US-Ukraine Business Council

"THE ACTION UKRAINE REPORT"
In-Depth Ukrainian News, Analysis, and Commentary

"The Art of Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World"

"Here we go again: Last week, in another international embarrassment for
Ukraine, the Kryvorizhstal steel mill was privatized by the State Property
Fund - right into the pockets of Ukrainian power-brokers Viktor Pinchuk and
Rinat Akhmetov, the first of whom is President Leonid Kuchma's son in law.

That happened thanks to an apparently rigged tender that favored these men
while excluding foreign steel groups interested in paying top dollar for the
prized mill. Pinchuk and Akhmetov made out like bandits, as the saying goes,
while the Ukrainian people were ripped off to the tune of nearly $1 billion
dollars.............

"THE ACTION UKRAINE REPORT" Year 04, Number 103
Action Ukraine Coalition (AUC), Washington, D.C.
Ukrainian Federation of America (UFA), Huntingdon Valley, PA
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C.; Kyiv, Ukraine, THURSDAY, June 24, 2004

-----INDEX OF ARTICLES-----
"Major International News Headlines and Articles"

1. "BEWARE FURTHER PRIVATIZATIONS"
EDITORIAL, The Kyiv Post, Thursday, Jun 24, 2004

2. UKRAINE: RUSHED PRIVATIZATIONS PREDICTED
By Roman Olearchyk, Kyiv Post Staff Writer
Kyiv, Ukraine, Thursday, Jun 24, 2004

3. UKRAINIAN PARLIAMENT FAILS TO RULE ON
2003 PRIVATIZATION REPORT
Interfax-Ukraine news agency, Kiev, in Russian, 22 Jun 04
BBC Monitoring Service, UK, in English, Tuesday, Jun 22, 2004

4. UKRAINE ASKS: WHO'S HUGHES?
Welsh expatriate businessman who brought steelmaking technology in 1869
Observer-Europe, Financial Times, London, UK, Wed, Jun 23, 2004

5.UKRAINIAN PARLIAMENT ADOPTS PRELIMINARY VERSION
OF CONTESTED CONSTITUTIONAL AMENDMENTS
More political turmoil in this former Soviet Republic
Aleksandar Vasovic, AP Online, Kiev, Ukraine, Wednesday, Jun 23, 2004

6. LEAK FORCES UKRAINE TO INVESTIGATE DEATH OF
KEY WITNESS TO THE MURDER OF HEORHIY GONGADZE
By Askold Krushelnycky in Prague
The Independent, London, United Kingdom, Thursday, Jun 24, 2004

7. UKRAINE PROSECUTORS "OUTRAGED" BY THE ARTICLE
PUBLISHED IN BRITAIN BY THE INDEPENDENT IN CONNECTION
WITH THE MURDER OF OPPOSITION JOURNALIST GONGADZE
TV 5 Kanal, Kiev, Ukraine, in Ukrainian, 23 Jun 04
BBC Monitoring Service, UK, in English, Wednesday, Jun 23, 2004

8. INTERNATIONAL FEDERATION OF JOURNALISTS SAYS
"UKRAINE MUST FACE TRUTH ABOUT GONGADZE"
International Federation of Journalists (IFJ), Brussels, Tues, June 22, 2004

9.BREAKTHROUGH IN GONGADZE CASE MET WITH DEEP SUSPICION
NEWS: Committee to Protect Journalists (CPJ)
New York, New York, Tuesday, June 22, 2004

10. DEFEATED CANDIDATE IN UKRAINIAN ELECTION CRIES FOUL
The opposition candidate had to compete in very harsh conditions
UNIAN news agency, Kiev, Ukraine, in Ukrainian, 22 Jun 04
BBC Monitoring Service, UK, in English, Tuesday, Jun 22, 2004

11. TWO UNKNOWN PEOPLE CRUELLY BEAT UNIAN EDITOR
UNIAN, Kyiv, Ukraine, Wednesday, June 23, 2004

12. TOXIC WASTE TIME-BOMB IS TICKING IN CRIMEA
NTV, Moscow, Russia, in Russian, 21 Jun 04
BBC Monitoring Service,UK, in English, Monday, Jun 21, 2004

13. UKRAINE: OFFICIALS KEEP FORCES IN IRAQ DESPITE DISSENT
By David R. Sands, The Washington Times
Washington, D.C., Tuesday, June 22, 2004

14. CALL FOR ACTION ON UKRAINIAN RESOLUTION IN CONGRESS
By Ihor Gawdiak, President. Ukrainian American Coordinating Council
Washington, D.C., Monday, June 21, 2004
========================================================
ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER ONE
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1. BEWARE FURTHER PRIVATIZATIONS

EDITORIAL, The Kyiv Post, Thursday, Jun 24, 2004

Here we go again: Last week, in another international embarrassment for
Ukraine, the Kryvorizhstal steel mill was privatized by the State Property
Fund - right into the pockets of Ukrainian power-brokers Viktor Pinchuk and
Rinat Akhmetov, the first of whom is President Leonid Kuchma's son in law.

The Kryvorizhstal scam worked so well that the country's too-rich and
too-greedy are planning other, similar privatizations - and the sooner the
better as far as they're concerned, given that a Viktor Yushchenko victory
in the presidential election this fall could mean an end to the gravy train.
Or so think some economic observers, according to a Post story this week.
[article number two below]

At least one observer thinks the State Property Fund is about to auction off
(in shady tenders, we'd suspect) more valuable assets: the Dnipropetrovsk
oblast-based Pavlohradvuhilya coalmine holding; the Ukrrudprom holding,
which controls shares in ore mines around the country; the Odessa Portside
Plant, which produces ammonia, carbamide and other chemicals; and the state
phone company Ukrtelecom.

Each of these assets is, so to speak, a goldmine.

