Rinat Akhmetov, Ukraine`s wealthiest man, has significantly increased his interest in a large electricity generating company through a controversial debt-for-equity transaction that has cast a shadow over Kiev`s ability to privatise state assets transparently, according to an article by Roman Olearchuk, the Financial Times.

The article reads as follows:

With snap parliamentary elections just weeks away, the deal has taken on political overtones. Opposition parties have cried foul, alleging the sale was fixed in favour of a businessman close to Viktor Yanukovich, Ukraine`s premier, and have pledged to challenge it.

Foreign investors who have had their shares diluted through the deal are also angry, saying the transaction could damage the investment climate in Kiev, which has attracted record inflows in recent years.

Officials representing the state`s interest in Dniproenergo agreed this week to a52 per cent share capital increase, which boosted Mr Akhmetov`s stake more than fourfold, to about 40 per cent. The stake has been valued at $400m-$500m (?294m-?368m, £200m-£250m).

In return, energy companies controlled by Mr Akhmetov agreed to cover $200m of Dniproenergo`s debt to creditors, mostly state enterprises. The government`s interest in Dniproenergo was diluted by a third, to 50 per cent. Minority shareholder interests were also diluted.

Proponents of the move, including Mr Yanukovich`s government, point to the need to pay off Dniproenergo`s debts. A manager at Mr Akhmetov`s Dtek energy holding said the transaction was "completely transparent" and legal, adding that his company would invest an extra $200m in the company.

Critics argue that the deal was conducted exclusively in the interests of Mr Akhmetov.

 Some analysts said the government could have covered Dniproenergo`s debts and raised funds for state coffers by auctioning off shares in an open tender.

Tomas Fiala, director of Kiev-based investment bank Dragon Capital, said: "It is kind of an inside deal and not very transparent. Mr Akhmetov was allowed to buy at $100 per share, a big discount to the $390 market price."

Opposition politicians campaigning ahead of the snap parliamentary elections on September 30 have criticised the sale as a shadowy privatisation that illustrates how Mr Yanukovich`s government panders to the interest of tycoon allies.

Mr Akhmetov is an influential member of Mr Yanukovich`s Regions party.

"We see how this government is working in tandem with business," said Yulia Tymoshenko, a former prime minister and leader of the opposition Byut bloc, which trails closely behind Regions with 25-30 per cent voter support.

Mr Akhmetov was not available for comment.

Viktor Yushchenko, Ukraine`s pro-western president, has sharply criticised Mr Yanukovich`s handling of the privatisation, saying the government has once again strayed off course.

Ms Tymoshenko`s bloc warned that the government might rush through the sale of prized assets to allies before the election.The government recently announced plans to sell several large enterprises this autumn, including a vast chemical plant valued at $1bn.