Ukraine’s antiquated railway is in bad shape. According to Infrastructure Minister Volodymyr Omelyan, 90 percent of the country’s rails and rolling stock require upgrade or repair.
These conditions have led many to argue that the sector needs a significant injection of private capital and large-scale modernization.
Who should lead those efforts, however, is a different question.
On Jan. 30, Ukrainian members of parliament registered a draft law that they say will allow for free-market modernizations, making the country’s railway market — currently a state-owned monopoly — more competitive and open. The new legislation could ultimately give private companies unprecedented access to Ukraine’s railroad. But some have called into question the motives of the lawmakers.
Yaroslav Dubnevych, the controversial head of the Ukrainian parliament’s transport committee, is the law’s main architect. He’s also an advocate for increased private sector access to the Ukrainian railroad market.
But Dubnevych also finds himself in the crosshairs of anti-corruption investigators, who accuse him of being party to large-scale, alleged embezzlement from the state-owned railway operator Ukrzaliznytsia.
The Kyiv Post contacted Dubnevych to request an interview and ask for a comment on the allegations of embezzlement, as well as the ongoing anti-corruption investigation. There was no response by the time this story went to print.
‘Competitive’ railroad law
Dozens of new or improved connections into the heart of Europe, growing passenger and freight numbers and millions of dollars in investments are improving the Ukrainian rail system. One of the largest and busiest freight and passenger transport systems in the world, Ukraine’s rails are now on track to become a lucrative and profitable target for private enterprise.
The new draft bill submitted on Jan. 30 by a group of 39 lawmakers would give private rail carriers access to the country’s state-owned railroad monopoly — allowing them to run services that transport passengers and goods.
The new law also suggests that contracts for passenger transport could be drawn up between private carriers and the country’s Cabinet of Ministers, or local governing bodies. Companies that want to provide such transportation services should be selected on a “competitive basis”, the law suggests.
It also proposes introducing two new bodies that will regulate and control Ukraine’s new “competitive” railroad market: a central executive body and a national commission that will implement and supervise the new regulations. The bill’s authors argue that the new legislation will create a competitive market while improving the efficiency, quality and accessibility of Ukrainian rail transport.
In a written statement on Jan. 30, Dubnevych claimed that the new law would guarantee Ukrainian integration into European railway networks, increase security and ensure more transparency over Ukrzaliznytsia.
Corruption cases
Not everyone is convinced.
Dubnevych is currently the target of anti-corruption investigators, who have recently attempted to strip him of his parliamentary immunity in order to prosecute him for alleged shady dealings and embezzlement from the state-owned railroad authority.
While pushing through legislation that will open up private sector access to the state-owned railroad, Dubnevych and his alleged co-conspirators are accused of having used complex embezzlement schemes to defraud Ukrzaliznytsia.
On Jan. 3, the General Prosecutor’s Office of Ukraine, or GPU, confirmed in a statement that it had received a request from anti-corruption prosecutors to strip Dubnevych of his immunity so they could proceed with prosecuting an embezzlement case against him.
The National Anti-corruption Bureau of Ukraine, or NABU, says it suspects Yaroslav Dubnevych and his brother Bogdan, plus six other individuals, of being party to an alleged embezzlement scheme that siphoned off funds from the Ukrainian rail operator.
They value that alleged fraud at Hrv 93.3 million, or about $3.35 million, saying that it was orchestrated via a scheme of selling spare parts at inflated prices to Ukrzaliznytsia through a company they allege belongs to the Dubnevych brothers.
But NABU and the State Security Service of Ukraine, or SBU, are reportedly investigating several more criminal cases involving Ukrzaliznytsya officials and companies that are are owned by the Dubnevych brothers.
And in another, separate NABU investigation, detectives have alleged that the Dubnevych brothers orchestrated an embezzlement scheme involving the purchase of natural gas from the company NAK Naftogaz Ukrainy. In this instance, anti-corruption investigators have said that “state interests” were “damaged” to the tune of at least Hr 1.4 billion, or about $50.5 million.
On Jan. 14, a spokesperson for Ukrainian Prosecutor General Yuriy Lutsenko said the evidence provided by anti-corruption investigators who requested Dubnevych’s parliamentary immunity be stripped was insufficient, and that the documents provided contained errors, including punctuation mistakes.
Both Yaroslav Dubnevich and Yuriy Lutsenko are allies of President Petro Poroshenko, and Dubnevych is a member of parliament in the Petro Poroshenko Bloc of the Ukrainian Verkhovna Rada.
On Jan. 30, the head of the Specialized Anti-Corruption Prosecutor’s Office, or SAP, Nazar Kholodnitsky, said his investigators will re-submit their request to the Prosecutor General’s Office as soon as possible.
In the meantime, Dubnevych is free to keep working on the creation of a “competitive” railroad market, while pushing forward new legislation to regulate the state-owned rail company that he allegedly stole from.
