Converting Law Problems Into Politics Will be Harder

On November 1 the Ukrainian delegation led by Premier Anatoly Kinakh returned from the United States. Meetings and talks in Washington culminated in Mr. Kinakh’s meeting with US trade representative Robert Zoellick on the last day of the visit. It was agreed that the US would postpone economic sanctions (scheduled to begin on November 1) provided the Ukrainian parliament passes the bills protecting intellectual property and regulating the manufacture and exports of CDs. If the threat of prohibitive duties on Ukrainian imports in the US market is actually averted, the value of this Kinakh breakthrough is likely to rise high.

The second nonetheless important gain of the three day visit is the Ukrainian-US arrangement to step up the struggle against money laundering; against this background even negotiating the next installment of IMF and World Bank loans passed with the least possible friction. The Ukrainian premier returned obviously pleased with the results.

Parallel to the premier’s visit, FATF Commission (involving 29 countries) held a meeting. In early September it had put Ukraine (along with Russia) on its blacklist of countries around the world deemed “uncooperative” in issues of money laundering. In truth, the decision was not totally unfounded. The Land Court of Hildesheim (Germany) is questioning witnesses in the interconnected criminal cases of former Hradobank president Viktor Zherdytsky and former Naftohaz Ukrayiny executive Ihor Didenko, both charged with fraud and embezzlement of funds earmarked as compensation to victims of Nazism. On November 12, the United States will announce the date when the trial of former Premier Pavlo Lazarenko will begin (expected on June 30, 2002) on charges of laundering $114 million and illegal transfers abroad in 53 cases. Finally, there is Yuliya Tymoshenko and her alleged involvement with Lazarenko through Unified Energy Systems of Ukraine, a subject most actively discussed in the Western and Russian media.

Ukraine thus emerges in the global information space as a source of corruption and criminal politics. Naturally, this background could not but affect the subjects broached during Mr. Kinakh’s talks in the US on October 29-31. The arrangement that Ukraine and the US will cooperate in combating money laundering without doubt ranks with the one suspending US economic sanctions. Ukraine is likely to receive other preferences. US Secretary of the Treasury Paul O’Neill announced that his department is prepared to provide Ukraine with any kind of expertise. During the talks both sides showed an interest in each other’s experience in combating money laundering and outlined measures to enhance financial control and cooperation within the framework of the international coalition formed after the September 11 terrorist attack. Secretary O’Neill stressed that Ukraine also has experience in this field and that this experience is interesting to the United States and other countries, reports UNIAN. It cost Ukraine much effort to gain US support of the Ukrainian option for the Eurasian oil transport route and assistance in setting up an international consortium to manage the Odesa-Brody-Gdansk oil pipeline.

The keen interest shown by the international community in the status of corruption in Ukraine prompted the political leadership to take appropriate steps. On October 27 President Kuchma held a conference in Kyiv that discussed corruption problems and decided to set up an interministerial financial monitoring coordinating authority to prevent money laundering. The State Tax Administration seems determined to hold key administrative posts there.

There are other opinions on ways to solve the problem of shadow capital. Yury Karmazin, chairman of the parliament’s Committee to Combat Corruption and Organized Crime and one of the authors of the bill to prevent and combat money laundering, told The Day that the committee rejected the cabinet bill and that the latter called forth a negative response from all our law enforcement agencies. The committee’s bill envisages the formation of a special executive authority under the cabinet to monitor financial transactions, the National Financial Security Agency. It will include a Chief Directorate and Interregional Bureau. Lest the agency turn into yet another affiliated body serving the interests of some political force, the authors propose special procedures to appoint its director; he is to be appointed by the president as submitted by the premier, after “coordinating” [agreeing on] the candidacy with the parliamentary committee having jurisdiction. However, in view of the results of Kinakh’s visit to the US, Mr. Karmazin noted that effective struggle against economic crime depends not on the number of bills passed, but on whether the punishments for these crimes are made inescapable. This is precisely what Ukraine lacks today, he said: “If no one could get away with such crimes, such issues would never be raised in America.” He further commented on the money laundering situation in Russia, stressing that they passed the necessary bill in the summer. But no steps have been made to set up an authority already tagged a “financial counterintelligence service.” If the anti-laundering bill is passed in Ukraine without foot-dragging, Mr. Karmazin predicts that this country will declare war on money laundering ahead of Russia and will thus be able to make headway there. The more so that, in his opinion, “The bulk of laundered money and arms traffic comes from Russia and is legalized in Ukraine through privatization, and we hide our eyes from it.” As a result, “Dirty money is operating precisely in this country.”