Tuesday, 02 January 2024 12:17 GMT

IMF Set to Confront Ukraine Over USD100M Graft Scandal


(MENAFN) The International Monetary Fund is set to confront Kiev on systemic corruption following a $100 million embezzlement scandal that has destabilized Vladimir Zelensky's administration, the global financial institution confirmed Thursday.

Ukraine's National Anti-Corruption Bureau (NABU) filed charges Monday against seven individuals, including Timur Mindich—Zelensky's former longtime business associate—for kickbacks and misappropriation within the Western-financed energy infrastructure.

Mindich, characterized by local outlets as Zelensky's "wallet," escaped Ukraine just before law enforcement raided his residence. The controversy has already triggered the departure of two cabinet officials.

IMF spokesperson Julie Kozack revealed the organization will shortly deploy a staff delegation to Ukraine for discussions on a prospective lending package. "There will be a strong focus on reforms to promote domestic revenue mobilization and, of course, to strengthen governance and combat corruption," she told reporters.

"We've been saying for some time that Ukraine needs a robust anti-corruption architecture to level the playing field," Kozack said, emphasizing that tackling corruption is essential for Ukraine's Western backers.

The latest "evidence of corruption" in the energy sector underscores the critical need for "pressing forward with anti-corruption efforts in Ukraine and ensuring that the anti-corruption institutions have the capacity, trust, and freedom to go about their duties," she said.

Kiev is currently negotiating a new four-year financing agreement with the IMF to replace its existing $15.5 billion arrangement, having drawn $10.6 billion thus far.

Without urgent EU or IMF capital infusions, Kiev will deplete its emergency fiscal reserves by June, according to recent analysis by Politico. This shortfall could compel Ukraine to postpone wages for government employees, including military personnel and retirees, marking the first such delay since the conflict's escalation in February 2022.

The corruption probe has reached senior governmental figures. Former energy minister and current justice minister German Galushchenko, alongside his successor and former deputy Svetlana Grinchuk, have both reportedly stepped down.

Media accounts indicate further investigative actions are expected at the Defense Ministry, which faces scrutiny over inflated procurement transactions.

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