National Bank of Ukraine Chairman Viktor Yushchenko has survived another call for his ouster in parliament following a report accusing the central bank of misappropriating the country's hard-currency reserves.
The allegations against Yushchenko and the NBU were drawn up by a parliamentary committee over the last several months and debated in a closed parliamentary session on May 6. Viktor Suslov, a member of the Peasant faction who is thought to have designs on Yushchenko's job, headed the commission.
At the debate, Suslov pressed for a vote of no-confidence in Yushchenko as a result of his committee's findings. But the motion, which most certainly would have led to Yushchenko's resignation, fell 36 votes short of the 226 votes needed to approve the motion.
Suslov said that Yushchenko should resign regardless of the outcome of the vote.
'If he was governed by the interests of the state, he would resign and would not allow what is going on in the mass media now and in the session hall. This would be best for the country,' Suslov told the parliamentary press corps.
A day before the parliamentary debate, Yushchenko said that resignation would be the easiest way out for him.
'Every person comes to a critical point where they just can't go on anymore,' he told interviewers from several television stations. However, he did not resign and instead came to the parliament the day after the debate to defend the NBU's actions.
The steps leading to the report and closed-door attempt to oust Yushchenko began on Oct. 1, 1998, when the State Security Service of Ukraine (SBU) presented a report to parliament indicating that the NBU had illegally handled the nation's hard-currency reserves. The full SBU report was never presented to the entire parliament and has never been made public officially. But details leaked to the press indicate that it was similar to the report gathered by Suslov's committee.
That report alleged several violations, the most controversial of which is that the bank failed to return up to $100 million of a $580 million deposit it kept in a Cyprus-registered branch of Credit Suisse First Boston bank in 1997-1998. CSFB secured the low-interest deposit with face-value Gazprom promissory worth substantially less than their discounted market value. That action, described by the committee as 'unsafe,' allegedly cost the country $85 million.
Lawmakers also alleged that the bank illegally transferred part of its reserves to Russia's National Reserve Bank, pursued a flawed monetary policy and lobbied the interests of the First Ukrainian International Bank, co-founded by Yushchenko's brother.
The latter charge also revolved around CSFB Cyprus, which allegedly loaned First Ukrainian International Bank $150 million for half a year at a highly favorable, 5 percent interest rate. That sum was then deposited into the accounts of the NBU and presented to the International Monetary Fund as evidence that the NBU's hard-currency reserves had grown enough to meet the fund's lending requirements.
Several sources told the Post under the condition of anonymity that the IMF knew that Ukraine had used untraditional means to boost its reserves. But none of those sources indicated that the IMF knew anything about the specific nature of those means, and could not speculate on whether First Ukrainian International Bank was involved.
Suslov did not provide details on the outcome of the committee's examination, saying it could adversely affect the hryvna's exchange rate.
Yushchenko himself said the operations were 'completely normal' and said that the case was politically motivated. He did not say who was behind the investigation, saying that only 'those who wrote [the report] know who ordered it.'
Yushchenko aide Viktor Lysytsky said that operations with hard-currency reserves involve many people in Ukraine and abroad and can be easily checked. He said that the furor surrounding the National Bank was motivated more than anything else by the desire of various political forces to gain control over government policy in regard to the printing of additional hryvnas.
'Yushchenko is not allowing control of any political forces over emission,' Lysytsky said.
Lysytsky also said that the SBU has a right to start a criminal case against any government official, including Yushchenko, if any accusation against him is serious.
'Obviously, they do not have any serious accusations,' he said.
The IMF has praised Yushchenko's tight monetary policies in the face of the declining currency reserves and a loss of investor confidence in the Ukrainian economy.
While the hryvna has lost close to 50 percent of its value since the Russian crisis hit last August, the NBU has kept the hryvna stable at around four to the dollar for the last two months.
Speculation ran rampant as to how Yushchenko was able to survive the no-confidence vote in face of a leftist-leaning parliament generally hostile to his policies.
President Leonid Kuchma is thought to have a personal interest in seeing Yushchenko hold onto his job, if only because an unemployed and popular Yushchenko could consider a possible presidential run.
At the end of April, the president made public statements praising Yushchenko for his high professionalism and his contributions to the stability of the hryvna. Analysts said that those statements in Yushchenko's favor may have been a signal to the pro-presidential Social Democratic faction in parliament, which was originally behind the anti-Yushchenko campaign, that they should not press for his resignation.
