One of last week's major financial events was the hearings in
Parliament of the National Bank bill - and not just hearings. It took half
a year to compose the text, first at the NBU and then the special Verkhovna
Rada committee. Finally, the legislature approved it in the second reading,
ordering six articles to be revised.
Remarkably, lawmakers' desire to place NBU within legal bounds this
May coincided in time with two other circumstances. Rather, the latter
prompted the legislative initiative. First, after the lawmakers' ad hoc
committee of inquiry reported its findings (with a touch of scandal) we
still recall the commission members' emotions and those of the NBU leadership
and various lobbyists. Second, the World Bank has long insisted on the
enactment of clear-cut laws On the National Bank and On Banks and Banking.
Otherwise Kyiv will have to wait for the next $100 million financial sector
adjustment loan installment even longer.
Recall that hard as Victor Suslov, chairman of the committee, tried
to dig up incriminating evidence, it just did not work. In fact, there
is nothing he can do to topple Ukraine's number one banker, and he admitted
as much, in his own way, declaring that "if I were Yushchenko I would resign."
Mr. Yushchenko replied that this would be too simple and that he was going
to continue the struggle. Six days later the second hearing of the NBU
bill began, with Mr. Suslov in attendance but without Mr. Yushchenko. Slight
as the hope for a reconciliation between the two Viktors had been, it died
right there.
Instead, the way Communist Adam Martyniuk, presiding over the hearing,
behaved made several things clear. Anatoly Stankov, Chairman of the Banking
Subcommittee, told The Day's Vitaly Kniazhansky that "because of
the procedural violations made by Adam Martyniuk, a number of articles,
even those of basic importance were put to the vote the wrong way or were
not voted on." In fact, even the legislators present were surprised at
being offered to vote on a dozen articles at a time.
It is safe to assume that the National Bank, outwardly quite calm about
the vote on the law about itself, has taken a winning stand. On the one
hand, support from Parliament's largest faction theoretically can help
NBU get the bill passed in the required form, while effectively resisting
mounting pressure from the pro-presidential SDPU(u). A day prior to the
vote its leader Viktor Medvedchuk, ignoring the President's admonition
not to make "negative statements that may affect the financial system's
stability," again agreed with Viktor Suslov that NBU operations rate "further
investigation and appropriate decisions." True, this would require that
same law on the National Bank. And so the goings on within the SDPU(u)
- NBU - Communist triangle acquired an interesting scope. The SDPU(u),
attacking the NBU, is hurling stones in the Communist garden. At the same
time, the United Social Democrats are interested in the NBU law and the
Communists are helping to push it through. NBU, finding itself between
a rock and a hard place, hoping for the bill to become a law the way it
wants it, is risking being used somewhat in the fiscal-election war. Yet
there is an alternative. Even now one can predict that, in the event of
ineffective collaboration with the Reds, Viktor Yushchenko as the President's
unwilling water boy will be the first to offer Mr. Kuchma to use his prerogative
and veto the law if it turns out the wrong way.
It is an established fact that one of the most important issues still
to be legally sealed for the NBU is the formation of the Supervisory Board.
So far, Parliament has voted on board membership of 14 and a 7-year term
of office. At the bank they insist that NBU agree with this kind of Supervisory
Board (which will do more than just supervise). Naturally, the Bank does
not like the prospect. The NBU's second in command, Volodymyr Stelmakh,
told the Ukrainski Novyny Agency that "the National Bank is not satisfied
by the adopted board standing orders which, on the one hand, make it the
NBU's supreme administrative body, and on the other provide for its membership's
voluntary basis [i.e., no wages payable]... We would agree with its being
the supreme administrative authority, but then its members must be on NBU
payroll and assume responsibility for their decisions." In fact, The
Day was warned about the same by Anatoly Stankov: "As former First
Deputy Chairman of the Board (when Vadym Hetman was Chairman - Ed.)
I must say that the articles voted on wholesale contain many things that
the Bank will find unacceptable. A host of conceptual provisos are absent.
For example, no mention is made of exactly who is to preside over the Supervisory
Board: an NBU official or, considering his status, someone from outside,
so he can be above and over the Bank."
It is interesting to note that in the course of the second reading the
issue of the NBU staff and its status was raised. Oleksandr Stankov, for
example, proposed to rename NBU as the Central State Reserve Bank. Later,
he told The Day's Vitaly Kniazhansky that "if they approved my proposal
the bank's staff automatically acquired civil servant status, then Viktor
Suslov's amendment about extending criminal responsibility to the NBU head
and his deputies, still to be adopted, would not be necessary..." One lawmaker,
asked by The Day's reporter why it is not necessary to comment on every
article of the law in detail, explained briefly exactly why the law was
needed: "Should Yushchenko or anyone else refuse to play by someone's rules
he could always be thrown behind bars or at least scared enough to know
better next time." Interesting.
Meanwhile, a debatable article called Publications (outlining the procedures
for making NBU information public) also went through its third reading.
Experts do not rule out the possibility that the NBU, remembering its recent
experience, will want to use it to keep information about its foreign exchange
reserves closed. If so, the IMF is sure to step in and then the situation
will become even more riveting.
PS: On May 20, contrary to predictions and expectations, Verkhovna
Rada approved the bill On the National Bank in its third reading.
NBU Governor Viktor Yushchenko was unable to convince lawmakers that
the present board (seven from Parliament plus the President), the decisions
of which the National Bank must carry out, actually creates a regime of
dual power. Yushchenko seemed to be asking whether the NBU Governor, who
does not chair the board, can be responsible for the stability of the Ukrainian
currency when the often contradictory interests of board members influence
that stability. Only one of Yushchenko's amendments, that the pay of the
NBU Governor and employees be a strictly internal affair of the bank, was
adopted.
Obviously tired but as cold-blooded as always, the NBU Governor was
asked by journalists immediately after the vote whether he wanted
to remain in his post under the new law. He answered, "I'll think about
it."
True, the President still could veto the bill and late last week stated
he had ample grounds to do so. However, former Economy Minister and Chairman
of the Ad Hoc Commission to Investigate National Bank Activities Viktor
Suslov told The Day, "I don't think that would be in the President's
interest. Apparently those who brief him forgot to tell him that he himself
will appoint half the oversight board and will thus have the same power
to dictate as Parliament likes. I think that in this situation, it's in
his interest."







