Thursday, November 30, 2006

Comb-over Alex

The summit of the Commonwealth of Independent States (CIS), which took place in Minsk on November 28th was one of the best-attended of recent years.

Among those present were President Yushchenko, Uzbek President Islam Karimov, President Ilkham Aliyev of Azerbaijan, Russian President Vladimir Putin, and Moldovan President Vladimir Voronin.

The host for this event was, of course, President Alexander Lukashenko of Belarus with his exemplary comb-over hair cut - the give-away is the proximity of the parting-line to the ear, and the depth to which it extends around the back of the head. [see photo] I wonder if some kind of adhesive or fixative is used in its elaborate arrangement, in order to avoid possible embarrassment caused by unexpected gusts of wind etc.

Kremlin-controlled disinformation is now flowing at full output following former FSB agent Alexander Litvinenko's fatal poisoning caused by a radioactive isotope in London.

I recall a highly placed official of the Russian State Organic Chemistry Institute attributing, in the mass media, Yushchenko's poisoning to 'out-of-date' eau-de-cologne, after western scientists had declared the probable cause was a dioxin cocktail.

Tuesday, November 28, 2006

Holodomor law passed

Today Ukraine's parliament passed a law recognizing the 1932-1933 Holodomor [artifically created famine] as an act of genocide against the Ukrainian people - ['narod', rather than natsiya - 'nation']. Public denial of this dreadful event will be consided a violation of the memory of the millions of its victims, and has been declared illegal.

The voting figures were as follows: supporting the bill were BYuT - 118 deputies, NSNU - 79 deputies, Socialists - 30 deputies, 4 independent deputies, and Party of Regions 2 - deputies. 200 deputies did not cast a vote. Interestingly, the only two PoR deputies who supported the bill were two of Yanukovych's closest advisers: Hanna German, and Taras Chornovil who even said that he may quit PoR over this most emotive of issues.

In the event 233 deputies supported the bill - a minimum of 226 votes were required for it to be passed.

PoR had proposed the famine to be considered "an evil act of the repressive totalitarian Stalinist regime, directed at mass destruction of part of the Ukrainian and other peoples of the USSR resulting in the artificial Holodomor of 1932-1933"

I guess many Ukrainians will now feel a little better whenever the Holodomor is discussed. They have done the right thing.

As the figures were flashed up on the screen in the VR I'll bet a stab of anxiety when through some of the PoR deputies. There are other divisive votes looming soon, e.g. on the budget.

PoR's leadership in the VR must have had a good idea how the vote would go. They should have been a bit smarter and allowed their deputies to vote according to their individual consciences - this would have improved their standing amongst most Ukrainians.

Some O.P.'s

More than half of Ukraine's adult population [52%] want the country to adopt a neutral non aligned status, according to a recent opinion poll.

65% have a negative or very negative attitude towards NATO, and only 23% support Ukraine's entry in NATO.

56% consider Ukaine joining NATO would significantly increase state budget expenditures on defence; and nearly one half [44.8%] of those questioned consider joining NATO would lead to a collapse of the military-industrial complex.

In another significant O.P. 56% of respondents drawn from all regions of Ukraine supported a motion for 1932-1933 Holodomor [great famine] to be legally recognized as an act of genocide.

22% felt that it was not necessary for the Holodomor to be considered an act of genocide.

Saturday, November 25, 2006

Echoes of 'The Great Terror'

Amidst all of the writing on the dreadful murder of Alexander Livinenko, one piece, from today's 'Ukrainska Pravda' written by a friend of his, caught my eye.

I've translated a bit:

"All of the might of the KGB, and now the FSB, is held together by total fear - of control, of the system. So throughout the whole period of existence of the Soviet authorities only one thing was said about the KGB: "They know [what's happening] everywhere - [they'll get you] from under the ground, if this becomes necessary."

And in order for those who sit in the building in Lyubyanka to hold people in a state of terror it is necessary to confirm everyday the certainty of the irreversibility of punishment for deviation, and for overcoming fear of the system.

A person such as Alexander Litvinenko, who knew the system from the inside and who did not stop fighting it for a minute, could not be an exception for them. For the Kremlin it wasn't Litvinenko that was dangerous. The danger was the precedent of his impunity.

It was necessary to destroy him as a lesson and a warning for those who may try some contortions ['tricks'] before the next presidential elections."

A significant portion of the last century's history of Russia and the Soviet Union was called "The Great Terror" - the instrument for application of this terror was the NKVD and KGB. Their successor is the FSB.

By coincidence the following piece [which I've also translated below] appears in today's "Donbass" newspaper. It helps explain why 'Ukraine is not Russia' - and how Ukrainians are coming to terms with their past, even in what some observers simplistically call the 'pro-Russian' eastern regions.

Candles lit up

Yesterday, hundred of people gathered in the Rutchenkovskoye Field, at a memorial service dedicated to the 'Victims of Political Repression and Holodomor'. This city outskirt hid ominous secrets for decades. In the thirties and forties of the last century thousands of "enemies of people" were shot here and dumped into a ditch. Only at the end of the eighties were their remains reinterred.

Relatives of the victims of political repressions, witnesses of the Holodomor [famine], members of political parties and public organizations, and students from the schools of the Kirov region came with the flowers and candles. The oblast governor Vladimir Logvinenko, and city mayor Aleksandr Lukyanchenko both addressed the meeting. Then after a requiem mass, flowers and lighted candles were placed at the foot of the monument.

Aleksandr Bukalov, the head of the civic organization "Donets Memorial" stated that there had been over fifty thousand victims of political repressions in the Donets region. He said that two 'books of memory' had been published in which it is possible to find lists of victims; and that work on the books continues.

To the question, "Was Holodomor of the thirties a planned genocide of the Ukrainian people?", he answered: "I think it is erroneous to speak about national aims. There was another purpose - to destroy a portion of the population and to hold people in fear in order to remain in the authority ."

During the same day meetings and the placing of flowers took place at the memorial plaque in honor of the victims of political repression in the Ukraine on the building of the Donetsk State Music Academy im. S.S.Prokof'eva' and at the memorial in honor of the Ukrainian poet Vasil Stus.

Friday, November 24, 2006

'Old habits die hard'

Fine review, entitled 'Old Habits Die Hard', of Andrew Wilson's unrivalled "Ukraine's Orange Revolution", Yale University Press, on the TOL website here.

Might be worth reading before it goes to 'subscribers only'

Thursday, November 23, 2006

'Bandits to jail' - 0/10

One of the demands of the Orange Revolution, which began exactly two years ago today, was 'Bandits to Jail!' For these demands to be met, reliable and uncorruptible law enforcement agencies and prosecutors would have to be in appointed. Sadly, this has just not happened.

Today's 'Ostrov' site runs a detailed piece on Renat Kuzmin, who on 5th September was appointed deputy Prosecutor-General. It reveals how little, if any, progress has been made - to use an old cliche, he seems to be as suitable for this position as King Herrod was for running a children's hospital.

Since being appointed, he has been the public driving force behind corruption charges that have been levelled, primarily for political reasons, against Minister of Internal Affairs Yuriy Lutsenko. [More on this here]. Volodymyr Shcherban has returned from a Miami prison cell to Ukraine and is now doing the rounds of TV stations and media interviews.

