The government – through the always politically malleable prosecutors – abruptly lodged major accusations against the owner of the country’s largest steel mill, in Kryviy Rih. The charges appeared out of thin air in July, and then disappeared just as suddenly on Oct. 12.
Ukraine’s general prosecutor claimed that the company violated an agreement to make certain investments in the plant after the $4.8 billion privatization deal in 2005. Fearing that the lawsuit may result in revoking the sale and loss of the investor’s money, ArcelorMittal raised an international stink about the case.
This time, the publicity paid off handsomely. President Viktor Yanukovcyh publicly backed down on Oct. 8 during his visit to France, saying the case will not get to the courts. Sure enough, four days later, the drama was cut short in court as the general prosecutor withdrew its accusations without any explanation. The judge did not question the decision.
What does it show us? That Ukraine has no judicial or prosecutorial independence, to start with. That lawlessness and corruption still permeate the nation; that the president tightly controls the executive and judicial powers. But those who run afoul of the administration can sometimes fight back and win, as ArcelorMittal showed.
But the steel giant should not hurry to crack open champagne yet. It’s not clear whether the issue with investment obligations will arise once again, in a different form, from a different government agency.
Presidential chief of staff Serhiy Lyovochkin promised on Oct. 13 that no reprivatization of this plant or any other will take place under this president, and that the agreement detailing ArcelorMIttal’s investment obligations will hopefully be signed next week during the visit of the company’s president to Ukraine.
In the end, sanity prevailed – for now. It may have happened because the administration decided that fighting with the largest investor is not good for the nation’s image ahead of key privatization sales of telecoms giant Ukrtelecom.
ArcelorMittal’s supporters scored big PR points by portraying the lawsuit as a government-sponsored raider attack. But the rights and property of investors are being routinely trampled. And most of them don’t have the clout of ArcelorMittal, the world’s largest steel producer. What will happen to them?
The only thing that is clear from this case is that anyone who is bold enough to invest in Ukraine should learn how to shout – the louder, the better.
