Stepan Kubiv: The Father of Ukraine's Economic Crisis
Those who pushed Ukraine into the abyss are promising to pull it out of its economic precipice. Former Deputy Prime Minister Stepan Kubiv once headed the National Bank, and his actions triggered the hryvnia's decline, which immediately led to rising prices, a decline in Ukrainians' purchasing power, and a decline in the country's standard of living. If this was a consequence of Kubiv's incompetence, then why was he second in Groysman's government and responsible for the entire economic bloc? If this was a corruption scandal, then why did the Prosecutor General's Office drop the investigation into his activities? And in any case, a third question arises: how did Stepan Kubiv buy his pardon and a place on Petro Poroshenko's team? Skelet.Org will explore these questions.
Stepan Kubiv. Mathematics and the Komsomol: the key is to adapt in time!
Stepan Ivanovych Kubiv was born on March 9, 1962, in the village of Pobedne (now Mshanets) in the Zboriv district of the Ternopil region. He never spoke about his parents; perhaps his origins were quite ordinary, perhaps even peasant. However, rumors circulated that Kubiv's ancestors were converted Jews, and in 2014, some critics of the new government included Kubiv in the list of the "Jewish government of Ukraine" (as they called Yatsenyuk's first cabinet). However, they provided no evidence.
Nature blessed Stepan Kubiv with two talents: intelligence and an understanding of the mysteries of the world of mathematics. While his peers were busy doing their homework, Stepan was engrossed in his homework, scribbling arcane formulas in notebooks. Thanks to this, after graduating from high school, he avoided conscription into the army and instead enrolled in the mathematics department of Lviv University. There, Kubiv shone not only with his mathematical talent: from his very first year, the excellent student began actively participating in Komsomol activities. He began by carrying out various assignments (the standard "obedience" of a Komsomol activist included some snitching on his fellow students), then became a member of the university Komsomol committee.
Apparently, Kubiv was even more diligent in his Komsomol work than in his studies, not forgetting to establish good connections with the Lviv City Committee of the Komsomol and the Communist Party of Ukraine – since immediately after receiving his diploma, he remained at the university not only as a graduate student, but also as secretary of the Komsomol organization, and also became a member of the CPSU.
And this was in 1984, when the "Andropov era" had just given way to the even briefer "Chernenko era," and to advance one's career in the Komsomol, one had to sing the praises of the Party and Marxism-Leninism with the zeal of Pavarotti. Kubiva would be remembered for that later.
When the winds of perestroika blew across the country and young and energetic people began to be hauled to the top, Stepan Kubiv also quickly adjusted—as did his colleague, Oleksandr Shlapak, secretary of the Komsomol organization at the Lviv Polytechnic Institute (now Lviv Polytechnic National University). Yes, that same Shlapak—the future Minister of Finance (2014) and chairman of the board of the nationalized PrivatBank (2016). During perestroika, Shlapak advanced faster than Kubiv, but he always dragged him along. When Shlapak was appointed department head of the Lviv Regional Committee of the Komsomol, Kubiv became secretary of the regional coordinating council of the Scientific and Technical Creative Youth. When Shlapak rose to the rank of First Secretary of the Lviv City Committee, and then First Secretary of the Regional Committee of the Lviv Komsomol, Kubiv became head of the Department of Scientific and Student Youth, and then head of the Organizational Department of the regional Komsomol committee. Together, they attended the Lviv Komsomol congress and served as members of the Central Committee's audit commission—and there they became close friends with the First Secretary of the Dnipropetrovsk Regional Committee of the Lviv Komsomol, Serhiy Tigipko ( read more about him in the article " Serhiy Tigipko: A Komsomol Oligarch Covers His Tracks ").