But more sinister, Kuzmin was behind the recent release, after the briefest of detentions, of Alexander Melnyk, a Crimean parliament deputy and alleged big-time 'kriminalnyi avtorytet' who has repeatedly been accused of leading the most powerful organized crime syndicate in Crimea - the "Salem" gang. According to Interior Minister Lutsenko, they are responsible for more than 50 murders, including those of policemen.

Melnyk had been apprehended by law enforcement officials and brought to Kyiv, but despite a large amount of evidence presented, the new deputy P-G failed to put the case before a court of law, and Melnyk was released.

Some Ukrainian journalists call Kuzmin 'Akhmetov's man in the P-G's Office'.

Melnyk has long been considered the "king of Donbass's overseer" in the Crimean Autonomous Republic.

A dubious parliamentary commission has been set up to investigate corruption in the Min. of Internal Affairs, led by Voldymyr Sivkovych - who lead a similar commission investigating Yushchenko's poisoning two years ago. [Their conclusion - Yush was suffering from herpes..]

An article in today's 'Grani Plyus' entitled, 'Two Prosecutors', concludes: "In our country we have two prosecutor's offices working in parallel. One actively interacts with the Ministry of Int. Affairs and investigates serious crimes, including those within the law-enforcement agencies themselves. While the other ignores the results of the work of its own lower tiers, and institutes proceedings on political orders."

The bandits can sleep easy.

ps Male life expectancy in Donbass is now an appallingly low 56,3 years, I thought that fighting corruption was problem #1 for Ukraine, I'm not so sure now. Maintaining the health and effective working lifespan of the workforce must be at least as important.

Wednesday, November 22, 2006

Oranges still divided

Several thousand invalid miners are planning to demonstrate on 28th November outside parliament to protest against cuts to their benefits which are being proposed in the 2007 budget: its second reading is to take place on that day. They intend to remain there until their demands are met, and the miners claim the proposed budget violates their constitutional rights.

More opinion polls show that for Ukrainians, paying the big increases in housing and utility charges will present major problems. One poll indicates well over 80% say they cannot pay the increases.

Other O.P.s show PoR's rating down to 27.6%, from a high of 37.5% last August. BYuT are at 16.7%, and NSNU are at 10.4%.

At the same time, the likelyhood of a reshuffle amongst the ranks of BYuT and NSNU, and a possibility of the the lesser orange parties who did not join NSNU for the March 2006 parliamentary elections joining forces with BYuT, is increasing.

This speculation from 'Dyelovaya Stolitsa':

"However, an analogous situation exists in BYuT as that in NSNU with the 'lyubi druzyi', i.e. former 'Kuchmistas' versus 'heroes of the Maidan'. Yuliya T has managed to balance her businessmen and 'clean politicians', but how for long can she go on doing so is anyone's guess.. In reality Yuliya Tymoshenko has little control over her regional cells and fractions in the local government organs, where internal squabbling frequently takes place.

Then there are external factors which could threaten the present leading position BYuT in the opposition. In the Spring a force could appear that would squeeze BYUT in the oppositional niche.

The consequence of the President distancing himself from NSNU could be the creation of new pro-president force, possibly, not so much party, as a civic movement. The potential leaders of such a grouping could include one of President Viktor Yushchenko’s political advisers, Taras Stetskiv, Minister of Internal Affairs Yuriy Lutsenko, Arseniy Yatsenyuk, or Vyacheslav Kirilenko. They could possibly be more attractive to the minor orange parties NRU, UNP and PRP, as well as some NSNU members, than BYuT."

PoR can remain reasonably relaxed - the 'oranges' are far from resembling a co-ordinated opposition.

Monday, November 20, 2006


The image of former FSB officer and defector Alexander Litvinenko lying greviously ill in a London hospital bed, and the speculation about who may have arranged his shocking poisoning, reminded me of a chorus of the frequently sung and heard old 'Гимн партии большевиков' - 'Anthem of the Bolshevik Party'

Изменников подлых гнилую породу
Ты грозно сметаешь с пути своего.
Ты гордость народа, ты мудрость народа,
Ты сердце народа и совесть его.

"The rotten breed of contemptible traitors
You ferociously sweep from your path
You are the pride of the nation, the wisdom of the nation,
the heart of the nation and its conscience"

Sunday, November 19, 2006

Litvinenko story last..

Today's papers have all printed articles about the recent poisoning in London of former FSB officer and defector Alexander Litvinenko. The story is not new - 'Kommersant' and others have been running it since last Monday. So why the delay?

Even without full identification of the poison used, the story should have been run in the media much earlier, particularly as Litvinenko had recently received full British citizenship. Realpolitik? Pressure from UK gov?

Ukraine & WTO

An excellent concise piece from the 'Oxford Business Group' on Ukraine's entry into the WTO here

A portion:

Both President Viktor Yushchenko and Prime Minister Viktor Yanukovych have stated that they consider the bills will pass and that this last hurdle to entry will be overcome. When it comes to predicting when entry might occur, however, they are less of the same mind. The endorsement on November 15 by President Bush of Russian entry to the WTO has once again raised the spectre of a possible synchronised entry of the two countries.

Many observers believe that Russia has a number of objections to the possibility of Ukraine joining the WTO first. Primary among these concerns is the influence that Ukraine may have on determining the terms of entry for Russia. Ksenia Lyapina, the chair of the subcommittee of the Supreme Rada for regulatory policy and entrepreneurship, which works on the issue of entry noted, "If Ukraine joins the WTO earlier than Russia it will be able to get in the working group for Russia's joining the WTO and articulate relevant requirements toward its northern neighbour, which is not at all liked by Russia."

The issue is also a matter of prestige for Russia, which would prefer to lead rather than follow the former satellite into the WTO. Entry to the WTO would reduce the leverage Russia has over Ukraine. Ukraine may need to sign a joint agreement with Russia stipulating that it will not attach additional preconditions to a Russian entry in order to drive the talks forward. Many observers expect that membership of the WTO for both countries would put an end to frequent trade wars between them, for example the banning by Russia of meat and dairy imports from Ukraine.

In an article in the local press on November 9, Andriy Honcharuk, an advisor to Yanukovych, predicted that Ukraine could expect to see up to a 10% increase in GDP when it joins the WTO. He believes that the metallurgical industries will see immediate benefits, with a predicted 22% increase in industrial output in the long-term period after becoming a signatory, with similar growth anticipated for the chemicals industry.

Saturday, November 18, 2006

Good guys losing..

The ex-governor of Sumy, Volodymyr Shcherban, says he is not seeking revenge against Minister of Internal Affairs, Yuriy Lutsenko. "To take revenge would below my level of dignity," said Shcherban in a recent TV interview.

This is the same man who addressed a meeting of regional state administration heads and leaders of agricultural enterprises as follows: "In earlier times ideology amongst the population was spread with the help of hangings, firing squads, and collectivizations. Today this does not happen. But don't risk it today, don't raise your heads, so that we don't chop them off on 1st November. Or we will chop off not only your heads, but also your male members." He was talking of the imminent presidential elections in 1999. Needless to say, the oblast produced the required vote and result for Kuchma.

