Ukraine starts grabbing Russian assets

Despite earlier reassurances from Ukrainian President Viktor Yushchenko, Russian businesses seem to be losing assets in Ukraine, Vedomosti reported.

A Kiev court has ruled that a 68% stake in the Zaporozhye Aluminum Plant, recently acquired by Russia's second-largest aluminum group SUAL, has to be returned to the state.

The tender for the 68% in the Zaporozhye-based smelter was held in late 2000. Ukraine's Supreme Arbitration Court eventually barred its first winner, KrAZ, who paid over $100 million for the stake, from taking possession of it in January 2001. After that, the plant went to Russian AvtoVAZ-Invest for $69.5 million.

Last year, SUAL came to the plant, taking three out of nine seats on the supervisory board and propelling its man, Nikolai Lukin, to chairmanship. In April, SUAL President Brian Gilbertson admitted his company had procured 69% of Zaporozhye's shares by buying 95% in AvtoVAZ-Invest that controlled 68.01% in the Ukrainian asset.

However, a business court in Kiev Tuesday ruled that the sale of 68.01% in Zaporozhye from the state to AvtoVAZ-Invest should be cancelled, citing the buyer's failure to fulfill the investment commitments, and the plant should be returned to the state.

SUAL points the finger at KrAZ, the unsuccessful rival who has since repeatedly sued the winner for allegedly rigging the tender. According to AvtoVAZ-Invest, the attack might be due to allegations that part of the 68-% stake is in effect controlled by embattled Viktor Pinchuk, former President Leonid Kuchma's son-in-law.

According to Konstantin Bondarenko, director of the Ukrainian Institute for National Strategy, SUAL is in for a long battle because, regardless of whatever lawsuits are filed, the situation cannot be resolved until next spring's parliamentary elections.