“True, they made us play outside the law,” Deputy Chairman of the State Property Fund Chechetov had to admit, commenting on the outcome of the tender selling 68.1% stock of the Zaporizhzhia Aluminum Combine (Ukr. abbreviation ZALK) state company. According to Part.Org (www.part.org.ua), Mr. Chechetov told a December 7 news conference that the [bid evaluation] committee wanted make its decisions using economic and legal coordinates, but that there was “also a political system of coordinates.”
The tender commission chairman also stated that what had happened (on December 5, when the successful bidder was to be announced, it allowed Itera Ukraine and KrAZ Foreign Trade Company to bid, although they had been disqualified, failing to meet the requirements of an industrial investor; the following day KrAZ was proclaimed the successful bidder — Ed.) was a breach of the bidding procedures, warranting the losing bidders to take the matter to court.
Simultaneously, First Vice Premier Yuri Yekhanurov stated on December 7 that the cabinet exerted no pressure on the tender commission: “I know of no such pressure. The commission makes its own decisions,” reports Interfax Ukraine. Mr. Yekhanurov stressed that he had personally instructed in writing Bohdan Butsa, Cabinet representative on the commission, to allocate maximum points to the bidder offering the largest sum for the block of shares.
In the end, the largest bid, $101.5 million, came from KrAZ. Pierre Heidenbrock, director of Reifeisen Investment, told Part.Org that the bid defied reality: “The amount offered by far exceeds the cost of the combine as a business entity. The people [offering the bid] must have been governed by factors other than business considerations... The sum is very impressive not only for Ukraine, but also for Central European countries.”
Regrettably, whether the successful bidder will be able to pay the sum to the budget (especially considering that several days ago it transpired that ZALK owed $115 million to the State Reserve for bauxite consumed) remains an open issue.
Just as regrettably, no one has so far refuted recent media reports that Governor Kucherenko addressed a letter to the Prime Minister, requesting he reinstate KrAZ and Itera Ukraine as bidders, and that Viktor Yushchenko approved.
“The tender shows that there is no limit to manual control over processes, which ought to be transparent and understandable,” Maksym KARYZHSKY, director of the Humanitarian Technologies Center, told The Day . He believes that if the results are finally approved this will threaten the budget plan of the privatization campaign and the campaign as such.
He stressed that the ZALK tender will be a “sure sign” to future bidders and that the latter will lower bids even when facing attractive property. Moreover, it is apparently less expensive to make a deal with local authorities or the government before the tender than waste time and money bidding.
“It is a familiar situation,” Mr. Karyzhsky said, “showing that notions such as transparency and observance of the rules are still to be established in Ukraine.”
