Business sees no results of reforms: Corruption in Ukraine returned to the level of 2014

Author : Olena Holubeva

Source : 112 Ukraine

The Ukrainian representation of the American Chamber of Commerce presented disappointing results of the annual survey on perceptions of the level of corruption in Ukraine. Its results are especially relevant against the backdrop of the severe criticism of the Ukrainian authorities by those international partners dissatisfied with the level of the fight against this phenomenon. The presented survey results can further exacerbate discontent: as the ACC assures, in terms of the number of corruption manifestations, our country has already sunk to the level demonstrated before Dignity Revolution, and the optimism about possible improvements in large business has diminished noticeably.
22:19, 31 January 2018

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The topic of corruption is one of the most acute problems, without mentioning which there has not been a single meeting of Ukrainian officials with foreign partners and donors. Back in 2015, speaking in the Ukrainian parliament, then-Vice President of the US Joe Biden spoke about the importance of defeating corruption, which devours Ukraine "like cancer", takes away resources from the people and does not allow the development of the economy. Biden stressed that there is not a single democracy in the world where the cancerous corruption booms as it does in Ukraine. Three years ago, Biden called for "carrying out the necessary judicial reforms so that certain individuals could be brought to justice." The president of Ukraine, Petro Poroshenko, was also urged to fight corruption and improve the business climate in the country by former US President Barack Obama, who was replaced in the President's chair by Donald Trump.

Authoritative foreign media have repeatedly written that Western partners can deprive Ukraine of financial support precisely because of the lack of action to overcome corruption. The culmination of frustration in the ability of Ukrainian authorities to cope with the problem of corruption was Biden's recent speech at the Council on Foreign Relations of the United States.

Biden stated: corruption in Ukraine remains the greatest problem. The former vice-president even recommended to Trump administration officials to carefully record what Ukrainians say and what Ukrainians do not say, and also check how they fulfill their promises. Speaking about the efforts of the Ukrainian authorities, in particular President Poroshenko, regarding the solution of the problem, Biden noted that "some very important, necessary institutional and personnel changes" were carried out. " At the same time, he lamented that one of the three necessary institutions - the Anti-Corruption Court - is receding into the background.

Sharp speech of Biden was "blocked" by Ukrainian authorities in the information space with another "victory" - the president found a common language with the director of the IMF Christine Lagarde. Allegedly the IMF is satisfied with the anti-corruption changes in Ukraine and is ready to allocate the next tranche of financial assistance.

What the business says about corruption

The announcement by the American Chamber of Commerce of results of the annual survey on perceptions of the level of corruption in Ukraine against this background looked particularly significant. The Chamber conducts the survey annually (starting from 2014) in order to track the dynamics of changes in relation to the problem after the Revolution of Dignity. The number of respondents who took part in the current survey was the largest for all years of interviewing - 184 subjects, 80% of which were international companies. The results of the survey can be really called the voice of a large international business, said Igor Svetlik, head of the working group of the American Chamber of Commerce for Combating Corruption.

"Our mission is to be the voice of business, and the American Chamber of Commerce communicates this voice to state authorities and journalists. This is indeed a clear message from the business: 89% (according to the results of the survey - ed.) consider priority number one – the improving of business environment in Ukraine and overcoming corruption," said the president of the American Chamber of Commerce in Ukraine, Andriy Gunder.

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Businesses, which representatives took part in the survey

The fight against corruption was called the highest priority task of Ukraine in 2015 by 80% of the respondents. In 2016, this indicator increased to 87%, in 2017 - to 89%.

The American Chamber of Commerce also clarified that among the 184 respondents who participated in the survey, 81% were representatives of companies with more than 100 employees, and 49% - were the top managers. And if the number of respondents who gave an answer to the question "Do you consider corruption practices common in Ukraine?" decreased from 99% in 2014 to 96% in 2017, the number of those who responded positively to the question "Did you have to deal with corruption during the activity?" fell to 91% in 2014. Note that in 2015 this indicator decreased to 88%, and in 2016 - to 81%. And now it is growing again.

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"In the first years after the Revolution, many officials were simply afraid, and in certain situations they did not do what they are doing right now, but now there is a situation that can be compared with the aggravation of the illness. Now none of the officials feel safe. Whoever remains in their posts is difficult to predict based on the level of confidence in the authorities. Many judges already understand that they will not pass the contest. We now have such cases, which were unbelievable before the Revolution of dignity. Even the judges themselves are shocked by what happens in the judicial branch of power, "said Artem Sytnyk, director of the National Anti-Corruption Bureau of Ukraine.

