Archive for July, 2017


Revisiting old and postponed decisions – Gas (U turn on a U turn?)

July 31, 2017

Following on seamlessly from the previous entry relating to (the mostly oligarch owned) electricity infrastructure and the proposal for RAB incentive based investment (or probably not when it comes to actual owner investment), the same energy regulator,  the National Commission for Energy Regulation and Utilities (NCRECU), seems set to revisit an old policy suggestion/regulatory plan relating to gas.

It is a policy it proposed, and submitted regulations for, on 28th March – and promptly withdrew on 1st April 2017.

A particularly swift policy/regulatory U turn even for Ukraine.

That is not to say that the policy was the wrong policy, undoubtedly as unpopular as it would be, but it is suffice to say that independent regulators are not exactly independent in Ukraine.

It took only a few words from President Poroshenko suggesting that the proposed regulations be suspended, for that suggestion to be immediately implemented – “Without dialogue with people, such decisions are not accepted,  I appeal to the government and the NKRECU to find an agreed solution that does not provide for raising tariffs and distributing subsidies for all types of payments for all who need it.

For those readers that may question lawfulness of the political interference by President Poroshenko with an independent regulator, it is fair to say that he exceeds his constitutional parameters, trampling heavily upon the constitutional areas of responsibility of the Verkhovna Rada, judiciary and independent bodies on a frequent basis.  NKRECU is clearly no exception.

That said, a reader might also ponder whether there is an occasional necessity to do so during a time of transition (at the presidential pace).  If accepting that to be the case, there should be few complaints when necessity is replaced by habit – and it is habitual.

Nevertheless it appears that on 4th August that the once proposed, adopted and subsequently canceled/suspended NKRECU regulatory proposal will again resurface.

The prickly issue at hand is the regulator’s proposal to implement a standing charge for the use of the gas distribution system.

A fixed monthly fee.

Except that fixed monthly fee is not the same for everybody.  There is a convoluted system relating to what sort of gas meter a customer has and its associated throughput, also for those without gas meters, and programmed cost differences across the oblasts.  For the purposes of this entry, there is no requirement to go into the specific methodology, suffice to say such schematics exit.

Nevertheless, this billing differentiation step relating to the delivery system is required as part of the energy reform within Ukraine – notwithstanding an EU obligation within the 3rd Energy Package.

It will insure is a reasonable amount of transparency when it comes to funds charged and dedicated to gas distribution networks and maintenance – which  no differently to the electricity grid mentioned in the previous entry, has been allowed to systematically fall into far into disrepair since independence.

As usual the owners are more interested in sucking out the money.  Only begrudgingly spending (rather than investing) when critical repairs involving scotch tape and “make do and mend” are required.  Ergo, the Ukrainian gas distribution and transportation system is more than a little leaky and inefficient.

(As an aside, for those readers who consider the gas transport system (GTS) to be a strategic matter for Ukraine with regard to the revenues it brings in when transporting Russian gas to Europe, and thus that is the cause of intense Ukrainian dislike for the Nord Stream II project, the blog takes a different view.  The GTS is strategically important for Ukraine less so for the revenues, but more so for the fact that Nord Stream II simply makes Ukraine less relevant to the EU if it be bypassed.  That strategic importance is far more important than the $ revenue the GTS provides.)

Returning to the gas distribution networks and the oblast infrastructure, while Odessagaz is owned by mafia Don Alexander Angert and Igor Uchitel, across the nation approximately 70% of the oblast gas distribution systems is owned by Dmitry Firtash (and associates) – oligarch in exile in Vienna pending extradition proceedings to Spain and the USA on corruption charges.

The introduction of the separate line item fee should amount to approximately UAH 15 billion being identified specifically for gas delivery systems.  The regulator expects that 38% will go toward wages, another 38% toward production and technology costs, and 6% toward capitol investment (and other things).  The remainder, presumably, is profit before tax.

