KIEV, Dec. 23 – A little-known banker with close personal connections to President Viktor Yanukovych on Thursday was approved – without debate or a Q&A session with lawmakers - as the governor of the National Bank of Ukraine.

Serhiy Arbuzov, 34, who for years led a small Donetsk bank that is thought to be affiliated with Yanukovych interests, replaces Volodymyr Stelmakh, 71, a veteran central banker.

The appointment, approved quickly by 280 lawmakers in the 450-seat Parliament, stunned opposition politicians: It turns one of the most important financial positions in the country to a person whose monetary policy views are not known.

The appointment comes one day after the International Monetary Fund approved an immediate disbursement of $1.6 billion to support economic reforms in Ukraine. The money will be wired to the NBU account and will be managed by the NBU.

The poor transparency of Arbuzov’s nomination and appointment underscores the extremely high degree of political influence that Yanukovych has enjoyed over his Regions Party and other pro-government lawmakers.

It also fuels fears and concerns that the position may be used to favor political allies and friends.

“The appointment is a direct ‘thank-you’ personally from Yanukovych and from the Yanukovych family for contribution that Arbuzov has made for growth of Yanukovych’s business,” Sehiy Sobolev, a lawmaker and the prime minister of the opposition government, said.

“The NBU will in fact become a hostage of the policy to finance unlimited budget deficit,” Sobolev said.

Arseniy Yatseniuk, another opposition politician who led the NBU as an acting governor in July 2004 through March 2005 and who competed with Yanukovych at the latest presidential election, said the appointment raises corruption concerns.

“They view Ukraine as a joint stock company,” Yatseniuk said. “The fact that they have appointed one of their own [as the NBU governor] means only one thing: they privatized the National Bank.”

Prime Minister Mykola Azarov, who had introduced Arbuzov to the staff of the NBU on Thursday, said he was “convinced” that Arbuzov is a “reliable” replacement to Stelmakh.

“Arbuzov is an experienced professional,” Azarov said.

Arbuzob began his banking carrier in 1998 as the head of a regional branch of Privatbank in Donetsk, and was later promoted as the head of the board at Donetchyna, a small Donetsk-based bank later renamed as UkrBiznesBank.

“Unofficially, the bank was a 50-50 joint business between Eduard Prutnyk and Viktor Yanukovych,” Serhiy Leshchenko, a journalist at Ukrayinska Pravda online newspaper, reported.

In the middle of 2009, Prutnyk has left the list of shareholders, and the bank was completed controlled by companies affiliated with Oleksandr Yanukovych, the elder son of President Yanukovych.

UkrBiznesBank, the No. 63 bank in Ukraine, holds and manages accounts of all companies that have either invested or are affiliated with acquiring or development of Mezhyhiriya, a huge land plot in the Kiev region that is owned by Yanukovych. The land plot is about the same size as the Principality of Lichtenstein, the smallest country in the world.

Oleksandr Yanukovych last week announced plans to expand his banking interests by seeking to acquire shares he does not already own in another bank, Vseukrayinskiy Bank Rozvytku (VBR), or All-Ukrainian Bank for Development. Arbuzov’s mother, Valentyna Arbuzova, is a board chairwoman at this bank.

VBR is the No. 138 bank in Ukraine and manages 348 million hryvnias in assets, a sharp increase from 80 million hryvnias a year ago.

In his tax declaration submitted to Parliament before his approval, Arbuzov indicated that his income in 2009 was 150.5 million hryvnias. Most of the money – 150 million hryvnias - came as “dividends, interest and royalty,” but did not specify.

“The source of this money is a mystery,” Leshchenko said. Arbuzov owns 2.3% of UkrBiznesBank, but the bank had never paid any dividends in 2009.

It will also be hard or even impossible to trace down how has the money been spent: Arbuzov does not have a Tax Identification Number.

Arbuzov sought – and won – a Donetsk court ruling allowing him to legally skip the Tax ID Number, according to the papers submitted to Parliament. (tl/ez)