The Kryvorizhstal auction was distinguished by its shamelessness. There was
no strong attempt to disguise what was going on; the robbery was
accomplished in the open. Such is the contempt that Ukraine's elite has for
its fellow Ukrainians. In the face of such open contempt, it's hard to know
how to react, since denunciations (like this editorial) are useless.

One thing that can be done is for foreign diplomats from responsible
countries to be vocal about what's going on. Aside from U.S. Ambassador
John Herbst, top foreign diplomats here were insufficiently critical of the
Kryvorizhstal outrage, and we fear they'll be too-little attentive to the
next phony auction. They're diplomats, of course, and so pledged to the
diplomatic nicety that can preclude naming criminality for what it is - but
we can always hope they'll be more proactive. They need to observe these
auctions like hawks, and, if necessary, try the brigands in the court of
international opinion - perhaps the only court that the recipients of the
State Property Fund's sleazy largesse need to fear.

There is already a precedent for a trial-by-international-attention in the
drubbing that Ukraine has received in the international media about the
steel mill tender. It could even have a beneficial effect, in that the next
Wesley Clark or George H.W. Bush whom Viktor Pinchuk invites to
Ukraine might decide not to come. That's very small justice, but for the
moment, that's the position we're in.

We call on foreign diplomats to make the upcoming privatizations their
business. There are worse things they could be doing than trying to ensure
that Ukraine's rulers don't rob the country blind.

And while we're on the topic, why don't native Ukrainians rouse themselves
from their customary passivity and raise a cry? That's the least you should
do when these thieves are making off with your property. (END)
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER TWO
Current Events Gallery: http://www.artukraine.com/events/index.htm
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2. UKRAINE: RUSHED PRIVATIZATIONS PREDICTED

By Roman Olearchyk, Kyiv Post Staff Writer
Kyiv, Ukraine, Thursday, Jun 24, 2004

The controversial sale of the Kryvorizhstal steel mill to a consortium
backed by President Leonid Kuchma's son-in-law Viktor Pinchuk, and Rinat
Akhmetov, reportedly Ukraine's richest man, is a dress rehearsal for a
string of shady privatizations to come in the next few months, informed
sources say.

The sale of the mill on June 14 to Investment-Metallurgy Union, many think,
is the first of a series of attempts by well-connected tycoons to grab hold
of remaining state assets before presidential elections this fall.

"It's not a coincidence that all strategic enterprises on sale now are being
sold in a rush," said Socialist faction deputy Valentyna Semeniuk, chair of
parliament's special controlling commission for privatization, adding that
the ruling elite hope to gain control of the country's big assets before
elections.

"Ukrainian business-political groups understand that the situation in the
country could change dramatically after the presidential elections," said
Oleksandr Ryabchenko, director of the Kyiv International Institute for
Privatization, Asset Management and Investments.

"Kryvorizhstal was the first step, and next on the list are [coalmine
holding] Pavlohradvuhilya, ore-mine holding Ukrrudprom, Odessa Portside
Plant and possibly state-owned Ukrtelecom," Ryabchenko said, adding that
some of these state assets are already being managed, unofficially, by
private business groups who don't want to lose control over them. Ryabchenko
predicts that the assets, possibly including Ukrtelecom, will be sold before
September.

Will foreign investors have an opportunity to buy these enterprises?
Semeniuk says there's "not a chance." "There was not a transparent tender
process in the Kryvorizhstal sale," Semeniuk said, "and people shouldn't
expect transparent tenders as the other companies are privatized, either."
She added that she will continue efforts to reverse the Kryvorizhstal tender
through lawsuits, even after the presidential elections.

The planned sell offs have, according to Semeniuk, received the blessing of
Prime Minister and presidential candidate Viktor Yanukovych. Yanukovych
trails opposition leader Viktor Yushchenko in the polls, and the funds
raised from the sales would allow his government to raise pensions and
salaries paid by the state to workers ahead of the elections, she added.

AT STAKE

Dnipropetrovsk oblast based Pavlohradvuhilya, which produces 13 percent of
Ukraine's coal, is already on sale. The State Property Fund launched a
tender last year, at a starting price of about $200 million. The sale
collapsed on a technicality and was re-launched March 17 with a starting
price of about $170 million. The SPF announced that two bids were submitted
by the June 23 deadline. Sale results should be revealed before the end of
June, SPF officials said.

UK-headquartered LNM Group, the second-largest steelmaker worldwide
which offered $1.5 billion for Kryvorizhstal, was expected to bid for
Pavlohradvuhilya. Ukrainian business groups are also expected to participate
in the tender.

A controversial condition that required bidders to have produced 1 million
tons of Ukrainian coke annually for three years effectively barred foreign
bidders from the Kryvorizhstal sale. Insiders also said the Kryvorizhstal
tender was "rushed" and foreign bidders had trouble receiving documents
detailing Kryvorizhstal's assets and operations. Fund officials admitted
there were bottlenecks.

There are no similar conditions for bidders for Pavlohradvuhilya, but the
sale is also being rushed, and stiff competition from local groups could
keep foreign bidders out, Ryabchenko said. "Unlike the case with
Kryvorizhstal, foreign investors have a chance to bid for Pavlohradvuhilya,
but they will have less of a motivation to compete as aggressively, as the
coal produced by this company is mostly consumed in Ukraine," he added.

Ukrrudprom, a holding that controls the state's shares in several lucrative
ore mining plants throughout the country, is expected to be broken up, with
the separate groups of shares sold individually. Individuals and groups who

already hold shares in the facilities will have priority purchasing rights;
these existing shareholders, Ryabchenko said, are almost exclusively
Ukrainian business groups.

