Newsletter
OPENING PANEL The President of Ukraine, Petro Poroshenko, officially opened the Conference. In his speech, the President stressed that in order for Ukraine to advance successfully and attract investors, the country has to demonstrate active efforts to battle corruption and guarantee peace. He stressed that, “without the active participation of society, we will not be able to ensure that reforms are effective” and noted that the first phase in providing institutional and legislative support for the struggle against corruption was about to finish. Mr Poroshenko also stated that the Director of the Anti-Corruption had been chosen by a special commission in an open, transparent and competitive contest. The President added that the dedicated Anti-Corruption Prosecutor was expected to be appointed before 1 December 2015 and that the selection process for choosing the five members of the National Agency for the Prevention of Corruption would be completed soon. The President moreover stressed that the judicial system presents specific challenges, particularly with regard to the independence of judges. Amendments to the Constitution are aimed at eliminating political influence on judges, abolishing judges’ immunity, expanding the list of grounds for prosecuting judges and renewing the judicial corps via independent evaluations. The President stated his conviction that judicial reforms would be a success, as they are endorsed by international experts, including the Venice Commission. The Prime Minister, Arseniy Yatsenyuk emphasised that the current agenda for Ukraine contains two principal challenges: the fight against external aggression and rooting out corruption. He provided information on the anti-corruption measures taken by the Government in the last 20 months. Arseniy Yatsenyuk noted that the largest source of corruption is linked to the oil and gas sector in Ukraine. The Prime Minister of Ukraine requested EU member states to provide funds to increase the salaries of civil servants, whose low salaries encourage corruption. The Prime Minister explained that this fund would be allocated, in particular, to pay a salary supplement to prosecutors, judges, civil servants and customs officers who will really carry out reforms, and who will not be involved in corruption”. Additionally, Mr. Yatsenyuk asked the United States and EU member states to create a permanent international anti-corruption mission in Ukraine in the next two years. He stressed the need to provide this mission with access to the databases of all law-enforcement agencies and also to initiate criminal proceedings outside Ukraine for cases of corruption. This would be done of the basis of joint memoranda and changes to legislation if necessary. An international anti-corruption mission, according to the Prime Minister, would enable Ukraine to avoid the problems faced by some European Union member states in the initial stages of forming anti-corruption bureaus.
HIGH-LEVEL PANEL “MAKING UKRAINE A SUCCESS-STORY” Session goals The high-level panel ‘Making Ukraine a Success Story’ served as an introductory session, before the break-out sessions, which were held in parallel. This first intervention was aimed at allowing high-level practitioner-experts to provide an overview of the existing anti-corruption system in Ukraine as well as paths for its possible further development.
International perspective and benchmarking The discussion set off by exploring attitudes to anti-corruption reform in Ukraine, namely the debate as to whether the reform had gone into the actual implementation phase or, alternatively, was still at the preparatory stages. Throughout the debate, participants agreed that anti-corruption reform
in Ukraine was still at a stage of developing and strengthening nascent anticorruption institutions, notwithstanding the progress in the legislative framework. Ukraine’s experience with joining global (UNCAC) and regional (OECD AСN and GRECO) anti-corruption monitoring networks was also discussed. Such experiences had not always did not always yield results overnight – for instance, the combined first and second monitoring rounds under GRECO monitoring of the Council of Europe was finalised after almost nine years of review only in summer 2015. Yet, some of the recent developments aligning policy with international standards are encouraging, especially in the legislative sphere. These developments include an attempt to regulate the issue of counter political corruption through tougher scrutiny of political party funding and expenditures.
Achievements / backlogs / issues Overall, Ukraine was discussed as a country en route to creating a massive institutional anticorruption machinery that would include preventive (National Agency for Prevention of Corruption or NAPC), investigative (National Anti-Corruption Bureau of Ukraine or NABU) and prosecutorial (Specialised Anti-Corruption Prosecution Office or SAPO) functions. It was further noted that the overall recipes for installing effective anti-corruption mechanisms and kick-starting them into action were well known to Ukraine’s most senior officials. The opening remarks of the Conference, amongst other things, pinpointed some of the very urgent areas for improvement and these remarks made it clear that senior figures in the government were aware of the instruments required to make progress.
