{"id":50659,"date":"2014-12-08T12:00:31","date_gmt":"2014-12-08T12:00:31","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=50659"},"modified":"2015-05-05T21:27:13","modified_gmt":"2015-05-05T20:27:13","slug":"ukraines-made-in-usa-finance-minister","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2014\/12\/ukraines-made-in-usa-finance-minister\/","title":{"rendered":"Ukraine\u2019s Made-in-USA Finance Minister"},"content":{"rendered":"

A top problem of Ukraine has been corruption and cronyism, so it may raise eyebrows that\u00a0new Finance Minister Natalie Jaresko, an ex-U.S. diplomat and newly minted Ukrainian citizen, was involved in\u00a0insider dealings while managing a $150 million U.S. AID-backed investment fund.<\/em><\/p>\n

\"Ukraine\u2019s<\/a>

Ukraine\u2019s new Finance Minister Natalie Jaresko.<\/p><\/div>\n

Ukraine\u2019s new Finance Minister Natalie Jaresko, a former U.S. State Department officer who was granted Ukrainian citizenship only this week, headed a U.S. government-funded investment project for Ukraine that involved substantial insider dealings, including $1 million-plus fees to a management company that she also controlled.<\/p>\n

Jaresko served as president and chief executive officer of Western NIS Enterprise Fund (WNISEF), which was created by the U.S. Agency for International Development (U.S. AID) with $150 million to spur business activity in Ukraine. She also was cofounder and managing partner of Horizon Capital which managed WNISEF\u2019s investments at a rate of 2 to 2.5 percent of committed capital, fees exceeding $1 million in recent years, according to WNISEF\u2019s 2012 annual report<\/a>.<\/p>\n

The growth of that insider dealing at the U.S.-taxpayer-funded WNISEF is further underscored by the number of paragraphs committed to listing the \u201crelated party transactions,\u201d i.e., potential conflicts of interest, between an early annual report from 2003<\/a> and the one a decade later.<\/p>\n

In the 2003 report, the \u201crelated party transactions\u201d were summed up in two paragraphs, with the major item a $189,700 payment to a struggling computer management company where WNISEF had an investment.<\/p>\n

In the 2012 report, the section on \u201crelated party transactions\u201d covered some two pages and included not only the management fees to Jaresko\u2019s Horizon Capital ($1,037,603 in 2011 and $1,023,689 in 2012) but also WNISEF\u2019s co-investments in projects with the Emerging Europe Growth Fund [EEGF], where Jaresko was founding partner and chief executive officer<\/a>. Jaresko\u2019s Horizon Capital also managed EEGF.<\/p>\n

From 2007 to 2011, WNISEF co-invested $4.25 million with EEGF in Kerameya LLC, a Ukrainian brick manufacturer, and WNISEF sold EEGF 15.63 percent of Moldova\u2019s Fincombank for $5 million, the report said. It also listed extensive exchanges of personnel and equipment between WNISEF and Horizon Capital.<\/p>\n

Though it\u2019s difficult for an outsider to ascertain the relative merits of these insider deals, they could reflect negatively on Jaresko\u2019s role as Ukraine\u2019s new finance minister given the country\u2019s reputation for corruption and cronyism, a principal argument for the U.S.-backed \u201cregime change\u201d that ousted elected President Viktor Yanukovych last February.<\/p>\n

Declining Investments<\/strong><\/p>\n

Based on the data from WNISEF\u2019s 2012 annual report, it also appeared that the U.S. taxpayers had lost about one-third of their investment in WNISEF, with the fund\u2019s balance at $98,074,030, compared to the initial U.S. government grant of $150 million.<\/p>\n

Given the collapsing Ukrainian economy since the Feb. 22 coup, the value of the fund is likely to have slipped even further. (Efforts to get more recent data from WNISEF\u2019s and Horizon Capital\u2019s Web sites were impossible Friday because the sites were down.)<\/p>\n

Beyond the long list of \u201crelated party transactions\u201d in the annual report, there also have been vague allegations of improprieties involving Jaresko from one company insider, her ex-husband, Ihor Figlus. But his whistle-blowing was shut down by a court order issued at Jaresko\u2019s insistence.<\/p>\n

John Helmer, a longtime foreign correspondent in Russia, disclosed the outlines of this dispute in an article<\/a> examining Jaresko\u2019s history as a recipient of U.S. AID\u2019s largesse and how it enabled her to become an investment banker via WNISEF, Horizon Capital and Emerging Europe Growth Fund.<\/p>\n

