Bank says media reports sabotaged business

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Oct. 21, 2004, 5:05 a.m. | Business — by Roman Olearchyk

Roman Olearchyk

Kyiv Post Staff Writer

Some in Ukraine's power structure may be unleashing their wrath on a bank co-owned by parliament deputy Petro Poroshenko, a businessman and key member of presidential candidate Viktor Yushchenko's Our Ukraine bloc. n Ukraine’s power structure may be unleashing their wrath on a bank co-owned by parliament deputy Petro Poroshenko, a businessman and key member of presidential candidate Viktor Yushchenko’s Our Ukraine bloc.

Mriya bank board chairman Konstantin Vorushilin said three television channels he claims are controlled by supporters of presidential candidate Prime Minister Viktor Yanukovych have conducted a smear campaign designed to scare clients into dumping the bank. In the past month, rumors have surfaced that the bank is having liquidity problems, Vorushilin said.

“It started in late September when three television channels – Inter, 1+1 and [state-owned] UT-1 – began in a partnership-like manner reporting temnyk-like news reports about our bank’s alleged troubles,” Vorushilin said.

Western democracy advocates and media watch dogs like U.S.-based Freedom House have described temnyky as orders originating in the Presidential Administration that stipulate to media what events to cover, and how they should be spun.

“We have [as a result] lost eight percent of our household deposits business,” Vorushilin added.

Although he did not name names, he claims the Social Democratic Party of Ukraine (united) – headed by Presidential Administration Chief Viktor Medvedchuk, a fierce Yushchenko opponent — is to blame.

“The channels [UT-1, Inter and 1+1] that waged an informational campaign against us are either subordinated or controlled by the Social Democratic Party of Ukraine (united) party,” Vorushilin added.

Officials at the TV channels deny that they have attempted to topple Mriya through smear campaigns.

It’s hard to determine where the truth lies, but bank officials insist the Mriya incident is the latest in a series of attempts to harm businesses linked with Poroshenko, like the Lutsk Automobile Plant and television station Channel 5.

Both companies have accused the authorities of harassment, unruly inspections and other abuses on numerous occasions this year.

“They specifically chose our bank because we’re linked with Poroshenko,” Vorushilin said, adding that Poroshenko and his relatives are beneficiary owners of less than 50 percent of the bank’s shares, and that no single individual owns a controlling share in the bank.

Vorushilin said Mriya bank has not financed any political campaigns, and if its shareholders decide to do so, that is “their own personal business.”

Mriya is listed as the 24th largest of more than 150 Ukrainian banks, with net assets of just under $200 million.

Elusive perpetrators

The news reports focused on what Vorushilin describes as a bogus complaint by a bank client to Ukrainian regulators. Documents obtained by the Post identify the individual as 26-year-old Andriy Moroz.

“[He] appears in August and deposits Hr 200 at the bank, then quickly but quietly files a complaint to the State Securities Committee that his rights as an investor have been violated,” Vorushilin said.

In his complaints to regulators and in a lawsuit submitted to Kyiv’s Darnytsya regional court, Moroz argued that his rights as “an investor” were violated during share emissions dating back to 2002-2003. The relationship Moroz had with the bank in those years, long before he opened an account at Mriya, is unclear.

The complaint triggered a one-month court battle covered by the television channels as an indication of intensifying troubles at the bank, Vorushilin said.

At an Aug. 16 hearing, the Darnytsya court upheld Moroz’s complaint, ordering the share emissions to be overturned. Bank officials claim they were not notified of the hearing, but learned of it one month after it had taken place.

They filed an appeal for a retrial. The appeal was granted on Aug. 20 and the new trial was scheduled for Aug. 25. The situation persisted with more court battles and appeals to Ukrainian securities market regulators, which concluded on Oct. 14, when Kyiv’s Economic Court ruled in favor of the bank and against Moroz.

Though the bank won the case, it was a bittersweet victory, Vorushilin said. The bank’s reputation had already been damaged by what he calls a “provocation” intended to bring the bank to the brink of collapse. The Ukrainian Association of Banks and the National Bank of Ukraine came to Mriya’s defense, testifying to the bank’s solid financial status, but it was too little, too late to stop customers from pulling their deposits.

Bank officials believe that Moroz, who they allege used a Kyiv address that does not exist when opening his bank account, acted as an agent of Our Ukraine bloc’s political opponents. The “provocation” was intended to stir panic amongst clients and to topple the bank, Vorushilin said.

Moroz did not respond to telephone inquiries by the Post.

Meanwhile, Vorushilin hinted at the involvement of the Social Democratic Party of Ukraine (united), a political opponent of Yushchenko and his Our Ukraine bloc, but he would not implicate Yanukovych in the affair.

“I don’t want to name concrete names, however, this action was not organized by the election bloc of either of the leading presidential candidates,” the bank’s chairman said. “We have no problem, as a bank, with Yanukovych.”

Vorushilin went on to say that the people behind the affair belong to the government’s ruling elite and that they want to “sabotage the election process.”

Meanwhile, Oleksiy Mustafin, editor in chief of the Podrobnosti news program on Inter, denied his channel’s involvement in a smear campaign.

“I’m a member of SDPU(u) but I did not receive an order from the party hierarchy to do this,” Mustafin said, adding that his team received documents from sources tipping them off to the story. “I don’t know of any organized effort to destroy their bank.”

Artem Petrenko, director of First National channel, also known as UT-1, tried to distance his channel from alleged attempts to purposefully harm the bank.

“We didn’t receive orders to specifically cover the story. We learned of the story from other news agencies and channels, maybe Inter or 1+1 – I don’t remember exactly,” Petrenko said. “From what I understand, our reporting was fair,” he continued.

While he expressed dismay over the possibility that his channel’s reports were damaging to the bank, “I know for certain that if there is a [political] battle, we are participants in it,” he added.

“Mass media often become part of this battle, either consciously or unconsciously. If any media outlet brings attention to a conflict, they ultimately become participants in it,” an apologetic Petrenko said.
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