The fighting over the last scraps of the Ukraine begins.

We’re all familiar with with the expression about rats leaving a sinking ship but it has a corollary. Nearly every one of those rats has something of value held between its pointy ratty little teeth that’s been stolen from the sinking hulk as it paddles away. Whether the ship in question is a business enterprise or a ship of state, it always happens. Just before they dive over the side, they have a quick look around for anything they can nick because they know in the chaos following the eventual sinking, there’ll be no way of tracing whatever happened to anything valuable, never mind who stole it, or if it was even stolen.

I’ve seen the number 100 billion USD as an estimate of how much money West block, that’s to say the US and EU, have given to the Ukraine in the last five months. That’s about 2,500 USD for every Ukrainian in that time period. As economic belts start to tighten in Europe, which is being hardest hit by blowback from the sanctions disaster, audit functions within even the EU are starting to dig their heels in about there being absolutely no accounting for what’s happening to the money as soon as it’s handed over to the Ukrainians.

For instance the EU amidst great fanfare recently announced a 9 billion euro donation but their own audit people refused to sign it off until some basic audit safeguards were finally put in place. The net result after a lot of internal screaming and shouting in Brussels was the Ukrainians would only get one billion euros for the moment until the audit guys were supplied with certain information about previous donations. Significantly, the Ukraine stalled and stalled refusing to supply the details the EU audit people wanted and then quietly dropped the whole issue. In the audit business, that’s not a red flag but a ruddy great polaris-sized rocket lighting up the entire night sky.

Another example is the Ukrainian government announcing they’d apparently sold off the country’s entire bullion reserve in an 11.9 billion USD transaction. Mebbe they needed the cash to keep the war going or meet the state payroll for a few months but one of the biggest bullion traders called the trade “murky” for a number of reasons. The first was they couldn’t find any trace of it and the second was the way the numbers didn’t quite make much financial sense. You see, the last official balance of Ukrainian gold reserves reported by themselves a year or two before the war broke out was 1.7 billion USD, which means this “murky” transaction nobody could find hair nor hide of was seven times the amount of gold officially held.

Gold has done its usual rise in value in economically uncertain times or when war breaks out, but certainly not a seven-fold increase. A more likely explanation for this ghost transaction is that someone has been quietly asset stripping the Ukrainian government and by a slip of the accounting pen simply got whatever assets they’ve just sold to be redesignated as held in the form of gold in the central bank. Suddenly, the books balance. Anyway, it’s all history now, because all the gold has vanished. What that indicates to me is a party or parties unknown have helped themselves to roughly 10.2 billion USD of assets from the government, plus 1.7 billion USD in gold bullion for some weekend spending money. Who says government is just a cost overhead that doesn’t generate money?

The corpse of the Ukraine hasn’t quite been picked clean yet but some large amounts of money can still be made off it if you’re nimble of foot and just as big a thief prepared to flout stock market abuse rules. There’s a particular way of manipulating the price of a quoted security that goes by many names but the usual one these days is “pump and dump”. Believe it or not, it didn’t used to be illegal but it certainly is these days. A real life example illustrates best the basic scam.

There was a journalist who wrote a stock tips column for one of the major British tabloids. As with most cons, it relied on the victim’s greed. This was somewhere in the 80’s and the greed is good craze had really taken hold of the public. He’d mention some penny stock in his column with an enigmatic phrase something like how market rumours were that something was afoot, know what I mean guv’nor, wink, wink, nod, nod. Time to get in on the ground floor was the none too subtle message.

Lo and behold, at market opening next day, the price had leapt upwards and the journalist would add in a smug I told you so to his daily column. Of course, the only reason the shares had risen was his tip and the small army of investors AKA suckers who followed it piling in. After a few days of constant rises the company in question would be forced by the regulator to issue a statement to clarify the situation, which usually went along the lines of they weren’t aware of any corporate interest in them.

With that, the over-inflated share price collapsed but by then, the con was already complete. Weeks before the tip was published, the journo and his cronies had been quietly accumulating substantial holdings in the security in amounts smallish enough not to raise suspicion, then when the stock tip was dropped, the value of their holdings increased amidst the buying frenzy. They rode the bull for a while and then in a timely fashion sold their holdings at a considerable profit, leaving nothing but an army of small investors clutching certificates in an essentially worthless company. In a similar but also illegal fashion, you can also make money artificially depressing the price of a company in order to scoop it up very cheap.

A good example of a pump and dump, occurred last week over the Ukraine. On Monday, Reuters – trusted news source (yeah) – came out with an article about how Russia was going to cut off all supplies of natural gas to Germany and they’d even see a letter to that effect, courtesy of Mr. Anonymous Source, received by some natural gas supplier in Germany. Imagine the spike that caused in natural gas prices and the various companies who supplied or traded in it. Big firms and commodities are not immune to getting the pump and dump treatment.

By Wednesday, more to calm internal markets than anything, Putin reiterated that Russia lives up to its contractual obligations, a none too subtle reference to the way international contractual obligations had become worthless when it came to the West block and the application of sanctions. Russian supplies of natural gas would resume on Thursday though with the useful caveat that the continued supply thereafter would depend on the quality of the repairs done to the pumps in Canada. If the work on the pumps was shoddy and breaks down, Germany is on her own. Russia supplies of natural gas did indeed resume to Germany on Thursday.

If that doesn’t look like a classic pump and dump, tell me what it was.


Related articles by Pointman:

The great global warming con.

Remind me again, which country’s economy was sanctions going to devastate?

The Ukraine war – the military realities.

All articles about the Ukraine situation

Click for a list of other articles.

3 Responses to “The fighting over the last scraps of the Ukraine begins.”
  1. philjourdan says:

    As additional evidence of your thesis, the fake news on this side of the pond has finally noticed the graft and fraud that extends throughout Ukraine for the first time! No longer the poor little picked on country, the Wapo and AP are starting to ask questions about where that $100b is.

    Even a blind squirrel finds a nut every once in awhile.


  2. another ian says:

    Hi Pointy




  3. HowardRichman says:

    Pointman, this could be your best posting ever! Your analysis of the real story behind the disappearing Ukrainian gold was totally brilliant. Your analogy to rats leaving the sinking ship was brilliant. For a slightly different take on this story, see:


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