Helmer wrote: \u201cExactly what happened when Jaresko left the State Department to go into her government-paid business in Ukraine has been spelled out by her ex-husband in papers<\/a> filed in the Chancery Court of Delaware in 2012 and 2013. \u2026<\/p>\n

\u201cWithout Figlus and without the US Government, Jaresko would not have had an investment business in Ukraine. The money to finance the business, and their partnership stakes, turns out to have been loaned to Figlus and Jaresko from Washington.\u201d<\/p>\n

According to Helmer\u2019s article, Figlus had reviewed company records in 2011 and concluded that some loans were \u201cimproper,\u201d but he lacked the money to investigate so he turned to Mark Rachkevych, a reporter for the Kyiv Post, and gave him information to investigate the propriety of the loans.<\/p>\n

\u201cWhen Jaresko realized the beans were spilling, she sent Figlus a reminder that he had signed a non-disclosure agreement\u201d and secured a temporary injunction in Delaware on behalf of Horizon Capital and EEGF to prevent Figlus from further revealing company secrets, Helmer wrote.<\/p>\n

\u201cIt hasn\u2019t been rare for American spouses to go into the asset management business in the former Soviet Union, and make profits underwritten by the US Government with information supplied from their US Government positions or contacts,\u201d Helmer continued. \u201cIt is exceptional for them to fall out over the loot.\u201d<\/p>\n

Jaresco, who served in the U.S. Embassy in Kiev after the collapse of the Soviet Union, has said<\/a> that Western NIS Enterprise Fund was \u201cfunded by the U.S. government to invest in small and medium-sized businesses in Ukraine and Moldova \u2013 in essence, to \u2018kick-start\u2019 the private equity industry in the region.\u201d<\/p>\n

While the ultimate success of that U.S.-funded endeavor may still be unknown, it is clear that the U.S. AID money did \u201ckick-start\u201d Jaresco\u2019s career in equity investments and put her on the path that has now taken her to the job of Ukraine\u2019s new finance minister. Ukrainian President Petro Poroshenko cited her experience in these investment fields to explain his unusual decision to bring in an American to run Ukraine\u2019s finances and grant her citizenship.<\/p>\n

A Big Investment<\/strong><\/p>\n

The substantial U.S. government sum invested in Jaresco\u2019s WNISEF-based equity fund also sheds new light on how it was possible for Assistant Secretary of State for European Affairs Victoria Nuland to tally up U.S. spending on Ukraine since it became independent in 1991 and reach the astounding figure of \u201cmore than $5 billion,\u201d which she announced to a meeting of U.S.-Ukrainian business leaders last December as she was pushing for \u201cregime change\u201d in Kiev.<\/p>\n

The figure was so high that it surprised some of Nuland\u2019s State Department colleagues. Several months later \u2013 after a U.S.-backed coup had overthrown Yanukovych and pitched Ukraine into a nasty civil war \u2013 Under Secretary of State for Public Affairs Richard Stengel cited the $5 billion figure as \u201cludicrous\u201d Russian disinformation after hearing the number on Russia\u2019s RT network.<\/p>\n

Stengel, a former Time magazine editor, didn\u2019t seem to know<\/a> that the figure had come from a fellow senior State Department official.<\/p>\n

Nuland\u2019s \u201cmore than $5 billion\u201d figure did seem high, even if one counted the many millions of dollars spent over the past couple of decades by U.S. AID (which puts its contributions to Ukraine at $1.8 billion) and the U.S.-funded National Endowment for Democracy, which has financed hundreds of projects for supporting Ukrainian political activists, media operatives and non-governmental organizations.<\/p>\n

But if one looks at the $150 million largesse bestowed on Natalie Jaresco, you can begin to understand the old adage that a hundred million dollars here and a hundred million dollars there soon adds up to real money.<\/p>\n

Those payments over more than two decades to various people and entities in Ukraine also constitute a major investment in Ukrainian operatives who are now inclined to do the U.S. government\u2019s bidding.<\/p>\n

________________________<\/p>\n

Investigative reporter Robert Parry broke many of the Iran-Contra stories for <\/em>The Associated Press and <\/em>Newsweek in the 1980s.<\/em><\/p>\n

Go to Original \u2013 consortiumnews.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A top problem of Ukraine has been corruption and cronyism, so it may raise eyebrows that new Finance Minister Natalie Jaresko, an ex-U.S. diplomat and newly minted Ukrainian citizen, was involved in insider dealings while managing a $150 million U.S. AID-backed investment fund.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[207],"tags":[],"class_list":["post-50659","post","type-post","status-publish","format-standard","hentry","category-balkans-eastern-europe"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/50659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=50659"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/50659\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=50659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=50659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=50659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}