December 9, 2016 / 4:28 PM / a year ago

ArcelorMittal's Ukraine arm says state agencies disrupting its work

KIEV, Dec 9 (Reuters) - Ukraine’s largest steel mill, owned by ArcelorMittal, accused local law enforcement agencies on Friday of disrupting the business with unwarranted inspections.

Paramjit Kahlon, chief executive of the Kryvyi Rih mill, was quoted by Interfax Ukraine as saying the agencies - which he did not identify - had interrogated management at the business.

“It’s clear pressure on us to share things with certain persons,” he was quoted as saying, without elaborating.

“There’s big pressure from law enforcement bodies. I don’t know if it comes from their own initiative or from some political force, but it brings large risks to the stable work of the business.”

The allegations from one of the largest foreign investors in Ukraine could be embarrassing for the government, which is seeking to prove to Western backers and businesses its commitment to eliminating corruption and cronyism.

“Today the leaders of the country are making all efforts to attract investment to Ukraine. But I am afraid that this might not happen ... The situation with ArcelorMittal is a benchmark for other investors,” Kahlon was quoted as saying.

He said the company had sent a complaint to prosecutors.

The prosecutors were not immediately available to comment.

The Kryvyi Rih mill produced 6.3 million tonnes of steel and 5.3 million tonnes of rolled products in 2015.

ArcelorMittal, which has spent $10.4 billion on the mill since acquiring it in 2005, is the kind of large foreign company whose investment Ukraine is anxious to attract to shore up its war-torn economy, which is emerging from two years of recession.

Ukraine’s leadership, which came to power after massive pro-European street protests in 2013-2014, promised to implement reforms in exchange for a $40 billion bailout package led by the International Monetary Fund.

Some key steps have been taken, including the launch of an online wealth declaration tool to boost transparency around the source of officials’ income, but a September poll showed 85 percent of Ukrainians do not believe the broader fight against corruption has been effective. (Reporting by Pavel Polityuk; Editing by Alessandra Prentice and Mark Potter)

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