When the party and Komsomol leadership of the Ukrainian SSR turned to commerce, Kubiv quickly found his bearings: in 1990-91, he headed a sector of the Lviv regional headquarters of student brigades. He effectively managed the construction brigades' treasury, which became the foundation of his future business ventures. Indeed, no sooner had the State Emergency Committee been dispersed in Moscow and independence declared in Kyiv than Stepan Kubiv enthusiastically tore up his Komsomol and party cards and joined the leadership of the regional youth scientific and economic association "Student Lviv"—created with funds from the former regional committee and the construction brigades' treasury. The only thing it resembled was students: this office served as a base for several commercial firms, providing them with benefits for "youth and students." In 1994, it was transformed into the joint venture "Student Lviv," and Stepan Kubiv became its director. But not for long: in the same year he transferred to work at JSC West Ukrainian Commercial Bank (ZUKB).
Credit and Politics: Sleight of Hand and the Right Connections
ZUKB was founded back in 1990, when the first commercial banks were being created using funds from the crumbling Soviet system: government agencies, enterprises, party and Komsomol funds, and funds from the Ministry of Internal Affairs and the KGB. Therefore, it's hardly a coincidence that the former head of the organizational department of the Lviv regional committee of the Komsomol found a job at ZUKB. Starting from a modest position as a specialist in the planning and economic department, Kubiv became acting chairman of the board by the late 90s, and since 2000, chairman of the board of JSC ZUKB. Crime reports don't reveal what Stepan Kubiv and his bank were up to in the 90s, but the most interesting developments, according to Skelet.Org , began in 2002.
In the spring of 2002, ZUKB increased its authorized capital from UAH 75,087 million to UAH 143,549 million thanks to foreign investors. The most important of these was the Polish Kredyt Bank SA, also established in 1990—it's possible it was a foreign "twin brother" of the Ukrainian ZUKB. Beginning in 1999, Kredyt Bank SA began gradually acquiring ZUKB shares, with the British-European EBRI and the Belgian KBC Bank NV also joining the minority shareholders. At the same time, ZUKB changed its name to JSC Kredyt Bank and was actively preparing for a full sale to the Poles. It also provided Western financing for Viktor Yushchenko's political campaign. The details of this highly scandalous story "sunk into oblivion" immediately after the first Maidan, when all traces of the involvement of Western "institutions of democracy" and foundations in preparing the "Orange Revolution" were carefully erased. However, many still remember that this was precisely the cause of Kredit Bank's first major troubles, which befell it from the Lviv Regional Tax Administration, headed by Serhiy Medvedchuk, the brother of Viktor Medvedchuk, the head of the Presidential Administration ( read more about him in the article " Viktor Medvedchuk: Putin's Godfather Guarding Russia's Interests in Ukraine "). At the time, Kuchma's team was slashing the tails of Yushchenko's Ukrainian and foreign sponsors across the country, and in Lviv Oblast, Viktor Medvedchuk used the help of his brother, a tax official.
Sergei Medvedchuk
Since tax violations were present in the operations of virtually all major Ukrainian enterprises, the tax authorities had no choice but to come and find them. This is how, in the region, they targeted the Drogobychevsky Galinina Oil Refinery, owned by Western Ukrainian "dairy oligarch" Igor Yeremeyev (138 million rubles in unpaid excise taxes), Yevhen Chervonenko's Orlan-Trans (tax evasion through fictitious losses), and Stepan Kubiv's Credit Bank. The latter was caught not only with taxes, but also with fraudulent sale of collateral, as well as money laundering by writing off the debts of fictitious debtors.
The tax authorities then directly targeted the 1st Lviv branch of Kredit Bank, headed by Bohdan Dubas, a trusted confidant of Stepan Kubiv. The raid was provoked by Dubas's role as head of the Lviv election headquarters of Our Ukraine, and later of presidential candidate Viktor Yushchenko, receiving direct funding for the campaigns through his own bank (with Kubiv's approval). However, Dubas was also a member of the Lviv Regional Council and succeeded in establishing a special commission to investigate Serhiy Medvedchuk, head of the regional tax administration, for abuse of office. Furthermore, Medvedchuk, as he claimed, received numerous threatening phone calls from Viktor Yushchenko, saying, "I'll soon become president and deal with you!"
A role was also played by the fact that in 2004, Kredyt Bank SA already owned 66,65% of Kredyt Bank shares and was preparing to sell them to Poland’s largest PKO Bank Polski.
