The Crimea adopts mandatory buyout of two Akhmetov's enterprises

Temporary administration appointed at the Kerch railroad switch plant and Metallurgical plant. 
Two enterprises located in the Crimea, Rinat Akhmetov's Kerch railroad switch plant and a metallurgical complex, will be forcibly bought by the Crimean government in accordance with the law of 2014. According to Kommersant, yesterday the Crimean officials held a meeting with the employees of the enterprise, and they introduced a temporary administration that would conduct an inventory of property and evaluate its value. This step of the Crimean authorities followed similar actions by the leadership of the Lugansk Republic.

The authorities of the Crimea decided to introduce an interim administration and buy out the property of two enterprises affiliated with Ukrainian businessman Rinat Akhmetov:  Kerch railroad switch plant and Kerch metallurgical complex. A source in the administration of the enterprises told Kommersant that on Monday, the deputy minister of industrial policy of the Crimea, Boris Kabakov, and the head of the Kerch administration, Vladimir Podlipentsev, met with the personnel of the plants (about 700 people work at the switch plant and 1 thousand people at the steel plant). They said that the Council of Ministers of the Crimea on March 3 had decided to buy out the property of both enterprises. The interim administrations will carry out an inventory of the property complex in order to determine the value of the plants for their compulsory redemption.

Also, the State Unitary Enterprise "Kerch Metallurgical Complex" was created, which will include the property of two plants after the forced repurchase. Crimean officials invited all workers of enterprises to write an application for transfer to work in the SUE. They assured that staff salaries will be paid regularly, and the complex will be supported in receiving orders (including those from the RF Ministry of Defense and Russian Railways), and its development will begin. The interlocutor of Kommersant in the government assured that the property of the plants would be evaluated and redeemed from the previous owner at a fair price.

Kerch railroad switch plant is engaged in the production of switches, elements of the upper structure of the track, as well as foundry products. "Kerch Metallurgical Complex" produces, basically, enamelware.

According to the explanations of the interlocutors of Kommersant, the government of Crimea made the decision on compulsory redemption because of the political position of the owner, Rinat Akhmetov. Initially, the property complexes of the plants were registered in Kiev and Krivoy Rog. After the accession of the Crimea to the Russian Federation, in Krasnodar, two firms were created that leased out the property of Ukrainian plants to two branches established in Kerch. Under this scheme, money for rent and profit was transferred to owners in Ukraine. "That is part of this money was spent to finance the military operation of the Ukrainian authorities in the Donbas," the source from the Crimean government told Kommersant. He also said that one of the reasons for the decision on compulsory redemption was that Ukrainian owners did not want to invest in the development of enterprises, and vertically integrated structures (for example, Russian Railways) refused to work with Ukrainian owners.

The decision of the Crimean authorities was followed almost immediately by the similar steps taken by the authorities of the unrecognized Lugansk Republic, which on March 1 introduced external administrations at three enterprises owned by Rinat Akhmetov: Krasnodonugol, Rovenkyantratsit and Sverdlovanthracite. The Lugansk Republic has undertaken such measures in reply to blockade of deliveries of coal to Ukraine which was established by Ukrainian voluntary formations. At that time, Rinat Akhmetov's representatives called the actions of the authorities of the LR "unacceptable". "We consider the private property sovereign, and the requirement to re-register its enterprises and pay taxes to self-proclaimed Donetsk and Lugansk Republics is unacceptable," the SCM Group's own company said in a statement.

The law "On the features of the redemption of strategic facilities in the Republic of Crimea" was adopted by the State Council of Crimea in 2014. According to this document, the objects for compulsory redemption are determined by the Council of Ministers of the Crimea. The government of the republic also sets the amount of compensation that the owner receives.