Pressure is now building on Lutsenko, who was grilled by the Prosecutor General's office and by a parliamentary committee on corruption and organized crime recently.

Lutsenko had been appointed Internal Affairs minister after the Orange Revolution, but suprisingly kept his job in the cabinet after the March 2006 VR elections.

Documents have now been presented by the Prosecutor-General's office to a court alleging corruption by the minister in the case of murdered senior organized crime investigator Roman Yerokhin, about whom I have posted previously

Volodymyr Stepanovych [if you can't beat 'em, join 'em] Malyshev, a PoR deputy and chief security director of Akmetov's S.C.M. corporation, but formerly head of the Donetsk oblast militia, is being pencilled in for the Internal Affairs Minister's job already. His record in solving crime in Donbas has been 'uninspiring', in other words, the ideal man for this lofty position.

Ironically the murdered Roman Yerokhin was himself considered to be a 'Malyshev man'...small world..

Lutsenko's dogged but fruitless attempts to 'nail' Shcherban have been hampered by Prosecutor General Medvedko.

And as I posted a while ago: [the late] Yerokhin's colleagues have no confidence either that the Prosecutor General, Oleksandr Medvedko, who has taken over investigations from the Ministry of Internal Affairs, will solve the case. Medvedko, a Yushchenko appointee, has dubious track record as a former Donetsk prosecutor, which only confirms their fears.

"Everybody Knows" by LEONARD COHEN

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling Like their father or their dog just died

Friday, November 17, 2006

Shcherban and the 'Regiony'

I've posted previously about the recent return to Ukraine of disgraced former governor of the Sumy oblast, Volodymyr Shcherban, and how $2m of SCM's money helped bail him out of a Florida jail.

Others excellent analysts have also provided comments on this affair.

An article in this week's 'Bez Tsenzury' publication sheds light on Shcherban's earlier career in Donbas, on his links with Rinat Akhmetov, Yukhim Zvyahilskiy, the late Akhat Bragin and Yevhen Shcherban, and on the tensions and fissures in what is commonly called 'the Dontesk clan'.

I've loosely translated some bits below:

"The initial march of Volodymyr Petrovych Shcherban into politics and power took place during the first murky years of the formation of the Ukrainian state and the capitalization of the economy.

When Yevhen and Volodymyr Shcherban (distant family namesakes) arrived in 1994 into the country's parliament, the older residents of the VR named them "meat-hackers". Volodymyr Petrovych still resents this, declaring that he has never stood behind a counter with knife in hand. The two influential Donechchany hammered together their initial capital in merciless conditions. They avoided being linked to any serious criminal cases although Volodymyr Shcherban was allegedly involved in some relatively minor commercial machinations. There was a scarcity of many products and basic commodities at that time and Shcherban, being by the director of large stores and warehouses, was involved with their deliveries and distribution - including to the tables of influencial party bosses.

The omnipotent Yukhym Zvyagilskiy helped Shcherban to avoid 'both prison, and ruin" in those years. But after becoming mayor of Donetsk he rapidly found common language with Akhat Bragin, Rinat Akhmetov and Yevhen Shcherban, who all rose to the top by natural selection during this epoch of racketeering. They dispatched a team to parliamentary and local elections of 1994 using new 'PolitTekhnologiya'. Bribery of electorate was achieved with the aid of mass distribution of vodka, sausage, macaroni etc. The former PartNomenklatura was shocked when the results of voting were revealed, and the era of "red directors" came to an end. The concepts of "authority" and "business", became unseparable.

Shcherban's trade mark "Dyelo Vsyekh" became a monopolist supplier for products in Donetsk region. Yevhen Shcherban successfully developed its business in the agrarian sector and in the market for coal and metal. Bragin also switched to these fields of operation after his racketeering past. Their political "roof" was provided by the Liberal Party of the Ukraine. After the flight abroad of its chairman Igor Markulov, Volodymyr Shcherban took over this position.

This "Big Three" (Akhmetov was still in the shadow of Bragin) during that year successfully switched their activities to gain control of the majority of the industrial enterprises of Donbass. Having gained such a powerful a base, Donetsk, by the end of 1995 was no longer hiding its presidential ambitions. "Whether anyone wants or not, Volodymyr Shcherban will become the President of the Ukraine," declared Yevhen Shcherban. However Bragin several times carelessly publicly insulted Kuchma by calling him a nominal President only, and said the true masters of the country are "Donetski". Special services twice took him in handcuffs to the capital for "prophylactic discussions".

From the beginning of 1996 the Shcherbans, shaping up for the forthcoming presidential battle, established contacts with a number of influential politicians, including the then prime minister Yevhen Marchuk. Volodymyr Petrovych did not hide his personal ambitions. In an interview in "Dzerkalo Tyzhnya" he promised that the next president of the country would be from Donbas. In order to achieve his ends, Shcherban was prepared to use the miners as weapon. He practically led the so-called miners' strike committee and, according to Pavlo Lazarenko, he was preparing to execute a coup d'etat with the aid of the miners.

For some this was all too much. An answer followed without delay. In October 1995, at the Shaktar stadium, Brakin was blown up and killed during a football match. At the beginning 1996 several prominent Donetsk businessmen were also killed in just a few months. In July the same year Volodymyr Shcherban was removed from his governor's post by President's Kuchma's decree; and that autum Yevhen Shcherban and his wife were shot dead at Donetsk airport.

Who " moistened" the "Donetski" is unclear even now. On one version indicates that Russian oligarchs may have been involved because they were being 'shut out' of Donetsk; another version implicates Kyiv special services - attempting to restore control to this, the most important region of the country. Finally, according to the Prosecutor General's office, the murders were ordered by former premier Pavlo Lazarenko, who was attempting to clear the Donbas of rivals to his Dnipropetrovsk corporation "United Energy Systems of Ukraine" [EESU]. It was Lazarenko that insisted Kuchma sign an edict to sack Shcherban from the governorial post. [I recall there were rumors also that Shcherban had previously ordered 'a hit' to be made on Lazarenko, something Shcherban denied on his recent return to Ukraine..LEvko]

There is also speculation that the murders were the consequence of vendettas between the leading 'Donechchany' (this is a theory held by the deceased ex- minister of internal affairs Yuriy Kravchenko).

The march of the "Donetski," and of their leader Volodymyr Shcherban into 'big politics', was stopped in its tracks and he then left the country for the first time for a prolonged stay in the USA. However, the unity of political power and capital took even stronger root.

Rinat Akhmetov inherited Bragin's business empire, including the Shakhtar soccer club. Together with Vitaliy Hayduk and Sergiy Taruta they strengthened the business positions of their newly-created "Industrial Union of Donbass" corporation. They successfully lobbied for Viktor Yanukovych to be appointed Donetsk oblast governor. Together they did everything possible not only to weaken the financial influence of Shcherban in the region, but also to practically destroy his businesses.

So perhaps the two million dollars bail money paid by Akhmetov, which guaranteed the release of Shcherban from an American prison, can be considered as a 'pay-off' for his demolished businesses in Donbas. But, most likely, this sum is a simple 'advance' paid for future collaboration, and he is certainly not just to be "an assistant to people's deputy Akhmetov", as Akhmetov ironically stated.

