South Korea's Daewoo has moved a step closer to reasserting its control over Ukrainian Radio Systems, which operates the Wellcom mobile telecommunications service.
Company officials representing Daewoo, including Finance Director In-Dae Hwang, have been locked out of the company’s offices since July 19, when officials representing URS’ Ukrainian partner, led by Yury Kurmaz, took over management of the company. Daewoo has been fighting a legal and public relations battle to regain control ever since.
Recent court decisions have supported the South Korean investors.
On Sept. 27, Ukraine’s Supreme Economic Court ruled that Kurmaz’ appointment as acting general director was illegal.
Following the decision, the National Bank of Ukraine banned commercial banks from conducting business with URS as long as Kurmaz continues to manage the company. A number of banks had stopped dealing with Kurmaz’s representatives even before the NBU’s intervention, claiming that he lacked authority to make financial decisions on behalf of Wellcom.
Among banks that refused to work with Kurmaz are Credit Lyonnais, Citibank, Raiffeisen Bank, Credit-anstalt, Pravex Bank, Vabank and Ukrsibbank. Without access to its old accounts, URS is said to be working with Privatbank, which is affiliated with URS’s Ukrainian investors.
Little information is available on how URS has continued to operate under Kurmaz. The firm’s South Korean investors lack access to the office or the accounting records maintained there. The company’s Ukrainian partners, represented by Kurmaz, have failed to respond to repeated inquiries by the Post related to the firm’s finances, the condition of its network and the firm’s response to the latest court rulings.
Following the lockout, the Kyiv City Employment Center revoked work permits held by corporate officers representing Daewoo. On Oct. 19, Dniprovsky District Court declared the revocations illegal and ordered the employment center to extend the work permits for another year.
However, despite the favorable rulings of Ukrainian courts, the South Koreans have found the decisions difficult to enforce.
Armed with copies of the court decisions and his attorney, URS’ ousted finance director, In-Dae Hwang, attempted to enter the company’s offices on Oct. 15.
According to Pavlo Pushkar, a lawyer retained by Daewoo, Kurmaz refused to yield to the Korean director.
“We entered the building and had a conversation with the Ukrainian side and with Kurmaz himself,” Pushkar said. “However, they refused to allow us into the building. They gave us no convincing reasons for their refusal. They said that they don’t recognize Hwang’s authority, and, therefore, will not obey the court’s decision.”
Kurmaz’ refusal to acknowledge the judicial orders may compel Daewoo to ask court enforcement officers to regain control of the company’s offices for them.
Meanwhile, Wellcom’s product, wireless telephone communications services, appears to have been unaffected by the power struggle within URS.
“The network is up and running,” said a salesman at Unitrade, which sells mobile phones and subscriptions to cellular services. “The [power] struggle had no effect on services, and we continue to offer subscriptions to Wellcom.”
URS was founded in 1998 as a joint venture between Daewoo, which holds a 49 percent stake, and two Ukrainian companies: Ukrfondinvest, which owns 31 percent, and Interinvest, with 15 percent. The State Property Fund initially had a 5 percent stake, but sold it to Interinvest, boosting that firm’s stake to 20 percent. A Dnipropetrovsk-based company, Optima, later bought Interinvest and Ukrfondinvest to become the majority shareowner.
