the national bank of ukraine is under growing scrutiny for how it has managed the currency and rescued banks. but there is no financial cop around to dig out the whole truth.

in lending ukraine nearly $11 billion since last fall, the international monetary fund says it is playing the doctor in treating a sick economy – not the police in ensuring that the money is spent properly.

but many think that the nation desperately needs a financial cop walking the beat. the problem is, there is no such officer around.

the national bank of ukraine and its friends in government say that they followed the rules in bailing out the nation’s banks with more than $13 billion in cash infusions as of oct. 1. but if central bankers followed the rules, critics say, they followed their own ones, written to favor insiders and keep out the rest.

“the nbu board, of course, always follows its own procedures,” said oleksandr savchenko, the former deputy nbu head, who resigned on sept. 11 after alleging that the central bank’s bailouts were done in an unfair and non-transparent way that let favored commercial banks and insiders profit from currency manipulation and speculation.

kost bondarenko, director of the kyiv-based horshenin institute of management problems, also said the central bank is not passing the smell test.

“i’m not a banker, but it doesn’t seem to me that the nbu ever had a coherent program, policy or law in place to refinance commercial banks,” bondarenko said. “the attitude of the central bank can be best summed up in the sentence history attributes to marshal oscar r. benavides, president of peru from 1933-1939: ‘to my friends everything, to my enemies the law.’’’

so far, the most egregious case of funny business – according to a verkhovna rada investigative committee – involved nadra bank. the bank, now under central bank administration, received cash injections of $1 billion (hr 8.5 billion) during a 40-day period last fall. the bank used more than half of the money to buy hard currency from the nbu at the official rate and re-sell it on the commercial exchange. the remainder went to making new loans (hr 2.1 billion) and paying off creditors (hr 700 million).

thus far, however, the central bank is giving the stiff-arm to investigators and others who want to see what other devils are in the details.

interior minister yuriy lutsenko said during a 1+1 tv interview on sept. 27 that it would take at least six months before his subordinates complete their investigation into how the nbu carried out bank refinancing. conveniently or not, that puts any investigative conclusion safely after the jan. 17 presidential election.

lutsenko talked big about resolving the case, despite accusations from his ministry that the central bank is withholding documents from investigators and that others – the imf and president victor yushchenko among them – are being less than cooperative.

“the chances of bringing the case to court are good, but we first need to conduct a colossal number of expert analyses,” lutsenko said. “the exercise would take a lot less time if the president, top nbu officials and imf mission members put all their documents on one table. unfortunately, i have not detected such a desire.”

if anything is amiss, the imf is being diplomatic in its criticism. dominique strauss-kahn, the imf managing director, told via video link at the yalta european strategy conference on sept. 26 that “the imf plays the role of a doctor, not a policeman. better governance – not more imf money – is needed for ukraine’s imf program to work.”

ernst & young in july completed a review of the central bank’s refinancing program at the behest of the imf. the audit itself remains secret. but the imf and world bank say it concludes that the nbu did its best to inject some of the nation’s 170 commercial banks – many tottering from bad loans – with billions of dollars worth of liquidity during the fall of 2008.

if that is the conclusion, people are wondering why the report remains secret and the central bank so dodgy.

vasyl horbal, a member of the nbu’s supervisory council, said that even he and his colleagues have not been privy to the terms and conditions of the nbu board-approved bank refinancing program. neither has oleksandr klymenko, a deputy and member of the investigative committee, who said on sept. 29 that the nbu is hiding behind banking secrecy laws. “the nbu has not provided us with enough information to judge how transparent the refinancing procedures actually were and where all the money wound up,” klymenko said.

even the imf’s argument that the central bank “broadly” followed its procedures and rules may not hold up under scrutiny.

an accounting chamber report on nbu found that 31 of 32 central bank board resolutions on refinancing 17 banks for hr 39 billion hryvnia ($5 billion) failed to comply with existing regulations.

“the nbu provided the funds without receiving the required notarized collateral, and the size of refinancing packages exceeded permissible risk limits,” according the report, which noted that board decision in late 2008 to grant billions of hryvnia in credits to a dozen commercial banks were improper because the banks did not provide required recovery plans or adequate collateral for the loans.

the ad hoc parliamentary investigation committee found that the riskiest and most complicated refinancing operations took place after the central bank radically changed eligibility requirements last oct. 11. the measure abolished the open tender process for banks to receive nbu refinancing. before the board annulled the decision on dec. 4 2008, the hryvnia was plunging to near-historic lows.

in its latest review of ukraine’s assistance program, the imf recommended that the nbu publish the main findings of the ernst & young report. but that hasn’t happened yet.

ceyla pazarbasioglu, the imf’s mission chief in ukraine, told attendees at billionaire victor pinchuk’s yes conference on sept. 26 that she thinks “about ukraine 20 hours a day, even in my sleep.”

if pazarbasioglu is losing any sleep over ukraine and is trying to figure out where the $13 billion in bank bailouts went and whether it was well-spent, she wouldn’t be the only one.