Our friend, business partner and fellow freedom loving frontier capitalist Joel William Bucher has died at the age of 37 here in Odessa, Ukraine this past Saturday, the 14th of November. Cause of death is still unknown pending results of autopsy by Ukrainian authorities.

Joel was born on Bastille Day in 1972  in the middle of America, and had the rock solid integrity and moral values that often are characteristic of people raised in this region of the United States . He was an ultra-achiever, a brilliant and critical thinker devoid of cynicism. His aim in life was to build rather than to tear down.

As a businessman, he was always a few steps ahead of everyone else, and was both ultra practical and extremely imaginative, a rare combination. His legacy is the love, respect and esteem felt by all those that knew him, and the ideas he originated and passed on to others to realize.

Now that the IMF may be having second thoughts about transferring additional monies to Ukraine to prop up the failing economy, the politicos are saying they really don’t need the money after all. The IMF was obviously concerned that the money would be wasted given the lack of reforms and the “buy the vote” legislation being pushed through before upcoming elections in Janauary.

The IMF must also be concerned about the potential for fraud given the billion dollar embezzlement that occurred after the last tranche was transferred.

The real question is what will happen if the IMF funds are not injected into the economy here. We are following this closely and expect the Ukrainian currency to reflect this.

Recently, one of my business partners here in Ukraine read his bank statement and discovered that he was the victim of fraud.  Parties unknown had withdrawn money from his European bank account…in Egypt. Well, today it was my turn to be the victim.

What the experience of my partner and I have in common is this:

We, like other travelers and ex-pats, use our bank debit cards to make withdrawals at ATMs here in Odessa.

…and the money was withdrawn from each of our accounts in Egypt.  In my case,  the fraud occurred after I had made a small withdrawal from UKRSIBANK (a member of the Paribas Group) here in Odessa this past Sunday. I am still verifying if my business partner had made any withdrawals from the same bank ATM.

I am not an expert on fraud, but I would think that banks would take precautionary measures to prevent this sort of thing.  Maybe it is an “inside job?” Would not surprise me. Bank fraud is prevalent throughout Ukraine. I was told this before I entered Ukraine. In fact, it is difficult to order goods and services online, and pay with a credit card.

Recently, a  Ukrainian banker(s) stole a BILLION U.S. dollars!! This was part of the money given to Ukraine by the International Monetary Fund. While the amount illegally withdrawn from my account was only about $1,000., there are probably scores of others who may have had considerably more taken.

One can only hope that Ukrainian banks-especially those that are foreign subsidiaries of larger institutions-are monitored more carefully by their parent companies, and that this type of fraud is addressed. Ukraine has great potential as a tourist destination as well as a place to do business. It would be a shame if it became known as a nation of thieves.

Nov. 7 (Bloomberg) — Ukraine’s inflation rate, Europe’s highest, slowed in October for a third month as the country’s recession blunted price pressures, which may allow the central bank to resume reducing interest rates.

The consumer price index fell to 14.1 percent from 15 percent in September, the Kiev-based state statistics committee said late yesterday in a statement on its Web site. The median estimate of nine economists in a Bloomberg survey was 14.4 percent. On the month, prices increased 0.9 percent after growing 0.8 percent in September.

Economic contraction, including a record annual 20.3 percent shrinkage in the first quarter, is helping subdue inflation, which the government has failed to push under 10 percent since 2003. The central bank cut its key rate twice since June as the recession curbed consumer demand.

“Benign monetary dynamics suggests that the disinflation trend will continue in the coming months,” Alexander Morozov, chief economist at HSBC in Moscow, said before the release. “The annual inflation rate should keep falling.”

Inflation, which peaked at 31.1 percent in May 2008, slowed from February through May, allowing the central bank to cut the discount rate to 10.25 percent. The government wants rates to fall further to spur economic growth.

Shrinking Output

Output has been shrinking since the fourth quarter of last year as demand for exports such as steel plunged, investments waned and the currency weakened. The International Monetary Fund, which approved in November a $16.4 billion standby loan for Ukraine to support the national currency and banking system, said on Nov. 4 the country’s economy remains “highly fragile.”

The Washington-based lender estimates an average inflation rate of 14 percent this year and 9 percent in 2010. The government, expects it to decline to 13 percent in December, compared with 22.3 percent a year earlier.

