Business Update – March 4: New PM, US-Ukraine cybersecurity, Kyiv fraud factory

A new Ukrainian prime minister will focus on the economy and supporting business, top lawmakers of the ruling party have said. Ukrainian Deputy Prime Minister and Regional Development Minister Denys Shmygal, who has become Ukraine’s new prime minister, will put greater emphasis on the economy than Oleksiy Honcharuk’s government did, Servant of the People faction deputy head Yevheniya Kravchuk said, as reported by Interfax-Ukraine. Honcharuk’s government was largely praised by Ukraine watchers for its efforts to modernize government, support business and boost the economy.

But the economy needs to be prioritized even more going forward, Kravchuk said. “We can feel that emphasis on the economy will be much bigger than it was in the previous government. In particular, emphasis will be placed on support for industries. A first deputy prime minister capable of overseeing this area is being sought,” Kravchuk told the press on Tuesday after a working meeting of the Servant of the People faction’s leadership.

Not everyone is convinced that ousting Honcharuk is a wise move. “The timing couldn’t have come at a worse moment for Ukraine,” writes Andy Hunder, President of the American Chamber of Commerce in Ukraine. “With the coronavirus outbreak, a global market downturn, no IMF deal, secondary market bondholders becoming itchy, and significant sovereign debt repayments due.”

Melinda Haring, deputy director of the Eurasia Center at the Atlantic Council, also weighed in: “Time to sound the alarm in Kyiv. Things look bloody awful,” she wrote on Twitter, sharing a link to her Atlantic Council op-ed titled “Ze end?”

Members of the European Parliament have written an open letter to Ukrainian President Volodymyr Zelensky, warning him against efforts to undermine the work of the National Anti-Corruption Bureau of Ukraine (NABU). Eight EU lawmakers with close ties to Ukraine expressed their “deep concern” over what they claimed were efforts to undermine NABU’s independence, “through an attempt of deliberate and illegal dismissal of its director.” 

NABU has launched a corruption investigation into Maksym Nefyodov, head of the State Customs Service, on a court order. Nefyodov and other customs officers allegedly received bribes for letting non-certified fuel into Ukraine and substituting real audits with fictitious ones, RBC Ukraine reported, citing its sources at NABU.

Oligarch Ihor Kolomoisky won a key legal victory as a Ukrainian court blocked changes to the management of Centrenergo. The Kyiv Administrative Court on Feb. 28 blocked a government plan to change the management at state energy company Centrenergo. The company is currently led by someone with ties to Kolomoisky. Honcharuk announced on Feb. 26 that Centrenergo’s management would be replaced, as the company gears up for its long-delayed privatization. The company supplies 15 percent of Ukraine’s energy needs. The State Property Fund currently owns 78.3% of Centrenergo.

A new investigation by the Organized Crime and Corruption Reporting Project, a Kyiv Post partner, unveils what it claims is a trail of broken lives and stolen funds that leads to a Kyiv fraud factory, where internet criminals allegedly stole millions from unwitting targets abroad in online investment scams.

Ukraine and the U.S. have agreed on a new $38-million cybersecurity project, Deputy Foreign Minister Yehor Bozhok said on social media. The announcement comes only a few days after U.S. prosecutors said a Ukrainian man who hacked Microsoft was facing 20-years in jail. Ukraine and the United States have now agreed on a new project in the field of cybersecurity for critical infrastructure. The two countries will “strengthen mutual cybersecurity, in particular, a new project on cyber-protection of Ukraine’s critical infrastructure (total value up to $38 mln),” the deputy foreign minister wrote on Twitter.

The State Aviation Service has given its permission for new low-cost flight routes from Ukraine. The Windrose airline now has permission to fly from Dnipro to Berlin, SkyUp can start a route from Odesa to Istanbul, and Ukraine International Airlines can start flying from Zaporizhia to Larnaca, the state regulator decided.