Five Ukrainian tycoons - Rinat Akhmetov, Kostyantyn Zhevaho, Hryhoriy Surkis, Eduard Shyfrin and Viktor Pinchuk - have given an interview on their recent meeting with President Viktor Yushchenko.

A common conclusion drawn from the meeting, according to the tycoons, was that all talk about reprivatization should be brought to an end and that business and the administration should reach a compromise on the question of additional payments for companies that had been privatized dishonestly.

Akhmetov and Shyfrin spoke of the need for a better investment climate in the country and Pinchuk said he had not yet decided whether to stand at the next parliamentary elections.

The following is the text of their interviews.

On Friday [14 October], Viktor Yushchenko carried out an unprecedented act of reconciliation with former oligarchs, inviting them to a four-hour round-table discussion.

The president is trying to revive trust in big business and, as expected, the way to do that had to be their voluntary additional payment for plants and factories purchased under [former President Leonid] Kuchma.

Five participants in this meeting with Yushchenko - Rinat Akhmetov, Kostyantyn Zhevaho, Hryhoriy Surkis, Eduard Shyfrin and Viktor Pinchuk - discussed what they got from it in an interview with Ukrayinska Pravda.


[Morda] What struck you most about this meeting?

[Akhmetov] Our company - SCM - has been prepared for this for a long time. We have over 160,000 employees and we are responsible for their welfare. In turn the president bears responsibility to all the Ukrainian people. We must think about how to merge our efforts for the good of society.

[Morda] But what did the president say - "all is forgiven" or "there will be no reprivatization"?

[Akhmetov] I have to tell you, there is nothing to forgive us for!

[Morda] In what context was the subject of Kryvorizhstal raised at the meeting?

[Akhmetov] It didn't crop up at all.

[Morda] Incidentally, will you be taking part in the repeat privatization of Kryvorizhstal?

[Akhmetov] I will say just one thing in answer to your question: legal proceedings are currently in progress around Kryvorizhstal, and I am not the court, so I cannot predict when they will end.

[Morda] How will you remember this meeting with the president?

[Akhmetov] That we won't be hearing this word "reprivatization". We shall be signing peace agreements.

[Morda] Who said that?

[Akhmetov] The prime minister. And to the question about additional payments, I will say this: we need respect for the rights of private ownership!

The administration must create a favourable investment climate so that we can be happy about investing in the country. Just imagine, the investment activity of our company in 2005 amounted to 900m dollars.

The plan for 2006-10 is more than 4bn dollars. This is not on new purchases, but on increasing production capacities and cutting down on production costs.

The prime minister [Yuriy Yekhanurov] emphasized that there will be no surprise moves, and the state has a vested interest in this. Major national business has already grown out of short pants and entered the big world now.

Our philosophy is that we are not interested in short-term profits, but long-term prospects. The main thing as far as we are concerned is to give business value. Just as the main thing for the state is to give the country value.

They are our only goals. In creating a value for business, we are working on the power and strength of the state. We don't need privileges, but precise rules.

[Morda] Oleksandr Yaroslavskyy, the owner of Ukrsibbank, who is standing alongside, joins the conversation.

[Yaroslavskyy] The president instructed the prime minister to do away with all these contentious issues on privatization within 30 days.

[Morda] [to Akhmetov] You have been out of the country for practically the whole summer in connection with this criminal case in which your name figures. Are you back for good now?

[Akhmetov] Well, if I have to leave for whatever reason, can't I do so?

[Morda] There was a report that you went to the Interior Ministry regarding this case and met with [Interior Minister Yuriy] Lutsenko. Did he just invite you for a cup of tea and a chat?

[Akhmetov] Yes, but I prefer to have my tea at home!


[Morda] [to Kostyantyn Zhevaho, co-owner of Finansy i Kredyt banking group]

What was the main thing you heard from the president?

[Zhevaho] That we must create system-orientated conditions so that business can develop.

[Morda] In what context was the question of additional payments mentioned at the meeting?

[Zhevaho] It would be correct to call this a question not of "additional payments", but "a settlement of the contentious issues of privatization". It was raised at the meeting, and not only when we spoke about Kryvorizhstal or the Nikopol Ferroalloys Plant.

This is a question which must be resolved.

We must not turn a blind eye to it, as we have been doing these past nine months, because the market is expecting answers to these questions. And until we get some answers we won't have good international ratings at Standard & Poor's or Moody's [investment service companies].

[Morda] How can these issues be resolved?

[Zhevaho] Through the courts. We have one branch of power which can deal with this and that is the courts.

[Morda] In other words, a voluntary additional payment is impossible?

[Zhevaho] There isn't such a law whereby one can come and make the additional payment voluntarily.

[Morda] What inspired or impressed you most from what Yushchenko said at this meeting?

[Zhevaho] I was very pleased that the president is considering means of structuring, like a real financier. He understands the link between cause and effect - where money comes from and where it goes.


[Morda] [to tycoon and MP Hryhoriy Surkis] What was your impression of the Friday meeting on Bankova [street in Kiev where presidential administration building is located]?