Priorities for Ukraine in the short- and mid-term It was agreed amongst the panel members that Ukraine should focus on the following priorities: • Achieving independence in decisions and resources exercised by newly-formed entities and sustained political and resource autonomy of the core anti-corruption bodies; • Proper coordination between the three institutions in the “anti-corruption trident” of NAPC, NABU and SAPO without turf wars; • Striking the balance between the preventive and investigative areas. Effective prevention could be summarised as reduced administrative bottlenecks, exercise of the right to information, transparency and competiveness in procurement, effective systems to disclose assets of public officials, as well as systems to manage conflicts of interest; • Open and transparent selection of the best candidates management positions, as well as proper training of staff for both preventive and investigative functions delivered on a systematic basis; • Ability of the court system to adjudicate corruption-related cases in good faith with resistance to any outside pressure; • Setting up effective and stable communication mechanisms: between anti-corruption agencies, different governance branches within a country, with international monitoring bodies and partners, as well as the public; • Maintaining public voices that are the necessary catalyst to keep anti-corruption reform from slipping into the backburner; • Honest and sincere communication with the population on progress achieved and setbacks experienced, (as any misinterpretation of facts could damage reform profoundly); • Special attention paid to questions of state-owned enterprises, heavily characterised as being part of the corruption chain (up to 80% of undue benefits are channelled through employees of state-owned enterprises in OECD countries);
• Ability to “rush without haste” - evening out public expectations and pressure for quickest possible results with a thorough and paced approach to solidly investigating cases and allowing the anti-corruption bodies to get stronger through accumulation of human resources and security of state support; • Ability to recognise that unlike in a marathon run, there would be no signposts indicating how far away success is. When combating corruption there will be many hurdles aimed at discrediting the effectiveness of efforts. The key to success would be to weather these initial storms. L I S T O F PA RT I C I PA N T S • Moderator: Mr. Andriy Kulikov, TV and radio anchor and journalist • Ms. Natalia Sevostianova, First Deputy Minister of Justice of Ukraine • Mr. Nicola Bonucci, Director for Legal Affairs, OECD • Mr. Arkan El-Seblani, Chief Technical Advisor, Anti-Corruption and Integrity in the Arab States, UNDP • Mr. Björn Janson, Deputy to the Executive Secretary of GRECO, Council of Europe • Mr. Paweł Wojtunik, Head of the Central Anticorruption Bureau, Poland
INVESTIGATION OF CORRUPTION CASES AND SANCTIONS Session goals During the session the following questions were discussed: 1. What is the role of the specialised anti-corruption agencies in investigating and prosecuting corruption? 2. How can the successful investigation and prosecution of high-profile corruption cases be ensured? 3. How can investigators/prosecutors be protected from undue influence (political, hierarchical, public pressure, etc.)? Based on their own experience, speakers considered different models of specialised anti-corruption agencies, which exist in their countries, what worked, what didn’t and presented what they learnt from the experience. Speakers also discussed what might be useful for Ukraine while establishing and planning the development strategy for the National Anti-Corruption Bureau, the Specialised Anti-Corruption Prosecutor’s Office, further developing anti-corruption specialisation of the already existing law enforcement agencies. What should be taken in to consideration? What should Ukraine avoid on its path? While discussing the investigators’/ prosecutors’ capacity, speakers paid attention to transparency, special skills needed to investigate complex anti-corruption cases, proactivity and ensuring independence. Another block of questions was devoted to ensuring the coordination and cooperation of the NABU and the Anti-Corruption Prosecutor’s office as well as other anti-corruption institutions and law enforcement agencies.
International perspective / benchmarking Considering the multitude of anti-corruption institutions worldwide, their various functions, and performance, identifying “good practice” for establishing anti-corruption institutions, the following models
could be summarised as: Multi-purpose anti-corruption agencies, specialised institutions in fighting corruption through law enforcement, preventive bodies. Responsibility for anti-corruption functions should be clearly assigned to existing or newly-created institutions. Both the United Nations and the Council of Europe anti-corruption conventions establish criteria for effective specialised anti-corruption bodies, which include independence, specialisation, and the need for adequate training and resources. In practice, many countries face serious challenges in implementing these broad criteria. While many anti-corruption bodies created in the past decade have achieved results and gained public trust, experience in emerging and transition economies demonstrates that establishing a dedicated anti-corruption body alone cannot help to reduce corruption. The role of other public institutions, including various specialised integrity and control bodies, and internal units in various public institutions is increasingly important for preventing and detecting corruption in the public sector. This trend converges with the approach of many OECD countries where specialised anti-corruption units were established in law- enforcement agencies, while the task of preventing corruption in the public sector and in the private sector was ensured by other public institutions as part of their regular work.
Achievements / backlogs / current problems in Ukraine voiced by the moderator and speakers Overall in 2014-2015, Ukraine achieved significant progress in aligning its anti-corruption legislation with applicable standards and recommendations, including those of the OECD/IAP monitoring. All corruption offences and their elements are now criminalised, including the crime of illicit enrichment. Ukraine also took steps to establish new anti-corruption law enforcement institutions – the National Anti-Corruption Bureau (NAB) and the Specialised Anti-Corruption Prosecutor’s Office, as envisaged in the laws adopted at the end of 2014 – beginning of 2015. While they are modelled on best international practice and comply with the OECD/IAP recommendations, it is important that the new institutions are allowed to function independently and with sufficient resources. Speakers underlined the need for NABU to become operational following the appointment of the specialised anti-corruption prosecutor and cautioned against the risk of the new intermediate steps being introduced. Nearly two years after the Maidan, the time available to deliver concrete results is nearly out and newly created institutions should demonstrate quick results to ensure confidence and trust from society. The anti-corruption system as a whole should be safeguarded against illegal interference; the operational and institutional autonomy of the specialised anti-corruption prosecutor’s office should be ensured and a solution to eliminate existing bottlenecks in the judicial system should be found (e.g. through specialised anti-corruption courts or judges). Among other issues raised during the session was that existing law enforcement institutions appeared not to be making sufficient efforts to obtain mutual legal assistance, and also that more needed to be done to ensure proper financial investigations in relevant cases. Moreover, recent amendments passed by parliament relating to asset recovery could make it more difficult to recover assets.
