Alexander Lukashenko leaves the most interesting companies to non-transparent privatization

Lukashenko banned preferential sale of shares of 54 state-owned enterprises (for employees). Lack of minority shareholders increases the value of the privatized enterprises and also increases the control of Lukashenko over the deals. At the same time, it deprives Belarusians of participation in privatization, as well as destroying the stock market.

Alexander Lukashenko signed a decree that banned preferential sale of shares of 54 state-owned enterprises (for employees). The list includes such companies as the Belarusian Steel Works (BMZ), SvetlogorskProduction Association “Khimvolokno”,

Baranovichi cotton production association, Krichevcementnoshifer, the Belarusian Cement Plant, Rechitsa metizny plant, Beltsvetmet, Minskvtormet with subsidiary unitary enterprises, Minsk Automatic Lines Plant named after P. M.Masherov, and SKB Camerton.

All more or less attractive enterprises were joint-stock companies with 100% of state-owned stock in 2011. The formal pretext – the shares of such enterprises would be sold to strategic investors, as well as to create large corporate structures. Thus, the Belarusian citizens were consistently and cynically denied the right to participate in the privatization of national assets both by a removal of the most attractive enterprises of voucher privatization (and its subsequent withdrawal), and deprivation of share repurchase of even the employees of the corresponding enterprises.

Absence of minority shareholders increases the value of the privatized enterprises, and increases the control of Lukashenko for possible transactions (as even the enterprises’ management will not have shares).

All this creates a great opportunity for shadow income in the case of non-transparent transactions (and all attractive companies in Belarus have been privatized during the backroom negotiations to date) and formalized by Presidential decrees.

Thus, there are new transactions with attractive assets in 2012 (both within the EurAsEC obligations on the loan, and also because of banal lack of currency in payment of debts), but their formal and informal terms will be determined solely by Lukashenko.

In addition, the concentration of shares in the hands of the state or a strategic investor negates the possibility to create a stock market.

A total of 38 companies’ state holdings of shares have been sold at auctions and tenders for more than 232.5 billion rubles ($ 28 million) and $ 2.5 billion in 2011.