New Anticorruption Framework and Consequences for the Business Community in Ukraine

The February 2015 announcement of minister Abromavicius, a reformer, of his resignation, arguing that the government was failing to seriously engage in the fight against corruption, can be regarded as the beginning of the downfall of Prime Minister Yatsenyuk, who was accused of having been bribed himself shortly before he stepped down on 14 April 2016. Justified or not, these messages show the importance of corruption as a political issue. Since the 2014 Revolution of Dignity, demands towards the Ukrainian authorities to fight corruption have been mounting both domestically and internationally. These combined efforts have resulted in significant changes in the country’s anti-corruption legislation and the decision to establish new anti-corruption bodies. Some of the new legal regulations and institutions require special attention from the business community operating in Ukraine.

In summary, the new legislation has introduced the following important novelties:

  • Implementation of suitable measures to prevent and fight corruption in the private sector,
  • Implementation of compliance programs and appointment of a responsible officer in companies subject to public procurement,
  • Corporate criminal liability for offering or providing an improper benefit to both public and commercial agents,
  • Asset confiscation as a penalty for certain corruption offences such as e. g. abuse of authority, forgery of documents or unjust enrichment,
  • Whistleblower protection that prohibits employers from dismissing employees for providing information about corruption to state authorities,
  • Disclosure of personal information about corruption offenders in a Unified State Register published online.

New institutions supporting the anti-corruption provisions

A few new institutions will support the implementation of anti-corruption provisions. Two of them are of special interest for the private sector. The National Anti-Corruption Bureau (NABU) will monitor and sanction public officials and other persons for corruption offences beyond a certain amount of money. The National Corruption Prevention Agency (NCPA) will investigate bribery in the public sector by checking e.g. asset declarations. However, the NCPA also has the right to observe anti-corruption compliance in the private sector. It is also worth noting that in late January another institution working with private business, the Business Ombudsman Council, signed a Memorandum on cooperation and information exchange with the NABU.

Positive effects to European standards

The adoption of anti-corruption regulations seems to have some positive effects by adjusting the Ukrainian legal framework to European standards and thus aiming at improving the investment climate in the country. For the first time, anti-corruption legislation has been prepared with active support from civil society and reformers who entered parliament and the government after the revolution in 2014.

Implementation of new laws most challenging part

As experience seems to indicate, the implementation of new laws in this field tends to be the most challenging part. The ruling elites’ attempt to put the NABU under their control can justifiably be regarded as an illustrative example of how difficult the introduction of changes supposedly is for the old political-economic elites. As any system is based on the instinct of self-preservation, it will remain their objective to establish control over institutions that could create obstacles to their money transactions. As a consequence, the pace of change will ultimately depend on the ability of anti-corruption activists and Western partners to maintain pressure.

Ewa Martyna-David