Conflict of interest for the NBU's chief lawyer: why Alexander Zima's actions raise concerns about fairness.

Alexander Zima, who serves as the director of the legal department of the National Bank of Ukraine and the head of the Administrative Council of the Deposit Guarantee Fund for Individuals, has found himself at the center of a scandal due to a potential conflict of interest. His directives to the Fund regarding the withdrawal of lawsuits filed by "Concord" bank against the NBU raise questions about violations of ethical and legal norms and have become the subject of a criminal investigation.

Zima's position as the director of the legal department of the National Bank of Ukraine (NBU) and simultaneously the head of the Administrative Council of the Deposit Guarantee Fund (FGVFL) creates an apparent conflict of interest, especially in light of recent events. As the chief lawyer of the NBU, Zima should have focused on protecting the bank's interests within his jurisdiction, particularly on providing legal support for the NBU's regulatory activities. Instead, the combination of his roles as an official with influence over the FGVFL has created a dangerous situation where, by giving instructions to the Fund on behalf of the NBU, he may have acted in his own interests or those of the NBU, which has now become the subject of a criminal investigation.

The investigation was initiated due to a letter from Alexander Zima to the Deposit Guarantee Fund for Individuals. In the document, Zima, representing the National Bank, recommended that the Fund withdraw the lawsuits filed by "Concord" bank against the NBU. These lawsuits concerned the cancellation of fines amounting to nearly 63.5 million hryvnias and were filed before the decision to liquidate the bank was made.

The Deposit Guarantee Fund followed this recommendation, which, according to Elena Sosedka, deprived the bank's shareholders of their constitutional right to a fair trial.

This means that instead of defending the NBU's position in court, Zima, likely aware of the likelihood of losing, opted for a simpler route and leveraged his influence.

According to general norms of Ukrainian legislation and international standards, a conflict of interest arises when an official can use their authority in one organization to influence the activities of another in which they also have interests. In the case of Alexander Zima, the conflict of interest manifested in his sending a letter on behalf of the NBU to the FGVFL recommending the withdrawal of the lawsuits from "Concord" bank against the NBU.

As the director of the legal department of the NBU, Zima should not have provided directives or recommendations on behalf of the National Bank to other state institutions, particularly the FGVFL, regarding the withdrawal of lawsuits. This could violate the fundamental principles of the separation of powers and the independence of various institutions, as in his letter he effectively used the authority of the NBU to influence the Fund, depriving the shareholders of "Concord" the opportunity to defend their rights in court.

Such actions may indicate violations of ethical and legal norms, as well as provisions regarding conflicts of interest in the sphere of public administration. Zima should have refrained from any interference in the activities of the Deposit Guarantee Fund, especially from directives that could influence the FGVFL's decision-making in favor of the NBU, which is under the regulator's control.

Liability

Human rights defender Eduard Bagirov does not rule out that there was a conflict of interest in Zima's actions, but law enforcement must prove his guilt in court.

"There is a conflict of interest, and it must be proven within the framework of the criminal proceedings and court decisions. The head of the legal structure of the NBU should be immediately dismissed from his position and, by court decision, sentenced to 8 to 12 years in prison with confiscation of property," Bagirov noted in a comment to UNN.

The lawyer added that if a conflict of interest is confirmed in this case, the official may be held liable for several types of offenses depending on the violations.

In particular, Zima may face criminal liability for abuse of power or official position, and administrative liability if a violation of conflict of interest prevention requirements is established.

Additionally, the chief lawyer may be subject to disciplinary action. Specifically, the relevant authority or the administrative council of the FGVFL, considering the internal rules of the NBU and the FGVFL, may initiate a disciplinary investigation against the official, potentially leading to his dismissal or other disciplinary measures.

It is worth noting that such actions cast doubt on the independence of the Deposit Guarantee Fund, as the administrative council headed by Zima should not interfere in the decision-making processes of the Fund's directorate and is only responsible for personnel policy within the FGVFL. The Deposit Guarantee Fund is established to protect depositors and ensure an independent liquidation process for banks, and its activities must occur without external influence, particularly from the regulator.

The consequences of such actions by the chief lawyer of the NBU could have a negative impact not only within Ukraine but also on the international stage. For instance, it is not excluded that the IMF, dissatisfied with the situation, may begin to actively demand that Ukraine develop a procedure and conduct an open competition for the position of the FGVFL's managing director.

Reminder

The case against Zima has now been transferred from the State Bureau of Investigation to the Pechersk Police Department in Kyiv for investigation. Law enforcement has informed UNN that they plan to interrogate the chief lawyer of the NBU, and after serving him with a notice of suspicion, investigators will likely file a petition with the court to suspend Zima from his duties as the director of the NBU's legal department.

Furthermore, it has become known that the co-founders of "Concord," Elena and Yulia Sosedka, have been recognized as victims in the aforementioned criminal proceedings. According to lawyers, this means that the investigation has acknowledged that Zima's actions caused harm, and the next step should be serving him with a notice of suspicion.

According to Elena Sosedka, Zima's directives deprived the bank's shareholders of their constitutional right to a fair trial.