STATEMENT for the Mass Media - Grant Thornton International
With this statement we, the representatives of Grant Thornton LLC (Ukraine), Ria Grant Thornton S.P.A. (Italy) and Grant Thornton Consulting DOO Skopje (Macedonia), the members of the global international network of consulting firms Grant Thornton International, would like to attract the attention of the supreme bodies of state power of Ukraine, representatives of the State Property Fund of Ukraine, the Special Control Commission of the Verkhovna Rada of Ukraine on privatization issues and the Ukrainian and international business community, to the material violations of the procedures on the 2nd stages of competition for the selection of advisers for the preparation for sale of large-scale privatization objects in Ukraine, namely, PJSC Indar, PJSC United Mining and Chemical Company, PJSC Odessa Port Plant, and state enterprises Zavod Electrotyazhmash and The Krasnolimanskaya Coal Company (hereinafter referred to as the Competition), which was held by the State Property Fund of Ukraine (hereinafter referred to as the Fund) on July 30th and 31st, 2018.
We have been encouraged to participate in the above-mentioned competition, following the adoption by the Verkhovna Rada of the new Law of Ukraine "On Privatization of State and Communal Property" dated January 18, 2018 No. 2269-19 (hereinafter referred to as the Law), as well as repeated statements of the first persons of the state with promises to end the shadow privatization, including through the involvement of highly qualified advisers with a worldwide reputation in processes the privatization. We also proceeded from the fact that Articles 3, 19 of the new Law of Ukraine "On privatization of state and communal property" and paragraphs 3, 23, 30 approved by Cabinet of ministers of Ukraine “Procedure for involving advisers in the process of privatization of state-owned objects" (hereinafter - the Procedure) dated 30.11.2016 № 878 guarantee an open, lawful, transparent procedure for holding a contest and select a winner.
Unfortunately, given our considerable international experience in participating in similar privatization contests in many countries of the world, we can state that the actions of the Competition Commission and the Fund during the Competition rebut all public declarations of honest, fair, transparent large-scale privatization in Ukraine.
In contradiction with generally accepted international standards and imperative requirements of the current Law, which impose the mandatory selection of advisers on the principles of openness, public availability and transparency, the Competition Commission in fact held all competitions behind closed doors, where we were participants.
In particular, during the Competition process, the members of the Competition Commission have committed a number of unlawful actions and material violations of the Competition procedure as provided for in the Procedure, namely:
1. The envelopes with bids were not opened in the presence of all contest participants, in other words, their price offers and terms of service were not publicly recorded;
2. the compliance of the bids with the current legislative requirements was not determined in the presence of the participants, and the best bids were not selected by calculating the points according to the criteria specified in paragraph 5 of the Procedure; 3. the winners of these competitions were not selected in the presence of the contestants.
This, in turn, has created the conditions for manipulating with facts and documents, generally the process of counting points and directly influenced the results of the Competition, which does not give any grounds to consider them unprejudiced and fair, as well as the fact the most competitive offers have won these contests.
At the same time, the aforementioned actions of the Competition Commission may inflict substantial damage to the State of Ukraine, considering that the Bid price offered by Grant Thornton company both fixed and variable fee offer are in some cases lower than the price offers of the bidders that the Competition Commission has determined as the winners.
We have informed in details the Government of Ukraine and the Special Commission of the Verkhovna Rada on privatization about the above-mentioned violations, inviting them to conduct a comprehensive operational investigation of the facts provided by us within their authority and, if these facts are confirmed, to cancel the results of second stages of the Competition of selection of advisers for the preparation for the sale of objects large privatization in Ukraine and take all necessary measures to ensure lawfulness and transparency in conducting the next competition for the selection of advisers.
On August 21st and 22nd Grant Thornton LLC applied to the Kyiv District Administrative Court with administrative claims to the State Property Fund of Ukraine asking for the invalidation of the results of the Contest on the selection of advisers for the State Enterprise Eletrovazhmash Plant; State Enterprise Coal Company Krasnolimanskaya and PJSC Indar. On August 28th, 2018, Kyiv District Administrative Court adopted the relevant Decrees on the acceptance of claims of Grant Thornton LLC for the consideration and subject to open the proceedings in these cases.
We are aware that another participant has appealed to the Kyiv District Administrative Court regarding the results of the Contests for the selection of advisers for PJSC "Odessa Port Plant" and PJSC "United Mining and Chemical Company".
We are convinced that, pending completion of the above-mentioned actions and restoring confidence in the fact that the Competition Commission in its work will strictly adhere to the principles of legality, impartiality and justice, It is inappropriate to conduct the next competitions for the selection of advisers for privatization.
We are also convinced that without the selection of world-renowned privatization advisers in competitive, open and fair competitions, it is impossible to secure largescale privatization in Ukraine on the principles of legality, transparency and noncorruption.