During the years following the Revolution of Dignity in 2014 reforms of Ukrainian legal framework, judiciary and law enforcement were driven by two key goals – fight against high level corruption and cutting of pressure on business from the law enforcement.
Change of landscape, rise of enforcement
Following Revolution of Dignity, demands of society and international donors prompted creation of two new law enforcement agencies from scratch: National Anti-Corruption Bureau (NABU) and Specialized Anti-Corruption Prosecution Office (SAPO). The new agencies became operational in December 2015, and it appeared to be a pivotal point to disrupt the status quo.
The first cases initiated against high level officials (followed by their arrest where appropriate) by NABU and SAPO for corruption-related offences were widely supported by society. This, in turn, sparked activities on the side of the General Prosecutor's Office and the Security Service.
As a result, there is informal competition as to which agencies designated to fight corruption are better in initiating and investigating the corruption-related crimes (while NABU is primarily responsible for such types of investigations, in the course of transition period prosecution offices are still involved in such investigations). Members of parliament, prosecutors, judges, officers of government watchdog agencies, managers of state enterprises became key targets under the investigators' scrutiny.
Situation with the investigations is far from perfect due to shortcomings in quality and motives of some probes. Further, significant bottleneck obstacle for good investigators is the judiciary which is still in the process of reform and not rotated to the extent required. This raised the question that the separate court to consider corruption-related cases shall be the next step in overcoming corruption, which is now actively discussed.
Nevertheless, substantial number of active investigations dramatically changed local law enforcement landscape.
Next reform on pipeline includes establishment of State Bureau of Investigation – the agency in charge of investigation of military offences and criminal offences (other than corruption-related crimes) committed by high-level officials. It is anticipated that the agency becomes fully operable in the fall of 2018.
Rivalry between law enforcement
Since the beginning of operation of specialized anti-corruption agencies, the certain level of rivalry between «new» and «old» law enforcement authorities became evident. The large scale tensions arose in the end of 2017 when investigators of the Prosecutor General`s Office of Ukraine (PGO) searched NABU agents and accused them of "incitement of individuals to commit crimes" (i.e. in unlawful provocation of bribes). NABU, in turn, claimed that PGO and Security Service have unlawfully intervened in and interrupted special undercover operation aimed at detecting the members of organized criminal group.
While there are number of reasons for such situation, and it was recently announced that the misunderstanding is over, in practice, this contributes to uncertainty when it comes to predictability of law enforcement climate.
The Business Ombudsman Council
In discussion at hand, it is important to notice the establishment of non-enforcement institution – the Business Ombudsman Council (BOC).
Namely, Business Ombudsmen considers complaints on the alleged acts of corruption and other violations of legitimate interests of businesses by actions or omissions (including decisions) on the part of state (including law enforcement agencies).
Whilst the Business Ombudsman Council has no direct executive or enforcement powers, it is viewed as effective tool for business to protect and defend its interests. In particular, Business Ombudsman (i) prepares recommendations for state and municipal agencies and uses its authority to ensure they are properly implemented; (ii) communicates problems directly to the country's top executives (President, Prime Minister); (iii) can pass the case to law enforcement where relevant; (iv) prepares periodic reports on systemic problems that negatively affect business in Ukraine.
The BOC proved to be the effective mechanism for businesses seeking to gain support and resist ill-motivated criminal investigations. The Council devoted significant attention to problems in the law enforcement field and has signed memoranda on cooperation with a number of investigative authorities.
A great number of complaints filed with Business Ombudsman related to actions of tax police. And there is on-going discussion to terminate such agency and establish Financial Investigation Service in charge of economic crime investigation (such as tax evasion).
Reduction of undue burden during criminal investigations
Another visible trend in WCC sphere in Ukraine is the continuous attempts of the government to reduce level of pressure on business during the criminal investigation to avoid significant disruption of normal activities of businesses. Ukraine law enforcement agencies are notorious for excessive number of brutal searches, raids, and seizure in course of criminal investigation.
There have been number of attempts to civilize the procedure and reduce pressure via various memoranda of cooperation, public meetings of business and the agencies, internal instructions within the agencies, but none of them happen to be effective in practice.
After numerous ineffective attempts the long discussed amendments to the criminal procedural code aimed to assist business to resist against unlawful behavior of the law enforcement authorities were adopted in December 2017.
The changes aimed at protecting the rights of individuals during the searches introduce the following provisions:
- Conduct of search shall be recorded by sound and video recording equipment (which should be part of the search protocol). Actions and circumstances that were not recorded could not be included into the protocol and further used as evidence;
- Defence is also entitled to make video recording of the search;
- Persons whose place of residence or other property is searched have the right to involve attorney at any stage of the search;
- Evidence obtained during the search conducted without an attorney (i.e. the attorney was denied the right to participate in the search) are inadmissible;
- Evidence obtained in the course of the search are inadmissible if the ruling authorizing it was rendered in the absence of complete record of the hearing where search was authorized (as of January 1, 2019).
Apart from this, the Law prohibits temporary seizure of electronic information systems or their parts, mobile terminals of communication systems (e.g. computers, cell phones) unless it is: required for expert examination; obtained as a result of the criminal offence or constitute means or instruments of commitments of such offence; an owner or holder restricts the access to them or such access requires overcoming of system of logical protection.
New Supreme Court
In the course of judicial reform, the new Supreme Court of Ukraine was launched in December 2017 – this move, inter alia, included complete revamp of the High Specialized Court of Ukraine for Civil and Criminal Cases (the cassation instance for criminal cases), which now is the part of new Supreme Court of Ukraine.
While concerns were raised that the selection process was not transparent and fair enough to ensure the sufficient level of rotation of judiciary, in overall, the positive changes are still expected. Namely, one of the main tasks for this new institution is unification of court practice and affirming the spit of law, inter alia, by landmark decisions.
For example, recently one important case was referred for consideration of the Great Chamber of the Supreme Court to decide in a view of very different practice of lower courts – the case is related to right of investigator to request in the course of criminal proceedings from investigative judge to appoint an unplanned inspection of business by relevant state authorities, and subsequent possibility of appeal of such decision by the investigating judge.
New in anti-corruption compliance
Along with significant changes of law enforcement landscape and rise of enforcement (and especially anti-corruption enforcement), the notion of anti-corruption compliance has been introduced in local regulations.
In March 2017, the National Agency for Prevention of Corruption (NAPC), in furtherance of the requirements of the Law 'On Prevention of Corruption', introduced new minimum standard for compliance and anti-corruption efforts mandatory for large state-owned enterprises and participants of major public procurement.
The new standard introduces concepts and procedures corresponding to international benchmark of corporate compliance. It implies introduction of practices mundane for the international companies, but rather new for local business community: anti-corruption risks assessment; internal investigations; onboarding trainings; due diligence of counterparts; procedures on charitable and political contributions; and gifts and hospitality procedures.
Although these are very first steps and many concepts are yet alien for local businesses, however such new development may facilitate attempts of large international players (from those jurisdictions where rigorous international compliance programs are required) to implement more effectively their compliance programs in local branches and with local agents by refereeing to Ukrainian legislation in addition to explaining the overseas requirements.
In a nutshell, there are numerous ongoing reforms and initiatives in relation to legal framework and law enforcement aimed to increase quality of investigations, fight high level corruption, reduce pressure on business from law enforcement authorities, and enhance judicial system – long-term results of reforms are yet to be seen. Compliant businesses and citizens received access to set of tools enabling them to resist unfair treatment, however the progress is fragile and there are visible effort to counter, or at least undermine, a lot of positive developments.