10:24 12.10.2020

Hochstein leaving Naftogaz's supervisory board, claims increasing sabotage from corrupt forces

3 min read
Hochstein leaving Naftogaz's supervisory board, claims increasing sabotage from corrupt forces

U.S. Businessmen and former diplomat Amos J. Hochstein has notified NJSC Naftogaz Ukrainy that he leaves the company as independent director in the supervisory board of the company and among the reasons behind his decision to leave the supervisory board, Amos Hochstein mentioned growing opposition to gas market reforms and the transformation of Naftogaz into an independent and efficient company, Naftogaz said on Monday.

"Naftogaz faces increasing sabotage from corrupt forces," Hochstein said in his column in KyivPost publication.

As reported, at the end of September, Anders Aslund, a Swedish economist, senior fellow at the Atlantic Council, has decided to leave the supervisory board of JSC Ukrzaliznytsia.

"Unfortunately, Naftogaz management's successful efforts to create a new corporate culture, transparent mechanisms, and an adherence to international standards, was resisted at every step of the way. The company has been forced to spend endless amounts of time combating political pressure and efforts by oligarchs to enrich themselves through questionable transactions," Hochstein wrote in the column.

He recalled that when fears abounded in late 2017 that Ukraine's efforts to dismantle corruption were weakening, U.S. and foreign officials encouraged me to accept the EBRD's request, and join the Naftogaz board to reinforce, and help protect, the progress that CEO Andriy Kobolev and his team had made, and continue with additional critical reforms.

He said that substantial progress was achieved: Naftogaz Group transformed from a loss-making company to a critical revenue-generator to the state budget, the unbundling of the transit system was completed and Naftogaz beat Russia's Gazprom in the largest ever commercial arbitration.

Hochstein said that these efforts at sabotage increased over the years as the international community experienced Ukraine-fatigue and the Trump administration no longer pursued an anti-corruption agenda. This was symbolized most clearly and egregiously when the government of Ukraine recently negotiated and approved a memorandum of understanding with Louisiana Natural Gas Exports to supply Ukraine with U.S.-sourced liquefied natural gas, while concurrently offering one of its executives, Robert Bensh, a seat on the Naftogaz supervisory board.

After finally convincing the government to cancel the public service obligations regime for households in August 2020, various unfounded accusations were leveled at Naftogaz, accompanied by the usual calls for investigations. The old tactic of using prosecutors and auditors for intimidation and retaliation is back, he said.

"I can no longer stand by and be used to endorse this negative trend, and it's why I must voluntarily leave the board," he said.

He called on the Ukrainian government to stick to acting to strengthen the independence of supervisory boards as a safeguard against the return of corruption schemes.

Kobolev expressed his appreciation for Hochstein's contribution to the company and called his contribution critical for winning the Stockholm arbitration, and also assured that the company will continue the course of reforms and complete a successful transformation.

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