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Ukraine was downgraded to a 14-month $3.9bn standby agreement (SBA) in 2018 for foot-dragging by the Poroshenko administration – largely for the lack of action on corruption related issues.
The IMF has also swallowed its fears and loosened the purse string because of the demands of keeping Ukraine Inc. running during the war, but those fears remain. Ukraine is back on an EEF and the IMF just signed off on its second assessment of Ukraine’s compliance with the terms of the deal, but like the EU, the many of the strings attached to the facility are related to judicial reform, corporate governance and transparency.
One of the issues that caused the previous downgrade was former President Petro Poroshenko's reluctance to set up an independent Anti-Corruption Court (ACC), part of the anti-corruption triumvirate composed of the National Anti-Corruption Bureau of Ukraine (NABU) that was independent of the government and could investigate wrongdoing; Specialised Anti- Corruption Prosecutor’s Office (SAPO), that is also independent of the regular police and could arrest wrongdoers; and the ACC that is also independent of the judicial system where the wrongdoers could be prosecuted and jailed.
According to RBK-Ukraine, there was an informal condition for allocating US money proposed in September; preparing a draft law to strengthen
institutional independence and operational efficiency of the SAPO. The law's adoption by the end of 2023 is one of the conditions for allocating macro- financial assistance from the EU and lending from the IMF, RBK reports.
The main problem lies in the powers
of the head of the SAPO, which was created as an independent unit of the Prosecutor General's Office to investigate corruption cases involving high-ranking officials. However, the SAPO still has
no separate legal status and remains administratively and procedurally dependent on the Prosecutor General Office, the US complained.
NABU made its first attempt to hook its first big fish, when it arrested Roman Nasirov, the government’s financial controller and former President Petro Poroshenko's right-hand man, and charged him with embezzling millions of dollars in March 2017.
Despite damning evidence, the case went nowhere. Nasirov's wife turned up at the courthouse the next day with a million dollars in cash and bailed him out. The charges were eventually dropped and Nasirov was not only reinstated in his old job, but went on to stand against Zelenskiy for the job of president in the 2019 elections.
The ACC was finally created on April 11, 2019, only ten days before Poroshenko
lost his job in the presidential elections that year. One of the issues that Zelenskiy campaigned on was to end the endemic corruption and the rule of the oligarchs.
And Zelenskiy has been true to his word. After dithering for the first
year, and maintaining a worrying
close relationship with oligarch Ihor Kolomoisky, whose media empire backed Zelenskiy election campaign, the former comedian has ratcheted up his attacks on the oligarchs.
It began with Kolomoisky’s aggressive campaign to try to retake control over PrivatBank, which was nationalised in 2016 after bne IntelliNews reported that its former owners had looted the bank of its deposits and left a $5.5bn hole in the balance sheet.
After Zelenskiy's election, Kolomoisky began what the National Bank of Ukraine (NBU) dubbed a campaign
of terror, physically threatening the central bank’s staff and launching 200 legal cases in one of Ukraine’s most notoriously corrupt courts. Worried that the state would hand the bank back, the IMF made it clear that any more aid was linked to heading Kolomoisky off.
In a dramatic vote, Zelenskiy persuaded the Rada to push through the so-called Anti-Kolomoisky law in May 2020 that made it impossible for the former owner of a bank that has been nationalised to retake control of it.
That story finally came to a head when Kolomoisky was arrested on September 2 this year by the Ukrainian Security Service (SBU), which is wholly under the president’s direct control, not NABU, which has been investigating him for years. However, shortly afterwards
more charges were brought against Kolomoisky of embezzling $250mn from his bank PrivatBank on September 8. Those charges were brought by NABU and Kolomoisky is still in pre-trial detention at the time of writing. His trial, if it happens, will be a landmark event.
Campaign broadening
It is becoming increasingly clear to Zelenskiy that he has to fulfil his promise
One of Ukriane's biggest and most powerful oligarchs, Ihor Kolomoisky has been taken into custody and charged with embezzling $250mn from his former PrivatBank in what should be Ukraine's biggest ever corruption case. / bne IntelliNews
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