As a British citizen, if my government was sued by a private company, I'd be more than a little surprised if it transpired that one of U.K. Prime Minister David Cameron's top assistants was a close friend of the company's owner.
And if our energy minister also turned out to be an associate of the same man, I'd certainly question whether he was able to act impartially and in the best interests of the country.
But in Ukraine, such links between private and state interests appear to be par for the course. It happened recently, when Swiss-registered RosUkrEnergo sued the Ukrainian government in Sweden - and won - over the state's repossession of 11 billion cubic meters of gas. It was a big victory for RosUkrEnergo's co-owner, Ukrainian oligarch Dmitry Firtash, who successfully argued that the gas belonged to his company.
The man at the center of this case by virtue of his position is Fuel and Energy Minister Yuriy Boyko, who is an associate and friend of Firtash. This would obviously be a potential conflict of interest regarding this arbitration case. It is possible that Boyko stepped back from any kind of involvement in the arbitration and let his less conflicted colleagues fight the case for the good of Ukraine.
However, Global Witness, the organization which I work for as a researcher investigating and campaigning to prevent natural resource-related conflict and corruption, has not been able to establish that he did in fact step back.
He hasn't said that he did and when Global Witness sent him a series of questions about his role in this case, he did not reply.
It comes as no surprise to us that Boyko did not reply, as he has never replied to any letter or e-mail from Global Witness in over four years. This despite the fact he is named on a document dated July 2004 as a member of RosUkrEnergo's key management committee while concurrently holding the position of the head of state oil and gas company Naftogaz Ukraine.
What was he doing on this committee at RosUkrEnergo? Presumably not representing Ukraine's interests. Neither Naftogaz nor the Ukrainian state owned shares in the company and the document clearly states that he was nominated to the board at the behest of Centragas. That is the private firm owned by Firtash and business partner Ivan Fursin, which held a 50 percent stake in RosUkrEnergo.
The conflict of interest was clear and we've said so since 2006.
Another associate of Firtash who might be seen as potentially conflicted is presidential chief of staff Serhiy Lyovochkin. We also asked Lyovochkin how he ensures that his official position and his friendship with Firtash are not in conflict. He did not reply.
Lyovochkin has said he is a close friend of both Firtash and Fursin. He was recently quoted by the Kyiv Post as saying, in response to a question about his own conflicts of interests: "I had one, but I have now unpicked it."
When he was asked whether he meant his ties to Firtash and Fursin, he replied, "No comment."
You may argue that this is nothing unusual in the countries of the former Soviet Union, where there often seems to be a definite intersection between private interests, politics and state concerns.
The matter becomes a little more worrying, however, when considering what is at stake in Ukraine: The verdict in favor of RosUkrEnergo will cost the Ukrainian government billions of dollars from the value of the gas, $5.4 billion if leader of the opposition Yulia Tymoshenko is to be believed.
Given the historically precarious financial position of Naftogaz, and recent talk of the merger between this company and Gazprom, the matter should be a wake-up call for those Ukrainians worried about the influence of mother Russia on Ukraine's gas pipeline system.
In a speech last week at the London-based think-tank Chatham House, Ukrainian Foreign Minister Kostyantyn Hryshchenko said the European Union was not willing to compromise in its negotiations with Ukraine. Though he did not go into details regarding what was in dispute, it seems highly likely that one sticking point is the reform of Naftogaz, including the "unbundling" of its transit operations.
The idea is to make Naftogaz more transparent and better run, to reduce the risk that Ukraine has to turn to the International Monetary Fund for yet another bailout. Yet, according to officials in the European Commission, progress is slow and Ukrainian officials are very reluctant to open up Naftogaz to public scrutiny.
If Ukraine wants to be taken seriously as a reliable partner to both Russia and the West, it needs to start implementing some reforms. Ukraine must start to address the conflicts of private and public interests that are "everywhere," as Lyovochkin himself told the Kyiv Post.
Global Witness has been calling for many years for Naftogaz to conduct proper audits on its operations: Audits for some years have been conspicuously absent on its website, which was down at the time of writing.
The last Ukrainian government pledged to join the Extractive Industries Transparency Initiative. But the new government has made no progress. Implementation of this initiative regarding the country's transit revenues would be a good first step. The ownership of regional gas supply companies also needs to become more transparent.
However, it seems unlikely that this will happen easily, given how entangled domestic and Russian oligarchs are with Ukrainian politics. International institutions such as the IMF should also not be afraid to ask difficult questions and to insist on clear answers before more financial assistance is offered.
If such rewards are given for free - without any significant improvement in the management of the country's oil and gas revenues - the Ukrainian government will see no reason to change.
Briefing Document / Sept. 18, 2010