It should be noted that according to the ACC survey, 38% in 2017 called Anti-Corruption Bureau "anti-corruption champion."

At the same time, it should be noted that against the backdrop of the growing number of those who faced corruption in Ukraine, the most widespread phenomena of corruption are observed to decline. Thus, the survey participants singled out a bribe demand (68% of respondents in 2016 and 67% in 2017), abuse of office (70% and 68% respectively), bribery for stopping illegal prosecution (41% and 45% - law enforcement officers, despite all the reforms, demonstrate growth in corruption), the requirement to partner with an affiliated company (29% and 25%), the requirement to donate funds for alleged charity (18% in 2016 and 2017), the requirement of donations for sponsorship (5% and 7%), also the requirement of "kickbacks" if he wins the tender (35% and 27%). Among the most corrupt government institutions surveyed identified local authorities (42% in 2016, 34% in 2017), central authorities (31% and 30%), tax and customs authorities (56% and 54%), courts (74% and 71%), the prosecutor's office (49% and 30%), the police (5% and 6%). Security Service in 2017 as a corrupt organ was noted by 19% of respondents. In 2016, the service was not included in the survey.

The statistics of answers to the question "Does your company have a successful example of cooperation with anti-corruption bodies after reporting corruption?" looks disappointing. In comparison with 2017, it decreased by 3% - from 18% to 15%. At the same time, the number of respondents who responded positively to the question "Does the company have experience of real punishment applied to the person who committed the corruption offense?" (the verdict of the court, - Ed.) was even less - only 7% in 2017. For comparison: in 2016 10% of respondents answered positively, and only 2% in 2014.

Also, the number of respondents optimistic about improvements in the situation with the anti-corruption policy in the country decreased. If in 2015 their number reached 51%, then in 2016 the amount of optimists fell to 47%. In 2017, the number of optimists became even smaller - only 42%.

Why is everything so bad? The version of the Anti-Corruption Bureau Director

It is the absence of examples of a real punishment for corruption crimes that is one of the most important problems, notes the head of the Anti-Corruption Bureau Artem Sytnyk, as well as representatives of the American Chamber of Commerce.

"Those cases that have already been submitted to the court are cases we have not seen in Ukraine before. I have worked in the law enforcement since 2001, graduated from the academy, I do not remember that. The fact that we generally showed that it is possible to detain top official, and such cases have reached the court – is a big step forward. On the other hand, the court shows in such cases the real inconsistency with regard to bringing cases to the end, "complains Sytnyk.

At the same time, according to him, courts in Ukraine are not always effective. As an example, he cited the case of the State Fiscal Service ex-head Roman Nasirov. "This movie was watched by the whole planet, and this did not add any credibility," Sytnyk said and described how, by using loopholes in the legislation, Nasirov's defense is working on the case. "The indictment to the head of the fiscal service consists of more than 700 pages. The meetings are held once a month. The prosecutor has the physical ability to read aloud only 30 pages a day. The banal mathematical calculation shows that this case can be considered for years. Nobody needs these meetings, all this is done in order to delay the punishment as much as possible, "said Sytnyk, whose department is also criticized for its low efficiency in fight against corruption.

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The director of Anti-Corruption Bureau also pointed out that the high workload of judges does not contribute to the promotion of anti-corruption cases in court. "In Kyiv courts, they (the judges, - ed.) have 700-800 cases, and it's very difficult to demand efficiency from them." He also mentioned political pressure. "A court hearing of the former people's deputy case: 18 members of parliament from his faction and three acting ministers came to court, and if the presence of members of parliament seems to me not so terrible, then the presence of acting ministers during working hours in court sessions ...", complained Sytnyk.

The director noted that "hundreds of cases without a final decision of the courts" are the reason for 99% of the criticisms that sounded against anti-corruption bodies in Ukraine. Mainly, according to Artem Sytnyk, the creation of the Anti-Corruption Court could significantly improve the situation, as also top officials from the US and the IMF say. The American Chamber of Commerce noted that this is seen as a way out of the current situation with corruption and business.

An anti-corruption court is needed, but only an independent one

Igor Svetlik says that during the survey they offer to the business to answer a new question: "What is the step (action) that could help in overcoming corruption in Ukraine." "It was an open question and the business could offer its options, the first place was the creation of the Anti-Corruption Court, not just creation, but the respondents stressed that it should be a transparent institution formed on the basis of an open competition that will be controlled by the public," he said.

