The View From Here: Gilt and Guilt

Volodymyr Kish.

Ukrainians were amazed a week ago to find out just how rich some of their politicians and senior civil servants were. Under a new law passed by the country’s parliament in order to satisfy the conditions for further IMF assistance as well as a new visa liberalization program with EU countries, some 100,000 deputies, judges, prosecutors, cabinet ministers and even the President had to declare on-line all significant assets they and their immediate family possessed. Over the course of the next year, this requirement will be extended to cover virtually everyone that works for the Ukrainian government in any capacity.

The revelations were the kind of stuff that tabloids just revel over. Vast real estate holdings, ridiculously expensive jewelry, luxury cars, wine cellars, antiques and cash, lots of cash. Prime Minister Groysman declared cash holdings of some $1.8 million. The total monetary asset holdings of all the members of Ukraine’s parliament amounted to an estimated $482 million dollars. One deputy, Vyacheslav Konstantinovsky declared $19 million in cash, a pretty hefty sum for someone whose official parliamentary salary in 2015 was approximately $3,700. The 24 members of the country’s cabinet hold over $7 Million in cash alone.

The popularity of cash holdings, usually in US $ or the Euro, testified to the serious mistrust that most Ukrainians have of their own currency, the Hryvnia, and their own domestic banks, 80 of which have been closed in recent years due to scandals, corruption and mismanagement. Even the governor of Ukraine’s central bank, Valeriya Gontareva, keeps most of her savings in the form of $1.8 Million in US currency, posing some serious questions as to the stability of the Hryvnia.

The declaration of President Poroshenko was hardly surprising in that he has for some time now been known to be one of the richest men in Ukraine. His total net worth amounts to some $1.2 billion, which includes ownership of over 100 companies in various countries including Russia, as well as $34 Million in various bank accounts. Nonetheless, he is not the richest man in Ukraine, with well-known oligarchs Rinat Akhmetov, Viktor Pinchuk and Igor Kolomoisky holding the top spots.

Amongst the holdings were some that were downright curious and bizarre. Parliamentarian Anatoliy Matviyenko declared a church amongst his holdings. Fellow deputy Mikhail Dobkin reported a wine cellar holding 1,780 bottles of fine wine. Two other deputies reported joint holdings of over 700 real estate properties. Ihor Mosiychuk, another parliamentary member declared a collection of antiques that contained a 16th century Turkish scimitar, an English broadsword and a Nazi SS dagger. Other curious holdings included sacred medieval relics, a Picasso painting, countless old icons, Faberge eggs, yachts, and a ticket to space on a future commercial spaceship.

In a country where the average wage is about $200 per month and where the monthly salary of a member of parliament is 6109 Hryvnas, or about $240 American, the above revelations not only raised some eyebrows, but also no small measure of outrage. Although one can’t assume that all this ostentatious accumulation of wealth was done illegally, a large proportion of it was undoubtedly secured by less than legal or ethical means, and the pressure is now on the country’s legal system to hold these people to account.

Going by recent history, that is not likely to happen either quickly or with any enthusiasm. Despite a lot of talk about rooting out corruption, most of the agencies of government responsible for the effort, including the prosecutors and the judiciary, are still populated by functionaries deeply complicit in creating and perpetuating the corrupt system of government that has existed in Ukraine since it became independent. Further, the country’s wealthiest oligarchs who were the chief beneficiaries of this system have tremendous political leverage, and have been quite effective in stymying any efforts to date at implementing any kind of serious anti-corruption initiative. Progress has been made and will continue to be made, but it will happen in incremental steps and will take many years before we see significant results.

One indication of this is the fact that Yuriy Lutsenko, named as the country’s Prosecutor General over six months ago with the explicit task of rooting out the deep-seated corruption in the Prosecutors office, has so far done almost nothing to purge his department of the discredited prosecutors appointed during the Yanukovich era. His lame excuses are beginning to cast serious doubt about his level of commitment to the anti-corruption effort.

The mandatory disclosure of assets was a monumental step forward in reforming Ukraine’s government. It is now incumbent on the IMF, the EU and all those countries that wish Ukraine to succeed, to keep the pressure on Ukraine’s reluctant political leaders to keep moving forward towards transforming their government into one that both the Ukrainian people as well as the outside world can trust.