Thursday, January 03, 2008

Big business and politics

Just before Christmas, ex-PM Viktor Yanukovych defended last year's privatization of "Luhanskteplovoz", the sole producer of cargo diesel locomotives in the CIS, stating that he considers it to be legal. 76% of the share of the company had been purchased by the Russian Bryansk Machine Building Plant and by the Demikhovskiy Machine Building Plant, both of which are affiliated structures of the Russian TransMashHolding.

On 26th September last year a Kyiv appeal court ruled that the privatization "Luhanskteplovoz" was illegal.

I posted in detail on the background to the highly dubious rigged Luhanskteplovoz sale several months ago. As president Yushchenko said at the time: "Instead of the expected 2 billion hryven [$400m], the treasury obtained only 292 million hryven."

Yanukovych's pleas seem rather forlorn, now that Yulka is back. But rather as with Kryvorizhstal during Tymoshenko's first stint as PM, Luhanskteplovoz may be the only major reprivatization that will take place this time around.

p.s. In its final edition of 2007, the business weekly "Kontrakty" provides an overview of the performance of Ukraine's most powerful oligarchs.

How their companies fare in global markets is critical to the Ukrainian economy, but frequent turbulent events in Ukrainian politics means this is often overlooked in the media. The article suggests the return of Yulia Tymoshenko to the Kabmin means Rinat Akhmetov will be less active in mergers and acquisitions in the Ukrainian market, but will most likely, make purchases abroad.

Another article in the same periodical speculates that the huge Mariupol MetKombinat, and also Zaporizhstal could be taken over by the Russian Evraz financial-industrial group. Wouldn't it be better if they were absorbed by one of the Ukrainian FIGS?

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