"Volodymyr Petrovich Shcherban has colossal experience,and reputation,and if he will be required in politics, then this depends on the people who he invites," said Akhmetov. So it is becoming understood that the alighty oligarch sees the refugee in politics again, for example in the role of party leader. According to information provided by some 'Regionaly' themselves, interrelations betweem party money bag Akmetov, and premier Yanukovych are not altogether smooth. Reliable sources repeatedly report to Akhmetov that Yanukovich is acting behind-the-scenes to form his own sphere of influence both inside the party and in the parliamentary fraction. Volodymyr Shcherban could become another center of influence in the "Regional" medium.

Shcherban would act as a guard dog for Akhmetov, particularly as Yanukovych and Shcherban do not have a good mutual relationship because Victor Fedorovych used administrative resources to the liquidate the Donetsk businesses of Volodymyr Petrovych after his predecessor as governor fell into disgrace.

Many influential 'Regionaly' are dipleased by the triumphal return of the "prodigal son". It is possible that an attempt may be made to appoint Shcherban a governor again. A second term of governorship in the Donetsk oblast could become compromise. Rumors such as these are already covering some local businessmen with a cold sweat."

The author ends his piece by suggesting that Akhmetov is a smart businessman, and that the $2m investment may provide a good return.

Today's 'Bez Tsensury' publication also provides detailed information of Shcherban's disgraceful activities and extortion of local businesses in Sumy while he was governor there, and helps explain why many Ukrainians are so fearful of the rapacious 'Donchany'.
The way the ruling authorities deal with the Ukrainian Shcherban in the weeks and months to come will provide good indication as to how they intend to govern the country. Allowing him to return with impunity is not a good start..

Wednesday, November 15, 2006

Wild east - and west..

It is often assumed that it is only in eastern Ukraine where gangsters and mafias reside and where businessmen are murdered in criminal vendettas, but this is not entirely true. Such terrible events also occur elsewhere in Ukraine.

There has been a spate of assassinations of prominent businessmen in Lviv this year - the latest taking place yesterday, when Bohdan Datsko [see photo] was shot dead on his way to work in his Mercedes.

Datsko was the owner and general director of a large company that manufactures Christmas decorations, a big player in the European market. A bar owned by Datsko's wife had been torched last winter.

Last month, on 26th October, an attempt was made on the life of Roman Fedyshyn, owner of the Shuvar market in Lviv. He survived, but an innocent 14 year old schoolgirl was killed when Fedyshyn's car was blown up.

On 30th December 2005 the chairman of the Lviv city council transport and communication administration died as a result of burns received when his car was set alight by unkown assailants.

On 29th September 2005 the head of the Lviv-based Ekolan corporation was killed by a burst of automatic fire from a 'Kalash'.

Six other prominent businessmen have also been murdered in Lviv since the turn of the millenium. None of these crimes have been solved.

Tuesday, November 14, 2006

"Donbass" on gas

Even Ukrainians in the eastern part of the country, which some observers simplistically consider 'pro-Russian', are disturbed by the means gas is procured for Ukraine's consumers. The popular "Donbass" daily runs a story today entitled:

"From hand to hand"

.. it constantly seems that any minute now the system of corruption and opaque state/commercial actions, by means of which someone can acquire billions, will collapse... This edifice of murky affairs started wobbling as early as 1985 - and is still crumbling.

Authority changes, from criminal to [supposedly] one of the people, but the schemes of enrichment remain, because no one destroys them, [on the contrary,] the mechanisms are transferred carefully from hand to hand.

....we thought that after the [March 2006] elections - gas businessmen would be banished in disgrace.. the new authorities would expose the [fraudulent] schemes, and state structures would take over [responsibility] for deliveries of gas into Ukraine, so earning money for the state, and not for the benefit of some unknown budget. But hopes were dashed. No one hurried to return the 'hen which lays gold eggs' to the people. Instead it was handed over with great care to the hands of the [election] winners. RosUkrEnergo" lives and flourishes.

What do the gas magnates hide from the people?

The bill proposed to the VR by Yuliya Tymoshenko on the formation of a temporary investigation commission to investigate the illegal activity of mediators in the Ukrainian gas market and the participation and abuse of power of high ranking officials in this sphere, (N2430) has been ditched because it allegedly does comply with VR regulations... it is only possible to fight with the incomprehensible goings-on in gas dealings when one is in opposition. [We are talking here] according to different unofficial estimates, of tens of millions of dollars a day. Or three and one-half billions of dollars per year.

Change of guard without change of direction.

So someone who is incomprehensible and very serious governs the sole supplier of gas into the Ukraine..with the full blessing of authorities. But as always - the main prize comes last. The most valuable asset in our country is its gas transport system. When Yuriy Boyko was in opposition he exposed Aleksey Ivchenko for the fact that under the management of this main nationalist of the Ukraine "Naftogaz" was accumulating debts just as dog gathers fleas. These criticisms were fair. Now Ivchenko is in parliament, and Boyko himself has taken "Naftogaz" under his wing.

It seemed things would be sorted out, debts repaid, and the schemes set up by predecessors cleaned up, and then everything will be beautifully and it is stable. It didn't happen. [Even] with a change of captain, the ship continues on the same course.

"Naftogaz Ukrainy" intends to draw credit of $550m. for five years in the Credit Suisse International bank, in two tranches, including the first - $350 million - before the end of the year.

Even in June 2006 the management of "Naftogaz" stated that it plans to draw credit for the purchase of gas for the underground depositories. In July "RosUkrEnergo" and JV "UkrGazEnergo" stated that they intended to pump 10.2 billion cubometers of gas for its own needs prior to the start of the heating season 2006-2007. Also part of the proposed credit had to go to the repay $320 million of debts of the state company to "RosUkrEnergo" and "Ukrgazenergo". So most of the first bank tranche will go to pay off debts to "RosUkrEnergo".

Interestingly - in spite of the colossal debts of "NaftoGaz", "RosUkEnergo" (50% of whose shares belong to Gazprom) continues to pump into gas into the Ukrainian depositories for its own purposes. This could be considered as the noble gesture if we believed in the decency of large and important companies. But we are not so naive. And we know that if people do not hurry to get large sums of money back, it means, in the course of time they want to obtain even larger sums. But if they do not hurry even with very large sums? Well, probably, after a time they'll want to seize everything. Don't forget that the debt of Ukraine becomes increasingly greater with each cubic meter of gas consumed.

If the government does not pay soon, according to calculations, then in the course of time the gas transport system of Ukraine will become the subject of haggling between the creditors, in the first place, "Naftogaz". On 18th September "BYuTovets" Nikolai Sivul'skiy declared, "In one of the agreements between the State company and a London company, which during June provided Naftogaz 200 million dollar's worth of credit, it is stated in clear text that the guarantee property, which ensures the recovery of loan, is the gas transport system of the Ukraine".

If we observe the [developing] spectacle then it would be foolish not to be surprised at the actions of of parliamentary leaders, who are clearly preventing an investigation being conducted into the gas system. Serious people divide serious money. But the people, whose labor created everything in this country are passed by with the cash box, just as with previous authorities.

Meanwhile, the lead story in today's 'FT' includes this:

A confidential study by Nato’s economics committee, said Russia was seeking to use energy policy to pursue political ends, particularly in dealings with neighbours such as Georgia and Ukraine.

