetov described the current corporate management status as unsystematic (the cabinet had transferred these rights to various structures, including regional state administrations, ministries, municipal authorities, even legal and natural persons). Mr. Chechetov reminded that Leonid Kuchma had repeatedly sharply criticized the existing system of corporate management; he stressed that the president’s directive was a “perfectly consistent move.”

It is also true, however, that one can discuss the consistency and legislative motivation of the national policy in terms of management of corporate rights — meaning also the rights of all Ukrainian citizens — with a lot of reservations. At one time, SPF was deprived of the corporate rights because it had failed to show an adequate performance. Those rights were handed over to a special agency headed by Oleh Taranov (a copy of the document effecting the transfer is at the editorial office). That agency also proved inefficient and was liquidated. In the end, SPF was returned the rights and would then lose them as resolved by different cabinets.

The last drop in the cup of Ukraine’s “consistent” corporate management policy was added by the cabinet resolution subordinating Naftohaz Ukrayiny to the Ministry of Fuel and Energy (the reason for this formulated as the need to secure a uniform approach to the coordination of the performance of enterprises of the oil and gas complex [sector]). The said resolution was passed January 15, without “coordinating” it with the president, and announced by Fuel and Energy Minister Serhiy Yermilov four days later in Lviv. It met with a most variegated response. Experts, interviewed by news agencies and by The Day, all pointed to negative consequences. Vladyslav Ostapenko, head of the information and analysis department, financial company Sokrat, cautioned that new business trends that had just been started by Naftohaz Ukrayiny would be in the hands of ministers, particularly access to the oil products retail market. He believes that one should not deviate from set course. Why surrender the whole market to Russian companies that were the leading operators anyway?

The fuel and energy ministry’s corporate initiative made the president once again ask himself who was actually in control of the rights of Ukraine and how those rights were being managed, who was getting hold of the money stemming from those rights that were still very extensive. And so he made a decision relating not only to Naftohaz but also to all state corporate rights. It is safe to assume that the State Property Fund is winning this encounter not only because it has somehow proved its ability to use state corporate rights effectively, or because it has offered a reliable model (the special SPF department mentioned by Mr. Chechetov recently is best described by the we-have-been-through-this clichО, immediately reminding one of eloquent shadow privatization examples demonstrating SPF’s sheer ineffectiveness). Moreover, SPF is very unlikely to feel happy about the new responsibility, including Naftohaz’s relationships with the budget. The president, by returning those rights to SPF (the latter being under his direct command), must expect no one to manage them behind his back any longer. Apparently, those at the helm of strategic enterprises like Naftohaz Ukrainy will continue to have direct access to the president to discuss the most important decisions, so that the role played by any structure formed within the Fund will inevitably be reduced to statistics. By the way, the fact that the cabinet placed the head of state in an embarrassing situation by its Naftohaz resubordination resolution is evidenced by rumors that the president’s directive should have actually been dated January 20, not 23.