Priorities for Ukraine in the short- and mid-term S H O RT-T E R M • Establishing an anti-corruption prosecutor’s office staffed with high calibre professionals and providing civil society with control over the establishment of the office, hiring decisions and further work; • Ensuring AC prosecutors’ compliance with high professional and integrity standards; • Starting investigations with a few cases where quick results can be achieved to establish confidence and credibility in the NABU; • Ensuring training for detectives and prosecutors to improve their skills in high profile corruption cases including financial investigations, liability of legal persons for corruption offences, asset recovery, seizure and confiscation; • Ensuring the independence of the NABU and anti-corruption prosecutor’s office including proper financing according to the envisioned budget for the mentioned institutions. M I D -T E R M • Ensuring effective reform of the judiciary which will comply with best international standards including the specialisation of judges; • Establishing a network of Ukrainian and international investigators to ensure more informal contacts and cooperation and stepping up efforts to obtain mutual legal assistance in corruption cases; • Improving legislation on recovering stolen assets and establishing a national mechanism for the independent and transparent administration of stolen assets recovered from abroad. L I S T O F PA RT I C I PA N T S • Moderator: Mr. Vitaliy Shabunin, Chairman, Anticorruption Action Centre, Ukraine • Mr. Artem Sytnyk, Director, National Anti-Corruption Bureau, Ukraine • Mr. David Green CB QC, Director, Serious Fraud Office, the U.K. • Mr. Giovanni Kessler, Director-General of the European Anti-Fraud Office (OLAF), Italy • Mr. Martin Polaine, Council of Europe Expert, Former Crown Prosecutor for the Crown Prosecution Service, the UK (England & Wales) • Mr. Anthony Robey, Former Assistant Director / Deputy Director of Operations, Independent, Commission Against Corruption (ICAC), Hong Kong
CORRUPTION PREVENTION Session goals The session was framed around the United Nations Convention Against Corruption (preventive Chapter 2), and aimed at taking stock of international best practice in creating actionable anti-corruption strategies, deploying effective asset-declarations systems, meaningful training of civil servants for better integrity, building systems of oversight in the area of political party funding, and working through peer-to-peer regional anticorruption networks. The session allowed the showcasing of practices that could potentially be of interest for Ukraine.
International perspective and benchmarking The first thematic block of presentations discussed 3 crucial elements for improving the work of the Ukrainian National Agency for the Prevention of Corruption. Akin to the situation in Ukraine, Romania began its path towards building an effective system of asset declaration disclosure, analysis and administrative investigation in the early nineties. Yet, it was only when stimulated by the conditionality set out by the EU / NATO in 2007 that Romania’s National Integrity Agency (ANI) was able to develop into a self-reliant and effective agency that, on average, won about 90% of the cases it put to court. Systems like this have to rely on relevant funding, coordination, IT infrastructure, and human capital to be effective.
Since in a lot of cases preventive work relies on solid awareness-raising and training techniques, the French experience was considered. The necessity of reaching out to a broad network of stakeholders that would benefit from such awareness was emphasised. At the same time, it is crucial to stay up-to-date and remain tuned into new areas that could impact on the evolution of corruption (such as emergence of crowd-funding, use of crypto-currencies, and open data for prevention). In the absence of a clear action-plan to underpin them, efficient training and the use of asset verification techniques will remain ad hoc measures with little systemic impact. In this light, the Latvian experience of shaping its Anti-Corruption Programme for 2015-2020 was discussed, dwelling on participatory approaches to the design of such strategic roadmaps. The two remaining presentations in the session (and the performance of the envisaged system of controlling political party funding in Ukraine measured against recommendations of the Istanbul Anti-Corruption Action Plan) dealt more with the issues facing Ukraine in terms of implementation rather than international best practice.
Achievements / backlogs / issues While Ukraine has made a decision to re-introduce a system of political party funding this year (partially in response to GRECO recommendations under the third evaluation round) much would still have to be done to make the architecture truly operational. Legislative innovations of 2015 were seen as positive (clear definition of prohibitions for donations, spending limits on campaigns, lower thresholds to receive state support and tougher audit requirements). At the same time, concern was expressed regarding generous funding and donation ceilings for parties and the complex, tri-partite structure for oversight (NAPC, Central Election Commission and Chamber of Accounts). On a more general level, Ukraine’s performance in the peer-to-peer regional anticorruption network, the Istanbul Anti-Corruption Action Plan, was presented. Overall, out of 18 thematic blocks of issues, Ukraine was assessed in October 2015 as having made progress in 13 areas and lacking it in 5. The biggest concerns were expressed regarding the set-up and operation of NAPC, introducing new regulations on the civil service as well as the full-scale launch of the new asset declaration and verification regime.
