Economist article here about the continuing corruption at the heart of the Ukrainian government:
Is Ukraine really interested in fighting corruption?
Sep 4th 2023 | KYIV
Winston churchill talked about the bulldogs of Soviet power fighting under the rug, with skeletons tossed aside as a clue to who was out of favour. In modern Ukrainian politics the game is less vicious, though often just as opaque.
Yuriy Nikolov, an investigative journalist, likens the practice to a scene in “The Prestige”, a thriller from 2006, in which Michael Caine’s John Cutter explains that the secret of magic is about diverting attention from the trick. “The real game is usually elsewhere,” Mr Nikolov says.
In the space of two days over the weekend, Ukraine has seen two big
corruptionstories make the news. At face value they show the government wresting back the initiative on reform. On September 3rd President Volodymyr Zelensky said he would replace his defence minister, Oleksii Reznikov (pictured), following months of corruption scandals at his department. A day earlier the sbu, Ukraine’s domestic security service, had detained Ihor Kolomoisky, a controversial oligarch once closely associated with the president, on suspicion of fraud and money-laundering. But there are some questions about the timing and nature of both interventions.
Mr Zelensky focused on his defence minister’s role as a brave and trusted comrade over 550 days of war. But in recognising the need for a change, the president was acknowledging that his record has been tarnished. Mr Reznikov was viewed by many, including Western partners, as a charismatic and resourceful negotiator. He was one of the inner core that stayed in Kyiv throughout the invasion despite the huge dangers. To his detractors, however, he will be remembered for two scandals, involving eggs and winter coats.
Mr Nikolov’s journalism exposed both. In February his investigations revealed that Mr Reznikov’s ministry had been paying 17 hryvnia (46 cents) for eggs when the market price was just five. Mr Reznikov somehow survived that scandal, only to be hit by another in August, which showed his ministry had bought military coats from Turkey, also apparently at a huge markup. Invoices in Turkey showed the coats had a value of $29, rather than the $86 paid by Ukraine.
Government insiders say Mr Reznikov does not appear to have had a direct hand in either of the contracts. He did not appoint the officials who signed the deals. But his poor handling of both scandals, including picking fights with journalists about irrelevant details, made his departure inevitable. “The defence minister had become a focus of jokes,” says a source close to Ukrainian law enforcement. “That’s not a good look at a time of war.”
Ukraine’s parliament was expected to confirm Mr Reznikov’s departure and approve his replacement, Rustem Umerov, in a session on September 4th. Mr Umerov, the chair of Ukraine’s State Property Fund, is something of a dark horse. Behind the scenes, he has played important roles as a negotiator on everything from the grain deal that allowed exports from Ukraine’s blockaded Black Sea ports to the greyer world of arms deals. He is a former investment banker and a prominent member of the Crimean Tatar community.
He was not the first choice for the job. Sources say the other men being considered wanted to install their own teams in the Ministry of Defence—a suggestion that was seen as too radical for a ministry with such a huge part of the state budget. Instead Mr Umerov is seen as a compromise candidate: a loyal administrator, but also respected by some anti-corruption activists. “He is simply not interested in money,” says Yaroslav Zheleznyak, an independent-minded mp and a colleague in the opposition Holos party. “I have high hopes for him.”
Mr Zelensky’s team hopes such qualities will allow them to quell public anger. Recent polling suggests six out of ten Ukrainians believe that corruption is the “main thing” standing in the way of military victory against Russia.
The presidential office also appears to have had an eye on the polls when taking on Mr Kolomoisky. Once one of Ukraine’s most powerful men, the oligarch has been a much diminished figure since the nationalisation of his main banking assets following allegations of serious fraud. Mr Kolomoisky had at one point been close to Mr Zelensky, with the oligarch’s 1+1 TV channel promoting first his comedy and then presidential ambitions, but the two have also slowly fallen out. That has allowed the president to make a graphic public demonstration of his battles against corruption.
The role of the sbu, a service controlled by the president, in taking on Mr Kolomoisky has, however, raised eyebrows. The law-enforcement source says the more independent (and Western-backed) National Anti-Corruption Bureau (nabu) had been planning to issue charges against the oligarch later this week. Some interpret the sbu’s move as an attempt to steal the headlines from nabu—or even less charitably, as an attempt to disrupt the case and allow Mr Kolomoisky to avoid court. Cases prosecuted by the sbu are widely seen as more dependent on political whim. Their management of a case often means the end of it. “We will see over the coming days, and whether nabu is able to issue its own charges,” suggests the source.
The eventual resolution of both stories—whether Mr Kolomoisky will face court and whether Ukraine’s defence ministry can be turned around—will go some way in determining how willing the West is to continue to underpin funding for Ukraine. Mr Nikolov said the renewed focus on corruption could only have a positive effect on crooks in government. “The more eyes you have, the less easy it is to trick.” The price of a military egg is a good indicator of the effectiveness of his work. It’s back down to seven hryvnia. ■