The head of the working group on anti-corruption issues of the American Chamber of Commerce noted that the Anti-Corruption Court "figured in almost all the comments to each issue, was reflected in each slide, was a red line." "We can say with confidence that business shares the mood of non-governmental organizations, society, that we need the Anti-Corruption Court and it will help in achieving significant progress in overcoming corruption," Svetlik stressed.

The majority of the respondents associate the creation of the Anti-Corruption Court with the appearance of real sentences to persons guilty of corruption crimes. As you know, the establishment of the court is also one of the main ultimatums of the IMF, on granting Ukraine the next tranche.

Participants of the poll of the American Chamber of Commerce as measures to overcome corruption also noted the real prosecution of intruders and judicial reform. There were also options: strengthening political will, increasing responsibility for corruption crimes, training of society, business and officials of zero tolerance for corruption crimes, replacing corrupt officials on posts. Note that as the reasons for the lack of results in the fight against corruption, most participants in the survey called precisely the lack of political will. In 2015, the number of respondents who chose this option was 48%, and already in 2017 reached 54% (in 2016, there were 63%). The respondents also called resistance of state bodies to reforms, lack of proper investigation and punishment of corrupt officials. In 2017, part of those who considered resistance to the fight against the courts to be an obstacle in the fight against corruption (16% in 2016 and 22% in 2017) increased.

It should be noted that on December 22, 2017, the draft law "On the High Anticorruption Court" was registered in the Verkhovna Rada. "It's good that the draft law exists and it was introduced by an authorized entity," said Sytnyk, adding that "there is a separate discussion about who has the right to make it." The document should be submitted by the president, and it is the presidential bill that we now have in parliament. Also, there are statements of key political players that they are going to consider this document very quickly, the head of the NABU emphasized.

But, according to him, the document is not so simple. "There are a number of norms in this bill that could put the creation of this institution at risk," said Artem Sytnyk.

As the most controversial issues related to the current version of the draft law on the Anti-Corruption Court, the director bureau has singled out the issue of appointing judges to the Anti-Corruption Court. "Even now there are opinions about the infringement on sovereignty and that foreign experts will decide on certain candidates," said Sytnyk, recalling that foreign representatives were, in particular, in the jury of the competitions for the heads of the Anti-Corruption Bureau. "And the competitions were not accompanied by statements that this is an infringement on state sovereignty," says the head of the NABU. He said that, in his opinion, the body which will be authorized to take decisions regarding the candidatures of judges of the Anti-Corruption Court should not consist solely of Ukrainian officials.

Sytnyk also criticized the norm of the draft law on the competence of Anti-Corruption Court to review cases in the sphere of drug trafficking violations. "These cases are not always connected with corruption, and we see that there are risks of just a certain spam regarding the court. When the college will have approximately 5-6 cases, it's normal, they can move at a normal pace, and if they will have drug cases I do not see the point in this. I think that the prerequisites are laid for the court to fill up with cases (not directly related to corruption, - Ed.), so that it cannot move quickly with cases (related to corruption, - Ed.) ", Sytnyk said, noting that in the normal regime, cases should not be considered by the court for more than two weeks.

Also, according to him, the fact that the number of judges in the text of the document is not recorded, causes concern, whereas, for example, the number of employees of the anti-corruption bureau was recorded in the law. "We counted (based on the burden that we give to the courts, based on the complexity of the cases) that we need to create about 11 colleges, that is, we can meet the number of 80 judges. If there will be an opportunity to regulate the number of judges in manual mode, the threat of reducing the staff of the court, in order to stop certain investigations remains, "Sytnyk said.

It should be noted that despite the fact that the bill is already in the parliament, the main Ukrainian anti-corruption officials do not have optimism regarding the timing of its adoption. In particular, Anti-Corruption Prosecutor’s Office head Nazar Kholodnytsky has already doubted that "Anticorruption court will start working in 2018".

Corruption continues to destroy Ukrainian economy and business environment. If in 2016 only 13% of those polled by the American Chamber of Commerce said that corruption is the reason why partners from other jurisdictions refuse to work in Ukraine, then in 2017 the figure increased to 17%. The number of those who called corruption the reason for the refusal of foreign parent companies to develop business in our country increased from 19% to 22%. Also, corruption contributed to the fact that companies were forced to spend more money on legal services, Svetlik said. According to the representative of the American Chamber of Commerce, corruption is a serious deterrent for investment. Because of corruption, Ukraine loses about 2% of economic growth annually, calculated IMF.

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