Ukraine has, for the past few decades, suffered from widespread corruption. The country has been consistently listed towards the bottom end of Transparency International’s Corruption Perceptions Index, and those appointed to enforce anti-corruption laws have themselves been among the worst offenders. Cases which have emerged have focused almost exclusively upon low level officials, and convictions have been few and far between. So much so, offenders have hitherto operated with almost complete impunity.
It is little wonder then that in such an environment, the concept of anti-corruption compliance used to be of interest only for international actors, subject to anti-bribery laws in other jurisdictions.
Rise of enforcement and accountability
Following the Revolution of Dignity in 2014, however, the anti-corruption landscape has gradually started to change. Societal demands and pressure from international partners prompted the creation of two new law enforcement agencies: the National Anti-Corruption Bureau (NABU); and the Specialised Anti-Corruption Prosecution Office (SAPO). The new agencies became operational in December 2015, and represented a watershed in Ukraine’s fight against corrupt activity.
The first arrests of high-profile officials by NABU and SAPO for alleged corruptionrelated offences were met with widespread public approval. This, in turn, prompted other agencies to get their acts together (in particular, the General Prosecutor’s Office and the Security Service).
Ukraine now has a measure of competition (informal) between the agencies as to which
have initiated the greatest number of highprofile anti-corruption cases. Dozens of new investigations made the headlines since December 2015. Members of parliament, state-owned enterprises, prosecutors, judges, officers of government watchdog agencies, and public procurement became key targets under the investigators’ scrutiny.
Nevertheless, there remain considerable shortcomings in the quality and motivation of certain probes, and substantial bottlenecks for good investigators seeking to advance through the unreformed court system. However, one thing is for sure – the atmosphere of impunity is gone. The probability of being caught has increased significantly, which should act as a considerable deterrence to those contemplating offending.
The status quo on corruption was further disrupted by the Business Ombudsman Council (BOC), a high-level reporting mechanism established in cooperation with the Organisation for Economic Cooperation and Development (OECD) and the European Bank for Reconstruction and Development. The BOC was designed to amplify the business sector’s voice through seeking redress against unfair treatment and corruption, and is entitled to communicate directly to the country’s top executives.
New tools in anti-corruption compliance
Enforcement and accountability have been crucial in breathing new life into Ukraine’s anti-corruption regime. Transparency has also increased markedly, which enhanced capabilities for due diligence and public oversight. For example:
- various governmental registers were opened for public access;
- a new scrupulous asset and income disclosure system was introduced; and
- a new public e-procurement system was established, replacing the old system of paper-based tenders.
Along with increasing transparency, the notion of anti-corruption compliance started to arise in local regulations. In March 2017, the National Agency for Prevention of Corruption (NAPC), in furtherance of the requirements of the Law ‘On Prevention of Corruption’ to set forth compliance policies in legal entities, introduced new minimum standard for compliance and anti-corruption efforts mandatory for large state-owned enterprise and participants of major public procurement.
The new standard introduces concepts and procedures corresponding to international benchmark of corporate compliance. It implies introduction of practices mundane for the international companies, but rather new for local businesses community:
- anti-corruption risks assessment;
- internal investigations;
- onboarding trainings;
- due diligence of counterparts;
- code of ethics;
- procedures on charitable and political contributions; and
- gifts and hospitality procedures.
Overall, the new standard provides for more than a dozen of procedures and other documents to compile and obliges companies to keep written track record of anticorruption efforts for up to five years.
In the face of reform, those who championed the old corrupt system have reacted with some vehemence. Progress is fragile and we have seen a concerted effort to counter, or at least undermine, these positive developments by all possible means.
Nevertheless, the bottom line is that compliant businesses and citizens have access to the tools enabling them to resist corruption for the first time in the history of Ukraine. Transparency, NABU and SAPO, BOC, e-procurement – this set of instruments should be mastered and used as much as possible to make sure that the old system never returns.
Moreover, considering gradual enhancement of the anti-corruption framework, international companies and actors should expect and require better comprehension of anticorruption compliance from their Ukrainian counterparts.
 See ‘Sample Anticorruption Program of Legal Entity’ registered at the Ministry of Justice of Ukraine on 9 March 2017.