Serhii Medvedchuk, Lviv Oblast tax chief, named to No. 2 post in Ukraine's State Tax Administration (01/18/04)

Serhii Medvedchuk, Lviv Oblast tax chief, named to No. 2 post
in Ukraine's State Tax Administration

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Almost exactly two weeks after the controversial arrest of a high-profile Lviv businessman on charges of tax evasion, which many Lviv politicians said was politically motivated, the head of the State Tax Administration of Lviv Oblast, Serhii Medvedchuk, received a promotion and was named first deputy chief of the national office on January 12.

The promotion, effected by presidential decree, was announced as Ukraine began implementing a flat, across-the-board 13 percent income tax, a reduction passed by the Verkhovna Rada last year and intended to raise budget revenues by drawing shadow income out into the open.

The promotion came after Mr. Medvedchuk the younger brother of President Leonid Kuchma's chief of staff, had become the center of an increasingly antagonistic situation in Lviv between his oblast tax agency and businesspeople aligned with the Our Ukraine political bloc.

Several lawmakers in the Verkhovna Rada said on January 14 that while the promotion of Mr. Medvedchuk to the number two slot in the State Tax Administration was obviously a move to reduce the political temperature in Lviv, it could also be the result of preparations for the presidential campaign season.

National Deputy Volodymyr Bondarenko, a member of the Our Ukraine faction, said the move was not simply a career advancement, but part of a larger reorganization of President Kuchma's closest cronies in preparation for the elections.

"This is part of a re-positioning of the political clan in preparation for the 2004 vote," stated Mr. Bondarenko. "The president wants his most loyal supporters in the key positions. But there is another factor. Mr. Kuchma seems to have understood that the situation in Lviv has gone too far, so the president decided now is the time to begin the moves."

Our Ukraine, headed by former Prime Minister Viktor Yushchenko, and the Social Democratic Party-United, headed by Mr. Medvedchuk's brother, Viktor, have been political enemies for several years. The enmity between them has heated up as the presidential elections approach. Mr. Yushchenko is considered the favorite in the October elections, along with whoever is chosen from the pro-presidential political bloc For a United Ukraine.

Our Ukraine activists in Lviv, including National Deputy Yevhen Chervonenko, a leading figure in the oppositionist political grouping who owns a Lviv-based transportation firm and a beverage firm, both known as Orlan, have repeatedly accused local tax officials of politically motivated harassment of their businesses since the younger Medvedchuk became Lviv's chief tax man.

When the Lviv Oblast Council passed a no-confidence measure on September 29 regarding Mr. Medvedchuk's policies in Lviv in the hope that President Kuchma would take note and replace him, the president responded by firing four raion representatives to the Lviv Oblast State Administration who had supported the call for the Lviv tax chief's dismissal.

Then, on December 30, Lviv tax police arrested high-profile businessman Markian Ivaschyshyn, co-founder of the oppositionist newspaper, Lviv Hazeta - who also owns a popular entertainment center, Dzyga - on three charges of failing to declare income. Mr. Ivaschyshyn, who was released after being charged, called the charges baseless. He said his arrest was the continuation of a pattern of harassment by Mr. Medvedchuk's people that has occurred since June 2003.

Mr. Medvedchuk replaces Oleksii Shytria, who had been a high level member of the State Tax Administration even before its reorganization, when it was known as the Main State Tax Inspectorate. The presidential decree releasing Mr. Shytria from his post offered no reason for the dismissal.

Mr. Medvedchuk will report to State Tax Administration Chief Yurii Kravchenko, a controversial figure associated with the Melnychenko tape scandal and the disappearance of journalist Heorhii Gongadze.

Some political voices are suggesting that Mr. Medvedchuk could eventually lead the State Tax Administration, given the influence his older brother enjoys with President Kuchma. A Ukraina Moloda story from January 14 stated that Mr. Kravchenko could soon return to head the state militia as minister of internal affairs, leaving Mr. Medvedchuk in charge of enforcing tax collection in Ukraine.

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