Business Crime 2019 | UKRAINE |Chapter author Volodymyr BOGATYR

ICLG

The International Comparative Legal Guide to:

Business Crime 2019 9th Edition A practical cross-border insight into business crime

Published by Global Legal Group, in association with CDR, with contributions from: AGS Legal Allen & Gledhill LLP Anagnostopoulos Criminal Law & Litigation Atsumi & Sakai Bogatyr & Partners Clayton Utz Cravath, Swaine & Moore LLP De Pedraza Abogados, S.L.P. De Roos & Pen Debevoise & Plimpton LLP DSM Avocats à la Cour Enache Pirtea & Associates Global Financial Experts Limited Homburger Hrle Attorneys Ivanyan & Partners Kachwaha and Partners

Lawfirm Holzhacker Lutgen + Associés Maples and Calder Matheson Navigant Consulting, Inc Paksoy & Co Peters & Peters Rahman Ravelli Rogério Alves & Associados, Sociedade de Advogados, RL Skadden, Arps, Slate, Meagher & Flom LLP Sołtysiński Kawecki & Szlęzak Studio Legale Pisano Tanner De Witt TripleOKLaw LLP Uroš Keber – Odvetnik Vilardi Advogados Associados

The International Comparative Legal Guide to: Business Crime 2019 General Chapters: 1

Contributing Editors Keith Krakaur & Ryan Junck, Skadden, Arps, Slate, Meagher & Flom LLP Sales Director Florjan Osmani Account Director Oliver Smith Sales Support Manager Toni Hayward Sub Editor Hollie Parker

Has There Been a Sea Change in the U.K.’s Regulatory Framework to Tackle Corporate Crime? – Elizabeth Robertson & Vanessa McGoldrick, Skadden, Arps, Slate, Meagher & Flom LLP

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2

UK vs US: an Analysis of Key DPA Terms and their Impact on Corporate Parties – Karolos Seeger & Bruce E. Yannett, Debevoise & Plimpton LLP XX

3

The Business Crime Landscape – Aziz Rahman & Nicola Sharp, Rahman Ravelli

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4

The Developing Partnership Between Financial Institutions and Law Enforcement – Claiborne (Clay) W. Porter & Robert Dedman, Navigant Consulting, Inc

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5

Jurisdiction and Global Settlements: Can We Streamline Multi-Governmental Investigations? – John Buretta, Cravath, Swaine & Moore LLP

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6

Transforming Culture in Financial Services – A Solution Driven by Banking Experts – Molly Ahmed & David Szmukler, Global Financial Experts Limited

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Country Question and Answer Chapters: 7

Australia

Clayton Utz: Tobin Meagher & Andrew Moore

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Senior Editors Suzie Levy Caroline Collingwood

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Brazil

Vilardi Advogados Associados: Celso Sanchez Vilardi & Luciano Quintanilha de Almeida

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CEO Dror Levy

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British Virgin Islands

Maples and Calder: Alex Hall Taylor & David Welford

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10 Cayman Islands

Maples and Calder: Martin Livingston & Adam Huckle

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11 England & Wales

Peters & Peters: Miranda Ching & Hannah Laming

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12 France

Debevoise & Plimpton LLP: Antoine Kirry & Alexandre Bisch

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13 Germany

AGS Legal: Dr. Jan Kappel & Dr. Jan Ehling

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14 Greece

Anagnostopoulos Criminal Law & Litigation: Ilias G. Anagnostopoulos & Jerina Zapanti

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15 Hong Kong

Tanner De Witt: Philip Swainston & Billy Tang

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16 India

Kachwaha and Partners: Ashok Sagar & Sumeet Kachwaha

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17 Ireland

Matheson: Claire McLoughlin & Karen Reynolds

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18 Italy

Studio Legale Pisano: Roberto Pisano

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19 Japan

Atsumi & Sakai: Masataka Hayakawa & Kumpei Ohashi

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20 Kenya

TripleOKLaw LLP: John. M. Ohaga & Leyla Ahmed

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21 Liechtenstein

Lawfirm Holzhacker: Gerhard R. Holzhacker

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22 Luxembourg

DSM Avocats à la Cour, Lutgen + Associés: Marie-Paule Gillen & Marie Marty

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23 Netherlands

De Roos & Pen: Niels van der Laan & Jantien Dekkers

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ISBN 978-1-912509-33-1 ISSN 2054-7579

24 Poland

Sołtysiński Kawecki & Szlęzak: Tomasz Konopka

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25 Portugal

Rogério Alves & Associados, Sociedade de Advogados, RL: Rogério Alves

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Strategic Partners

26 Romania

Enache Pirtea & Associates: Madalin Enache & Simona Pirtea

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27 Russia

Ivanyan & Partners: Vasily Torkanovskiy

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28 Serbia

Hrle Attorneys: Vladimir Hrle

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29 Singapore

Allen & Gledhill LLP: Jason Chan Tai-Hui & Evangeline Oh JiaLing

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30 Slovenia

Uroš Keber – Odvetnik: Uroš Keber

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31 Spain

De Pedraza Abogados, S.L.P.: Mar de Pedraza & Paula Martínez-Barros

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32 Switzerland

Homburger: Flavio Romerio & Roman Richers

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33 Turkey

Paksoy & Co: Author 1 & Author 2

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34 Ukraine

Bogatyr & Partners: Dr. Volodymyr Bogatyr & Vladyslav Drapii

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35 USA

Skadden, Arps, Slate, Meagher & Flom LLP: Keith Krakaur & Ryan Junck XX

Group Consulting Editor Alan Falach Publisher Rory Smith Published by Global Legal Group Ltd. 59 Tanner Street London SE1 3PL, UK Tel: +44 20 7367 0720 Fax: +44 20 7407 5255 Email: info@glgroup.co.uk URL: www.glgroup.co.uk GLG Cover Design F&F Studio Design GLG Cover Image Source iStockphoto Printed by Ashford Colour Press Ltd September 2018 Copyright © 2018 Global Legal Group Ltd. All rights reserved No photocopying

Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720 Disclaimer This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.

Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.

This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

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Ukraine Bogatyr & Partners

1 General Criminal Law Enforcement 1.1

What authorities can prosecute business crimes, and are there different enforcement authorities at the national and regional levels?

