Page 9 - bne IntelliNews Ukraine Country Report May 2017

Kyiv.
According to a confidential letter sent by Sir Suma Chakrabarti to Prime Minister Volodymyr Groysman and President Petro Poroshenko, the chief of the multilateral lender underlined that “the reform of Naftogaz, which is just recognised as one of the most meaningful reforms undertaken under your leadership, is at risk of collapsing within the next few days”. This letter, seen by a bne IntelliNews correspondent in Kyiv, was dated April 7.
The EBRD head said that the implementation of the corporate governance action plan for the state-owned gas utility signed earlier between the bank and the Ukrainian government is being “unduly delayed” by the lack of enactment of the required legislation. After months of consultations, the draft state ownership policy for Naftogaz still contains provisions that go against the spirit of the corporate governance reform, thus compromising the intended independence and insulation of the company from undue political interference, according to the letter.
“Naftogaz also need to become, as originally agreed, an entity of private law,” Chakrabarti added. “I am asking you to do all that is necessary to have Naftogaz’s new charter and necessary enabling legislation in place before the end of this month [April].”
Chakrabarti also warned of negative effects from the threatened resignation of the independent board members of Naftogaz. This move might not only “severely damage” the company at a time when its transformation is finally beginning to take hold, but could also “shatter the international confidence in your government’s commitment” to reform and restructure Naftogaz and other state-owned enterprises in Ukraine, according to the letter.
On April 6, four of the independent board members – Paul Warwick, Markus Richards, Charles Proctor and Yulia Kovaliv – sent a letter to the Ukrainan government indicating their conserns over the situation in the company. Without “material progress” it would be “inappropriate and untenable” for them to continue as supervisory members, they said in the letter.
Specifically, the independent board members demand the “resolution of issues” related to the electronic declarations system of Ukrainian officials. According to recent amendments to Ukrainian legislation, financial disclosure obligations are extended to existing and potential members of supervisory boards of state-owned companies. “It is impossible for foreigners to complete necessary actions with such inaction leading to potential criminal claims against us,” the independent board members wrote.
Chakrabarti also said that the amendments will “seriously discourage worthy candidates” with international experience from applying for such positions and hence deprive the country of much-needed expertise for the transformation and proper governance of state-owned companies.
2.4 IMF finally releases next $1bn
9 RUSSIA Country Report April 2017 www.intellinews.com
The IMF Executive Board reported on April 3 it has completed the third review of its $17.5bn Extended Fund Facility program and approved a $1.0bn disbursement for Ukraine . In its release, IMF Acting Chair David