Problem of corruption overshadows Ukraine IMF aid bailout

‘Only about five per cent of [judges] are honest. That’s why no senior person has been prosecuted in the last five years. The few honest ones can be rehired’

President Poroshenko at the UN General Assembly in New York (Reuters)

“You can’t catch a big fish with a small, thin rod” responded Volodymyr Groysman, the prime minister of Ukraine, when asked why not a single “big fish” has been convicted in a country rated as the most corrupt in Europe.

Sergii Leshchenko, an MP in the party of Petro Poroshenko, Ukraine’s president, held that this was because the “President’s cronies” are deeply enmeshed in graft. “I think the main problem is the lack of political will to fight corruption among the Ukrainian leadership” he claimed.

President Poroshenko will be addressing the UN General Assembly this week; an address in which he will accuse Vladimir Putin of continuing to destabilise Ukraine, and complain about voting for Russia’s parliamentary elections being extended to “Kremlin-occupied” Crimea. President Poroshenko has not been personally accused of corruption, but the issue continues to hang over him and it is due to be a key topic of discussion when he meets Barack Obama in New York. US vice-president Joe Biden has, in the past, flown to Ukraine specifically to stress how corruption was eating into the country “like a cancer” and putting international support at risk.

Western diplomats are exasperated by the failure to combat the endemic problem which keeps Ukraine at the bottom of Transparency International’s corruption index for the continent. This, they point, is still the case two years after the overthrow of the Russian-backed president Viktor Yanukovych – a revolution which was supposed to herald in a dawn of democracy and accountability.

Now the IMF has decided to release another billion dollars in aid to Ukraine – money which has been frozen since February when the Kiev government was told it must carry out essential anti-corruption and economic reforms to receive the funding.

“The positive decision by the IMF is evidence that the world recognises that reforms are happening in Ukraine, that real and positive changes are happening in Ukraine, and that the country is moving in the right direction”, President Poroshenko declared.

But the executive board of the IMF has pointedly stated that Ukraine has failed to meet all the conditions it was supposed to have done. And, days after the money, part of a $17.5bn (£13.41bn) package over three years, was released the European Union announced that it will initiate a fresh programme to tackle corruption in the country.

Russia, which says it is owed $3bn by Ukraine, has opposed the IMF extension, with finance minister Anton Silunov charging that the decision “is clearly being taken in non-compliance with applicable rules”. Kiev has disputed the amount being demanded by Moscow; the matter will be decided in a court case in London next January.

The reform move by the European Union was announced by Danish foreign minister Kristian Jensen – whose country will run the programme – at the Yalta European Strategy (YES) Conference held in Kiev.

Mr Groysman and Mr Leshchenko had also used the conference to make their remarks about corruption and malpractice. When the audience, comprising of senior international and Ukrainian public figures, was asked how many of them believed that the government was carrying out a serious fight against corruption, only two out of the 200 present raised their hands in assent.

Mr Groysman is the second prime minister of Ukraine who has had to admit that no rich businessmen or oligarchs had faced prosecution since the fall of Mr Yanukovych. This echoed a similar admission last year from his predecessor, Arseniy Yarsenyuk.

Investigations against suspects who are influential either simply have not taken place, or have been dropped. Geoffrey Pyatt, until recently the American ambassador, publicly cited the example of the former Ukrainian ecology minister, Mykola Zlochevsky, who had assets of $23m seized in London last year. The office of the general prosecutor, Viktor Shokin, maintained that Mr Zlochevsky had no case to answer and returned the money to him.

President Poroshenko was forced to sack Mr Shukin under pressure from the European Union and the US seven months ago. Anders Aslund, an eminent Swedish economist who had played an important role in reforming a number of former Warsaw Pact economies, told the Conference that drastic measures were needed to deal with the deeply tainted judicial system.

“Do what was done in Germany and Georgia, sack all the judges, start with a clean slate” he said. “Only about five per cent of them are honest. That’s why no senior person has been prosecuted in the last five years. The few honest ones can be rehired.”

Mr Shukin was replaced as prosecutor general by Yuriy Lutsenko, who had been a political prisoner under President Yanukovych.

But Mr Lutsenko is himself now under fire from several quarters. Mustafa Nayeem, a young MP of Afghan descent who was one of the chief instigators of the Maidan protests, accused Mr Lutsenko of letting down the principles of the revolution and consorting with the same oligarchs and political strongmen who prospered by manipulating the system in the past.

“Mr Lutsenko is a hostage of the old elite, he needs to refresh his team, bring in a new, effective team”, said Mr Nayeem. “If you criticise the system now you are accused of being a populist, even of working for the Russians: that’s how they try to deflect blame”.

Mr Lutsenko insisted that changes were taking place, new people are being appointed who would “clear out the traitors and the briber, they will deal with corruption”. But, the general prosecutor wanted to add, “it is not the case that the reform programme is a battle between fluffy white angels and old ugly dinosaurs.”

Vitaly Kasko, a former deputy prosecutor general who now works for Transparency International, remained unconvinced. He said: “The prosecutor general’s office should be cleansed starting from the top. But they are not doing that. Instead, Lutsenko is saying there are no angels or demons in the prosecution service”.