www.ukrweekly.com ;7- -У- •1/" . Published by the Ukrainian National Association Inc.. ^ I I ic, a fraternal non-profit association! rainian Ш V Vol. LXI No. 11 THE UKRAINIAN WEEKLY SUNDAY, MARCH 14, 1993 50 cents First public auction of businesses Large-scale privatization begins hailed as resounding success in Lviva t Odessa meat conglomerate by Chrystyna Lapychak economy until a new Cabinet of Minis­ by Marta Kolomayets meat-processing enterprise in the ters was approved by the Parliament in Special to The Ukrainian Weekly Kyyiv Press Bureau region, owning and operating 10 October 1992. plants within the area. It employs over LVIV — Private ownership, the "The last government had exactly the 4,500 people and slaughters about cornerstone of any free market eco­ KYYIV — Just five days after U- same people as before Ukraine became kraine's first small-scale privatization 600,000 sheep, pigs and cattle per year. nomy, is now gradually becoming a independent — the old guard who were It produces mainly fresh meat products reality in Ukraine, following this young auction in Lviv, this post-Communist only interested in gaining time," said society witnessed its first large-scale and sausages. country's first public auctions of small Ms. Feldman. businesses held recently in this western privatization as an Odessa meat conglo­ "With the acquisition of the state's "But you can't run in place when the merate began selling public shares in its Ukrainian city. ground is crumbling," she said. assets, all employees will become actual It was no coincidence that this over venture on Thursday, February 25. owners. This was their desire and "We came to Lviv last summer just With the advice and assistance of the 750-year-old architectural gem was before the only reformer in the govern­ intention. We hope our profits will selected as the spot for Ukraine's first International Finance Corp. and the increase through the payment of divi­ ment was fired and his replacements financial assistance of the British small-scale privatization pilot project, were not only uninterested in privatiza­ dends to shareholders. And each one as many residents harbor memories of "Know How" Fund, the assets of the will have the right to trade and/or give tion, but, quite frankly, wanted us to Odessa Leaseholding Association of private enterprise in this region between fail. away shares. This gives us hope that the two world wars. Meat Processing Industries were sold in people will give more of themselves and "We were stalled for several months a public offering of shares, reported Remnants of this entrepreneurial until (Leonid) Kuchma, Ukraine's new see the actual results of their work, and spirit, as well as this region's leading Volodymyr Priadko, chairmen of invest money into the construction of prime minister, and (Viktor) Pynzenyk, the State Property Fund of Ukraine. role in the movement towards Ukrai­ the new economics minister, came into housing, day-care centers and stores, as nian independence in -ecent years, the picture and things began to roll," "This is only the beginning, a pilot for consumers," Mr, Tiakhov con­ inspired local reformers and represen­ said Ms. Feldman. project on privatization," he said. cluded. tatives of the international Finance Mr. Kuchma and his economic team Labeling the Lviv experience "a very At the second stage, which will occur Corp. to choose Lviv as a showcase for have made privatization a priority in pleasant surprise," he added, "We in approximately two months, the Ukraine's first auction of state-owned their economic plan for 1993, en­ think that leasing and the collective (Continued on page 6) small businesses. couraging local governments to imple­ form of ownership are not the most Although privatization in Ukraine ment Lviv-type plans so that well over efficient form of ownership; we've had started nearly a year after FLussia held half of the small businesses in Ukraine this for many years in our society. Many Russia asks U.N. its first auctions in April 1990, the are in private hands by the end of the enterprises have understood, finally, financial outcome of the February 20 year. that the next step iscorporatization,"he Lviv auction exceeded all expectations. The financial success of the Lviv concluded. for special powers Only residents of Lviv bid for 17 auction has inspired other cities to seek In a two-stage process, a closed joint JERSEY CITY, N.J. — The Russian small retail shops and eateries, which the help of the IFC and the World Bank company was formed between the delegation at the United Nations has sold for a total of over 780 million in speeding up their moves toward the Association of Meat-Processing Indus­ formally submitted a document des­ karbovantsi (about $390,000 U.S.) — auction bloc — in spite of the fact that tries and the State Property