Getting the money back – Ukraine

March 27, 2015

Somewhat belatedly perhaps, by Presidential Decree, President Poroshenko yesterday created the “Inter-agency Working Group on Coordination of the Return of Funds, Received in a Criminal Way by Former Senior Officials, to Ukraine.”  Imaginatively titled, all would agree.

Surprisingly for a presidential decree – or indeed anything generated entirely within domestic Ukrainian politics – there is a finite time limit to produce results.  The inter-agency working group has been given two months to complete its task.  Tuesday 26th May, when time expires, noted in many diaries undoubtedly.

Deputy Prosecutor General Vitaly Kasko will head the team comprised of Deputy Head of the Presidential Administration Andrei Taraov, the 1st Deputy Head of the SBU, Head of the Main Directorate for Combating Corruption & Organised Crime Control, Central Security Service Yuri Artukhov, Deputy Foreign Minister for European Integration Elena Zerkal, Deiputy Head of the State Service for Financial Monitoring of Ukraine Vitaly Zubri, Deputy Interior Minister, Head of the Main Investigation Department Vitaly Sakal, Deputy Prosecutor General David Sakvarelidze, Deputy Head of the Foreign Intelligence Service of Ukraine Volodymyr Sinkevich, Deputy Head of the National Bank of Ukraine Yakov Smoli, and Deputy Minister of Justice Anton Yanchuk…….and friends.

A lot of Deputy Heads – and notwithstanding the numerous very dodgy domestic “deals” for domestic assets during the period of “The Family” regime – all with existing job descriptions that would point to a heavy bias toward looking at Europe and assets therein, first and foremost.

Their two month mission has two tasks.  The first is to be extremely creative, engage in clever thinking (and enlightened conversation with their European counterparts undoubtedly) to arrive at mechanisms to return the assets stolen by the previous nefarious regime to Ukraine.  The second task is to identify any legislation that prevents any such return easily, and suggest amendments to domestic statute that would smooth the path to State repossession.  Perhaps GRECO can lend a hand with the latter.

Nevertheless, the clock is now ticking within an identified, and short, timescale – most unusually for Ukraine.

That raises two possibilities as to why there is such a short time frame – for it is surely not about to become standard practice for presidential decrees of presidentially created working groups – or Ukrainian politics in general.

The first possibility is that the Europeans have told President Poroshenko in very blunt terms, that the current freezing of assets under the auspices of “personal sanctions” cannot remain forever thus.  A message has perhaps been passed that any further longterm freezing will require some form of legitimate criminal investigation of which the Europeans are reasonably convinced is justified, and have a chance of success in any judicial process.  In doing so, as is always the case with technical fraud and money laundering cases, it can then take years before assets are unfrozen pending the conclusion of any due process.  Alternatively, if assets can be returned swiftly(ish) when the evidence is clear-cut.

The second possibility is that President Poroshenko (and the Cabinet of Ministers) is well aware that societal support for both executive power branches, is eroding rather rapidly – mainly due to the economic situation in the country, but aggravated by a perceived lack of timely reforms.  This is one of several reasons that for the past few months, there have been several mentions of a Cabinet reshuffle in the blog – an attempt to re-energise public support for the President and a new-look Cabinet of Ministers.

There are no serious domestic political rivals to President Poroshenko, or the current majority Rada coalition.  The Opposition Block and People’s Will regurgitations of the Party of Regions remain extremely toxic within the Ukrainian constituency (notwithstanding most of their traditional voter base is either annexed by, or now controlled by, Russia).  The biggest political threat to both President and Cabinet of Ministers is the lack of energised public support in the run up to the local elections due in October – for those that win will benefit from the decentralisation/devolution of powers to the provinces that are expected by the year end.  Something of a disaster awaits if those who don’t vote, either out of apathy, or to make a political statement by abstaining, outnumber those that do.

Without that energised public support associated with President Poroshenko until recently – or indeed to avoid guilt by association to the President – it is perhaps why “Block Poroshenko” is now in the process of re-re-branding back to its original “Solidarity” name.

To re-energise public opinion, both President and Cabinet need to either accomplish some populist achievements – such as repatriating a lot stolen State wealth, or deliver tangible reforms that will be both seen and felt by society, that will in part, mitigate the economic situation.  In the absence of either, and perhaps it is now to late to avoid anyway, a major Cabinet reshuffle is the only other option that may achieve a general and broad re-energising of the Ukrainian constituency.

However, should the newly created  “Inter-agency Working Group on Coordination of the Return of Funds, Received in a Criminal Way by Former Senior Officials, to Ukraine” manage to actually find a way to swiftly repatriate stolen State wealth, there remains the matter of preventing it being stolen once again.

Nevertheless, it will be interesting to see what enlightening cleverness this working group can generate within the next two months.

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