However, as stated in the previous entry – “Messrs Kolomoisky, Akhmetov, Grigorishin feature prominently – as does the Russian firm VS Energy, ultimately owned by Alexander Babakov (who is associated with numerous organised crime figures such as the late (assassinated) Maxim Kurochkin, Alexander Lebedev et al).  It therefore follows that scandalous and nefarious acts are to be expectantly anticipated from all involved” – few if any readers would expect the likes of Don Angert and Dmitry Firtash not to enter into scams, schemes, and nefarious acts to defy the regulator and insure that most of the raised sums disappear offshore, or are otherwise put to other use.

What the distribution system owners can be certain of is a steady and predictable income, no longer subject to seasonal peaks and troughs.  Lo, the proceeds of acquisitions financed by original sins/organised crime during decades past become not only legitimate but increasingly and predictably organised – c’est la vie when failing to put people in jail over the preceding decades for their organised criminality.

Nevertheless the average Ukrainian would, in the long term, win on the proviso that the regulator can force the infrastructure owners to invest in their otherwise ignored assets and deliver efficiently for the social good.  Reliable, quality infrastructure naturally has societal benefits.

However, just as the previous entry doubted the ability to force those owning the electricity infrastructure to invest, there must be serious doubts about the ability of the regulator do the same with gas.


RAB – The right policy for Oblast Energy?

July 30, 2017

It appears that the National Commission for Energy Regulation and Utilities (NCRECU), the Ukrainian regulator, is set to introduce Regulatory Asset Base (RAB) tariff incentives for the regional electricity providers.

How very European – in fact RAB is a UK concept employed across much of Europe.

A reader should think of RAB as a sort of alternative to PPP (Public, Private Partnership) as a way to bring investment into infrastructure – ex ante.

The issue with ex ante is that the Ukrainian consumer/customer will have to hope that the NCRECU gets its math right – for ex ante relies upon the regulator being able to differentiate between the operating costs recoverable from users and what is not.  It is also dependent upon existing asset value assessment employed in the regulated function.  In short it simply has to arrive at an accounting number that reflects the historical investment in infrastructure – albeit in the Ukrainian case, it will reflect the assets acquired by the oligarchy that have seen little (or no) investment historically as all profits were simply sucked out year on year.

Thus any accounting figure necessarily takes the view of valuing long-lived infrastructure more highly than its worth for it will eventually require replacement at today’s cost – not those of yesterday when the assets were acquired.

The ultimate aim of RAB, via the regulator, is to (at the very least) insure that capitol investment in the infrastructure remains and that monetary and/or asset market value is consistent through the passage of time, whilst also placing a form of ex ante price control on the participants.  Ergo by default ex ante presumes some form of free market failure/exceptionally high barrier to entry (and nobody is going to arrive in Ukraine and install a new electricity infrastructure).

There is also a requirement for the regulator to get the math right regarding new investment (that by default increase the RAB value), asset depreciation, the aforementioned operating costs, and financial costs (loans etc).

Further, specific agreements clearly identifying licencing, responsibilities/obligations and rights have to be addressed. – which brings about just how the regulator will evaluate performance – quality and delivery (superior life cycle investment), or delivery efficiency (target driven)?

Is there any flexibility in either approach that may (and therefore will) facilitate shenanigans by the owners of the Oblast energy infrastructure?

Will the RAB incentive model equate to better social welfare outcomes?  (That will almost certainly depend upon the strength of the Ukrainian NCRECU regulator.)

So what is the RAB incentive for oligarchy/current owners of Ukrainian infrastructure?

How do they benefit by investing money when traditionally they have simply sucked all the money out, investing only enough to keep their infrastructure running held together with scotch tape and “make do and mend” maintenance – particularly when the NCRECU is capping profits?

The regulator it appears, will provide for 12.5% profit from the value of the decrepit infrastructure already owned which will be deliberately over valued.  That over-valuation, it is claimed, equates to something approaching UAH 30 billion per annum for those in the business, plus an additional 12.5% from any new infrastructure investment.

It will be a particularly sensitive issue – for many Ukrainian electricity infrastructure owners are the oligarchy.  Messrs Kolomoisky, Akhmetov, Grigorishin feature prominently – as does the Russian firm VS Energy, ultimately owned by Alexander Babakov (who is associated with numerous organised crime figures such as the late (assassinated) Maxim Kurochkin, Alexander Lebedev et al).

