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Guest Post: What Is Happening In The Ukraine? – Market Maker Edge Trading in Multiple Markets Skip to main content

Guest Post: What Is Happening In The Ukraine?

By January 31, 2014No Comments

Submitted by Pater Tenebrarum of Acting-Man blog,


yush and tymo


Viktor Yanukovich, who looks like he would make a good bouncer

(Photo credit: Reuters)



Not surprisingly,  the Ukraine is listed as one of the most corrupt countries in the world, tied with Bangladesh, Cameroon, the Central African Republic and Syria. On the surface, the conflict in the Ukraine is between the Russian-speaking half of the country (where Yanukovich’s main support base is) and the more pro-Western Ukrainian-speaking half.

It appears to an outside observer rather as though various criminal gangs are vying for control of the State so that they can steal without fear of retribution.

A friend pointed the following example of a wealth-grab by Ukrainian politicians out to us. Apparently two businessmen and members of parliament have shaken down BNP Paribas for $100 million, with the connivance of the Ukrainian courts. Here is an open letter written by the board of the Ukrainian subsidiary of BNP Paribas to the president:

“Dear Mr. President,


BNP Paribas international financial group represented by UkrSibbank PJSC expresses its deep respect and is forced to appeal to you for protecting its rights as a reliable strategic investor of banking system that promotes the development of Ukrainian economy with credit resources. The European Bank for Reconstruction and Development, the largest financial investor in Ukraine, owns a 15% stake in UkrSibbank PJSC.


Taken the importance you traditionally pay to the investment climate in the country, we hope that you will not leave without attention an egregious situation that has been developed in business relations between UkrSibbank PJSC as a lender and the actual owners of AIS corporation Dmitriy Svyatash and Vasiliy Polyakov as unscrupulous borrowers who have been evading repayment of debt totaling USD 100 mln for nearly 5 years.


Such loans were granted by our bank in 2007-2009 under personal guarantees of Messrs Svyatash and Polyakov being the actual owners of AIS corporation, managing its current activities and now serving as the People’s Deputies of Ukraine. However, instead of complying with the terms and conditions of loan agreements, during all this time the borrowers have been committing acts qualified by the lawyers as persistent refusal to meet their obligations. They have commenced bankruptcy proceedings of companies-borrowers and many assets pledged to our Bank have been illegally transferred through offshore structures to new companies. Messrs Svyatash and Polyakov are currently continuing their business under `AIS` corporate brand based on newly incorporated companies that formally bear no indebtedness to UkrSibbank PJSC and report an annual turnover amounting to USD 800 million. Messrs Dmitriy Svyatash and Vasiliy Polyakov continue making attempts to evade repaying their debts therefore discrediting the government system of Ukraine they actually represent in the parliament.


Numerous shifting of dates of court and other proceedings without warning the bank’s lawyers, groundless rejection of their petitions, other procedural irregularities, and finally the cynical appointment of a court hearing on the national weekend and a holy holiday for all Orthodox Christians, the Christmas eve, on the 6th of January – this is an incomplete list of facts evidencing that court decisions are biased and passed in favor of unscrupulous borrowers.


The utmost injustice with regard to UkrSibbank PJSC was the decision of the Court of Appeal of Kyiv adopted at the hearing on January the 6th when the judge Anna Kryzhanovskaya has de facto sanctioned the fraudulent schemes and allowed Messrs Svyatash and Polyakov not to repay USD 100 mln to the Bank. Unfortunately, according to the trend of making judicial verdicts, we fear that our appeal against this decision will not be treated on a fair basis.


That is why, Mr. President, we are writing to you as the guarantor of observance of legality in the country to intervene in the situation and help restore the justice.


We hope for your support and assistance in practical confirmation of commitment of the Ukrainian State to the rule of law. We believe that the willingness of the President of Ukraine, the Government, and the higher judicial institutions to advocate for the rights of banking institutions will have a positive impact on the international image of Ukraine and its system of state power. In addition, this will serve to strengthen the confidence in the judicial and law enforcement system of the country, which demonstrate its impartiality, the ability to make fair decisions regardless of political affiliation of the parties.


 Jean-Paul Sabet

Chairman of UkrSibbank Supervisory Board”

It remains to be seen whether Yanukovich will intervene on behalf of BNP, but this is quite a story. Shaking down a big powerful Western bank for $100m. in broad daylight takes some chutzpa, and the way in which it was done certainly seems to confirm the validity of the Ukraine’s corruption ranking.

Naturally, it seems quite likely that there is genuine frustration in the population over the state of political affairs in the country. In other words, the protests likely are rooted in genuine grievances, even though Western powers may have had a hand in their timing. Here is a BBC update on the latest developments. One reader sagely commented:

It seems astonishing that protesters are risking their lives to join the EU whilst southern Europeans are bankrupt, unemployed and taxed to the hilt at the hands of Brussels.”

It is not merely ‘astonishing’, it really strains credulity. In other words, we don’t believe for a second that people have been standing in the cold for weeks and engaging in battles with the police because they love Brussels and Herman ‘damp rag’ Rompuy so much, in spite of his undeniable haiku-writing talent. It seems far more likely that they are simply hoping that finally a perhaps somewhat less corrupt political group will take over. That seems quite a tall order considering the disappointments of the Yushchenko/Tymoschenko era.

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