Priorities for Ukraine in the short- and mid-term Recommendations and considerations for Ukraine could be summarised by the following thematic clusters: A N T I CO R R U PT I O N P L A N S A N D S T RAT E G I E S — Developing strategies and action plans with a clear structure, indicators and monitoring/evaluation mechanisms in a participatory manner to ensure buy-in and responsibility; — Proper balance in the strategies and action-plans between the “political” and the “technocratic” approach to produce politically meaningful and practically executable outputs; A S S E T D E C L A RAT I O N S R E G I M E — Special attention paid to regulating electronic signatures and the validity of e-declarations to avoid double reporting (paper and electronic) and ensuring linkage to databases of other institutions from day one;
— Design of effective and actionable mechanisms to cancel decisions produced in situations of conflict of interest; — Usage of political tools and, if necessary, external conditionality and pressure to retain levels of funding for the dedicated body for verifying the declaration of assets; A N T I CO R R U PT I O N T RA I N I N G A N D AWA R E N E S S - RA I S I N G — Necessity to stay abreast of all new developments not only in the anticorruption realm, but also in areas that may impact anticorruption work – such as crowdfunding, crypto-currencies (Bitcoin), as well as open data and big data; PO L I T I CA L PA RTY F U N D I N G — Early and deep coordination between the three Ukrainian institutions responsible for the area to avoid duplication and misunderstandings; — Understanding of the role not only and primarily as a stringent watchdog, but also as an assistant to the parties to comply (rather than just prosecuting them for non-compliance); — Stimulation of the non-governmental sector to serve as the eyes and ears in identifying issues (as official oversight would not be sufficient to ensure compliance); R E G I O N A L- L E V E L A S S E S S M E N T U N D E R T H E I S TA N B U L A N T I - CO R R U PT I O N ACT I O N PLAN — Launch of NAPC as soon as possible to start delivering on its mandate, accompanied by robust institution-building support; — Parallel development of the asset declarations collection and verification scheme (even prior to NAPC launch), as the task requires much time and effort; — Systematisation of existing and future research on anti-corruption (polling, risk analysis, assessment of coordination) for better and more informed policy-making; — Accompaniment of the top-down approach to prevention with a bottom-up drive for more integrity and ethical behaviour in public and business-sectors. L I S T O F PA RT I C I PA N T S • Moderator: Ms. Natalia Sevostianova, First Deputy Minister of Justice of Ukraine • Mr. Alvils Strīķeris, Head of the Policy Planning Division, KNAB, Latvia • Mr. Silviu Popa, Director, Communication, Public relations and Strategy Directorate, ANI, Romania • Mr. Quentin Reed, Council of Europe Expert • Mr. Xavier Inglebert, Adviser, Central Service for the Prevention of Corruption, France • Ms. Olga Savran, Manager, Anti-Corruption Network for Eastern Europe and Central Asia (ACN)
RETURN OF STOLEN ASSETS Section goals The session was meant to stimulate discussion regarding institutional structures, mechanisms, tools that are necessary to provide for effective asset recovery, including existing models, successful and failed approaches and lessons-learnt. The focus of the session was on ensuring recovery of assets in
corruption cases, including the steps necessary within the country, following the money trails, identification of assets, freezing and seizing of assets, and managing recovered assets. Finally, issues of effective cooperation with other jurisdictions were elaborated upon.
International perspective / benchmarking The investigations, which include the return of stolen assets, are very complex, since they often involve different schemes in a number of different jurisdictions. The two key factors for the effective return of stolen assets are the desire from political actors to take action as well as institutional and professional capacity. The most efficient response to these capacity challenges is the establishment of specialised asset-recovery and asset-management offices (ARO/AMO). For instance, the EU Directive on the freezing and confiscation of instrumentalities and proceeds of crime prescribes the establishment of centralised AMO offices as a possible solution for EU Member States. At the same time, adequate measures of freezing and confiscating criminally obtained assets and instruments of crime should be introduced, including extended confiscation and third-party confiscation. Law enforcement personnel need to be well trained to deal with these issues.
Achievements / backlogs / current problems in Ukraine voiced by the moderator and speakers The assets of former officials of the Yanukovych regime are frozen in a number of EU countries and now Ukraine will provide appropriate evidence that these assets were obtained as a result of criminal activities. Ukraine and its international counterparts have achieved some progress in cooperation but such evidence is still a necessary pre-condition for the successful completion of the launched procedures. At the same, the Government-initiated legislative package aimed at improving regulations on seizure and confiscation of assets as well as establishing the Ukrainian ARO-AMO was greatly diluted within the Parliament prior to adoption. One of the reasons it takes a lot of time for Ukraine to resolve the problem of recovering stolen assets is absence of capacity. This issue does not fall under the top priorities of Ukrainian investigators who concentrate mainly on the task of bringing a person to court. Another reason is the absence of one clear unified strategy, practice and expert knowledge regarding the return of stolen assets. Cooperation between the law-enforcement branch and the Financial Intelligence Unit of Ukraine needs to be improved as well.
Priorities for Ukraine in the short- and mid-term S H O RT-T E R M • Establishing ARO-AMO with the involvement of the best qualified professionals to work there and providing civil society control over the process of establishing the agency, hiring staff and its further work; • Amending the newly-adopted legislation on the seizure, special confiscation and ARO-AMO to create effective asset recovery instruments on the basis of international standards and best practices; • Intensifying the activities of investigative bodies to get evidence proving that assets abroad belonging to officials in Yanukovych’s regime and which have been frozen were obtained as a result of criminal activities and evidence of how they were taken out of Ukraine. Providing respective international partners of Ukraine with this evidence.
• Providing for more active and fruitful cooperation between law enforcement agencies and FIU; • Ensuring the training of investigators and prosecutors to improve their skills in assets recovery, seizure and confiscation; • Ensuring AC prosecutors’ compliance with high professional and integrity standards; • Training bankers and financial intermediaries for better identification of dubious assets; • Establishing a joint independent body with OLAF on the investigation of EU-money embezzlement M I D -T E R M • Denounce double taxation relief agreements with other jurisdictions (especially with Cyprus) • Provide strong and efficient National Bank control to avoid the outflow of capital abroad L I S T O F PA RT I C I PA N T S • Moderator: Mr. Vitaliy Kasko, Deputy of Prosecutor General, head of the Asset Recovery Coordination Working Group, Ukraine • Mr. Daniel Thelesklaf, Head of FIU of Liechtenstein • Ms. Daria Kaleniuk, Executive Director, Anti-Corruption Action Center • Mr. Andrii Kovalchuk, First Deputy Head of the State Financial Monitoring Service of Ukraine • Mr. Ruslan Ryaboshapka, OECD expert • Ms. Mary Butler, Deputy Chief, International Unit Asset Forfeiture and Money Laundering Section Department of Justice, the U.S.
