ESBU faces another management reshuffle, but still no restart

New digest on the progress in cooperation with the IMF and World Bank covers updates between 07 August - 13 August 2023. There were not significant decisions in the Parliament or CMU regarding the fulfillment of the Memorandum. The single update of Structural Benchmarks is that the DL on corporate governance reform at the Gas Transmission System Operator was unblocked in the parliament and can be signed. 

In the Memorandum with the IMF Ukraine stated the intention to revise the legal basis of the operation of ESBU and reorganize it to strengthen its analytical support. The recent events with the change of management to another figures loyal to the Presidential Office shows that it's the long way ahead the restart of the state body. Moreover, during last week several steps were made for EU integration, political transparency and anticorruption, as well as Ukraine demonstrated once more a lack of credibility and pitfalls of the state ownership. 

Regarding the progress in cooperation with the IMF, as I've already mentioned, the Parliament unblocked the DL on corporate governance reform at the Gas Transmission System Operator (GTSO). 

As was reported earlier, two MPs from Batkivschyna faction submitted the resolution to cancel the decision of the Verkhovna Rada to adopt the DL #9311-1-d on the GTSO corporatization. On the plenary meeting last week, the Parliament didn't support the resolution. Thus, the DL can be signed by the Head of the Rada and transferred to the President. 

Let me remind, that the corporate governance reform at the GTSO through transferring the shareholding directly to the Ministry of Energy, adopting the new charter selection and appointment of a supervisory board is a requirement under Structural Benchmarks #8 and #18 of the Memorandum with the IMF. The DL #9311-1-d gives necessary changes in legislation to start the process.  The Parliament also unblocked the signing of the Credit Unions Law #5125. Ukraine stated in the Memorandum the intention to adopt the DL by end-June to strengthen regulatory effectiveness for NBFIs.

The Anti-Monopoly Committee of Ukraine will receive more powers, but not the political independence as required by agreements with the IMF. Verkhovna Rada adopted in the second reading the DL #5431 on strengthening the powers of the AMCU. According to the DL, the AMCU receives more instruments and powers for inspections and obtaining confidential information.  We believe, that such approach doesn't meet the promises given in the Memorandum regarding the reform of the AMCU.

Because with more powers the DL doesn't ensure institutional independence and restart of the state body's management in the first place.  Economic Security Bureau of Ukraine faces another change of management, also linked to the Presidential Office. Three months after the appointment previous Acting Director Eduard Fedorov went on vacation, then took a sick leave and as for now, according to our sources, he resigned. Same series of events preceded the dismissal of the ESBU Deputy Director Vitalii Hahach. 

Andrii Pashchuk has already been officially appointed as the new Acting Director (without competition). Although he began signing documents in this status even earlier, since the very biginnning of Mr. Fedorov's vacation.  Mr.

Pashchuk worked in the Ministry of Internal Affairs under the Yanukovych's regime at the same time when Oleg Tatarov, currently the Deputy Head of the Office of the President, also worked there.  Despite the long absence of management, the ESBU announced competitions to hire new employees. There are several problems with this decision. 

First problem, the Public Control Council is not involved in competition procedures. Moreover, the requirements for candidates are discriminatory and allow only former law enforcement officers to hold vacant positions.  Second problem is that the ESBU doesn't have enough funding even to pay salary to the current staff.

Just 31,3% of the ESBU budget remains till December. It means that the ESBU can spend approximately UAH 31,5 mln in a month till the end of the year, while the expenditures in July itself reached UAH 56,2 mln.  Institutional problems of the ESBU matters even more in light of the recent statements of CEOs of the two big Ukrainian businesses about the government pressure.

In his speech during the iforum2023 the co-founder of Ukrainian online retailer Rozetka complained about more frequent inspections and fines. His colleague, co-founder of the largest private postal and delivery service Nova Poshta Volodymyr Popereshniuk also confirmed the growing pressure on business from the state authorities.  Among other economic issues which are important for our cooperation with the international partners Ukraine made another step toward the eurointegration of its customs. The President signed the DL # 5353-d which brings the provisions of the Customs Code of Ukraine into compliance with EU rules regarding the determination of the country of origin for goods

Recently nationalized Sense Bank may change the CEO. According to the Forbes Ukraine, current CEO may be dismissed due to health issues but mostly because of poor management and communication between the CEO and the rest of the management team. Dmytro Kuzmin was appointed as the CEO of the Sense Bank on 22 July after the decision to nationalize the bank.  Financial reports of political parties may be back. The Parliament adopted in the first reading the MPs' alternative DL #9419-1.

As we reported in the Issue 16, the DL restores the obligation of political parties to submit financial reports on their assets, incomes and spendings as well as the obligation of the National Agency on Corruption Prevention to check these reports in 60 days. Iaroslav Zhelezniak Articles reflect their author's point of view and do not claim to be objective or to explore every aspect of the issues they discuss.

The point of view of the Ukrainska Pravda editorial board may not coincide with the point of view of the article's author.