Producer prices, an early indicator of inflation, increased 1.9 percent on the month in October, according to the statistics office. Annual producer prices rose 5.1 percent.

(from www.bloomberg.com)

Nov. 5 (Bloomberg) — Ukrainian authorities need to reach a consensus to overcome the “lingering uncertainty” that threatens to derail economic recovery, an International Monetary Fund official said.

Ukraine’s economy remains “highly fragile” and the 2010 budget draft would result in a deficit of 8 percent of gross domestic product, “far above” the terms of the country’s IMF program, Ceyla Pazarbasioglu, the IMF mission chief in Ukraine, said in an interview with IMF Survey magazine, distributed by e- mail yesterday.

Ukraine is relying on an IMF loan to stay afloat after the credit crisis undermined demand for its exports such as steel and left its financial sector stumbling. The country seeks to receive a $3.4 billion payment this month. The Washington-based lender wanted the president to veto a law increasing social benefits and alter “some policies” before that.

“Policies in some areas, including the submission of an expansionary 2010 budget and the new social standards law, threaten” previous gains in economic stability, Pazarbasioglu said. “There is serious disagreement among the authorities on how to proceed.”

The hryvnia closed at 8.25 per dollar yesterday in Kiev, from 8.215 on Nov. 3.

‘Difficult to Finance’

The economy contracted an annual 17.8 percent in the second quarter after shrinking 20.3 percent in the three months through March. A budget gap reaching 8 percent would be “difficult to finance” and would probably push up interest rates, she added.

The situation is aggravated by political fight between President Viktor Yuschenko and Prime Minister Yulia Timoshenko, who will compete in the Jan. 17 presidential elections. The opposition blocked the passage of legislation in September and October until its demands for higher social spending were met.

Ukraine’s IMF program was stopped in February and renewed in May after Timoshenko pledged to narrow the budget deficit. The country has received $10.6 billion in loans to date.

Ukraine has failed to comply with the loan’s terms, including raising natural gas prices for households and adopting laws needed to stabilize the financial system. Lawmakers increased spending on social benefits, including minimal wages, in an effort to win voter support ahead of Jan. 17 general elections.

The Washington-based lender urged Yushchenko to veto the bill on social benefits, which IMF Managing Director Dominique Strauss-Kahn said “threatens the economic stability.” The president signed it on Oct. 30.

“It is simply not possible to increase wages and pensions too rapidly without leading to higher unemployment or higher inflation,” Pazarbasioglu said. “If the social standards law is implemented as voted, it could cost as much as 7 percent of GDP in 2010, which is totally unsustainable. The country simply cannot afford this.”

Nov. 3 (Bloomberg) — World Bank President Robert Zoellick said Ukraine is having difficulty emerging from the global financial crisis.

“They remain very much at risk,” Zoellick said today during a speech in Washington. He noted that nearby countries such as Poland are in better shape.

Last month, an International Monetary Fund report projected the world economy will expand 3.1 percent next year after shrinking 1.1 percent in 2009. In that same report, Ukraine was forecast to contract 14 percent this year before growing 2.7 percent in 2010.

“The region still faces dangers,” Zoellick said, before adding that Eastern Europe “should be able to stabilize the conditions” affecting its economy and financial system.

Nov. 2 (Bloomberg) — At least 67 people have died in an epidemic of flu in Ukraine that has infected 255,000, the country’s first deputy health minister Vasyl Lazoryshynets said.

A total of 15,000 people are being treated at hospitals, Lazoryshynets said at a press conference in Kiev today. The country has sent suspected swine flu samples to the U.K. for testing, he said, declining to say when results are expected.

Lazoryshynets said the government has registered 22 cases of suspected swine flu. He declined to comment on which influenza strain is responsible for the deaths. Ukraine has asked the U.S., the European Union, NATO and neighbors for anti- flu drugs. Poland and Slovakia sent protective masks and Roche Holding AG’s drug Tamiflu to Ukraine after President Viktor Yushchenkosaid the country couldn’t fight an outbreak of pandemic influenza alone, a statement from the government said.

In the U.S., President Barack Obama declared swine flu a national emergency on Oct. 24. The disease is widespread across the country and accounted for 411 confirmed deaths as of Oct. 30, including 114 children, and more than 8,200 hospitalizations since Aug. 30, researchers at the Centers for Disease Control and Prevention and the Harvard School of Public Health said on Oct. 29.