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. Last Updated: 07/27/2016

Kiev Court Reviews Steel Privatization

KIEV -- A Kiev court opened proceedings Friday on whether to annul the privatization of the country's largest steel mill, which was sold for $800 million last year to a group that included then-President Leonid Kuchma's son-in-law.

The court proceedings were proposed by a parliamentary commission and a lawmaker loyal to new President Viktor Yushchenko, and underlined expectations that the new administration will re-examine some of Ukraine's murkiest business deals.

The Kryvorizhstal steel mill was sold by the state to coal and steel tycoons Rynat Akhmetov and Viktor Pinchuk, the son-in-law of outgoing President Leonid Kuchma, despite reported higher bids from foreign investors.

Lawmaker Pavlo Ignatenko said he had filed suit to annul the privatization, arguing the deal had violated the right of Ukrainian citizens to buy the company's stakes. Irina Nazarova, a lawyer, said a similar motion had been filed by the parliamentary Special Commission on Privatization.

In an interview, Pinchuk said he was not "concerned or worried" over Kryvorizhstal's possible reprivatization and that he would accept any ruling "provided the court acts according to law."

Other bidders at the auction, including Russia's Severstal and a consortium of LNM Group and United States Steel Corp., cried foul, claiming they had offered more than Pinchuk and Akhmetov.

Pinchuk said the government's decision to award the plant to his consortium "was a strategic decision ... in the interest of the Ukrainian economy."

"The price paid for Kryvorizhstal is two times higher than the sum paid for all the other metallurgical factories in Ukraine," he said.

Kryvorizhstal produces about 20 percent of Ukraine's steel and had a pretax profit of about $300 million in 2003.

It is one of the world's most profitable steel mills, with a large degree of integration that protects it from the kind of price rises in global raw materials markets that have hit steelmakers over the last 12 months.