[Surkis] We had been hoping for such a meeting for a long time. It's a pity we didn't have it in January-February, but better late than never, as they say. The most important thing that Mr Yushchenko said was that a clear idea had been expressed that big business is one of the system-forming elements of the Ukrainian state.

Basically, the president has extended his hand and offered partnership to big business. At the same time, he has not made any specific offers, say, to [Dnipropetrovsk-based tycoon Ihor] Kolomoyskyy or Akhmetov, or Zhevaho or Surkis.

That was in the past. And one has to admit, on the one hand this allowed national capital to stand on its own feet and take part in shaping a base of economic growth in recent years.

On the other hand, this has led to a dramatic slump in trust, both in the administration and in big business. The "oligarchs", as we have come to call businessmen, have in the public opinion turned almost into enemies of the people.

In the past eight months the country has ceased to be successful in the question of attracting investment. I am sorry that we have become a bugbear-country!

One has to admit that it is worth rebuilding a credit of trust in the state.

We must not give preferences to any businessmen.

Now, as I understand it, we are talking about a partnership between the administration and business as though it were a section of the population.

But for this we need a body to represent the interests of this sector. At the same time, basically, this should be not a sum total of the private interests of individual businessmen, but the common interest of this sector.

It is very important what the president said: certain conclusions will be made. And if a business pays taxes and thinks about social programmes, then that business will always be respected by the administration.

In my speech I said that big business has a profound interest in the stability of the state and state institutions and that clear permanent rules of the game should exist for everyone.

Only then can we ensure growth of capitalization and, accordingly, economic growth in the country at the same time.

[Morda] But one gets the impression that you had a long discussion, but about nothing in particular.

[Surkis] It's no use saying we spoke about nothing in particular. For example, I proposed that we should create a permanent body and organize ourselves as representatives of business.

We could meet in the same composition, but not necessarily with the president, say at least once every two months, preparing study materials and scientifically based proposals, and after discussing them we could go to the president or his authorized representatives.

To do this we must set up an analytical fund which would work on a permanent basis. I reminded him that in this instance it would be worth studying the experience of the Japanese Keydanren [federation of economic organizations] company.

[Morda] Tell me specifically, are you prepared to pay more for certain enterprises?

[Surkis] I will be frank: I don't know which companies you are referring to. Can you name the companies I run today?

[Morda] Oblenerhos [electricity distribution companies], Dynamo (Kiev) [football club].

[Surkis] Oblenerhos don't belong to me. And it wasn't mentioned at the meeting. Why don't you talk to me about how many tens of millions, including by me personally, have been put into Ukrainian football, an industry which isn't even profit-making?

Or that our national side has reached the final stages of the World Cup, with the hearts of all Ukrainians full of pride for their glorious lads!

The subject of additional payments was not raised at the meeting. We said that, since this saga of Kryvorizhstal and NFP has happened, we should apply a proper procedure - if the state believes that the Nikopol plant is subject to reprivatization, then this company will be put out to tender.

All the rest - if the facilities have been privatized under the table, without transparent tenders and at reduced values - this stage once and for all must be passed and it must not cripple the investment climate. As the president said - 196 dollars of investment per capita doesn't bring honour to the country.

[Morda] After Yushchenko became president, his cool attitude to the Social Democrats, and in particular Surkis, was obvious. Now there is a clear trend towards a thaw - he has visited the national football team's base, and then he invited Surkis to a round-table meeting.

[Surkis] I am head of the football federation and a member of the UEFA executive committee, I represent the country in the international arena, I am fighting to improve its image and to win the right to hold the Euro-2012 finals. Our national side has reached the final stages of the World Cup. And this deserves attention and appraisal - but not to me personally, I am just one of many.

All revolutions begin and end! You can't have a situation in the country when some people are always friends and others are always enemies. I am not an enemy of the president, because there is no way I could be. You mentioned the word "thaw" in relation to Surkis.

I would put it another way - there is common sense, people have cooled down

after political battles. We have had eight difficult months and malice and bitterness should be done away with and we should work together to improve the welfare of our people.

As an MP what am I prepared for? Any healthy cooperation with the administration. Not around the subject of "social outcasts" - we are all citizens of the country and we must be sensible and do what is possible to ensure that the pre-election slogans are implemented.

[Morda] Incidentally, at this meeting, according to the documents of the president's secretariat, you attended as a representative of the Slavutych group.

[Surkis] Today I have nothing to do with the Slavutych group! The moment I became an MP I sold all my shares in Slavutych. I was invited to this meeting of businessmen because they obviously believed that my experience and my position in society gave me the right to attend. I expressed a few things of my own which the president and some of my colleagues there agreed with.


[Morda, addressing Eduard Shyfrin, head of Midland group] On Friday, [Prime Minister] Yuriy Yekhanurov said that the best way to put an end to the subject of reprivatization is the voluntary additional payment for enterprises by their owners.

[Shyfrin] It seems to me the most sensible way is to put an end to this business, forget all about "reprivatization" and "additional payments" and create a normal investment climate in the country.

[Morda] In other words, additional payment is not possible?

