Time for renewal: Why the NBU Governor should think about team renewal

The Governor of the National Bank of Ukraine (NBU), Andriy Pyshny, has recently faced serious challenges in managing the regulator. Along with the difficulties caused by Russia's full-scale invasion of Ukraine and the difficulties in the banking market, the NBU has also been at the center of several scandals involving key officials that could undermine the authority of the regulator. All this creates the need for Pyshnyi to think about renewing his team and attracting new, more competent personnel, UNN writes.

Is the NBU open to renewal?

In a recent interview, NBU governor Andriy Pyshny told reporters that before he joined the regulator, a fairly stable team had already been formed here, and only some of its updates were needed.

In other words, the NBU already had a fairly stable team, very solid in terms of expertise, and I saw the need to update and strengthen it in some elements. But for now, this composition has been formed and will continue to develop

At the same time, he added that the National Bank is open to strengthening its team with new personnel. "In my understanding, the National Bank as an institution should always remember that attracting the best personnel from the market means getting additional expertise and fueling its ability. Because of this, I believe that we need to be even more aggressive in finding talents and ideas, so that our team constantly receives an influx of new intelligence, new thoughts, new understanding of the situation, certain fresh views. And I see openness to everything, including among the board members: everyone is interested in strengthening our team," Pyshny said.

At the same time, he diplomatically avoided the topic of scandals that have recently accompanied his subordinates.

Case of the chief lawyer of the NBU

In particular, Andriy Pyshnyi is still silent about the criminal proceedings against the NBU's chief lawyer Oleksandr Zyma. By the way, he was appointed director of the National Bank's legal department thanks to Pyshnyi, as they used to work together at Oschadbank.

The criminal proceedings were initiated by Zyma's letter to the Deposit Guarantee Fund. In the document, Zyma, who is also the chief lawyer of the National Bank and the chairman of the Administrative Council of the Deposit Guarantee Fund, recommended on behalf of the National Bank that the Fund withdraw the lawsuits filed by Concord Bank against the National Bank of Ukraine.

It was about four lawsuits in which Concorde demanded to cancel fines totaling almost UAH 63.5 million. They were filed even before the National Bank decided to liquidate Concorde and put it into temporary administration.  

The Foundation followed the recommendation it received on behalf of the regulator. The letter contained a digital signature of Oleksandr Zyma.

According to Concorde co-owner Olena Sosiedka, Zima deprived the bank's shareholders of their constitutional right to a fair trial by his instructions. 

Now the case of winter has been transferred from the state Bureau of Investigation to the Pechersk Police Department of Kiev. Law enforcement officers told UNNthat they plan to determine the circle of victims , as well as interrogate the chief lawyer of the National Bank. Also, after serving Zima with a notice of suspicion, investigators will apply to the court to remove him from his duties as director of the NBU's legal department.

By his actions, Zyma, who is also the head of the Deposit Guarantee Fund's Administrative Board, could have called into question the independence of the Fund's management, which now has a negative impact on interaction with international financial institutions. It is possible that, for example, the IMF, due to its dissatisfaction with the situation, began to actively demand that Ukraine develop a procedure and hold an open competition for the position of the DGF Managing Director. 

In addition to legal aspects, the Winter case also calls into question the transparency of the regulator's actions, which negatively affects confidence in the banking system and can harm relations with international partners.

Conflict with a volunteer soldier

Another scandalous case is the behavior of Pavlo Polarush, head of the NBU's Department for Work with Troubled Assets, who, incidentally, was named by journalists as the main contender for the currently vacant position of head of the Deposit Guarantee Fund. According to media reports, Poliarush, while drunk, got into a conflict with a well-known Belarusian volunteer soldier, Andrei Tratsevski (Bezsmertny), threatening him with physical violence and a weapon. 

According to Tratsevsky, the NBU official jumped in front of the soldier, blocked traffic, started fighting, and said that he would shoot him in the legs with his award-winning weapon. Polarush denied everything. Another video published by the military shows that police officers inspecting Polarush's car found an object that looked like a gun. According to Tratsevsky, Poliarush allegedly said that he would "buy everyone" and said in front of law enforcement officers that "all Belarusian volunteers will either go back to Belarus or kneel in Pokrovsk." Videos of the incident went viral on social media and caused outrage among users. They demanded a reaction from the NBU leadership to the incident.

The Kyiv police told UNN that they had opened criminal proceedings under the articles "threatening to kill" and "inflicting light bodily harm" and drew up a report against Polarush for driving under the influence. In addition, law enforcement officers confirmed that they had seized a weapon from the official.

The National Bank of Ukraine limited itself to a brief statement hinting that Polarush would not be prosecuted because the "incident" in which he was involved was "not related to the performance of professional duties" and occurred during off-hours. The National Bank also promised to conduct an internal investigation. That was the end of the regulator's communication with the public. The NBU management did not express any condemnation or regret over the incident, nor did it report on the results of the internal investigation.

The conflict between the NBU official and the military at least demonstrated Polarush's poor moral character. The information found by journalists that he repeatedly traveled abroad after the start of Russia's large-scale invasion of Ukraine does not add to his credentials. In particular, according to media reports, in November 2022, he received permission to leave the country from the odious former Deputy Minister of Defense, who is currently a suspect in corruption crimes. The permit was allegedly issued to Polarush to travel abroad in an elite Lexus car to receive humanitarian aid. However, it is not known on what grounds Polarush traveled abroad from February to November 2022.

Rozhkova v. Supreme Court

No less significant is the situation with the first deputy head of the NBU Kateryna Rozhkova. The Cassation economic Court as part of the Supreme Court put an end to the litigation between the individuals ' Deposit Guarantee Fund (DGF) and the former management of Platinum Bank, which was declared insolvent in 2017. Among the ten defendants in the case was Rozhkova, among others. Before being appointed to the National Bank, she worked as a member of the bank's management board.

According to the court's decision, the defendants must compensate UAH 1.5 billion in losses that were caused to Platinum Bank due to the issuance of non-performing loans (NPL). Funds, according to Rozhkova's Declaration, are debited from her accounts.

Despite the court's decision, which actually ruled that Rozhkova, among others, had committed violations that caused enormous damage, she continues to work at the National Bank of Ukraine and decide the fate of other financial institutions.

That is, in this case, as in other scandalswhere Rozhkova appeared , the management of the National Bank sees no problems.

NBU Governor Andriy Pyshnyi did not even want to explain this situation to MPs at a  meeting of the Committee on Finance, Taxation and Customs Policy. In particular, when one of the committee members asked him whether it was correct that Rozhkova continued to work in her position after the Supreme Court's decision, Pyshnyi replied: "I would not dive into the discussion of this issue now." 

This creates the impression that high-ranking officials can avoid responsibility even when their work causes damage to the state.

Against the backdrop of such numerous scandals, the question arises of the need for personnel changes at the National Bank. The lack of an adequate response to such violations discredits the institution and undermines its credibility as a financial regulator. As the head of the NBU, Andriy Pyshnyi  should probably think about renewing his team and inviting professionals with high moral character and reputation to ensure transparency, efficiency and reliability of the regulator's work.