It therefore follows that scandalous and nefarious acts are to be expectantly anticipated from all involved – notwithstanding a possible further price hike to insure maximised returns within the regulatory price cap.

Nevertheless, what of the core policy goal of upgrading the infrastructure?  Will it bring much needed investment by these men into what it beyond decaying infrastructure?

At a RAB capped 12.5% profit from new infrastructure investment it seems extremely unlikely.  The high street banks are offering between 13% – 16% on UAH deposit accounts.  Quite simply, other than emergency investment/maintenance, the offered bank interest is better than the investment return (and some of the above individuals own minority/majority/completely the banks).

So, is the RAB policy the right policy (even if it is a well used policy across Europe and beyond)?  If it is, then are not the details in need of tweaking to insure the desired outcome?


A transitional mixed bag – High Qualification of Commission of Judges results

July 28, 2017

7th December 2016 witnessed the beginning of a vetting process for those wishing to become Supreme Court Judges – be they Civil, Criminal, Economic or Administrative.

From 1436 applicants, 653 were admitted to the competition, from which 625 eventually underwent assessment.

During the evaluation, participants of the competition completed professional and psychological tests, were scrutinised by the National Anti-Corruption Bureau of Ukraine, the National Agency for the Prevention of Corruption, and the Public Council for Integrity,   The Public Council for Integrity had a semi-veto on applicants requiring the Higher Qualification of Judges Commission to vote by 2/3rds to overturn that quasi-veto – and it did on numerous occasions.

Indeed, whilst the PCI continued to highlight lifestyles and assets far beyond applicant incomes, the HQCJ continued to demand proof of corruption.  In short the new Supreme Court will almost certainly not be staffed by those that passed every “sniff test” of a “reasonable person”.

A low moral and ethical bar thus apparently been set.

As a result more than 350 interviews took place for those seeking to fill the 120 vacancies.  The advantage of interview scores of course is that they are subjective and can therefore be used to artificially bolster otherwise distinctly average (or minimum acceptable) written examination scores.  The final, published candidate scores providing only a final overall candidate score.

Truth be told there are names on that final list, across all four categories for positions within the Supreme Court, that would make any reader familiar with them simply roll their eyes and express something similar to “FFS!”

However, the list (per final assessment and ranking scores) does also include some apparently morally upright and seemingly independent applicants.

To throw out the good (or at least potentially improved) composition of the Supreme Court in pursuit of the best is perhaps not the wisest policy – albeit disappointment should be recognised insomuch as some names simply should not be on that list if the process had not been manipulated along the way.

The results should perhaps be interpreted as transitional and a further reflection of a Ukrainian elite trying to slow societal progress for their benefit, but ultimately being dragged in the direction the vast majority of constituents want to go.

It is beyond doubt that this Presidential Administration is no more capable of surrendering control over the prosecutors and judiciary than any that came before it.  It is also clear that the current Presidential Administration is running out of wiggle room before it has to address progress that will curtail and/or infringe upon its own vested interests.


As with any transition this is to be expected.  It is the current reformers among the national, regional and local middle management working within a transitional regime that are learning the ropes and schemes and noisily fighting against it that are, ultimately, the future.  Civil society remains robust too.

Thus a similar view is perhaps required when looking at the results for the 120 vacancies within the Supreme Court.

Cynically a reader will expect the names that shouldn’t be on the judicial list but are, will somehow manage to (coincidentally) preside over cases requiring certain outcomes for certain circles within the elite.  “For my friends anything – for everybody else the law” will probably continue to be the Presidential Administration’s policy, but perhaps to a far lesser extent that recent Ukrainian history has witnessed as certain trends become apparent and associated public ire is made known.

However, as disappointing as it may be,”For everybody else the law” should perhaps be seen as (limited) progress if equal application of the law, and proportionate verdicts are the result.

Whether Lady Justice via a newly staffed Supreme Court will prove to be blind, and on balance more ethical, or whether it should fall upon its sword remains to be seen.