Fund. The cribing Russia's proposed role as peace­ 20 times the amount both the central Ukrainian law so far does not allow the workers bought 60 percent of the state- keeper in the Commonwealth of In­ and local authorities had expected. monies earned by auction to go toward owned assets in the company for cash dependent States. Except in one case, Ukraine's new the local budget. and privatization certificates. They then The document was presented on owners actually bought only the finan­ The revenue from Lviv's first auction, contributed these assets to the company March 3 by Deputy Foreign Minister cial assets of the enterprises, and not the according to the city plan, will go partly and received shares in exchange. Sergei Lavrov in support of a statement property or real estate portion, because toward a special fund enabling these The State Property Fund has retain­ delivered by President Boris Yeltsin's on Ukraine's laws on privatization of land new private businesses to obtain loans ed 40 percent of the assets, contributed February 28 before a forum of the Civic and real estate have not yet been for re-investment and development, these to the company and also received Union in Moscow. Mr. Yeltsin had stated implemented. partly to cover the debts of the outlets shares in exchange. The workers enter­ that: "the time has come fordistinguised Therefore, property leases for an left over from before, and partly toward ed into their lease in June 1990. Under international organizations, including average of five years were factored into an unemployment fund. the lease terms, they collectively owned the United Nations, to grant Russia the starting prices. But, Ukrainian reformers hope to all assets acquired from the inception of special powers as a guarantor of peace Nine out of the 17 winners were amend Ukrainian laws to allow some the lease. The workers have also con­ and stability in regions of the former employees, or so-called workers' collec­ auction earnings to make their way into tributed these assets to the company USSR." tives, who under Ukrainian privatiza­ local budgets as an incentive for local and received shares in exchange. RFE/ RL reported that the document tion laws are entitled to certain perks governments to speed up privatization. Over the next 45 days, members of submitted to the U.N. took pains to over other buyers. Although Ukraine has not faced the the collective farms that are suppliers to note similarities between Russian ope­ In Lviv, these benefits include a 30 type of mass popular opposition to the meat-processing industry will also rations and U.N. operations, but it percent discount and up to a year to pay privatization as Russian authorities have the opportunity to purchase the failed to treat the problem of ensuring off the rest. All other buyers must pay have encountered, some Ukrainians State Property Fund's shares for cash Russian impartiality as a peacekeeper. the final auction price in full and have voiced concern over possible and privatization certificates. Once this Also on March 3, the Foreign Ministry upfront. corruption in the process. purchase has been completed, the of Russia responded to complaints by company will be owned by the em­ The Lviv City Council was the first in But Lviv officials and their IMF Ukraine concerning President Yeltsin's the country to pass a municipal privati­ ployees and the collective farm mem­ call for a special regional mandate for advisors made a special effort to inform bers. zation program back in September the public that auctions by nature tend Russia. To claim that Mr. Yeltsin's 1992, despite a lack of support — even to weed out corruption via fair compe­ "After we worked as a leased enter­ statement is evidence of "neo-impe- resistance — from the previous conser­ tition and bidding, which can actually prise for two and one-half years, we rialism," the ministry said, "could not vative government of Vitold Fokin. transform so-called dirty money into improved our qualifications and gained be farther from the truth." Calling the plan "pretty revolu­ clean money. experience. Fifty percent of our current According to the RFE/RL report, a assets were created by our association tionary for Ukraine," Roberta Feld- "It's impossible to avoid this mass ministry spokesman said that Russia's man, the IFC project coordinator in during this period,"explained Konstan- peacekeeping operations were aimed at hoarding of capital in such a chaotic tin Tiakhov of the Odessa Leaseholders Ukraine, said Ukrainian reforms suffer­ economic environment." said Pavlo supporting peace in specific regions of ed critical delays because there was no Association. the former Soviet Union and only with commitment to a transition to a market (Continued on page 10) The Odessa company is the largest the support of concerned parties.