The Constitutional Court (CC) of Ukraine is again considering the constitutionality of Ukrrukprom’s privatization. Unlike the previous attempt, which ended in nothing in May 2019, this case clearly has Igor Kolomoysky’s ears, not Victor Pinchuk’s.

It should be reminded that the first attempt to contest the privatization of key enterprises of the mining industry took place immediately after the Orange Revolution. But on October 12, 2005 the Constitutional Court refused to consider the constitutionality of the Law on Specifics of Privatization of Ukrrrukprom.

Obviously, it was the Ukrainian oligarchs that did not have much to gain from debasing this strategically important asset. At the beginning of the zero years the state joint stock company Ukrrrhudprom used to own controlling stakes in iron ore mining and processing plants (GOKs).

In fact, only two major iron ore producers remained outside Ukrrrukprom’s perimeter: Poltava Mining and Processing Integrated Works (already controlled by Konstantin Zhevago at the time) and Zaporozhye Iron Ore Works (privatised by the Slovaks).

Iron ore is in fact as important to Ukraine as hydrocarbons are to Russia. In terms of proved reserves and iron ore extraction, our country is stably in the world’s top ten. However, unlike in Russia, where oil and gas exports are the main source of replenishment of the state budget, the rent rates for iron ore resources in Ukraine are minuscule, which is not surprising considering that the main beneficiary of this resource extraction has been Rinat Akhmetov for the last decade.

On the eve of the end of Leonid Kuchma’s second presidential term, the state-owned company’s assets were finally privatised by the biggest players in the Ukrainian metallurgy market.

On March 23, 2004, Rinat Akhmetov himself (he also represented Oleksandr Iaroslavskyi), Ihor Kolomoiskyi (he represented Vadim Novinskiy), Victor Pinchuk and Grigory Surkis met at the Deportivo vs. The following agreement was reached between them to acquire the ownership of the assets of Ukrrrukprom:

– Rinat Akhmetov gets Northern and Central Mining and Processing Plants;
– Igor Kolomoyskyy: South and Ingulets GOKs;
– Viktor Pinchuk – Krivoy Rog iron ore plant;
– For his part, Grigory Surkis asked other FIGs not to interfere in his fight for the property of Konstantin Grigorishin.

As a result, on April 9, 2004, the Verkhovna Rada of Ukraine passed a law “On the Specifics of the Privatisation of Ukrrrrukprom Enterprises”, and on April 29 this law was signed by President Leonid Kuchma. Article 2 openly states that the purpose of the privatisation is “to prevent internal corporate disputes at Ukrrrukprom enterprises…

In 2004, Akhmetov’s companies bought 50%+1 share in Central and Northern Mining for UAH 106m and UAH 207.6m respectively. Privat Group bought 25.78% of shares in Yuzhny Mining for UAH 60mn and 25.1% in Sukhaya Balka for UAH 18.13mn; plus 93% in Krivoy Rog iron-ore plant for UAH 689.5mn in favor of Victor Pinchuk. Novinsky diluted a state-owned stake of 50%+1 share in Ingulets GOK by issuing additional shares and bought the remaining 37.5% for UAH 162.9 million.

As is customary among Ukrainian nouveaux riches, not everything that was agreed was implemented in full. The main troublemaker was traditionally Igor Kolomoisky, who under the changed circumstances (the Orange Revolution) decided to dump his son-in-law, the incumbent President, and not to give him the KZHRK. As a result, Victor Pinchuk was forced to go to the High Court in London 9 years later, demanding as much as $2 billion for the Krivoy Rog iron ore plant, purchased from the state for less than $140 million. In 2016, the parties reached a settlement agreement under which Kolomoisky and his traditional partner, Gennady Bogolyubov, gave Pinchuk the London property they owned.

Shortly before that, in March 2015, Igor Kolomoisky (trying to press Pinchuk in their London dispute) stated at a meeting of the Verkhovna Rada Privatisation Commission about irregularities in the sale of Ukrrrukprom companies and even demanded re-privatisation of those assets. However, at that time Benya did not go further than to make loud statements in the Parliament. Pinchuk, on the other hand, seems to have had a real taste for the idea.