Ukrainian authorities that can prosecute business crimes are: the General Prosecutor’s Office and Departments of the Prosecutor’s Office in different regions. However, only the Prosecutor’s Office has the authority to charge an individual or entity with a crime, meanwhile for investigation purposes, all information and investigation provided by different law enforcement authorities such as the police, tax police, Security Service and the National Anti-Corruption Bureau can be used.

In February 2018, Transparency International ranked Ukraine 130/180 in the corruption index, which placed Ukraine on the same level as such countries as Sierra Leone, Iran, Myanmar and Gambia.

The Transparency International ECO chart for Ukraine showed that the main issues of Ukraine are corruption, bribery, fraud, money laundering and tax evasion. Ukraine is the poorest country in Europe, according to The Global Wealth Databook and Eurostat data. Despite all the efforts that Ukraine and its people are making to fight corruption, unfortunately, the number of respondents of EY Fraud Survey: Corruption Perception 2017, who believe bribery and corruption to be widespread in Ukraine is unacceptably high, at 88%. According to this criterion, Ukraine ranked the lowest among all countries participating in the study and thus is the leader in corruption.

According to the Index of Economic Freedom 2018, Ukraine’s oligarch-dominated economy is ranked last in the Europe region.

There are serious issues regarding corruption in the judiciary, one of the country’s weakest and least trusted public institutions. Judges are largely seen as protectors of business and other powerful sources of influence. Corruption remains a serious problem for Ukraine, and progress on increasing accountability is quite slow. Ukraine’s Journalists Physical Safety Index 2017 shows that there were 90 incidents of physical aggression against journalists from January – December 2017. Similarly, World Press Freedom Index by Reporters Without Borders ranked Ukraine 101, which suggest that our press freedom is lower than in Kenya and Tanzania, placed 96 and 93 accordingly.

Recent report of Freedom House: Freedom in the World 2018 states that Corruption is a serious problem, and there is little political will to combat it despite strong pressure from civil society. The authorities’ failure to prosecute extensive high-level corruption has undermined the popularity of the government and affected some

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Dr. Volodymyr Bogatyr

Vladyslav Drapii

reform efforts. In the sphere of civil liberties, political pressure and attacks on journalists have threatened freedom of the press. Due to such facts Ukraine scored 62/100.

Ease of Doing Business 2018 index by the World Bank ranked Ukraine 76, which shows that Ukraine still suffers from bureaucracy and contract enforcement problems. Economic Freedom of the World 2017 index placed Ukraine 149/159, its ranking is almost the world’s lowest, for example, Zimbabwe was ranked 144 and Niger 139.

Rule of Law Index by World Justice Project ranked Ukraine 77/113.

Ukraine’s position in the rank is dragged down due to serious issues with order and security and the absence of observance of fundamental rights. Index of the Criminal Justice in Ukraine is in between Morocco and Zimbabwe. Index of the Civil Justice in Ukraine is in between Guyana and Tanzania. Index of the Corruption in Ukraine is level with Albania, Bangladesh, Guatemala, Honduras, Sierra Leone and Uzbekistan.

Furthermore, Global Peace Index 2018 ranked Ukraine 152/163, which correlates with the Global Terrorism Index 2017 where Ukraine is considered to be dominating the region in terms of both the number of terrorist attacks and fatalities over the last 15 years.

Results of the coercive regime change (later named as Revolution of Dignity) and reforms brought Ukraine to a hybrid regime ranked between Honduras and Zambia in the Democracy Index 2017 by the Economist. The freedom of the media within Ukraine is largely limited and rated between Uganda and Zambia. For Ukraine, the clash between vested interests (who have enjoyed the benefits of being in power for decades) and reformist forces is central to its future progress. Tensions between the National Anti-Corruption Bureau (NACB) – which is broadly independent – and other lawenforcement agencies – which are widely considered as close to the government – have emerged as a key area of conflict between reformist forces and vested interests. So far not a single investigation of the NACB has led to a conviction. Yet Petro Poroshenko, the president, cannot allow the NACB to be stripped of its independence, as this would provoke international condemnation.

Ukraine was ranked 132/159 in the Human Freedom Index 2017.

It states that the lowest levels of freedom are in the Middle East and North Africa, Eastern Europe (Moldova, Russia, and Ukraine).

This low score was given to Ukraine (64/128) in Social Progress Index 2017 due to low personal safety, personal freedom and choice.

The fight against corruption in Ukraine: public opinion conducted by the Ilko Kucheriv Democratic Initiatives Foundation jointly with the Razumkov Center sociological service states that (83%) of respondents believes that the fight against corruption in Ukraine is not successful, with 50% saying it is a total failure. A significant

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Bogatyr & Partners proportion of the population (48%) claim that they do not see any institution that is actively fighting corruption in Ukraine. None of the institutions that should fight corruption received a positive grade concerning the effectiveness of its effort. An overwhelming majority of citizens (73%) believe that judicial reform is going unsuccessfully (moreover, 43% believe it is a complete failure). The most negative grades were given to the courts (79%), Prosecutor General’s Office (75%), and National Police (74%).

In the publication Business Insider, its article stated that Trump told world leaders at the dinner table that “Ukraine is one of the most corrupt countries in the world” and wondered why leaders sided with them over Russia. Trading Economics index forecasted that the Ukraine Corruption Index is projected to trend around 30.00 Points in 2020, according to reforms after the coercive regime change in 2014. Amnesty International Report 2017/2018 indicates that Ukrainian authorities increased pressure on their critics and that law enforcement officials continued to use torture and other illtreatment and the existence of secret prisons of the Security Service of Ukraine (SBU).

In accordance to “Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?” the shadow economy constitutes 44.8 % of Ukrainian GDP. Ukraine is next to Uruguay and Uganda in its indices in accordance to IMF rankings. Ukraine was ranked 113, between Uganda (112) and Trinidad and Tobago (114) in the World Economic Forum: The Global Competitiveness Index 2017– 2018. We believe that this rating position was influenced due to mafia-oriented racketeering, extortion by the law enforcement officers, high level of corruption and pressure on the businesses.

We want to invite your attention to the legal risk index which is getting worse than before.

