Ukraine bets on raising capital
One third of the new Cabinet’s members are investment bankers by trade
It looks like the nation bets on it, at least judging from the new Cabinet of Ministers of Ukraine’s economic bloc’s professional composition. The Cabinet now has five former investment bankers serving in it, who have contracts worth hundreds of millions of dollars in their portfolios.
Minister of Energy and Coal Industry Volodymyr Demchyshyn worked as director of investment banking at the Investment Capital Ukraine (ICU) since 2008, while present chairwoman of the National Bank of Ukraine Valeria Hontareva served as ICU’s chairwoman of the board.
Minister of Agriculture Policy and Food Oleksii Pavlenko is a partner of investment fund “Pharus Assets Management,” head trustee of “Int Invest,” and a trustee of “European Dairy Technology” company.
YATSENIUK’S SECOND CABINET
Infrastructure Minister Andrii Pyvovarsky worked in Ukrainian investment company “Dragon Capital” as managing director and director of investment banking. Before that, he served in the Moscow office of the IFC, where he managed an investment portfolio in Central and Eastern Europe amounting to 100 million dollars. Immediately prior to his Cabinet appointment, Pyvovarsky was CEO of “Continuum” group of companies, which includes, in particular, WOG network of gas stations, owned by MP Ihor Yeremeiev.
Aivaras Abromavicius, our new economy minister, was 22 when he became director of securities in the largest Baltic bank Hansabank. Prior to December 2, Abromavicius was managing partner of Swedish investment fund “East Capital,” which, as we have just learned, is a minority shareholder of Russia’s Sberbank.
SPEAKER HROISMAN IS LEARNING SO FAR
Finally, Finance Minister Natalia Jaresko was a co-founder of “Horizon Capital” and served as its CEO. She worked at the US Department of State’s economic bureau, specializing in the Soviet issues. Following the USSR’s dissolution, Jaresko moved to Ukraine, where she headed the economic section of the US embassy. Having completed her contract term, Jaresko went to work in the SME-oriented private equity fund “Western NIS Enterprise Fund” (WNISEF), to which the US government allocated 150 million dollars at its inception. Jaresko came to lead WNISEF in 2001, and launched her own company “Horizon Capital” in 2006 in the wake of increased interest to Ukraine after the Orange Revolution. Since its inception, the fund has invested over 250 million dollars in Ukrainian companies.
Logically, these people should perfectly understand what it takes to attract investors, both domestic and external, and therefore have to immediately launch a deregulation drive and reduce corruption component of business expenses by lowering the number of businesses’ encounters with the government... Moreover, they have good contacts in the capital market and thus hold the key to the Ukrainian economy getting investments which it sorely needs now.
All would be well, if not for “nuances” of their biographies that began emerging on the day when the Verkhovna Rada voted for the new Cabinet. For example, Abromavicius has a close relationship with Sberbank of Russia. By the way, Abromavicius and Jaresko were described as “the greatest mistake of Ukraine” by a person close to the capital market in an interview with The Day, as that person stressed that we might have to “pay a high price” for appointing these ministers. Our interlocutor refused to provide any specific arguments, saying only that Abromavicius’s relationship with Sberbank of Russia was not as simple as it seemed at first glance, and Jaresko’s investment activity in Ukraine allowed her to get fantastic experience of dealing with offshore companies and perfectly master the basics of “financial espionage.”
GREETINGS TO THE NEW FINANCE MINISTER JARESKO FROM THE FORMER TWO-TERM FINANCE MINISTER PYNZENYK
Sadly, the business community’s general impression from what they saw and heard on the day of the new Cabinet’s appointment was less than fully comforting as the day ended, even though hopes were high at the start of the coalition talks. “Another quarter of such appointments and faux reforms, and Ukraine will lose not just donors but international business as well” is a rough summary of the impression made by the night vote in the Verkhovna Rada on The Day’s respondents belonging to expert and business communities.
COMMENTARY
Nika CHITADZE, political scientist, Georgia:
“When Mikheil Saakashvili came to power, a French citizen of Georgian origin, Salome Zurabishvili, was appointed minister of foreign affairs. Besides, the US citizen Daniel Kunin held the office of the president’s national security advisor. There were also US professionals and advisors at Georgia’s defense ministry. As for the government members, they were mostly citizens of Georgia.
“As for Eka Zguladze, she was first deputy minister of the interior and then was the head of this ministry for a short time. She proved to be a good official. In 2006, the crime rate in Georgia was about 62,000 cases. This rate had fallen to 32,000 by 2011. Besides, civil control over the police became stricter, the law-enforcement system was computerized, and more than 60 police stations were opened in over 60 regions of Georgia.
“Now about Aleksandr Kvitashvili. Georgia has never placed him on the international most wanted list. The progressive-minded people should welcome the appointment of him as Ukraine’s minister of public health. I think he will be able to take part in reforming the health care system in Ukraine, taking into account his intellect, Western education, and personal qualities.
“He showed a good performance in Georgia. For example, about 40,000 people used insurance in 2006. When Kvitashvili worked in the ministry, this number grew fourfold. In addition, he carried our reforms in the Georgian social security system. Then Kvitashvili became rector of Tbilisi State University. He also proved to be a good functionary in this office. If some Georgians object to his appointment to this post, let them explain what legal infractions he committed in the past.
“Many Georgians welcome the decision to appoint him as minister in Ukraine. On the one hand, Georgia is losing an intellectual functionary. On the other, Mr. Kvitashvili can make a positive contribution to the development of the health care system in the friendly Ukraine.”
