Input Paper “Fighting corrup­tion in Ukraine”

As part of our project “Eastern Part­ner­ship Plus”, we are publishing a first series of input papers on the topic of anti-corrup­tion reforms in Ukraine, Georgia and Moldova. The authors from the region (Kateryna Ryzhenko, Ion Guzun, Sandro Kevkhishvili) analyse the role of the European Union in supporting the fight against corrup­tion and formulate their political recom­men­da­tions for decision-makers in Berlin and Brussels.

By Kateryna Ryzhenko

In 2014, major anti-corrup­tion reforms were launched in Ukraine. Political changes opened the country up to successful inter­na­tional expe­ri­ence, a beginning of system­atic reforms and active engage­ment by civic society. Several key achieve­ments and reforms since then should be pointed out. Full-scale anti-corrup­tion infra­struc­ture has been created in Ukraine: over the past seven years, Ukraine has developed an anti-corrup­tion infra­struc­ture for the detection and inves­ti­ga­tion of high-level corrup­tion offenses and the punish­ment of those who commit them. The following “the classic elements” of this infra­struc­ture are worth mentioning here:

The National Anti-Corrup­tion Bureau of Ukraine (NABU) is a law enforce­ment body estab­lished in 2015 whose purpose is to conduct pre-trial inves­ti­ga­tions into top-level corrup­tion cases and to cleanse the govern­ment from corrup­tion in order to enable the formation and devel­op­ment of a successful society and efficient state. The Special­ized Anti-Corrup­tion Prosecutor’s Office (SAPO) is mainly respon­sible for supporting and over­seeing criminal inves­ti­ga­tions launched by the NABU. All cases from NABU-SAPO are adju­di­cated by the High Anti-Corrup­tion Court of Ukraine (HACC). The launch of this court was one of the greatest anti-corrup­tion achieve­ments in 2019.

In addition to the law enforce­ment and judicial bodies, the anti-corrup­tion infra­struc­ture includes two central executive bodies that have a special status: the National Agency on Corrup­tion Preven­tion (NACP) is respon­sible for the devel­op­ment of anti-corrup­tion policy and preven­tion of corrup­tion and the National Agency of Ukraine for detection, inves­ti­ga­tion and manage­ment of assets received from corrup­tion and other crimes (ARMA: Asset Recovery and Manage­ment Agency) was estab­lished with the aim of iden­ti­fying, tracing and managing the relevant assets.

In addition to estab­lishing anti-corrup­tion insti­tu­tions, Ukraine carried out numerous reforms in different sectors involving the creation of registries, digi­tal­iza­tion of processes and the opening of new possi­bil­i­ties for citizens and business. The most successful of these are:

• Digi­tal­iza­tion and the imple­men­ta­tion of new rules in the public procure­ment sphere – the elec­tronic public procure­ment system ProZorro, which is based on the OCDS standard, is inno­va­tion that has garnered inter­na­tional attention. The system makes infor­ma­tion on tenders available to everyone. Ukraine has won recog­ni­tion around the world as a leader in procure­ment reform.
• The elec­tronic auction system Sale is used to for the liqui­da­tion of assets from insolvent banks, for small-scale priva­ti­za­tion and lease of communal and state property. Now, when a public or municipal asset or property is being sold, everyone has the oppor­tu­nity to bid for it.

Produc­tive coop­er­a­tion between the state, business and civic society orga­ni­za­tions made the imple­men­ta­tion of the above­men­tioned reforms possible.

Obviously, not all efforts are going smoothly and/​or speedily. There are several chal­lenges, and they must be addressed in the near future. The following are examples of issues consid­ered problematic.

Proce­dures for selecting the heads of anti-corrup­tion insti­tu­tions must be reassessed in order to eliminate possi­bility of political influence. Currently, the terms of the appoint­ments of the heads of the SAPO and the ARMA are not very long, which signif­i­cantly limits their effec­tive­ness. A new compet­i­tive selection procedure for the position of the NABU director is slated to begin in less than a year, but parts of the legal provi­sions regu­lating this process have been declared uncon­sti­tu­tional by the Consti­tu­tional Court of Ukraine.

