Ukrainian banker conviction ”politically motivated”?

Europe Uncategorized

The conviction this week of a powerful Ukrainian banking figure could have far-reaching implications for the country’s financial sector and upcoming presidential elections.

Volodymyr Bondar, former deputy chairman of the National Bank, was sentenced on Monday by Judge Yelena Kafidova in a sweltering courthouse in Kiev’s Pechersk District.

But it wasn’t just the sun outside that raised the courtroom temperature.

In the course of her 30-minute judgment, Judge Kafidova said the former deputy chairman of the National Bank was culpable for $20 million in losses incurred by the state in 1997 after he approved a $75 million transfer to the Cyprus-registered affiliate of Credit Suisse First Boston and authorised a $15 million loan to the Kharkhiv-based Real Bank.

The Bondar case is widely perceived by political opposition leaders as being aimed at discrediting Viktor Yushchenko, who headed the National Bank in the 1990s.

Opposition leaders say weighted national media coverage of the lengthy investigation and subsequent trial may cause voters to question whether Yushchenko knew about the transactions all along.

Bondar, who worked at the NBU (National Bank of Ukraine) from 1991, was Yushchenko’s deputy from 1995 to 1999. He was convicted under Article 165 of Ukraine’s Criminal Code for abuse of office.

Judge Kafidova banned Bondar from holding any executive positions at commercial or government agencies after his release from prison.

Yushchenko – who leads the oppositionist "Our Ukraine" bloc (founded on the union of 10 national political parties), is expected to run for president next year. He slammed the court’s verdict on May 13, accusing authorities of orchestrating a "show trial."

"The regime, having lost the trust of the people, is now trying to sully the reputation of those it fears," he said.

Yushchenko pointed out that four of the five banking "experts" who testified in the case have never worked in the banking business.

Kyiv City Prosecutor, Zoya Kravchenko, dismissed the criticism.

"The case was tried in open court," Kravchenko said. "People can make up their own minds whether the verdict was politically motivated or not."

The charges against Bondar originated in 1998, when a Secret Service (SBU) probe into NBU activities led to the creation of an ad hoc parliamentary commission charged with investigating how the central bank managed the country’s hard currency reserves. Bondar’s name figured prominently in the commission’s final report.

In June 2000, the Kyiv Prosecutor’s Office opened a criminal investigation into the matter. Bondar was arrested in March 2001 and held in pre-trial confinement for a month before being released pending trial. In August 2001, Kyiv prosecutors formally charged him with abuse of office.

According to commission chairman Viktor Suslov, 500 copies of the report were distributed unofficially to journalists and other interested parties during the summer of 1999. The report served as the basis for a series of articles that appeared in the Financial Times in early 2000. The articles held up the transactions, approved by Bondar, as examples of International Monetary Fund (IMF) incompetence.

A series of audits commissioned by the IMF in 2000 found the NBU had indeed engaged in transactions to generate a falsely optimistic picture of its reserves, but the fund said it had detected no cases of misappropriation of funds.

Since 1999, Yushchenko has consistently stated he was unaware that Bondar approved the transactions.

Oleksandr Yelyashkevych, a former deputy head of parliament’s Finances and Banking Committee, said in a written statement May 11 that he possesses evidence that President Leonid Kuchma and then-First Deputy Rada Speaker, Viktor Medvedchuk, had conspired to try Bondar in February 2000: three months after Yushchenko was appointed as prime minister.

Yelyashekevych, who was granted refugee status in the United States last year, did not elaborate, but promised to pass on proof of the allegations during Yushchenko’s May 11-17 visit to Canada.

Bondar’s lawyer, former Deputy Prosecutor General Bohdan Ferents, said on May 14 he had received informal indications prior to sentencing that his client would be convicted.

"No evidence was presented to prove his guilt," Ferents said after sentencing. "The court said nothing about how Bondar exceeded his authority at the NBU or who suffered as a result."

Ferents said his client – who was unable to appear in court for sentencing due to ill-health – would appeal against the verdict.

Bondar’s wife, Larissa, thanked Yushchenko for offering her family "moral support" throughout the legal ordeal, which she blames for ruining her husband’s health.

Meanwhile, Real Bank spokesperson, Oleh Khmil, said on May 12 that his bank is thriving.

"As of May 1, we have paid off $4 million of the $15 million lent to us in 1997 by the NBU," Khmil said.