As the world reflects on Mikhail Gorbachev’s role in dissolving the Soviet Union, and Ukraine continues its fight for independence, Global Insight assesses the challenges the country and its leaders are facing to meet the requirements for EU accession.

Ukraine’s come a long way since claiming independence, as the Union of Soviet Satellite Republics abruptly fragmented in 1991. Mass protests, known as Euromaidan, were sparked in 2013 when the government suddenly decided not to sign the EU–Ukraine Association Agreement and instead pursue closer ties to Russia. The protests led to the ousting of President Viktor Yanukovych, kickstarting a national movement to tackle corruption head on.

Transparency International’s 2021 Corruption Perceptions Index ranked Ukraine 122nd out of 180 countries, making it the second most corrupt country in Europe – behind Russia of all countries at 136.

Ukraine filed its application for membership of the European Union only days after the Russian invasion. Less than four months later, on 23 June, the EU awarded Ukraine candidate status and urged the country to continue its roadmap to reform.

The enormity of the challenge ahead was thrown into sharp relief on 17 July by President Volodymyr Zelensky’s decision to fire the head of Ukraine’s security services (SBU), Ivan Bakanov, and the country’s prosecutor general, Iryna Venediktova, after it came to light that some members of their agencies had been collaborating with Russia.

The dismissals caused an international stir, particularly as Venediktova had garnered widespread praise for her role as a key driving force behind securing war crime prosecutions against Russian soldiers less than two months into the conflict.

Kostin has launched an internal investigation into the regional Prosecutors’ Offices in Ukraine’s occupied territories and expects the results in the coming weeks. To him, the need to identify those collaborating with the enemy has become of paramount importance as the war continues. ‘If such people work in law enforcement agencies or state authorities, this creates a high level of risk, not only for state security, but also to the security of our people’, he says.

One of Kostin’s first tasks was to appoint Oleksandr Klymenko as the new head of Ukraine’s Specialised Anti-Corruption Prosecutor's Office (SAPO). SAPO was one of the three main anti-corruption pillars established in Ukraine in the wake of the Euromaidan revolution following pressure from international partners, including the EU and the International Monetary Fund.

While the National Anti-Corruption Bureau of Ukraine (NABU) carries out anti-corruption investigations, SAPO oversees all of its cases and carries out prosecutions in parallel with the General Prosecutor’s Office. The High Anti-Corruption Court (HACC) was established in 2018 to adjudicate both NABU and SAPO cases. The independence of SAPO, NABU and the HACC has been a specific requirement of international partners since their inception.

The appointment of Klymenko – an experienced NABU detective who should not be confused with the sanctioned former Ukrainian finance minister of the same name – was a welcome move as the position had lain vacant since August 2020 when the previous incumbent resigned unexpectedly four months before the end of his five-year term. As SAPO head, Klymenko acts as Kostin’s deputy, but retains procedural autonomy from the Office of the Prosecutor General.

Kostin and Klymenko’s appointments have attracted some controversy though. Kostin, a private practice lawyer turned lawmaker from Zelensky's party and former head of the Legal Policy Committee of the Ukrainian Parliament – the Verkhovna Rada – was widely regarded as one of the original frontrunners for the role of SAPO head before international members of the selection commission vetoed his candidacy. Kostin denies reports that he was the ‘preferred candidate’ for SAPO head but concedes that the SAPO selection process had ‘a lot of internal shortcomings’.

Klymenko, meanwhile, was reportedly favoured by Western experts for the role of SAPO head from December 2021, but his appointment was blocked by members of the panel who demanded he underwent a second background check.

Kos says the whole mood surrounding the delayed SAPO appointment process altered overnight. ‘This changed quickly after Ukraine got the chance to become the candidate for the European Union’, he says. ‘It was obvious that somebody told the representatives from Rada that they should stop obstructing the process and that we should appoint a winner. We did it very easily afterwards.’

Kostin refrains from commenting directly on the timing or circumstances surrounding Klymenko’s appointment but says filling the SAPO vacancy was one of his first priorities. ‘I understand that this selection process was finished and there is a winner of the selection process and I immediately appointed him when I started my office’, he says. ‘The SAPO has procedural autonomy and of course there is a system of balances between SAPO and the Prosecutor General. Each of us plays a specific role.’

He says he was ready to work alongside Klymenko from the outset. ‘After meetings with the new head of SAPO and analysing the [unit’s] workload, he asked me to open new vacancies. I agreed and ordered the opening of nine more vacancies for prosecutors of SAPO, which are the first since 2015 when it was created.’

