澳门六合彩

BY MYKHAILO MINAKOV

On May 13, 2020, the Verkhovna Rada approved a draft to improve regulation of Ukraine鈥檚 banking sector, known informally as the 鈥�.鈥� This law prevents the return of insolvent banks to their previous owners (chiefly, it prevents the return of the PrivatBank to Ihor Kolomoisky and Gennadiy Bogolyubov, its previous owners). To ensure nonreturn, the act limits the role of the Ukrainian courts and increases the power of the National Bank of Ukraine (NBU) in decisions as to whether a bank should be taken off the market because of insolvency. Further, a court appeal against an NBU decision or action shall not lead to a pause in the execution of that decision. Once the NBU declares a bank insolvent, it shall continue selling off that bank鈥檚 assets.

The act was approved for many reasons. It makes good on President Zelensky鈥檚 promise to decrease the oligarchs鈥� role in Ukraine (and Zelensky鈥檚 in parliament during the vote was critical for passage of the draft law). Passage of the law was also to achieve a much-needed deal with the IMF, which is expected to open doors to funding from other international lenders, critical to help Ukraine advance out of the economic crisis wrought by the coronavirus. The EU also welcomed the draft law鈥檚 approval: European Commissioner for Neighborhood and Enlargement Oliv茅r V谩rhelyi the European Commission鈥檚 support for the act.

However, passage of the draft law has stirred discussion about its legitimacy and constitutionality. For example, Yulia Tymoshenko has called the act . Kolomoisky himself has called the act . And Minister of Justice Denys Malyuska that the act will be challenged in the Ukrainian Constitutional Court and the European Court of Human Rights.

We asked Ukrainian experts to comment on why so much controversy surrounds the long-awaited draft 鈥渁nti-Kolomoisky law.鈥�

Mykhailo Kukhar: This question should go to the constitutional lawyers first. Indeed, the situation is contradictory: on the one hand, it is unusual to adopt a special law to make irreversible one specific kind of deal; on the other hand, the law should be flexible enough to address new situations and establish new precedents.

In my opinion, there are reasons for the law to be regarded as constitutional. Both the Ukrainian constitution and the laws pertaining specifically to the NBU provide the central bank with broad and strong authorities. Among the NBU鈥檚 powers is some partial arbitration function comparable with the courts鈥� arbitration functions. In our government, certain autonomous power institutions, such as the central bank and the Antimonopoly Committee, are designed to respond to rapid changes in the economy and the market. Thus the NBU can change financial regulations and withdraw licenses from commercial banks, if needed, in one day. The central bank works on behalf of all of Ukraine鈥檚 banking sector.

As an economist who has studied NBU decisions and actions since 1995, I see the economic meaningfulness of the newly approved law. I support such expansion of NBU powers because our economy needs a stronger central bank in times of economic and financial crisis. And a stronger NBU will likely be important for Ukraine in the future.

Vadym Syrota: The law is controversial indeed! It fails to respond to numerous issues.

First, the law does not address all the issues connected to PrivatBank. For example, it does not address the issue of how to deal with the lost funds of insolvent banks. In the case of PrivatBank, the financial resources that were amount to over $5 billion. Neither the by the Kroll group, a reputable detective agency, nor work by the consortium of banks headed by to restructure PrivatBank鈥檚 loans led to repayment of the bank鈥檚 troubled loans.

Second, the draft law approved by the Verkhovna Rada on May 13 creates a legal conflict with the potential to impose a huge financial burden on the public. For example, it stipulates that a court cannot restore a bank to the financial market if the NBU has ruled otherwise. But then the government is not protected from shareholder lawsuits to compensate for their financial losses. And these are potentially multibillion-dollar (USD) demands, which can threaten the financial stability of Ukraine, especially in light of the current budget deficit and Ukraine鈥檚 mounting debt.

Third, the聽NBU鈥檚 actions in 2014鈥�2016 should themselves be properly investigated. , about $15 billion was looted from Ukrainian banks during that period, but only a third of the missing funds could be assigned to PrivatBank. The central bank seems to have been lax in providing effective banking supervision. There is still the issue of whether the NBU鈥檚 methodology for reviewing banks鈥� solvency such as done in 2016 to support PrivatBank鈥檚 bailout, including the stress test model used and application of IFRS9 standards (which were by the EU only in 2018), was correct and timely. The NBU took over PrivatBank at the end of 2016; Kolomoisky has charged that the central bank鈥檚 actions were with applicable laws.

驰耻谤颈测听痴补办丑别濒: In my opinion, the adopted law has a number of problems that will be discussed by the legal community and in the courts. Here I would point to three major issues:

First, this law deprives the right to judicial protection guaranteed by international and Ukrainian legislation, including Articles 6 and 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECPHRFF) and Articles 19 and 55 of the constitution of Ukraine, which protect the right to an effective remedy for owners. In my opinion, the May 13 draft law threatens the legal order in Ukraine.

Second, there is a question as to whether the draft law limits the possibility of realizing a fundamental human right, the right to own property, which is enshrined in Article 41 of the constitution and ECPHRFF Protocol 1. I doubt both the functionality of the act鈥檚 provisions and its freedom from potential bias in determining the right of the bank's shareholders to receive compensation.

Third, the draft law appears to violate Article 58 of the constitution regarding the inadmissibility of laws and other normative legal acts being applied retroactively, except in cases where such retroactive application mitigates or cancels the liability of a person. It is a fundamental principle of justice that laws cannot be passed just to apply to a single case. This principle of law is the same for factories, shops, and banks, regardless of who owns them.

Mykhailo Kukhar is a head of the Independent Macroeconomic Forecasting Group Ukraine Economic Outlook (formerly known as the IMF Group Ukraine ). Over the past ten years he has served as adviser to the head of the NBU, vice prime minister for social policy, and minister of agriculture. He teaches macroeconomics at the MiM business school in Kyiv.

Vadym Syrota聽is an independent banking expert and a regular contributor to Ukrainian business publications on banking. Previously he worked at the National Bank of Ukraine on banking supervision and financial stability issues. He holds a Ph.D. in economics with a focus on crisis management in banking.

Yuriy Vakhel is a lawyer, volunteer, and Kyiv City Council member who also serves as secretary for the Kyiv City Council Property Commission. He is a member of the Kyiv Team councilors group. He has more than twenty years of international business experience in Ukraine in a broad range of corporate, commercial, GR, and legal matters.

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.