Issue #3 of the “The Price of Reforms” cycle The Anti-Corruption Reform

The Anti-Corruption Reform

Corruption in Ukraine has become a byword years ago. This depressing fact is recognized both inside the country and abroad.

Reviews of foreign partners, places in international rankings and amounts of damage caused by corruption

At the end of 2016, the Accounts Chamber of the European Union has recognized Ukraine as the most corrupt country in Europe. The auditors' conclusions are based on the gas sector analysis, Kyiv's actions in the area of public financial management, the effectiveness of EU lending money use, and the fight against corruption between 2007 and 2015. The American newspaper "The Washington Times" characterized Ukrainian corruption as following: "In Ukraine there is so much corruption that even the Nigerian prince would be embarrassed".

According to the Transparency International Corruption Perceptions Rating, in 2017, Ukraine was ranked 130 out of 180 (2016 - 131, 2015 - 130, 2014 - 142). Our country shares its position in the last year's rating with Gambia, Myanmar, Sierra Leone and Iran, that scored the same number of points. According to TI, 86% of Ukrainians do not believe that the government will be able to overcome corruption. Part I of the report on the situation in Europe and Central Asia published by Transparency International in February 2018 noted that anti-corruption activists in Ukraine are persecuted and violated, and the authorities ignore calls for an independent Anti-Corruption Court. According to the study by Ernst & Young Global, published in April 2017, 88% of Ukrainian respondents believe that bribery and corruption are widely spread in the country. The damage from corruption in the period 2014-2016 is estimated at no less than 130 billion hryvnia, which is comparable to the annual budget expenditures for national security and defense.

On November 3, 2017, the Permanent Representative of the International Monetary Fund (IMF) in Kiev, Yosta Lungman said that the country annually loses 2% of its GDP growth because of corruption. In March 2017, the head of the NABU, Artem Sytnik, published the figure of damage to state enterprises from corruption after 2014. According to him, it is about 80 billion hryvnia.

Anticorruption structures and costs allocated for their activities

The number of of fighters against corruption has significantly increased immediately after the Maidan. New specialized bodies were connected to the partial anti-corruption public (which then has figured in corruption scandals more than once). It should be noted that all of them - NABU, SAPO, NAKA and the recently created SIB - largely duplicate the functions of the existing GPU, SBU, the Interior Ministry, and the military prosecutor's office.

At the moment, the list of Ukraine’s anti-corruption bodies is as follows:

  • National Anti-Corruption Bureau of Ukraine

  • Special Anti-corruption Prosecutor's Office

  • The Prosecutor General's Office of Ukraine

  • National Council on Anti-Corruption Policy

  • National Agency for the Prevention of Corruption

  • The State Bureau of Investigation

  • The General Inspectorate of Internal Investigations of the General Prosecutor's Office

  • The Department for Investigation of Corruptive Criminal Offenses Committed by Judges of the Prosecutor General's Office

  • The General Directorate for Combating Corruption and Legal Crimes ("K" Directorate of the SBU)

  • The Internal Security Department of the Ministry of Internal Affairs

In addition, since the beginning of 2017, the issue of the Supreme Anti-Corruption Court creation has been actively discussed in the media space. During this period, 6 alternative draft laws were submitted to the parliament. One them was withdrawn from consideration. On March 1, 2018, the Verkhovna Rada voted the presidential bill No. 7440 "On the Supreme Anti-Corruption Court" in the first reading. It should be noted that out it is the one of all alternative projects that least meets the requirements of the IMF and other Western partners for the recruitment and binding of the verdicts of the Council of International Experts on the appointment of judges, jurisdiction of the SACC, and the timing of its creation.

By delaying the adoption of the law on the SACC and having prescribed long terms for the formation of this body (should be created within 12 months from the date of entry into force), the current authorities achieved one of their most important goals - leveling the influence of the future anti-corruption court on the results of the 2019 elections. If the current process of law adoption is not accelerated by unforeseen circumstances, the Supreme Commercial Armed Forces is not created until 2019, and its first decisions should be expected in 2020 after the elections.

Another long-nurtured "newborn" in the chain of anti-corruption bodies was the State Bureau of Investigation. The process of its creation was stretching since November 2015, when the Verkhovna Rada adopted the relevant law. It is expected that the SBI will start full-fledged work only in the autumn of this year. At the same time, there are already a number of questions to the recruitment of this structure. Most of them concern the competition for the post of the SBI, which was won by Roman Truba. The conditions for getting this official and the former private entrepreneur among the contenders remain a mystery. Proceeding from the insights infiltrated in the media and information about the previous career of R. Truba, it can be concluded that he is the creature of the “National Front”, coordinated by the NSDC Secretary A. Turchinov with the president. This means that, the head of the new anti-corruption body is dependent on the representatives of the ruling coalition.

