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Why does Ukraine need aid?

Written by Robert Barrington on Tuesday, 25 February 2014

It was reported in Tuesday’s Financial Times that Ukraine is seeking $35 billion in foreign aid. Why does it need the money? As more evidence emerges of the kleptocratic nature of the former regime, it seems that gross mismanagement of the economy by a corrupt elite is one of the reasons.

Indeed, a Guardian blog by my colleague from TI Ukraine Oleksii Khamara, suggests that in addition to mismanagement, many billions have been looted by corrupt politicians, public officials and resources-resources-business people. A sense of the ambitions and scale of the looting can be gained from viewing the Presidential Palace.

The money has not simply vanished. It has been laundered through the global financial system. The situation in Ukraine is somewhat reminiscent of the Arab Spring, when governments and news organisations focussed on the revolution, but forgot to look for the money.

This is the time that the people of Ukraine need their own money back. It is somewhat ironic that the UK taxpayer is being asked to pay for a bailout while the stolen billions are themselves on their way to London, the UK’s off-shore territories and other financial centres.

The UK and other major jurisdictions seem continually surprised every time there is a revolution and then take far too long to catch up. After the fall of regimes in North Africa, it took weeks for the EU to order asset freezing, and the banks to implement this. Such delays give ample time for funds to be laundered and moved on.

That is why we are calling on the UK Government for the immediate creation of a cross-departmental Task Force on Ukrainian Assets. A similar group was set up by the Cabinet Office after the Arab Spring to bring together asset recovery experts investigators and prosecutors into a single team. It is important to act quickly and before it is too late. Right now, it is likely that corrupt assets of Ukrainian origin are flowing through the UK’s financial system. It is reported that UK police are in Kiev today. There should be UK asset recovery specialists there as well before the leads go cold and the paperwork is lost or destroyed.

In addition, the government and the institutions that constitute the UK’s front-line defences against money laundering – banks, accountants, lawyers, estate agents – should right now be reviewing and re-rating the risks for assets and customers connected to the Ukraine. Where suspicions are reported the UK authorities should act immediately to enable the assets to be frozen.

Once this latest crisis is over, the Government should consider new laws to tackle such situations in future. The UK’s system is out of date, and badly needs updating. For example, there is a case for legislation that allows suspicious assets to be frozen unless they can be proven to have been obtained legitimately. The UK should not allow itself to be a safe haven for corrupt money, and it should not take a revolution to prompt action when suspicious funds are flowing into and through the UK and its off-shore financial centres.


Read 7721 times Last modified on Tuesday, 24 November 2015 11:47

Robert Barrington

Robert is TI-UK's Executive Director. You can view his full bio here, and tweet him @TIukED.

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