It’s been widely acknowledged that the lack of a permanent SAPO head has significantly hampered Ukraine’s capacity to fight corruption in recent years. In this sense, these latest appointments could reflect favourably on the country’s drive to tackle corruption during wartime, according to Vadim Medvedev, a partner in Avellum’s tax and litigation practices.

‘They’re a positive signal towards further improvement of the anti-corruption authorities and improvements in the system in general’, says Medvedev. ‘After a long time and a complicated process, Mr Klymenko was appointed as head of SAPO. He’s a former detective from NABU, so he has quite a strong experience of working on those cases on the investigation side and I understand he received quite positive feedback from foreign partners who were involved in the selection process. This was a strong message that anti-corruption prosecution will continue operating properly.’

Despite frustrations that emerged during the process, Kateryna Gupalo, Head of White-Collar Crime and Tax and Customs Litigation practices at Arzinger in Kyiv and Vice-Chair of the IBA Business Crime Committee, agrees these appointments bode well for the country’s capacity to fight corruption. ‘We had this long process and civil society, along with international partners, was pushing hard in respect of appointing the head of the SAPO’, she says. ‘Both NABU and SAPO used to have troubles with the government because it was trying to push on them, but they showed resilience and they showed themselves as independent players.’

Kos, who is now working on helping NABU select its new director, says the issues he experienced during the SAPO selection process have only made him more determined to help Ukraine’s anti-corruption efforts. ‘Without fighting corruption, there is no future for Ukraine’, he says. ‘It’s a pity because I’ve seen […] not only in the anti-corruption area, but also generally in Ukraine, so many good public officials, investigators and prosecutors, so everything is there. Now we need a good head of NABU too. The people of Ukraine deserve that all the international community assist them as much as possible, not only in the war against Russia, but also in the war against corruption. I will continue to do that. Retreat is not an option.’

A NABU spokesperson told Global Insight that the new director would be appointed by the Cabinet of Ministers following the outcome of a competitive selection process. ‘The Bureau expects such competition to be transparent and take place as soon as possible. Meanwhile, NABU continues to fight corruption.’

Kostin, who has been quick to prioritise investigating and prosecuting cases of elite corruption, treason and acts of collaboration alongside his Office’s ongoing efforts to investigate and prosecute war crimes, says moves to beef up the capacity of Ukraine’s anti-corruption institutions will be critical to the country’s future. He hopes the selection process for SAPO prosecutors – which will be overseen directly by Klymenko – will be as ‘open’ as possible and will be concluded by the end of 2022. ‘This will give them more opportunity and more capacity to work more effectively’, he says. ‘It's a good sign that we have the same aim, the same goal and that they are doing their job.’

A united front

Certainly, there are strong indications that the country is presenting a united front to tackle these issues, says Serhiy Derkach, Head of the Corruption Prevention and Detection Department at the National Agency on Corruption Prevention of Ukraine (NACP), which was established in 2015 to address anti-corruption policy in Ukraine and provide oversight of public officials.

‘Fortunately, now we have the anti-corruption prosecutor’, says Derkach. ‘A large number of SAPO prosecutors are not prosecuting cases – they went to the frontline and are fighting in the military forces right now. We believe that now, as some of the hardest periods of war have passed, we can [take] some steps for returning them to their usual work, as there are no other people that can replace them in ensuring the proper justice for those who try to steal public funds despite the war.’

The NACP plays a vital role in assessing corruption risks, proposing mitigation actions and pushing public institutions to enact them. As well as scrutinising laws passing through the Rada, the agency has been tasked with preparing the National Anti-Corruption Programme, which sets out specific activities and key performance indicators for each government body to implement as part of the government’s National Anti-Corruption Strategy until 2025.

Holding public officials to account, analysing political party reporting and identifying potential conflicts of interests is another key part of the NACP’s mandate. Since 2020, the agency has identified violations in the reporting of three out of five political parties represented in the Rada – a significant finding given that all parties receive money from the state budget.

Prior to the war, Derkach and his team were responsible for managing the country’s online, publicly accessible asset declarations register, which was widely considered one of the cornerstones of Ukraine’s recent anti-corruption reforms. Providing false declarations was punishable by penalties and even imprisonment in the most serious of cases.

Reporting has continued since the invasion but is no longer mandatory. For security reasons, any reporting that is submitted is no longer published on government websites or made accessible to the public.