There is contin­uing pressure on inde­pen­dent insti­tu­tions. For example, due to flaws in the legis­la­tion governing the prosecutor’s office and the limited powers of the acting head of the SAPO, the Pros­e­cutor General has been able to interfere repeat­edly in high-profile NABU-SAPO inves­ti­ga­tions, under­mining the inde­pen­dence of these insti­tu­tions. The Pros­e­cutor General did not pass up the oppor­tu­nity to study and even influence the proceed­ings in the high-profile corrup­tion cases of 2020. Securing an effective system of checks and balances that will ensure the inde­pen­dence of the anti-corrup­tion infra­struc­ture from admin­is­tra­tive and political pressure should therefore be a priority.

The unre­formed judicial system remains the greatest threat to the sustain­ability of reforms in all the areas. In fact, no progress has been made on judicial reform in the past two years. Last year, the President and Parlia­ment tried several times to start a painful process of change. A first attempt at judicial reform, in the form of a draft law submitted by the President, had been adopted by Parlia­ment in 2019, but key provi­sions of that legis­la­tion were declared uncon­sti­tu­tional by the Consti­tu­tional Court of Ukraine on 11 March 2020.

The next attempt to launch the reform was also initiated by the President in the form of several draft laws submitted to Parlia­ment. Currently awaiting final­iza­tion and the second reading, they have been merci­lessly crit­i­cized by the Venice Commis­sion and the expert community. A high standard of integrity on the part of members of self-governing judicial bodies, who are elected with the partic­i­pa­tion of the inter­na­tional community and civil society experts, remains a current require­ment of the IMF, is the subject of a recom­men­da­tion of the Venice Commis­sion and is demanded by the public.

In addition to the above­men­tioned issues, attempts to disrupt and nullify anti-corrup­tion achieve­ments in the field of public procure­ment in the past several years also provide cause for concern. In partic­ular, both the Govern­ment and the Parlia­ment are trying to amend the legis­la­tion and implement local­iza­tion in public procure­ment, an approach which, according to researchers in the field, would drive the domestic economy into a dead end. Moreover, this initia­tive would violate commit­ments under­taken by Ukraine in the Ukraine-EU Asso­ci­a­tion Agreement and in the Agreement on Govern­ment Procure­ment within the framework of the WTO.

Which tasks should take priority?

Ensuring the inde­pen­dence and capacity of the anti-corrup­tion infra­struc­ture. Carrying out a trans­parent and polit­i­cally impartial process for the compet­i­tive selection of heads of anti-corrup­tion insti­tu­tions. Securing an effective system of checks and balances ensuring the inde­pen­dence of anti-corrup­tion infra­struc­ture from admin­is­tra­tive and political pressure. Providing anti-corrup­tion bodies with the legisla­tive tools necessary for the full imple­men­ta­tion of their functions.

Forming a profes­sional and inde­pen­dent judiciary. Electing (appointing) a fair compo­si­tionto self-governing judicial bodies with the partic­i­pa­tion of the inter­na­tional community and public experts. Submis­sion to Parlia­ment of a new compre­hen­sive draft law taking all the recom­men­da­tions from the Venice Commis­sion on the reform of the Consti­tu­tional Court into account and the prompt consid­er­a­tion thereof.

Intro­ducing a system for the manage­ment of public assets that ensures trans­parency and account­ability and safe­guarding the further devel­op­ment of the procure­ment sector. Disclosing infor­ma­tion about state-owned enter­prises. Devel­oping a new register of state-owned enter­prises as an acces­sible and conve­nient tool for visu­al­iza­tion and search of enter­prises. Changing the legal framework for the manage­ment of state assets. Improving the areas of procure­ment in line with inter­na­tional commit­ments (refraining from adding to the list of contract types not falling within scope of the Law on Procure­ment). Ensuring effective control and moni­toring of procure­ment by the State Audit Office.