ZERO TOLERANCE TO CORRUPTION Session goals The main goal of the session was to define the role of civil society and parliamentary oversight in preventing and fighting corruption in Ukraine. To study best practices, identify the basic mechanisms to successfully combat corruption in Ukraine and to describe the role of civil society in this struggle.
International perspective / comparison What can civil society do when faced with corruption at a high level, which is ignored by the law enforcement system? Besides public protests, there are three other important methods to influence change – firstly, discovering public cases of corruption in collaboration with the media, secondly, putting pressure on the authorities and forcing them to respond to cases of corruption and thirdly, to attract the attention of international community. These measures can be taken simultaneously. Before starting the process, it is however crucial to use an important tool – directing powerful civil pressure against corrupted state mechanisms. Civil society is unable to change state bodies but has enough capacity to force them fulfil their duties. There is no country that is free of corruption, the only difference how institutions and the public respond to published cases of corruption. For example, when journalistic investigations revealed high level corruption among public officials in Uzbekistan and Azerbaijan involving foreign telecommunication companies, criminal proceedings were only opened in Switzerland, Sweden, Netherlands, the USA, and not in Uzbekistan and Azerbaijan.
Research At the start of the session, the results were presented of a nationwide survey conducted with the support of Pact UNITER/USAID. The survey contains comparative data for several years and presents changes in the perception and experience of corruption among Ukrainians. More than 80% of Ukrainians believe that corruption is a part of the Ukrainian mentality and culture. Also Ukrainians believe
that the situation regarding corruption has not changed. One positive change is the tendency of Ukrainians to reject corruption as when asked ‘when do you think corruption is acceptable?’ 65% answered never, or in rare cases. This is a significant improvement in comparison to previous years and means that Ukrainian society is ready to combat corruption. Another interesting thing is the comparison between the perception of corruption and experience. Ukrainians feel that the most corrupted authority is the Police. Two thirds of Ukrainians believe that prosecutors and courts are corrupt. And unfortunately these indicators are increasing yearly. Also they feel that the customs service and healthcare system are corrupted as well. With regard to the level of corruption, the healthcare system is recorded as being the most corrupt, with 69% of Ukrainians stating that they had experienced corruption in that area. Ukrainians also reported experience of corruption in the education system and when dealing with law enforcement authorities. The conclusion that can be drawn from the research as well as previous experience is that the most effective way of reducing perceptions of corruption in Ukraine is to start with law enforcement bodies.
Achievements / unfinished tasks / current issues in Ukraine, announced by the moderator and speakers The Ukrainian Parliament (Verkhovna Rada) has approved comprehensive anti-corruption legislation, to a greater extent than was agreed upon in the coalition agreement. This legislation has yet to be fully implemented however. The new legislation outlines new anti-corruption institutions, but the setup of these bodies is proceeding slowly and often in contradiction to best practice. The importance given to the work of journalists has changed. Last year, after evidence of corruption was revealed in the press, eight high level officials were dismissed. This can however be considered merely a drop in the ocean as the system remains largely corrupt. Judicial reform is severely lacking, particularly the reform of prosecutors. Reform of the traffic police has shown positive results, but the whole structure of the Ministry of Internal Affairs needs to be reformed, for example by re-recruiting investigators on a competitive basis. Euromaidan has shown that there is a place for big changes in a society, but decades of corruption, cultivated by previous regimes remain part of everyday life. It should be understood widely that if a person gives or accepts a bribe, he or she maintains widespread corruption of the state. P R I O R I T I E S F O R U K RA I N E I N T H E S H O RT- A N D M I D -T E R M • Developing in a transparent manner the key anti-corruption institutions in Ukraine and providing them with sufficient resources to do their work; • Rebooting the Ukrainian judicial system through the total re-certification of judges and securing the political and financial independence of the judiciary; • Creating formal mechanisms for the authorities to react to public and media exposures of corruption; • Strengthening public and parliamentary control over the implementation of anti-corruption laws; • Nurturing an intolerance in Ukrainian society towards corruption; • Developing and strengthening anti-corruption movements at the regional level. L I S T O F PA RT I C I PA N T S • Moderator: Svitlana Zalishchuk, Deputy of the Verkhovna Rada of Ukraine, Chairman of the subcommittee for Euro-Atlantic cooperation and European integration of the Committee on Foreign Affairs of Ukraine • Mr. Yehor Soboliev, Chairman of the Verkhovna Rada Committee on Corruption Prevention and Counteraction • Ms. Miranda Patruchich, Expert of the Council of Europe, a leading investigative journalist of the Centre for Research on corruption and organized crime (OCCRP)/Initiative Investigative Dashboard, Bosnia and Herzegovina
• Mr. Nikolai Staikov, member of the “Network of protest”, Bulgaria • Mr. Dmytro Hnap, “Slidstvo.info” on Hromadske TV, Ukraine • Mr. Oleksii Khmara, Executive Director of “Transparency International Ukraine” • Ms. Diana Zubko, UNDP expert in Ukraine • Mr. Roland Kovach, Director of the “Unite for reform”, Director of Pact in Ukraine
MAINSTREAMING ANTI-CORRUPTION IN SECTORAL AND REGIONAL REFORMS Session goals The panel discussed the issue of corruption and its cross-sectoral and regional nature, as well as ways of addressing corruption in the context of the current Ukrainian realities. The speakers were asked to address the following questions in their presentations: 1) Which corruption issues in the discussed sectors make reforms critical and urgent? 2) Which specific anti-corruption initiatives have been implemented to date, and how can they be evaluated at this stage? What were the factors in their success or barriers? 3) What are the anti-corruption priorities for the near future? What should be done at the central and regional levels in order to ensure success?