Ryabchenko said foreign steel groups want control over Ukrainian ore
producers, as they are among the largest suppliers of the raw material
worldwide, but foreigners don't stand a chance given the conditions set for

the sale of Ukrrudprom. Parliament passed a law in April that gives priority
purchasing rights to shareholders who own at least 25 percent stakes in ore
companies in which Ukrrudprom also owns shares.

"This gives priority buying rights to companies such as [Akhmetov's] System
Capital Management, and companies affiliated with Dnipropetrovsk-based
Privatbank," Ryabchenko said. Ukrrudprom's statutory fund stands at
Hr 1.343 billion (more than $200 million).

A firm hired by the SPF recently valued Odessa Portside Plant, which
specializes in the production of ammonia, carbamide and loading chemical
products exported through the Yuzhny port, at Hr 1 billion. SPF chief
Mykhailo Chechetov said June 14 that he planned on starting the Ukrrudprom
and Odessa Portside Plant sales in July. Ryabchenko described the Odessa
plant as "very attractive," and he expects tough competition.

"I think a Ukrainian group will win. We will know more when the conditions
are publicized, but I won't be surprised if they favor Ukrainian groups, as
the conditions in the Kryvorizhstal sale did," Ryabchenko said.

FOREIGN PARTNERS WANTED?

Cash-rich Russian investors bought up many of Ukraine's oil refineries and
other assets several years ago, outbidding Ukrainian groups. Ryabchenko said
Ukraine's five biggest business groups have grown aggressively in recent
years and are now able to hold their own when competing against larger
Russian and western investors. "Now the situation has changed and Ukrainian
groups are buying it all up themselves," he said.

"If such a situation didn't exist, it would mean that Ukraine doesn't have
big business able to defend its interests. I'm not saying this is
transparent and legal, but these are people who are aggressively defending
their interests. Four years ago they didn't have the muscle to defend their
interests this way."

Nearly all of Ukraine's steel mills have already been privatized into the
hands of local business groups. But there is still a whim of hope that
strategic foreign investors will have a fair chance to gain a slice of
business in Ukraine that is currently being privatized.

"If the Kryvorizhstal sale is an isolated incident, then this will only have
a short-term negative impact. However, if this is followed by other
controversial privatizations that exclude strategic foreign investors, it
will send a message that Ukraine's most profitable enterprises are not open
to foreign investors," said a consultant to one foreign steel firm.

"We haven't given up hope, but I understand it's not going to be easy to get
a foot in the door. There is still interest in Ukraine, as it is a country
with some of the biggest raw material supplies for steel making," said an
official at one foreign steel group.

Jorge Intriago, a partner at the Kyiv offices of PricewaterhouseCoopers in
Ukraine, which represented a foreign company with a strong interest in
buying Kryvorizhstal, said there is a real possibility that foreign steel
groups could establish a mutually beneficial partnership with Ukrainian
steel groups, including Kryvorizhstal's new owners.

"I think that a post-privatization partnership with an international
strategic investor is feasible, and makes perfect sense, for a number of
reasons. It would bring in needed inflows of capital investment, and a
strategic partner can facilitate access to foreign markets, especially to
markets in which Ukraine is not an important player," Intriago said. "A
strategic investor would also bring significant industry experience and
technical know-how," Intriago added.

Ukraine, currently not a member of the WTO or recognized as a market
economy, faces a growing number of trade barriers directed at its exports.
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER THREE
Ukrainian Culture Gallery: http://www.ArtUkraine.com/cultgallery.htm
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3. UKRAINIAN PARLIAMENT FAILS TO RULE ON
2003 PRIVATIZATION REPORT

Interfax-Ukraine news agency, Kiev, in Russian, 22 Jun 04
BBC Monitoring Service, UK, in English, Tuesday, Jun 22, 2004

KIEV - Parliament has failed to approve a resolution on today's report by
State Property Fund head Mykhaylo Chechetov on privatization in 2003. The
opposition, angered by the sale of the giant Kryvorizhstal steelworks to a
consortium of politically well-connected tycoons, was seeking to pass a
resolution censuring the SPF and calling for President Leonid Kuchma to
fire Chechetov.

KIEV - Parliament has failed to approve the report of the State Property
Fund on the implementation of the state privatization programme in
2003. Four draft resolutions on this topic were registered in parliament,
but none of them received the necessary number of votes.

A draft resolution authored by Socialist Party faction MPs Stanislav
Nikolayenko and Ivan Bokiy received the votes of 183 MPs out of 431
registered as present (226 votes are needed for approval). The authors
proposed to find the work of the SPF in the given period unsatisfactory and
to ask President Leonid Kuchma to dismiss SPF head Mykhaylo Chechetov
"for crudely violating legislation, and damaging state and public interests
in the process of privatizing state property".

They also proposed to call on the Prosecutor-General's Office to open a
criminal case and prosecute Chechetov "for exceeding his authority and
consciously acting in such a way as to cause serious damage to state and
public interests".

Nor did MPs support a draft resolution submitted by Socialist Party faction
members Mykola Rudkovskyy, Oleksandr Baranovskyy and Mykhaylo
Melnyk. This draft received the votes of 139 MPs out of 429 registered as
present. It proposed to find the work of the SPF "unsatisfactory and
ineffective" and recommend Kuchma to fire Chechetov.

In addition, the draft proposed suspending all privatization, including the
sale of Kryvorizhstal, until the end of 2004 and unilaterally cancelling the
purchase-sale agreement for the state-owned stake in this enterprise. It
also proposed that the State Commission for Securities and the Stock Market
and the parliament's special control commission on privatization issues
check the legality of the Kryvorizhstal privatization.

A draft resolution authored by the head of the special control commission on
privatization issues, Valentyna Semenyuk of the Socialist Party faction, was
also rejected. It proposed finding the work of the SPF in the given period
unsatisfactory and calling on President Kuchma to dismiss Chechetov. The
resolution was supported by 187 deputies out of the 430 registered as
present.