These changes have raised some concerns among civil society groups, says Medvedev. ‘Ukrainian and international NGOs proved an important role in reviewing different appointments and activities for the different public servants’, he says. ‘They have less ability to do that now without being able to access up-to-date information regarding the financial position of these people. But on the balance of the need to protect the country during the massive invasion and public interest in ensuring the integrity and proper conduct of public servants, I would say that it is reasonable to restrict this information for now.’

Despite the war, many, including Derkach, believe the announcement of Ukraine’s EU candidacy has served to highlight the need for greater scrutiny of Ukrainian public officials. ‘We believe that now it is time to restore the verification of public officials’ declarations, as it is the right thing to do on Ukraine’s path to full EU membership’, he says.

Medvedev says the war has emphasised the significant challenges of public data management and the use of personal data facing Ukraine. ‘It will be interesting [to see] what decision Ukraine will have to take after the war, because many of the information systems in Ukraine rely on administration of various domestic aspects proved to be a huge source of intelligence for Russia’, he says. ‘Probably Ukraine will have to rethink the way it collects information regarding individuals and businesses because the Russian threat is not likely to go away completely.’

Rebuilding Ukraine

As Ukraine expects to receive billions of pounds in international aid to help its post-war recovery, there are widespread concerns as to how the country will navigate the corruption risks associated with the reconstruction process. ‘Clearly research shows that countries where there is a high level of corruption and where there is a lack of political will to fight corruption, if you pour the money into such countries, corruption will simply explode’, says Kos. ‘This will not just be an explosion of a small bomb, this will be a nuclear explosion, because so much money will get into the country. We need to be careful in designing the reconstruction process in a way that fighting corruption and fraud and waste and abuse is equally as important as effectively and efficiently rebuilding the country.’

The huge array of corruption risks – from the transportation of humanitarian aid to taxation and distribution – is staggering. As Ukraine continues to fight war on the frontline, the country is grappling with how to manage both international donations and money from the state budget in a transparent and methodical way. ‘Especially for the huge amount of money, which is coming from international donors, there might be reconstruction funds created under the EU and the US and other countries’, says Derkach. ‘So there’s also significant corruption risk there because there are no specific policies in Ukraine to ensure all the procedures will be transparent and accountable. Our role is to look at all these procedures and to make sure that everything is set in the right direction and then do monitoring in the area.’

In April, the government established a National Council for Recovery of Ukraine to put together a comprehensive reconstruction plan for different parts of the economy and to support and compensate those who have lost homes, businesses and livelihoods. The plan, which the government estimates could cost up to $750bn, was discussed in July with international partners during the Ukraine Recovery Conference (URC2022) held in Lugano, Switzerland.

Tetyana Korotka, Ukraine’s Deputy Business Ombudsman, attended the URC2022 and says the plan was a major talking point, but warns there are still many areas that require clarification. What was apparent, she stresses, was the solidarity shown by the international community to help get Ukraine back on the road to recovery. ‘In Lugano, after all those awful months it was absolutely clear how much international society supports Ukraine.’

As with many countries, corruption has eroded public trust in state institutions in Ukraine. However, Korotka says there’s also an important role for businesses to play in mitigating potential opportunities for corruption as the country embarks upon its recovery plan. ‘The presentation of the Ukraine Recovery Plan is of great interest to different stakeholders’, she says. ‘However, some questions about the details of further activities and stakeholders' coordination remain to be answered in the future. It is very important to provide proper stakeholders coordination and prevent abuse during the plan’s implementation phase. The Business Ombudsman Council is one of the bodies that can contribute to the architecture of recovery.’

Derkach says it’s vital the recovery process is managed properly. ‘It's not only to reconstruct, it’s to build better’, he says. ‘It is going to encompass not only plans for the recovery and what we lost, but for reforms as well.’

He says further work does need to be done though, particularly in the areas of damage and loss assessment of assets, where currently there is no established methodology. ‘Even if a building wasn't damaged fully, if it's reported that it's fully damaged the municipality receives the money for the reconstruction and uses it in its own way and that can lead to corruption risks with the public procurement’, he says. ‘Or take the example of a factory that has never been working before the war – now it is suddenly claimed to be damaged because of the war and, thus, to be reconstructed.’