What is the EU’s role in supporting the fight against corrup­tion in Ukraine?

The European Union has been one of the main supporters of reforms in Ukraine in general and of the estab­lish­ment of anti-corrup­tion legis­la­tion and insti­tu­tions in partic­ular. Combat­ting corrup­tion was always a primary focus of condi­tion­al­i­ties attached to a number of macro-financial assis­tance packages and played a crucial role in the visa liber­al­i­sa­tion action plan.

Every year the European Commis­sion issues a report assessing Ukraine’s contin­uous fulfil­ment of visa liber­al­i­sa­tion require­ments on the basis of its moni­toring activity. Defi­nitely an important document, this thorough report contains an analysis and high­lights certain results and trends, including in the anti-corrup­tion sphere. The devel­op­ment of anti-corrup­tion indi­ca­tors, which could be based on the visa liber­al­i­sa­tion action plan (VLAP), and the quarterly moni­toring of those indi­ca­tors would be a way to obtain an even better and fuller picture on a contin­uing basis. This kind of moni­toring might also be a helpful tool for inter­na­tional partners and national civil society orga­ni­za­tions to use in their advocacy work.

Macro-financial Assis­tance (MFA) is a form of financial aid that the EU has extended to Ukraine since the outbreak of the crisis in early 2014. Ukraine and the EU jointly signed a Memo­randum of Under­standing (MoU) outlining the policy programme attached to the MFA operation. This programme, based largely on the reform agenda pursued by the Ukrainian author­i­ties, covers a broad range of areas, including public finance manage­ment, gover­nance and trans­parency, the energy sector, social safety nets, business envi­ron­ment and the financial sector. Important anti-corrup­tion condi­tion­al­i­ties are attached to the assis­tance in the MoU.

Consid­er­able financial support has been provided newly created insti­tu­tions and civic society organ­i­sa­tions by other European programmes as well, such as the funding from EU Anti-Corrup­tion Initia­tive (EUACI). Funded by the EU and Denmark and imple­mented by the Danish Ministry of Foreign Affairs, the EUACI is the EU anti-corrup­tion program in Ukraine. This initia­tive began a new four-year phase in May 2020 with a 22.9 million-euro budget.

On 25 January 2021, the G7 ambas­sadors to Ukraine made public a set of clearly artic­u­lated recom­men­da­tions as to action Ukraine should take next in its fight against corrup­tion. In their “roadmap” for strength­ening anti-corrup­tion insti­tu­tions and reforming the judiciary, the G7 ambas­sadors acknowl­edge the fact that recent decisions by the Consti­tu­tional Court of Ukraine have created a threat to the country and its demo­c­ratic reforms. They go on to identify a number of prior­i­ties on which they believe Ukraine should concen­trate, and propose deadlines for their imple­men­ta­tion. Specif­i­cally, they identify the following as the most urgently needed steps: 1. re-estab­lishing with a firm legal basis the anti-corrup­tion provi­sions recently declared uncon­sti­tu­tional; 2. prevent the Consti­tu­tional Court from causing further harm while it is being reformed; and 3. ensure all nomi­na­tions to key judicial and law enforce­ment bodies are trans­parent, merit-based, and credible.

It is necessary to underline that the prior­i­ties iden­ti­fied by the G7 are fully supported by the civil society experts and activists. Unfor­tu­nately, the majority of the recom­men­da­tions have not yet been imple­mented. Although the deadlines proposed by the G7 ambas­sadors lie in the past or will soon do so, the priority actions the roadmap proposes are still very relevant. Further support for and insis­tence on the urgent necessity of these prior­i­ties on the part of the EU would defi­nitely be bene­fi­cial for Ukraine and its anti-corrup­tion efforts.

Kateryna Ryzhenko
Head of Legal, Trans­parency Inter­na­tional Ukraine

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