A local court in Kyiv for the second time postponed a hearing on an eight-year-old case surrounding the privatization of Kryvorizhstal, one Ukraine's largest steel mills, which could potentially take it out of the hands of a foreign investor and return it to a company that two well-connected oligarchs had established to purchase it during the first state sale.
The Kyiv Commercial Court postponed the June 18 hearing until July 9 because the plaintiff failed to show up. The plaintiff, Investment-Metallurgical Union, co-owned by Ukraine’s richest oligarchs Rinat Akhmetov and Viktor Pinchuk, appealed the steel mill’s 2005 nationalization, which led to a repeat privatization.
It was purchased for $4.8 billion by Lakshmi Mittal’s global titan through a competitive tender that still remains the biggest in Ukraine’s history. A year earlier, Akhmetov and Pinchuk bought the plant for $800 million.
The appeal by Investment-Metallurgical Union against the State Property Fund’s decision has been sitting in court until last month.
Yuriy Nikitin, head of the Department for Agreements Management at the State Property Fund of Ukraine, who represented the defendant in court on June 18, said that the court could have closed the case after the plaintiff’s failure to show up twice, but chose instead to move the hearing to a later date. The previous hearing was scheduled for June 4, but also postponed for the same reason.
A representative of ArcelorMittal in Kyiv said neither the court’s failure to close the case, not the move to restart it after eight years were accidental. “We need to wait and see the hidden motives,” Volodymyr Tkachenko, head of Kyiv office of ArcelorMittal Kryvyi Rih, told the Kyiv Post.
“The renewal of this case trashes Ukraine’s reputation as (destination) for foreign investment, Tkachenko added.
Representatives of both oligarchs’ holdings had said they are not pedalling the case. Presiding judge Yuriy Vlasov did not make any comments to the press.
Tkachenko said that the newly revived case is not the only worrisome development which affects ArcelorMittal’s activity in Ukraine. He said this year the company is seeing a dramatic increase in the number of inspections by Ukrainian authorities. To date, their number this year already exceeds the total number for last year, he said.
The latest inspection, completed by the State Property Fund on May 27, confirmed that the company is sticking to all its investment and social obligations undertaken during the privatization, Tkachenko said.
Number of inspections of ArcelorMittal Kryviy Rih by government agencies
Year | Total number of inspections | Number of scheduled inspections | Number of unscheduled inspections |
2011 | 110 | 70 | 40 |
2012 | 110 | 43 | 67 |
2013* | 78 | 28 | 50 |
*data for four months
Source: ArcelorMittal Kryviy Rih
