AntAC Newsletter

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We are covering:

1. The most burning successes and challenges of the anti-corruption reform in Ukraine

2. State of implementation by Ukraine of international obligations and commitments in the area of the anti-corruption

3. The most crucial and fresh cases of corruption investigations and revelations from journalists and law enforcement agencies of Ukraine

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Yours, Anti-corruption Action Centre

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Holding those responsible for syphoning money from procurements.

Watchdogging for public procurement of drugs.

Map Ukrainian Politically Exposed Persons (PEPs)

Foreign partners condition Ukraine to fight corruption. We are monitoring how Ukraine implements these obligations.

Exploring corruption and learn to fight it.

Helping to return the money stolen by corrupt officials back to Ukraine.

Olena Halushka: How well did Ukraine implement anti-corruption conditionalities in July?

Ukraine’s parliament is off for summer recess without adopting the bill on a truly independent anti-corruption court. However, it also lacked votes for the appointment of loyal National Anti-Corruption Bureau of Ukraine auditor.

Political class balances between imitation of anti-corruption efforts when further international assistance demands it and sophisticated brutal attacks over effective anti-corruption institutions when tangible results of the reform are strongly felt.

What is the state of implementation of existing anti-corruption conditionalities as of July and what issues require further close attention?

Tips for making miracles

Doubtlessly, Ukraine indeed has made much progress after the EuroMaidan Revolution that drove President Viktor Yanukovych from power on Feb. 22, 2014.

And itwould be impossible without Ukraine’s international partners investing funds, expertise and political pressure in building institutional framework for the fight against high-profile corruption, the No. 1 problem in Ukraine.

However, given the growing resistance NABU and e-declarations system meet it is crucially to secure their independence and efficiency by international partners’ constant monitoring and continuation to link further support to specific reforms deliverables.

In 2016, the European Union amended its legislation to toughen a mechanism aimed at suspending visa-free regime with the third country which violates a set of rules, among which is ensuring sustainability of the reforms implemented within the visa liberalization action plan.

Elaboration of procedure and criteria for post-plan monitoring is necessary as soon as possible. Supporting these efforts, the Anti-Corruption Action Center launched an instrument of civic oversight over Ukraine’s commitments to international partners that goes beyond the post-plan monitoring and includes also the EU’s macrofinancial assistance and state building contract, and the International Monetary Fund memorandums. It is available on the website: maps.antac.org.ua, which tracks the progress and obstacles of commitments fulfillment.

Breaking MPs’ impunity

July 13 was the last full-time working day of the Rada before summer recess. A few reform-oriented MPs, however, had to block the parliamentary tribune demanding that the Rada to consider the anti-corruption agenda first. Being supported by the huge crowd chanting outside of the parliament, MPs voiced the demands which included consideration and adoption of the bills on establishment of the anticorruption court and cancellation of parliamentary immunity.

Bringing top officials to justice is key demand of all foreign assistance programs, but comprehensiveness of parliamentary immunity often makes almost impossible the investigation of criminal cases against MPs. According to Ukrainian legislation, for any investigatory measure, such as serving a notice of suspicion, detention and arrest law enforcement agency has to get separate consent of the parliament. Delay in doing this or granting permission for just one of the measures enables the MPs to win the time and flee the country, as it happened in the case against Yanukovych’s former ally, Sergiy Klyuyev.

And this manipulation aimed at preventing justice was again repeated by the parliament two days earlier, triggering rally of hundreds activists, who went on the street action protest to stop this high level sabotage.

Although in the end of the day under the pressure of the crowd MPs did strip the immunity of the Oppositional Bloc MP Mykhailo Dobkin and permitted his arrest, systemic problem of existing collective impunity within the parliament yet left unresolved. Continuous and inventive attacks over the institutions capable and willing to break the vicious circle of grand corruption are blatant proofs of old elites trying to preserve the status quo by any means.

Parliament’s never-ending saga on NABU auditor appointment

Conducting NABU independent external audit is Ukraine’s commitment to the IMF. This audit should be independent and unbiased as its negative conclusion regarding effiсiency of the NABU and its Head is the only legal ground for Head’s early dismissal.

