Ukrainian authorities have opened an investigation into current and former central bank officials suspected of embezzlement, the Prosecutor General’s office said on Friday.
Its statement came after the Kyiv Post newspaper and other local media reported that a top central bank official was being investigated for treason and embezzlement in connection with the central bank’s hiring of foreign consultancies and law firms.
The investigation is likely to put more scrutiny on Ukraine’s efforts to fight corruption and implement reforms at a time when the government is trying to secure loans from the International Monetary Fund to support its virus-hit economy.
Loan negotiations under a $5 billion IMF deal were derailed last year, partly due to concerns about the central bank’s independence.
The top central bank official who is reportedly at the centre of the embezzlement probe has been outspoken in saying that the central bank’s independence has been under threat since the appointment of a new governor last year.
“During the pre-trial investigation, the circumstances are being checked of a possible seizure by officials of the National Bank of Ukraine … of funds worth over 900 million hryvnia ($32.47 million) by concluding agreements on the provision of legal services at inflated prices,” the Prosecutor General’s office said in the statement to Reuters, in response to a query about the Kyiv Post’s report.
The investigation had been opened at the behest of a public organisation, the statement said, adding that no-one had been officially notified and no searches carried out.
The Kyiv Post earlier reported that Deputy Central Bank Governor Kateryna Rozhkova was under investigation for hiring the security company Kroll to investigate corruption allegations at PrivatBank, which was nationalised in 2016.
Rozhkova said she could not comment on the media reports about the investigation into her but criticised the fact that the central bank itself had been investigating the central bank’s use of external companies, including Kroll.
“I am convinced that such actions deal a powerful blow to Ukraine’s reputation and image in the international arena,” she said.
Kroll did not immediately respond to a request for comment.
The central bank said the media should not disseminate “unconfirmed information”.
President Volodymyr Zelenskiy’s office in a statement urged the central bank’s leadership to put the country’s interests above its own, adding that “concerns about internal strife at the National Bank are growing”.
“The office of President Volodymyr Zelenskiy, with the support of Ukraine’s Western partners, will continue to do everything necessary to return all funds stolen from the Ukrainian population, including money related to PrivatBank.”
Rozhkova played a major role in driving banking reforms that culminated in the decision to nationalise PrivatBank, the country’s largest lender, against the wishes of its main owners, Ihor Kolomoisky and Gennadiy Bogolyubov.
After hiring Kroll and other companies to investigate PrivatBank’s finances, the central bank said in 2018 that PrivatBank was used for shady deals and money-laundering, causing a capital shortfall of $5.5 billion.
Kolomoisky dismissed the allegations as “nonsense” and is fighting a legal battle to reverse the nationalisation.
Rozhkova has been at loggerheads with the central bank’s leadership since the arrival of new Governor Kyrylo Shevchenko last year, who was appointed after his predecessor resigned while complaining of political meddling.
Shevchenko has repeatedly denied suggestions that the central bank’s independence was under threat. Rozhkova recently accused the central bank of trying to censor comments she made to a local media outlet.
($1 = 27.7199 hryvnias)