Fraudulent Activities in Banking Sector Hamper Ukraine’s Cooperation with IMF

The International Monetary Fund (IMF) has provided Ukraine with a $700 million tranche, but the country’s banking sector continues to be plagued by scandals and fraudulent activities. The recent visit of the IMF mission to Ukraine was overshadowed by concerns over the adoption of a realistic state budget, continued banking reforms, and attempts to roll back the reforms within the National Bank of Ukraine (NBU).

A Troubled Banking Sector

Ukraine’s successful “bank failure” scheme in 2015-16, which aimed to consolidate the banking system and filter out fraudulent banks, has consolidated some oligarchic circles against cooperation with the IMF. The scheme led to the closure of several banks involved in illegal withdrawals of depositors’ funds and fraudulent activities.

Dubious Past of NBU Governor

The dubious past of NBU governor Kyrylo Shevchenko is an additional factor contributing to the IMF’s distrust of Ukraine. Investigations have revealed that he was directly involved in withdrawing depositors’ funds from TerraBank under a similar fraudulent scheme in 2011 and Ukrgazbank in 2014.

• The case of Ukrgazbank, which was chaired by Shevchenko at the time, is particularly disturbing.
  • The bank paid huge sums of money to outside intermediaries for allegedly bringing clients to the bank, despite there being no intermediaries in the chain between state-owned companies and the bank.
  • Many individuals who received money from the bank were small private entrepreneurs, pensioners, students, or low- income individuals with no relation to the banking sector.

Concerns Over Appointments

The IMF has also expressed concern over the appointment of persons whose reputation has been tarnished by participation in illegal schemes or unethical behavior to high positions in the banking sector or NBU. The recent attack on investigative journalists by Ihor Telbizov, head of Ukreximbank’s banking security department, has further eroded trust in Ukraine’s banking environment.

Close Relationships

The situation is made worse by the close relationships between President Volodymyr Zelenskyy and some bank officials, including Ukreximbank’s ex-director Yevhen Metzger. The active role that Ukreximbank has played in the President’s “Big Construction” road reconstruction program raises further questions over the credibility of Ukraine’s banking sector.

Conclusion

In conclusion, Ukraine must take immediate action to clean up its banking environment and ensure that only trustworthy individuals hold high positions in the banking sector or NBU. As long as Ukraine’s relations with the IMF and its banking sector are plagued by scandals and fraudulent activities, trust will continue to be put to the test.