IN RESPONSE TO MUSTAFA NAYEM.
Or why is the Azarov’s government unwilling to deal with the "Great four" of the audit

Message that it is the advocatory bureau Trout Cacheris PLLC that will conduct the audit or — frankly speaking — the investigation of Yulia Timoshenko government economic activity has caused quite a weird stir among the democratic Ukrainian media, constantly complaining about the censure. Mustafa Nayem — famous journalist, "Ukrayinska Pravda¹" and Savik Shuster employee — wondered why it were not the IMF specialists or someone from the "much more well-known" "Great four" audit companies — PriceWaterhouseCoopers, Ernst & Young, Deloitte or KPMG — who would conduct the audit that started on the 10th of June?

They’ve already worked with Timoshenko — playing the part of her contractors

Message that it is the advocatory bureau Trout Cacheris PLLC that will conduct the audit or — frankly speaking — the investigation of Yulia Timoshenko government economic activity has caused quite a weird stir among the democratic Ukrainian media, constantly complaining about the censure. Mustafa Nayem — famous journalist, "Ukrayinska Pravda" and Savik Shuster employee — wondered why it were not the IMF specialists or someone from the "much more well-known" "Great four" audit companies — PriceWaterhouseCoopers, Ernst & Young, Deloitte or KPMG — who would conduct the audit that started on the 10th of June?

Well, members of "Great four" have really worked with the Ukraine for a long time now. Someone earned an ill fame due to the employee-connected scandals — as the KPMG, for example. Someone’s working double tides, developing the "market relations" in the Ukraine, someone’s making various forecasts. Here’s the Ernst & Young, for example. It is acting in the Ukraine since 1991 — since the very start of "independence", so to say — having pioneered the country for the "Great four". Recently they have published such a masterpiece of the Ukrainian real estate market crisis analysis.

According to the document, "the first scenario makes the surmise that crisis has already reached its bottom and the improvement of activities in all the economic fields is about to start. The second scenario assumes severe protracted and full-scale crisis. According to the third scenario, crisis is really rather serious but the certain state economic revival is about to start within 6-9 months framework". Work of an expert, definitely. Whichever you look at it, one of the scenarios should be definitely true. Cost of this research, ordered by the the government of Yulia Timoshenko remains unknown.

Besides that, "having carried out the orders of Ukrainian Cabinet of Ministers for the benefit of fulfilling IMF mission arrangements" (here goes the IMF), "Naftogaz" and "Ukrgaz" also appealed for the Ernst & Young audit in 2009. At that, in June of 2008 Principal supervising and auditing administration of the Ukraine appealed the State Property Fund (SPF), demanding to deprive Ernst & Young of the license for auditing activity. The reason was simple — regional Dnepropetrovsk SPF branch "qualified the Ernst & Young reports as not meeting the requirements of the normative legal acts for auditing the property, inferior, incompetent and unacceptable".

It didn’t work out though — Timoshenko government stood up for such a solid company. But how can you expect Yanukovych government to trust it after that? It seems like Ukrainian democratic media — and Mustafa Nayem in particular — were unwilling to think over the reasoning of the Ukrainian leadership decisions.

Trout Cacheris, PLLC at the same time is not a trifle, too. Of course it made its reputation on the big trials over their famous clients — especially this is applied to Plato Cacheris who defended not only Monica Lewinski, Aldrich Ames and Robert Hanssen but also former U. S. Attorney General John Mitchell — "Watergate scandal" figure — and Congressman William Jefferson, accused of the fraud and misappropriation of the funds. But having inspected the specialization of the company top employees, one may understand that attorneys dealing with the issues of espionage, economic crimes and world-scale frauds make up quite appropriate company for the Ukraine. And the one, not engaged in the lawsuits it is about to investigate, at that — unlike the IMF and the rest of the audit giants. Besides that, it seem to be capable of mediating the settlement of the delicate matters, exclusion of the international scandals and the adequate informing of, say, the first parties of the Big West — if it would concern the matter of returning the money soiled out of the country, for example.