Monday, November 13, 2006

Trouble on tariffs

In an opinion poll carried out in Kyiv last week, 77% of respondents considered the increases in housing and communal services tariffs were unjustified: 45% said they cannot pay the new tariffs, and 44% said they could, but that it would be difficult.

Details of a similar poll taken in Donetsk are described in an article entitled, 'To pay or not to pay, this is the question..' in today's 'Donbass' newspaper.

In their poll, 40% of those in employment said they would not pay, against 54% who said they would.

47% of pensioners said they would not pay and and equal portion, 47%, said they would.

Three quarters of the respondents who are intending not to pay explained that this was because they just don't have the money in their family budget to do this.

My bet is that this is a far greater worry for most families that questions about NATO, special status for the Russian language, possible entry into the EU, squabbles in the VR, and so on.

Showdown over Tarasyuk?

Yanukovych declared on Saturday that he is going to turn to the President and Parliament with an initiative to sack Minister of Foreign Affairs, Presidential appointee, Borys Tarasyuk.

"What can my attitude be to a minister who states that he is in opposition to the government? This means he does not agree with the program of the government. If you are a man, if you have principles, write a [resignation] declaration, and go. And if not, if you don't want to do this, then of course, we'll help you," said the PM in a TV interview.

Yanuk was particularly pi$$ed that Secretary General of the Council of Europe, Terry Davis, did not see him, as planned when he was in Kyiv several days ago. Apparently Davis was 'held up' at a lunch with Tarasyuk.

Davis had been particularly critical of the way the first two rounds of the 2004 Presidential elections were conducted and so is well aware of the hanky-panky that went on at that time.

A few weeks ago it was reported in the Ukrainian media that during a cabinet meeting, Yanuk broke off when addressing the cabinet, to warn Tarasyuk for 'snickering'. Rumor has it that when Yanuk was last PM, such matters were, on occasion, resolved with fists.

I think Tarasyuk is a cool operator who knows exactly what he is doing - for Yushchenko to 'give him up' and accept a PoR candidate for this position would be a big humiliation. But it is also clear that 'playground bully' Yanuk is sick of brainy teacher's pet Borys.

Saturday, November 11, 2006

Improving people's lives..

Donetsk city council held an unusual and important meeting today during which deputies voted to double housing charges in one stroke. A council commission had proposed a threefold increase, but the mayor of Donetsk, Aleksandr Lukyanchenko, held out for a less punitive increase.

During the session deputies could not agree on the increases in tariffs, and the speaker called for a break during which 'Regionaly' held a meeting on their own. Eventually, Lukyanchenko's proposal to 'only' double tariffs was upheld by 50 deputies, 4 voted against, 2 abstained, and 6 did not vote. Out of a total of 81 deputies, only 61 turned up on the day. The city council comprises two fractions - PoR with 68 deputies, and 13 'Vitrenkovtsy'. Motions are normally carried with boring regularity almost unanimously, just as in 'the good old days'.

This is the second time this autumn that communal tariffs have been increased. From 1st October bus fares increased by one and a half times in Donetsk, and on the 4th October 'GorElektroTransport' also went up. Heating and hot water charges have almost doubled too. The leader of urban opposition, the chairman of the civic organization "Gromads'ka Rada" Aleksandr Kolchak, made several statements to representatives of the media about the local authority's extortion of the city's inhabitants.

"When the local authority is converted from the defenders of people and social partners to prison guards and tax collectors - they becomes a general evil, so it is completely possible that in the very near future, inhabitants themselves will terminate the authority of those whom they elected by mistake in 2006," said Kolchak.

Commenting to novosti journalists, the secretary of city council Nikolai Levchenko stated that, "Today any opposition between the council deputies arose around just small dispute, we had a discussion," and when asked about the legality of voting on the motion which took place three times, he claimed 'the reglament' had not been breached.

Representatives of the Nataliya Vitrenko bloc severely criticized the decision of their associates, and declared they will refer the matter to the procurator and a court of law in order to cancel today's decision. There had even been rumour that the "vitrenkovtsy" would block the speaker's platform preventing any vote taking place.

PoR's website announces to visitors today that 'In three months of work, the Min. of Finance has corrected the negative situation with the execution of the 2006 budget, which occurred during the first half of the current year.. The article is accompanied with this graph - maybe inappropriate in the light of the huge increases in housing and utility charges facing the citizens of most Ukrainian cities ..

ps some interesting photos on the novosti.dn link

Thursday, November 09, 2006


Curious article in today's 'Donbass' newspaper entitled:

"Is a revolution being preparing in Donetsk?"

The leader of the Committee of Voters of Donbass [K.I.D. - website here ], Aleksandr Khryakov, told journalists that he considers that, "An Orange Revolution #2," is being prepared in Donetsk.

He says he has information that western funds are financing numerous public organizations of a nationalist character, which are now very active in Donbas, adding there are precisely 270 of them. According to Khryakov, this process is proceeding with the support of the Donetsk city council, and also with the support of the city's Head Administration for Community Links, Maxim Rovinskiy.

"The nationalistic forces, beginning with the World Forum of Ukrainians, and also from the diaspora, will soon start an investment project to introduce into the economic field of the Ukraine a network of the public organizations, directed primarily for the purpose of "splitting the the electoral field of Donbass," asserts the KID leader. The headquarters of these organizations, in the opinion of Khryakov, are in Brussels, Warsaw, L'viv, Kyiv and Donetsk. These organizations will now conduct a "brutal battle for the power" in Ukraine.

He mentions" numerous flows of money, into Donets region, directed toward work with the young people, seminars in forests etc.

When 'Donbass' correspondents asked Maxim Rovinskiy to comment on Kryakov's statements, he replied: "This charge would even be flattering to me if it was made by someone other than Kryakov."

The Donetsk mayor Aleksandr Luk'yanchenko called these charges fantasies. "Probably, such fantasies came to mind to Mr. Khryakov on the second anniversary of the Orange Revolution," he said.

OK, not much of a story, but if but if protests against swingeing increases in housing and utility charges occur, then we know who will be blamed.

The Novosti.dn website posts a riposte from Denis Tkachenko - founder of the ngo.donetsk site [Maybe there's something in it after all..]

"If a baboon has a red 'zadnitsa', this does not necessarily mean, that it is in a revolutionary frame of mind."- V. Shenderovich

Also worthy of attention is a brief interview in 'Expres'with Hennadiy Udovenko - senior Ukrainian diplomat even in the days of the Soviet Union, a former Ukrainian foreign minister and UN ambassador, and now an NSNU VR deputy, who says,

"Russian capital will pulverise the 'Donetski'"

"Russian capital today has very powerful forces in Ukraine. The Yanukovych government is creating advnatageous conditions for a massive offensive of this capital in Ukraine.
Having gained control in Ukraine, Russian capital will destroy both Ukrainian oligarchs, and those who aspire to them. This powerful force will not indulge any opposition.
It is very strange that the ruling circles in power are striving as quickly as possible to enter the Single Economic Space. Donetsk capital has certain positions in Ukraine, but Russian capital is already stepping on its heels. Anti-Ukrainians and anti-state forces are activating their actions, taking advantage of their influence in parliament, and exploiting anti-Nato, and pro-Russian attitudes in the government.