Achievements / backlogs / issues According to the Deputy Prime Minister Gennadiy Zubko, ongoing decentralisation is the largest anti-corruption project in Ukraine. Local communities get a greater number of opportunities to use available budget funds and other resources and to perform local governance functions. The key anti-corruption initiatives in decentralisation reform today: 1. Creating a transparent mechanism for selecting and funding regional development projects. 2. Decentralising the functions of the State Architectural Control in order to promote deregulation. 3. Increasing transparency in land-related issues by simplifying paperwork in land management, opening access to the state land cadastre, launching online administrative services. 4. Initiating the process of demonopolisation and deregulation in housing and communal services. The Minister of Economic Development and Trade Aivaras Abromavičius sees prospects for Ukraine to enter the top 50 countries in the World Bank’s ease of doing business by 2020. One of the most successful anti-corruption initiatives pursued by the Ministry is public procurement reform, particularly introducing electronic procurement tenders. So far, about 400 million UAH have been saved solely due to the implementation of subthreshold e-procurement through PROZORRO. Over the next year it is planned to transfer all public procurement into an electronic format, allowing savings of up to 50 bn UAH annually, which otherwise would have been lost to corruption. Another anti-corruption initiative of the MEDT is a new system of SOE management, introducing international standards of corporate governance, reporting transparency and the appointment of professional top-management. Moreover, in the short term an extensive privatisation should be conducted in order to transfer a major part of state assets to the most effective owner – private business. Restrictions to the maximum compensation level for employees at state-owned enterprises remains critical problem for today.
A process of comprehensive deregulation has been initiated together with the creation of the Better Regulation Delivery Office (BRDO), which is the largest project office created under a state body and funded by international donors. According to the Minister of Infrastructure Mr. Pyvovarskiy, his Ministry is a leader by subthreshold procurement through PROZORRO. Those purchases that do not pass the threshold are carried out through open tenders broadcast online. As a result, Ukrzaliznytsia buys diesel fuel at cheaper prices than in retail, and the cost of road maintenance by Ukravtodor has fallen by 2-3 times (not even taking into account changes in FX rates). Also the Ministry has launched a process of deregulation in ports, greatly simplifying the vessels’ inspection and administration. In general the deregulation in ports and on railways saves substantial funds to business, for example, savings on logistics in the agricultural sector reach 30%. Odesa region is one of the leading regions of Ukraine in terms of anti-corruption initiatives. According to the Governor Mikheil Saakashvili his team has prepared a package of 29 draft laws that in particular provide deregulation and transparency in doing business. It was reported that the Centre for Administrative Services, recently opened in Odesa, is more efficient than other similar institutions in Ukraine, but still slower than in Georgia. The Odesa Customs senior management was replaced and procedures were improved and aligned with the legislation, in particular providing equal opportunities for exporters. Nevertheless, the total revenue has fallen, as a significant part of cargo flows were redirected to other Ukrainian customs. According to the speakers, a key issue in the implementation of sectoral and regional reform lies in low wages (both for employees of state enterprises and public officials) and strong resistance from the side of controlling and inspection bodies that are losing their sources of corrupt income.
Priorities for Ukraine in the short- and mid-term Representatives of central and regional Ukrainian authorities that took part in the discussion agreed that Ukraine should prioritise the following: • Taking a complex and consistent approach in implementing anti-corruption initiatives and regional and sectoral reforms. • Changing current regulations and procedures in the government that often do not facilitate rapid reforms. • Ensuring the effectiveness of state institutions, including the newly established ones specialising in preventing and combating corruption. • Decreasing as much as possible the role of an individual public servant in interactions with citizens and business, particularly through the introduction of e-governance. • Reducing the distance between government and the recipients of services (citizens, businesses) in order to ensure greater accountability of public officials to voters and taxpayers. • Ensuring maximum transparency of state and local authorities, as well as state and municipal enterprises. • Raising wages for public servants as part of public service reform, transferring powers to local authorities, and introducing service standards in healthcare and education.