The total budgetary expenditures for anti-corruption structures in the period 2015-2017 amounted to UAH 2.9 billion. And the costs for the "old" Interior Ministry, SBU, GPU, which have not lost the functions of fighting corruption, for 2014 – 2016 amounted to 138 billion hryvnia. In the 2018 budget, more than 2.2 billion hryvnias have been allocated to the activities of NABU, SAPO and NAKA. At the same time, the total financing of the activities of the GPU, the Ministry of Interior and the Security Service of Ukraine this year will amount to UAH 78.34 billion.

Just to compare: under the previous government, for the period 2010 - 2013, the costs for the Ministry of Interior, SBU, and GPU amounted to 68 billion hryvnia. Prominent politicians and officials (though not all of them for corruption) were sent to prison: Y. Timoshenko, Yu. Lutsenko, V. Volga (head of the Financial Services Commission), I. Markov (People's Deputy of the PR), V. Galitsky (head of the Employment Service), I. Zvarych, B. Presner (Deputy Minister of Ecology), N. Sinkovsky (deputy head of the State Committee for Reserves), and V. Shcherbina (ex-Mayor of Alushta).

Functions duplication leads to interdepartmental competition. In 2016, the public has witnessed the clarification of relations between the GPU and the NABU - not only during the searches of the prosecutor's office in the office of A. Sytnik, but also right in the center of Kiev, during a fight between the employees of these bodies. In December 2016, A. Sytnik complained that the GPU, headed by Yu. Lutsenko, has blocked the access to the Unified Register of Pre-trial Investigations for NABU.

Results of anti-corruption bodies work

We can often hear a hypothesis telling that the newly formed anti-corruption structures are an instrument of external influence on the top Ukrainian authorities. The development of the situation around the case of R. Nasirov - the only official from the higher echelons, reached out by the NABU, can be an evidence of the failure of foreign partners’ attempts to influence the Ukrainian leadership in the matter of anti-corruption activity. The ex-head of the SFS, who was dismissed from his post, is accused of illegally granting a tax installment to a fluent deputy A. Onishchenko, whose case was a failure for the Anti-Corruption Bureau. As often happens in such cases, Nasirov was released "on health grounds" right from the courtroom. At the accounting briefing in February 2018, the heads of the NABU and SAP admitted that taking into account the pace of consideration in the court and the amount of the indictment (800 pages), Nasirov's case could be heard for years. In fact, this statement is a recognition impotence.

Another fugitive, Judge N. Chaus, who was "taken to prison" with pomp by the NABU and the SAPO, was luckily arrested in Moldova. However, in April 2017, the Moldovan court released him from custody. Authorities still conduct negotiations on his extradition.

The ex-head of the Court of Appeal in Kiev A. Chernushenko has made a series of statements on the pressure on the judiciary by high-ranking Ukrainian officials, in addition to escaping from law enforcement agencies. There were no reaction of law enforcement agencies to these statements.

They also did not react to the statement of a former deputy A. Shepelev telling that the current public prosecutor Yu. Lutsenko in 2006 has demanded a bribe of 150 thousand dollars from him. According to A. Shepelev, he personally transferred this amount to Yu. Lutsenko in exchange for stopping the pressure – the deprivation of parliamentary immunity and citizenship.

Another scandal with which the National Anti-Corruption Bureau is firmly associated is the Manafort (ex-head of the staff of D. Trump) case. In 2016, the NABU legalized anti-Tramp political rumors, accusing P. Manafort of receiving 12.7 million dollars from the team of V. Yanukovych. After the victory of D. Trump in the presidential election, a number of political experts expressed fears that a story with compromising information from the NABU would damage Ukraine's relations with the United States. However, soon after the arrival of D. Trump in the presidential cabinet, P. Manafort was accused in the United States of "collusion against American interests" and the potential for deteriorating relations with Ukraine was forgotten.

As for measurable indicators of fighting corruption, they are extremely modest. Out of 128 people who received prison terms for corruption (between July 2015 and July 2016), only 3 class A officials (two heads of district state administrations and the deputy head of the State Forestry Inspection) and 4 officials of class B (three investigators and the head of the Lazurni village council) were accused. According to A. Sytnik, as of February 2017, NABU transferred 50 criminal cases to the court and obtained 12 sentences, but no less than in 5 cases an agreement with the investigation was reached. The head of the department claims that many cases are hampered in the courts, therefore he supports the creation of the above-mentioned Anticorruption court.

