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Ukraine seizes stakes in strategic companies under wartime laws

By Max Hunder and Tom Balmforth

KYIV (Reuters) -Ukraine said on Monday it had invoked wartime laws to take control of stakes in a top engine-maker and four other strategic companies from some of the country's richest men.

It was the first time the government had used martial law for such a move since Russia invaded Ukraine in February, and President Volodymyr Zelenskiy said the move was needed to help meet the defence sector's urgent needs during the war.

It was also the government's most dramatic intervention of the war into big business, touching companies linked to tycoons whose political power Zelenskiy's team has long sought to curb.

The decision was taken at a meeting of top security officials chaired by Zelenskiy on Saturday and went into force on Sunday, placing the privately held stakes under the control of the Defence Ministry, three top officials said.

The companies included engine maker Motor Sich, energy companies Ukrnafta and Ukrtatnafta, vehicle maker AvtoKrAZ and transformer maker Zaporizhtransformator.

"Such steps, which are necessary for our country in conditions of war, are carried out in accordance with current laws and will help meet the urgent needs of our defence sector," Zelenskiy wrote on the Telegram messaging app.

"In these difficult times, we must direct all our forces to liberate our land and people, support the Ukrainian army."

None of the five companies offered any immediate comment.

LINKS TO BILLIONAIRES

The companies are partially owned by the state and are associated with powerful businessmen including billionaires Ihor Kolomoisky and Kostiantyn Zhevaho, as well as businessman Vyacheslav Bohuslayev, who was detained in October on suspicion of collaborating with Russia.

The decision was announced at a joint news conference given by Security Council Secretary Oleksiy Danilov, Defence Minister Oleksii Reznikov and Prime Minister Denys Shmyhal, an unusually high-profile panel that signalled the sensitivity of the move.

"This is not nationalisation... this is a direct taking-over of assets during wartime. These are totally different legal forms," Reznikov said.

Danilov added: "At the end of the military state (martial law)... the assets can be returned to their owners or appropriately compensated at their value."

The officials did not elaborate on the size of the stakes that had been taken over.

Asked if other companies' shares could be taken over, Reznikov declined to comment after the news conference.

At the news conference, Danilov answered: "It depends how much influence they have on the state of our country".

(Reporting by Max Hunder, Pavel Polityuk and Dan Peleschuk; Writing by Tom Balmforth; editing by Timothy Heritage)