Reputation and reform

Beyond the war, Derkach says now is a key time for the country to assess anti-corruption efforts and secure its future. ‘Now, what we are trying to do is stocktaking and to look at the system that was set in 2015: how it works, what doesn’t work and how we can enhance it so that far a greater number of entities follow the path of transparency and accountability and their officials set good tone at the top’, he says.

Prior to working at the NACP, Derkach worked as a project manager at the EU Anti-Corruption Initiative, the EU’s largest programme to support the fight against corruption in Ukraine. He says Ukraine’s recent reforms are a strong sign of what is to come. ‘I’ve visited lots of anti-corruption institutions and […] can say that the agencies in Ukraine provide really good examples of very comprehensive legislation in some sectors and very good IT tools, such as the asset declaration register’, he says. ‘We are also creating [a] unique whistleblowing portal where every citizen in Ukraine will be able to report corruption in a fast and efficient way.’

Sinichkina says such moves indicate how far Ukraine’s anti-corruption efforts have come. ‘Today, society itself in Ukraine is not tolerating corruption’, she says. ‘This is the main prerequisite for fighting corruption in any country, because if society is tolerant, then you can’t do anything. In Ukraine, it’s vice versa and it’s become shameful to be somehow connected to corruption. We have done a lot in comparison to ten years ago and the anti-corruption strategy is treated quite seriously in Ukraine.’

As Ukraine’s EU candidacy hinges on anti-corruption reforms, Gupalo says the country will have to work even harder to prove it means business. ‘Unfortunately, one of the messages that has been very widespread is about Ukraine being a failed state and very corrupt state’, she says. ‘To break through this image, we need to invest a lot of time and efforts in anti-corruption issues to show that we are willing to deal with it and we are willing to fight corruption.’

Irina Paliashvili, founder of the Washington-based RULG-Ukrainian Legal Group, sits on the IBA’s Section on Public and Professional Interest Council and Senior Lawyers’ Committee Advisory Boards. She says Ukraine has already made great strides. ‘The falsehood of this narrative and the strength of Ukraine’s democratic institutions and anti-corruption efforts became more than evident since the beginning of the full-scale war Russia waged against Ukraine more than six months ago.’

Both Gupalo and Paliashvili are members of a new task force established by the IBA Anti-Corruption Committee which will focus on anti-corruption efforts in Ukraine. Paliashvili says international support will be crucial for Ukraine’s reform, (see box: IBA task force to help Ukraine build back better). ‘Ukraine has much more work to do on the anti-corruption front, and Ukrainian civil society, legal and business communities and media do not refrain from sharp criticism and demands to do more’, she says. ‘To this end the advice of the international legal community, such as the Ukraine Task Force of the International Bar Association’s Anti-Corruption Committee, donors, international finance institutions and non-governmental organisations, continue to play a most valuable role.’

Likarchuk says many of the much-needed reforms – such as eradicating judicial corruption – will not happen overnight and require both time and investment. ‘On the one hand, we have thousands, maybe millions of people fighting Russia on the frontline and millions trying to do something to help support the Ukrainian economy, but we also have judges who are dragging us behind’, he says. ‘Unfortunately, it will take a lot of time and effort to have this system cleaned up. We need to improve the quality of judges and of the judiciary and need to replace around 80 per cent of judges. That’s a huge challenge, especially during wartime.’

At the time of the invasion, Ukraine was on the cusp of finalising plans for widespread judicial reforms. As the war continues, it’s unclear how or when such reforms can and will be implemented. However, the two recent appointments of Roman Maselko – a well-known anti-corruption crusader – and lawyer and academic Mykola Moroz to the High Council of Justice (HCJ) – which appoints, dismisses and disciplines judges – provide considerable grounds for optimism, says Medvedev. ‘We do hope that they will also influence the process and influence the workings of the HCJ in terms of how they look into cases’, he says.

As Ukraine faces an uncertain future, Korotka says the country’s approval as an EU candidate will motivate the country to keep pushing for even more reforms. ‘We are not naive people, that tomorrow we will be a member of the European Union and we should stop doing reforms or developing our society – of course not’, she says. ‘But this is a clear signal that international society accepts us as part of their family. You can’t imagine how difficult it is to live and to continue the reforms while being between two worlds. You see there is the Russian Federation and a Russian world on the one side and the European Union with a high wall for us [to climb] from the other side. We have definitely demonstrated that we would like to change society. We would like to be respected members of international society and we are able to be good neighbours.’

Ruth Green is the IBA Multimedia Journalist and can be contacted at ruth.green@int-bar.org