Furthermore, even due to prohibition of propaganda of fascist and nazi organisations, new organisations continue to emerge and at the same time, police organisations refrain from prosecuting them.

In the meantime, there have been cases of political persecution of individuals that have used communistic symbols, and also of those who took part in marches of memory of those who died during the Second World War. We would also like to provide you with a direct speech of the head of the Special Investigations Department of the General Prosecutor’s Office of Ukraine, who said: “...we first attempted, again, to declare internationally wanted through Interpol and received rejection due to signs of political persecution...”, “...we asked Interpol, namely, to report on the place of residence. So-called blue, blue card, that is, even then we have an opportunity to send a request directly to the country, if we know where he is (the suspect) country...detention and extradition. If a person is wanted, then automatically...”.

That is, the head of the Special Investigations Department of the General Prosecutor’s Office of Ukraine publicly and openly stated the possibility of manipulating the Interpol data processing system in order to obtain information on cases Interpol considers to be politically motivated.

Furthermore, due to the increase of violations of lawyer professional rights and privileges and the failure of many reforms, the Ukrainian National Bar Association decided to address the International Commission of Jurists on the topic of violation of professional rights.

We also have to mention that the present reform of the penitentiary system is rather narrow; it does not affect the most problematic areas of the system, such as the inhuman conditions in the jails, the attitude of the workers of penitentiary institutions, lack of medical care and proper nutrition for the inmates. Only last year, the European Court

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Ukraine of Human Rights has satisfied claims of 344 Ukrainians, most of the claims related to the conditions of jails.

The decision of the European Court of Justice Klyuyev v Council from 11 July 2018 is essential for understanding the current situation of political persecution in Ukraine. The court practice stated that the new regime in Ukraine was undermining democracy and the rule of law, and was flagrantly and systematically violating human rights, both with specific regard to the applicant and in general. One of the parties pointed out the improper functioning of the Ukrainian judicial system and a failure to observe the right to a fair trial. This is compounded by a judiciary lacking independence, which impairs its impartiality, in particular with regard to the prosecution of officials of the former government, as the High Commissioner of the United Nations responsible for a Human Rights Monitoring Mission in Ukraine recognised in his report. Similar findings were made in the United States of America State Department Report into the Ukraine in 2015. The same considerations apply to the Prosecutors General Office, which in addition to not being responsible for its acts is susceptible to political pressure from the current regime, as is apparent from a report published in December 2014 by the Centre for Political and Legal Reforms in Kiev. The existence of systemic problems within the Prosecutors General Office, which is the sole source on which the Council has systematically and exclusively relied, has been confirmed by the resignation, on 19 February 2016, of the Prosecutor General, Mr V.S., amid allegations of corruption and following pressure from President Poroshenko, which was commended by the Vice President of the United States.

Moreover, one of the parties submits that the mere fact that Ukraine is a party to the Convention for the Protection of Human Rights and Fundamental Freedoms is not sufficient to ensure that fundamental rights are respected in that country. The party also refers to the fact that in October 2014, the Law on government integrity, known as the ‘Law on purging the government’ was extended to cover State officials and enforcement agencies more generally. That law allows certain persons, including judges and prosecutors, to be dismissed from public office on the ground of their past conduct.

Serious shortcomings in that law were recognised by the European Commission for Democracy through Law in an interim opinion of 16 December 2014. In an opinion of 23 March 2015 published jointly with the Directorate-General of Human Rights of the Council of Europe, the Venice Commission again raised concerns as to the independence of the judiciary in Ukraine.

The court practice established that the Prosecutor General Office failed to provide the slightest information that the investigation had been formally suspended and the fact that the Prosecutor General Office confined itself to constantly repeating the same information on the pre-trial investigation without mentioning new information regarding its progress, namely its suspension, which weakened the reliability of the information it provided and how up to date it was.

Thus, the above-mentioned decision greatly portrays the conduct of Ukrainian law enforcement authorities, not only do they violate fundamental rights, they prefer to provide international institutions with irrelevant and untrue information in order to pursue their aims in political persecution.

A recent poll by GFK Ukraine on the support of judicial reform shows that only 23% of Ukrainians support the current reform and in general, 46% of respondents believe that the situation with the judiciary has become worse since 2014. Finally, 61% of the respondents believe that there is no right for a fair trial in Ukraine and 60% do not believe in the independence of courts from the government.

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Bogatyr & Partners 1.2

If there is more than one set of enforcement agencies, how are decisions made regarding the body which will investigate and prosecute a matter?

Currently our law enforcement office is under reform and this, in fact, creates problems such as the lack of power to investigate different kinds of crime or difficulties due to different authorities having the same power to investigate the same criminal activity.

General principles are explained in the Criminal Procedural Code of Ukraine; the Prosecutor’s Office defines the jurisdiction through a special procedural heading. In case of disagreement, the defendant can challenge the jurisdiction through a special investigating judge.

Absurd reforms have brought political conflicts between different law enforcement authorities and some of them have been created in an unconstitutional way. Furthermore, the United States Department of State OSAC notes: “Ukrainian law enforcement agencies do not meet U.S./Western European standards” and that case resolution level has fallen dramatically since the beginning of the reform.

1.3

Is there any civil or administrative enforcement against business crimes? If so, what agencies enforce the laws civilly and which crimes do they combat?

Certainly, there is civil and administrative enforcement.

Administrative enforcement is usually related to cases such as infringement of taxes and different administrative procedures and business cases related to government regulation of such business activity. Civil and commercial litigation are common practice for solving commercial disputes between companies. However, it should be noted that there are differences from other countries in the qualification of fraud for Ukraine; it can only be criminal in accordance with the Ukrainian law. In general, it is policed, but the Prosecutor’s Office still has the Investigative Department, which hasn’t been liquidated under the new law because of the number of political and high-level economic cases which they unlawfully use to exert pressure on business. We have the same situation with the tax police, which was formally liquidated but is still operating with the tax avoidance cases.

1.4

Have there been any major business crime cases in your jurisdiction in the past year?

