Government’s order to appoint NJSC Naftogaz Chairman of the Board should be canceled – order of the Head of NACP Oleksandr Novikov

Building an effective system of corporate governance of state-owned enterprises is one of the main pillars for combating corruption in Ukraine. It is also one of the key recommendations of the Organization for Economic Cooperation and Development, which is currently conducting an online monitoring visit to Ukraine.

In order to prevent corruption, the Ukrainian law stipulates that after dismissal from public service a person must not participate in the management of organizations that he or she could influence while working for the state. This restriction is applied regardless of how long a person worked in the position before dismissal. 

Such a violation is a ground for termination of the contract of a former public servant with the organization.

The National Agency on Corruption Prevention of Ukraine (NACP) monitored and supervised if former Deputy Minister of Energy of Ukraine Yuriy Vitrenko ensured compliance with these requirements, as currently, he holds the position of Chairman of the Board of NJSC Naftogaz of Ukraine.

According to the results of the monitoring, the NACP established a violation of the mentioned norm of the law. 

In detail, while holding the position of Deputy Minister (acting Minister of Energy) from December 21, 2020, to April 28, 2021, Yuriy Vitrenko systematically participated in the development of decisions on the activities of NJSC Naftogaz of Ukraine.

In particular:

• On January 12, as an acting Minister of Energy, he signed and sent a letter to the Ministry of Economic Development, Trade and Agriculture (Ministry of Economy) regarding the order of the Cabinet of Ministers № 50-р. The letter proposes to supplement the text of the order with items that provided for the Ministry of Energy of Ukraine with the right to manage the shares owned by NJSC Naftogaz of Ukraine;
• On March 4, Vitrenko signed and sent a letter to the Ministry of Economy, which provided proposals for a draft decision of the Government to determine the main activities of NJSC Naftogaz of Ukraine to develop the natural gas market;
• On April 27, Yuriy Vitrenko considered the draft order of the Cabinet of Ministers of Ukraine № 370-r, which provided an assessment of the work of the Supervisory Board and the Management Board of NJSC Naftogaz of Ukraine in 2020. Based on the results of the review, he proposed to recognize the work of the Board and Supervisory Board of Naftogaz as unsatisfactory. 

These proposals were taken into account in the order № 370-r and the work of the supervisory board and the head of the company in 2020 was considered unsatisfactory. The powers of independent members of the supervisory board were prematurely terminated. By the same order, Yuriy Vitrenko was appointed as a Chairman of the Board of Naftogaz of Ukraine.

In this regard, the Head of the NACP Oleksandr Novikov submitted an order to the Cabinet of Ministers of Ukraine to eliminate violations of Art. 26 of the Law of Ukraine “On Prevention of Corruption”.

The order requires:

• to repeal items 8 and 9 of the Government Order № 370-r, according to which Yuriy Vitrenko was elected and appointed Chairman of the Board of NJSC Naftogaz of Ukraine for a term of one year;
• to terminate the contract with the Chairman of the Board of NJSC Naftogaz of Ukraine as this contract is illegal. 

“The purpose of the NACP is to ensure integrity in all government institutions. The energy sector is one of the key elements to Ukraine’s development, and it should not remain outside the implementation of the Law of Ukraine “On Prevention of Corruption”, – said the Chairman of the NACP Oleksandr Novikov.