After a grueling battle featuring judicial abuse and multiple bomb threats, state energy company Centrenergo is finally under new management.
The State Property Fund, which owns 78.3% of the company, on May 29 said it cut through layers of bureaucratic and legal obstacles to install industry veteran Oleksandr Korchinsky as general director. The company supplies 15% of Ukraine’s energy needs.
“Today we returned Centrenergo to the control of the state, despite all the resistance: judicial trolling, repeated bomb threats of the State Property Fund building and pressure on the Centrenergo supervisory board,” said Fund chief Dmytro Sennychenko.
While nominally a state enterprise, the company has been under the influence of oligarch Ihor Kolomoisky, who many have accused of doing everything he can to block the new director.
The previous director, Volodymyr Potapenko, who was installed last year, has been linked to Kolomoisky, allowing the oligarch to profit from Centrenergo and milk it to send cheap energy to his metallurgy plants. Kolomoisky had denied wrongdoing.
“We carried out a one-day lightning operation: a court decision, gathering a supervisory board, amending the (company) registry and introducing the new head,” said Sennychenko.
Fund personnel, backed by law enforcement, entered the fortified office campus in Kyiv Oblast’s Koncha-Zaspa region, where Centrenergo’s previous managers moved the company headquarters earlier. The property, ringed with walls and barbed wire, appeared in Sennychenko’s Facebook photos with the announcement.
“They were barricaded there,” Sennychenko told the Kyiv Post. “But since we had with us all proper administrative documents and busloads of special forces, they did not resist.”
He added that, since the previous management hid the company’s audit data, the next step will be to find the employees who have harmed the company and tried to cover it up.
“What now?” he said. “Now we will find everyone who has moved to the dark side of the force.”
Dmytro Sennychenko, head of the State Property Fund, followed by police officers, approaches the Centrenergo office in Koncha-Zaspa near Kyiv on May 29. (Dmytro Sennychenko)
Corruption
The move may finally let Centrenergo start to untangle its messy inner workings and move toward its long-delayed privatization. Hr 100 billion ($3.73 billion) have been siphoned from the company since 2004, according to the Fund.
In 2004, there was an attempt to bring the company to artificial bankruptcy. In 2015-2016, dubious purchases were made through shell companies in Russia and Russian-occupied territories in Ukraine. One of Centrenergo’s plants ceased operation in 2015 due to an artificial coal deficit.
In 2013 and 2018, the Ukrainian government attempted to privatize Centrenergo, both times unsuccessfully. To date, there are more than 17,000 legal documents in the war over the enterprise.
“Centrenergo in recent years has become a center of corruption,” the Fund said in a statement.
After Potapenko became director last year, the company was accused of favoring Kolomoisky, buying Russian coal through a shell company at above-market prices and then selling electricity to Kolomoisky’s metallurgical plants at a loss. Kolomoisky has denied that Potapenko is under his control, but has told reporters that Potapenko is a director he “understands.”
Sennychenko said that the company refused to release financial results for 2019. “It was a black box,” he said. Nevertheless, he estimates that last year, Centrenergo lost more than Hr 2 billion ($75 million) and had more than Hr 4 billion ($150 million) in unpaid fuel debt.
Legal battle
Barbed wire surrounds the campus where Centrenergo’s previous management moved its main office. (Dmytro Sennychenko)
On Feb. 17, Centrenergo’s deteriorating finances led the Fund to consider replacements for the acting general director.
Oleksandr Korchinsky won the role. He had previously worked with the World Bank on enhancing the energy efficiency of Ukraine’s heating infrastructure and also participated in drafting the country’s new energy market law.
Former Prime Minister Oleksiy Honcharuk announced on Feb. 26 that the Cabinet of Ministers approved the replacement.
Several Ukrainian media outlets reported on Feb. 27 that unknown people were blocking the entrance to Centrenergo and that the decision to change the leadership was being rolled back. Honcharuk insisted on March 2 that the change would be carried out. He and most of his cabinet were dismissed on March 5.
Kyiv’s Administrative Court on Feb. 28 blocked the move following a motion from an unnamed supervisory board member. The motion claimed that only the board can dismiss the company’s managers and that the plaintiff was excluded from meetings concerning the change.
The injunction was then under dispute in several courts. On one occasion, bomb threats were reportedly called into the Sixth Court of Appeals and the Fund’s headquarters.
On May 29, however, Sennychenko said that the injunction was finally lifted and the Fund moved quickly to finalize Korchinsky’s appointment and introduce him to Centrenergo’s staff.
Court battles over Centrenergo will no doubt continue.
