Property Fund chair unclear amid political battle

by Alina Pastukhova, Kyiv Post Staff Writer
May 07 2008, 23:37

Andriy Portnov

The battle to control the State Property Fund (SPF) between the president and prime minister escalated during the holiday break, and now it's unclear who is in charge of the influential agency.

President Viktor Yushchenko  refused to acknowledge Prime Minister Yulia Tymoshenko’s February decree dismissing Valentyna Semeniuk-Samsonenko.

Meanwhile, the premier appointed Andriy Portnov as SPF acting chair on April 25 after the Constitutional Court declined to review a presidential complaint asking to overturn the February decree.

“Currently, there is no diarchy in the SPF as all property records are at the SPF offices and they can’t be moved to other offices,” Semeniuk­Samsonenko said. “And I have the SPF stamp.”

Just who ultimately becomes the SPF chair will determine the future of several key government­owned assets slated for privatization.

On May 5, Semeniuk­Samsonenko re­affirmed her stance that the estimated $1 billion Odesa Portside Plant is not up for privatization, suspending her deputy Dmytro Parfenenko after the government newspaper he directs officially announced on April 26 the plant will be auctioned on May 20.

The information was published illegally, Semeniuk­Samsonenko said, and she initiated an internal investigation, during which Parfenenko will remain suspended.

Semeniuk­Samsonenko announced she returned a $60 million security deposit the Russian company Azot­Servis paid to enter the auction for the nation’s leading producer of ammonia and nitrogen fertilizer.

In response, Portnov said May 5 the SPF’s accounts don’t require Semeniuk­Samsonenko’s signature, while he hasn’t signed any decree returning funds to investors. 

The Odesa Economic Court ruled on May 5 to forbid the plant’s privatization, which Portnov said was illegal, with plans to appeal to the Higher Justice Council.

Portnov insisted nothing will delay the plant’s privatization beyond the planned May 20 auction.

Other interested companies include Russia’s Yevrokhim, Norway’s Yara International ASA, Estonian­based Nitrofert controlled by Ukrainian billionaire Dmytro Firtash, Dniproazot controlled by Ukrainian billionaire Igor Kolomoisky, Naftokhimimpeks controlled by Ukrainian billionaire Kostiantyn Zhevago, British banking giant HSBC and Kyiv investment bank Concorde Capital, among others.

Other than the Odesa Portside Plant, Tymoshenko said she also wants to privatize state telecommunications giant UkrTelekom, the More Shipbuilding Company in Feodosiya, the Scientific Institute for Electronic and Mechanical Devices, the Kharkiv­based Turboatom turbine manufacturer, and six oblast energy distributors.

The privatizations are necessary because the state properties continue to lose market value as time passes, experts said. Tymoshenko especially needs to raise government revenue to cover social spending costs.

Yushchenko wants the parliament to decide whether or not Semeniuk­Samsonenko stays, insisting it’s the only body that can appoint or dismiss the SPF chair.

Despite the Constitutional Court’s refusal to review Tymoshenko’s February 25 decree, Yushchenko still maintains it was illegal and doesn’t recognize it.

He could appeal to the Court again, though he already canceled the prime minister’s decree the same day.

That prompted another decree from Tymoshenko, ordering Portnov to ignore the president’s decree to cancel her decree dismissing Semeniuk­Samsonenko.

Political observers said it’s unclear how the conflict will be resolved, with two people claiming to be the SPF chair. Experts were divided on who is the rightful SPF chair.

The president assured the public he wouldn’t allow a repeat of last year’s government conflict, in which forces loyal to then­Prime Minister Viktor Yanukovych stormed the Prosecutor General’s Office to defend their man against the president’s attempts to dismiss him.

In the view of Kyiv political analyst Taras Berezovets, Semeniuk­Samsonenko is temporarily dismissed, so Portnov is legitimately the SPF acting chair.

The conflict between the president and prime minister is not over privatization policy, but for control and success in the upcoming presidential elections, said Igor Shevliakov, the public administration analyst of Western­financed International Centre for Policy Studies in Kyiv, a view widely held.

The president is trying to block the government’s privatization program as he understands the Cabinet of Ministers’ social payment plans can’t be realized without selling several enterprises, said Berezovets, director of Polittech political consulting company, which performed work for Our Ukraine and Tymoshenko Bloc, among other clients.

This competition is strategic and the president’s main goal is to decrease Tymoshenko’s electoral rating, especially in eastern and southern Ukraine, he said.

The president also wants to prevent any privatization in favor of businessmen close to Tymoshenko, said Vadym Karasiov, a political advisor to Presidential Secretariat Chair Viktor Baloha.

If Tymoshenko demonstrates she can carry out privatization in favor of certain business groups, the business community will understand they should cut deals with the premier and not the president, he said.

Both Yushchenko and Tymoshenko need the business elite’s support during the presidential election campaign, Karasiov said.

“Tymoshenko understands that to be elected president, she needs not only high ratings, but contracts with the business elite, while Yushchenko doesn’t want his contract with the business elite to be broken in favor of Tymoshenko,” he said.

If the matter is decided in parliament, Our Ukraine­People’s Self­Defense lawmaker Kseniya Liapina said on April 29 her faction will vote for Portnov if the Tymoshenko Bloc supports the new Cabinet of Ministers law to restore the president’s authority.

In Karasiov’s view, only the passage of privatization law, which currently doesn’t exist, will resolve the conflict.

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