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Tuesday, July 15, 2008

Semenyuk-Samsonenko Warns ArcelorMittal (Updated)

Valentyna Semenyuk-Samsonenko, head of the State Property Fund: I harbor no bias, and the Fund harbors no bias, toward [Arcelor] Mittal Steel. We equally treat everyone who came to Ukraine with investments. If you assume obligations, you should deliver. If you don’t deliver, you’ll be parted with your respective entity. Last year, we repossessed 35 such entities. It’s no big deal.

Having, so far, fended off an attempt by PM Tymoshenko to sack her, Mrs. Semenyuk-Samsonenko has reinforced her buy-hold-sell prerogative with a policy of who’s-your-mama.

Not only does Semenyuk-Samsonenko bounce the privatization deals sought by Tymoshenko, but she also seeks to pull the rug from under the deal that Tymoshenko considers her personal triumph.

In 2005, the resale of Kryvorizhstal in a live-broadcast open-bid auction fetched a record price of $4.8B, becoming the only transparent transaction in Ukraine’s history of murky privatization deals governed by cronyism and favoritism.

Since then, experts believe, the market value of the steel mill has increased manifold.

What’s done is done. Unless ArcelorMittal fails to meet the terms and conditions of the sales agreement, its property rights must not be violated.

And given Semenyuk-Samsonenko’s agenda, the public has the right to know the facts, just the facts.

An article in ePravda (Ukr) cites ArcelorMittal’s failure to pay out dividends to the State Property Fund, which retains a 7% stake in the steel mill. The SPI also claims that the company management has not improved working
and housing conditions as stipulated by the agreement. Semenyuk-Samsonenko, the article continues, has voiced plans to divorce ArcelorMittal from its asset, and has asked the government to cover litigation costs.

At the same time, the article argues that Semenyuk-Samsonenko's move
is primarily a crusade against Tymoshenko.

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hans said...

Back then I thought re-re-privatization of Kryvorizhstal was a silly joke. I can't believe it's even coming up now... Of course, I'd like more information on the accusations, and there has been talk of failure to meet investment expectations.

But combine this with the Vanco situation, and Ukraine's foreign investment climate will completely nosedive. (Regardless of how justified the decisions are.)

hans said...

PS, trading yesterday dropped Kryvorizhstal's value on the PFTS stock market by nearly 19%... said...

Sounds like a waste of money, a whole $72 million UAH. And they (the Property Fund) do not even expect to win, according to ePravda!! Unless they're bluffing and do not really intend to spend the money on arbitration, this is an unnecessary expense that could be better used elsewhere.

Taras said...

Good to see you again, Hans!

From what I’ve read, I see Vanco’s subsidiary as a front organization for special interests, or, as many call it, RosUkrEnergo 2.

Being transparent and world-class, ArcelorMittal falls into a different category. In ArcelorMittal’s case, Ukraine should strive for an out-of-court settlement whereby the company would retain its property rights by meeting its obligations.

But what "Ukraine" are we talking about? We have President Yushchenko, who probably eyes Kryzhorizhstal’s former owners as guardian angels in his reelection plan. We also have Semenyuk-Samsonenko, who enjoys Yushchenko’s tutelage and appears to be pushing his agenda.

Vitaliy, bluffing or posturing may very well be the case in an overblown or publicity-driven argument.

I hope ArcelorMittal keeps its side of the bargain and that will be the end of it. Constant violation of the sales agreement, however, can and should result in arbitration.

In countries that care about the public good, investors observe the local laws and abide by their agreements.

hans said...

It's too bad that Ukraine lacks the legitimacy to be taken seriously in these types of issues. When such accusations appear, the immediate thought is, "who in politics will be benefiting," not "well, that's good that they caught them violating an agreement."

But maybe I'm just cynical and it's only me...

Back from a great vacation in Crimea, by the way. Hoping to keep busy for the next month or so in Kyiv before I head back stateside.

elmer said...

No, Hans, you are absolutely right - it is a nut house, and what we see are the effects of the sovok union.

Ukraine, as in the case of all the former sovok republics, has an immensely difficult task - transformation from a brutally repressive central command economy to democracy.

It is no small undertaking, and no small task.

There are a few people who have risen to the occasion - among them Lutsenko, Yatseniuk, Tymoshenko and some others.

Yushchenko started off on a great note during the Orange Revolution.

But instead of following through, he screwed the pooch.

The former commie-sovoks learned very quickly, as insiders, how to gather and steal ungodly wealth - through the use and abuse of government.

They are, to a large measure, still in power today.

Instead of following through on his words ("corruption is killing the country"), Yushchenko seeks to appease Akhmetov and kiss his butt.

But it's not just Yushchnko's fault.

The people thought that this would be a quick fix, and are themselves continuing to participate in corruption, or are simply looking the other way - at a time when public vigilance and public outcry and public demonstrations are now possible, at a time when public accountability is most necessary, and at a time when public responsibility is most called for.

So they elect a corrupt thug like Cherno mayor of Kyiv - again - KNOWING THAT HE IS A CORRUPT THUG.

That's just one example.

As Platini said, it is a nut house.

Old sovok habits die hard.

Including the genetic culture of fear and the massive inertia that the sovoks built into the people ("my house is on the edge, I know nothing" - sort of like Sgt. Schultz in the old TV program, Hogan's Heroes, who always repeated "I know nothing, I know nothing.")

Ukrainian politics is a kaleidescope right now - there may be new patterns when you turn it, but it's the same old pieces of glass.

Yushchenko had the chance to break that kaleidescope, with massive support from the people.

He blew it.

So now, inch by inch, Ukraine is slowly crawling towards true democracy.

To the detriment of the country and its people.

And to the continuing benefit of about 100 corrupt thug oligarchs.

Taras said...

Hans, Ukraine often lacks credibility because “one law for all” doesn’t work in Ukraine.

In Ukraine, status defines standards. As long as standards vary with status and no clear set of rules applies to all investors, we’ll have lawlessness at home and credibility gaps in our relations with foreign partners.

Judging by your blog chronicles, you’ve done quite a piece of work researching energy issues in Ukraine!;)

You’re right, Elmer!

That task remains largely unfulfilled even though we no longer have a command-and-control economy but one controlled by the oligarchs.

Akhmetov was expected to join Yushchenko in his annual Mount Hoverla climb, but canceled at the last moment. Yushchenko had to go it alone. Well, not exactly, as these pictures show.

Once on top of Mount Hoverla, the two of them could have done “Up Where We Belong” or “Against All Odds” or “True Colors” or “Girls Just Wanna Have Fun.”