Ukrainian Cabinet’s double bookkeeping will bring Ukraine adverse consequences in the next couple of winter months
The ad-hoc committee to verify payments between energy sector enterprises and energy suppliers, as well as the financial relationships between budget-sustained and off-budget funds, set up as instructed by the Ukrainian President, has completed its work.
According to Yevhen Marchuk, its chairman, “The information received from the government, concerning the most important energy sector indices, does not tally with the current realities.” Mr. Marchuk went on to say that the committee had uncovered overstatements in terms of electricity payments and energy market returns to such companies. In particular, there were 500 million hryvnias included in the UAH 1.2 billion worth of credits and cost of bills.
The Ukrainian Cabinet has understated more than twice over the amounts due as state budget returns from the energy sector. In the course of inspection, data submitted by the State Tax Administration, amounting to UAH 16,443,000,000 hryvnias (contrary to the Cabinet’s stated UAH 8,950,000 hryvnias) was fully confirmed.
The Cabinet increased the amount due energy sector enterprises as advance payments by offset (UAH 3,500,000,000), the overall liabilities amounting to UAH 6,400,000,000. In other words, actual prepayments to the state budget were around UAH 2,900,000,000. This tallies with what the State Tax Administration claimed (UAH 2,736,000,000) and is corroborated by the energy sector taxpayers’ accounting reports.
The committee retained experts from the Chief Auditing Directorate and discovered that some of the spending unit liability reports contained cooked data, resulting in such dubious data relating to the implementation of the national and local budgets, channeling current budget funds into the covering of previous years’ debts, thus increasing the spending units’ current liabilities.
In addition, it was found that that the total amount of such offsets, in compliance with Article 30 the law of Ukraine On the State Budget of Ukraine for the Year 2000, was in excess of the formally adopted UAH 214.5 million. In other words, the government has obviously lost control over the implementation of the state budget and use of budget funds meant to supply the energy sector needs, reads the committee’s report.
Similarly, the available accounting reports do not confirm bank settlements with the state budget amounting to UAH 224 million, payable by the energy sector’s state-owned enterprises (the Cabinet report shows UAH 2,753,000,000).
The Cabinet of Ministers of Ukraine understated the energy sector’s liabilities to the state budget by UAH 4,787,000,000. The State Tax Administration’s estimate of UAH 13,100,000,000 is confirmed by an audit report signed by the STA, Fuel and Energy Ministry, and the Naftohaz Ukrayiny National Joint Stock Company.
The Cabinet’s statistics concerning arrears on gas consumption due to current tax concessions and subsidies to the population, stated at UAH 482 million, along with the alleged UAH 500 million worth of subsidies to municipal enterprises, is not true, because the amount registered when checking their records reflected only an increment in arrears. Actually what they owe the budget, as of October 1, totaled UAH 593 billion and UAH 1,365,200,000. In other words, the Cabinet understated Ukraine’s overall gas liabilities due to tax exemptions and budget subsidies due the populace and municipally owned heat-supplying enterprises by UAH 976.7 million.
The committee further established the Cabinet’s rotten statistic concerning the repayment of back pay due nuclear power personnel, totaling UAH 45.8 million as of October 1, 2000. The Enerhoatom National Joint Stock Company was found to operate several organization departments procuring and stockpiling the same data, using various methods, allowing access to such data, depending on who wants it and at what level.
Whatever will happen in Ukraine’s energy sector largely depends on the stand taken by Verkhovna Rada, Mr. Marchuk pointed out, because the Ukrainian parliament, when dealing with the energy sector and preparing its enterprises to cater to this country’s needs during the fall-winter heating season ended by moving to adjourn the final resolution until the ad hoc committee’s findings are submitted in full. Mr. Marchuk believes that Verkhovna Rada has enough legislative vehicles to effectively influence the Ukrainian energy sector: “And if parliament tries to bypass this problem, the lawmakers will in many respects assume responsibility for what will happen in the energy sector this winter.” Premier Viktor Yushchenko does not agree with the committee findings as voiced by RNBOU Secretary Yevhen Marchuk, particularly his allegations about tainted Cabinet statistics concerning the accumulation of fuel and energy resources to supply the needs of the coming heating season, reports Interfax Ukraine. Mr. Yushchenko made it clear he would resign once he realized that his mission as head of the government became obviously “ineffective.” “I do not agree with the committee findings. I do not consider them sincere,” said Mr. Yushchenko.
Meanwhile, the opponents and proponents of the current Ukrainian government are taking polarized stands with regard to the ad hoc committee and its findings. Socialist leader Oleksandr Moroz told The Day, “I have no reason to disbelieve this statement coming from the Secretary of the National Defense and Security Council,” adding that Yuliya Tymoshenko, this “energy sector iron lady,” spoke in Parliament and cited “convincing” facts and figures backing her stand. A very good statement, proving that the latter-day Socialists have a flexible mentality.
Viktor Suslov, a Yabluko member, declared that he viewed the committee findings as quite convincing. “I did not doubt that Mykola Azarov [head of the State Tax Administration] would win the argument. He has long been known in Verkhovna Rada and he is certainly a decent person.” Mr. Suslov believes that the committee findings will have consequences, and that, even if the President and Verkhovna Rada are found to have been duped, “those at the head of the government will not be able to learn anything from this lesson.”
Oleksandr Zinchenko, leader of SDPU(o) faction, says that “all the government functionaries involved in or with the dissemination of such falsified information should be brought to account, and that Viktor Yushchenko could not but be fully aware of such double bookkeeping.
Serhiy Tyhypko of Labor Ukraine stated in an interview with UNIAN that the Ukrainian legislators have no cause to mistrust experts that had “checked and rechecked the data submitted Yuliya Tymoshenko by the State Tax Administration.” He went on to say that the Cabinet must respond to the committee findings, and that, in his opinion, what is happening at Ukraine’s energy sector is a “very grave situation and it cannot be viewed optimistically.”
P.S. President Leonid Kuchma said it is necessary to take action following the examination of information on the situation in the fuel and energy complex (FEC), made public by the government but rejected by the State Tax Administration. Commenting on the debates between the government and the ad-hoc commission headed by National Security and Defense Council (RNBOU) Secretary, Yevhen Marchuk, over the data on FEC situation, the President said, “One has to muster the strength and courage to analyze the real state of affairs and take measures as soon as possible.”
The President has no doubts about the commission’s findings. He noted in particular that the commission included representatives of all branches of state authority, not only the RNBOU. “I do not think somebody is interested in political quarrels, so one should throw out a desire to play big-time politics.” Mr. Kuchma said. He believes “what we need today like never before is the truth, and it is winter that will in fact test the FEC,” UNIAN reports.
As a counterbalance to the presidential decision on the National Committee to Regulate the Energy Sector, directed against the continuous and illegitimate attempts by Yuliya Tymoshenko to manually run the energy sector, the Prime Minister has demonstratively is concentrating in her hands complete power over the fuel and energy complex. Of course, the first lady of energy completely approves of such measures. As she put it, in order for Ukraine to be ready for the fall and winter months a strict system of management is necessary so that “someone will take responsibility for it,” and in this way the premier has created “a strict vertical to settle all problems in the FEC during the fall and winter.” “This is part of my responsibility as Vice Premier for the FEC, and Yermilov as minister is supposed to follow my orders without question,” Ms. Tymoshenko emphasized.
