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Naftogaz board member quits on sabotage
Journal Staff Report

KYIV, Oct 12 - A former U.S. diplomat has left the supervisory board of Ukraines largest energy company, Naftogaz Ukrayiny, citing sabotage and intimidation from powerful figures amid apparent efforts by the authorities to slow down economic reforms.

Amos J. Hochstein was asked by U.S. and European officials in 2017 to join the board of Naftogaz to help accelerate reforms in the energy sector. But after some success in 2018 and 2019, the pressure on the company from unidentified powerful figures has increased, apparently making his mission impossible.

"Naftogaz faces increasing sabotage from corrupt forces," Hochstein said in a column published by the Kyiv Post. "I can no longer stand by and be used to endorse this negative trend, and it's why I must voluntarily leave the board."

The decision by Hochstein to quit comes as a major setback to those who have expected Ukraine to accelerate economic reforms under President Volodymyr Zelenskiy. It comes less than three weeks after a prominent Western economist, Anders Aslund, a senior fellow at the Atlantic Council, quit the supervisory board of the state railroad company Ukrzaliznytsia.

The developments underscore growing concerns among business leaders in Ukraine that Zelenskiy has decided to turn around the governments economic policies after reshuffling the government in February. Reformist Prime Minister Oleksiy Honcharuk was replaced with inexperienced Denys Shmyhal, who has been alleged by media reports to have ties to powerful business tycoons.

"Unfortunately, Naftogaz management's successful efforts to create a new corporate culture, transparent mechanisms, and an adherence to international standards, was resisted at every step of the way, Hochstein said.

The company has been forced to spend endless amounts of time combating political pressure and efforts by oligarchs to enrich themselves through questionable transactions."

But the efforts to derail reforms have accelerated in August, now with various unfounded accusations were leveled at Naftogaz, accompanied by the usual calls for investigations. The old tactic of using prosecutors and auditors for intimidation and retaliation is back, he said.

Naftogaz recently reported massive losses of about UAH 11.5 billion in January through June, reversing profits of UAH 17.6 billion in the same period a year ago, citing declining oil prices in the period.

The Finance Ministry this month forecast that Naftogaz will probably report losses in 2020, 2021, 2022, and 2023, while Naftogaz had rejected the forecast as too pessimistic and said it will probably return to profits in 2021. (tl/kp/ez)

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USD 27.05 27.19
RUR 0.368 0.368
EUR 31.85 32.03

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