Interviews and articles
Interview: I’m interested more in the society than in politics
- How do you assess the major event of the expiring year in Ukraine - the change of the government and, in fact, the authorities?
- How can one assess the change of the government, which was done in line with the new regulations of the Constitution? It's logical and natural that the government is formed by those who polled a majority of votes. It meets the democratic, European standards.
Of course, I was advocating a "wide" Coalition with participation of "Our Ukraine". But it did not work, to my regret. And it did not work not for some really strategic differences but for the people, who using the irrelevant topics as a cover, could not share some things.
- Why, do you think, the tug of war exists between the President and the primer-minister?
- There are many examples in the European history, when the president led one political power and the head of the government the other. In today's Europe, we're the only one of this kind, but recently there has been something similar in Poland, in France - more than once the rightist prime-minister had the leftist government, and visa versa.
And the USA? You will see yourself the problems that President Bush will face under the Democratic majority in the Congress and Senate.
It has happened nowhere and will not happen. Moreover, our contradictions are rather than objective. Still, I see both in Yuschenko and in Yanukovich the potential for cooperation. Knowing both leaders and their teams, I believe that they will be able to work together for the country's benefit.
- Are the actions taken by the acting government improving the Ukraine's investment image abroad?
- The investment image is improved by all the initiatives that facilitate the stable growth of economy and the formation of clear and equal rules for all engaged in a business activity.
Foreign investors evaluate the investment climate by three criteria: first, whether the business practice corresponds to the world standards; second, whether the investors' rights are protected in the given country; third, whether the political situation is stable.
- Which of these three criteria is the most problematic today?
- Our situation is not ideal so far in terms of all three criteria. We are having a raider problem, and both the Ukrainian and the foreign companies working in Ukraine are subject to the raider attacks. Our judicial system is far from being always able to protect a low-abiding investor. Re-privatization has been denounced at the highest official level, but the processes, which are per se reprevatizing, are still going on in the country. And finally, the investors are not sure that all businessmen in Ukraine are on an equal footing that no one is being given preference. Thus, for the time being, only the attained relative stability of political institutes could enter on the credit side.
- You're talking about the preferences of one businessmen over the others. How do you assess the current policy of the government on the VAT reimbursement to exporters? For instance, the fact that the Donetsk businessmen are reimbursed in the first place?
- I have not verified it, I've just heard of it. If the rumors represent the fact, it's very bad.
There is a system problem - we're having an unbalanced budget. It means there should be a priority - whom to pay primarily. To give money not to the oligarchs, of course, but first - to the pensioners.
So, let's discuss it - maybe one can settle this issue and let the state-financed organizations be the first. To refinance the state according to some comprehensible rules. But will you tell us please when you will balance the budget, when will you reimburse everything, and what you will do to exclude such situation in the future?
One does not need to pressure us. Since I've been already told that we're evading taxes and we're threatened with integrated tests. But we're paying simply huge taxes! We're a transparent company; we're planning to undertake an IPO. And this kind of pressure does not suit me at all! And we'll fight against it.
- Does your company have any problems with the VAT reimbursement?
Last week I was told that recently 198 million hrivnas of an overdue VAT had been accumulated in our businesses.
- They say that the "kick-back" systems have come back? Is it true?
- They will come back, if the businessmen allow it. I've said flatly: not a kopeck.
- You're one of the first businessmen who suffered from the raider policy.
- I have not suffered; I've obtained a lot of experience. And I'm grateful to the Almighty, to my friends and even to my enemies for the lessons I've got over the last couple of years. I've got a better understanding of what is really important and what is not. And who is who.
- The raider phenomenon appeared after Leonid Kuchma's resignation. At that time there was a decision-making center...
-These are interrelated things. Leonid Danilovich, with his strong will, his principles and values, would not have allowed it in the country.
Basically, there has never been a systematic raider phenomenon in Ukraine. It appeared when the new authorities started reprivatization. The raiders became in demand, and a special environment emerged. It happened when people who were striving to settle a score, making hay at that; the people who picked up what belonged to others and who had already specialists and technologies to do it.
- Has the problem of battling the raider system been discussed during the last meeting of the businessmen with the President?
- Look, honestly, I consider there is nothing to discuss. The authority should employ its authority. And everything will be ended.