Ukrainian no more? Saakashvili

July 26, 2017

Rumours abound that Misha Saakashvili has been stripped of his Ukrainian citizenship.  They are probably accurate.

The bureaucratic reasoning being that upon his application, subsequently granted by President Poroshenko in May 2015, Mikhail Saakashvili lied.  In that application rumour has it he declared he was not wanted or under investigation within or without Ukraine – when Georgia was indeed investigating him and wanted him.

Thus Clause 2 of Article 19 of the Law on Citizenship was violated.

Quite why Mr Saakashvili made such an erroneous declaration is unknown, for at the time of application, President Poroshenko would have granted his citizenship regardless of the Georgian investigations had he declared it.

In December 2015, Georgia stripped Mr Saakashvili of his Georgian citizenship.

Times of course change, and Misha Saakashvili rapidly fell in significance in Ukrainian national politics after resigning as Governor of Odessa in November 2016.  His political momentum was lost, short of early elections that could have seen those around him perhaps enter the Verkhovna Rada (albeit not Mr Saakashvili himself who was constitutionally barred from being a parliamentarian until May 2020 (unless directly appointed to the Cabinet of Ministers)).

That The Bankova (President and Presidential Administration) have successfully managed to defeat any notion of forced early elections (unless early upon the President’s time table), leaves the perception that Misha Saakashvili pulled his “independent trigger” too early.  However it is also clear that he was losing interest in the Governor’s role in June 2016 when the blog was chatting to him, and that he was already looking ahead.  He was clearly frustrated at what he perceived to be a lack of support from Kyiv for anything he tried to do in Odessa and had decided that it was necessary to take the fight to Kyiv.  Nevertheless it took until November 2016 for him to eventually resign.

A reader is left to ponder, what citizenship Mr Saakashvili now holds.  Having lost Georgian citizenship in December 2015, and if rumour be true, having now lost Ukrainian citizenship, is he now a stateless person?

Is it even constitutional for Ukraine to strip him of his Ukrainian citizenship and leave him stateless?  How to interpret Article 25?  “A citizen of Ukraine shall not be deprived of citizenship and of the right to change citizenship.”  If he hasn’t changed it (exchanged it, or taken an additional citizenship), can Ukrainian citizenship therefore be stripped (despite the flawed declaration when obtaining it)?

It is perhaps no coincidence that, if true, this occurs now.  To be blunt there is no reason to believe it is false.

During a 3 day trip to Georgia on 19th July, President Poroshenko publicly pretended to have no knowledge that Mr Saakashvili was and had been wanted in Georgia (as if the Georgian Ambassador would have failed to have mentioned it whenever they met in Kyiv).  The writing, during this trip, was clearly on the wall for Misha Saakashvili considering President Poroshenko’s public statements whilst there.  Following such blunt statements/inferences only a dullard could not see what the immediate future held.

Naturally arresting and deporting Misha Saakashvili would be a little too much politically and diplomatically considering it was President Poroshenko who invited Mr Saakashvili to Ukraine and made him a Ukrainian citizen.  Stripping citizenship due to lies on an application was a comfortable political and diplomatic place instead.

Further, to strip citizenship now, when many people are on holiday, enjoying the sun, parliament is closed, and the Kremlin “Guns of August” will probably soon roar with more intensity in eastern Ukraine, societal reaction (if any) will be extremely muted.

Internationally the public political and private diplomatic fallout will also probably be minimal – if any.  There is little that Misha Saakashvili can say or muck-raking he can do that he hasn’t already said either privately to diplomats or publicly to anybody that would listen since his arrival in Ukraine.  It is not as though either supporters or enemies of Ukraine need rely upon Misha Saakashvili to know the details of the corrupt and otherwise nefarious goings on among the Ukrainian elite.  The embassies speak to a lot of people all the time – including this blog.  And a lot of people go and speak privately at the embassies.

That said, some individuals may have some additional concerns.  Recently, Odessa Mayor Trukhanov was asked what his biggest problems were.  The answer was not city budgets, nor effective administration, nor corruption.  His answer was Misha Saakashvili besmirching his name internationally.  That, apparently, was/is his number one problem.

