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In an Aug. 28 session, the council took three actions that were denounced by critics Korrespondent The Kyiv City Council is back in the dirty business of doling out land plots, evidently for far less than what the properties are worth.

In an Aug. 28 session, the council took three actions that were denounced by critics. First, it voted to sell 24 parcels for $74.2 million, at least $100 million less than the properties are worth, according to one reliable estimate.

Secondly, the council also gave away four hectares of public green space in the city center – valued at $150 million – to a group of individuals. And finally, at the same meeting, the council paved the way for the sale of city shares in lucrative monopolies, including two utilities and the bread factory.

The decisions were made with little debate and no advance public notice, with 90 out of 120 City Council members voting in favor.

The latest land sales are reminiscent of last year’s shadowy deal, when the City Council sold roughly $10 billion worth of land for only $200 million. That notorious one­day land grab was championed by Kyiv Mayor Leonid Chernovetsky. Challenges to nullify the 2007 decision in court failed.

The entire roster of property beneficiaries in the Aug. 28 vote is unclear, beyond generally non­descriptive names of companies. But whoever they may be, and few doubt that they are well­connected insiders, they are getting sweet deals.

According to estimates given to the Kyiv Post from a real estate expert, the land could have easily sold for more than double the amount – $190 million or more – if the sales had been conducted in a competitive and transparent manner on the open market.

If this estimate is correct, then the city’s politicians financially cheated the citizens and the public treasury of more than $115 million.

The secretary of the Kyiv City Council, Oles Dovhiy, who chaired the Aug. 28 session, could not be reached for comment.

“This is a continuation of Soviet­style governance, in which decisions are made behind closed doors in a non­transparent fashion and in clear violation of democratic principles,” said Ihor Shevlyakov, an economist at Kyiv’s International Center for Policy Studies. “I’m pessimistic about the city’s future in this respect because we can expect more shady land transfers to private structures.”

The only City Council faction to cry foul was the essentially powerless one led by heavyweight boxing champion Vitaliy Klitschko, which holds only 15 of 120 seats on the council.

“It [Aug. 28] was a day of political corruption,” said Valeriy Karpuntsov, a Klitschko bloc member. “Prior arrangements were made before Aug. 28 that consciously ignored the public interest. A large chunk of land was practically given away.”

The session reversed a privatization ban on the city’s natural gas, bread making and waterworks utilities: Kyivgaz (Kyiv Gas), Kyivvodokanal (Kyiv water) and Khlib Kyeva (Kyiv Bread). The three lucrative monopolies are considered prized assets.

City officials justified the privatization vote by saying that the new owners will be chosen by tenders and will be required to improve management, increase investment, boost salaries and improve the overall quality of the enterprises.

The operations of Kyivgaz and Kyivvodokanal are coordinated by Kyivenergoholding, which also owns shares in Kyivenergo, the capital’s electricity utility. The holding company was created in April 2006 as a joint closed stock company by the Kyiv City Council and two companies registered in Cyprus. Those companies are reportedly controlled by billionaire Vasyl Khmelnytsky and his slightly less­wealthy partner, Andriy Ivanov, according to Ekonomichna Pravda online news source.

Khmelnytsky is a member of parliament from the Party of Regions. Kyivenergoholding owns 60 percent plus 1 share in Kyivgaz, 12.7 percent of Kyivenergo and 67 percent of Kyivvodokanal, according to Ukrainian News.

The City Council decision to reverse the privatization ban “was rushed,” complained Klyus. “One must auction [these properties] to the highest bidder. The city should augment the city budget, instead of supporting these utility monopolies [owned by private individuals] with subsidies.”

The Aug. 28 transactions were “a strategic mistake, very negative for society,” Klyus said. “The city completely lost control of these crucial enterprises. Utilities should belong to the cities.”

The Kyiv city administration said it will hire a foreign audit company to value all the companies which it plans to privatize. Last year, the city approved a list of over 250 companies for privatization by 2010. According to Kyiv’s 2008 annual budget, the city plans to raise some $300 million from the sale of land and other assets.

Despite the plan to audit and auction the properties, suspicions are high that Khmelnytsky and Ivanov will be the ultimate recipients of the gas, water and bread monopoly.

Khmelnytsky could not be reached for comment. Neither could Ivanov, but one of his aides said: “I suggest you look at publicly available documents and arrive at your own conclusion” about whether Khmelnytsky and Ivanov control Kyivenergoholding. “It’s difficult to say whether [Ivanov] is the future natural gas and water supply monopolist.”

But others are certain the City Council’s action will ultimately lead to greater control by Khmelnytsky and Ivanov. “Khmelnytsky and Ivanov control them through Kyivenergoholding,” Klyus said.

Strengthening the pair’s control will not be in the public’s interest, critics said.

In the Aug. 28 giveaway of the four­hectare plot worth $150 million, a dozen of the 32 new owners of the plots are apparently related, a Delo newspaper investigation reported, with two or more owners sharing the surnames Mamedov, Kruhlykov, Novyk, Chytakh, Kordonets and Konovalenko.

Kyiv City Council member Oleksandr Bryhynets of the Yulia Tymoshenko Bloc, which has 32 seats, abstained from voting. He said the entire process breached established procedures.

“I can’t even tell you how other deputies voted, because those records are unavailable,” said Bryhynets, adding that members of BYuT, as the bloc is known, were not instructed to vote one way or another.

As in last year’s massive land selloff, it appears that little can be done to stop the transactions, given the current political realities and makeup of the courts.

Only an official complaint from the prosecutor’s office can lead to a court order preventing the City Council’s decision from taking effect.

On Oct. 1, 2007, the Kyiv City Council doled out nearly 300 land plots worth an estimated $10 billion in a single day, which was roughly 3 to 4 percent of Kyiv’s territory.

Opposition forces challenged the council’s votes in the courts, claiming that orders and procedures were violated during the rubber­stamp session. The case made it all the way to Supreme Court. Ukrainian media reported last week that the Supreme Court rejected the legal challenges, leaving all of the decisions in force.