Ukrayina Bank in the epicenter of political earthquake

Perhaps the most painful problem of recent days in Verkhovna Rada has been the debate on the bill providing for a special emission of state bonds to pay off Ukrayina Bank’s liabilities to creditors. On July 9, the bill was voted down. A legislative little brother revised by the Interministerial Task Force under Finance Minister Ihor Mitiukov’s patronage suffered the same lot on July 12 (152 nays out of 197 votes cast).

That same day, Deputy Finance Minister Pavlo Hermanchuk declared in parliament that Ukrayina Bank depositors could get all of their money back only by issuing internal government bonds. “If we opt for bankruptcy proceedings, a mere UAH 67 million out of UAH 227 million will be repaid; thus your decision today will mean whether 1.7 million Ukrainian citizens will get their money back and whether this problem, which has long outstripped the essentially financial sphere, will be solved.”

Viktor Suslov, deputy chairman of the interim parliamentary committee of inquiry, holds an entirely different view. He believes that repaying Ukrayina Bank debts at the expense of the national budget (i.e., with taxpayers’ money) is just another way to subdue the bank scandal, leaving those involved in the shadows. Meanwhile, returning some one billion hryvnias by the bank’s debtors would make it possible to solve the problem.

However, parliament was unable to hear the inquiry committee’s report as scheduled on July 12 (Ukrayina Bank ranks with the nation’s largest banks). Mr. Suslov noted that “we have stumbled into a number of problems in our work.”

“The National Bank, Finance Ministry, and State Tax Administration simply refused to provide the data we require with regard to the fifty biggest debtors.” People’s Deputy Mykhailo Brodsky played the accuser’s role, stating officially that he is in possession of “killing documents” showing not only Vadym Hetman, but also Viktor Yushchenko and Ihor Mitiukov to be directly involved in the Ukrayina Bank bankruptcy. The documents, he added, make it clear that the finance minister loaned and never repaid $20 million and would immediately be submitted to the Prosecutor General’s Office.

It is hard to predict what course events will take in the Ukrayina bankruptcy scandal. Very likely, the creditors will not get their money back, although Viktor Korol, chairman of the interim committee of inquiry, says that his meetings with the president and prime minister show that both are eager to investigate the situation and prevent its repetition; this inspires hope that the committee of inquiry will be able to show a better performance. Premier Kinakh says, “The government fully supports the committee of inquiry, for its work is of national importance. Yet what we are doing now should have been done a couple of years earlier. The government will provide the best possible conditions for the parliamentary committee of inquiry and every official found to have been responsible for the bank’s collapse will be brought to account, regardless of his rank and position.”

In addition, parliament supported Deputy Hryhory Omelchenko’s July 12 initiative and almost unanimously resolved to forward official inquiries to the SBU and Prosecutor General’s Office to have a full picture of the Ukrayina Bank’s bankruptcy and verify the available information indicating the complicity of certain ranking officials (lawmakers included).

Prime Minister Anatoly Kinakh said on July 13 that Bank Ukrayina would have its license revoked on July 16 and then face bankruptcy procedures, adding that the government, together with local authorities and the Verkhovna Rada ad hoc commission inquiring into the Ukrayina Bank situation, will take steps to defend as much as possible the rights of bank depositors, Interfax-Ukraine reports. The premier promised that the cabinet will furnish the Verkhovna Rada investigating commission with all the necessary information materials.

INCIDENTALLY

The parliamentary inquiry addressed to General Prosecutor Mykhailo Potebenko and signed by Hryhory Omelchenko and Anatoly Yermak reads that 116 business entities with Ukrayina Bank loans owe it a total of UAH 827,754,441 as of July 1, 2001, reports Interfax Ukraine. In addition, ten physical persons likewise owe UAH 1,319,731. On July 12 the parliament supported the inquiry with 297 ayes.

Parliament considers that the Prosecutor General’s Office must ascertain the circumstances of the loans in question, how the money was used, why it was not repaid, and the amount owed the bank by the said business entities and physical persons at the time of the parliamentary inquiry.

The inquiry further proposes to establish which government officials and legislators (names to be released) assisted these entities and individuals in receiving Ukrayina Bank loans.

Enclosed with the inquiry is a list of 116 business entities and ten names of physical persons as Ukrayina Bank debtors (including former Ukrayina Bank departmental heads, officials in charge of its Volyn office, and its Vinnytsia office security service).