Foreign investors grill Poroshenko over corruption, sale of seats

Tomas Fiala, head of the major investment house Dragon Capital, was first to the microphone, where he lashed out about how, despite the pronouncements of honest parliamentary elections, places on party lists were allegedly being sold for $3-4 million.

“And I refer to all party lists, including yours and yours,” Fiala  stressed, pointing at the president and prime minister.

Fiala then asked how asset raids were still happening months after the EuroMaidan Revolution, citing a $200 million commercial property dispute between an Estonian investor and local property developer who is running for parliament.

“And that person is number 58 on your party list, Mr. President,” Fiala said. “How do you respond?

Poroshenko said that he was not aware of the problem and would investigate, going as far as to possibly exclude the specific candidate. The president then emphasized how the meeting was all about “trust” and that government and business were all on one team.

Number 58 on the list of Bloc of Poroshenko is Kyiv city council member Oleksandr Hranovsky of Vitali Klitschko’s Ukraine Democratic Alliance for Reforms and a shareholder of Skymall, a shopping center in Kyiv that is in the center of corporate conflict  Hranovsky could not be reached for comment. Dragon Capital is a minority investor in Skymall through its property development fund.

A serviceman of the pro-Ukrainian Saint-Maria Battalion prays near the cross, installed on a seashore near the eastern Ukrainian city of Mariupol, on Oct. 2. (AFP)

Every seat in the main ballroom of the Fairmont Grand Hotel in Kyiv was filled as Poroshenko and Yatsenyuk fielded questions about their plan to transform Ukraine into a modern European country in 2020.

Poroshenko said Yatsenyuk’s presence was to show “that the president and the government remain united in their goals.” The president emphasized that “the core vision of the Ukrainian idea is European Union integration and Ukraine’s rightful place in the world.”

This includes a list of 62 initiatives, the most essential of which cover combating corruption, making the judiciary independent, deregulating the economy and improving national defense.

In addition to Russia’s war against Ukraine and energy security, Yatsenyuk stated graft was a top challenge. He noted that parliament will hold an extraordinary session on Oct. 7 to consider a bill to create an independent corruption-fighting agency that also is a requirement of the International Monetary Fund, the country’s major source of financial support.

When asked several times about why the bureaucracy was still bloated and that little in the way of red tape had been cut, including combating corruption, Yatsenyuk became defensive and began reciting his accomplishments.

“We have cut the number of bureaucrats by 10 percent,” he said, “and reduced the number of required licenses. We are not happy with this, but we are advancing.” He also threw out the “Rome wasn’t built in a day” excuse.

The other major concern of business was the rise in excise, especially sin taxes on alcohol and tobacco.
However, of equal concern was the apparent contradiction of the president’s refrain that the government welcomes all suggestions and cooperation with the business community and actual experience, where ministries have been either rejecting or ignoring suggestions.

Again, the duo reiterated the openness of their government and said that they would look into the matter.

Continuing the bureaucracy theme, Edilberto Sagura of the U.S. equity fund SigmaBleyzer and former World Bank country director warned that “if deep and comprehensive administrative reforms of the bureaucracy are not made, all reforms will come to naught, since if you cut 100 licenses (as Yatsenyuk said) 200 new ones will appear overnight.”

He asked what the government was doing about this. Neither the president nor the prime minister gave a concrete answer, although Poroshenko brusquely stated that other essential reforms could not wait until administrative reforms were completed.

On the whole, the speakers from the business community were asking how they can accelerate the reform process and promote deregulation of the economy.

Lawyer Bate C. Toms, who heads the British-Ukrainian Chamber of Commerce, said that several hundred millions of dollars was available without donor organization contributions to begin a political risk program to encourage the return of investment to Ukraine. He said that $1 billion worth of investments was on hold because of the war.

Kyiv Post business journalist Evan Ostryzniuk can be reached at ostryzniuk@kyivpost.com.