Sept. 8 - Ukrainian President Viktor Yushchenko dismissed the cabinet amid accusations of graft and accepted the resignation of his head of national security eight months after he was swept into office on promises to end corruption in government.
Yushchenko named Yuriy Yekhanurov, 57, the governor of the Dnipropetrovsk region, as acting premier to replace Prime Minister Yulia Timoshenko, and told him to form a new government. Yushchenko also ordered a probe after at least four officials quit in the past two weeks, citing corruption concerns. Yekhanurov will arrive in Kiev today, 5 Kanal television reported.
``I have to make those decisive radical steps, because the ideals of the revolution cannot be under any doubt,'' Yushchenko said on public television in Kiev today. ``The team was disintegrating.''
Yushchenko came to power in December in the wake of the so- called Orange Revolution, when millions of Ukrainians protested the outcome of a November election that he lost and the U.S. and European Union said was riddled with fraud. Yushchenko campaigned to clean up government after years of accusations about cronyism and flawed asset sales under his predecessor, Leonid Kuchma.
Today, Yushchenko said that there was ``a lack of trust'' in his team, as Timoshenko, 44, and National Security Council head Petro Poroshenko, 39, battled over policy and relations between the government and parliament deteriorated.
Those disputes led to stalled asset sales and contributed to a slowdown in economic growth, he said. As a result, a ferroalloy plant formerly owned by Kuchma's son-in-law ``was falling into the hands of one band of thugs from another instead of being returned to the state'' for resale, he said on television.
Ukraine's $60 billion gross domestic product expanded 4 percent in the first half of the year, compared with 12.7 percent in the same period last year.
The yield on Ukraine's $1 billion bond due 2013 fell for the first day in six, declining 0.018 percentage point to 5.945 percent. The price of the 7.65 percent bond rose .115, or 11.5 cents per $100 face amount, to 110.447, according to ING Bank prices as of 1:11 p.m. Kiev time.
The reshuffle ``is a good thing,'' said Marianna Kozintseva, a New-York based vice president at Bear Stearns International, who is traveling in Ukraine. ``I'm optimistic about Ukraine in the long run and expect some turbulence in the market in the short run and recommend investor caution.''
Poroshenko today submitted his resignation less than two weeks after he was accused by state officials of corruption. He also said in a statement issued by his press service that accusations against him are ``groundless and absurd.''
Deputy Premier Mykola Tomenko also resigned today, saying he quit because Poroshenko was acting on behalf of wealthy businessmen.
With parliamentary elections scheduled for March, Yushchenko is seeking to persuade voters and investors he can clean up the government, even as some complain corruption may be on the rise.
Yushchenko said the accusations are groundless and set up a commission to handle the affair. He also suspended his aide, Oleksandr Tretyakov, 31, and said he wants Timoshenko and Poroshenko to remain on his team, though he didn't say in what capacity.
Timoshenko, a former utility executive, was one of Kuchma's staunchest opponents and led street marches and demonstrations over the years against his rule. She was one of the most vocal and photogenic personalities on stage in Kiev's Independence Square during the December rallies that led to Yushchenko's victory in the election rerun.
She was fired in 2001 by Kuchma as a deputy prime minister and was investigated by Kuchma's government for embezzlement and spent a short time in prison that year.
Concerns over corruption in Yushchenko's administration rose after Ukrainska Pravda newspaper reported in July that his son, Andriy Yushchenko, 19, was driving a BMW valued at about $160,000 and was living in a luxury apartment in the center of Kiev. Yushchenko said his son earned his money working at two jobs, while the car belongs to a friend.
On Sept. 3, State Secretary Oleksandr Zinchenko stepped down, saying he was concerned about corruption. Yushchenko replaced him with Oleh Rybachuk, 47, his top aide for more than a decade, on Sept. 7.
Rybachuk, wants the country to sell more state assets, improve ties with the EU and enter the World Trade Organization as soon as this year, he said in an interview in Kiev on June 16.
``It's really a very positive step that Rybachuk is appointed as a state secretary, because his hands are clean and he has strong ties with investors worldwide,'' Bear Stearn's Kozintseva said.