Some will also perceive this move as somewhat politically pointless and/or weakness.  Others will perceive it as vindictiveness and thus an entirely avoidable political own goal.

With regard to domestic politics, it remains to be seen whether the Saakashvili loyalists and party members will continue to ponder partnership with Samopomich and/or the Democratic Alliance, or whether they will now seek to assimilate themselves within those two political parties henceforth.  They may also decide to integrate with the people of Svyatoslav Vakarchuk, who may run for President and also create a political party.  There is little reason to think that any Vakarchuk political venture would be any less successful than a Saakashvili political venture – indeed it may well be a little more successful.  (An entry relating to Mr Vakarchuk will be forthcoming when internally matters are a little clearer and structured.)

Thus, if true, questions of timing are fairly self-explanatory.  The question of actually stripping citizenship is perhaps not one of why, but rather why not from a Bankova perspective.  Georgia will be far more on-side, there will be little overt (or perhaps covert) international reaction that Kyiv cannot cope with, and a minor domestic thorn in the side has been removed.

Perhaps the most immediate question to answer is the current whereabouts of Misha Saakashvili.  Rumour has it he is in the US, and it is far more convenient to remove his citizenship while he is outside of Ukraine than if he were within it – so perhaps that’s where he is.  So, if stuck in the US a while, and with a reasonable relationship with the GOP historically, perhaps he could lobby to get a few Ukrainian corruptioneers placed upon the Magnitsky list?  May as well be useful while planning his next move.


The Royal Navy in Odessa

July 25, 2017

The visit of HMS Duncan to Odessa is worthy of a blog entry.

It is worthy because it has been well over a decade since the Royal Navy docked in Odessa.  That is happened to be HMS Duncan, the most recent addition to the Royal Navy (baring the next aircraft carrier yet to enter service) and thus only several years old is also a bonus for those allowed aboard and to poke around in important mission critical rooms.  Everything is still shiny and new and works.  It is also about as big (9000 tonnes) as they come regarding the Montreux (Black Sea) Agreement (a limit of 10,000 tonnes).

Ergo it follows a few lines of gratitude are required to UK Ambassador Gough, the ship’s Commanding Officer Eleanor Stack, and the two senior Ops Officers for both the personal and personable hours given.

A reader can possibly only wonder at the (if not exactly misogynistic, nor quite “Homo Sovieticus”, then certainly) “dated” questions (in the absence of the blog) posed to those two powerful ladies with regard to UK policy,  the Royal Navy, leadership, discipline, “women’s issues”. and warfare. over the course of the Duncan’s stay – for such questions will be no doubt forthcoming.

(Perhaps the Ukrainian military leadership will feel more comfortable with the latest UK Defence Attaché who is a male Colonel – though his predecessor was a female Naval officer which also probably made them uncomfortable initially before they overcame the “traditional role” issues.  For the record, the blog has always found intelligent and powerful women particularly attractive – and good to work for within the government/Crown machinery.)

With Sea Breeze 2017 having now concluded (a brief write up of that exercise by the blog will appear at Jamestown EDM sometime this week), the Ukrainian Navy will now partake in a few days of exercise with HMS Duncan, the Turkish frigate Yildrim and a Romanian vessel in Passex exercises.

Discussions regarding the on-going remake of the Ukrainian navy, the new UK aircraft carrier, threats to (any) naval units (regardless of flag) during warfare as yet to be effectively mitigated (by anybody) etc may perhaps be raised in future entries.  There are certainly policy and strategy issues to ponder.

Suffice to say the visit of HMS Duncan could not pass without note – for the blog has been aboard what seems like half the US 6th Fleet over the past few years while the Royal Navy never actually stopped in Odessa (despite being in the Black Sea).  Thus if it be another decade plus before the Royal Navy dock in Odessa, a few lines simply had to appear!


The war of words, and at last the word “war” – A Donbas reframing ahead

July 23, 2017

On 7th July the blog noted the appointment of Kurt Volker as US Special Envoy to coordinate US State Department efforts in resolving the conflict in eastern Ukraine – per the wording of his mission.

