The conflict surrounding Elektrotyazhmash, one of the largest machine-building plants, has been ongoing for six months. It has drawn in not only the plant's director, Vladimir Glushakov, who has repeatedly tried to challenge his illegal dismissal, but also the Minister of Economic Development and Trade, Aivaras Abromavicius, who recently resigned. The government member is trying hard to secure his protégé, Dmitry Kostyuk, as the plant's director, ignoring court rulings.
The ministry claims to be trying to prevent a hostile takeover of Electrotyazhmash. However, they are actually blocking the operations of the enterprise, which is Kharkiv's largest taxpayer and provides jobs to over 5 people.
Delete without reason
Events at Elektrotyazhmash began to unfold in August 2015, when the Ministry of Economic Development issued an order abruptly dismissing the plant's director, Vladimir Glushakov, and appointing Dmitry Kostyuk as his acting deputy.
Glushakov was charged with what appeared to be a rather serious violation—approximately $1,6 million in lost profits. According to the Ministry of Economic Development and Trade, ArcelorMittal Temirtau paid Electrotyazhmash almost $3 million for the electric motor, but the plant received half that amount from the deal, with the remainder going to a UK intermediary.
Vladimir Glushakov disagreed with this formulation. The next day, he initiated an inspection of the plant by the State Financial Inspectorate (SFI), which found no such violations. Furthermore, no investigation was conducted, nor were any documents requested that could have confirmed Glushakov's guilt.
Vladimir Glushakov
Ultimately, the dismissed plant director, whose employment contract didn't expire until 2018, filed a lawsuit in Kyiv's Pechersky District Court demanding reinstatement. The court, finding the dismissal illegal (one of the most striking facts is that the dismissal took place on August 27, while the documents on which the Ministry of Economic Development and Trade based this decision are dated August 28), ordered Glushakov's reinstatement (the court decision of October 15, 2015, in case No. 757/32347/15-c is in the author's possession).
The Ministry was forced to reinstate Vladimir Glushakov. However, Aivaras Abromavicius's department decided to continue the fight and, on the same day—November 5, 2015—fired the reinstated director again.
The Ministry of Economic Development found a new reason and accused Glushakov of violations in foreign currency transactions, resulting in losses of 2,67 million hryvnias per plant. The reason was late payments on contracts with Russian Railways. As a result, tax authorities assessed a 0,3% penalty, which was collected into the state budget.
Thus, Glushakov was dismissed for the second time. He again attempted to reclaim his right to remain as head of Electrotyazhmash through the courts. On November 16, the Kyiv District Administrative Court suspended the second order dismissing Glushakov from his post.
A month later, on December 15, 2015, the order of the Ministry of Economic Development and Trade was cancelled, and Glushakov was reinstated as the plant director (the editorial staff has a copy of the corresponding court ruling).
There will be no competition
The Ministry ignored the court's decision, even after Vladimir Glushakov was added to the Unified State Register of Enterprises and Organizations (EGRPOU) as the company's director in late December. And on January 19, 2016, Aivaras Abromavicius issued a new order rescinding his own order reinstating Glushakov after his first illegal dismissal, even though that order had already been carried out.
It's also unclear on what grounds the Ministry of Economic Development and Trade announced a competition to fill the position of director of Electrotyazhmash on December 8, 2015. At that time, a court ruling declaring Glushakov's dismissal illegal was already in effect. Furthermore, on January 29 of this year, the Kyiv District Administrative Court upheld the illegality of the competition in case No. 826/1097/16 (the corresponding court ruling is in the editorial office's possession), prohibiting the approval and publication of the results of the director selection process and the introduction of changes to the Unified State Register of Enterprises and Organizations (EDRPOU) due to the violation of Glushakov's rights.
Glushakov's side accuses former Deputy Minister of Economic Development Ruslan Korzh of abuse of office. On January 20, Prime Minister Arseniy Yatsenyuk signed an order dismissing Ruslan Korzh at his own request.
But a week later, on January 27, as deputy minister, he signed and sent a letter to Dmitry Kostyuk, who remained acting head of Electrotyazhmash. In it, Korzh not only stated his position on the plant but essentially called on its management not to comply with court decisions related to Glushakov and his repeated dismissals.
Their people
Dmitry Kostyuk's personality is also quite interesting. Before joining Elektrotyazhmash in 2012, Kostyuk spent about five years working for Rinat Akhmetov's DTEK. Since the fall of 2015, Kostyuk has effectively become a protégé of Aivaras Abromavicius, who began reshuffling major state-owned enterprises. These include, for example, Ukrburshtyn, which was the focus of law enforcement and media attention for almost all of 2015, as well as the United Mining and Chemical Company and Uktransammiak, where, as at Elektrotyazhmash, Abromavicius decided to carry out management changes.
Dmitry Kostyuk
In January, Aivaras Abromavicius claimed that the reinstated director was attempting to "seize the company's financial flows" and had brought "armed men" to the plant. In reality, a group of regional police officers, representatives of the special police and the Security Service of Ukraine (SBU), and journalists from the Kharkiv television channel "ATN" were present at the plant. All of them confirmed that there were no armed men, let alone a seizure, at the plant.
Furthermore, the Ministry of Economic Development and Trade has repeatedly alleged that Glushakov has driven Electrotyazhmash into a dire financial state. First Deputy Minister Yulia Kovaliv, for example, cited figures showing that production volumes fell by 20% in the first nine months of 2015, compared to the same period in 2014. And from January to September 2015, the plant incurred a net loss of 53 million hryvnias. However, Kovaliv, for some reason, failed to mention that by the end of the year, the plant's losses under Kostyuk's leadership had already reached 120 million hryvnias.
Yulia Kovaliv also forgot to mention that it was during Glushakov's tenure at the company that the second power unit, equipped with a hydrogenerator-motor manufactured by Electrotyazhmash, was commissioned at the Dniester Pumped Storage Power Plant, Europe's largest. In 2014, the plant ranked first in Ukraine among large and medium-sized enterprises manufacturing electric motors, generators, and transformers. In 2015, Electrotyazhmash prepared the TGV-550-2MU3 turbogenerator for shipment to the Ekibastuz State District Power Plant-1 in Kazakhstan.
In addition, in 2013 and 2014, the plant brought the state more than 100 million hryvnia in dividends and profits, and also paid several hundred million hryvnia in taxes (in 2013 – 220 million hryvnia, in 2014 – 150 million hryvnia).
Squeeze everything out
Dmitry Kostyuk also clearly lacks a clear position on the situation. Back in March 2015, he gave an interview to a Kharkiv newspaper, where he repeatedly mentioned the professionalism of the plant's current management, of which Glushakov was the full director. Kostyuk also noted the active expansion of orders, including contracts from Serbia, Finland, India, and China.
At the same time as the Ministry of Economic Development dismissed Glushakov in August 2015, Ruslan Korzh, then still deputy minister, visited the plant and announced at a general meeting that the Ministry would supply the company with orders from Western Europe. Until then, not a single contract had been signed.
The government as a whole, and the Ministry of Economic Development and Trade in particular, are unable to designate state-owned enterprises as "green zones" and ensure their privatization. According to official data, the 100 largest state-owned companies incurred losses of UAH 117 billion in 2014. Meanwhile, the plan to sell state assets has been disrupted for several years in a row. By the end of 2015, privatization volumes will be achieved at best by 1%.
The arrival of a private investor in Electrotyazhmash could provide a significant boost to the company's development and strengthen its position not only in the local market but also beyond Ukraine. However, this requires the company's management structure to be as transparent as possible, free from behind-the-scenes struggles for leadership and financial control.
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