In Russia, the raider system was flourishing for certain time, but they put an end to it there. And in a very demonstrative way at that. There was a conflict about one object: courts, shares discarding, fragmentation - everything, as usual. On the Kremlin order, one set a special investigating commission, ensured the conditions which excluded any kind of corruption within this group, and retraced the whole chain. Those, who gave bribes and those, who took them. In short, all people who ensured the raider scheme operating. Someone were put into jail, someone are still hiding abroad. That's all; there is no one to do it again.
Yes, the Kremlin interfered here. But I can't make out why the Bankovaya Street and the Grushevskiy Street (the government and the parliament residency) should be weaker.
- Were there really allied relations between Igor Kolomoiskiy and Julia Timoshenko in their struggle against your business?
- You see, one old and wise man, one of the character of the "Spell Your Name" film, said, "Maybe this guy does not look like a Jew, but somehow all the Jews look like him". Perhaps, the relations of Yulia Vladimirovna and Igor Velerievich in the story with a trial seizure of the Nikopol Ferroalloy Works (NFA) were not partnership, but they looked like ones from the outside. Let's assume that by that time their interests had just coincided...
- Is it true that the conflict around the Nikopol Ferroalloy Works is a personal conflict between Pinchuk and Kolomoiskiy? They say that Leonid Danilovich reconciled you, unexpectedly inviting you both to his place?
-Our relationships with Igor Valerievich are very interesting. We respect each other. He is attractive to me as a gifted, intelligent and even talented person. That is why, everything concerns the conflict is the business and nothing personal.
As for "reconciled"... I cannot tell that Leonid Danilovich reconciled us, though we met and he gave us his advice, ‘Stop that nonsense'. One could say that he contributed to it.
- Can you tell what kind of agreements you have with Kolomoiskiy in terms of the Nikopol Ferroalloy Works?
- No, I really cannot.
- And now, the NFW is being supplied with the ore from the "Privat" ore-mining and processing enterprises?
- And from them too.
- There are various rumors.
- Let them be.
- It just surprises everyone, after such wars, now they say: there is a joint management at the NFW.
- The businessmen, like the politicians, have the only way to solve conflicts in a civilized way - to sit together, negotiate and find compromises.
-What is the situation with the lawsuits related to the Nikopol Ferroalloy Work?
- Two judicial bodies have recognized the proprietary rights for the NFW shares to belong to the "Pridnestrovje" Consortium as a law-abiding getter. These decisions completely meet the regulations and practice of the European Law. And it's absolutely unclear to me why the official bodies, the State Property Fund and the Prosecutor-General's Office maintain actions on this property deprivation, i.e. they, in fact, maintain reprivatization while the President and the PM make the absolutely opposite statements.
- Do you think that there were no well-grounded claims against privatization?
- None of the big businesses in Ukraine were conceived in a test-tube, not speaking of the Immaculate Conception. No one made here large fortunes on the computer technology, and none came into billion fortunes. Everybody participated in privatization. In a long run, it was the privatization that formed the economy with its today's highest growth rates in Europe.
The Ukrainian privatization was the kind it was. Perhaps, we were not better than the rest. But for sure, we were not worse compare to others. We always operated in compliance with the laws and commonly accepted rules, and we're ready to prove it in any courts, even in the European one. As they say, till final victory.
- In the past you declared that you would leave the politics, in case the state could guarantee the business inviolability. Are you sure now that the business inviolability in Ukraine is ensured?
- Three years ago, I officially announced that I would not run for the next parliament (Verkhovna Rada), because I'm convinced that the business and the politics should be separated.
The businessmen are just unable to get out of head their business, no matter how hard they'd try. There are no exceptions. Unfortunately, I was not an exception either.
A member of parliament should have in mind something absolutely different. And in case of temptation, how will you vote for the country's benefit then, if you know that you'd loose a lot, had you voted like this? The risks and temptations are too big.
But the business protection has not been ensured yet. And the fact that there are many businessmen in today's parliament, it's primarily the fault of that policy of reprivatization and repression we witnessed in 2005.
- And you personally, you're not going to come back to the politics?