As a result, on 6 April 2018, 54 MPs of the Verkhovna Rada submitted a motion to the Constitutional Court to declare the law on the privatisation of Ukrrrukprom companies unconstitutional. And already on 18 April it became known that the Constitutional Court accepted the document for consideration.

The initiators of the Constitutional Court’s consideration of the issue were MPs Pavlo Rizanenko and Viktoriya Voytsitskaya. Apart from this couple, the list of signatories to the Constitutional submission also included Viktor Pinchuk’s almost official representative in parliament Olga Belkova, her ex-assistant (and later MP) Nataliya Katser-Buchkovskaya, and a dozen more Eurooptimists “on grants” to Kuchma’s son-in-law.

However, on 28 May 2019, just as the presidential mace was passing from Petro Poroshenko to Volodymyr Zelensky, the CC rejected 54 MPs’ requests to declare the law on the privatisation of Ukrrrukprom enterprises unconstitutional and closed the case.

Yesterday on 10 November, the Grand Chamber of the Constitutional Court of Ukraine (CCU) was considering a similar case based on the constitutional motion by 45 MPs in an open plenary session. Unlike last time, the CCU waited more than two years to hear the issue of the legality of the privatization of Ukrrrukprom.

Perhaps because Igor Kolomoisky, who has long been perceived as the puppeteer of the current president, is behind this initiative. And only now, after the de facto nationalization of Ukrnafta and Ukrtatnafta, Vladimir Oleksandrovych can afford the luxury of ignoring hurtful nicknames like ‘Benin’.

This time the initiator of the submission to the CC is MP Max Buzhansky, who is part of the informal group of Oleksandr Dubinsky, Kolomoisky’s “black media technologist”. Apart from these two, among the 45 MPs-signatories another one third is among those parliamentary lobbyists, whom the media already accused of systemic work in the oligarch’s interests a year and a half ago: starting with Andriy Gerus and ending with the unsinkable Oleksandr Trukhin.

Obviously, Igor Kolomoysky will no longer get his gesheft in the framework of another revision of the Ukrrrukprom privatization results initiated by him. Not without reason, yesterday’s meeting was attended by the Minister of Justice Denis Malyuska. Most likely everything will be done in the interests of deoligarchization announced by the Presidential Office.

And judging by the list of companies whose privatisation is actually being challenged by the CC:

– “Sukhaya Balka, 25.1% (Oleksandr Iaroslavskyi is now the beneficiary);
– “Southern Mining and Processing Plant”, 25.78% (Rinat Akhmetov, Vadim Novinsky and Roman Abramovich);
– “Northern Mining and Processing Combine”, 50% plus one share (Akhmetov, Novinsky);
– “Central Mining and Processing Plant”, 50% plus one share (Akhmetov, Novinsky);
– “Inguletskiy Mining and Processing Combine”, 37.57% (Akhmetov, Novinskiy);
– “Krivoy Rog Iron Ore Plant”, 100% (Akhmetov, Igor Kolomoysky);
– “Dokuchaevskiy Flux-Dolomitny Combine”, 100% (Akhmetov, Kolomoisky, the enterprise is now in occupied territory);
– “Novotroitskoye Rudoupravlenie”, 100% (Akhmetov, Kolomoisky);
– “Balaklavskoe Rudoupravlenie named after A.M. Gorky”, 100% (Novinskiy transferred the enterprise after the Russian occupation of Crimea to his brother Malkhasyan);
– “Kryvbasvzvzryprom Industrial and Production Enterprise”, 100% (Akhmetov, Novinsky).

Akhmetov and Novinsky’s Metinvest will be the main casualty. After all the biggest part of the iron ore enterprises belonging to Ukrrrukprom belongs to “the richest Ukrainian” making, in fact, the basis of his business.

Oleg KALITA, Nikita AFANASYEV

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