What surprises me is the short-sightedness of the 'Regiony': if tomorrow Russian capital comes into Ukraine, they'll be pulverised! They don't realise that it is the independence of Ukraine has secured their businesses, and that they should continue on this independent path...Taking into account the substance of Russian capital and its endeavour to become the ruling power in Ukraine, the authorities should give this matter serious thought before giving this capital the 'green light'.

Wednesday, November 08, 2006

Winter of discontent..again?

This winter Ukrainians are being hit with massive price increases - a doubling and more of their housing-communal-services tariffs and utility charges.

I've posted blogs about rumblings of discontent, particularly in the eastern parts of the country previously. Today 'Oglyadach' publishes results of a recent opinion poll in which repondents were questioned on these matters.

72% thought that there was no justification for the increases.
31.3% said they would refuse to pay the increased tariffs,
and 48.5% thought it was the government that was to blame for the increases.

Surprisingly only 14.4% considered that no one was responsible, and that the tariffs had increased because of increase in the price of Russian gas.

The author ends his article rather ominously: "So with the first cold spells of November and December we should expect serious mass actions. The experience of Orange revolution shows that the snows of revolution are not an obstacle.."

Today the President's Secretariat issued a detailed statement: "The President's Secretariat calls on the Government and VR to take into account the Head of State's comments on the Projected 2007 Budget," which enumerates the many parts of the budget with which he is not happy.

This may well develop into a deeper conflict between the Pres and Gov - the Pres could refuse to sign-off the budget, gaining some 'brownie points' from the electorate.

The 'Novosti.dn' website has published a list of the most valuable Ukrainian corporations:

1. Naftohaz Ukrainy [state-owned oil and gas co.] $10.9Bn
2. Metinvest Holding [SCM] $18.14Bn
3.UkrZaliznytsya [State Railroad] $12.53Bn
4.Industrial Union of Donbas $10.22Bn
5. NAEK Energoatom[State Atomic Energy Company] $7.18Bn
6.TNK-BP [Alfa-Group] $7.07Bn [incl.Russian Mikhail Fridman]
7.MMK im.Il'ich [Mariupol worker's collective] $7.00Bn
8.DTEK - Donbas Fuel and Energy Company [SCM] $5.8Bn
9.Interpipe [Pinchuk] $5.7Bn
10.Zaporizhstal $5.18Bn [Interesting link here]
12. Mittal Steel Ukraina $5.09Bn
and so on.

Predominantly in eastern part of the country..

Old pals together again..

Volodymyr Shcherban, 55, a former governor of Sumy Oblast, was deported from the United States to Ukraine on 4th November. Ukrainian prosecutors had issued an international arrest warrant for Shcherban in 2005, charging him with vote fraud during the 2004 Presidential election, extortion, and abuse of office. Scherban was detained in Florida in October 2005 on charges of being in the United States illegally. He was not taken into custody after returning to Kyiv, but released because several influential deputies from the ruling coalition signed a pledge that he would voluntarily appear for interrogation whenever prosecutors summon him.

In 2004 Shcherban gave Sumy students a particularly hard time . Their desperate but dignified appeals, some in rudimentary English, posted on the internet were really quite moving.

More on Shcherban's background here.

I've translated portions of an hubristic interview [one of several] he gave in today's 'Obozrevatel', entitled: 'Akhmetov put up bail for me.' He makes a few 'Freudian slips'.

In the interview he says that in order to leave the US, a bail of $2M had to paid, and admits Akhetov's System Capital Management [SCM] put up the cash. [Even though they had previously denied this.]

When asked if he requested Akhmetov to help him out, he replies, "You have to ask him," and claims that had SCM not put up the money, then Industrial Union of Donbas [IUD], owned by Serhiy Taruta, and Vitaly Hayduk who is now secretary of Yushchenko's National Security and Defense Council, would have put up the bail.

"I have known what persecution is since 1996 when Kuchma sacked me as the head of Donetsk OblAdministratsiya... one of the reasons for this was the fact that I was supposed to have organized an attempt on the life of premier Lazarenko to take place here, in Kyiv, on the Rybalskyi bridge. The same now. I know I have not broke either Ukrainian or American laws... well, perhaps just immigration [laws]...

Wasn't it foolish, to burn your fingers over an overdue visa?

"This was usual tourist visa."

Shcherban explains that in the USA he was represented by one of the largest companies of attorneys in that country.

In 2004, Presidential election falsifications in the Sumy oblast, where Shcherban was governor, were maybe even greater that in Donetsk, but Shcherban denies any falsifications took place and suggests that local commissions favourable to Yushchenko, who comes from that part of Ukraine, exaggerated the extent of election fraud.

"And your son [Artem - presently a PoR VR deputy] withdrew [from bank accounts] $50 million in just a few days, then transferred them through mediators so that you had something to eat in the USA?"

"Yes, last year, in April he did make withdrawals - from the "Rodovіd bank", as I recall. But this was before any criminal case was opened, and not in such quantities, certainly. Lutsenko exaggerates! Although I'm not poor person, I came into politics from business...
What are your relations with Timoshenko like?
"Normal. I have never quarrelled with her. Generally I am a man who dislikes conflicts, but I advise you - don't touch me - I'll eat you, together with your boots."

When asked about his businesses, he replies: "I participated also, in the creation IUD. We created employment, together with Taruta and Hayduk. The economy of region was put onto fresh tracks. They wanted finished products, and not raw material to be exported from the Donetsk region. Remember, I was governor - Hayduk and I examined huge three metre long diagrams in my office. They were spread on the floor and we crawled around on our knees, deciding where the coal has to go, and where coke and metal also, so that the region would develop...Vitaly Anatolevych [Hayduk] worked with me in my provincial administration. I invited him to be my deputy... Andrey Klyuev was also my former deputy - I took him on as a 30- year old...

Monday, November 06, 2006

Price of gas

The BBC last night broadcast a current events 'Panorama' program -'Price of gas' .

There are some bits on RosUkrEnergo, Firtash et. al. - about 16 minutes into the program and onward. It includes brief interviews with Yuliya T., a decidedly 'shifty' and sweaty Robert Shelter Jones, and old clips of Mogilevich.