To be entirely blunt, the Donbas front line is not a conflict.  It is one front of many through which Russia is waging war on Ukraine.

The blog has consistently employed the terms “illegally annexed” with regard Crimea, “occupied territories” with regard to the areas of the Donbas beyond the control of the Ukrainian authorities, and persistently highlighted the fact that the kinetic engagement in eastern Ukraine is but one front that has to been seen as part of the political, diplomatic, economic, social, information and cyber fronts that form a war that is being waged.  It is a war of exhaustion.

Equally it has shunned “hybrid war”, “ATO” and “weaponised” – all misnomers and flapdoodle.

The use, or absence, of these words within the prose of the blog is deliberate.  What is said is sometimes less important than what is not said.  It is not what you say, but what people hear that matters.

They are the words employed, or absent, when writing for other (paying) publishers.

The blog is not of a mind to have these words changed or manipulated by (paying) editors.  If the editors wish to shy away from such terms then articles and essays are retracted and they can keep their money.

Objectivity and giving all a fair hearing is absolutely right – but there is no moral equivalence to be found when Russia started and maintains its war on all fronts.  Only a dullard cannot recognise events have been driven by The Kremlin from the very start.  (Fortunately for such dullards, jellyfish which have no brain, have survived for about 500 million years – ergo said dullards will too manage to survive.)

It is easy to criticise western journalists when terms such as “civil war” and “conflict” etc still appear – however the blog knows of several journalists that have submitted copy with far more robust and far more accurate words, for them to be edited and published with either entirely inaccurate phrases such as “civil war”, or weaker words such as “conflict” replacing original prose.

A reader may frown upon the journalists for not standing their ground and/or “outing” the spineless editors/editorial line, however these people have bills to pay and there are plenty of unemployed/under employed journalists who can replace them.

It has to be said that Ukraine has not helped itself by maintaining the ATO label for so long with regard the occupied Donbas.  As made clear a month ago, that will undoubtedly change in September via legislation with “temporarily occupied territories” becoming the official lexicon – and not before time.

The question will be whether the same deluded editors that employ “civil war” or those that are meek and choose “conflict” will adopt that same official lexicon of “temporary occupied territories”?   One of the best ways to force that into the media cycle is for public figures to repeatedly use the phrase – as they will be quoted verbatim.

Of the most public of acts thus far by US Special Envoy Kurt Volker, occurred on 23rd July with a visit to Kramatorsk in eastern Ukraine – what did he have to say?

It’s not a conflict, it’s a war, it’s a crisis that needs to be resolved as soon as possible.

Well bravo – insofar as it goes.

It remains to be seen whether Messrs Tillerson and Trump will repeat that framing publicly too – or indeed whether US Ambassador Masha Yovancvitch or US Ambassador Nikki Haley will also henceforth employ that same framing.  They should, for war is what it is.  Diplomacy can be deft and nimble, or it can be blunt and robust – but it should be accurate either way.  How else can effective policy be crafted?

Unfortunately the accurate words of Mr Volker will almost assuredly only be associated with the narrow view of the fighting on the Donbas front by the domestic Ukrainian media – it’s unlikely the international media will even notice – whereas those words should be associated with the entire spectrum of war that Russia wages.

Even if a ceasefire can be achieved, the Russian war will continue (for at least another decade, probably longer) on all other fronts – perhaps even intensify.

If Russian cyber attacks continue to damage, degrade or completely down critical infrastructure then lives of non combatants/innocents can, and eventually will, still be lost.  The issue of (yet more) war crimes will arise.

In the meantime a reader may be wise to pay attention to the official rhetoric henceforth.  Is there about to be a (public) reframing – whether it be to support the imminent Ukrainian legislative cancellation of ATO and commencement of “temporary occupied territories”, or simply a move to accurate oratory and prose – or both.

To be sure it will not change policy within The Kremlin, but it may make for more robust policy from without.


Taking the slow boat to an Anti-Corruption Court

July 21, 2017

As a search of the historical posts of the blog will amply display, it is something of a fan of the Venice Commission and the wise Opinion (it does not do recommendations, only Opinion) it almost unfailingly produces when asked to assess matters of legal structure, process, and prose.