Nor did parliament adopt a draft resolution submitted by representatives of
the parliamentary majority, who proposed to approve the SPF report but to
find its work in the given period unsatisfactory. The draft noted that in
carrying out the tasks set in the state privatization programme, the SPF
exceeded the target for budget revenues from privatization of state
property.

The draft received the support of 186 MPs out of 426 registered as present,
while 40 voted against. MPs tried voting again on the draft that received
the most votes, but they again failed to obtain the required number.

First Deputy Speaker Adam Martynyuk then suggested that MPs assign the
special control commission on privatization issues to work out a new version
of the document on the basis of the four drafts. This proposal was supported
by 258 deputies out of the 429 registered as present.

[The SPF on 14 June declared Metal Invest Union, a consortium led by
Kuchma's son-in-law Viktor Pinchuk, the winner of the tender for the sale of
Kryvorizhstal. The opposition protested that the terms of the tender were
rigged to favour Invest Metal Union and that other bidders were ready to pay
more for the asset.] (END)
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER FOUR
Current Events Gallery: http://www.artukraine.com/events/index.htm
=========================================================
4. UKRAINE ASKS: WHO'S HUGHES?
Welsh expatriate businessman who brought steelmaking technology in 1869

Observer-Europe, Financial Times, London, UK, Wed, Jun 23, 2004

John James Hughes, the Welsh expatriate businessman who helped introduce
steelmaking technology to Ukraine way back in 1869, is still capable of
generating controversy.

Originally there was so little else in the area where the pioneering Hughes
built his steel works that the town that grew up around it came to be known
as Hughesovka.

Then along came the Soviet Communist party, which did its best to wipe out
Hughes's memory. It renamed the mill after Lenin and the town after
Stalin - then changing its mind and calling the town Donetsk instead.

Several decades on and, with the fall of the Soviet Union, Hughes was back
in fashion. Newly empowered local authorities, courting a fresh generation
of foreign investors, created an official day honouring the Welshman as
Donetsk's founder.

But Hughes is out again. The government is selling Kryvorizhstal, Ukraine's
biggest steel mill, to two local businessmen: Viktor Pinchuk, who happens to
be the son-in-law of Leonid Kuchma, the Ukrainian president, and Rinat
Akhmetov, owner of Donetsk's football team and about half the rest of the
city.

The sale saw foreign bidders complaining of prejudice and Ukrainian
officials defensively touting the talents of "national" metallurgists.

Donetsk's city council took note and has moved the city's founding date back
to 1779, when two villages within its current territory were established.
[observer@ft.com]
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER FIVE
Current Events Gallery: http://www.artukraine.com/events/index.htm
=========================================================
5. UKRAINIAN PARLIAMENT ADOPTS PRELIMINARY VERSION
OF CONTESTED CONSTITUTIONAL AMENDMENTS
More political turmoil in this former Soviet Republic

Aleksandar Vasovic, AP Online, Kiev, Ukraine, Wednesday, Jun 23, 2004

KIEV - In a move that heralds more political turmoil in this former Soviet
republic, the Ukrainian parliament on Wednesday endorsed a preliminary
version of constitutional amendments that the opposition has denounced as
undemocratic.

The proposal, submitted by allies of President Leonid Kuchma in the 450-seat
parliament or Verkhovna Rada, was passed in a first reading by a vote of
276-5.

Opposition deputies boycotted the vote and tried to block the rostrum in a
futile attempt to prevent endorsement of the bill.

"The people in power ... will never carry out a constitutional coup d' etat
with our votes," Viktor Yushchenko, a key opposition leader, told reporters
after the vote.

Another opposition leader, Yulia Tymoshenko, said that Kuchma's allies
would not be able to secure the two-thirds majority required for the final
vote, which is expected after the Constitutional Court approves the legality
of the draft amendments.

Bills have to be passed in three readings before going to the president's
office for signature and enactment into law. "They will fail now as they
have failed before," Tymoshenko told reporters. In April, Kuchma loyalists
failed to muster enough votes to secure the two-thirds majority necessary to
amend the constitution.

After a long dispute last month over whether the proposed amendments could
be brought to a vote again, the ruling majority submitted a new, slightly
modified draft of the bill, which calls for the president to be appointed by
parliament rather than chosen by the electorate beginning in 2006.
Ukraine is to hold a presidential vote on Oct. 31 and the opposition
believes it has a strong chance of winning against Kuchma's choice for
successor, Prime Minister Viktor Yanukovich.

The opposition claims the proposed amendments would weaken democracy by
shortening the new president's term and would deprive voters of their right
to elect a new leader. The opposition also fears that Kuchma's allies could
take back the presidency in 2006. Western governments and other
organizations have repeatedly criticized the passage of constitutional
changes ahead of elections.

The Council of Europe's Parliamentary Assembly warned Wednesday that
Ukraine's constitutional reform, "which is in principle highly necessary,
should be postponed until after the presidential election and then conducted
in a democratic and transparent manner." (pvs/av/nl/ji) (END)
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER SIX
Check Out the News Media for the Latest News From and About Ukraine
Daily News Gallery: http://www.artukraine.com/newsgallery.htm
=========================================================
6. LEAK FORCES UKRAINE TO INVESTIGATE DEATH OF
KEY WITNESS TO THE MURDER OF HEORHIY GONGADZE

Askold Krushelnycky in Prague
The Independent, London, United Kingdom, Thursday, Jun 24, 2004

UKRAINIAN AUTHORITIES are to investigate the death in custody of a key
witness in a politically sensitive murder case after The Independent
revealed confidential documents which showed he had been murdered.

