Wednesday

26th Jul 2017

EBRD funds pocketed by Lukashenko henchmen, politician says

Money from the London-based European Bank for Reconstruction and Development (EBRD) has been distributed to individuals connected to Belarus’ President Alexander Lukashenko, according to a career politician in the regime.

“The credit line is supposed to go to small business owners but anyone who is not connected to Lukashenko will never get it,” Viktar Ivashkevich, who co-chairs the council of people’s assembly in Minsk, told the Euobserver. Ivashkevich has been an active politician in Belarus since he first joined the underground Youth Movement in 1983.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • Belarus state lotto on TV: EBRD funds allegedly go only to Lukashenko confidants (Photo: superloto.by)

He’s also one of the leaders in the Belarusian Movement Party, a new party on the political scene that draws its members from the disparate and fragmented opposition groups.

Last year, the EBRD financed in Belarus 7,626 projects for a total of just over €65 million.

The EBRD is partnered with nine banks in Belarus, eight of which disperse the money to small companies throughout the country. None of the banks is majority-owned by the Belarusian state, says the EBRD.

A mortgage credit line is given to the ninth bank, the Minsk-based Priorbank which is the country’s largest commercially-run financial institution. Priorbank belongs to the much larger Austrian Raiffeisen Bank International company; a leading corporate and investment bank that primarily targets Central and Eastern Europe.

It is the EBRD mortgage credit line at Priorbank that allegedly only goes to those tightly connected to Lukashenko. The chairman of the board at Priorbank is Sergey A. Kostyuchenko who is reportedly in the top twenty of the most powerful businessmen operating in Belarus.

Priorbank signed onto a €15 million EBRD loan at the end of 2007. Of the €15 million, half was syndicated to the Netherlands Development Finance Company, meaning only €7.5 million is owed to the EBRD.

But one source, who declined to reveal his name, finds the allegation doubtful. According to him, the Belarus state banks generally offer highly subsidised mortgages with lower interest rates and with much longer periods than those offered by Priorbank.

The state banks offer loans in the local currency at interests rates of between 1 percent and 5 percent a year over a 30 year period.

The EBRD loan given to Priorbank was in a much stronger foreign currency. Because the Belarus ruble is currently so unstable, the source told the EUobserver that it doesn't now make sense to take out a loan with Priorbank. However, he conceded that when the loan was initially offered in 2007, the Belarus economy was more stable and its currency much stronger.

The EBRD has declined to comment on the allegations.

Since the December 19, 2010 crackdown, the EBRD altered its investment strategy and now only targets privately-run companies and businesses.

In May, they gave a €38 million, five-year loan to Belpromstraybank, the country’s third largest bank controlled by the Russia’s Sberbank. They gave another €11 million to ZAO Holding Company Pinskdrev, Belarus’s largest wood processing and furniture group.

Presidential fund siphons off private enterprise

But in Belarus, money and business flows through a state-centric policy entirely controlled by President Alexander Lukashenko. A special presidential committee screens any business or individual that is able to generate large profit.

Each business or business owner is then ‘asked’ to make a special contribution to the state coffer – known as the ‘presidential fund’. Those who refuse, end up in jail or face massive fines.

Nobody knows for sure how much a company or an individual needs to earn before they are monitored and then eventually told to contribute to the president’s fund.

Alexander Atroshchonkau told EUobserver that he had spoken to an agent from Belarus’ department of financial investigations during his nine-month incarceration at a penal colony in 2011.

“He told me that anyone with more or less $100,000 per month turnover is monitored by this special committee,” he said. “Eventually, they are controlled by them.” Atroshchonkau added the figure was just an example and could be substantially higher or lower.

Atroshchonkau was sentenced to jail for his alleged role in instigating the mass demonstrations on 19 December, 2010. He worked for currently detained political prisoner and former presidential candidate, Andrei Sannikov.

Clans and corrupt businessmen run the government

The regime and its government is structured around clans on the national, regional and municipal level. Each has its own agenda, each vying for attention and endorsement from Lukashenko.

“The clans often dispute with one another. Lukashenko mediates and decides what is what,” says Ivashkevich, who adds the dictator has managed to consolidate absolute power and loyalty over the course of his 18-year reign.