In this regard, not only Viktor Yushchenko and his entourage, but also representatives of the Polish government appealed to Leonid Kuchma to "stop the persecution of foreign investors." Thanks to such a powerful defense, Kredit Bank managed to repel attacks even from the all-powerful Medvedchuks and held out until the end of 2004—and after the Maidan, all charges against the bank were dropped. Moreover, the new president thanked his aides: Bohdan Dubas was appointed chairman of the State Mortgage Institution, and then advisors to the head of the Presidential Secretariat, while Stepan Kubiv appointed his people to the leadership of the Lviv Oblast Tax Service. However, several years passed, and Stepan Kubiv's bank once again became "famous" throughout the country.
Since 2005, Kredit Bank has belonged to PKO Bank Polski, which gradually acquired 98% of its shares and again changed its name to Kredobank. The deal also included the continuation of the contract of the bank's management, headed by Stepan Kubiv—somehow the Poles were convinced that it was impossible to find a replacement for these "professionals." Incidentally, Sergei Tigipko concluded a similar deal in 2007 with the Swedish buyers of his TAS-Kommerzbank. Well, PKO Bank Polski agreed and... soon regretted it greatly (as did the Swedes about Tigipko). Because Kubiv's "professionals" drove Kredobank to losses and ruin, and this happened in 2008, even before the global financial crisis. The main reason, according to Polish media, was that Stepan Kubiv was actively creating so-called... "Problem loans"—possibly the embodiment of some kind of scam. The cover was a "weak connection" between the bank's head office and its branches—meaning these "problem loans" were being blamed on scapegoats, the managers of Kredobank's branches, who, it was claimed, were unprofessional. Indeed, the bank's structure had fallen apart, and the work of the head office and branches was often dependent on Kubiv's personal relationships with their subordinates.
"The biggest mistake of the Polish PRO BP was handing over control of Kredobank to local management, over which it lost control. The bank is in disarray; Kredobank is no longer manageable," an anonymous source from Kredobank told the media at the time. Beginning in March 2008, the bank ceased to generate profits for its Polish owners. In May of that year, it began selling off its real estate and cutting about 20 branches, laying off all their employees. Even disabled employees were fired, which violated labor laws. In April 2008, the Kyiv office of Kredobank was stormed by tax police: according to their representatives, the branch had been converted into a currency conversion center, working with fraudsters from the Zhytomyr region, to whom the bank had issued a total of over 80 million hryvnia in cash. Although the tax authorities didn't bring any charges against Kubiv himself, he rushed to defend his people. At the time, Kubiv categorically declared the tax authorities' actions illegal, bombarding the president, the prime minister, the National Bank, and the parliamentary committee on financial activities with complaints. Interestingly, from that moment on, Stepan Kubiv became an implacable enemy of the tax police—and in the summer of 2016, already serving as first deputy prime minister, he categorically advocated for the abolition of the service.
Stepan Kubiv
Despite Kubiv's attempts to portray Kredobank's problems as temporary or the work of enemies, its situation worsened day by day. After August 2008, it became clear that the bank urgently needed to be rehabilitated, beginning with a management change. However, Kubiv himself had given up clinging to his position, and he had good reasons for doing so. First, Kubiv could no longer manipulate Kredobank's finances so freely; he was subject to a rigorous audit by the bank's Polish owners. Second, with the onset of the global crisis, Kubiv's plan to borrow from European banks fell through. Third, since Kubiv's bank wasn't his personal bank, he couldn't withdraw depositors' money converted into dollars offshore or refinance the National Bank—something many Ukrainian oligarchs with their own captive banks were actively pursuing in late 2008.
Stepan Kubiv. Maidan and Loans: Everybody Dance!