• Granting the authority to state-owned enterprises to set market level wages. • Building an effective system of communications with the public and business. L I S T O F PA RT I C I PA N T S • Moderator: Ms. Anna Derevyanko, Executive Director of the European Business Association, Ukraine • Mr. Gennadiy Zubko, Vice Prime Minister, Minister of Regional Development, Construction and Communal Services, Ukraine • Mr. Aivaras Abromavicius, Minister of Economy and Trade, Ukraine • Mr. Andrei Pyvovarskiy, Minister of Infrastructure, Ukraine • Mr. Mikheil Saakashvili, Governor of Odesa Region
CORRUPTION AND BUSINESS Session goals The panel aimed to present the role of private sector both in promoting and fighting corruption. The speakers were asked to address the following questions in their presentations: 1) What is the perception of corruption by business in Ukraine? 2) How can business show its proactive position in preventing and fighting corruption? What are the tools and approaches used in other countries to achieve «anti-corruption responsibility» in business – both by governments and companies? 3) What should Ukraine do as priority steps in order to make businesses: 1) feel responsible for fighting corruption, 2) intolerant to corruption cases in their practices?
Special focus: Corruption perception In the beginning of the session there was a short presentation of the corruption perception survey results, conducted by the American Chamber of Commerce among approximately 200 of its members. The main outcomes of the survey are: - 98% of respondents consider that corruption is widespread in Ukraine. At the same time slightly fewer (88%) have faced corruption while doing business here. - 73% do not believe that the level of corruption has decreased since March 2014. - 87% named courts and the General Prosecutor’s Office as the most problematic state institutions for doing business in Ukraine. - The majority of the companies (84%), which participated in the survey, have anti-corruption programmes. But sometimes they are “forced” to be involved in corruption, mostly in order to accelerate procedures (33%), as a defence against illegal actions (27%) and to have access to public procurement (17%). - In accordance with the responses, the major obstacle to combat corruption in Ukraine is people’s mentality (70%), political will (50%) and resistance of state bodies (27%).
International perspective and benchmarking The CEO of Citibank, Ukraine, Mr. Steven Fisher described his vision regarding the problems countries have because of widespread corruption. Among the different challenges, the major areas of concern are social unrest and instability, reduction of business activity and FDI Inflow, barriers for development of the nation.
Corporate liability for corruption offences is legislated for in similar way among members of the OECD, GRECO and ACN (67 countries). 58 of them have corporate liability, among which 42 countries have criminal liability, 9 – quasi-criminal (including Ukraine), and 7 – administrative. In accordance with the OECD Foreign Bribery Report 2014, most foreign bribery cases brought to the attention of law enforcement bodies were related to self-reporting by companies themselves (31%), and only 13% by law enforcement and 5% by media. Self-reporting companies became aware of foreign bribery in their business operations through internal audit (31%), M&A due diligence (28%) and whistleblowers (17%). In developed countries companies can pay huge amounts of money as fines if they have been found guilty of corruption. Companies also invest large amounts of money on internal compliance and conducting investigations. In Ukraine legislation adopted in April 2014 introduced huge fines for corruption, but the legislation is not being implemented in practice. According to OECD expert Dmytro Kotlyar, there were almost 400 convictions of individuals for corruption, but there have been no cases of criminal cases against legal entities in Ukraine so far. Ms. Enery Quinones, a former EBRD Chief Compliance Officer, indicated that international companies often are «clean» in their home countries, but when operating abroad they often do what is needed to succeed. It is hard to resist corruption for a clean company in a corrupt environment.
Achievements / backlogs / issues When the EBRD came to Ukraine they were trying to apply compliance rules for the companies they worked with. But they soon discovered that it was impossible for companies to stay ‘clean’ in a totally corrupt environment. Corruption became embedded in the internal culture of the business. Business needed a mediator to resolve its problems. So, on May 12, 2014 EBRD signed a Memorandum of Understanding, which resulted in the creation of the Business Ombudsman Office in Ukraine. Business Ombudsman Mr. Algirdas Semeta reported significant progress in his Office so far. In the six months the Business Ombudsman has been in operation, they have received almost 500 complaints from businesses, opened more than 250 investigations and closed more than 100 cases (either resolved the problem or provided practical recommendations to relevant state authorities). 79 recommendations were issued on the basis of these cases, 31 of which have been already implemented and 48 are still a subject for monitoring. Companies are dealing more often with the «wrongdoing» of tax inspections. 40% of complaints relate to State Fiscal Service (SFS) activities, 20% to the national law enforcement agencies. Mr. Semeta pointed out that corruption has two sides: supply and demand. And it should be tackled from both sides. In his work he has noticed the reluctance of business to report corruption cases. Though has created a rather comprehensive legislative and institutional framework for combating corruption, CEO of Danone Nutricia Ukraine Mr. Tahsin Yasin sees a gap between progress evaluation, promises and plans at the central level and the reality on the ground. With his experience of working in 14 countries Ukraine is the only country he had to go to court to fight corruption (ongoing case against the State Fiscal Service). Providing the example of China, where during the first year of the anti-corruption campaign 200000 cases were taken to courts apart, Mr. Yasin emphasised that corruption should be tackled at the same time both on the high and low levels.
Priorities for Ukraine in the short- and mid-term In accordance with the panellists, Ukraine should prioritise: • Ensuring the proper implementation and enforcement of liability for corruption offences committed by legal entities.
