Top Ukraine Court Upholds Challenge To Steel Mill Sale

KIEV, Ukraine -- The Ukrainian 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 policy of challenging murky privatization deals.

Viktor Pinchuk

The court's ruling, which is not open to appeal, is a major setback for one of the country's wealthiest businessmen, Viktor Pinchuk, son-in-law of the former president Leonid Kuchma.

Interpipe, a company controlled by Pinchuk, bought a 25 percent stake in the Nikopol factory in 2003 and won the right of first offer to buy another 25 percent plus one share 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, or $81 million.

In upholding a lower court decision that judged the sale to be invalid, the Supreme Court effectively returned the factory, a major producer of ferroalloys, to state control.

Pinchuk could not immediately be reached for comment.

President Viktor Yushchenko in September abandoned his government's policy of reversing past privatizations but said some of the more egregious examples should not be allowed to stand. He cited the 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 purchased the mill in a highly competitive auction for $4.8 billion - more than five times the original sale price.

Source: AP