The Cabinet is screensing officials who supported the Maidan

Ukraine is heading towards Europe without the qualified financial experts and professionals

Photo: Konstantin Melnitskiy

The Cabinet of Ministers approved the list of civil servants to be lustrated according to the Law On Lustration. Starting October 26 they will be dismissed from their posts and will not be able to hold public offices for 10 years. The list of “cleansed” officials in the financial sector has surprised many.

Professionally useless

Initially, the Cabinet confused the National Commission for Regulation of Financial Services Markets (NCRFSM) and the National Securities and Stock Exchange Commission (NSSEC) and added to the NSSEC’s dismissal list some employees, who have never worked there. However, later the error was corrected. Viktor Berlin, who submitted a letter of resignation in August, will be dismissed from the NCRFSM. His letter of resignation remained unsigned by the president and the official went on vacation.

Almost the entire leadership of the NSSEC will be laid off. The reason – they have worked for more than one year over the period February 25, 2010 to February 22, 2014, i.e. during the times of President Viktor Yanukovych in office. Indeed, some people were hired to the NSSEC back in 2011, but many employees in the commission worked in their positions since its inception, in the years of previous governments. “There are people in the NSSEC who outlasted three presidents and represent the securities market. I do not understand such an approach to lustration, all the more that it violates the Constitution of Ukraine,” says acting Chair of the SCSSM Yevhen Voropayev.

For example, a member of the NSSEC Oleksiy Tarasenko, who oversees operation of stock exchanges, has only one entry in his employment record. He started his career as a leading expert for investment management at the SCSSM (the predecessor of the NSSEC). Since 2005, Tarasenko has headed the Department of Methodology of Securities Regulation at the commission. In 2011, he became a member of the NSSEC and supervised the operation of stock exchanges.

Another member of the NSSEC Oleksiy Petrashko is in a similar situation. Back in 1996 he was promoted to the position of Deputy Chief of the Dnipropetrovsk Territorial Administration of the SCSSM and he became a member of the commission back in 2009, when ex-president Viktor Yushchenko was in power. For the last few years Petrashko has been overseeing the NSSEC’s Committee for Development of Debt Securities.

Member of the NCRFSM Serhiy Biryuk has been working for both financial departments for 18 years. All this time he was in charge of investment and private pension funds in Ukraine. He was responsible for the development of the Law On Collective Investment Institutions. Lately, he has been involved in the reform of the personal pension coverage market. Financial experts know him not only as an official, but as a scholar. Back in 2007 he predicted the start of the global financial crisis in 2009 and warned CEOs about risky investments.

Oleh Mozgoviy, the first chairman of the stock market regulator, will also be laid off. He headed the SCRFSM for nine years, since its inception. In 2008–2009, Mozgoviy was a member of the Financial Services Commission (today the SCRFSM) and Director of the Department of Supervision of Credit Institutions. Recently he has headed the NSSEC Committee for Strategy and Economic Analysis of the Stock Market.

Anatoliy Amelin, the most ardent supporter of the Maidan among NSSEC employees, was also “cleansed”. In the commission he was responsible for the corporate sector. In recent years Amelin lobbied the Law on Derivative Lawsuits, which would allow minority shareholders to protect their rights. This means a minority shareholder could sue the director of a company if its assets are withdrawn in favor of a majority shareholder. However, the former government headed by Mykola Azarov did not agree to approval of the law. It is highly likely that the new convocation of the Verkhovna Rada will adopt it.

Waste of space

Only one member will stay in both commissions. Mykhailo Nazarchuk, who supervises prudential standards, will retain his position at the NSSEC. He was hired as a replacement for Kostyantyn Kryvenko in July 2013. According to the law, later he will be tested and could undergo lustration just like the other officials. Chief of Staff at the NSSEC Oksana Sakhnatska, who has been working for the commission for 13 years, will also undergo inspection.

The situation at the NCRFSM is even worse. The only member of the commission who is not subject to lustration is its Acting Chief Maksym Polyakov, who is on leave as he is engaged in the election campaign. He is running for the VR as the 39^th candidate on the list of the People’s Front party headed by the Premier Arseniy Yatsenyuk.

Shortly before the cleansing the NSSEC was working on a new strategy for the development of the stock market. It is still unclear who will implement the reforms that are essential for the capital market. “For many officials this will not be interesting,” said Amelin. “The budget of UAH 40 mn a year is scarce and is mostly spent on paying wages, which are continuously being cut. Most professional employees prefer to quit”. There is no market itself, adds Amelin saying: “There is no liquidity and it is not expected over the next two years. Also, there is no authority, public policy for the attraction of investments, development of the stock market and there is no understanding of the importance of the stock market for the development of the economy at the government level”.