The victim, Ihor Honcharov, a former undercover policeman, was providing
information about the abduction and murder of an opposition journalist,
Heorhiy Gongadze, whose headless corpse was found weeks after he disappeared
in September, 2000. Gongadze had irritated the Ukrainian government with
articles about corruption which, he said, reached all the way to the
President, Leonid Kuchma.

Secret recordings of Mr Kuchma made by a former bodyguard indicate his angry
orders to "take care" of Gongadze. Mr Kuchma says that the recordings are
false, and denies any involvement in the journalist's death.

Gongadze's killers have not been caught. His relatives, colleagues,
opposition politicians and journalists' defence groups long suspected orders
for his elimination came from the President or close associates.

Documents were provided to The Independent by disaffected members of
Ukraine's security organisations, angry their investigations were being
suppressed. They said Mr Kuchma appointed the prosecutor general last year
to cover up damning evidence. Many of the documents are extensive and
detailed interviews with past and present agents for the Ministry of
Internal Affairs (MVS). Many say they were ordered by MVS General Oleksiy
Pukach to spy on Gongadze from July until his disappearance.

They say General Pukach tried to destroy all evidence of the operation. Some
believe the general, acting on political orders, engaged criminals to abduct
Gongadze. One of the most powerful pieces of evidence is from Mr Honcharov,
a former senior MVS undercover policeman, who was in custody last year on
charges of working with racketeers.

He said the abduction and murder were committed by gangsters at the bidding
of the MVS. He said the MVS minister, Yuriy Kravchenko, ordered Gongadze's
killing on behalf of the President. He also predicted that he, too, would be
killed and his death made to look like suicide or illness. Soon after, the
authorities said he had become ill in an MVS solitary confinement cell and
died in hospital last August.

But The Independent obtained a copy of a secret official autopsy showing Mr
Honcharov was severely beaten and injected with a drug called Thiopental,
which probably led to his death.

Mr Honcharov had said he knew where Gongadze's head is hidden, and that he
had been threatened with death in jail by Serhiy Khamula, deputy head of the
MVS organised crime unit.

The papers show the authorities knew that Mr Honcharov's death was
suspicious and the prosecutor general questioned Mr Khamula about it.
Documents from another Ukrainian intelligence agency confirm that Mr Pukach
was in charge of the surveillance operation and was suspected by his deputy
of improper contacts with criminals.

The prosecutor general's office has finally admitted the documents were
genuine and said it was investigating the suspected murder of Honcharov.

Last October, General Pukach was arrested briefly on the orders of the then
prosecutor general, accused of illegally destroying records to hinder their
investigation, and to prevent identification of the team last monitoring
Gongadze and who might have seen or been involved in his abduction. Soon
after the general's arrest, the President replaced that prosecutor general
and General Pukach was released.

And in another twist, the authorities announced they have a confession from
a convicted killer they name only as "Mister K", that he murdered Gongadze.
Critics say the authorities have claimed several times to have caught the
killer, or killers, but no claim has been substantiated. (END)
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER SEVEN
The Genocidal Famine in Ukraine 1932-1933, HOLODOMOR
Genocide Gallery: http://www.artukraine.com/famineart/index.htm
=========================================================
7. UKRAINE PROSECUTORS "OUTRAGED" BY THE ARTICLE
PUBLISHED IN BRITAIN BY THE INDEPENDENT IN CONNECTION
WITH THE MURDER OF OPPOSITION JOURNALIST GONGADZE

TV 5 Kanal, Kiev, Ukraine, in Ukrainian, 23 Jun 04
BBC Monitoring Service, UK, in English, Wednesday, Jun 23, 2004

KIEV - Ukraine's prosecutors have expressed their anger over the publication
of damaging allegations in Britain's The Independent in connection with the
murder of opposition journalist Heorhiy Gongadze. The paper said on 19 June,
quoting anonymous Ukrainian police sources, that a key witness in the
murder, Ihor Honcharov, was killed in custody, and that officials were
hampering the investigation of the Gongadze case. The following is the text
of a report by Ukrainian television TV 5 Kanal on 23 June:

Detectives of the Prosecutor-General's Office say they are outraged by the
article in Britain's The Independent about the investigation into the death
of Gongadze. Detectives say information published by the newspaper
misrepresents the true state of affairs and misleads the public.
Furthermore, the publishing of part of the evidence collected by the
detectives has already affected the investigation and put in real jeopardy
some people involved in it.

This is why the Prosecutor-General's Office has decided to launch a criminal
case in connection with the disclosure of information about the pre-trial
investigation. But the prosecutors have still not said whether they will
take legal action against citizen K, whom they have recently questioned and
who has allegedly [confessed to] killed Gongadze.

[Yuriy Hryshchenko, captioned as head of the group investigating the
Gongadze case, speaking at a news conference ] We are investigating this
statement in the Gongadze case. He [K] had committed a crime and was
prosecuted. Detectives established that at the time [of Gongadze's killing]
he was involved in other crimes as well. Because it is a secret of the
investigation I cannot say more. [Journalist shouting from the audience]
Has he been charged?

[Shortly after the publication of the article Ukrainian prosecutors said for
the first time that Honcharov did not die of natural causes while in
custody, as was claimed earlier. They also said they were holding a man who
had confessed to killing Gongadze, identifying the man as K.] [Audio and
video available. Please send queries to kiev.bbcm@mon.bbc.co.uk]
---------------------------------------------------------------------------
NOTE: Most observers of Ukrainian matters have been totally "outraged"
by the activities and statements of the Prosecutor-General's Office these
past few years. International observers say the reputation of the
Prosecutor-General's office in Ukraine is terrible and it now has almost
zero professional credibility in the international legal and justice
community.
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER EIGHT
Historical Gallery: http://www.artukraine.com/histgallery.htm
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8. INTERNATIONAL FEDERATION OF JOURNALISTS SAYS
"UKRAINE MUST FACE TRUTH ABOUT GONGADZE"

International Federation of Journalists (IFJ)
Brussels, Belgium, Tuesday, June 22, 2004

The government of the Ukraine "must face the truth and take responsibility"
over the brutal killing of opposition journalist Georgiy Gongadze, says the
International Federation of Journalists as new developments put fresh
pressure on President Leonid Kuchma and point to a denial of justice in
the case.