In Minsk, people call the president’s loyal troupe the Shklov mafia, named after a town in the east of the country where he worked as a collective farm manager. Many are young and uneducated says Ivashkevich and had replaced the old guard of bureaucrats who had originally sworn their allegiance to the Soviet empire.

Others, like Nadezhda Ermakova, who now chairs the national bank, were given promotions without having the proper credentials and experience.

“Nadezhda,” says Ivashkevich, “has no university education. Prior to becoming the country’s chief banker, she had a low-level managerial position in a regional state bank. This is Belarus."

Opinion

Lessons learned for the EBRD

The EBRD should ensure its money does not end up in the pockets of corrupt elites or in projects which harm the environment.

Journalists on trial highlight Turkey crackdown

The trial, which opened Monday, of 17 journalists and administrative employees of the daily newspaper Cumhuriyet is considered one of the most important episodes in a systematic campaign to silence dissent.

Journalists on trial highlight Turkey crackdown

The trial, which opened Monday, of 17 journalists and administrative employees of the daily newspaper Cumhuriyet is considered one of the most important episodes in a systematic campaign to silence dissent.

Opinion

Stronger EU-Egypt ties must not disregard human rights

The EU’s apparent willingness to water down its stance on human rights in Egypt could seriously compromise its credibility and have far-reaching consequences for its relations with other countries in the region.

Stakeholders' Highlights

  1. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  2. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  3. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  4. ACCAAnnounces Belt & Road Research at Shanghai Conference
  5. ECPAFood waste in the field can double without crop protection. #WithOrWithout #pesticides
  6. EU2017EEEstonia Allocates €1 Million to Alleviate Migratory Pressure From Libya in Italy
  7. Dialogue PlatformFethullah Gulen's Message on the Anniversary of the Coup Attempt in Turkey
  8. Martens CentreWeeding out Fake News: An Approach to Social Media Regulation
  9. European Jewish CongressEJC Concerned by Normalisation of Antisemitic Tropes in Hungary
  10. Counter BalanceOut for Summer Episode 1: How the EIB Sweeps a Development Fiasco Under the Rug
  11. CESICESI to Participate in Sectoral Social Dialogue Committee on Postal Services
  12. ILGA-EuropeMalta Keeps on Rocking: Marriage Equality on Its Way

Latest News

  1. EU and Turkey fail to defuse tensions
  2. European law will apply 'for years' in the UK, says EU judge
  3. US votes to sanction EU firms in Russia project
  4. Journalists on trial highlight Turkey crackdown
  5. EU to give research tips on dual food quality
  6. Polish president's veto leaves uncertainties over next move
  7. EU Commission unmoved by Polish president's veto
  8. UK presses the Brexit pause button

Stakeholders' Highlights

  1. European Friends of ArmeniaEuFoA Director and MEPs Comment on the Recent Conflict Escalation in Nagorno-Karabakh
  2. EU2017EEEstonian Presidency Kicks off Youth Programme With Coding Summer School
  3. EPSUEP Support for Corporate Tax Transparency Principle Unlikely to Pass Reality Check
  4. Counter BalanceEuropean Parliament Improves the External Investment Plan but Significant Challenges Ahead
  5. EU2017EEPM Ratas: EU Is Not Only an Idea for the 500mn People in the Bloc, It Is Their Daily Reality
  6. Nordic Council of MinistersCloser Energy Co-Operation Keeps Nordic Region on Top in Green Energy
  7. ILGA-EuropeGermany Finally Says Ja - Bundestag Votes for Marriage Equality!
  8. EPSUJapanese and European Public Sector Unions Slam JEFTA
  9. World VisionEU, Young Leaders and Civil Society Join Forces to End Violence Against Girls
  10. UNICEFNarrowing the Gaps: The Power of Investing in the Health of the Poorest Children
  11. EU2017EEEstonia to Surprise Europe With Unique Cultural Programme
  12. International Partnership for Human RightsEU-Kyrgyzstan Human Rights Talks Should Insist on Ending Reprisals Vs. Critical Voices