Bank Ukrayina’s Bankruptcy Explained?
“The National Bank of Ukraine is to blame for the situation concerning Bank Ukrayina,” President Leonid Kuchma said September 25 in Kyiv, addressing a regional media workshop. “I must put a solid end to the Bank Ukrayina problem,” Interfax-Ukraine quotes him as saying.
“Nobody but the National Bank has anything to do” with the banking system of Ukraine. “It is a closed structure,” he emphasized. “I am not going to comment on this, I will leave the comments to the prosecutors.” He also criticized the performance of the parliamentary commission investigating the Ukrayina affair, calling it “a populist (i.e. pie-in-the-sky —Ed.) body.”
The president said he did not understand the situation when in 1998 a foreign auditor pronounced Bank Ukrayina bankrupt, and simultaneously the NBU gave Ukrayina UAH 150 million, while the latter was running a loss of UAH 123 million. “Is it not clear who the loans went to?” Mr. Kuchma asked, adding, “Can a loan be extended somebody who has nothing?”
The chief executive believes that the law is also contributed to the Ukrayina situation. “The law is as this: whoever stole more is right,” he said. According to Pres. Kuchma, Ukraine’s banking system is “the weakest in the world.” He also pointed out that a market economy cannot develop without a strong banking system. Today, 70% of Ukrainian enterprises are losing money. “Their number, instead of decreasing, is growing,” he said.
It will be recalled that Ukrayina began to fail as far back as 1996. Parliamentary Investigative Commission Vice Chairman Viktor Suslov thinks that what in fact set things in motion was the replacement of Ukrayina’s Chairman of the Board Oleksandr Kovalenko by Viktor Kravets, then Viktor Yushchenko’s deputy at the NBU. “It was done under an open pressure of the National Bank management,” Mr. Suslov claims.
The lawmaker said that this “close cooperation both professional and personal” yielded immediate results. In the period 1996 through 1998, Ukrayina’s revenues dropped by UAH 300 million, following the deliberate issuance of loans that would obviously go bad, and as soon as in 1999 the bank incurred a UAH 123.1 million loss. Seeing this, the NBU not only turned a blind eye but even supported the bank, injecting new millions into it. It is in 1998 that the NBU ignored not only the conclusions of foreign auditors but also IMF recommendations about Ukrayina and the conclusions of the State Department for Banking Supervision. So pu b lic money continued to flow regularly through Ukrayina into the pockets of companies behind which stood, as the parliamentary investigative commission has learned, certain high ranking officials and business figures. It is perhaps on this point that Mr. Kuchma declined comment, saying, “The prosecutors will deal with this.”
“What made it possible to shut down this gold mine and thus effect the bankruptcy of Ukrayina was the firm stand of Current NBU Governor Volodymyr Stelmakh,” Suslov told The Day . On the other hand, Mr. Kravets is now NBU payment systems department director. Being “fully competent,” he continues to work “in his specialty” is how Mr. Kravets has exculpated himself before the people’s deputies, according to Viktor Korol, chairman of the Verkhovna Rada commission. Incidentally, lawmakers have repeatedly complained that the National Bank has failed to supply them with even a list of Ukrayina’s deadbeats.