Kubiv's banking expertise proved irrelevant in 2008, just as it was in 2009. All he could manage was a job as an associate professor in the marketing and logistics department at Lviv Polytechnic. But in 2010, he was invited to the supervisory board of the small bank Lviv, also opened in 1990 and sold in 2006 to Icelandic investor Margeir Petursson. That same year, 2010, Stepan Kubiv changed his political allegiance: he left the defunct Our Ukraine party and became head of the Lviv branch of Arseniy Yatsenyuk's Front for Change, whom he had known since the late 90s, when Yatsenyuk worked at Aval Bank. Under the Front quota, which ran alongside Batkivshchyna in the 2012 parliamentary elections, Stepan Kubiv received the easy spot #23 on the BYuT list. Apparently lacking other responsibilities, he actively engaged in public political activity, transformed himself into a street speaker, and by 2012 was calling on Ukrainians to fight the "internal occupation." However, not all Lviv residents believed the former Komsomol activist.
Having settled into his new role, Kubiv made a name for himself during the second Maidan. Together with his fellow deputy, Andriy Parubiy ( read more about him in the article " Andriy Parubiy: What the Former Maidan Commandant and Head of the National Security and Defense Council Concealed "), they became the two main commandants of the Maidan. More precisely, Kubiv became the commandant of the Trade Union House in Kyiv, which had been seized by protesters (having immediately figured out how to rent it from the Federation of Trade Unions, where, rumor has it, numerous Berkut and other law enforcement officers had "turned up dead" before mysteriously disappearing), while Parubiy became the commandant of the tent city. Besides them, there were half a dozen other commandants on the Maidan: Svoboda members Mykhailo Blavatsky (known in Lviv as the crime boss Misha the Broker), Ruslan Andriyko, Yevhen Karas, and Eduard Leonov; Udar member Serhiy Averchenko; and Mykola Katerenchuk. Stepan Kubiv's main activity consisted of delivering speeches between "feedings" of the protesters: he took on the role of organizing food and other supplies, reporting on the purchase of colossal quantities of food and disposable tableware. However, there is information that Kubiv (like Parubiy) was charged with embezzlement and misappropriation of funds from the "Maidan cashbox" (surprisingly, where did this cashbox come from? Is the US State Department involved?).
The new government formed in late February 2014 compromised itself so quickly that many of its former members were later hauled in for questioning by the Prosecutor General's Office. And perhaps the biggest havoc there was caused by the new head of the National Bank, Stepan Kubiv. Why this important post was offered to him, a banker with a dubious past and a poor reputation, remains a mystery in the behind-the-scenes dealings of the leaders and sponsors (the US again?) of the second Maidan. But two facts are noteworthy: first, Kubiv began working alongside his old friend from the Young Communist League of Ukraine, Oleksandr Shlapak, who was appointed Minister of Finance. Second, Kubiv settled into his new position incredibly quickly, as if he knew in advance what was required of him and what needed to be done. And what was required was to organize a colossal refinancing of Ukrainian banks.
Kubiv became involved in Ukrainian financial sector issues as early as February 20, 2014, when, hiding behind the walls of the Trade Union Building from the gunfire and smoke, he obsessively studied Ukrainian Eurobond prices and began broadcasting on Facebook about the imminent default of the Ukrainian economy. Understandably, such information only further alarmed Ukrainian bank depositors, who rushed to withdraw their deposits and buy up greenbacks: by the time Yanukovych fell, the dollar was already trading at 9,1 on the Interbank Market. It seemed perfectly reasonable that the new Yatsenyuk government decided to aid the Ukrainian banking sector. However, it was unlikely that it was unaware that most Ukrainian banks, including those owned by Maidan leaders and financiers, had begun a massive scam: they were siphoning off banks' capital through loans to their own or shell companies, buying up foreign currency with the money, and transferring it abroad.
Later, Stepan Kubiv would be accused of, while still in possession of confidential information about the IMF's demand to "free" the hryvnia (stop propping it up with gold and foreign exchange reserves), and thus understanding the consequences of this move, deciding to give a gift to his longtime acquaintance (and possibly business partner) Mykola Lagun ( more about him in the article "The Criminal Schemes of Banker Mykola Lagun (Investigation)" ), the owner of Delta Bank, and several other banker acquaintances. Kubiv offered them the first chance to take out a huge refinancing loan from the National Bank (over 4 billion hryvnias) at 12,61% per annum, revealing that a rapid decline in the hryvnia was expected in the near future: this meant not only that inflation would write off debts, but also the opportunity to "make money" through speculation on the currency market, using the refinancing funds as free capital. And for this, according to the Prosecutor General’s Office, he wanted a kickback in the amount of 25% of the refinancing amount (one billion hryvnia).