"The time is right to clear the air," said Aidan White, IFJ General
Secretary. "We need to know the truth, pure and simple. Only a fresh
investigation that is independent, transparent and stripped of self-interest
and political intrigue will deliver justice."

The death in custody of a key witness, the announcement of a confession by
a convicted murderer and a call from parliamentarians in the Ukraine for the
impeachment of President Kuchma all indicate that the mystery surrounding
the 2000 assassination of Internet journalist Gongadze is at last
unravelling, says the IFJ.

"After years of willful political neglect, incompetent investigation and
official bungling the truth is beginning to emerge and President Kuchma and
his government must face up to their responsibility," said White.

Yesterday the prosecutor-general's office in Kiev announced that a man
previously prosecuted for murder had confessed to the killing of Gongdaze,
an investigative reporter and a sharp critic of corruption in government
circles. His decapitated body was found in woods outside Kiev in November
2002. Although President Kuchma has always denied being involved, he has
been linked to the murder through controversial taped evidence.

The news of the confession came as prosecutors announced an investigation
into the death in police custody of a key witness who had alleged that Mr
Kuchma was implicated in the murder of Gongadze. Former policeman Ihor
Honcharov died last August of spinal injuries. Criminal proceedings have
been opened against police in the matter, said the prosecutor's office.

And a special parliamentary committee, mainly consisting of Kuchma's
political opponents, which has been examining events around the killing,
including secret tape recordings, says Mr Kuchma should be impeached and
subject to criminal proceedings. The IFJ welcomed the work of the committee
but warned against politicians using the conclusions as a "football for
political game-playing". White said: "This case is about justice for Georgy
Gongadze, not securing the defeat of Leonid Kuchma."

Last month the IFJ, which is supporting an international review of how the
Gongadze case has been handled, confronted Ukraine Prime Minister Viktor
Yanukovych, a favourite to replace Kuchma in national elections later this
year, during a visit to Brussels with a "catalogue of concerns" over a wide
range of problems facing journalists in the Ukraine and asked for a new and
independent inquiry into the Gongadze case. (END)
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER NINE
http://www.artukraine.com/buildukraine/index.htm
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9. BREAKTHROUGH IN GONGADZE CASE MET WITH DEEP SUSPICION

NEWS: Committee to Protect Journalists (CPJ)
New York, New York, Tuesday, June 22, 2004

NEW YORK - Ukraine's prosecutor-general, Gennady Vasilev,
announced yesterday that investigators are questioning a suspect who
admitted to killing independent journalist Georgy Gongadze, local reports
said. The citizen, identified only as K, is a convicted murderer already in
prison for several other killings that involved decapitation, the manner in
which Gongadze was killed four years ago, according to Agence
France-Presse (AFP).

The Prosecutor-General's Office stated that in addition to confessing to the
murder, the suspect had described in detail the circumstances of Gongadze's
death, particularly the decapitation.

The announcement was met by skepticism, however. A number of local
opposition groups accused Ukrainian authorities of trying to avert public
attention from a report published in the London-based Independent on
Saturday, June 19, suggesting that President Leonid Kuchma impeded the
investigation into Gongadze's murder.

The Independent said it had obtained classified documents supporting its
allegations and also claimed to have the results of a secret autopsy
performed on the corpse of a key witness, Igor Goncharov, who died in police
custody in August 2003. Goncharov's body was cremated two days after his
death, before an autopsy was allegedly performed. The Independent also said
on Saturday that documents showed that an injection of a drug called
Thiopental caused Goncharov's death.

Early yesterday, prosecutors stated that they have evidence that Goncharov
died of injuries in prison last year. They said an inquiry into the abuse of
authority by prison officers had been launched. However, they dismissed the
Independent's allegations that Goncharov had been injected with Thiopental,
the AFP said.

"The timing of this announcement, combined with President Kuchma's repeated
interference in the investigation into Gongadze's murder, raises deep
suspicions," said CPJ Executive Director Ann Cooper. "We urge the
prosecution to pursue every lead in the case and to investigate fully
allegations involving President Kuchma."

Gongadze was the editor of news Web site Ukrainska Pravda
(www.pravda.com.ua), which often featured critical articles about President
Leonid Kuchma and other Ukrainian government officials. He disappeared in
Kyiv in September of 2000, and his headless body was found in November
of that year.

For more information on Gongadze's case, click on CPJ's 2000 killed list and
scroll down to Ukraine -
http://www.cpj.org/killed/Ten_Year_Killed/2000_list.html#gong .

CPJ is a New York-based, independent, nonprofit organization that works to
safeguard press freedom worldwide. For more information about press
conditions in Ukraine, visit www.cpj.org . (END)
LINK: http://www.cpj.org/news/2004/Ukraine22june04na.html#more
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER TEN
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10. DEFEATED CANDIDATE IN UKRAINIAN BY-ELECTION CRIES FOUL
The opposition candidate had to compete in very harsh conditions

UNIAN news agency, Kiev, Ukraine, in Ukrainian, 22 Jun 04
BBC Monitoring Service, UK, in English, Tuesday, Jun 22, 2004

POLTAVA - A former MP candidate in a by-election in single-seat
constituency No 151 (Poltava Region) and head of the Poltava Region branch
of the Ukrainian People's Party [UPP], Oleksandr Kulyk, who was supported
by the [centre-right] Our Ukraine bloc, views his electoral defeat as a
victory over the government machine.

