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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