ODESSA, Ukraine -- The head of Ukraine's biggest shipping company made an impassioned plea on television this month dressed in pajamas and sitting in a hospital bed.
Pavel Kudykin, president of Blasko, the Black Sea Shipping Company, was calling for an end to a parliamentary investigation into allegations against his company of stealing state property and corruptly selling off ships to foreign ship owners.
His bizarre speech and the allegations were only the latest chapter in a scandal around Blasko which has become something of a test case in the battle between Ukraine's reformers who want to privatize state property and old Communists who want to maintain state control.
The whole privatization process in Ukraine, which officially began in late 1992, has become caught up in political wrangling like the Blasko affair.
Only 5 percent of Ukraine's work force is employed at privatized companies, compared with 50 percent in Russia.
Using a scheme similar to Russia's voucher program, Ukrainians have each been issued with special individualized privatization accounts that they can use to invest in shares in state companies. But so far, only one large state company has been put up for sale.
Last month, Ukraine's socialist-dominated parliament even decided to suspend privatization for two months while it reassessed the course of the program. It has indicated that it will make a list of industries which will be permanently excluded from privatization.
Newly elected President Leonid Kuchma, however, has indicated that he may try to push ahead with privatization. Some local politicians are also pushing to speed up the sale of state property.
But for the moment, most large-scale privatization in Ukraine has become mired in disputes like those at Blasko. Kudykin stepped down from his post as Blasko's president and put on his pajamas early this year after a team of parliamentary investigators was appointed to find evidence of thefts of state property from Blasko.
Blasko would like to become private and has begun the process of incorporating into a joint-stock company, which is the legal preliminary to privatization.
Deputies, however, charge that Blasko's management has contrived to "lose" about a third of the ships in the fleet. The deputies say that many ships which used to be on the balance sheet have now been removed.
Yevgeny Pechkurov, Blasko's vice president who is acting as deputy for his hospitalized boss, said that Blasko still has its full fleet of 220 ships and the scandal is an example of the way in which hard left deputies have effectively stalemated privatization.
"We have a privatization law but it does not get implemented because the deputies find formal pretexts for stopping things at the local level," he said.
According to Pechkurov, the controversy around Blasko arose from a series of deals that would be considered unexceptional in the West. Five ships have disappeared off the balance sheet, but they were old ships that were sold for scrap, he said.
The other "missing" ships of Blasko's fleet have actually been rented to seven foreign joint ventures, including the CTC British cruise ship line and a German bulk shipping company.
Pechkurov said that these joint management deals were Blasko's strategy for breaking into the world market and acquiring foreign agents and facilities. Thanks in part to this strategy, over 95 percent of Blasko's customers are now foreign, almost the inverse of the situation three years ago when Soviet exporters were required to use Soviet ships.
He said that the deals are highly profitable for Ukraine, but deputies in the national parliament simply see that ships are no longer operated by Blasko and say this is theft of state property.
A special committee is still investigating Blasko. So far, none of the management deals have been canceled, and no findings have been made against any of Blasko's managers.
Meanwhile, the political controversy has made it impossible for Blasko, a company with a turnover of $1 billion, to complete the process of privatization and start attracting foreign investment, which Pechkurov said it urgently needs.
"We need money for investment. Most of our fleet will have to be written off by the year 2000," Pechkurov said.
Blasko has chosen Arthur Andersen and the International Finance Corporation to help it find outside buyers for its shares, although no sale of stock in the company is possible until the scandal is over.
Pavel Kudykin, president of Blasko, the Black Sea Shipping Company, was calling for an end to a parliamentary investigation into allegations against his company of stealing state property and corruptly selling off ships to foreign ship owners.
His bizarre speech and the allegations were only the latest chapter in a scandal around Blasko which has become something of a test case in the battle between Ukraine's reformers who want to privatize state property and old Communists who want to maintain state control.
The whole privatization process in Ukraine, which officially began in late 1992, has become caught up in political wrangling like the Blasko affair.
Only 5 percent of Ukraine's work force is employed at privatized companies, compared with 50 percent in Russia.
Using a scheme similar to Russia's voucher program, Ukrainians have each been issued with special individualized privatization accounts that they can use to invest in shares in state companies. But so far, only one large state company has been put up for sale.
Last month, Ukraine's socialist-dominated parliament even decided to suspend privatization for two months while it reassessed the course of the program. It has indicated that it will make a list of industries which will be permanently excluded from privatization.
Newly elected President Leonid Kuchma, however, has indicated that he may try to push ahead with privatization. Some local politicians are also pushing to speed up the sale of state property.
But for the moment, most large-scale privatization in Ukraine has become mired in disputes like those at Blasko. Kudykin stepped down from his post as Blasko's president and put on his pajamas early this year after a team of parliamentary investigators was appointed to find evidence of thefts of state property from Blasko.
Blasko would like to become private and has begun the process of incorporating into a joint-stock company, which is the legal preliminary to privatization.
Deputies, however, charge that Blasko's management has contrived to "lose" about a third of the ships in the fleet. The deputies say that many ships which used to be on the balance sheet have now been removed.
Yevgeny Pechkurov, Blasko's vice president who is acting as deputy for his hospitalized boss, said that Blasko still has its full fleet of 220 ships and the scandal is an example of the way in which hard left deputies have effectively stalemated privatization.
"We have a privatization law but it does not get implemented because the deputies find formal pretexts for stopping things at the local level," he said.
According to Pechkurov, the controversy around Blasko arose from a series of deals that would be considered unexceptional in the West. Five ships have disappeared off the balance sheet, but they were old ships that were sold for scrap, he said.
The other "missing" ships of Blasko's fleet have actually been rented to seven foreign joint ventures, including the CTC British cruise ship line and a German bulk shipping company.
Pechkurov said that these joint management deals were Blasko's strategy for breaking into the world market and acquiring foreign agents and facilities. Thanks in part to this strategy, over 95 percent of Blasko's customers are now foreign, almost the inverse of the situation three years ago when Soviet exporters were required to use Soviet ships.
He said that the deals are highly profitable for Ukraine, but deputies in the national parliament simply see that ships are no longer operated by Blasko and say this is theft of state property.
A special committee is still investigating Blasko. So far, none of the management deals have been canceled, and no findings have been made against any of Blasko's managers.
Meanwhile, the political controversy has made it impossible for Blasko, a company with a turnover of $1 billion, to complete the process of privatization and start attracting foreign investment, which Pechkurov said it urgently needs.
"We need money for investment. Most of our fleet will have to be written off by the year 2000," Pechkurov said.
Blasko has chosen Arthur Andersen and the International Finance Corporation to help it find outside buyers for its shares, although no sale of stock in the company is possible until the scandal is over.
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