Living up to its heritage as successor to the Soviet-era KGB, the Security Service of Ukraine showed why its powers and budget should be cut by 10 times at least.
The SBU, as it is known, has a rich budget and 40,000 employees whose core functions in a democracy should be limited to ensuring the security of the state, mainly by combatting terrorism, espionage, engaging in intelligence and counter-intelligence operations and, in general, fending off real threats to Ukraine’s wellbeing.
But political leaders, who appoint the head of the agency, have always expanded the SBU’s powers to investigate economic crimes. In practice, this has meant shaking down law-abiding businesses for bribes or attacking political enemies.
The SBU, now led by close friend of President Volodymyr Zelensky Ivan Bakanov, also sees itself as policing free speech. Such as the case when it issued a statement attacking ex-National Bank of Ukraine governor Valeria Gontareva for speaking her mind about Zelensky’s attacks on central bank independence. The SBU said in a statement on July 7, in part, that it is “inadmissible to declare statements that could harm the national security of the state.” This is all in response to Gontareva’s remark that the International Monetary Fund should ask for its money back if Ukraine’s central bank is no longer independent. (The IMF will get the money back, anyway, since it’s a loan.)
Zelensky for months tolerated physical threats, paid protests and other real crimes against Gontareva and her successor Yakiv Smolii, with his (allegedly)
corrupt, do-nothing Interior Minister Arsen Avakov firmly place.
Then, whatever Zelensky told Smolii in a private meeting on June 30, it was enough to frighten Smolii into quitting. Since then, Zelensky has been acting like he wants to take on the duties of a central banker — advocating the weakening of the value of the hryvnia and the lowering of interest rates further to boost the economy. Worse, the fear is that another of Zelensky’s friends, billionaire oligarch Ihor Kolomoisky — perhaps the biggest thief of all Ukraine’s oligarchs, and that’s quite a prize — will find himself back in the banking business again, stealing depositors’ cash to enrich himself and then, when the Ponzi scheme can’t go on, sticking the taxpayers with the losses. (A replay, in other words, of how he bankrupted — allegedly, because nothing is ever proven in Ukraine — PrivatBank).
A search is underway for the successor and it doesn’t take a genius to predict there’s the proverbial snowball’s chance in hell that the central bank will remain as independent and as transparent as it has been since 2014.
Not that Ukraine’s central bank was perfect under Gontareva. They were so slow in moving against insolvent banks that many owners emptied out the vaults of billions of dollars by the time the central bank got around to taking control.
Also, despite declaring that the 90 banks closed were guilty of simple and easily provable bank fraud, the evidence somehow got lost on the way (or in)the General Prosecutor’s Office. Most likely it’s because Gontareva wasn’t as independent as she likes to claim — there was a strong perception that ex-President Petro Poroshenko, who also appointed two of Ukraine’s mos useless and corrupt prosecutors, called the shots. Hence, $20 billion stolen, nobody punished, nobody in jail, little money returned.
London analyst Timothy Ash is right: The SBU is telling Gontareva, Smolii and everyone else in favor of an independent central bank “to shut up as Zelensky and crew take over the NBU.” Darker days ahead, indeed.
