Viktor Korol, chairman of the Verkhovna Rada interim committee of inquiry into the bankruptcy of commercial Bank Ukrayina, read his progress report on September 19 to a dead silent parliamentary audience. Finance Minister Ihor Mitiukov seemed to be listening even more attentively than to Oleksandr Turchynov with his draft budget proposal.
Such attention by lawmakers, ministers, and journalists was quite understandable. Previously, Mr. Korol had on more than one occasion promised to not only explain the crisis of one of Ukraine’s largest commercial banks, but also identify those responsible for its bankruptcy.
Bank Ukrayina was formed based on one of the largest Soviet banks, Ahroprombank. On the date of registration with the NBU (September 28, 1991), its authorized capital stock totaled 1.3 billion coupon karbovantsy in the midst of hyperinflation (when the hryvnia came it was 100,000 coupons or 60 cents to the dollar, a peak from which it has fallen by two- thirds). After six stock emissions, by 1996 it registered UAH 70.3 million (then about $42 million). Its assets included 27 directorates and over 510 regional offices serving over 200,000 legal entities and some 1.5 million physical persons. Originally intended as a specialized banking institution to finance the agribusiness sector, it ranked with Ukraine’s eight top banks only three or four years later.
“Bank Ukrayina has always had lawmakers’, the cabinet’s, and the National Bank’s ear,” declared Viktor Korol, adding that this positive factor “showed the bank its flip side.” The investigating deputies established “repeated cases of interference in the bank’s affairs by politicians and other influential people along with attempts to use its powerful financial resources for their own benefit... Some of the bank executives lobbied for high government officials, politicians, and representatives of the business elite.”
Mr. Korol further said that on September 18 at a meeting of the parliamentary committee of inquiry the leaders of the legal policy and budget committees proposed that civil courts handle the nonpayment disputes objectively. Perhaps to add “objectivity,” such cases were to be suspended. Viktor Suslov, deputy chairman of the committee of inquiry, told The Day, “While working on the case, we constantly experienced the NBU’s and the bank’s temporary management’s reluctance to provide information about its debtors.”
Still, the investigating people’s deputies came to certain conclusions. In 1996-97, the bank’s revenues dropped by UAH 300 million. In 1999, the bank was in the red (-123.1 million). According to Mr. Korol, this is explained by the management’s “imperfect policy,” as predictably bad loans were often granted. It also transpired that the cabinets of Pavlo Lazarenko, Valery Pustovoitenko, and Viktor Yushchenko had played a major role in the bankruptcy. In 1991-99, some thirty cabinet resolutions were issued, under which the bank paid out about UAH 459 million (of which only 25 million was recognized as government guaranteed).
In addition, Mr. Korol maintains that there are over 140 firms with “politicians operating behind some of them” directly involved in the bankruptcy. Twenty of them (including Nafta-K, Interarhro, and Tekhnopark) owe the bank more than a billion hryvnias. He attributes the peak of what can be described as robbing Ukraine to NBU protege Viktor Kravets and Volodymyr Satsiuk’s team. Incidentally, the latter was comfortably double dipping as chairman of the board and people’s deputy. Mr. Korol believes this warrants stripping him of parliamentary immunity.
Moreover, Viktor Korol said that the Bank Ukrayina bankruptcy took place with the NBU and cabinet looking the other way. He read Volodymyr Stelmakh’s statement to the effect that the NBU has no authority to interfere in commercial bank affairs, disputed assertions that the state held an interest in Bank Ukrayina, and added that the NBU was entitled to do precisely that. In a word, the investigating legislators did their job regardless. What course events will take will depend on the Prosecutor General’s Office, as its authority in the case is considerably broader than that of the NBU and Solons put together.
As for the committee of inquiry, Viktor Suslov told The Day that there would be nothing sensational, and he was right. Mr. Korol presented no evidence fleetingly mentioned at the press conference, incriminating Deputies Kateryna Vashchuk and Liudmyla Suprun, as well as Finance Minister Ihor Mitiukov. Instead, Oleksandr Volkov was scolded for twice failing to report for questioning by his fellow lawmakers acting as investigators. It should be noted that the causes and culprits of Bank Ukrayina, only recently a financial giant, ought to have been analyzed at greater depth, so that many more officials at various levels could face the people, but they currently remain in the shadows. Summing up the parliamentary investigation, one is reminded of previous bold statements (we know everything; we have evidence), including what Mykhailo Brodsky said about documents incriminating Mitiukov and interviews with all those bank managers “driven into a corner,” complaining that they had received instructions from above, and constant NBU—Ukrayina—so-called reform cabinet reshuffling.