Joint Ukrainian-American business with the Kharkov roots

In order to make it clear, why would such "mediators" as Ernst & Young be foisted off on the new Ukrainian government let us share the certain "history of success" with you, the one that is quite characteristic of the contemporary Ukrainian economics. So on a modern IT, cable TV and the management consulting market of the Ukraine there’s a such serious player as SigmaBleyzer that closes up the circle of UGF (Ukrainian Growth Funds) "development funds". Company — that is rather successful not only in the Ukraine but also in quite a number of Eastern European countries and Kazakhstan — is headed by Max Bleyzer. This gentleman was born and got educated in Kharkov, in 1978 he immigrated to the United States and during the following 15 years he worked at (pay attention!) the "leading positions" of such companies as Exxon and Ernst & Young. Having learnt to cleverly choose the goals, while working in the transnational companies specialized at the economic audit, Maxim Bleyzer returned to his historical homeland after the collapse of the USSR and dedicated himself to "reviving the Ukrainian economy". In order to do so he founded SigmaBleyzer, having joined his efforts with the Ukrainian-American investment bank. Here’s the quotation regarding that, taken from the company web-site: "In 1994 Mister Bleyzer founded SigmaBleyzer Investment Group LLC that focuses on the opportunities that emerged due to the collapse of the Soviet Union and the new type of investments turnaround and distressed economies".

Whole constellation of Kharkov citizens immediately sided Mister Bleyzer. Mind that several of them even have the same last name. But there’s also Mrs. Diana Smachtina who "works for SigmaBleyzer since its foundation in 1993. She is well known in the Ukraine as the leading specialist in the issues of privatization and stock market development. She was one of the organizers and a permanent member of the governing council of the Ukrainian Stock Market (Ukrainian Association of Securities’ Traders and the Ukrainian Association of Investment Business (UAIB). Under her supervision, SigmaBleyzer was the participant of a pilot project implemented in Ukraine by USAID (American fund for promoting democracy) and PriceWaterhouse. She closely cooperates with IMF, IFC (International Finance Corporation is a World Bank department dealing with issues of "aiding" the venture investments and administrative consulting for small and medium business). Being the Supervisory Council Chair and member of Supervisory boards of numerous Ukrainian enterprises, Mrs. Smachtina spent a lot of time restructuring their corporative management. Gained experience let her successfully participate in the Expert Rada for corporative management within the State Commission for Securities and Stock Market, Task Forces preparing the joint-stock companies and the matters of improvement of Ukrainian investment legislation laws.

In order to let you know that Mister Bleyzer structures weren’t let unattended, I have to note: SigmaBleyzer Supervisory Board is headed by Doctor Edilberto Segura, senior employee of the World Bank, author of numerous published economic researches and also the Professor of the Oxford University Said Business School where he delivered the lectures on the subject of "Developing capital markets".

In 1999, due to the initiative of President of the company Max Bleyzer, International Private Capital Task Force (IPCTF) was created. Main goal of the Task Force is to define the state policy actions, promoting the improvement of investment climate in the country and attracting the private capital, having made the comparative analysis and research of the countries with transitional economics. Nine utmost important factors of state policy are given in this research — having fulfilled them, the Ukraine may achieve significant progress in increasing the in-flow of foreign investments, stabilization of economic growth and creation of a successful country with a market economy.

Holodomor exhibitions and Kateryna Yushchenko diplomas

Mind that "since 2001 International Bleyzer Fund funded comparative researches and statistical analysis of the state economic actions in 128 developing countries and countries with the transitional economics — this resulted in making up a concept of economic policy for the developing countries. During the last few years Fund has turned into the economic development ‘think-tank’ that analyzes the relationship between the investments into private capital and creations of the values. Mr. Bleyzer was invited to CNBC as an expert of investments in the countries with developing economies and he often holds the public speeches at various investment conferences all over the world. During last 7 years Mr. Bleyzer was a member of the Houston Holocaust Museum board and currently he is a member of Supervisory Council of the Thunderbird Center for Direct Investments into the Capital, Thunderbird International Council and the Emerging Markets Private Equity Association advisory board."

We should mention that it’s not only Holocaust that bothers SigmaBleyzer. Holodomor is every bit as urgent for this organization as well. On the 29th of November, 2006 Mrs. Katheryna Yushchenko — wife of the former Ukrainian President — took part in the solemn ceremony of awarding the winners of poster-drawing competition named "Holodomor of 1932-33. Genocide of the Ukrainian nation", initiated by Morgan Williams — SigmaBleyzer Government Affairs department director and President of the U. S.-Ukraine Business Council (USUBC).

We may stop at that, I guess. Acute readers should have got enough information about the kind of affairs that Ernst & Young and other transnational companies acting in Ukraine deal with. Though the audit that is about to begin may expose even the bigger affairs. Who knows?

By Ignat Kuskov

¹ "The Ukrainian Truth". Popular Ukrainian Internet newspaper.