We have represented a number of clients in criminal cases by the Prosecutor’s General Office, police and Security Service against industrial steel companies, ports, shipyards, agricultural holdings, Ukrainian and Russian banking groups. This shows the increasing pressure on business and increasing level of corruption. Donald Trump indicated that “Ukraine is one of the most corrupted counties in the world” and, because of this, the Transparency International Corruption Perception Index showed the ongoing increase of corruption after coercive regime change in Ukraine since 2014.

As a result, the “Revolution of Dignity” became the revolution of corruptions. Ukraine scored 30/100 in the 2017 Index, which shows that Ukraine is highly corrupt.

2 Organisation of the Courts 2.1

How are the criminal courts in your jurisdiction structured? Are there specialised criminal courts for particular crimes?

Specialised courts for particular crimes are absent in Ukraine.

Ukrainian courts are structured into: local courts; courts of appeal

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Ukraine and the Court of Appeals of Ukraine; and the Supreme Court. The Сivil and Criminal Court has the jurisdiction to review criminal cases. It should be noted that a specialised Criminal and Civil Court exists, however, it can review all crimes. Additionally, there exists a system of Administrative courts. The creation and legitimacy of this system is, however, disputed due to the breach of Constitution by the present political regime. In many of our cases, we are experiencing that the Prosecutors Office rejects to acknowledge the decisions of Ukrainian courts which is an example of legal nihilism.

2.2

Is there a right to a jury in business crime trials?

Such practice is usually absent in Ukraine. It was recently introduced exclusively for crimes consisting of intended murder, where a lifelong sentence can be imposed. However, it is important to note that the penitentiary system in Ukraine continues to have issues such as ill-treatment and use of torture in secret prisons run by the SBU (Secret Service),which the Amnesty International and Human Rights Watch stated as being the case. Prison staff censoring and discouraging complaints, as well as penalising and mistreating prisoners who make such complaints, are directly linked to the conditions and welfare of prisoners. There is no lasting improvement in the conditions of detention, which do not comply with Article 3 of the European Convention on Human Rights; furthermore, they continue to become worse, as the number of people in prison cells is, in most cases, higher than the cell can hold.

3 Particular Statutes and Crimes 3.1

Please describe any statutes that are commonly used in your jurisdiction to prosecute business crimes, including the elements of the crimes and the requisite mental state of the accused:

o

Securities fraud

The descriptions provided below refer to the statutes from the Criminal Code of Ukraine, unless additional statutes are mentioned.

Adding an unauthorised person in the documents submitted for registration of securities or false information, if it caused great material damage for the investor in securities, leads to a fine or deprivation of the right to occupy certain positions or engage in certain activities for up to three years. Damage shall be considered significant if it is twenty times more than non-taxable minimum incomes. o

Accounting fraud

Amendment of documents or accounting registers or making statements to a financial institution which are knowingly false, consisting of incomplete information on transactions, obligations, property agencies, mandatory revocation of a financial institution or declaring it insolvent, leads to fine or imprisonment for up to four years, with disqualification to hold certain positions or engage in certain activities for up to 10 years. o

Insider trading

Intentional unlawful disclosure, transfer of or access to insider information, as well as providing information on the use of such recommendations to the acquisition or disposal of securities or derivatives, if it led the persons who committed these acts, or third parties to unjustified profits in a significant amount, or to avoid stock market participation or caused third parties to have significant damage or if it caused substantial harm to legally protected rights, freedoms and interests of individual citizens, or state and public

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Bogatyr & Partners interests, or the interests of legal entities, leads to a fine with disqualification to hold certain positions or engage in certain activities for up to three years. o Embezzlement The appropriation or embezzlement of another’s property that has been entrusted to a person or was in his jurisdiction is punishable by correctional labour for up to two years, or imprisonment for up to four years, or imprisonment for up to four years with disqualification to hold certain positions or engage in certain activities for up to three years. o

Bribery of government officials

The offer or promise to an official legal entity, regardless of the legal form which would lead to a third party undue advantage, as well as providing such benefit or its request to the commission referred to an official action or inaction of using the powers granted them in the interests of the person who offers, promises or gives such benefit or that of a third person is punishable by a fine or community service for a period of one hundred to two hundred hours, or imprisonment for up to two years. o

Criminal anti-competition

This is regulated by a specialised law of Ukraine regarding the protection from unfair competition. This law defines the legal basis of the protection of entities and consumers against unfair competition. The law is aimed at establishing, developing and providing trade and other fair traditions in competition when performing economic activity in market conditions.

Ukraine o

Money laundering or wire fraud

Making a financial transaction or a transaction with funds or other property obtained as a result of committing a socially dangerous illicit act that preceded the legalisation (laundering), and actions aimed at concealing or disguising the illicit origin of such funds or other property, rights to such funds or property, source of origin, location, movement, change their shape (conversion), as well as the acquisition, possession or use of money or other property derived from the commission of a socially dangerous illicit act that preceded the legalisation (laundering) leads to imprisonment for a term of three to six years, with disqualification to hold certain positions or engage in certain activities for up to two years with confiscation of property. o

Cybersecurity and data protection law

The legal basis for cyber security are the Constitution of Ukraine, laws of Ukraine “On National Security”, “On information” and “On protection of information in telecommunication systems”. The Council of Europe Convention on Cybercrime has been also ratified

by Ukraine. o

Trade sanctions and export control violations

This is not applicable. o

Any other crime of particular interest in your jurisdiction

This is not applicable.

3.2

Cartels and other competition offences These are regulated by the antimonopoly committee and the law of Ukraine regarding the protection of economic competition. They are not regarded as criminal offences, and may lead to a fine or to a forced division of the entitled’s property. They are usually qualified as civil and administrative offences. o

Tax crimes

Wilful evasion of taxes and duties (mandatory payments) in the system of taxation imposed in accordance with the law committed by a company, institution or organisation, regardless of ownership or a person engaged in entrepreneurial activities without establishing legal person or any other person who is obliged to pay if those actions resulted in actual underpayment into budgets or state purpose funds in significant amounts leads to a fine or deprivation of the right to occupy certain positions or engage in certain activities for up to three years. o

Government-contracting fraud

There is no specific statute for such crime, therefore it usually qualifies the same as embezzlement. o

Environmental crimes

The Criminal Code of Ukraine chapter VIII describes crimes against the environment. o

Campaign-finance/election law

Presentation of deliberately false information in a report of the party considering property, income, expenses and financial obligations or in the financial statements on the receipt and use of election funds of the party or local party candidate in the elections is punishable by a fine or correctional labour for up to two years, or imprisonment for the same period, with disqualification to hold certain positions or engage in certain activities for up to three years. o

Market manipulation in connection with the sale of derivatives

Such activity is managed by the antimonopoly committee.