In a release circulated by the press service of the UPP's Poltava Region
branch, Kulyk made the following comment, summing up the outcome of the
election campaign in constituency No 151: "Although we did not win the
election, we defeated the powerful government machine."

The release recalls that Kulyk took second place in the election, polling
nearly 20,000 votes (22 per cent of the vote).

"The opposition candidate had to compete in very harsh conditions. The
authorities threw their weight behind Oleksiy Lelyuk (chairman of the board
of the Poltavahaz joint-stock company and head of the Poltava Region branch
of the [pro-government] Party of Regions - UNIAN), opening all media
channels to him and forcing the local bodies of power to work in favour of
one candidate," the release reads.

It also says that, in four district centres out of five in the constituency,
Kulyk won by a large margin. According Kulyk, his rival was given votes
by "the village bosses who were carrying out the will of the district
officials, trying to curry favour with them and promising villagers gas
supply, roads, free meters and other charitable `donations' from the
Poltavahaz chief, Oleksiy Lelyuk".

"Printed applications [presumably, to vote at home] were discovered at
almost all the polling stations - applications from citizens who were
effectively forced to cast their ballots at home. According to preliminary
calculations, that was 10 per cent of all the voters, and according to the
poll results, the pro-government candidate won almost 100 per cent of the
ballots in the portable ballot boxes for voting at home.

As already reported by UNIAN, the by-election in single-seat constituency
no 151 was won by Lelyuk, who polled 32.86 per cent, or 29,440 votes.
Kulyk got the backing of 22.4 per cent of voters, or 19,914 votes. (END)
---------------------------------------------------------------------------
NOTE: "Mobile" voting practices allowed in Ukraine provide for an
unbelievable number of opportunities for major, widespread voter fraud.
It would be appropriate for the organizations in Ukraine involved in
election monitoring to make public as soon as possible much more
information about "mobile" voting practices and the way gross voter fraud
is and can be committed in Ukraine.
=========================================================
ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER ELEVEN
=========================================================
11.TWO UNKNOWN PEOPLE CRUELLY BEAT UNIAN EDITOR IN KYIV

UNIAN, Kyiv, Ukraine, Wednesday, June 23, 2004

KYIV - Editor-translator of UNIAN news agency Oksana Romanyuk and
her friend were cruelly beaten by two unknown people near "Nyvky" subway
station in Kyiv at about 18.30 on June 12.

As the victim has reported to the agency, two unknown men (of Caucasian or
Arabian appearance) started proposing her to go with them.

Her friend came to the defense of her, as a result of which a fight has
started between the attackers and the UNIAN employee's friend. The girl and
her friend got physical injures and were taken to the hospital. The
criminals were also injured but they managed to disappear from the place of
the incident by the car (which number plate was written down by the casual
passer-bys).

As chief of the criminal investigation department of #3 Shevchenkivsky
district internal affairs department Ruslan Osipenko has reported to an
UNIAN correspondent, the militia employees conduct an investigation on
the application of the victim of the incident.

UNIAN news agency from its side will keep up with the course of the
investigation. O.Romanyuk stayed in the hospital for 10 days (during June
12-22). Her diagnosis is bruises, close cranial-brain injure and brain
concussion. The car, by which the attackers escaped, was waiting for them,
and it belongs to Lutsk inhabitant. (END)
=========================================================
ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER TWELVE
Historical Gallery: http://www.artukraine.com/histgallery.htm
=========================================================
12. TOXIC WASTE TIME-BOMB IS TICKING IN CRIMEA

NTV, Moscow, Russia, in Russian, 21 Jun 04
BBC Monitoring Service,UK, in English, Monday, Jun 21, 2004

[Presenter] One of the most popular holiday destinations in the Crimea
[Ukraine], Alushta, is on the brink of an environmental disaster. The Crimea
is home to over a 100 depots full of dangerous toxic substances. The stores
are decaying and there is no money to decommission the poisonous waste. Our
correspondent reports from the Crimea.

[Correspondent Anna Konyukova] This danger sign is pinned to the gates of
an agricultural warehouse in the village of Izobilne outside Alushta. It
contains toxic substances that are either banned or are past their use by
date. There are 156 storage sites like this in the Crimea plus 2 large
depots. Experts say that none of these facilities meet the standards of safe
storage of poisons, and they pose danger to the environment.

[Vladimir Serebryakov, section head of the Department for the protection of
the population of Crimea, captioned] Many warehouses are run down, storage
tanks are worn out, there is danger of chemicals seeping into the ground.

[Correspondent] There is just enough money in the republic [of Crimea] to do
some emergency work at the two main depots. Toxic substances that have been
stored here for decades are now leaking from rusty barrels and pouring out
of burst bags. All these toxins mix up to create new, unknown substances,
and experts do not know how to decommission them. But the most dangerous
thing is that these poisons leak into the ground.

[Serebryakov] This is an environmental disaster. Parts of the Crimea depend
on water from artesian wells and, naturally, these toxins find their way
underground and into the water supply to the general public. This is fraught
with poisoning.

[Yevgeniy Levkov, head of the emergencies department of the Ministry for
the agro-industrial complex of Crimea, captioned] This may cause general
intoxication of the organism, paralyse the nervous system, etc.

[Correspondent] The chemical storage in the village of Izobilne sits next to
a water reservoir, supplying the environs. Across the Crimea, such
storehouses may be found in the most unlikely locations.

Behind these gates there is another storage of poisonous chemicals. All
information about it is top secret because this environmentally unsafe
facility is located just 5 km from the Livadiya Palace [venue of the Yalta
conference between Churchill, Roosevelt and Stalin], the very same palace
which several times a year hosts meetings between various heads of states
and governments.

