or Premier under fire of two legislatures

People’s Deputy Viktor Suslov (SDPU{o}), chairman of the Verkhovna Rada ad hoc National Bank Commission of Inquiry, has expressed a desire to work on a sequel to the serial called “Misappropriation of IMF loans by the NBU.” As we know, the commission he heads has been investigating how the National Bank (then headed by the current Premier Viktor Yushchenko, used IMF credits. It is the findings of this commission that were quoted in foreign press reports, especially those in The Financial Times . According to Mr. Suslov, new information has emerged, requiring additional investigation by his commission.

That the renewed inquiry into NBU activities by the commission is primarily a political, rather than legal, financial, or economic, issue raises very little doubt. In particular, People’s Deputy Oleksiy Kucherenko (Regional Revival) noted in an interview with The Day, “That the renewed investigation into National Bank activities by the ad hoc commission is of a political nature is beyond doubt. In all probability, the forces that initiated this inquiry earlier are now ready to continue. Thus, their interests have changed, and they are now acting against the head of government rather than that of the National Bank. This whole story is clearly saturated with a political subtext.”

In the words of Mr. Suslov, the commission found documents testifying that the National Bank misappropriated IMF credits. But he also stressed that none of these documents bears the personal signature of Mr. Yushchenko.

“Viktor Yushchenko is perhaps not guilty personally,” Mr. Suslov told The Day’s correspondent, “but he should have found and punished the guilty instead of saying that there were no violations. Yet, he failed to do so and put himself in a very difficult situation, covering up for the culprits.”

The resumption of the committee’s work at a time when the IMF has not yet decided on extending new credits to Ukrainian greatly complicate the loan issue. Thus, the moment for NBU inquiries is extremely inconvenient for the premier but very suitable for those who take a dim view of Mr. Yushchenko’s and the government’s performance.

Meanwhile, despite scathing criticism of the Ukrainian government for alleged NBU misappropriation of international loans coming from influential parliamentary forces in Ukraine, The Financial Times, and some US Republicans, official Washington is demonstrating that it is still Ukraine’s strategic partner. This can be proved by the recent visit to this country of US delegation headed by Ambassador William Taylor, US State Department aid coordinator for the newly independent states. Addressing journalists on March 24, Mr. Taylor said the purpose of his visit was to study the strategy of the new Ukrainian government.

The US delegation noted such achievements of the Ukrainian government as passing the budget and restructuring its foreign debt. Mr. Taylor appreciated the decree on land President Leonid Kuchma announced last December. According to John Tedstrom, in charge of Russian, Ukrainian, and Eurasian affairs in the US National Security Council, this kind of radical reorganization of agriculture will promote the formation of a real middle class in Ukraine.

Today, US aid totals $170 million. The US has earmarked another million dollars to the families of deceased coal miners, for miners’ training, and for improving safety at coal mines.

But Ukraine is in for a still bigger prize: an invitation for Mr. Yushchenko to visit Washington. Mr. Tedstrom said negotiations about the visit are already in progress and its date will be announced in the near future.

Answering The Day’s question whether House Banking Committee hearings will influence the financial relationships among Ukraine, the US, and the IMF, Mr. Taylor pointed out he had only seen a report on the hearing. Yet, he assured all that “the hearings will not influence the aid program. We are convinced the Ukrainian government is committed to the course of reforms, which we think will help it move in the right direction. On our part, we will support Ukraine.”

In his turn, US Ambassador to Ukraine Steven Pifer noted that the IMF and the US government should find out what exactly happened three years ago.

Another American, Secretary of the Treasury, Lawrence H. Summers, speaking at the House Banking Committee hearing, said that, until the inquiry into the so-called misuse of IMF loans by the NBU is completed, Ukraine should “institute more detailed quarterly audits, and agree to place the proceeds of any new IMF disbursements in an account at the fund that can be used only to repay its debts to the IMF” (quoted from a hearing transcript on the US House of Representatives website, http://www.house.gov/banking).

INCIDENTALLY

Testifying before the House Committee mentioned, James Healy, Managing Director of Credit Suisse First Boston (CSFB), denied accusations about his bank’s unlawful operations with the NBU, on which a third party allegedly cashed in. “If we had possessed any such evidence at the time, we would not have entered into the transactions” with the NBU, he told the American Congressmen. Mr. Healy also said the NBU did not violate at all any IMF requirements or restrictions while cooperating with CSFB. He also indicated that, of the total amount that the NBU deposited with CSFB and that CSFB, in turn, lent to third- parties, which is approximately $705 million, all of it was returned to the NBU with interest. And, in general, the managing director is very much surprised that such operations can be considered a violation. As to the third allegation that CSFB’s transactions with the NBU resulted in a misreporting of the NBU’s reserves, Mr. Healy also noted he was not aware of the reserve requirements imposed by the IMF on the NBU.