See it here

And a full transcript here

Here's a portion:

YULIA TYMOSHENKO: When I was the Prime Minister,. We provided the President of Ukraine with documented proof that some powerful criminal structures, are behind the RosUkrEnergo company. I can only say as a politician: we have no doubts whatsoever that the man named Mogilevich is behind the whole operation called RosUkrEnergo.
STEVE BRADSHAW: Simeon Mogilevich is on the FBI's most wanted list - wanted for alleged money-laundering.
Seven years ago Panorama made a film about him and asked about his complex business deals- and why he'd opened offshore accounts in Britain's channel islands.
Then in April this man - Dimitry Firtash - a Ukranian gas trader - said it's not Mogilevich - it's my company that owns the mystery half of RosUkrEnergo.
Attention now focussed on mister Firtash's business associates - including one who did seem - well - unusual. Her name - Louise Lukacs. Gas baron? Mobster?
No - out of work Romanian actress with a role in another gas trading company MR Firtash had helped set up.
She'd agreed to be on the share register saying she needed help with her phone bill.
We asked Mr Firtash for an interview, but were offered instead his British representative.
STEVE BRADSHAW:But what on earth was this woman doing with a company in the first place?
ROBERT SHETLER-JONES: As is usual in some private businesses, ownership is held on trust for the beneficial owner. It was ... this was one of the trustees who was known to the team that created the company and she was asked, approached, to be a trustee on behalf of Mr Firtash.
STEVE BRADSHAW: Figure head for Mr Firtash.
STEVE BRADSHAW: Necessarily because... ?
ROBERT SHETLER-JONES: Mr Firtash at that time did not want to be a public figure.
STEVE BRADSHAW: Was Mr Mogilevich - people wanted to know - perhaps using Mr Firtash as a figurehead? The two men had met and had used the same lawyer.
But both deny ever having done business together. Mr Firtash says the hugely lucrative shares he holds in RosUkrEnergo are his own.
ROBERT SHETLER-JONES: Mr Firtash is his own man. I think you have to look at...
STEVE BRADSHAW: Are you sure he's not acting on behalf of anybody else?
ROBERT SHETLER-JONES: I'm positive he's not acting on behalf of anybody else
STEVE BRADSHAW: Would you know?
ROBERT SHETLER-JONES:Given how close I am to him and his business I would know. I would argue that Rosukrenergo is not a murky company, in fact it is very open and transparent. It is a Swiss registered company. The owners of the company are known, and Ukraine is benefiting today from some of the cheaper gas in Europe as a result of RosUkrenergo's business.
STEVE BRADSHAW: Why could Rosukrenergo matter to us?
JONATHAN STERN: What happens ... if RosUkrenergo breaks up because there are some problems of governance, or some problems of alleged mafia connections, that could eventually disrupt gas supplies, and that's what we should be concerned about.
STEVE BRADSHAW: Gas supplies to?
JONATHAN STERN: That could disrupt Russian gas supplies to Europe. That's why we need to be concerned about it.

Sunday, November 05, 2006

Battle for metal

This week's 'Bez Tsenzury' carries a lengthy article about the growing struggle [and possible political and economic ramifications] between the major Donbas financial industrial groups [FIGs]. They are fighting over the supply of raw materials for their heavy industry plants. As usual I've loosly translated most of the significant portions:

Battle for the metal

Increasing opposition between oligarch- metallurgists threatens Ukraine with economic crisis

The Ukrainian State Property Fund [SPF] recently postponed for an indeterminate period the tender competition for the sale of 38,14% of the state-owned block of shares in the "Komsomol mine management" company . This was decided by a special VR commission on questions of privatization, which also ruled against additional conditions being applied in the competition.

Potential bidders accuse the head of the SPF, Socialist Valentina Semenyuk, of favouring the "Mariupol Metallurgical Combine im. Il'icha", [MMK] which is led by leading Socialist Vladimir Boyko.

The head of the VR special investigation commission on questions of privatization, VR BYuT-faction deputy Andriy Kozhemyakin, has referred the matter to the Prosecutor General, the Minister of Internal Affairs, and the security service.

Parliamentarians are concerned that the conditions currently being applied considerably narrow the circle of those who can participate in the competition for the purchase of the block of the shares of enterprise, and consider they are biassed in favour the "Mariupol Metallurgical combine im. Il'icha".

Kozhemyakin claims that that if the privatization tendering process for "Komsomol mine management" were to be fair, then the state would receive three times more money than is being offered by MMK, as most of Ukraine's FIGs would be interested in bidding and purchasing the shares.

"Komsomol mine management" is the sole producer of essential flux limestone for Ukraine's metallurgical enterprises. If the 'Il'ichevtsi' were to regain, via the SPF, the right to purchase the 38% of shares of "Komsomol mine management", practically the entire enterprise would be in their hands, since they already have possession of 60% of the shares, obtained by means of doubtful manipulations. The "Komsomol'sk-Il'ichevsk" conglomerate would become monopolist domestic producers of scarce flux limestone.

According to experts, the chances of opponents 'MMK im. Il'ich' purchasing the 38% of shares on offer will only increase if the leadership of SPF is changed, therefore they do not exclude the possibility of a political war between 'Regionaly' and their ruling coalition partners, the Socialists.

Experts do not doubt the fact that the MMK boss, "people's capitalist" and leading Socialist Vladimir Boyko, would not fail to exploit his position and take vengeance upon his competitors for all the years of humiliations and offences.

Recently the representatives of 'MMK im. Il'icha' accused "Avdeyevskiy KoksoKhimZavod", [coke works] which belongs Rinat Akhmetov, of the intentional disruption of deliveries of coke. Coke reaches other customers on time, but not to us, say the Il'ichevtsy. They have been forced to obtain alternative supplies from the far-off Altai region in Siberia.

'MMK im. Il'ich' has also had problems with iron ore supplies and has had to pay 'through the nose' for their raw material.

At a recent conference of the government commission for mining/metallurgy complex, the deputy minister of 'prompolitiki' Pavel Shinkarenko, in premier Victor Yanukovich's presence, warned that the problems being experienced by the industry right now are worse than have been for ten years or more.

"Metallurgprom" boss Vasiliy Kharakhulakh stated that during September production of cast iron fell sharply - by 134,000 tons, because of the undersupply of coke to 'MMK im. Il'icha' and "Zaporozhstal', and because of an emergency situation at the 'Yenakievsko Metzavod' . Deliveries of home-produced coking coal to the 'koksokhimzavods' have decreased by 180,000 tons.

The association of coke-chemical enterprises "UkrKoks " claims there could be a possible shortage 104,000 tons of coke for metallurgical enterprises during November. Moreover, the Ukrainian KabMin has decided to order 200,000 tons of coal, including coking coal, for supply of power stations, to ensure the country is prepared for winter. There are problems with the import of coal from Russia because of ever-increasing demand from the Chinese. There is also a shortage of suitable railroad wagons for transportation.
The problem is so acute that it seems that in 2007 it will be necessary to import more than 10 millions tons of coking coal - an unrealistically high quantity.

Experts assert that the present metallurgical crisis is the result of the privatisation campaign of "UkrRudProm", started by Yanukovich government as early as 2004.
Then, Ukrainian oligarchs, with the support to President Leonid Kuchma, forced through a law in parliament: "On the characteristics of the privatization of enterprises in the state joint-stock company UkrRudProm ". All the most tasty morsels of the metallurgical pie were divided up between the Financial Industrial Groups's owned by Igor Kolomoyskiy, Vadim Novinskiy, Victor Pinchuk and Rinat Akhmetov.

First of all, they determined ownership of the ore-dressing and iron-ore combines, to ensure that raw material supplies to their own industrial enterprises of were guaranteed.
Their competitors were left with the crumbs. The 'MMK im. Il'icha' was deprived of deliveries of domestic raw material, and interrelations between metallurgists and miners became almost war-like.

Simple workers have also been drawn into oligarchic disputes. [something I have posted blogs about recently] Workers have not only become instruments in the hands of their masters, but also the victims of their business warfare and intrigues. At the beginning of October approximately 150 representatives of the Joint stock company "DonetskKoks" picketed the Donetsk city executive committee. It seems that their enterprise is simply no longer required by its owner - Akhmetov's SCM corporation, which includes more profitable 'koksokhim' works, including the 'Avdeyevskiy KoksoKhim', the largest in Europe.

