One of the most notorious political scandals of October was the raid by People's Deputy Sergei Taruta on Washington, where the annual meeting of IMF and World Bank member countries was taking place.
The target of the deputy's raid was NBU Governor Valeria Gontareva ( read more about her in the article "Valeria Gontareva: The Glitter and Machinations of the Queen of Coins "), who was attending the event as part of the official delegation. Serhiy Taruta personally distributed among the meeting participants his work, published in English under the title "Gontareva: A Threat to Ukraine's Economic Security." To understand the full unusualness of this incident, one must be aware of Mr. Taruta's utterly averse to outrageous behavior and his focus on anything but Western elites. Therefore, the usually reserved politician's action, carried out in the style of Oleh Lyashko, surprised many.
What made the modest center-left Taruta go to the lair of global imperialism and put on a show there distributing red brochures?
Experts insist on two explanations for the incident. The first is a renewed rapprochement between Serhiy Taruta, who has become significantly impoverished in recent years, and Yulia Tymoshenko, whose ratings have plummeted. While Taruta, according to ratings, retained only about $120 million, or approximately 10% of his former fortune, Tymoshenko has fallen from the number one or two positions in the political system to fourth or fifth. To improve her fortunes, she is diligently exploiting the most populist issues – from raising tariffs to protecting bank depositors. The latter issue could once again unite longtime political allies Tymoshenko and Taruta. The former governor of the Donetsk region has been vying for power under Valeria Gontareva for about a year, seeking her resignation as chair of the NBU board. Yulia Tymoshenko hopes that depositors from liquidated banks will bring her as much ratings as utility bills. Having achieved their shared goal, the political tandem expects to reap both political and business dividends.
The second theory, although less romantic, is far more credible. Sergey Taruta is a co-owner of Kremneva, Ukraine's largest insurance company by assets. This new market leader has never actually been involved in traditional insurance: it is virtually invisible in retail and has rarely participated in tenders for corporate services. However, in the rankings for the first half of 2016, Kremneva leads by a wide margin in the "outgoing reinsurance" category. Over the course of six months, the insurer withdrew over UAH 1,4 billion from Ukraine. The company ranked second showed results 4,5 times lower. Until recently, Lemme Insurance Company held the market leadership in terms of premium volume, although it was also not particularly active in traditional insurance. It also actively engaged in reinsurance abroad. This type of activity is the main channel for money laundering and transferring money out of the country in the insurance market. Following the death of its founder and director, Sergei Chernyshov, Lemma left the market, and Kremen Insurance Company became the largest player in the foreign reinsurance sector.
According to international practice, reinsurance typically covers major risks that a single company cannot cover. These include nuclear, space, and aviation risks, as well as risks associated with insuring major events. In this case, the insurer shares its risks with a pool of several companies and, accordingly, shares the collected funds with them. However, as far as is known, Kremneva has not insured nuclear power plants, space launches, or World Cups. It did, however, insure the pipelines of the state-owned company Ukrtransnafta, receiving almost 70 million hryvnias for this. Tellingly, the transaction occurred precisely when Ihor Kolomoisky was at risk of losing control of this asset. This transaction subsequently became the subject of a law enforcement investigation. However, for a long time, money laundering and the transfer of money from Ukraine to Western bank accounts was the subject of tacit consent by the government and business. This dangerous process for the economy intensified immediately after the overthrow of Yanukovych, as those who had previously only dreamed of such access gained access to money-flow channels.
In 2014, the main flow of money flowing abroad was concentrated in "laundering" banks. It was during this time that Kremneva's reinsurance business was under threat – the company's turnover fell fourfold. However, market participants working with traditional insurance lines (life, auto, health, mortgage, etc.) reported turnover declines of only 1-6%.
However, in 2015, the NBU cleaned up the banking ranks so much that most of the "washing machine" banks that helped clients move money out of Ukraine were forced to leave the market. And the flood of money laundering and withdrawal orders flooded into insurers.
Demand creates supply. This year, Kremne Insurance Company regained its lost ground and even broke its own record, collecting UAH 1,44 billion in six months and reinsuring (read: transferring abroad) 97,65% of the collected funds.
It would seem that in 2016, the owners of Kremnya should be silently thanking Valeria Gontareva every day for clearing a vast and highly profitable market of competitors for them.
However, in the near future, the NBU will become the regulator not only of the banking market but also of the insurance market. Then, the cash flow control technologies and transparency standards proven in banks can be applied to insurance companies as well. NBU top managers have already announced plans for a thorough cleanup of the insurance market.
It's naive to think that the National Bank, during the cleanup process, won't take an interest in both Kremneva Insurance Company itself and its clients, their risks, and the money that has left Ukraine. A successfully operating channel for funneling money out of the country could be shut down. Moreover, the head of the National Bank doesn't have warm feelings for Serhiy Taruta. Then the former oligarch's words to journalists, "I don't have a business now, I'm not in business anymore," could suddenly come into sharper focus.
Faced with the threat of lost income, many panic and take hasty, ill-considered actions. Taruta's American tour is precisely such an act.
The $120 million that rating compilers currently attribute to Serhiy Taruta isn't money in bank accounts, but the value of his remaining assets. The work of moving money abroad guarantees a constant cash flow. If this flow is cut off, one of the once richest men in Ukraine could lose another tenfold. And from ten to twelve million dollars to poverty is just one step. Anyone would panic.
On the topic: Sergey Taruta. The secret coordinator of Ukrainian oligarchs.
Igor Kovalev
There is no power
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