Pinchuk and Kolomoyskiy co-operate to hang on to NZF

After the O.R. the Tymoshenko government tried to keep declared promises and reprivatise assets that had been sold off to insiders at below-market prices with the blessing of the former president Leonid Kuchma. In the event only Kryvorizhstal was taken away from Rinat Akhmetov and Kuchma's son-in-law Viktor Pinchuk and reprivatized, to be later purchased in auction by Mittal steel at a much higher price.

Another major enterprise that had been earmarked for reprivatisation was Nikopol FerroAlloy Plant [NZF] owned by Viktor Pinchuk, who heads 'Interpipe', and Ihor Kolomoyskyi, co-owner of 'Privat Group'.

In 2005 the proposed reprivatisation of NZF created a 'big stink' between president Yushchenko and his Prime Minister, Yuliya Tymoshenko, who favoured minority shareholder Kolomoyskyi. [He is rumoured to be sympathetic to BYuT.]

But now it seems Pinchuk and Kolomoyskyi are co-operating again in order to hang on to NFZ. Today's 'Kommersant' gives an update. Here are some [paraphrased] bits:

"Victor Pinchuk and Igor Kolomoyskiy close ranks

The co-owners of NZF Victor Pinchuk and Igor Kolomoyskiy have combined in the fight against reprivatisation of the enterprise. Yesterday the State Property Fund stated that Victor Pinchuk's Ukrsotsbank has refused to carry out a court order to return to the state 50%+1 of NZF shares on the grounds that they have been transferred to another registered bearer - the Dnepropetrovsk registrar 'RK profit' Plc,which maintains registration document for a number of the enterprises of Igor Kolomoyskyi's 'Privat' group ". Experts consider that the head of the State Property Fund now has little chance in the fight against the united forces of two multi-millionaires.

NFZ is one of the world's biggest producers of ferroalloys (about 10% of world market). Estimated annual profits of the enterprise could be $500 million. In 2003 50%+1 of the state's shares were sold for $77,5 million to the 'Prydinproviye' consortium - part of Victor Pinchuk's "Interpipe". At that time Pinchuk already had possession of 23% of the company's shares, with 26% under the control of its co-owners, Igor Kolomoyskiy's "Privat" group.

In 2005 the Tymoshenko government challenged the privatization of the 'GosPaket' of NZF, and on 20th January, 2006, the chamber of administrative affairs of the Supreme Court finally confirmed the illegality of privatization. Ukrsotsbank now say they cannot satisfy a resolution made the supreme economic court at the beginning of this February and transfer 50%+1 of the shares of NZF back to the state. [Looks like its owners have its seems have done some 'fancy legal footwork' to avoid doing this].

The director of the union of blast-furnace workers Vladimir Tereshchenko is confident that the transfer of shares by Ukrsotsbank to a registrar close to the "Privat" group indicates that two co-owners of NZF have combined in the intention not to allow reprivatisation of the enterprise.

"Igor Kolomoyskiy and Victor Pinchuk, in essence, have come to an agreement," according to a legal observers. "These two owners possess such a powerful juridical and financial force, that the state property fund has little chance to reprivatise the plant".

The transfer of NZF shares to "Profit" will substantially complicate the process of their return to the state. The state property fund will now have to work through the courts again in order to try and get the shares returned - better for them to come to a peace deal with NZF's owners, say observers.

LEvko says this story highlighs a feature of contemporary Ukraine - avowed bitter political and business enemies will kiss, make up and co-operate for the sake of their own self-interest. Ukrainian politics in particular is full of turncoats.

Pinchuk has transformed himself into Ukraine's leading philantropist and is now quite chummy with Yushchenko. He has become a regular fixture at the World Economic Forum in Davos, where he 'showed Yanukovych the ropes' recently.