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Is there liability for inchoate crimes in your jurisdiction? Can a person be liable for attempting to commit a crime, whether or not the attempted crime is completed?

The concept of a crime includes not only the completed crime, but the preparation and the attempt of crime, which are all seen as socially dangerous acts. However, preparation for a minor offence does not entail criminal liability. The law is known to exclude responsibility for the completed crime which, although formally has signs of offence under the criminal law, is not a public danger due to insignificance. This especially does not constitute a crime, for instance, when the criminal attempt is not a public danger (e.g., attempted destruction or damage to property that has no value).

The procedural rule states the only reason a person could be criminally responsible is if that person has committed a socially dangerous act which appears to constitute an offence under the Criminal Code. The same grounds for criminal liability exist for the preparation of a crime and attempted crime. In other words, the basis of responsibility for the preparation of a crime and the attempted crime can only be found in the individual act of a crime.

The preparation for a crime and attempted crime is, effectively, an unfinished crime – the organisation or preparation of a crime constitutes attempted crime.

4 Corporate Criminal Liability 4.1

Is there entity liability for criminal offences? If so, under what circumstances will an employee’s conduct be imputed to the entity?

An entity can be liable for criminal offences regarding its economic activity, such as the list of offences provided above. The conduct of the employee is taken into account in most cases, as in where the actions of the employee have led to violation of the law by the entity.

However, in most cases the employee is not liable for the crime, while the entity is. As a rule, such crimes are usually connected with fraud and forgery of documents.

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Bogatyr & Partners 4.2

Is there personal liability for managers, officers, and directors if the entity becomes liable for a crime?

Under what circumstances?

Only the entity is liable for crimes committed by the employed officials. There are, however, institutes of legal liability in practice, although they are rarely used. All officers, managers and directors are subject to legal liability of crimes as well as the entity liable for crimes of the entity.

4.3

Where there is entity liability and personal liability, do the authorities have a policy or preference as to when to pursue an entity, when to pursue an individual, or both?

There is a lack of numbers of real cases connecting to the entity liability.

4.4. In a merger or acquisition context, can successor liability apply to the successor entity? When does successor liability apply?

Yes, in all cases of mergers and acquisitions, the legal liability of the legal entity of all past companies will be taken into account.

However, the practice of applying criminal liability to legal entities is absent in this case.

5 Statutes of Limitations 5.1

How are enforcement-limitations periods calculated, and when does a limitations period begin running?

The limitations period depends on the level of the crime. It begins running from the moment of committing the crime or from the moment of detecting the crime, if the first is unknown.

5.2

Can crimes occurring outside the limitations period be prosecuted if they are part of a pattern or practice, or ongoing conspiracy?

Yes, in cases where the crime is a repeating practice. If a number of similar crimes were committed, the limitations period begins running from the known date of the last crime.

5.3

Can the limitations period be tolled? If so, how?

Yes, in the cases where the crime was detected after the limitations period has already passed. However, this does not apply to cases where crime was committed against peace and humanity.

6 Initiation of Investigations 6.1

Do enforcement agencies have jurisdiction to enforce their authority outside your jurisdiction’s territory for certain business crimes? If so, which laws can be enforced extraterritorially and what are the jurisdictional grounds that allow such enforcement? How frequently do enforcement agencies rely on extraterritorial jurisdiction to prosecute business crimes?

Ukraine 6.2

How are investigations initiated? Are there any rules or guidelines governing the government’s initiation of any investigation? If so, please describe them.

The investigator and the prosecutor have to immediately (but no later than 24 hours after application, notification of committing a criminal offence or after self-identifying it from any sources of circumstances that may indicate criminal offence) submit relevant information to the Unified Register of pre-trial investigation. The investigator, who will carry out a pre-trial investigation, should be determined by the head of the pre-trial investigation.

A pre-trial investigation begins after entering data in the Unified Register of pre-trial investigations. Regulations of the Unified Register of pre-trial investigations and the procedure of forming and maintaining is approved by the Prosecutor General of Ukraine in cooperation with the Ministry of Internal Affairs of Ukraine, the Security Service of Ukraine, the National Anti-Corruption Bureau of Ukraine, as well as the body that monitors the compliance of tax laws.

6.3

Do the criminal authorities in your jurisdiction have formal and/or informal mechanisms for cooperating with foreign enforcement authorities? Do they cooperate with foreign enforcement authorities?

International cooperation in criminal proceedings relies on taking the necessary measures to provide international legal assistance through the exchange of documents, execution of certain proceedings, extradition of persons who have committed criminal offences, temporary transfer of persons taking over the criminal prosecution, transfer of sentenced persons and execution of judgments. International treaties of Ukraine may provide different measures than those described in the Criminal-Procedural Code and forms of cooperation in the criminal proceedings. The practice of cooperating with foreign authorities is rather undeveloped at the current stage, since Ukrainian authorities, in practice, are reluctant to do so and have inadequate training to do so. There are a number of political motivations present in the United Kingdom, Europe and other jurisdictions and it shows that Ukrainian law enforcement authorities massively use criminal investigations in order to pressure businesses supporting corporate raids for supporting pro-president businessmen and political opponents. Unfortunately, we have to mention that the present General Prosecutor and the Minister for Internal Affairs and the Head of the SBU (Secret Service) do not have a legal education, and thus cooperation with foreign authorities is usually unsuccessful due to the high level of unprofessionalism.

Furthermore, as mentioned by the Council of Europe, the amount of cases where the Interpol Red Notice system was used for the personal aims of Ukrainian officials and for the purpose of political persecution continues to increase.

7 Procedures for Gathering Information from a Company 7.1

What powers does the government have generally to gather information when investigating business crimes?

The government acts through covert investigative actions and has the power to collect information from personal computers, data storage devices, telephones and other devices through the ruling of court.

