Ukraine seeks to reassure US lawmakers over graft
5 min read . Updated: 08 Mar 2023, 09:18 PM IST 
Premium- Renewed concerns over corruption in Ukraine are adding to calls in Congress for tighter controls over financial and military assistance.
KYIV, Ukraine—A year into Russia’s full-scale invasion, Ukrainian Finance Minister Sergii Marchenko is steadily gathering enough financial aid from the U.S. and other international allies to ensure the Ukrainian state can keep functioning. His new challenge is to assuage doubts about the country’s history of corruption.
Graft scandals at the Ukrainian Defense Ministry and other government agencies have added to calls in the U.S. for stricter controls over assistance for Ukraine, as more American voters and lawmakers are growing skeptical about the cost of financial and military support for the country’s defense against Russia’s invasion.
Republican members of the House of Representatives oversight committee wrote to the Biden administration in late February demanding more information on how U.S. taxpayer aid to Ukraine is monitored. “It is critical that government agencies administering these funds ensure they are used for their intended purposes to prevent and reduce the risk of waste, fraud, and abuse," the letter said. The administration’s assurances that the aid wasn’t falling prey to corruption sat uneasily with recent revelations of corruption in Ukraine, the lawmakers said.
Ukrainian President Volodymyr Zelensky recently ousted a string of senior officials after Ukrainian investigative journalists revealed that the Defense Ministry was paying inflated prices for food for the army, among other procurement scandals. The oustings showed that Kyiv is capable of cracking down, but were also a reminder of Ukraine’s longstanding graft problem.
Mr. Marchenko, the 42-year-old finance chief, said U.S. and other foreign aid for Ukraine’s military and its budget is tightly monitored, but that Ukraine also needs to show progress in its broader fight against corruption to preserve the trust of its Western supporters.
“We can show every individual who has received money from U.S. taxpayers. When we’re talking about our international partners’ money, it’s impossible to steal," Mr. Marchenko said. “But our partners also want to see that no hryvnias are stolen from our own treasury."
Russia’s assault has devastated Ukraine’s economy, which shrank by about 30% last year. Kyiv is using its own tax revenues mainly to fight the war, while the U.S., the European Union and others have agreed to help cover Kyiv’s civilian budget deficit.
U.S. financial aid is tied to specific spending agreed between U.S. and Ukrainian officials. The $15.5 billion disbursed so far has helped to pay the salaries of Ukrainian teachers, healthcare workers and first responders, as well as support for nearly two million refugees displaced within the country and welfare programs for poor and disabled people, according to both governments.
Although no specific instances have emerged so far involving the misuse of U.S. financial aid, Ukraine’s poor general reputation for graft is causing unease as the cost of supporting the country rises.
Ukraine ranks 116 out of 180 countries in the Corruption Perceptions Index compiled by Berlin-based anticorruption watchdog Transparency International. Among European countries, only Russia ranks lower, in 137 place.
Corruption in Ukraine has particularly afflicted areas such as public procurement, government permits and appointments, privatizations and court proceedings, said Andrii Borovyk, head of Transparency International’s Kyiv office. The country has made significant progress in the past decade, including by using digital technology to make government activities visible, but there is still a long way to go, he said.
U.S. aid for Kyiv’s wartime budget is probably well protected, Mr. Borovyk said. “I don’t know how someone can steal or manipulate money that goes to civil servants’ salaries," he said, adding that U.S. officials should be able to check since everyone receiving a salary has a name and tax number.
Mr. Marchenko said Ukraine’s broader problem of corruption hasn’t gone away despite the country’s fight for survival. “War is not just brave soldiers. Sometimes it’s also corrupt and greedy civil servants and officials. A lot of people can use war for their own interests," he said.
“We need to convey to Congress and to people in the U.S. who support Ukraine, not only with messages but also with deeds, that we are capable of handling this U.S. support," he said.
U.S. disbursements, which are handled by the U.S. Agency for International Development, mostly flow via the World Bank, which combines them with other governments’ bilateral contributions. Since September, the use of U.S. financial aid has been monitored by USAID and Deloitte Consulting LLP.
Mr. Marchenko estimates that Ukraine needs about $38 billion in budget assistance from its international allies this year. The U.S. has promised around $10 billion this year, while the EU has pledged $19 billion. Kyiv is currently negotiating with the International Monetary Fund about a loan program that would help cover part of its shortfall.
Western financial help is arriving more regularly this year than in 2022, when Ukraine’s central bank had to print money to keep the government afloat. Meanwhile, Ukraine’s economy is stabilizing, albeit at a depressed level, having withstood Russia’s attempts this winter to destroy the country’s energy infrastructure with missile attacks.
The EU is also pressing Kyiv to enact more anticorruption overhauls as a condition for starting talks about joining the bloc. EU leaders formally made Ukraine a candidate for membership in 2022 but warned that the process could take many years.
Ukraine this week named a new head for its National Anticorruption Bureau, which investigates corruption allegations, but which has often struggled to secure convictions in court because of problems of corruption in the judiciary.
Mr. Marchenko said he is pressing his government colleagues to reinstate Ukraine’s prewar system of online public tenders, called Prozorro, meaning “transparently" in Ukrainian. The system, which anticorruption activists credit with reducing graft in recent years, was suspended for both military and civilian public procurement after Russia’s full-scale invasion last year.
The government said the suspension was necessary to ensure faster decisions and to hide plans from Russia. But the secrecy of decisions created opportunities for corruption, finance-ministry officials complain, pointing to the Defense Ministry’s scandal over army food supplies.
Mr. Borovyk of Transparency International said the heightened Western scrutiny of Ukraine’s government is useful. “Fighting corruption in Ukraine is like a sandwich: You need international pressure from above and civil-society pressure from below. That’s when reforms happen," he said.
Write to Marcus Walker at Marcus.Walker@wsj.com