As of September 2017, the total number of proceedings investigated by the NABU was 410. At that time, the detectives of the bureau reported a suspicion to 260 individuals, and 86 cases were sent to the court. Court decisions were made only in 23 of them. At the same time, only 17 convictions have become valid.

At a joint briefing on the results of work for the second half of 2017, the heads of NABU and SAPO A. Sytnik and N. Kholodnitsky stated that since the investigation began, the amount of compensated damage was about 250 million UAH, 117 of which were compensated for the reported half-year. In addition, according to the statements of anti-corruption officials, "it was possible to prevent plundering of almost 2 billion hryvnia, 1.5 of them in the energy sector", and 650 million hryvnia is still in the process of confiscation at the moment. During the investigation period, the lawyers of the bureau filed 35 lawsuits on invalidating transactions related to corruption. The final decision by the court of cassation was made only in 15 of them.

The statistics of the funds return to the budget is impressive only at first glance. There are serious grounds for doubting its reliability. In 2016, the management of the NABU reported that in the year of their work, 100 million hryvnia was returned to the treasury and the theft of 580 million hryvnia at state-owned enterprises was prevented. At the same time, according to the executive director of the Center for Corruption Combating D. Kalenyuk, in the first half of 2016 only 78 thousand hryvnias of corruption assets were returned to the budget.

In addition, we should note that the NABU itself, for a short period of its existence, was a party to corruption scandals involving the purchase of ammunition for special troops - 373 hryvnia for a couple and T-shirts for 1116 hryvnia.

The activities of the NAPK, headed by the former teacher of A. Yatsenyuk N. Korczak, also cause many questions. According to the "Schemes", in July and September 2016, the members of the NAPK issued bonuses of 250% to themselves in addition to the salary and allowances. The criteria for the success of this department are determined by its employees.

A complete audit of the electronic declarations that have made noise has so far not been carried out. At the end of November 2017, the NAPK reviewed only 11 declarations of people's deputies for 2015 - 2016. In fact, in Ukraine there was a legalization of capital, a large part of which was obtained illegally.

Conclusions

Summarizing the above-mentioned, we have to state that the anti-corruption reform to date has not reached its goals. The problem seems to be complex. It is connected with such factors as low qualification of employees of anti-corruption bodies, imperfection of the legislative base, dependence of anti-corruption structures on higher echelons of power and many others.

The results of the work of anti-corruption bodies clearly do not correspond to the costs spent for their activities. Thus, the total costs for NABU, SAP, and NAPK in the period from 2015 to 2019. (including 2.2 billion UAH pledged for the current year) will amount to 5.1 billion UAH. At the reporting briefing in early 2018, the heads of the NABU and the SAPO said that since the beginning of the investigations, the amount of compensated damage amounted to about 250 million UAH. In addition, according to them, "it was possible to prevent the plundering of almost 2 billion hryvnia, 1.5 of them - in the energy sector." Even with this "prevention" in mind, the effect of the activities of the NABU and the SAPO does not cover the costs spent on it in the period from 2015 to 2017. 2.9 billion hryvnia.

The number of cases opened and the arrests of corrupt officials is also not impressive. At the beginning of 2018, out of 300 people suspected of corruption during the entire period of activity of the NABU and the SAPO, only the castes of 165 citizens were transferred to court. Of 86 criminal proceedings sent to the court, decisions were taken in 23 cases, and only 17 convictions entered into legal force (data for September 2017).

The delay in the process of creating an anti-corruption court, the confrontation between various elements of the anti-corruption system (NABU vs. GPU, etc.), as well as the attempts of authorities to direct the process of creating new profile structures in their advantageous channel, are vivid evidence that a corrupt "deep state " was formed in Ukraine. The main decisions of political and economic nature are made in the depths of it, and external forms such as the ruling coalition, presidential powers, and the judiciary, the service only as a screen for it.

At the moment, we are witnessing how large corruption cartels are trying to infiltrate newly formed anti-corruption structures by their proteges and paralyze their work in every possible way. The modest results of anti-corruption activities over the past three years are the best evidence that in this fight against the will of foreign partners and financial donors who place high hopes on the NABU, the SAP, and the future SACC, Ukrainian corrupt officials, for the time being, win. Hence, the tangle of corruption problems in Ukraine will have to be unraveled for more than one year.

Author's collective

Ruslan Bortnik, Maxim Semenov, Denis Antonovich, Vladislav Dziwidzinsky, Daniil Bogatyrev, Anatoly Peshko, Valentin Gayday, Nikolay Spiridonov, Igor Pechenkin and others