Trade unions accuse Kremikovtzi management of asset-stripping worth 50M euro

Trade unions accused the managers of Kremikovtzi steel mill of stripping assets worth 50 million euro over the past several weeks, including land and equipment that is of key importance for the continued operation of the steelworks, investor.bg reported.

The steel mill's management sold around 150 hectares of land, but former Chief Executive Officer (CEO) Alexander Tomov had actually asked the economy ministry for permission to sell 500 hectares, Vassil Yanachkov from Confederation of Independent Trade Unions in Bulgaria (KNSB) and Lyudmil Pavlov from Podkrepa trade union told a news conference.

The two trade union chiefs blamed Tomov, who has since been replaced as CEO, but is still on the Kremikovtzi managing board, for stripping the assets, which include the settling tank, a key element of the mill's production cycle.

Kremikovtzi's majority shareholder, Indian businessman Pramod Mittal, had used the tank as collateral in the deal to buy CSKA Sofia football club, the trade unions claimed.

Since then, the collateral has passed into the hands of Konstantin Zhevago, the Ukrainian billionaire who held talks to buy the steel mill from Mittal last month, giving him an advantage in future negotiations, according to the trade union chiefs, quoted by investor.bg.

Although Tomov had promised that the funds would go to bolster Kremikovtzi's cash flow, they never made it into the stell mill's bank accounts, the trade unions said.

Yanachkov and Pavlov claimed that the assets sold out included Prokatna railway station, a warehouse for ready production, another warehouse for spare equipment and probably the equipment itself.

The two refused to name the companies that bought the assets, but said they were Bulgarian firms operating in the same line of business. Kremikovtzi assets were sold at price way under their market prices, according to the trade union officials, as quoted by investor.bg.

Although the trade unions did not take the matter to court in order to stop the sales from going through, they were happy with the Post-privatisation Control Agency's decision to impound Kremikovtzi shares.

On the issue of ownership, the two union officials said they did not care much about the identity of the owner, as long as the majority shareholder was willing to fund the development and modernisation programme that would bring the steel mill up to environmental standards, and keep it in operation by injecting funds to solve its cash flow problems.