That robustly remains the case, albeit the Venice Commission is not renowned for speed.  Speed, in all fairness, is not a particularly desirable virtue when dealing with such weighty matters submitted for consideration and resulting Opinion.  And Opinion is worth the wait – on the proviso that those receiving it closely adhere to it, rather than ignore it.

Both internally and externally of Ukraine expectations, demands, and frustrations have seen the absence of a dedicated and independent Anti-Corruption Court steadily rise toward the top of the judicial reform agenda (or lack of it) underway in Ukraine.  “Needless to say there are some significant issues within the Constitutional Court legislation rushed through the Verkhovna Rada on its final day of its final plenary session before parliamentary summer holidays.   The new legislation does not provide for a structure or mechanism to make the 6 parliamentary, 6 presidential, and 6 Congress of Judges appointments subject to any form of open competition.  Thus the most deserving and successful candidates will remain those politically deserving – no differently to what occurs now.

The new grounds for dismissal are both woolly in interpretation and can be equally politically driven (albeit that dismissal is now the sole purview of the CoJ).  The major pluses to the hurriedly passed  legislation are, well, none.

A dedicated Anti-Corruption Court is not going to appear any time soon leaving the anti-corruption institutions to present cases to an unreformed court – and Lady Justice in Ukraine remains a harlot for hire.”

Naturally with a National Anti-Corruption Bureau genuinely attempting to do its best, independent of political interference, to place cases before the current corrupt judicial system hardly brings confidence in a rightful and proportionate judicial outcome.

(Thus far the proposed changes to the Supreme Court do not bring about any confidence either.  It appears to simply arrive at the same probability of political interference but via a different appointment and dismissal route to that which currently exists.)

Quite simply the Ukrainian political class remains too weak to genuinely set the prosecutors and judiciary free from their (all to often nefarious and unwanted) influence.

But pre-election electioneering will begin in the Autumn – there is no doubt.  Elections may not be until 2019 but obvious preparatory acts and the first truly aimed shots will be fired before the year end.  As such the current leadership will soon begin handing out incentives to the electorate.  It will also have to mitigate against any poor commentary from the external supporters of Ukraine that may resonate within the voting constituency, whilst simultaneously not upsetting the domestic power dynamics too greatly to avoid unnecessary (oft behind the curtain) electoral enemies.

As the Anti-Corruption Court (and not an Anti-Corruption Chamber within an existing court structure, as some within the elite would prefer) sits high atop civil society and external support on the rule of law agenda, a way to kick the issue into the long grass is necessary without appearing obstructive.

Lo, on 20th July 2017, two draft laws, “On Anti-Corruption Court” (No. 6011), and “On Amendments to the Law of Ukraine on the Judiciary and the Status of Judges on the introduction of mandatory specialization of judges to deal with cases of corruption ” (No. 6529) were sent, via the Ukrainian parliamentary Speaker to to the Secretary General of the Council of Europe (CoE) for forwarding to the Venice Commission.

A reader would be wise not to expect an Opinion from the Venice Commission on either law within 12 months – July 2018 perhaps the earliest.  Ergo, the Ukrainian leadership can now justifiably state it awaits the wisdom of one of Europe’s most respected institutions before progress can be made.

Naturally upon receipt, the Ukrainian leadership must then mull over the Venice Commission Opinion on both laws and decide what, if any, of the Opinion it will take heed of in any subsequent tweaking to what was originally submitted.

Ultimately it is then a matter of political expediency as to whether the decision to submit “Venice Commission approved” legislation goes to the Verkhovna Rada for vote before or after the 2019 elections.

Thereafter if the draft laws become law there is then the less than timely matter of creating the structures and appointing the personnel.

Thus, sometime in 2020 may reasonably be the earliest an Anti-Corruption Court physically materialises – and 2020/2021 the earliest the first anti-corruption case heard by the new court see a verdict reached.

