When French President Jacques Chirac arrived into Ukraine last week, a privatization conflict involving French construction materials giant Lafarge and the Lviv oblast-based cement plant Mykoayivtsement was supposedly one of the top items on the French leader’s agenda. Several Ukrainian newspapers predicted that pressure from Chirac would sway the Ukrainian government to urge a court considering the case to favor Lafarge in the dispute.
Publicly, it did not appear to turn out that way. Chirac came and went with scarcely a mention of the dispute. President Leonid Kuchma restricted his public comments to generalities about Ukraine working hard to improve relations with foreign investors. Prime Minister Valery Pustovoitenko was only slightly more specific, announcing that the two sides had brokered a ‘compromise’ between Lafarge and their Ukrainian opponents in the dispute, represented by Mykolayivtsement shareholders Gradobank and Khorda.
As the Post has discovered, however, the Lafarge dispute received more attention than what might have been gleaned from media reports. A senior presidential administration official, who asked that his name be withheld, told the Post that Kuchma had specifically said, ‘Lafarge’s problem in Ukraine is under my personal control.’ The official said that Kuchma was aware of the problem and was determined to solve the dispute as soon as possible.
According to the source, Chirac also gave the Lafarge matter close scrutiny during his visit. Chirac expressed particular concern about the Lafarge dispute, and addressed four other major French investment projects in Ukraine, as well.
Lafarge, which owns 74 cement plants in 23 countries, bought a 28 percent stake in Mykolayivtsement for Hr 3 million at a State Property Fund tender in March. Following the tender, the Ukrainian company Partner, which had been appointed by the State Securities and Stock Exchange Commission to register the sale, refused to do so on the basis that the documents were turned in late. Final approval of the deal has been held up ever since.
Lafarge has repeatedly said it made no infractions, fueling suspicion that Partner’s decision may have been illegally influenced by the Ukrainian majority shareholders in Mykolayivtsement, who vigorously oppose the sale to Lafarge.
In July, Parliament formed a temporary commission to investigate the behavior of all the parties in the dispute – a commission that appeared heavily biased against Lafarge. In forming the commission, Parliament issued a statement labeling the dispute a ‘threat to national security.’ The statement said the stake was sold to Lafarge for less than market value, and that other foreign investors were precluded from participating in the tender due to conditions favoring Lafarge.
The French side expressed concerns about the commission’s objectivity, given that Viktor Zherdytsky, the former chairman of Mykolayivtsement, is now a Parliament deputy.
Commenting on this, the presidential administration official said, ‘This commission can not solve the dispute. It is an obvious case of lobbying for the interests of one Parliament deputy.’
He added that it would be the government, as a result of its consultations with Chirac, that would ultimately accelerate the solution of the Lafarge dispute.