Such practice is absent in Ukraine; the enforcement agencies are to investigate crimes committed only in their appointed region.

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Bogatyr & Partners Document Gathering: 7.2

Under what circumstances can the government demand that a company under investigation produce documents to the government, and under what circumstances can the government raid a company under investigation and seize documents?

The government can demand a company to produce documents only through court ruling, if the judge decides such measures as necessary.

7.3

Are there any protections against production or seizure that the company can assert for any types of documents? For example, does your jurisdiction recognise any privileges protecting documents prepared by in-house attorneys or external counsel, or corporate communications with in-house attorneys or external counsel?

There are no legal rights as to the seizure of documents. As a measure of protection, the company can transfer these documents to a law firm for pre-study purposes as advocates offices enjoy special immunity, and the information is protected by the legal professional privilege.

It is often used by various commercial structures to store originals of important documents, for example, the original documents or documents certifying ownership. It is worth mentioning that recently in Ukraine the number of cases of violation of rights of attorneys has increased; furthermore, the number of illegal searches has also increased. These facts were indicated by the Ukrainian Bar Association and also became subject to a hearing by the Council of Europe. It should also be noted that Amnesty International reported in its review 2017/2018 that: “members of law enforcement agencies continued to use torture and other ill-treatment and committed other human rights violations; there was continued impunity for past and ongoing violations of international humanitarian law� which again shows that law enforcement authorities continuously violate rights of attorneys and lawyers.

Furthermore, in the past, Ukrainian law enforcement authorities played a role in the robbery of the Ukrainian Jewish community, the unlawful seizure of bitcoins from IT specialists and the theft of personal belongings of company employees during searches.

The facts cited point to the complete lack of observance of rights of the persecuted persons during searches, which often turn into looting by law enforcement officers. However, lawyers and company owners are sometimes able to capture this on video. Such cases have occurred recently in jewellery stores, banks and large enterprises.

However, due to the total corruption within law enforcement agencies, investigation and/or punishment of those guilty of committing such crimes is prevented. On the contrary, law enforcement officers are largely engaged in extortion including demanding ransom for illegally seized property.

Law enforcement officers also increased pressure on representatives of religious communities. In particular, a series of searches was conducted in the Ukrainian Orthodox Church.

7.4

Are there any labour or privacy laws in your jurisdiction (such as the General Data Protection Regulation in the European Union) which may impact the collection, processing, or transfer of employees’ personal data, even if located in company files?

Does your jurisdiction have blocking statutes or other domestic laws that may impede cross-border disclosure?

Ukraine 7.5 Under what circumstances can the government demand that a company employee produce documents to the government, or raid the home or office of an employee and seize documents?

The law enforcement authorities have the rights to search and seize but only through court ruling.

7.6

Under what circumstances can the government demand that a third person or entity produce documents to the government, or raid the home or office of a third person or entity and seize documents?

The law enforcement authorities have the right search and seize but only through court ruling. Crimes relating to corruption impose a significant threat as confiscation of property is common in such cases.

Questioning of Individuals: 7.7

Under what circumstances can the government demand that an employee, officer, or director of a company under investigation submit to questioning?

In what forum can the questioning take place?

Any of the said individuals can be submitted for questioning at any moment, if the individual does not agree to submit voluntarily which they can be forced to do so by the court ruling. It should be noted that if the individual submitted has completed an application regarding the damages created by such submission, such as absence from work and other damages, the government or the firm has to pay for the damages caused. This also relates to entities.

7.8

Under what circumstances can the government demand that a third person submit to questioning? In what forum can the questioning take place?

This is not applicable.

7.9

What protections can a person assert upon being questioned by the government? Is there a right to be represented by an attorney during questioning? Is there a right or privilege against self-incrimination that may be asserted? If a right to assert the privilege against self-incrimination exists, can the assertion of the right result in an inference of guilt at trial?

The defender is a lawyer who protects the suspect, accused, convicted, acquitted or the person who assumed the use of coercive measures of medical or educational nature or a question about their use.

A defence lawyer may be used by the accused, investigator, prosecutor, investigator, judge or court in cases envisaged by the law governing legal aid. The participation of the defender is mandatory in criminal proceedings concerning particularly serious crimes. If the accused does not have the funds to cover such expenses, the government must provide him with a defender. This is also the case for where the accused is under the age of 18, or the mental state of the accused does not allow self-representing, etc.

This is not applicable.

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Bogatyr & Partners 8 Initiation of Prosecutions / Deferred Prosecution / Civil Dispositions 8.1

How are criminal cases initiated?

If there is reason and grounds the prosecutor, investigator, body of inquiry or judge are obliged to issue an order to institute criminal proceedings, stating reasons and grounds for instituting proceedings, the criminal law article on the basis of which the proceedings are initiated, as well as further its direction.

Ukraine particularly serious; if immediate punishment may lead to extremely serious consequences for the convict or his family because of special circumstances (fire, natural disaster, serious illness or death of one of the working family member, etc.) – the term set by the court is no more than one year after the judgment has taken legal effect.

Delaying execution is not allowed for persons convicted of serious and particularly serious crimes, regardless of the sentence.

8.4

If at the time of institution of criminal proceedings they found the perpetrator, criminal proceedings should be brought against that person.

After the initiation of the case the following steps can usually occur: 1) the prosecutor sends the case for the production of pre-trial investigation or inquiry; 2) the investigator starts pre-trial investigation and inquiry agency begins inquiry; and 3) the court shall appoint a case to the proceedings.

8.2

What rules or guidelines govern the government’s decision to charge an entity or individual with a crime?

Grounds for initiating criminal proceedings may be as follows: 1) statements or reports of enterprises, institutions, organisations, officials, representatives of government, public or individual citizens; 2) communications from the government, the public or individual citizens detained the suspect at the crime scene or in the act; 3) voluntary surrender; 4) reports published in the press; and/or 5) direct detection of the inquiry agency, investigator, prosecutor or court of evidence of a crime.

This is not applicable.

8.5

Can a defendant and the government agree to resolve a criminal investigation through pretrial diversion or an agreement to defer prosecution? If so, please describe any rules or guidelines governing whether pretrial diversion or deferred prosecution agreements are available to dispose of criminal investigations.