Therefore should Ukraine actually fully adopt (at least on paper) whatever is within any Opinion returned, the submission of these two laws to the Venice Commission on 20th July now necessarily requires a realistic look at timelines – and to what politico-judicial skulduggery can be expected in the meantime.


Odessa MP appearing in the Trump-Russia orbit? Not quite

July 20, 2017

In the US the Trump-Russia affair continues to muffle much of the news across the globe as one questionable occurrence appears after another.

Whether or not President Trump, or his campaign, colluded/conspired with The Kremlin remains to be proven in a court of law.  To be honest, when it comes to President Trump, his business empire and any kompromat and/or Russian influences, it is probably wiser to follow the money and look to money laundering either knowingly or negligently over the decades.  Quite clearly no due diligence was entered into when it came to the legitimacy of the money used to buy or invest in Trump real estate.

The clouds that hang around his family and entourage seemingly also continue to darken.

Prejudging on-going investigations are a somewhat pointless affair even if they make good media copy and/or click bait – and anyway this blog focuses on Ukraine.  Thus perhaps the affairs of Paul Manafort are about as close to anything in or surrounding the White House behind the curtain issues?

In a very recent New York Times article the name Ivan Fursin appeared in relation to a string of offshore companies and apparent debts of Mr Manafort.

Small change perhaps?  That depends upon what a reader knows of Mr Fursin.  With very little said of Mr Fursin, so perhaps a little background?

He is after all an MP for Odessa.

Ivan Fursin is allegedly a childhood buddy of Sergei Liovochkin – who with Dmitry Firtash currently sits behind the Opposition Block (remnants of Party of Regions) of which Mr Fursin is an MP.  It is claimed that Mr Fursin’s father once worked in the Ministry of Interior under General Liovochkin, Sergei’s father and there began is a lifelong friendship.  Whether or not that is true, both men went to Kyiv Economics University at the same time (1989 ish) and certainly bonded there if not before.  (Within that university circle of friends are several other (in)famous names which are not relevant to this entry.)

In 1993 Messrs Liovochkin and Fursin (and a few others) opened a bank in Kyiv called Askold.  That the bank survived nefarious and violent interests during those wild, wild days of the 1990’s can perhaps be put down to Sergei Liovochkin’s father – the aforementioned General within the Ministry of Interior.

The bank also managed to attract one or two quality customers – perhaps again thank’s to the General.

Whatever the case the bank also become one of the major currency converters – for the legitimate customer or otherwise.

By 1995, with a bit of offshore smoke and mirrors, Askold Bank became the infamous Banking House (also known as Gangster House by the late 1990s).  Naturally the temptation to avoid nefarious deeds was too great – questionable property financing, insurance and trusts etc.

Banking House closed in the late 1990’s mired in scandal – though naturally nobody went to jail.

Mr Fursin then appeared in Odessa in 1999 with a new bank called Misto Bank (which he created with Sergei Kivalov, Artem Ershovym and another).  Mr Ershovyn would continue to feature in the business of Messrs Liovochkin and Fursin via his East-West finance vehicle.  It is about this time that Dmitry Firtash and small shares in an oil and gas company company called Basco all appeared within the Fursin orbit – via Sergei Liovochkin.

For the next decade Mr Furzin built his empire, much of it along side and with minority shares within the Firtash empire – Clearing House, Centragaz, Raiffeisen Investment and more.  This in turn and via these entities, led to Mr Fursin having an indirect minority share in the notorious RUE monopoly gas intermediary between Russia and Ukraine.  Mr Furzin began collecting Odessa landmark property while Misto Bank lent large sums to select clients in Kyiv – some of which were then “taken over”.

In 2012, Mr Furzin entered the Verkhovna Rada for the Party of Regions having won single mandate seat 138 in Odessa – which was just as well as he had become a person of interest in the Boiko Towers oil rig scandal via, by then, a vast web of smoke and mirrors offshores, and his Centragas interests.  Naturally nobody has yet gone to jail.

He remains a parliamentarian for the Opposition Block.

So the apparently still unpaid “loan” to Mr Manafort of $9.9 million via all the corporate smoke and mirrors – small change or not for Mr Fursin?  Well he’s certainly not hurting!

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