Ukrainian company
System Capital Management or SCM (Ukrainian: Систем Кепітал Менеджмент) is a major Ukrainian financial and industrial holding company established in 2000 in Donetsk, Ukraine. It is currently headquartered in Limassol, Cyprus.[2] The business is controlled by Ukrainian businessman and oligarch Rinat Akhmetov, who owns 100% of the company's shares. In 2011, the group had revenues of around $19.5 billion and assets worth over $28.4 billion.[3][unreliable source?]
The company includes over 100 businesses in metals and mining, power generation, banking and insurance, telecommunications, media, real estate, and others.[4] SCM employs approximately 200,000 people. The group is audited by PricewaterhouseCoopers.[5][unreliable source?]
As of May 2022, SCM (dba SCM Consulting Ltd) was represented in the United States by the Washington, D.C. based public relations firm Qorvis LLC.[6]
Structure
The biggest company in the SCM Group is Metinvest, involved in the mining and steel business.[7] It is one of Ukraine's largest private business and one of the biggest steel producers in Europe. It is also the largest Ukrainian producer of iron ore. In addition to Ukraine, Metinvest has assets in the US, Italy, UK, Bulgaria, and Switzerland.[8]
The second major company of the group is coal mining and power generation company DTEK. DTEK was formed in 2002. The nucleus of the complex consisted of Vostokenergo Power Generation Company, ServiceInvest Energy Company, and the coal mine Komsomolets Donbassa. The other companies ranged from scientifically oriented energy-sector companies to those in various social fields.[citation needed]
SCM also owns a large bank. In telecommunications, SCM has a fixed line business, Vega Telecom group. The Group's media interests include the newspaper Segodnya and Ukraina Media Group. The group is also in the real estate business and owns two five star hotels – one in Kyiv and one in Donetsk. SCM group also includes assets in heavy engineering, clay production, transportation, agriculture, and retail businesses.[citation needed]
SCM operations amid Russian military invasion
On 22 February 2022, when hundreds of people took to the streets of Mariupol protesting against Russia's invasion into Ukraine, Akhmetov announced that the company was going to pay $34 million in taxes upfront to bolster Ukraine's treasury.[9]
Shortly after Russia invaded Ukraine, Akhmetov stated that the company's goal in war conditions was to help Ukrainians withstand the invasion: "My Foundation is helping Ukrainians survive by providing water, food, medicines, and any help we can give here and now. SCM businesses are helping the army and territorial defence forces defend our sovereignty, our freedom and independence, and win the war," he stated. Akhmetov stated that SCM was using its international connections and opportunities to communicate to their international partners that Ukrainians were dying and suffering because of Russia's aggression: "What is unfolding here is a war crime and a crime against humanity, against Ukraine and the Ukrainians. This can neither be explained nor justified."[10]
Since the outbreak of the war, SCM businesses together with the Rinat Akhmetov Foundation (ex-Foundation for Development of Ukraine) and FC Shakhtar Donetsk have channeled over ₴1.4 billion ($48 million) to help Ukraine.[11] This included the following assistance:
- SCM channeled ₴100 million to help Kyiv.
- Metinvest purchased armour for territorial defence fighters for ₴330 million.
- Metinvest Group's steel mills provided metal and make 35,000 anti-tank hedgehogs and spike strips against wheeled vehicles
- FUIB channeled ₴62.4 million to the Armed Forces of Ukraine and Territorial Defense Forces.
- YASNO allocated ₴5 million in humanitarian aid.
- DTEK supplied free electricity to hospitals, military facilities and emergency services, and bakeries in three regions, costing around ₴50 to 60 million per month. The company channeled ₴1.05 million to help Territorial Defense fighters and children's hospitals. Territorial Defense Forces received fuel, protective gear, and communication devices. In the month after the onset of the war, DTEK engineers restored power for 300,000 Ukrainian households affected by damaged power lines.
- Ukrtelecom channeled ₴18.4 million to the Armed Forces of Ukraine and Territorial Defense Forces.
- HarvEast Holding donated ₴500,000 to the Armed Forces of Ukraine.
- Lemtrans donated ₴20 million in aid for the Ukrainian Armed Forces and 650,000 for the Territorial Defense Forces.
SCM's Metinvest and DTEK have joined efforts with the Rinat Akhmetov Foundation to launch the Saving Lives humanitarian project, which supplies food to IDPs as well as helps evacuate and accommodate people.[12]
Metinvest, UMG Investments, DTEK and other SCM businesses have joined efforts to create a national and international network of carriers to supply humanitarian aid during wartime, the Logistics Front. The objective of the logistics network is to help people as well as towns and cities affected by the Russian invasion deliver food and essentials and support critical infrastructure facilities. The company calls for carriers to join the network and become logistics partners.[13][14]
Assets affected as a result of Russian aggression
Luhansk TPP was shelled on February 22, 2022, on the eve of the Russian invasion, during the escalation in certain areas of Donetsk Region and Luhansk Region (CADLR). It was the major source of heat and power in those regions. DTEK noted that restoration works could be carried out only in case of ceasefire.[15][16]
In his comments to The Wall Street Journal, Ahmetov, the owner of the two biggest Mariupol metallurgy plants, Azovstal Iron and Steel Works and Illich Steel and Iron Works, stated that both plants were under Ukrainian control but had been temporarily shut down. "Russian troops are turning Mariupol into rubble, killing Mariupol residents and bombing the plants," he said. "Under no circumstances will these plants operate under the Russian occupation."[17]
On March 13, 2022, Metinvest Group's Avdiivka Coke Plant came under heavy shelling. The shells damaged two coke shops and some other facilities of the plant. No one was injured.[18]
In February 2023, all of Akhmetov's assets in Russian occupied Donbas were confiscated.[19] The local Russian-installed authorities stated as a reason for the seizure that Akhmetov was a "rogue individual."[19]
Awards and recognition
In September 2011, under USAID support, the Centre for Corporate Social Responsibility Development published the results of the first Ukraine's Companies' Transparency Index. The top ten list included three SCM Group companies: System Capital Management, Metinvest and DTEK, with DTEK as number one in the list.[20] SCM Group prepared the first corporate social responsibility report in Ukraine in 2005.[21]
On 1 December 2011, SCM was honored at the Business Leadership Roundtable and Corporate Social Responsibility Awards Luncheon held during Ukraine's 20th Anniversary of Independence Gala events in Washington, D.C.[22] On 15 December 2011, SCM took the first place at the National CSR Business Case 2011 Contest for its Contemporary Education social programme.[23][24]
At the beginning of 2012, Metinvest, DTEK and SCM took three first places at the ranking compiled by Gvardiya national ranking magazine[who?] as the most socially responsible businesses in Ukraine.[25]
US$23.470 billion (2012)