Such agreements are not provided in the Ukrainian law system; however, there are agreements of delaying execution, agreement of reconciliation, as well as the agreement of sincere repentance.

Agreement on reconciliation between the victim and the suspect or the accused may be concluded in the proceedings concerning criminal offences or crimes of small and medium severity in criminal proceedings in the form of private prosecution. The conclusion of the settlement in criminal proceedings against the authorised person of the legal person who committed a criminal offence in respect of which carried out proceedings against a legal entity is not allowed.

Implementation of a conviction sentence including correctional labour, arrest, confinement, detention in a disciplinary military unit or imprisonment can be postponed in case of: serious illness that prevents the execution of sentences for his recovery; pregnancy or in the presence of a minor child if the child is no older than three years; in cases where a person convicted of a crime that is not

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In addition to, or instead of, any criminal disposition to an investigation, can a defendant be subject to any civil penalties or remedies? If so, please describe the circumstances under which civil penalties or remedies may apply.

In addition to the main sanction, additional sanctions can be introduced such as deprivation of a military or special title, rank, grade or qualification class as well as deprivation of the right to occupy certain positions or engage in certain activities.

Deprivation of the right to occupy certain positions or engage in certain activities can be assigned as the main punishment for a term of two to five years or as an additional punishment for a term of one to three years.

9 Burden of Proof 9.1

The matter may be brought only in cases where there is sufficient evidence indicating the existence of a crime.

8.3

If deferred prosecution or non-prosecution agreements are available to dispose of criminal investigations in your jurisdiction, must any aspects of these agreements be judicially approved? If so, please describe the factors which courts consider when reviewing deferred prosecution or nonprosecution agreements.

For each element of the business crimes identified above in Section 3, which party has the burden of proof? Which party has the burden of proof with respect to any affirmative defences?

In all cases, the burden of proof lies on the accusing party, i.e. the prosecutor. In consideration to the defence, the defendant can provide the court with materials and evidence in order to provide proof.

9.2

What is the standard of proof that the party with the burden must satisfy?

Evidence is admissible if it is received in the manner prescribed by the criminal procedures in Ukraine, such as by investigation and other means. Illegal evidence cannot be used in making procedural decisions and it cannot be invoked in the courts judgment. Evidence is inadmissible if it was obtained as a result of a significant violation of rights and freedoms.

9.3

In a criminal trial, who is the arbiter of fact? Who determines whether the party has satisfied its burden of proof?

An arbiter is not provided in criminal cases. The court decides if the party has satisfied the required amount of proof for decisionmaking.

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Conspiracy / Aiding and Abetting

10.1 Can a person who conspires with or assists another to commit a business crime be liable? If so, what is the nature of the liability and what are the elements of the offence?

The Ukrainian procedural process provides us with such definition of the individuals involved in the crime. The contractor (subcontractor) is subject to criminal liability which provides for the crime committed by him. The organiser, instigator and accomplice are all subject to criminal liability for the crimes they have performed.

In the case of an individual’s unfinished crime, other accomplices shall be criminally liable for complicity in unfinished crime.

Accomplices should not be criminally liable for acts committed by the Contractor, if it was not of their intent, however, they should still be liable for other criminal activities they have taken part in.

11 Common Defences 11.1 Is it a defence to a criminal charge that the defendant did not have the requisite intent to commit the crime? If so, who has the burden of proof with respect to intent?

According to court practice, in such a situation where we have an individual who is not directing their will to achieve the result, the court will nevertheless knowingly allow its occurrence. Most often, this is a conscious assumption expressed in indifference to consequences. In other words, the person is not interested in being of socially dangerous consequences of his act and still allows for the possibility of the outcome, therefore he should still be liable for his indifference.

11.2 Is it a defence to a criminal charge that the defendant was ignorant of the law, i.e., that he did not know that his conduct was unlawful? If so, what are the elements of this defence, and who has the burden of proof with respect to the defendant’s knowledge of the law?

In Ukrainian law, ignorance of the law does not free the individual of the consequences.

11.3 Is it a defence to a criminal charge that the defendant was ignorant of the facts, i.e., that he did not know that he had engaged in conduct that he knew was unlawful? If so, what are the elements of this defence, and who has the burden of proof with respect to the defendant’s knowledge of the facts?

In such cases, the burden of proof lies on the defendant and his representatives; however, in general practice it is viewed in the same way as ignorance of the law, therefore it does not free the individual from the consequences.

12 Voluntary Disclosure Obligations 12.1 If a person or entity becomes aware that a crime has been committed, must the person or entity report the crime to the government? Can the person or entity be liable for failing to report the crime to the government? Can the person or entity receive leniency or “credit” for voluntary disclosure?

Failing to report a crime of high or particularly high seriousness

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Ukraine may lead to imprisonment for up to three months or imprisonment for up to three years, depending on the level of seriousness. Family members or close relatives of the person who committed the crime should not be liable for failing to report.

13 Cooperation Provisions / Leniency 13.1 If a person or entity voluntarily discloses criminal conduct to the government or cooperates in a government criminal investigation of the person or entity, can the person or entity request leniency or “credit” from the government? If so, what rules or guidelines govern the government’s ability to offer leniency or “credit” in exchange for voluntary disclosures or cooperation?

The person who first committed a minor offence or a medium seriousness crime due to carelessness, except for corruption offences, can exempted from criminal liability if it is after the crime they sincerely repent, actively contribute to the detection of crime and fully reimbursed damages caused by it.

13.2 Describe the extent of cooperation, including the steps that an entity would take, that is generally required of entities seeking leniency in your jurisdiction, and describe the favourable treatment generally received.

This is not applicable.

14

Plea Bargaining

14.1 Can a defendant voluntarily decline to contest criminal charges in exchange for a conviction on reduced charges, or in exchange for an agreed-upon sentence?

It is possible in the case of sincere repentance by the defendant of the offence as fact. The defendant can negotiate the charge with the prosecutor in this case. It is possible to sign a deferred prosecution agreement between the defendant and the prosecutor/or the victim.

The court has the power to allow such agreements or decline them if the content does not meet the requirements.