According to the IMF conditionality, the appointment of auditors from the parliament, the government and the president should have been completed by end-April, but as of July for the second time the parliament failed to appoint their delegate. The president keeps the intrigue, while the government has appointed a human rights lawyer Mykhailo Buromenskyi, nominated by the Ukrainian Helsinki Human Rights Union.

On July 12, the Rada’s anti-corruption committee interviewed the candidates who ran for auditor’s position. Among them there were Martha Boersch, the U.S. prosecutor who succeeded to bring ex-Prime Minister Pavlo Lazarenko to justice, Carlos Castresana, who imprisoned the president of Guatemala and a number of other top officials in different countries, human rights lawyers, and even dubious private detective Nigel Brown, who confessed that in April he was invited to Ukraine and pre-interviewed by Artur Herasymov, the then president’s representative in the parliament and today’s head of the Bloc of Petro Poroshenko faction. Moreover, it came as a huge surprise to Brown that auditor’s work is to be done pro bono – looked like he was promised a payment from the alternative source.

MPs’ pretexts for not supporting world-level professionals with international experience of corruption crimes investigation, as demanded by the IMF back in 2015, looked ridiculous and unconvincing, but went absolutely in line with the idea to have a loyal auditor appointed.

In the end, the committee shortlisted four candidates, among which the parliament was proposed to pick one. Plenary rating voting breakdown looked as follows: Oleksandra Yanovska – 207, Serhiy Honcharenko – 22, Boersch – 111, Castresana – 110, but in the final voting the favorite Yanovska got only 216 votes out of 226 necessary, so the issue was once again postponed – this time till autumn.

In the meantime, on July 28 Yanovska was announced as a finalist of the Supreme Court competition, yet is to be confirmed by the High Council of Justice and the president.

According to the law on NABU, an acting judge is not eligible to be appointed as NABU auditor. Since Yanovska did not withdraw her candidacy from the Supreme Court competition, she may not run for the position of NABU auditor any longer. It is crucially important that the Rada selects NABU auditor among the finalists, shortlisted by the Committee on July 12 – Boersch or Castresana, taking into account IMF’s demand of international investigation experience of the candidate. However, since there is also a shortlisted Ukrainian candidate – Honcharenko, he potentially could also be considered by the Rada, which is desperately trying to avoid the appointment of a foreigner.

Anti-corruption court cornerstone

One of the ways to undermine NABU is to leave its activity fruitless: consideration of 40 percent of the cases submitted to the first instance courts has not even started, some of them have been pending for more than a year.

Establishment of the independent anti-corruption court is envisaged by the law on the judiciary, it is also Ukraine’s commitment to the IMF. Moreover, the vision concerning establishment of such a court and introduction of additional guarantees for an independent selection of anti-corruption judges was reflected in the common statement of international donors presented on June 16.

However, during the EU-Ukraine Summit, which took place in Kyiv on July 13, European Commission President Jean-Claude Juncker voiced the vague statement that the EU abandons the support for the anti-corruption court and agrees to support the chamber, which, according to the editorial remark on the website of the Petro Poroshenko’s administration, must be a chamber of the Supreme Court. After a number of appeals from the civil society, Juncker’s cabinet explained that these are independence, efficiency and transparency that matter, not the institutional structure. However, to meet all these criteria the institutional structure does matter.

Top politicians are using the idea of anticorruption chambers to divert attention from major requirement towards new anticorruption judicial body – bringing in place independent judges.

Anti-corruption chambers offer only either acting judges to be labeled as anti-corruption judges or lengthy selection of new judges through existing procedure.

Given the discouraging results of the Supreme Court selections, where each fourth finalists is dubious and received negative opinion from the Public Integrity Council, and 93 finalists out of 120 (83%) are acting or retired judges, existing selection procedure did not give highly anticipated renewal of the judiciary. Now final result lies in the hands of the High Council of Justice, which can disqualify notorious candidates, while the High Qualification Commission of Judges proved to be inefficient and incapable of selecting unbiased judges. So will they be able to select independent anticorruption judges? Real judicial reform is not about processes, it is about the results.

