Secret operation to nationalise Milavitsa

The authorities have designs on one of the most successful Belarusian companies.

The Minsk city executive committee sent a letter marked “for internal use only” to Bellegprom concern. The letter contains strange instructions. We don't cite the whole document, but note that Bellegprom is ordered to hold a meeting of the supervisory board of Joint Venture ZAO Milavitsa in the nearest future to discuss the mechanism of including the Minsk city executive committee into the number of the company's shareholders. The document refers to a relative instruction from the country's prime minister Mikhail Miasnikovich, Yezhednevnik reports.

The Minsk city executive committee confirms that the document really exists, but it looks a bit fantastic, especially with the “for internal use only” stamp.

It looks even more fantastic amid news that ZAO Milavitsa opened its logistics centre, the first one in Belarus's light industry, on September 17. As Alena Kukharova, the head of Bellegprom's department for development of knitted and sewing sectors, said at the opening ceremony, that Milavitsa has always been a “fast-growing company that uses innovative technologies”.

“Milavitsa has always been one step ahead of others. It is the company that has the highest wages in the light industry. Today it presents its project in the logistic sector. This is the first and the only such project in Belarus's light industry,” Alena Kukharova said.

According to Bellegprom, Milavitsa accounts for around 9% of the concern's production and around 12% of the export. The growth of the company's net income for the first 8 months of 2014 was 22.7% compared to the same period of 2013. “This is a very good result,” Alena Kukharova praised the company.

Amid these news, the actions by the Belarusian authorities that launched a secret operation to nationalise the successful company look unclear and illogical. The state lately sold its share in OAO Brest Stocking Factory to private company Konte SPA for 39 billion rubles, but suddenly decided to secretly regain its control over Milavitsa and thus to offend, to put it mildly, foreign investors. Milavitsa's main owner is Silvano Fashion Group (SFG) listed at the Tallinn and Warsaw Stock Exchanges. Its shares are owned by 2,000 shareholders, among them Polish pension and investment funds, as well as clients of a number of large European banks. It is more serious than offending just one foreign investor.

The Minsk city executive committee, which sent its secret instructions to the concern, declined to explain why the state wants to gain control over the successful company. “Are we supposed to wait until it collapses?” they ask in reply.

The committee refuses to say why Milavitsa can collapse, if Bellegprom concern calls its the leader of the industry keeping one step ahead of others. The committee again answers with a counter-question: “Can you give us guarantees that it won't happen?” In other words, the state decided to take control over Milavitsa just in case.

This information gives little ground to suggest that the secret project to nationalise Milavitsa really has the aim of protecting the state's interests. The state wins nothing, but loses a lot. So, it is likely to be a project of an official who plays his own game under the shield of protecting the state's interests.