Tuesday

25th Sep 2018

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.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • 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.

EU wants continental free-trade deal with Africa

Earlier this week, European Commission president Jean-Claude Juncker in his state of the union announced a new relationship with Africa. On Friday, his subordinates outlined the vision, promising jobs and growth by leveraging public funds for investments.

News in Brief

  1. Migrant rescue ship heading to French port
  2. EU angry at British tabloids on Brexit
  3. UK to allow EU flights in no-deal Brexit
  4. Greek reporters arrested after story on 'mishandled' EU funds
  5. Austrian minister urges police to out foreign sex offenders
  6. ECB's Draghi set to clarify role in secretive G30 group
  7. Half of EU states at risk of missing recycling target
  8. Commission refers Poland to EU top court over rule of law

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  2. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  3. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  4. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  5. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  6. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  7. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  8. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  9. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  10. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  11. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  12. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow

Latest News

  1. Russian with Malta passport in money-laundering probe
  2. Cyprus: Russia's EU weak link?
  3. Missing signature gaffe for Azerbaijan gas pipeline
  4. Every major city in Europe is getting warmer
  5. No chance of meeting EU renewable goals if infrastructure neglected
  6. Brexit and MEPs expenses in the spotlight This WEEK
  7. Wake-up call on European Day Against Islamophobia
  8. Sound of discord at 'Sound of Music' Salzburg summit

Stakeholders' Highlights

  1. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  2. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  3. Mission of China to the EUChina: Work Together for a Better Globalisation
  4. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  5. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  6. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  7. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  8. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  9. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  10. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  11. FIFAGreen Stadiums at the 2018 Fifa World Cup
  12. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development

Join EUobserver

Support quality EU news

Join us