13:20 15.12.2020

Groundless accusations of UMCC on product supply to occupied territories aimed at disrupting company's privatization – State Property Fund

4 min read
Groundless accusations of UMCC on product supply to occupied territories aimed at disrupting company's privatization – State Property Fund

The State Property Fund of Ukraine evaluates the disinformation campaign about the alleged supply of products of PrJSC United Mining and Chemical Company (UMCC), which manages Vilnohirsk Mining and Metallurgical Plant (Dnipropetrovsk region) and Irshansk Mining and Processing Plant (Zhytomyr region) to the temporarily occupied territories of the country as an attempt to disrupt the process of preparing the state-owned enterprise (SOE) for privatization.

"The State Property Fund of Ukraine takes a principled public position to assist all law enforcement agencies in monitoring the observance of the legality of the activities of all enterprises under the fund's management. At the same time, unsubstantiated accusations in the media against the fund and its representatives indicate that certain persons are not interested in compliance with the law, and in the destabilization of state-owned enterprises important for the economy," the fund said in a statement on Tuesday.

Deputy Head of the State Property Fund Denys Kudin believes that "deliberately damaging the reputation of the United Mining and Chemical Company, certain persons pursue their own goal, which is to devalue this asset before privatization and reduce the circle of potential investors who monitor this facility and may create competition during the bidding process."

He also said that such actions contradict the interests of the government and Ukrainian society, which are interested in obtaining stable income from the company at the stage of its state ownership, in compliance with the current legislation when carrying out activities and from privatization at a transparent auction.

It is also noted that this is not the first case of using dirty information campaigns to destabilize the United Mining and Chemical Company, which was brought to positive financial performance due to the complex actions of management.

In turn, the United Mining and Chemical Company denied the likelihood of participation in the sanctions operations.

"Information about the supply of the United Mining and Chemical Company's products from the seaport of Chornomorsk to the occupied territories was fabricated against an enterprise in the public sector of the economy with the direct purpose of denigrating its reputation before privatization by the previous management, mired in corruption," the company said in the press release.

In addition, the document explains that the United Mining and Chemical Company works with the Belanto trade s.r.o. Czech company as well as with other foreign buyers of the United Mining and Chemical Company's products, on FCA terms in accordance with the international commercial rules of Incoterms. In accordance with the specified conditions, the end point at which the United Mining and Chemical Company supplies its products is a certain railway station on the territory of Ukraine. The further logistics chain of product movement takes place under the direct control and responsibility of the foreign buying company.

As a responsible Ukrainian enterprise, the United Mining and Chemical Company requires all clients to adhere to an obligatory condition, the prohibition of any trade and economic operations in the sanctioned territories, including the temporarily occupied territory of the Autonomous Republic of Crimea. In case of non-compliance with the stated conditions for the signing of the contract or establishing reliable facts about the occurrence of such a condition during the performance of the contract, the obligations of the parties are subject to early termination, as stated in the press release.

"All the United Mining and Chemical Company's contracts necessarily contain an undeniable clause that unequivocally prohibits the subsequent resale of products purchased from us to companies under sanctions. Moreover, the company sets a condition for counterparties to add a similar clause to subsequent contracts with their clients. The Economic Security Service checks the business history and possible delivery risks for all potential counterparties," Acting Chairman of the company's board Artur Somov said.

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