KYIV -- As foreign investors representing $5 trillion sat in the hotel hall, speaker after speaker bluntly confronted Ukraine’s biggest investor turnoff: corruption.

From Prime Minister Groysman to the IMF resident representative, speakers at Dragon Capital’s annual investor conference at the Hyatt on Thursday embraced the Anti-Corruption Court as key to Ukraine’s effort to turn the corner on impunity.

Across town, even the Rada seemed to play along. While seated on the speaker’s platform, Groysman pulled out his smartphone, read a few lines. With a theatrical flourish, he announced the Rada had just voted, with 282 votes, to approve the first draft of an anti-corruption court bill.

“The key issue is the anti-corruption court, Ukraine needs the anti corruption court,” he said, facing about 200 investors. Addressing impunity, he added: “We need to put a full stop to corruption in the public sector. We don’t need a lot of [jail] sentences. We need to show that people will be liable for their actions.”

The hall remained full through the morning, as investors waited for Prime Minister Groysman's noon speech and Q and A. (UBJ Editor)

Needed: A Real Court

Addressing fears that a court should only for show, he added: “If we create some distorted system, the results will be catastrophic…If the rules are in place, it will prevent many people from wrongdoing.”

Earlier, his Justice Minister, Pavlo Petrenko, sounded the same note, using the political code phrase to signify a politically independent court: “It has to comply with the recommendation of the Venice Commission.”

An independent court is key to unlocking billions in dollars of low interest loans, assured Gosta Ljungman, the IMF representative for Ukraine.

“The key issue to resolve is the anti-corruption court and assuring our previous agreements on adjusting gas tariffs are being followed,” he said, dispelling doubts that the IMF is wobbling on the issue. “All these issues are feasible and can be resolved reasonably quickly. Once they are, we can take this review to our Board, and complete distribution of the next tranche, which is $1.9 billion.”

The message was that a cooperative working relationship with the IMF would reassure private sector investors for Ukraine -- and it would also unlock more multilateral aid.

Finance Minister Oleksander Danyliuk said renewal of EU macro aid to Ukraine has been "approved." European Commission official said 'not quite.' (UBJ Editor)

IMF-EU: Joined at Hip

Earlier, Finance Minister Oleksandr Danyliuk had announced that the European Commission decided Wednesday to renew EUR 600 million in macro financial aid, or MFA. This loan to Ukraine had been suspended two months ago for lack of progress with the IMF.

However, at the Dragon Conference, Katarina Mathernova, a European Commission Deputy Director General, made sure that attendees saw no daylight between the EU and the IMF.

“For our MFA to come on stream, we need a letter from the IMF, or an IMF program,” Mathernova said, reaching over and touching Ljungman on the arm in a gesture of solidarity. “Whatever the Ukraine government has committed with the IMF is very important.”

On a different topic, government speaker after speaker assured private sector representatives that the government is clipping the wings of rogue security agencies.

The government has started to list inspection schedules online, said Maksym Nefyodov, deputy minister for economic development and trade.

“Businessmen can see who is coming to check them, and what are the areas to be checked,” he said of visits that can lead to shakedowns. “If someone shows up and says ‘I just decided to pop in,’ the business has the right refuse them.”

Ghosts of Soviet Past

Groysman spoke of new laws restricting activities of the State Security Service of Ukraine, or SBU.

“We want the SBU to be stripped of right to contact with business,” he said of bills under preparation. “We want the subdivision of the National Police that deal with business to be liquidated.”

In their place, Finance Minister Danyliuk assured attendees that he plans to persevere in creating one investigative agency to deal with business.

“We are preparing the law on creation of the Financial Investigation Service,” said. “We are committed to move forward and to create this institution.”

“The tax police, the general prosecutor’s office – they suppress business,” he said of two targets of reformers. “That is the legacy of the Soviet past -- not only repressing business, but the people who try to change the country.”

Justice Minister Petrenko was equally blunt, collectively calling the agencies “a monster.” He said: “This Soviet inheritance -- a Soviet judiciary and Soviet law enforcement – are unchanged.”

Don’t be a Kamikaze

Francis Malige, a French banker, represents the bank with the largest loan portfolio in Ukraine, the European Bank for Reconstruction and Development.

“If we tell investors, come and build a plant -- and it could be stolen -- that is not so attractive,” he said.

Addressing government officials, he assured the fighting corruption will be a vote winner in the 2019 elections.

“As we enter the year before election, you don’t have to be a kamikaze,” he said. “An anti-corruption court is a critical part of building a lasting Ukraine.”

Slider Photo: Prime Minister Groysman talks to investors, while Daniel Bilak, head of UkraineInvest, listens. (UBJ Editor)

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Posted March 2, 2018