Simultaneously, in February-March 2014, Stepan Kubiv committed two more acts that had fatal consequences for the Ukrainian economy: he turned on the printing press (in the last week of February alone, issuance exceeded 5 billion hryvnias), and he ceased repo operations—that is, refinancing banks with securities with an obligation to repurchase them. The latter was completely unnoticed (few were interested in the details of banking), yet the cessation of repo operations was a real bombshell that detonated the financial sector. The fact is that banks could not steal (convert into loans and withdraw from the banks) these securities, unlike the monetary refinancing that the NBU (Kubiv) and the Ministry of Finance (Shlapak) began generously providing them with, with the blessing of Prime Minister Yatsenyuk.
Refinancing volumes of Ukrainian banks as of April 7, 2014
Meanwhile, the hryvnia began to plummet on the Interbank Market (to 11,7 per dollar by April 8), but Stepan Kubiv blamed it all on notorious speculators. The head of the NBU was blatantly lying to journalists and fellow citizens, knowing full well that street speculators don't control even 5% of Ukraine's foreign exchange market, and the overall population's share of foreign exchange transactions (at bank branches, exchange offices, and through money changers) doesn't exceed 15%. The remaining 85% of the currency was bought wholesale and shipped out of the country by banks and large enterprises.
And the refinancing flow kept growing: by the time Stepan Kubiv was dismissed (June 19, 2014), the NBU had distributed 101,279 billion hryvnias to banks, of which Oschadbank received 30 billion, and the rest went to commercial banks. The leaders in terms of the amount of money received were: PrivatBank (over 20,5 billion), Delta Bank (over 9,5 billion), Ukreximbank (7,6 billion), Nadra (around 4 billion), Serhiy Kurchenko's Brokbusinessbank (around 2 billion), and VAB-Bank, owned by agricultural oligarch Oleh Bakhmatyuk. "The sums involved are colossal. Banks linked to an American sunflower concern and the governor of one of the regions raked in the most," a source from the NBU told the press at the time. Meanwhile, the dollar was already trading at 12 on the interbank market, and defrauded bank clients who were unable to repay their previously taken foreign currency loans staged protests and demanded Kubiv's resignation. Thus began the months-long "credit Maidan," which would be dispersed by the National Guard in February 2015.
The consequences of this ill-fated refinancing were catastrophic: the national currency fell by 30%, consumer prices increased by 50%, fuel prices soared—almost ruining the sowing campaign and putting small and medium-sized agricultural producers in bondage—and the real estate market collapsed. Ukraine, led by Yatsenyuk and Kubiv, boldly stepped into a new crisis—one that continues to this day. Incidentally, Stepan Kubiv's efforts to derail the Ukrainian economy cost the state 165,000-200,000 hryvnias per month—that's how much he earned (including bonuses, travel allowances, and indexation) as head of the NBU.
Stepan Kubiv. Girls and daughters: if we're going to go for a walk, let's go for a walk!
On June 18, 2014, Prosecutor General Ihor Makhnitsky was dismissed ( read more about him in the article " Ihor Makhnitsky: Is There a Limit to the Shamelessness of the Former "Maidan Prosecutor" ). On the same day, Stepan Kubiv submitted a voluntary resignation as head of the National Bank, which would be approved the following day—Kubiv himself would only learn of it that evening, waking up with a severe hangover. The former "Maidan Prosecutor" and "Maidan Commandant" decided to celebrate their resignations together, not by drinking bitter vodka at a bar, but by throwing a grand party at a restaurant. There was something symbolic about this: the former head of the National Bank, who had cheated the country out of tens of billions and plunged it into crisis, and the former prosecutor general, who hadn't caught criminals but closed and ruined cases for bribes, were celebrating the end of their successful cases together.
