Friday

20th Apr 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.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  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.

EU toes the line on Syria air strikes

EU foreign ministers to back Western air strikes on Syria, the same way they backed the UK over Russia's chemical attack on an ex-spy in Britain.

Analysis

Is Germany more hawkish on Russia?

Germany's socialist foreign minister just said the EU should "step up pressure" on Russia. Merkel aired "political" doubts on a Russian pipeline.

Analysis

Is Germany more hawkish on Russia?

Germany's socialist foreign minister just said the EU should "step up pressure" on Russia. Merkel aired "political" doubts on a Russian pipeline.

News in Brief

  1. Audit office: Brexit 'divorce' bill could be billions higher
  2. MEPs urge better protection for journalists
  3. Dieselgate: MEPs back greater role for EU in car approvals
  4. European parliament adopts new organic farming rules
  5. EU granted protection to half million people in 2017
  6. Report: Facebook to carve 1.5bn users out of EU privacy law
  7. Greek court ruling permits migrants to travel to mainland
  8. Commonwealth summit hopes for trade boost after Brexit

Stakeholders' Highlights

  1. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  2. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  3. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  4. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  5. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  6. UNICEFCalls for the Protection of Children in the Gaza Strip
  7. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  8. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight
  9. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  10. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  11. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  12. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia

Latest News

  1. ECJ ruling set to end 10-year 'mouth tobacco' lobbying saga
  2. Whistleblowers, Syria and digital revolution This WEEK
  3. MEP friendship groups offer 'backdoor' for pariah regimes
  4. Macron and Merkel pledge euro reform
  5. Obscurity surrounds EU military fund's expert groups
  6. New EU party finance rules short circuit accountability
  7. Draghi to stay in secretive 'lobby' group
  8. Bulgaria offers lesson in tackling radical-right populists

Stakeholders' Highlights

  1. Mission of China to the EUChina and EU Must Work Together to Promote Global Steel Sector
  2. Swedish EnterprisesEU Tax Proposal on Digital Services Causes Concern for Small Exporting Economies
  3. Europea Jewish CongressCondemns the Horrific Murder of Holocaust Survivor Mireille Knoll in Paris
  4. Mission of China to the EUAn Open China Will Foster a World-Class Business Environment
  5. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  6. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  7. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  8. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  9. Martens CentreEuropean Defence Union: Time to Aim High?
  10. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  11. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  12. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights