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    August 24, 2015

    "Carrying water in a sieve": European loan vanishes without trace in Kiev


    Aug 24th 2015. Translated by Tatzhit.

    From the translator:
    This has been exploding all over Ukrainian internet and mass media in the past few days; as discussed here, the president is getting too much power and presumably the news channels controlled by other oligarchs are jumping at the chance to paint his team as being more corrupt (which is a lie, they’re all the same).

    Still, this is an exciting story that gives a perfect example of why giving loans to the current government is similar to the proverbial activity of “carrying water in a sieve”.

    Originally posted by “Nashi Groshi” journalist Denis Bigus <more shady deals in this article>:


    ======

    Today we’ll share a story of a completely unprecedented, simply stunningly arrogant theft. Something this brazen rarely happens, and we have the opportunity to talk about it even less often. Banking regulations, all that. Today we talk about Ministry of Finance, the National Bank, and how, under the guise of “banking confidentiality”, one can steal an international loan for 5,000,000 euro. Buckle in, the story has some serious twists:

    It begins a few days before the Maidan takeover. Ukraine is negotiating getting a 5,000,000 euro loan from European Investment bank, for rebuilding power lines. The money will be kept in, and disbursed by, the bank owned by Artem Pshonka - BGbank.

    Then Maidan happens. <Yanukovich’s buddy> Pshonka runs away, Mahnitsky from “Svoboda” <nationalists, replaces Pshonka-senior as> Prosecutor General. BGbank is on the verge of collapse, and taken over by the men of Svoboda’s sponsor - Igor Krivetsky, otherwise known as ”Pups”.

    By July 2014, BGbank consists of a table, couple of chairs and a folder with documents. It is already under direct oversight of the National Bank of Ukraine (NBU), with NBU curator on site. It’s already in the news that the bank cards no longer work in ATMs. In short, everyone understands that the bank will soon go bust. And at this point, ranking Finance Ministry official Vitaly Lisovenko (an experienced banker, by the way), transfers the aforementioned euro loan to the account in BGbank. Cause “why not”? According to the documents from half a year ago, the bank is all right.

    No, of course, AFTER approving the transfer, Lisovenko sends a courtesy letter to the NBU - asking, roughly “is this bank doing OK?”. NBU replies - “All good, holding steady”. Although, remember, the bank was already in “supportive care” mode, with NBU curator onsite for months. A week after that answer, NBU prohibits BGbank from taking deposits, and 3 months later puts it under temporary administration. At this point, there already wasn’t a dime of money in the whole bank.

    Of the 5 million euros, UkrEnergo, which was supposed to get the loan, only managed to pull out a million. Although they’ll have to pay interest on 5 mil, and will need to return the entire amount. Now they’re attempting to get it out of the budget.

    Vitaly Lisovenko - appreciate the irony - is now managing the external debt of Ukraine. Goes to talks with creditors. Explains the country’s finances are in a tough spot due to “war”.



    But let’s go back to what happened in BGbank. After receiving a gift from the Ministry of Finance, they gave a million to Ukrenergo (how generous), and the rest of the money was used, after a series of operations, to buy a portfolio of government bonds. The owners and management of the bank were replaced by various "proxy people" by that point (one of them is in “wanted” announcement in the picture above). This package of government bonds, worth 61 million hryvna, was sold to an unknown company for 8800 hryvna.

    Try to wrap your mind around this. A government loan was turned into a portfolio of securities worth 61 million UAH and sold to unknown people by nobodies, for $400. In the presence of the NBU curator.

    And no one even knows the identity of the buyer.
    The transaction was carried out through the National Clearing Center. The accounting department of the new administration, installed by the National Bank, describes the deal like this: "We have sent 61 million to the National Clearing Center, and received 9,000 hryvnia from them. Who did we send to, and who paid us - is a mystery known only to the Clearing Center."

    Clearing Center should notify the National Bank and Ministry of Finance about such “mildly” suspicious transactions, and their representative says that they did. However, this does not make their subsequent actions look any better: after this greatly successful gesheft, the Clearing Center is hiding who the buyer is. From everyone - including even the NBU administration in BG bank!

    “- Say, Clearing Center, who has bought 61 million of securities from us for 9000 hryvnia?

    - Go **** yourselves, kids - confidential banking information.

    - Clearing Center, are you high? We are the seller in that deal.

    - Then **** off because our printer isn’t working. And in general, don’t ask so many questions.”

    Ultimately, Ministry of Finance tightly closed their eyes and gave BG Bank the euro loan. Then the National Bank tightly closed their eyes and let the nominal "management" take the money. Maybe, by now, someone already cashed in the government bonds and walked out with a suitcase of unmarked bills.

    Oh, I forgot to tell you - whose people carried out this charming deal. In order to deal with government bonds, BG bank was temporarily invaded (for 2 weeks) by men from groups associated with Sergei Shakhov. His office is next to the former office of Pshonka, in the very same building of the BG bank, and previously, they were considered partners.

    But now, Mr. Shakhov is a partner of the “revolutionary” regime. By his own admission, he organized a the election headquarters for Poroshenko in the Luhansk region. That election HQ was headed by another ex-buddy of Pshonka - MP Mishchenko, whose people were also seen in BG bank some time back.

    So, that’s all you need to know about our President's new team.

    PS. Really, when the Clearing Center, controlled by the NBU, flat out refuses to disclose to the NBU administration who stole their 61 mil - I don’t even know what to say.

    =============

    Further reading:

    Another piece from Nashi Groshi, posted at Russia Insider, details a much, much bigger heist (~2 billion dollars of IMF aid) by oligarch Kolomoiski, as well as others.
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