• Providing proper investigations of complaints made by business about corruption by state authorities/ public servants and convictions in courts in case of proving their guilt. • Building an effective system of protection measures for legal entities and individuals from negative consequences for reporting corruption. • Providing an efficient communication policy in order to motivate business to report corruption offenses and build intolerance to corruption actions (e.g. by joining Transparency International’s Anti-Corruption Declaration). • Create possibilities for SMEs to collaborate and unite their efforts in acting against corruption. • Involving civil society and empowering investigative journalism. L I S T O F PA RT I C I PA N T S • Moderator: Mr. Andy Hunder, President of the American Chamber of Commerce in Ukraine • Ms. Enery Quinones, Chairwoman, OECD Anti-Corruption Network (ACN), Former Chief Compliance Officer at EBRD • Mr. Dmytro Kotlyar, OECD Expert, Anti-Corruption Network for Eastern Europe and Central Asia (ACN), Ukraine • Mr. Algirdas Semeta, Business Ombudsman, Ukraine • Mr. Steven Fisher, CEO, PJSC Citibank, Ukraine • Mr. Tahsin Yasin, CEO, Danone Nutricia Ukraine
PLENARY CLOSING PANEL Session goals The speakers were asked in the closing session to present the next steps for fighting corruption, and to define the indicators for evaluating progress in the fight against corruption for the next year.
International perspective / benchmarking • Ukraine should develop a set of anticorruption laws based on the examples of the USA and the EU (such as the US FCPA, UK Bribery Act etc.) and to adapt standards of “compliance” with the laws. Meanwhile Ukrainian officials have to reject superficiality towards the laws. (D. Shymkiv). • Officials in western countries are obliged to publish their income declarations as well as those of their families, and this has to become standard practice in Ukraine as well (G. Pyatt and J. Tombinski). • Ukraine should avoid repeating mistakes made by other countries in dealing with corruption such as for example politicising anticorruption bodies that can lead to the results of investigations being manipulated (P. Petrenko about the experience of Poland). • The USA as well as other western countries take anticorruption measures to a global level by holding international companies liable for giving bribes where these practices are not punished (such as in Ukraine). • According to J. Hiemstra, while international experience has to be taken into account, it is the political will within a country that is the key success factor in fighting against corruption.
Achievements / backlogs / current problems in Ukraine voiced by the moderator and speakers AC H I E V E M E N T S: - The major achievements of the Ministry of Justice in the sphere of anticorruption expressed by the speakers were the launch of the online system of administrative services that aims at abolishing corruption mechanisms at an everyday level because “computers don’t take bribes” as well as ensuring digitalising of processes and documentation. - The reform of the new Patrol Police which was supported by international donors and which has become a success story for the whole of Ukrainian society (G. Pyatt). - Meaningful changes have taken place in the sphere of e-governance, e-procurement, the energy sector, but these reforms require further efforts in order to be sustained and moved forward. B AC K LO G S: - According to G. Pyatt, US Ambassador to Ukraine, reform of the public prosecutor’s office remains the most pressing challenge for Ukraine. The USA welcomes the creation of an independent Inspection General function within the PGO, an anticorruption prosecutor, whose office will be free of political influence. - Justice reform and the reform of law enforcement bodies, e-governance and e-procurement reforms, and reform of the energy sector also require further efforts. С U R R E N T P RO B L E M S: - The main challenge voiced by the US Ambassador, the EU Ambassador and the UNDP Country Director is a substantial delay in corruption investigations and the lack of results yielded by anticorruption measures, which undermines the trust of society towards the authorities. - According to D. Shymkiv, another pressing issue is the lack of funding for the National Anticorruption Bureau and other anti-corruption bodies. - The need for deep institutional reforms and raising the professional standards of officials and their salaries were mentioned as current challenges by P. Petrenko and D. Shymkiv. P R I O R I T I E S F O R U K RA I N E I N T H E S H O RT- A N D M I D -T E R M - Ensuring sufficient funding of the institutions responsible for fighting corruption (D. Shymkiv). - Reforming law enforcement bodies, primarily the public prosecutor’s office (G. Pyatt). - Implementing deep institutional changes that will trigger legislative changes, enforcement of the law and judicial reforms (P. Petrenko). - Ensuring that the authorities react rapidly and with determination to anticorruption investigations, as corruption undermines society’s trust in the whole system of public order (J. Tombinski and J. Hiemstra). L I S T O F PA RT I C I PA N T S Moderator: Mr. Andriy Kulikov, journalist, editor, radio- and TV-host, media expert Speakers: • Mr. Pavlo Petrenko, Minister of Justice of Ukraine • Mr. Dmytro Shymkiv, Deputy Head of the Presidential Administration, Ukraine • Mr. Jan Tombiński, EU Ambassador to Ukraine • Mr. Geoffrey R. Pyatt, US Ambassador to Ukraine • Mr. Janthomas Hiemstra, Country Director, United Nations Development Programme in Ukraine.
EXHIBITION STAND AND QUESTIONNAIRE SURVEY The frank and open dialogue between state, business and civil society that took place at the “First International Anti-corruption Conference” also found room in an interactive survey stand produced by the EU Advisory Mission. The stand collected questionnaires and suggestions for communication on AC and how to fight corruption in Ukraine from more than 100 participants and using the hashtag #IACCUkraine (https://twitter.com/ search?q=%23IACCUkraine). Please click here for a summary of the findings of the questionnaire survey. (https://youtu.be/r9-hLvyRuNk) Some of the interesting ideas from the participants were: • “You should start from yourself, don’t give and don’t take bribes!” • “We need to explain to children from the first year of school that corruption is bad” • “Do not apply to yourselves double standards” • “State should ensure independence of investigators and prosecutors” • “Salaries of state officials must be increased” • “Communication between anti-corruption agencies and civil society has to be established”