Former minister arrested on charges of corruption (03/30/03)

Former minister arrested on charges of corruption

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Ukrainian law enforcement officials detained a former vice prime minister of agriculture on March 24 on charges of corruption and tax evasion. The charges came after President Leonid Kuchma ordered an investigation into reports of huge grain shortages in the country.

The Procurator General's Office has charged Leonid Kozachenko with abuse of office for taking bribes for the illegal sale of grain to foreign buyers at reduced prices. He has also been charged with tax evasion for failing to declare 584,940 hrv as director general of the firm UkrAgroBusiness.

As vice prime minister in the government of Anatolii Kinakh from June 2001 to November 2002, Mr. Kozachenko was in charge of agricultural policy. If convicted he could face up to eight years imprisonment on the first charge and 10 years on the second. The case is one of 90 such investigations Ukraine's chief law enforcement agency has been pursuing throughout Ukraine.

On March 25 President Leonid Kuchma said he was satisfied with the work of the Procurator General's Office thus far, which had turned up startling evidence of wrongdoing. Prosecutors said they have found violations of law in all of Ukraine's 27 regions.

President Kuchma noted that many of the illegal foreign transactions involved great deals for foreign buyers. He said that at times "the prices that were set for [grain] export and those that were reported in customs differed by up to 30 percent."

The Ukrainian president said the best outcome from the scandal would be if reporting and enforcement mistakes were not repeated. Mr. Kuchma emphasized that he believes those who closed their eyes and ears to what was happening around them bear the same guilt as those who took part in the criminal activity.

While Mr. Kuchma underscored that he wanted to keep the investigation separate of the politics, the organization that former Prime Minister Kinakh currently heads, the Union of Industrialists and Entrepreneurs, claimed that the charges against Mr. Kozachenko were exclusively of a political origin and reflected an effort to hide a failure to implement structural economic reforms.

The arrest of Mr. Kozachenko, 48, came after the Procurator General's Office received instructions from President Kuchma to look into the current situation in Ukraine's grain market, where revelations of grain shortages had thrown the country's vital bread-making industry into turmoil. The crisis began in mid-February, when bread prices began to rise dramatically in some southern oblasts of Ukraine amid allegations of severe grain shortages. The current minister of agrarian policy, Serhii Ryzhuk, originally said the deficit was not caused by "abuses... but by flawed statistic-gathering methods."

Over the last six weeks, prosecutors have accused individual farms, traders and regional officials of inflating the figures of current reserves and last year's grain harvest, which was originally reported to have been about 39 million tons. Prosecutors now say the amount of the harvest was "substantially less."

Investigators continued to search for evidence that grain harvest figures were inflated to hide secret sales at reduced prices to foreign buyers. By inflating harvest numbers, those who undertook the criminal activity allowed themselves a greater share of international sales, ceilings for which are derived as a percent of the total harvest.

In an interview with the newspaper Den, Procurator Tatiana Korniakova cited a Ukrainian-Egyptian deal as a specific example of how set prices and delivery prices differed. She said that, while an agreement between Egypt and Ukraine had directed that grain sales occur at a government-set price of $80 per ton of wheat, customs documents showed grain transfers had been made at $50 per ton.

Among the regions of southern Ukraine reporting the largest discrepancies between the harvest figures as reported last year and the current, more accurate numbers were the Crimean Autonomous Republic, Dnipropetrovsk Oblast and Zaporizhia Oblast.

President Kuchma said Ukraine had supplemented local grain stores from its central depositories, which had stabilized the pricing situation in the country. However, the president said he looked askance at the manner by which oblasts and municipalities had allowed themselves to be left with shortfalls.

"Kyiv sold grain openly, but it was the first to ask for state supplements," noted Mr. Kuchma.

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