- No, I'm not. Frankly speaking, today I'm interested more in the societal problems than the politics. Basically, I take now the Ukrainian politics differently than some years ago. Once President Putin said that he wanted to be equally distanced from all the tycoons. Me too, I'm trying to be equally distanced from all the political forces.
- Putin has not succeeded completely in being equally distanced. There is Hodorkovskiy, after all!
- I haven't fully succeeded either. There is Timoshenko, after all.
- At present, "Ukrgaz-Energo" refuses to deliver gas to the "Privat" enterprises? Aren't you afraid that you will be also dictated some terms?
Actually these treats (the gas ones - Ed.) are excellent challenges which are stimulating and motivating to all of us. For example, now we are building a new arc-furnace works. It will enable us to close the open-hearth furnaces. The gas consumption will be reduced by 90%.
- Will this works be built on the basis of "Dneprospetsstal" (Dnepropetrovsk special steel works)?
- No. Though the name will be similar - "Dneprostal" (Dnepropetrovsk steel works). It will be a super modern arc-furnace works in Dnepropetrosvsk. The price of the project is above 400 million dollars.
- How was solved the conflict with Konstantin Grigorishin related to "Dneprospetsstal"? They wrote in the press that you exchanged the assets with him.
- This is nonsense and gossips. We did not have a conflict and we did not exchange anything. We purchased 30% of the works'shares.
- Will it be finalized the deal on the UkrSotsBank with the Italian "Banka Intesa" at last?
- You know, when I look at the growing banking sector, estimate trends and perspectives, then I often ask myself: why I'm selling such a good asset? You remember, in Mikhalkov's poem, "I need myself such a good cow!" But to keep words means to keep them - the contract has been signed and under this contract, the deal should be finalized before March 31st.
- Recently, there have been appeared many reports on possible restructuring of the Interpipe.
The key goal of our restructuring is a transition from the industrial and financial company to the investment group, to the portfolio company.
Our new, you may say, philosophy is in transitioning from maximization of profits to maximization of capitalization. In transitioning from the management of assets to the management of investments, from operating management to the financial supervision.
The Interpipe is a part of your new group now. It will be a brand of only our tube and wheel business. The Interpipe presentation in this quality will take place in the nearest future. Our other businesses and companies will have the other brands.
- What will you company gain from Ukraine's entry to the WTO?
- For the business, the WTO is a stability and potential growth of capitalization. I would say that the accession to the WTO would facilitate to an IPO undertaking.
-What year?
- For the Interpipe the benchmark is 2008-2009.
- Have you already decided what percentage of the securities you will place?
- We have not.
- Will it be up 10% or more?
- We'll define our tactics later on. We'll do as we decide.
- In what projects will you allocate the called-up money?
- I consider we should purchase another works.
- Where?
- On the planet. In various places.
- Has anything attracted your attention?
- There are some plans. And our new investment company will naturally purchase the assets in the science intensive and actively developing sectors of economy. Not only in Ukraine, but also in Europe, Russia and USA.
- Do you plan to sell your media resources?
- I have very many proposals of this kind. We do not sell anything, not a share. We're ready to consider solely the proposals on merging, amalgamation with the world big players. In this case, our assets - or its some pieces - will become a part of the global.
- Today, the Donetsk people have come to power. Under the Kuchma they said that the country was ruled by the reps of the Dnepropetrovsk elite. Could the Dnepropetrovsk elite and business bring back a former influence in the politics?
- Today the country needs not the Donetsk or the Dnepropetrovsk elite, but the professional one. The national elite united by common goals and values. It would be a big mistake from the part of the "regionalists" to rely solely on the fellow men, but not on the best forces of the whole country. However, in my view, they form now a team not by the regional principle but by the professional one. And the bright and strong persons have gathered there.
Though, I think that the President has formed his best team, really of top level, because he was selecting the people not by the color of their scarves, or their places of birth, or their services to the revolution, but by the criteria of professionalism.
Now everything depends on interactions between the Bankovaya and Grushevskiy Streets. While the Heaven's office is in charge of climates outside, these two are responsible for the climate in the state.
For instance, the success of Ukrainian business depends not only on managers' team but also on the two teams - of the president and of the PM. And if they still are aimed at the conflict, not at the joint work, if there is no synergy of these two teams - capitalization of any Ukrainian company will not grow at best. Even if all top-managers are the Harvard graduators.
