And the winning bid is from tycoon and ex-President Viktor Yanukovych ally Vasyl Khmelnytsky’s firm, whose offer of the minimum price of roughly $51 million was enough to develop a prime 35-hectare parcel close to the city’s center.
That’s not a hard prediction to make about the coming Oct. 27 sale of the Bilshovyk state machinery plant and land by the State Property Fund. The sale should be stopped until the state clearly has legal title to all of the property. Otherwise, the taxpayers to whom it belongs could be out $100 million or more as Khmelnytsky or another bidder reaps an undeserved windfall.
The crumbling 140-year-old machine-building plant barely makes ends meet, yet its massive size and great location had investors salivating and some saying they were willing to pay double or triple the minimum bid.
But investors’ dreams turned into a nightmare after they dug into the details. Many pulled out before the Oct. 20 deadline, when a court mysteriously ruled that the State Property Fund had clear rights to sell it.
So what looks to be coming is, at best, an opaque sale, and at worst, a rigged one. Riddled with debt, the plant is embroiled in judicial issues likely designed to make a transaction complicated for anyone but Khmelnytsky.
A few years ago, companies linked to Khmelnytsky acquired pieces of the property, meaning that anyone who bought Bilshovyk will face clogged up prospects of development in court cases for years. Khmelnytsky did not respond to requests for comment before deadline.
It’s the same old story. The State Property Fund wittingly or unwittingly sells a dirty asset before the legal dust has cleared. Meanwhile, shrewd and favored insiders have seen to it that they (and an allied second bidder, needed for the sale to be valid) will get an asset at rock-bottom price.
It looks to be a steal, in every sense of the word.
When President Volodymyr Zelensky announced that large-scale privatization would resume after his election in 2019, investors rubbed their hands. Two years later, the privatizations take place, but in the same old shady manner.
When the iconic Dnipro Hotel was sold in 2020, the secrecy surrounding its buyer led to speculation about Russian involvement, so much so that esport entrepreneur Alexander Kokhanovskyy was pushed to admit he was behind the sale. Nothing good comes out of these non-transparent practices.
Full disclosure of the Kyiv Post’s big conflict of interest: The newspaper’s publisher, Adnan Kivan, was interested in buying the property, he said, but pulled out because buying it would be “a ticket to war” with years of entangling litigation. But there were many other investors who also wanted in. If the sale goes ahead on Oct. 27, we’ll be very surprised if we’re wrong if Khmelnytsky comes out the winner at a price barely above the minimum bid with a losing bid coming close.
The Bilshovyk plant is not only a lucrative asset, it’s also a symbol of today’s Ukraine, whose leaders continue to do their utmost in deterring fresh investors in a nation starved for it, and in keeping the spoils to the chosen insiders.
