Russian government tries to hide its takeover of IUD to avoid affecting presidential election

DONETSK, Jan. 5, 2010 – (UBO) – The Industrial Union of Donbas (IUD), one of Ukraine’s largest industrial holdings has been bought by the Russian government in a thinly veiled deal being operated through the Russian government-owned bank, Vneshekonombank. Reports from sources believed to be reliable said that Prime Minister Vladimir Putin, who serves as chairman of Vneshekonombank’s supervisory board, has been hands-on in the deal. The bank will pay $1 billion for the stakes of IUD’s Vitaly Gaiduk, Sergei Taruta and Oleg Mkrtchian, who hold 20 percent, 40 percent and 40 percent stakes in the company, respectively.

The reports say that IUD had no choice but to agree to the takeover bid since it had run up huge debts to Vneshekonombank and other foreign banks. The sale was said to be the only way that IUD could avoid bankruptcy.  

Up to this point the deal had been kept secret since both the Russian and the Ukrainian principals believed that disclosure prior to Ukraine’s presidential election on January 17 might result in a negative reaction for the election chances of Viktor Yanukovych, generally regarded as the candidate Russian political leaders want to see win the Ukrainian presidency.

The deal will be considered worrisome not only in Kyiv but in other capitals since it effectively places the largest metallurgical works of Hungary, Poland and Ukraine in the hands of the Russian government. The properties now held by the Russian government through the thin veil of Vneshekonombank include Hungary’s Dunaferr in Dunaújváros, Poland’s Huta Czestochowa, as well as facilities formerly owned by the Industrial Union of Donbass at Dnipropetrovsk and Alchevsk.

The IUD takeover comes in the wake of the recent bankruptcy of Soyuz Viktan, one of the world’s largest vodka makers.