- Is it really worth to form team of the Harvard graduators?
- No, one should make our education not worse. Study, study and study - here is a fundamental principle of the country's modernization. Education, new generation advancement - basically, this is my key priority in the public activity.
One should support the young and talented people, to create the conditions for their development. We've started implementing the scholarship program "Zavtra.ua" for the best students of Ukraine and launched the project "Kiev School of Economics".
- The "stars" - Francis Fukuyama and Robert Engle arrived for this school presentation. Is it difficult to arrange such visits?
- Actually, everything is gradually building up. Today, it's already easy.
If a person sees that you need not his autograph but his participation in an interesting project, in modernization of the whole country, he will eagerly contact and help to involve the others.
The world intellectual elite - it's such a large village. Everyone somehow knows each other. And recommendation of common acquaintances does not mean that much. The rest is a question of schedule.
- Does you Eurointegration project work on the same principle?
- Naturally. The Yalta European Strategy is an institute of the civil society. A wide network based on the permanent contacts and joint actions of the authoritative people in Ukraine and in the West. The people who are capable to explain the Ukraine what for it needs the Europe, and to explain the Europe what for it needs Ukraine.
The more like-minded persons and "lobbyists", on whom everything will finally depend, the better. Only for the recent time, the board members of YES have had meetings with Jose Manuel Barrozo, Benito Ferrero-Valdner, and Olly Rehn.
- What does Ukraine lack to become a member of the European Union?
- The reforms, which we need, as a matter of fact, on their own terms.
Implement reforms, apply at the right time - and enter the Europe. Nobody will be able to refuse you. There is the Constitution of Europe, with its article 49 that states: any European country is entitled to become a member of the EU. If you want to go to Europe, then do it!
- Are there any plans on Ukraine's international advance for the near future?
- Now we're arranging another event, which has already become traditional - the Ukrainian lunch in Davos. The debate will be dedicated to the place of Ukraine in the global world, where it is advancing to. The top-level speakers are expected to participate in it. I suppose President Clinton, President Kwasniewski and the EU Enlargement Commissioner Olli Rehn will also take part in our lunch. The WTO Director-General Pascal Lamy and George Soros have been invited as well. Naturally, we would like Ukraine to be represented adequately.
- On what principles, criteria are you charitable projected selected?
- Modernization of the country, the new generation advance in society, politics and business - these are my strategies for selecting all public and charitable projects.
What is more, we are constantly looking for the international partners, the joint projects with whom might be of benefit to our country. For instance, my wife's Foundation (The Elena Franchuk ANTIAIDS Foundation) in cooperation with President Clinton Foundation (Clinton HIV/AIDS Initiatives), targeted at battling HIV/AIDS in Ukraine.
- How do you plan to develop the PinchukArtCentre?
- The way it was designed - rather as a cultural center than as a museum. Some very interesting exhibition projects are scheduled for the next year. As early as in January, we'll introduce some young Ukrainian and American contemporary artists.
In parallel, preparations for the next Venetian Biennale are under way.
By the way, in this context I always think of "Arsenal". What a great Kiev Biennale could be held there, it might become a cultural event of highest level! Of course, the state has another concept for "Arsenal", but the thing is these projects are not implemented. Maybe, it makes sense to come back to that project of "Arsenal" we have won the tender? I'm still ready to invest very serious funds in that project.
- Recently, you've had a meeting with the president on the "Artistic Arsenal". Have you suggested Victor Yuschenko to come back to your project?
- Certainly, because it seems to me that the conceptual idea of the state projects has not been shaped yet. How many museums to place there? Ten? Fifteen? Where will expositions be taken from? From the store rooms? Why will it be of anyone's interest? The British Museum and the Louvre are unique in terms of their collected treasures representing the whole world civilization. And in what terms will we be unique?
When we talk about such "major" Ukrainian museum, we should demonstrate not only where we are from, but also where we are to. For this purpose, there is such universal notion in the world as a contemporary art museum. And also, there is a huge region, a piece of the world, without such museums. They say, this kind of museums do not exist on the area stretching from Prague to Vladivostok. And one should fill this niche. It might be our role - the contemporary art museum of the whole region.
- Have you discussed it with the president?
- Yes, I've discussed it. And I think the president has become interested.
