Lana Sinichkina,
Arzinger Law firm, Kyiv, Ukraine
lana.sinichkina@arzinger.ua

Volodymyr Svintsitskyi,
Arzinger Law firm, Kyiv, Ukraine
​​​​​​​volodymyr.svintsitskyi@arzinger.ua

Anti-corruption remains a leading issue in Ukraine today. This is due to both strong public demand within the country to combat corruption, and demands from Ukraine’s international partners, such as the International Monetary Fund (IMF), Organisation of Economic Co-operation and Development (OECD) (within the framework of the Istanbul Anti-Corruption Action Plan), the United States, European Union, and others, for the country to tackle corruption.

This call to combat corruption is also attributed to Ukraine’s unsatisfactory performance in international rankings. For instance, according to Transparency International’s Corruption Perceptions Index, Ukraine attained 33 points out of 100 in 2020, placing the country 117th out of the 180 countries in the Index.^[1]

With intention to changing this state of affairs, the Ukrainian government has taken several difficult steps to create new institutions and bodies which should help combat corruption. Measures taken have included:

• creating a number of anti-corruption bodies – the National Anti-Corruption Bureau of Ukraine, the National Agency on Corruption Prevention, the Specialised Anti-Corruption Prosecutor’s Office, and the High Anti-Corruption Court of Ukraine;
• significantly updating Ukraine’s anti-corruption legislation; and
• holding open and transparent competitive procedures to fill top positions in some of the above bodies.

Whistleblowing

Key changes came into force at the start of 2020 to establish the institution of whistleblowing in Ukraine. At first the legislator considered the best existing practices, including Directive (EU) 2019/1937 of the European Parliament and of the Council On the protection of persons who report breaches of EU law, dated 23 October 2019. But this drew public criticism due to gaps and lack of regulation in terms of possible abuse and the inadequate protection of whistleblowers.

The problem was partially solved owing to repeated amendments to the legislation and the institution has already started working. In its current form, the new legislation creates three types of channels for reporting corruption:

• internal channels which are compulsory for government agencies and private companies participating in public procurement which exceeds the threshold of UAH20m (approximately US$760,000);
• regular channels which are created by the relevant government authorities; and
• external channels which include the media, NGOs, business or professional associations, among others.

At the same time, Ukrainian legislation does not restrict whistleblowers in how they use such channels or the number of channels which can be used, allowing whistleblowers to maintain their full anonymity.

In addition to the standard measures to protect whistleblowers and their families, such as security, anonymity, guarantees in the field of employment law, the legislator, guided by the example of the US, has provided the possibility of obtaining financial rewards for whistleblowers if a judgment of conviction is made based on the results of their report, and if the object of offence or damage to the state exceeds UAH12.4m (US$471,000). At the same time, the amount of the reward shall not exceed ten per cent of the amount of the offence or damage caused to the state, and is limited to UAH18m (US$684, 000).

Despite this impressive motivation, no whistleblower has yet obtained a reward in Ukraine. This is due to the requirement of a court decision having to be rendered, a significant amount of damage or the object of offence (a bribe, as a rule), as well as the lengthy proceedings.

Nevertheless, there is a first positive practice in place. According to the 2020 report of the National Agency on Corruption Prevention (NACP),^[2] the Agency has taken part in 70 court cases, and there have already been 15 positive court decisions on the protection of whistleblowers’ rights as well as five orders issued by the NACP to restore the employment rights of whistleblowers.

There have also been the first cases of corruption-reporting at the highest level. Oleg Polishchuk, a compliance officer at the Energoatom, an enterprise that generates more than 50 per cent of Ukraine’s electricity, reported a possible breach of anti-corruption laws by the head of Energoatom to the NACP. There have so far been no negative consequences for the head of Energoatom, and Polishchuk is defending his rights in the court. Polishchuk has already obtained a decision of the first instance in his favour, whereby his dismissal after reporting corruption was declared illegal and the court ordered his reinstatement with compensation. This case has become a stress test for the entire institution of whistleblowing and showed both its weaknesses and the possibility of real protection of the whistleblower’s interests.

However, due to lack of considerable practice, it is too early to comment on the full-fledged successful launch of this new institution. At the same time, the active development of legislation in this area, the high-level activity of potential whistleblowers (the NACP receives thousands of reports each year), as well as the first positive judicial practice, gives reason to believe this institution has prospects and that it may become an effective instrument in improving the business climate in Ukraine.

First practice of anti-corruption bodies

As mentioned above, a significant number of new government authorities and law-enforcement agencies have been created as part of ongoing anti-corruption reform. Nevertheless, only the quantity of relevant court decisions will show the real efficiency of the whole new anti-corruption system.

In order to guarantee independence and qualification of courts handling corruption cases with the involvement of high-ranked government officials, it was decided to establish the High Anti-Corruption Court of Ukraine. The Court was formed by transparent procedure with the involvement of independent international experts. As a result, the Court is headed by an independent judge enjoying a good reputation and support from the legal community. Moreover, several law-enforcement agencies responsible for conducting investigation in corruption cases (such as the National Anti-Corruption Bureau of Ukraine) and presenting the case in a criminal trial (the Specialised Anti-Corruption Prosecutor’s Office) were established.

Considering the significant duration of investigations and court proceedings as well as the short existence of the new bodies’ activity (eg, the work of the High Anti-Corruption Court of Ukraine was only launched as recently as September 2019), there is as yet no significant number of condemnatory judgments.

Nonetheless, the system is up and running and any government official can be held accountable for misconduct. By way of example, two decisions of the High Anti-Corruption Court sentenced two judges for nine^[3] and five^[4] years in prison respectively, with confiscation of assets for corruption crimes. Another representative case is the decision of the Court which sentenced a member of the Poltava Regional Council to four-and-a-half years in prison for attempting to bribe a police officer.^[5]

Furthermore, there has been significant upward trend in the workload of the High Anti-Corruption Court. In its first year, judges only passed 16 sentences; in its second, there were almost twice as many decisions (29), 12 of which have been made in the last three months.

Conclusion

Considering the creation of the new institutions and bodies, the first positive law-enforcement practice, ongoing anti-corruption reform, and an intention to relaunch the whole judicial system using the successful example of the High Anti-Corruption Court of Ukraine, we may conclude that landmark changes have already been made and that we may expect positive changes to Ukraine’s business climate in the near future. Of course, we recognise there is still a long way to go but believe that the continuous work of Ukrainian society, as well as support from our international partners will help Ukraine take its place among countries which have an established anti-corruption culture and to build a non-tolerance of corruption environment.