A Kyiv court adjourned the high-profile case between Ukraine and Russia's Mobile TeleSystems over who owns Ukraine's largest mobile telephone firm, Ukrainian Mobile Communications.
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The July 12 hearing on UMC, which the government says the Russian firm bought illegitimately, ended in less than 30 minutes, but lasted long enough to produce some courtroom drama.
A Prosecutor General’s Office lawyer representing the government failed to produce documents establishing him as the plaintiff’s representative, prompting MTS attorneys to refuse to recognize him. The Economic Court upheld MTS’ refusal, ordering the lawyer to bring correct papers to the next hearing in this unusual case.
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Prosecutors say Mobile TeleSystems’s acquisition of a 51 percent stake in UMC from the state-owned fixed-line telephone company Ukrtelecom was illegal; in effect, the government position is that it itself acted illegitimately during the sales transactions in 2002 and 2003. If Ukraine’s courts rule in favor of Ukraine, a controlling stake in UMC will be transferred back to Ukrtelecom.
MTS, which has since acquired 100 percent of UMC, at a total cost of $400 million, says its purchase of UMC was legal.
Some say the case against MTS was orchestrated by Ukrainian business interests to hinder major MTS shareholder Sistema’s bid for a 43 percent share in Ukrtelecom, which the government plans on privatizing later this year. “Ukrainian business groups don’t want competitors like Sistema to show up for the sale,” an analyst said on condition of anonymity.
Sistema, which owns a controlling 50.4 percent share in MTS, is 78 percent owned by Russian business mogul Vladimir Evtushenkov, documents obtained by the Post show. Evtushenkov is a close associate of Moscow Mayor Yury Luzhkov.
Whether MTS is being targeted by Ukrainian interests or not, the government appears hesitant to privatize Ukrtelecom until the fate of MTS’ 51 percent share in UMC is decided.
As of July 14, a government commission chaired by First Deputy Prime Minister Mykola Azarov had not reached a decision on whether or not to go ahead with the Ukrtelecom sale.
Vitaly Lukyanenko, Azarov’s advisor, told the said the court case has interfered with the Ukrtelecom sale, as it remains unclear whether Ukrtelecom will gain control of the lucrative UMC, or not.
“It might be necessary to wait for a final court ruling in this case,” Lukyanenko said.