[Shyfrin] We should study each specific case. Additional payment should be looked at from the moment of purchase, and the investments made by owners when possessing the enterprise should be assessed.

And on that work out a formula. But I don't think it is we who should be paying extra, but they who should be paying us extra when they see how much we have put into these enterprises!


[Morda, to Viktor Pinchuk, head of Interpipe and former President Kuchma's son-in-law] What is your impression - was the meeting between the businessmen and Yushchenko much ado about nothing or, on the contrary, did anything specific come out of it?

[Pinchuk] The fact that it took place is important. Such a meeting should have been held back in January as one of the president's first meetings after his inauguration. Then a lot of things in the country would have been different. Undoubtedly, the meeting was an interesting one.

For everyone and for me it was important to hear what the president has to say today and how the administration and business should work together.

[Morda] Was anything specific mentioned?

[Pinchuk] Yes, from both sides. The president spoke about taxes, about getting away from the shadow operations and about the social responsibility of business, and about his attitude to ownership and separating business from politics. We discussed common and personal issues, for example, the return of the VAT and, of course, protecting rights of ownership.

[Morda] It is possible this is a false notion, but it seemed that during the meeting questions would be raised about voluntary additional payment for companies which were dishonestly privatized?

[Pinchuk] This wasn't raised. I believe this was not quite correct. Although that was not the format of the meeting. To discuss who should make these additional payments and how much may be too broad a subject for a specific discussion, although we should have had such a meeting a long time ago.

We should have discussed this issue in January-February and then finished with it. Business was, undoubtedly, ready to make compromises. But one needs to be a philosopher and admit that, possibly, we made mistakes. We must find compromises.

[Morda] What compromise is possible, apart from additional payment?

[Pinchuk] We must put an end to all this talk about reprivatization! And it seems we have. Business and the administration should get together and decide why these additional payments should be made. I think that it should be because it is in the country's interests.

It's no good saying "we are whiter than white" and "we will not yield an inch of Russian soil". If society has a need and it relates to past privatization, then in the interests of this society we must reach a compromise.

[Morda] Are you prepared, as part of a compromise, to forget the legal proceedings on Kryvorizhstal and call the trial off and get back your 4.2bn hryvnyas?

[Pinchuk] I can see a number of compromises over Kryvorizhstal and I have expressed them. The important thing is for somebody to start talks on this subject. We haven't had any.

[Morda] Well, what talks are possible? The plant will be sold in two weeks' time. And your predictions that no-one will take part in the privatization are not coming true.

[Pinchuk] Let's look at what will happen on 24 October. It seems to me that the closer it gets to the tender, the more serious investors will start to ponder the situation. The case has been to the Supreme Council and there has been no decision. It has been to the European Court and still no decision.

There have been a whole number of violations around the reprivatization of the combine.

[Morda] There is something you're not saying - what might prevent the repeat sale of Kryvorizhstal?

[Pinchuk] The investors must stop and think. Our lawyers have sent the investors a letter describing the situation.

[Morda] To all potential investors - Arcelor, Mittal?

[Pinchuk] Yes, all of them! We have set out the current position. The case is at the Supreme Council. Say you want to buy a flat but you are told that this flat is the subject of a court case. Will you risk buying it? I don't think so.

[Morda] What was the outcome of Yushchenko's meeting with the businessmen - did it settle anything?

[Pinchuk] No, rather it was the start of a serious dialogue between the country's leadership and business. The president proposed holding these meetings every three months.

[Morda] In Russia the first such meeting was held before the default of 1998, when [former Russian President Boris] Yeltsin brought all the oligarchs together.

[Pinchuk] But you know Ukraine is not Russia! (laughter)

[Morda] After this meeting are you planning to stand for the Supreme Council [parliament] in 2006?

[Pinchuk] I wouldn't like to. After all, everything starts with respect for the right of ownership. If this is sealed by legislation, then the administration will not be pushing businessmen into entering parliament and protecting their property there.

I believe that there should not be any businessmen in the Supreme Council; this is the place for professional politicians. Then parliament will have more time to deal with the interests of the whole country.

[Morda] Anyway, a direct question for you: have you decided to stand for the new parliament, declined or not yet come to a final decision?

[Pinchuk] I haven't yet made a final decision. Like many other businessmen, I am still thinking about it.

[Morda] After this meeting with Yushchenko, are you prepared to fund projects under the aegis of the president: the Hetman palace at Baturyn and the Hermitage at the Arsenal plant?

[Pinchuk] I am funding a considerable number of projects in the cultural field, and I see nothing wrong with taking part in this with the president.

For example, I am participating in the funding of Baturyn. You know, I was planning to open a museum of contemporary art at Arsenal, and I have not given up on this idea.

I have now acquired several floors in the very centre of Kiev in a building where the Arena is situated - there will be a museum of contemporary art there.

Although if it had been at Arsenal this would have been a jewel for the whole country! I am sure that we need to come back to this and I am prepared to invest. And why not with the president?
BBC Monitoring Service, UK, in English, Thu, Oct 20, 2005
Action Ukraine Report

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