Following six years of corruption scandals involving money Ukraine received from selling its greenhouse gas emissions quotas to Japan, Ukraine is finally returning some of the funds.
Ukraine got the funds under the Kyoto protocol, an international climate deal adopted in 1997 that sets binding emission reduction targets for its signatories. In 2009 and 2010, Kyiv sold its emissions quotas to Japan for 440 million euros. Under the agreement, the funds were designated as “green” investments into energy-saving programs. Kyiv was also obliged to return any unused money to Japan in 2012.
However, after the 2012 deadline to spend the funds passed, the return of the unspent funds was delayed three times, for reasons including the political turmoil in Kyiv, the annexation of Crimea and the outbreak of the conflict in Ukraine.
The unspent money is only now being returned, with Ukraine’s State Treasury Service sending 2.5 million euros back to Japan, news agency Interfax-Ukraine reported on Feb. 26. Overall Ukraine is to return 5 million euros.
But why did Ukraine fail to spend the funds?
Andriy Zheleznyi from National Ecology Center of Ukraine told the Kyiv Post the reason is “the inability of Ukraine’s Ecology Ministry, which is responsible for this deal’s implementation, to organize a transparent and clear scheme for executing green projects.”
The Kyoto funds have been mixed up in corruption scandals since they arrived in Ukraine.
The first scandal was connected to then-opposition leader and former Prime Minister Yulia Tymoshenko, whom the authorities under former President Viktor Yanukovych accused of misusing 320 million euros received in December 2010 from the sale of greenhouse gas emission quotas. Tymoshenko allegedly used the funds to pay pensions instead of planting forests as had been agreed with Tokyo.
Later, Yuriy Ivanyushchenko, a political ally of Yanukovych and ex-lawmaker, was accused of embezzling 16 million euros of Kyoto money. However, Ukrainian prosecutors failed to pursue their case against Ivanyushchenko, and the Ukrainian Appeals Court ruled to close criminal proceedings against him on Feb 11. The court based its ruling on “a lack of action” on the part of the prosecutors.
The new post-EuroMaidan government has also been involved in scandals with the Kyoto money – the last straw for Tokyo was a corruption scandal that erupted in December 2015 over a tender for LED light bulbs for street lighting.
The Hr 480 million ($17.8 million) tender was won by an obscure company, Agrotekhbud, which critics said had all of the characteristics of a shell company. The tender transaction was suspended and an investigation into the case was launched.
An audit of Kyoto projects showed that Ukraine had 20 million euros in remaining funds, although the administration of former President Viktor Yanukovych earlier told the Japanese government that all of the money had been spent, then-acting Ecology Minister Serhiy Kurykin said on Jan 20.
According to Kurykin, after very difficult talks, Japan agreed that Ukraine could keep 15 million euros for energy saving projects and the renovation of underground trains, but 5 million euros had to be returned.
The situation could have been different and Japan could have again postponed the deadline for returning the Kyoto funds if the government had been able to show any progress, Zheleznyi told the Kyiv Post. “But in the past two years, nothing has changed. The mechanism for spending the money was not changed, it retained the element of corruption, and the investigation into the crimes of the previous regime failed.”
Ukraine will report to Japan on March 31 on how it has spent the remaining funds.
Kyiv Post staff writer Olena Savchuk can be reached at [email protected]