14.2 Please describe any rules or guidelines governing the government’s ability to plea bargain with a defendant.

Must any aspects of the plea bargain be approved by the court?

If the agreements are reached during the proceedings, the court shall immediately stop to conduct the proceedings and proceed to examine the agreement. Before making a decision on approval of the agreement on the recognition of guilt, the court must ensure that the agreement is voluntary. The Court examines the agreement to meet the requirements of the Code and/or the law.

Court denies approval of the agreement if: 1)

the terms of the agreement are contrary to the requirements of the Criminal Procedure Code and / or the law, including the allowed incorrect legal qualification of the criminal offence which is more serious than that which is provided with respect to the possibility of concluding an agreement;

2)

the terms of the agreement do not meet the interests of society;

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3)

the terms of the agreement violates the rights, liberties or interests of parties or other persons;

(15 days) from the date of handing him copy of the judgment by the court that decided the verdict, ruling or decision.

4)

there are reasonable grounds to believe that an agreement was not voluntary, or the parties have reconciled;

The appeal may be filed by:

5)

the obvious impossibility of execution of the accused taken on obligations under the agreement; or

6)

there is no factual basis for a conviction.

15 Elements of a Corporate Sentence 15.1 After the court determines that a defendant is guilty of a crime, are there any rules or guidelines governing the court’s imposition of a sentence on the defendant? Please describe the sentencing process.

There is no such practice at the moment.

15.2 Before imposing a sentence on a corporation, must the court determine whether the sentence satisfies any elements? If so, please describe those elements.

Yes, such a sentence, as a rule, should include specific charges against company officials. However, practice of imposing a criminal sentence on corporations hasn’t been formed yet.

16

Appeals

16.1 Is a guilty or a non-guilty verdict appealable by either the defendant or the government?

Such verdict can be appealable by the defendant as well as the government in the role of the prosecutor. The possibility of appellate review is not always available by the present Criminal Code, but at the same time, in appellate cases and in the European Court of Justice, we have been successful in our practice at making such possibility conform with the European Convention on Human Rights.

16.2 Is a criminal sentence following a guilty verdict appealable? If so, which party may appeal?

An appeal against the sentence, ruling or decision of the trial court, unless otherwise provided by the Criminal Procedural Code of Ukraine, may be filed within 15 days from the date of their announcement and the convict, who is in custody – at the same time

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1)

the defendant in respect of whom was adopted conviction, his legal representative or defender - in the part concerning the interests of the accused;

2)

the defendant in respect of whom was approved acquittal, his legal representative or defender - in terms of motives and grounds for acquittal;

3)

the suspect, his legal representative or defender;

4)

the legal representative, defender minor or very minor, which was decided on the application of compulsory educational measures – in part related to the interests of a minor;

5)

the legal representative and defender of a person against whom a question on the application of compulsory medical measures;

6)

the prosecutor; or

7)

the victim or his legal representative or representative – in the part concerning the interests of the victim, but within the requirements stated by them at first instance.

16.3 What is the appellate court’s standard of review?

The court of appeal tends to check the correctness of applying the norms of substantial law and procedural rules by first instance courts.

Usually the courts of appeal pay greater attention at the uniformity of law application and it is done by three or more qualified judges.

However, our latest practice shows that judges are under increased pressure from the present law enforcement authorities and that they are forced to take decisions not in conformity with the rule of law, but with the instructions provided by the law enforcement authorities. Ukraine was ranked 77/113 in the Rule of Law Index 2017/2018 conducted by the World Justice Project due to its very high level of corruption and failure of Criminal Justice.

16.4 If the appellate court upholds the appeal, what powers does it have to remedy any injustice by the trial court?

The court may decide to: a)

uphold the decision of the trial conducted by the first instance;

b)

to change the decision of the first instance and make a new decision; or

c)

cancel the decision of the first instance and send the case for retrial.

At the same time, it should be noted that the investigation of new evidence and full consideration of the case is conducted only by courts of the first instance and if the court of appeal has uncovered any violations when considering the decision of the first instance in which it is necessary to collect more evidence, the only way is then to conduct the retrial.

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Dr. Volodymyr Bogatyr

Vladyslav Drapii

Bogatyr & Partners 32/34 Shovkovychna Str., office 24 Kyiv Ukraine

Bogatyr & Partners 32/34 Shovkovychna Str., office 24 Kyiv Ukraine

Tel: +38 044 363 77 22 Email: volodymyr@bogatyr.Ń om URL: www.bogatyr.com

Tel: +38 044 363 77 22 Email: drapii@bogatyr.kiev.ua URL: www.bogatyr.com

Dr. Bogatyr have served as a Deputy Minister of Justice of Ukraine from 2007 to 2011, recognised as The Honoured Lawyer of Ukraine by the President of Ukraine in 2010. He was admitted as an advocate in Ukraine (2001), a foreign advocate in Russia (2014) and in Poland (2015). Dr. Bogatyr is registered as a foreign advocate in Poland and Russia. Dr. Bogatyr acquired the Letter of Merit for diligent work and high professionalism from the Prime Minister of Ukraine (2017).

Trainee at Bogatyr & Partners, student of International Law faculty at the Taras Shevchenko National University of Kyiv.

Dr. Bogatyr is a member of the International Bar Association, Ukrainian Bar Association, Okręgowa Rada Adwokacka w Katowicach, Union of Lawyers of Ukraine, Union of Advocates of Ukraine, International Division of the Law Society for England and Wales.

Bogatyr & Partners is a full-service boutique law firm based in the heart of Kyiv, Ukraine. We have particular focus and experience in business crime, fraud, asset tracing & recovery, commercial litigation in Ukraine and international legal assistance in challenging economic sanctions. In the past we have successfully represented an international financial institution in a USD 72 million debt recovery dispute. The team has also successfully acted for a Dutch-owned leading Ukrainian bank in its USD 44 million loan agreement dispute. We acted for a private client in a complex cross-border fraud matter involving tracing assets in Canada and Switzerland, obtaining a freezing injunction and recovering USD 70 million via Cyprus courts.

Our law firm were first to create a precedent of recognition and enforcement of judgments of the British High Court of Justice in Ukraine. In addition, we have successfully removed a number of Interpol Red Notices throughout the year.

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