Ukraine `loses' West's $5bn aid cash

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ALMOST five billion dollars (pounds 3.1bn) which was supposed to be spent dealing with the terrible aftermath of the Chernobyl disaster - on medicine and rehousing for victims - has been squandered, it emerged yesterday.

A probe by the Ukrainian government has unearthed massive misuse of the money which was earmarked for tens of thousands of victims, including salting cash away into illegal accounts in order to pocket the interest.

There have long been suspicions in the West of widespread abuse of Chernobyl money. But the scale of the scandal will cause consternation, not least because Ukraine has been lobbying for Western funds to fulfil a pledge to close Chernobyl down by 2000.

Ukraine has also been pressing for more international cash towards rebuilding the dangerous, leaking 74-metre-high sarcophagus which covers the remains of the exploded reactor, including 34 tons of highly radioactive dust.

Western sources in Ukraine, who have been closely involved in the 12- year operation to cope with the after-effects of the world's worst environmental disaster, confirmed earlier this year to The Independent that considerable amounts of Chernobyl money had disappeared. Much had gone on flats for people who were largely unaffected by the accident.

But the suggested figures did not run into the billions of dollars. The Ukrainian government said the scandal came only to light after its Finance Ministry checked 5,000 enterprises which handle money from the Chernobyl Fund,set up after the 1986 disaster. Businesses in the former Soviet republic are obliged by law to pay into the fund. In the capital city of Kiev alone, the inspectorate's officials found 1m Ukrainian hryvna, (pounds 310,000) had been misspent.

Examples included money which was supposed to provide apartments for victims of the disaster, but which ended up buying housing for others. Another $1bn, which was for food, medicine and other health services, ended in pockets elsewhere.

The Ukraine said yesterday it had launched 70 criminal investigations. It claimed it had already forced culprits to pay back $1bn, and said 94 officials had been fined.

The government of President Leonid Kuchma chose to release details of the scandal as it halved mandatory payments by employers to the Chernobyl Fund, part of a move to avert the worsening fiscal crisis.

Ukraine, like most ex-Soviet republics, has been engulfed by corruption since the end of the USSR, with many millions disappearing into foreign bank accounts or country mansions on the Black Sea.

The fate of its Chernobyl money will cause little surprise, but will complicate its troubled relationship with the West over the disaster, which sent a radioactive cloud across the northern hemisphere.

Earlier this month, Ukraine's Prime Minister, Valeri Pustovoitenko, criticised what he said was the West's slowness in putting up the cash needed to make the Chernobyl nuclear plant safe before its planned closure in 2000. "We don't agree to the fact that we may have to wait for two years for aid," he said.