As Skelet.Org has learned , Kubiv and Makhnitsky rented a private cottage with a sauna in the Lesnaya country restaurant complex and ordered a lavish feast featuring delicacies and very expensive alcohol, as well as a minibus of "girls"—that is, prostitutes. According to eyewitnesses, the "recreation" lasted until the morning and ended in a loud scandal—a fight between the "grumpy guy" (Kubiv) and one of the prostitutes, who allegedly stole 30 euros in cash from him. After they were separated, the "girls" retreated, and Kubiv and Makhnitsky continued their protracted party.
This incident prompted journalists to recall a similar story that occurred on September 19, 2013, when Stepan Kubiv and his old friend Oleh Kanivets (also a member of the opposition BYuT faction) got drunk at the Carteblanche cigar club and then, drunk, attempted to enter the State Treasury Department (why, one wonders?). Security guards blocked their path, and the opposition MPs became enraged at the "dogs of the regime" and began shouting that they were untouchable, elected representatives of the people, when… Oleh Kanivets vomited the food and drink he had previously eaten right at the entrance to the State Treasury. Unfortunately, one of the guards, either trying to help him or escort him outside, touched the "sacred body" and received a crushing blow to the jaw, instantly losing consciousness (he was later taken away by an ambulance). Nevertheless, the remaining State Treasury security forces withstood a new attack by opposition MPs. Having failed to achieve their desired result, they... urinated on the entrance to the State Treasury and, hugging each other, went off to fight the regime elsewhere.
Incidentally, it's interesting that just a month before this incident, on August 19, 2013, Stepan Kubiv participated in a clash between the opposition and Berkut riot police outside the Kyiv City Council building (also attempting to break into the building), during which, according to him, he suffered a broken rib, a bruised liver, and a spinal injury. He was hospitalized and gave an interview from his hospital bed, while his comrades shouted about "a new regime crime."
After that wild party with the "girls," Stepan Kubiv disappeared from Skelet.Org's radar for a couple of months —there were even rumors he'd gone on the run. As it later turned out, this wasn't far from the truth: Kubiv was indeed abroad, traveling to Nice, not to improve his failing health, but to buy real estate. He could also have been visiting his daughter, Ulyana, in Toronto, Canada, who had remained there since 2009, after graduating from New College, University of Toronto. In 2010, she worked at the "Buduchnist" credit union (designed for outreach to the Ukrainian diaspora), in 2011-2012 she became co-owner of the "V&U Very Unique Gifts" store, and in 2014, she joined the company "MEEST Corporation." The reader will have to wonder why so much wealth was being provided to the daughter of a famous Ukrainian banker.
On August 23, 2014, Stepan Kubiv was detained at the elite Bukovel sanatorium, where he was vacationing (according to Skelet.Org , again with girls). But after several interviews with the Prosecutor General's Office, Stepan Ivanovych underwent another transformation: he ran for election on the Poroshenko Bloc "Solidarity" list (No. 59), and became not only a people's deputy but also the president's representative in the Verkhovna Rada (since January 15, 2015). And on April 14, 2016, Stepan Kubiv received the second seat in the new government of Volodymyr Groysman and became Ukraine's first deputy prime minister.
Stepan Kubiv and Volodymyr Groysman
One can only guess what this, to put it mildly, worst NBU governor in Ukrainian history could have offered or at least promised the president to not only evade criminal liability for multi-billion-dollar corruption but also to secure a high-ranking position in Petro Poroshenko's team. But it's worth remembering that for the "Vinnytsia people," he will still remain an outsider, someone who could be sacrificed in an emergency. Well, then, it's possible that Kubiv's name could soon become the next in a series of corruption sensations, such as the case of the long-fugitive Oleksandr Onyshchenko ( read more about him in Oleksandr Onyshchenko: A Man with a Taste for Scandal ) or the recently arrested Roman Nasirov ( read about him in the article "Roman Nasirov: The Business Past of Ukraine's Chief Tax Official ").
Sergey Varis, for Skelet.Org
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