A heavy, perhaps final blow has been dealt shadow privatization in Ukraine. On July 5 Verkhovna Rada almost unanimously passed a bill enforcing a moratorium on compulsory sales of public property to private owners. From now on blocks of shares owned by the state and property complexes will be allowed to be sold on account of debts only after settling all problems in this sphere. The moratorium has no time limit and will be lifted only after parliament passes bills tentatively titled On the Executive Service, On the Resumption of the Debtor’s Solvency or Proclamation of Bankruptcy, and On the Mechanism of the Compulsory Alienation of Public Property.
Yuri Hryshan, deputy chairman of the State Property Fund of Ukraine (SPFU), presented the bill in parliament and said its main purpose was to put an end to a series of scandals ensuing from the shadow privatization for token money of several combined heat-and-power units and the giant Rosava tire-making enterprise. “Now we’ll have an opportunity to prepare documents that will not allow the shadow operators to get state-owned blocks of shares out of state control so easily,” he noted, adding that adopting such documents will nof be easy, because certain forces in parliament are opposed. He predicted that the moratorium would last until mid-fall.
The SPFU has prepared and agreed with the cabinet on almost all of the bills required to straighten out compulsory sale procedures. The main innovation concerns the valuation of public property put up for compulsory sale. All the appraising firms will have to receive SPFU licenses and notify it of their findings (two months ago, SPFU learned about Rosava’s valuation and sale at 25 times less its face value from the press). In addition, SPFU’s authority to collect information on persons acquiring property on account of state enterprises’ debts will be duly regulated. Even now the SPFU has no idea who purchased the legendary Rosava. Its chairman Oleksandr Bondar merely said that his totally informal sources trace the scandal to Russia. Ukrspetsiust and the Antimonopoly Committee know everything about the new owners, but are in no hurry to share this information.
The most disputable aspect about the moratorium bill concerns competence — in other words, who will approve and monitor such purchases — to be vested in various state structures. Minister of Justice Siuzanna Stanyk has twice proposed the cabinet to liquidate the company Ukrspetsiust which is entitled to sell public property as claimed by creditors. Formally accountable to the Ministry of Justice, the company’s performance has given cause to open 140 criminal cases. Ms. Stanyk proposes not to accuse Ukrspetsiust of anything till the court rulings. All things considered, the company will not live longer than a couple of months.
Strangely, the most skeptical view on the moratorium bill comes from SPFU Chairman Bondar. He admits that the passage of the bill is to be regarded as a desperate move. “I’m sure that new shadow privatization techniques will be contrived, something we can’t even imagine,” he says. This means the moratorium will be just a short respite in the SPFU’s heroic struggle for the right to conduct civilized privatization in the interests of both the investor and the state.
