Ukraine's Supreme Court on Friday declared that the 2003 privatization of a major Ukrainian steel factory was illegal, giving the government what many expect to be its final victory in a now-abandoned policy of challenging murky privatization deals. The Supreme Court ruling, which is not open to appeal, is a major setback for one of the country's wealthiest businessman, Viktor Pinchuk, who is also the son-in-law of former President Leonid Kuchma.
Pinchuk's Interpipe Corp. bought an initial 25 percent stake in the Nikopol factory in 2003 and won the right of first offer to buy another 25 percent plus one share stake in a later auction that no other bidders were allowed to participate in. The stakes were sold for a total of 410.5 million hryvna (US$81 million; euro68 million). The Supreme Court upheld a lower court decision that the sale was invalid, and effectively returns the factory, a major producer of ferroalloys, to state control. Pinchuk couldn't immediately be reached to comment. His lawyer, Oleksiy Reznikov, said that they would prepare an appeal to the European Court of Human Rights.
President Viktor Yushchenko in September abandoned his government's policy of reversing past privatizations, citing the damage it caused his country's reputation within the business community. But he insisted that some of the more egregious examples should not be left to stand, citing Kryvorizhstal steel mill and Nikopol. Kryvorizhstal, which was bought by Pinchuk and another tycoon, Renat Akhmetov, in 2004, was resold by the state in October. Mittal Steel Co. snatched it up in a tense auction for US$4.8 billion (euro4.1 billion), more than five times the original sale price, reports the AP. N.U.