Ukraine’s Supreme Economic Court has suspended the renationalization of monopoly fixed-phone operator Ukrtelecom, and it is unknown when the case will be reviewed again, news agency Interfax-Ukraine reported on June 6, referring to its sources.
This means the country’s richest man, the billionaire oligarch Rinat Akhmetov, will continue to own Ukrtelecom through his SCM Holding.
The renationalization of Ukrtelecom was put on hold under an appeal from ESU, the firm that privatized the formerly state-owned telecoms giant, which had later re-sold 93 percent of the shares to Akhmetov’s SCM Holding. ESU had wanted to prevent Judge Ludmyla Stratienko from hearing the case, because “she has made several court decision in favor of the State Property Fund,” which is the plaintiff in the case.
“The SPF is a plaintiff in this case, and this undoubtedly raises doubts about the objectivity and impartiality of Judge Stratienko,” a representative of ESU said during the court hearing, according to news website Ekonomichna Pravda.
Ukrtelecom spokesperson Mikhail Shuranov told the Kyiv Post that his company would not comment on court decisions, but he confirmed that ESU indeed has asked for the judge to be removed from the case.
The State Property Fund did not immediately respond to a request for comment, but its representatives attending the hearings said that “(Akhmetov) is trying to drag the case out.”
ESU privatized Ukrtelecom back in 2011, paying $1.3 billion for the Ukrainian telecoms giant. Akhmetov then bought a majority stake in Ukrtelecom in 2013, paying a reported $1 billion for a 93 percent stake. The oligarch also bought ESU later on, which gave him complete control of Ukrtelecom.
On Oct. 19, the Kyiv Economic Court decided to nullify the privatization contract between the State Property Fund and Ukrtelecom’s initial buyer, ESU.
According to that decision, Akhmetov would have to return all of Ukrtelecom’s ownership rights to the state, while ESU would have to pay a fine of $82 million for failing to fulfill its privatization contract commitments.
According to the sales agreement, ESU was to have invested $450 million in building up Ukrtelecom’s network over five years. However, it failed to do so, and in May the SPF filed an application to return the operator to state ownership.
As the investigation started, at the beginning of 2017, the Pechersk Kyiv Court arrested Akhmetov’s shares in Ukrtelecom, and following suit, the District Court of Nicosia in Cyprus issued an order in December 2017 to freeze SCM’s Cyprus-based assets (up to $820 million). On June 6, however, the Cypriot court ruled to unfreeze SCM’s assets in Cyprus.
The court hearings and ownership dispute have not affected Ukratelecom’s operations.
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