About 8 tonnes of banned toxic substances are stored here. But even the
guards do not know what exactly they are keeping the watch over.
[Viktor Gurlov, captioned as guard] There was some kind of smell coming from
down there. What was it we do not know, we don't have access or keys. Of
course, we told our bosses but we don't really pay much attention to it.

[Correspondent] Chemical experts say such depots are time bombs. Nobody
knows when a disaster will strike. They simply hope it won't happen in their
time. (END)
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER THIRTEEN
Your financial support for The Action Ukraine Report is needed.
==========================================================
13. UKRAINE: OFFICIALS KEEP FORCES IN IRAQ DESPITE DISSENT

By David R. Sands, The Washington Times
Washington, D.C., Tuesday, June 22, 2004

WASHINGTON, - Ukrainian troops will remain in Iraq despite continuing
security woes and political pressure at home, Foreign Minister Konstantyn
Hryshchenko said in an interview yesterday.

"We have faced constant criticism from our opposition, but it is the strong
position of our government that we have to combat international terrorism --
not just on our home soil, but wherever it threatens us," Mr. Hryshchenko
said.

With 1,650 troops deployed in the southern province of Wasit, Ukraine has
the largest non-NATO force participating in the U.S.-led postwar security
mission, and the fifth-largest deployment overall. Three Ukrainian soldiers
have been killed in combat operations.

The government of Ukrainian President Leonid Kuchma has made eventual
membership in NATO a top priority. Kiev is hoping Ukraine's contributions to
the Iraq mission and NATO's peacekeeping force in Kosovo will give its
candidacy a boost when NATO leaders hold a summit in Istanbul next week.

"We are trying to demonstrate we can not only be part of a coalition of the
willing, but we play a real operational role in the coalition," said Mr.
Hryshchenko, who served as ambassador to Washington before taking the top
diplomatic post.

The Ukrainian foreign minister met with Secretary of State Colin L. Powell,
National Security Adviser Condoleezza Rice and other senior administration
and congressional leaders during his one-day stop in Washington. The visit
comes at a time of distinct improvement in Ukraine's sometimes strained
relations with the United States and the West.

Bilateral ties were severely strained by accusations in 2002 that Mr. Kuchma
approved the sale of sensitive radar equipment to Saddam Hussein's regime
and by the unsolved slaying of a prominent Ukrainian journalist who was
harshly critical of Mr. Kuchma.

The president, who has said he will step down when his second five-year term
ends in October, was largely shunned by NATO leaders at the Prague summit in
2002. NATO officials in Brussels caution that Ukraine's military still must
undergo major reforms, but relations are clearly better.

NATO has used Ukraine's highly regarded An-124 Ruslan transport planes--
which are built in Kiev -- to ferry troops to Afghanistan, and Mr. Kuchma is
expected to received a much friendlier reception in Istanbul than he got two
years ago.

Ukraine's leftist opposition parties have consistently opposed the country's
Iraq mission. Ukrainian forces in southern Iraq came under heavy pressure
after U.S. forces began an unexpected crackdown on supporters of radical
Shi'ite cleric Muqtada al-Sadr.

But the foreign minister said he remained "cautiously optimistic" about
Iraq's political future, particularly in light of the recent U.N. resolution
endorsing a transition to a fully sovereign Iraqi government. "I am
optimistic if only because failure would be so costly that it's hard to
imagine how the international community can allow it to happen," he said.
"Whatever the questions about the beginnings of the war, a failure now in
Iraq would mean bigger problems for everyone than anything Saddam Hussein
ever posed before." (END)
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ACTION UKRAINE REPORT-04, No. 103: ARTICLE NUMBER FOURTEEN
Your financial support for The Action Ukraine Report is needed.
==========================================================
14. CALL FOR ACTION ON UKRAINIAN RESOLUTION IN CONGRESS

By Ihor Gawdiak, President. Ukrainian American Coordinating Council
Washington, D.C., Monday, June 21, 2004

WASHINGTON - Upcoming Ukraine presidential elections concern the U.S.
- Ukrainian Americans call for support of S. Con. Res. 106 and H. Con. Res.
415. The October presidential election in Ukraine is critical to the future
of Ukraine, US-Ukrainian relations, and to the very security of Europe. It
is
also crucial that all presidential candidates be given equal coverage in the
media and full unhindered opportunity to present themselves before the
Ukrainian electorate during the election campaign.

Ukrainian Americans and their friends and supporters are therefore urged
to call their congressional representatives, both in the House and the
Senate, to become co-sponsors Senate Concurrent Resolution #106, which
urges that the presidential election process in Ukraine be carried out in a
"democratic, transparent and fair" manner.

In the House of Representatives, House International Relations Committee
Chairman Rep. Henry J. Hyde (R-IL) has cosponsored an identically
worded resolution - H. Con.Res.415 - with Helsinki Commission Chairman Rep.
Christopher H. Smith (R-NJ) and Rep. Tom Lantos (D-CA). Helsinki Commission
Co-Chairman Senator Ben Nighthorse Campbell (R-CO) is sponsor of the Senate
resolution which is co-sponsored by Commission Ranking Member Senator
Christopher J. Dodd (D-CT) and Senate Foreign Relations Committee Ranking
Member Senator Joseph R. Biden (D-DE).

Telephone numbers of your Senators and Representatives may be obtained by
calling the Capitol Information Line at (202) 225-3121. Contact information,
including e-mails addresses, can also be found by going online to
www.house.gov and www.senate.gov.

For the text of the resolutions and accompanying statements, see the
Helsinki Commission website - www.csce.gov, or contact Orest Deychakiwsky
at the Commission for more information: orest.deychak@mail.house.gov
==========================================================
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