Says Komp&nion story delayed Daewoo deal, damaged reputation
($500,000) lawsuit against a business magazine for publishing a story the firm says delayed its joint venture deal with South Korea's Daewoo, and caused a number of its business partners to revise their contracts. The lawsuit, filed by AvtoZAZ Chairman of the Board Oleksandr Sotnykov on Feb. 4, said that the story, published by Kyiv-based business weekly Komp&nion in December, became 'a prime reason delaying the official establishment of the joint venture between AvtoZAZ and Daewoo until February 1998.'
'Publication of incorrect information about [AvtoZAZ] did significant damage to its business reputation and caused moral damage which is preliminarily estimated at Hr 1 million,' said Sotnykov.
Komp&nion's story alleged that the establishment of the AvtoZAZ-Daewoo joint venture was delayed because AvtoZAZ top managers were attempting to extract bribes from Daewoo. 'In practice [foreign] investors [in Ukraine] face not only difficulties caused by the political and economic situation before the [March 29 parliamentary] elections, but also the inclination, common to government officials and large enterprise directors in post-Soviet countries, to be guided by personal interests when taking important decisions,' read the story. The story included no source for the accusation.
According to Sotnykov, the article damaged ongoing negotiations between Daewoo and AvtoZAZ, prompting Daewoo to demand 'extra guarantees for its investment, which are burdensome to [AvtoZAZ] and Ukraine.'
AvtoZAZ officials said last week the deal, in which Daewoo will promise to spend $1.3 billion over six years, is now likely to be finally signed and sealed by the end of April. A preliminary agreement between the two companies was signed in September last year.
Komp&nion representatives, who were notified about AvtoZAZ's lawsuit by Kyiv's Pechersk District Court on Feb. 13, said Sotnykov's claims were not sufficiently justified. 'Extra evidence is needed to say that a single story damages the whole country,' Komp&nion's lawyer Ihor Kyrylyuk said at a press conference Tuesday. He said that on Feb. 20 Komp&nion sent a letter to Sotnykov asking him to provide documents proving that AvtoZAZ's partners asked to revise their contracts with AvtoZAZ after the story was published, and requesting the minutes of any meeting between Daewoo and AvtoZAZ representatives during which the South Korean company used the story as a reason to delay establishment of the joint venture. Komp&nion editor Volodymyr Chelombytko said that Daewoo officials interviewed by the magazine in January had not complained about the December story.
'We interviewed Daewoo Motors Ukraine President Lee Pil Cho in January, and he never mentioned the story to us,' said Chelombytko. 'Nor have any other Daewoo representatives complained about the story.'
AvtoZAZ officials could not be reached for comment concerning Komp&nion's letter.
According to Kyrylyuk, the date for the first hearing of the case is yet to be set. 'Preparation procedures [for starting the hearing] are currently going on,' he said.
