Ferrexpo CEO May be Expelled from Ukraine Parliament

KIEV, Ukraine - The Corporate Relations Research Center, an independent source of information on corporate governance and business-government relations, today welcomed moves to expell businessman Konstantin Zhevago from the Ukrainian parliament.

At the initiation of members of the Yulia Timoshenko Bloc (BYT), Konstantin Zhevago, a BYT member, may lose his parliamentary status. According to letters signed by several members of BYT’s party organizations, Zhevago is in apparent breach of the Ukrainian Constitution and laws. Starting Oct. 25, 2008, he accepted the post of general executive director of Ferrexpo, a mining company in which he owns 51%. According to the Ukrainian Constitution and the Law “On a Parliamentary Member’s Status” a Ukrainian MP may not conduct his parliamentary activities and simultaneously function in a senior managerial post in a commercial company. Zhevago should have excused himself from his parliamentary functions from the moment of his appointment as CEO of Ferrexpo, the Center stated.

In a research note issued today, the Center said:

“There have been some positive changes in recent times and the number of cases of combining parliamentary and other functions by Supreme Rada members has decreased, but this problem has not been solved yet in the country.”

Ukrainian political scientists expect a toughening of attitudes towards such dual jobholders in the parliament. Oleg Kubakh, Consultant, the System Analysis and Forecasts Center, said, “The Constitutional Court of Ukraine ruled on this issue on Jan. 28, 2009: a parliamentary member’s status cannot coincide with a managerial position in a company as the purpose is the deriving of profit. A breach of this requirement can be grounds for withdrawal of a deputy’s authority.”

Economic experts suggest that the expected early withdrawal of Zhevago’s parliamentary powers could have a positive impact on Ferrexpo’s share price. Vyacheslav Butko, Chief of Economic Programs, the Center of Corporate Relations Research, said: “A discussion of possible withdrawal of Zhevago’s parliament member status would allow Ferrexpo to eliminate risks associated with possible breaches of Ukrainian laws and the Constitution by the company’s chief executive. The resulting decrease in reputational risks could contribute to a positive revaluation of Ferrexpo’s share price.”

The research “Breach of the Ukrainian Constitution and Legislation by Ukrainian Supreme Rada Members Combining Parliamentary Activities with Work in State and Commercial Companies” is available at corporativ.info/en/?/analytics/3012/.

Contacts: Olga Zbitneva info@coporativ.info Tel: +380(44)490-04-12/13 +380(50)387-32-42

Source: Corporate Relations Research Center, Kiev, Ukraine

Contacts: Olga Zbitneva, info at coporativ.info, Tel: +380(44)490-04-12/13, +380(50)387-32-42