Challenges Inside the State Property Fund
Dmytro Natalukha, head of Ukraine's State Property Fund, has reported intense resistance from individuals who have long controlled state enterprises, alongside internal sabotage, data leaks, pressure, and threats. An audit revealed that over half of the enterprises on the Fund's balance sheet exist only on paper, while strategic assets have accumulated significant debts.
Natalukha faces widespread opposition manifesting in various forms, including threatening phone calls after he demanded financial reports and independent audit results. He notes that his team spent their first months overcoming internal sabotage and stopping information leaks.
“We spent the first few months specifically overcoming this and stopping the leakage of information to outsiders who were interested in keeping the management unchanged at specific sites and preventing those sites from being put up for privatization,” Natalukha commented.
Management Issues
According to the Fund's chair, many state enterprises operated under informal control systems: “These so-called pimps of state property essentially privatized enterprises through management and have been taking profits for years, if not decades, while pushing risks and losses onto the state.” Resistance to reforms comes from certain state sector representatives and dishonest private businesses.
Natalukha also reported cases where minority shareholders blocked enterprise management, even when the state held controlling stakes.
“We have several cases involving quite interesting profitable enterprises where a private minority shareholder did everything possible legally and administratively to effectively strip the state, which holds a controlling stake, of control over the enterprise,” he stated.
The State Property Fund's audit uncovered extensive management problems with state assets that require urgent solutions. “This resistance was, is, and will continue to be,” Dmytro Natalukha concluded, highlighting the challenges his team faces in reforming state enterprises.
The situation within the State Property Fund underscores deep systemic issues in state asset management that demand immediate attention. Internal sabotage and pressure from those invested in preserving old schemes complicate the reform process, jeopardizing the future of state enterprises. It also highlights the need for stronger oversight and transparency in privatization and asset management to ensure efficient operations and reduce state risks.
The challenges faced by the State Property Fund are further complicated by the alarming revelation that a significant portion of its assets are non-liquid. This situation raises concerns about the financial stability and operational effectiveness of state enterprises. For a deeper understanding of the current state of affairs within the Fund and the implications of these findings, read more about the liquidity issues affecting its assets.