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Business

Ukraine to Review Privatization of Firms

Ukraine plans this year to review the privatization of some 20 major concerns that the government believes were sold off at unfairly low prices under the previous regime, the deputy prime minister said Saturday.

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A firm of the son-in-law of former President Kuchma will be probed

First Deputy Prime Minister Anatoly Kinakh said the authorities had narrowed down the list of enterprises concerned to around 20 and the government aimed to conclude the process by the end of the year.

"There are about 20 at this stage, not more. I hope that the main problems concerning privatization can be resolved by the end of this year," he told a small group of foreign journalists.

The announcement will come as a relief to foreign investors and local businessmen who were rattled earlier this month after Prime Minister Yulia Tymoshenko threatened to contest the sale of 3,000 privatized firms. President Viktor Yushchenko contradicted her, insisting in an interview with the AFP news agency that only a "few dozen" companies were affected, but the deputy prime minister's statement marks the first time a precise figure has been given.

The new reformist Ukrainian government alleges corrupt dealings between the former administration of President Leonid Kuchma and powerful business clans based mainly in the eastern industrial heartland during Kuchma's 10-year rule. In particular, it is determined to reverse privatizations that handed vast assets in the strategic mining and metals industries to a handful of well-connected oligarchs for bargain prices.

Firms to be resold

Yushchenko has said the firms in question will most likely be resold at auction to raise funds for the impoverished state budget unless the current owners agree to pay a much higher price. Last week a tribunal in Kiev on ruled that last year's privatization of the country's largest steel enterprise, Krivorizhstal, was illegal, a decision that must be upheld by the supreme court.

A consortium created by Viktor Pinchuk, Kuchma's son-in-law, and Rinat Akhmetov, Ukraine's wealthiest person, bought a 93 percent stake in the Krivorizhstal plant last June for $800 million. The bid was successful despite offers of $1.2 billion by the Russian steel giant Severstal and $1.5 billion from the British-US consortium of LNM Group and United States Steel Corp.

Ukraine's Economy Minister Serhiy Terekhin said Friday another priority for re-privatization was the country's major Ukrrudprom iron ore production holding, which produces around 70 percent of iron ore in Ukraine. Interests linked to Akhmetov -- whose wealth is estimated at $3.5 billion -- control the holding of 10 companies in Ukrrudprom after most of its assets were purchased at closed tenders last year.

According to the economy minister, two other important concerns are on the list: the Nikopolsky plant, which has an 11.5-percent share of the world's ferroalloys market, and the giant Mikolayiv aluminum refinery. Kuchma's son-in-law, whose fortune at the end of last year was estimated at $2.5 billion dollars, holds a controlling stake in Nikopolsky.

RusAL, the biggest Russian aluminum group, in 2000 won a rather opaque tender to acquire Mikolayiv, the largest producer of alumina in Europe.

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