Agency for Corruption Prevention verifies 3 declarations per month

Verification of e-declarations is one of EU’s burning demands which Ukraine has to fulfill to receive the next tranche of the macro-financial assistance of 600 million euros. However, the situation does not look good. As of July, nine months after the first wave of submitting e-declarations came to an end, the agency finally managed to verify first declarations – 29 out of more than 1 million. Following the same rate, it will literally take decades for the agency to verify declarations of at least 2015.

Among the first verified were the declarations of 10 Ministers, 2 MPs, and 6 judges, and the agency did not identify any fraud, signs of illicit enrichment or conflict of interests. Regarding two lower level officials the agency filed cases to the law enforcement agency.

In the meantime, on its own initiative NABU already started investigations of 61 cases, opened upon analyzing the e-declarations, and even served the first notice of suspicion. The suspect is a retired judge from Luhansk Oblast. He failed to declare assets worth of Hr 10 million, owned by his de jure ex-wife, which though continues to live together with him.

One of the schemes the officials widely use to hide their assets starts to crack.

No progress on abolishing e-declarations for activists

A few days before the EU-Ukraine Summit, Poroshenko submitted to the parliament two bills, one of which cancels e-declarations for the anticorruption activists, and the second introduces new, much stricter form of tax reporting for the NGOs and individual entrepreneurs that get money from international technical assistance. However, the MPs demonstratively failed to even include the bills in the plenary agenda.

Simultaneously, in its legal opinion the Agency for Corruption Prevention confirmed worst fears of the activists: thus, the Agency may consider as potential declarants people who participated in the trainings conducted at the cost of the anticorruption project, as well as those who happen to receive from third parties the money from anticorruption projects of the international technical assistance. It is absolutely not clear how the agency will track the violators since the law obliges all such persons to decide individually whether they are subjects to e-declaration. Such a collision will end up with potential declarants not knowing about their obligation and being selectively prosecuted by the Agency.

Medicine procurement saves lives

Outsourcing of medicines procurements is one of the IMF’s conditionalities, and the system successfully works in Ukraine for two years already. In spite of widespread smear campaign, on July 27 the Ministry of Health of Ukraine officially signed the contracts with the UNICEF,the UNDP, and British Agency “Crown Agents” for 2017 procurements.
The results of 2016 procurements are striking: 25% of primary budget was saved, and these funds can be now directed to providing more patients with quality medicines. Certain figures are even more breathtaking: a medicine for blood cancer treatment “Imatinib,” which was bought in 2014 for $96.50 per pill, in 2016 was procured for $1.43 only – 67.5 times cheaper – so much money was embezzled previously, leaving seriously ill people without any hope! Now this reform saves thousands of people’s lives every year.

Asset recovery challenges

Ukraine committed to the EU to build an effective system of stolen assets seizure and confiscation. And while the institutional framework is being established, newly created Agency for Recovery and Management of Assets already can take over under management specific seized assets.

On July 28, Prosecutor General Yuriy Lutsenko announced the total amount of seized assets within criminal investigation of Oleksandr Klymenko, former head of tax administration under Yanukovych regime, is equal to 6,9 billion UAH. He is suspected in participation in organized criminal group and abuse of power. Previously, military prosecutor Anatoliy Matios mentioned that within the course of criminal investigation, prosecutors seized dozens of elite apartments in Kyiv, office buildings, houses, land plots and a thousand of railcars.

According to the court decisions, most of the assets are seized with forbidding the owner to use them. It is not clear who actually did the evaluation of the assets and who is in charge for their management, but according to the law it is the Agency for Recovery and Management of Assets that should be taking care of the management of such assets. This is a unique chance for the Agency to start maturing.

In such a situation of two steps forward one step back tight conditionalities and constant monitoring are crucially important to secure achievements and facilitate further successes of Ukraine’s fight against corruption.

Olena Halushka is head of international relations at the Anti-Corruption Action Center in Kyiv and the former head of international relations at the Reanimation Package of Reforms.

Published Aug. 4 at KyivPost Op-ed section.