No one has considered the problems of other metallurgical producers and the universal shortage of coke. Protesters holding meetings are carring banners with the inscriptions "Koksokhim workers are not animals!", "Work for the people - coke for the country", and "Oligarchs - hands off the plant!"

Recently the minister of internal affairs Yuriy Lutsenko declared that in 8 months of the present year the state lost 8 billion hryven as a result of the irregularities in the metallurgical industry, that criminal investigations are proceeding into these matters, and that all material has been transferred to the state prosecutor who will make decision on how to proceed. The Minister emphasized that there was no political sub-text to his investigations, and enterprises were being checked independently of the political preferences of their management.

[Note: Lutsenko was suspended a few days ago from his ministerial position by the VR.
Socialist deputies abstained, and did not vote with their PoR coalition allies. The motion to suspend Lutsenko was carried only with the help of 'renegade' BYuT and NU deputies; some of these BYuT deputies are wealthy and influential associates of Yuliya T suggesting to observers that there may have been collusion between PoR and BYuT on this VR motion.]

If one considers that the fraction of metallurgy in the export balance of our country exceeds 40%, then the losses to Ukraine may even be greater than the more significant numbers quoted by Lutsenko.

Friday, November 03, 2006

VAT fiddles..

Bits from an article it today's 'Delo' business daily entitled:

"Economy returning to the shadows"

The number of business enterprises in Ukraine who paid their taxes honestly in 2006 has dropped dramatically compared to the previous year.

The Institute of economic research and political consultations calculates that Ukrainian companies paid almost 80% of what was due last year, but this year the figure is around 55%.

According to the State Tax Administration, Ukrainian financial-industrial groupings [FIGs] are taking advantage of the links between their numermous enterprises to set up fictitious deals and avoid payment of taxes.

The FIG's who 'minimize' their financial responsibilities to the greatest extent, according to deputy head of the STA Mykola Romaniv, are 'Privat', 'Industrial Union of Donbas' [IUD], and 'Interpipe', [owned by Kolomoyskiy, Taruta/Hayduk, and Pinchuk resp.]

Akhmetov's System Capital Management, [SCM] was not mentioned on the list of transgressors. [What a surprise..]

Romaniv said that in order to minimize their VAT payments, the FIGs use 'pseudo-exporting' operations to obtain refunds [Well, well, well..]

"The mentality of Ukrainians is such that does not accept taxes which can be recompensed from the budget. If there is even a minimal possibility of return of tax from the budget, then there will certainly be abuses. To administer this nightmare in the present form is quite impossible, " considers Dmitriy Svyatash, member of the VR committee on questions of finances and bank activity. [It's all the fault of Ukrainians' mentality then.]

Meanwhile other companies are complaining that they they are not receiving the VAT repayments to which they are entitled.

Newly appointed NSDC secretary Vitaliy Hayduk [see above] has recently been asked by the President to sort out the problem of VAT fiddles - obviously the right man for this vital task.

See also VAT-man Azarov

Two views of Dnipropetrovsk - a fine city that's been in the news lately. [Click on the photos for a better image]

Wednesday, November 01, 2006

Gangster state

For all of the talk of economic progress and cleaning up of politics in Ukraine, the grim reality is that business, politics and organized crime are intertwined, and disputes are still too often settled by criminal means. Politicians, businessmen, as well as police are still being periodically assassinated.

'Juicy' bits of real estate such as the 'Ozerka' market in Dnipropetrovsk are being fought over by private armies on behalf of their untouchable oligarchic paymasters whilst state law-enforcement agencies stand idly by.

I've loosely translated some parts from an article from today's 'Kommersant', by no means a sensationalist newspaper, below:

In parliament an atmosphere of fear has set in

Deputies frighten each other with the situation in the country and within their families.
Without naming concrete names, Yulia Tymoshenko's bloc has accused the authorities of terrorist attacks against its deputies.

A large part of the yesterday's sitting in Parliament was concerned with the drafting of the State budget for 2007. Nevertheless the day began with addresses from several parliamentarians. BYuT deputy Oleksandr Turchinov stated that in Ukraine, "criminal terror has begun [to be used] against the opposition fraction". He spoke at length about several incidents in which representatives of BYuT have been attacked in different regions, in particular about the murder on 27th October of one of one of its leaders in the the Donetsk oblast - a founder of the Debal'tsevsk machine building plant - Gennadiy Bystryakov. Turchynov accused local authorities of indifference in solving the murder.

"You had excellent possibilities to demonstrate force and decency of the authorities, when you were the head of the security service," retorted VR speaker Oleksandr Moroz to these charges.

Immediately after Turchinov left the podium, up stepped the leader of Socialist fraction Vasyl Tsushko, who stated that, "For the first time I come to the platform not to talk on about politics."

Mr. Tsushko reminded deputies, about his recent appearance on an ICTV TV program - "Freedom of Word" when he publicly quoted President Viktor Yushchenko who had once asserted that the company "Unified energy systems of Ukraine" (YeESU), which was headed Yulia Tymoshenko, were responsible for state losses of 8 billion hryven.
"After this my family and I were subjected to illegal pressure and persecution from unknown persons," said Mr. Tsushko. He alleged that certain anonymous persons had told him they know the telephone numbers of its family, had provoked a traffic accident, and also intimidated his son and wife.

After the VR session Oleksandr Turchynov responded, accusing Tsuskho of talking rubbish, raking over the matter of YeESU for political gain. He suggested Tsushko go to the SBU to provide protection and to check out his accusations. BYuT representatives had stated previously that they were suing Tsushko for slander folowing his remarks on TV, but a spokesman from the judical department, Andriy Portnov, told 'Kommersant' that he knew nothing of this.

On 26th October, a BYuT Lviv city council deputy, Roman Fedyshyn survived an assassination attempt during which Fedyshyn's car was blown up - a young schoolgirl, Mariya Kutsynda, was killed.

In June two ByuT representatives were killed. On 11th of June Zaporizhzha city council deputy Viktor Savkin was shot dead in Yalta. That same week, Hryhoriy Potelchak, a city councillor from Nizhyn was also killed.

BYuT has made many unsubstantiated claims in recent times about murders, bribes of VR deputies, and corruption at the highest levels of government. Nevertheless, people as still being killed with impunity, that's a fact. And while the country has leaders who climbed to the top of the political/business ladder by methods akin to those employed at the 'Ozerka' market, this state of affairs will continue.

More on "Ozerka" - UNIAN reports that groups of raiders, many from Russia, have been seen mobilizing in the suburbs of Dnipropetrovsk in order to launch another attack on the market.

Unian' s sources speculate that the conflict around "Ozerka" is being used by specific political forces of Russian origin to destabilize the region and then the country as a whole, and that the attempts to take "Ozerka" is a rehearsal for similar actions in other parts of Ukraine. The article mentions that Maxim Kurochkin, one of the two chief protagonists in the tussle, benefits from the patronage of the highest echelons of Russian Ministry of Internal Affairs, as well as that of the Russian president's administration.