Financial Institution Fraud Haunts UKRAINE’s Reforms
=====================================================
As International Monetary Fund (IMF) officials prepare for their latest visit to Ukraine, concerns over financial institution fraud and its impact on cooperation with the global lender have reached a boiling point.
The Ongoing Problem of Bank Failure Schemes
Ukraine’s successful “bank failure” scheme, which saw banks involved in fraudulent schemes shut down between 2015-16, has consolidated some oligarchic circles in their opposition to cooperating with the IMF. This scheme has raised concerns over Ukraine’s ability to clean up its banking environment.
The Dubious Past of National Bank of Ukraine Governor
National Bank of Ukraine (NBU) Governor Kyrylo Shevchenko, whose shady past and alleged involvement in fraudulent schemes have raised eyebrows. His involvement in the TerraBank scandal, where depositors’ funds were withdrawn under a fraudulent scheme in 2011, has raised questions about his suitability for the position.
Allegations of Corruption and Bribery
Investigations into Ukrgazbank, which Shevchenko chaired in 2014, have uncovered evidence of large-scale fraud. Furthermore, allegations of corruption and bribery within the NBU and Ukraine’s banking sector continue to plague efforts to reform the system.
The Case of TerraBank
The case of TerraBank, where Shevchenko was involved in withdrawing depositors’ funds under a fraudulent scheme in 2011, has raised questions about his suitability for the position. Similarly, investigations into Ukrgazbank, which he chaired in 2014, have uncovered evidence of large-scale fraud.
The Video Scandal
The recent video of Ihor Telbizov, head of Ukreximbank’s banking security department, showing him being given a standing ovation after attacking investigative journalists has sparked outrage and concerns over the lack of accountability in Ukraine’s banking environment.
Conclusion
In conclusion, the IMF’s distrust of Ukraine’s banking sector is understandable, given the numerous scandals and corruption allegations that have plagued the country. Until Ukraine can demonstrate its commitment to cleaning up its banking environment and holding accountable those responsible for financial institution fraud, trust between the country and international creditors will remain fragile at best.
Key Issues Facing the IMF
- Adoption of a realistic state budget
- Continued banking reforms
- Counteracting attempts to roll back said reforms within the NBU
Recommendations
- Ukraine must demonstrate its commitment to cleaning up its banking environment and holding accountable those responsible for financial institution fraud.
- The IMF should prioritize cooperation with Ukraine only when it has confidence in the country’s ability to reform its banking sector.