Mykolaiv Alumina Plant is at center of controversy over director's dismissal (08/01/99)

Mykolaiv Alumina Plant is at center of controversy over director's dismissal

RFE/RL Poland, Belarus and Ukraine Report

KYIV - On June 24 the government dismissed Vitalii Meshyn, director of the state-owned Mykolaiv Alumina Plant and appointed Mykola Naboka to replace him. That move provoked unrest among the plant's 7,000-strong work force. The Verkhovna Rada also protested Mr. Meshyn's dismissal, arguing that it is illegal, and asked the government to revoke it.

Since Mr. Meshyn did not obey the order and remained in the plant, on July 7 police used force to remove him from his office. The government appointed First Vice Minister of Industry Serhii Hryschenko to oversee the facility and ease the transition for the new director.

The government said Mr. Meshyn was fired because of the company's worsening performance and growing debts. In addition, the plant director was interrogated by the State Security Service on suspicion of selling alumina - the main component for making aluminum - to a network of intermediaries who resold it at higher prices and did not return those revenues to the plant. Mr. Meshyn responded that the government had to fire him in order to sell the plant to a foreign company.

The Mykolaiv Alumina Plant is believed to be one of the country's most lucrative companies slated for privatization. A report in the July 15 edition of the newspaper Kievskie Viedomosti suggests that the replacement of the Mykolaiv plant's director is connected with the government's privatization plans and may have grave economic and even political consequences for Ukraine.

According to the Kyiv-based national daily, the new director, Mykola Naboka, maintains close ties with the British intermediary company Trans World Group (TWG), which controlled a number of key metallurgical plants in Kazakstan in the mid-1990s. This year, the Kazak Supreme Court declared TWG's activities in Kazakstan to be illegal and detrimental to state economic interests. Kazak authorities estimated the losses inflicted by TWG on the state treasury at $400 million.

According to Kazak experts cited by Kievskie Viedomosti, Trans World Group registered a great deal of its profits in Kazakstan as losses and transferred those revenues to its own accounts through offshore firms. TWG also paid Kazakstan only 50 percent or so of what it obtained on the world market for the goods produced at its Kazak plants. Moreover, in order to increase TWG's profits, banks controlled by Trans World Group granted credits to the Kazak plants.

Kievskie Viedomosti suggested that Mr. Naboka - who was involved in Trans World Group's schemes of getting money out of Kazakstan - intends to stop supplies of Mykolaiv alumina to Sayanskii Aluminum Plant in Russia and an aluminum plant in Tajikistan, and to begin supplying Russian aluminum plants controlled by TWG, in particular, the Krasnoyarsk Aluminum Plant.

The newspaper concluded that the Mykolaiv plant may follow the tortuous path of TWG's Kazak metallurgical plants and become fully controlled by TWG. Such an outcome, according to the newspaper, would inflict considerable losses on the Ukrainian economy and harm Ukraine's cooperation with its CIS partners, particularly Russia and Tajikistan.

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