The law "On the Bureau of Economic Security" has been adopted; the new body should take over the function of combating economic crimes. Now, this is being conducted by the tax police, the Security Service of Ukraine (SBU), and the National Police, but in practice, this "struggle" is often reduced to pressure on the business. It is necessary to separately amend the Criminal and Criminal Procedure Codes, otherwise, everything will remain in the same places only with new, "reformed" signs.
Purposes for creation
For a long time, three law enforcement agencies have been investigating economic crimes in Ukraine: the SBU, the National Police, and the Tax Police. At the same time, they do not differ in high efficiency: the number of closed cases (including due to "lack of corpus delicti") is almost two times higher than the number of cases sent to court. Compensation for losses caused by crimes in the field of economic activity is no more than 25% of the amount of the damage itself. And to the defendants themselves, Themis often shows unprecedented favor.
"Here, for example, is the official statistics of the Office of the Attorney General on the article for tax evasion for 2019. Of the 1287 registered criminal proceedings, 263 were closed at the stage of pre-trial investigation. For the rest, the court managed to deliver only 18 sentences, of which three were based on an agreement on the admission of guilt and eight – acquittals," manager of Law Firm Winner Ihor Yasko notes.
According to the lawyer, not all open criminal proceedings have real grounds and evidence, and in the first place they are not pursuing work for the good of the state, but the opportunity to "get something" from the business. The expert adds that law enforcement officers can appear with an unexpected search or obtain a court decision to seize accounts for any reason: terrorist financing, fraud, tax evasion.
The scale of such operational activities is evidenced by other striking statistics. In 2019, 183 companies were arrested daily (almost 67,000 companies per year) and 200 searches were carried out (70,000 searches per year)! Without working capital and access to working technology, savings were melting before our eyes, the business was idle and was approaching collapse. It should be reminded that most of the criminal cases had to be closed due to the lack of corpus delicti or the fact of a crime, and businessmen even stated about "agreements with law enforcement officers."
"Despite the fact that the Department of Economic Protection in the National Police was liquidated under the pretext of reducing pressure on business [and the subsequent creation of the Financial Investigation Service, - Ed.], in fact, these powers were transferred to other departments, including the Department of Strategic Investigations. And the decriminalization of criminal liability for smuggling and the transfer of economic crimes to a specialized body forced the SBU to find a new approach to the "feeding trough": they enter customs under the guise of investigating corruption," says Major General of the Tax Police and Economist Yuriy Atamanyuk.
Of course, it is difficult to count on economic growth and investment attractiveness in such dense conditions. In order to ease the pressure on business and at the same time more effectively fight the shadow economy, it was decided to establish a new law enforcement agency that would replace the tax police and include units of the Ministry of Internal Affairs and the Security Service of Ukraine to combat economic crimes.
This has been discussed for 6 years now, and the parliament annually registers initiatives with different names for the new body. This is the Service/Bureau of Financial Investigations, the Financial Police, the National Bureau of Financial Security... The current president made such a promise during the election campaign. And this time the parliament moved from words to deeds the closest: on January 28, bill No. 3087-d was adopted in the second reading. And although the president has not yet signed it, and the law itself is a "framework," many opinion leaders presented it as a real victory and a turning point in the history of Ukraine.
However, experts assure: at the snap of the fingers, changes will not come and it is too early to celebrate the "change." It is necessary to carry out a reform of the SBU, which should liquidate the department for combating corruption and organized crime, amend the criminal and criminal procedure codes to determine jurisdiction (from last year this can only be done by a separate law, and not by transitional provisions), carefully monitor personnel appointments in the new body. However, more about the effectiveness of the new bureau later. First, let's talk about the nuances of the new organization.
Foundation of the new Bureau
The final version of the law is significantly different from the one that was adopted as a basis in the first reading last September. Initially, the Bureau of Economic Security was supposed to be a state law enforcement agency created and personally accountable to the president. However, the guarantor of the Constitution, following the letter of the same Basic Law, cannot have such powers, therefore, as a result, the BEB became the central body of executive power in the structure of the Cabinet of Ministers.
Which ministry will take over the leadership will be decided separately, but according to the idea, this task will be entrusted to the Ministry of Finance. At the same time, the main function of the new body should be not a law enforcement one, but an analytical one: the detectives of the Bureau will be guided in their work by the so-called "risk-oriented approach," which implies the identification of fraudulent schemes and preventive work with economic crimes, and not the fight against them. consequences after the fact. The law defines the general principles for the creation and functioning of the Bureau, preparing the "foundation" for the new body. At the same time, a number of its elements deserve special attention.
- Organization and staffing
The bureau consists of a central office and territorial subdivisions with a total boundary number of 4,000 employees. Prior to that, almost 10 thousand employees were involved in the investigation of crimes in the tax police, the Department of Economic Protection of the National Police, and subdivisions of counterintelligence protection of the interests of the state in the field of economic security of the SBU.
Taking into account the past deplorable experience with the re-certification of police officers who were reinstated in service through the courts, this time the law envisages a mandatory competition for filling vacancies. The new body will be able to start working after filling at least 30% of the state.
The future director of the Economic Security Bureau must go through the most careful selection, for which a separate commission is being created. It will include 3 members from the Cabinet of Ministers, 3 from the National Security and Defense Council, 2 from the tax committee of the Verkhovna Rada, 1 from the law enforcement. The commission will select the three most suitable candidates and submit them to the Prime Minister for consideration, after which, upon his proposal, the BEB Director will be appointed by the Cabinet of Ministers.
Despite such a number of figures and all kinds of combinations, the Ministry of Internal Affairs is already talking that Ihor Kupranets intends to take the post of director of the BEB: earlier he was the head of the Department of Economic Protection of the National Police.
- Tasks and working methods
These law enforcement officers will be able to conduct inquiries, operational search measures, pre-trial investigation, and search for persons hiding from responsibility. But along with this, their responsibilities are expanded by a significant amount of analytical work. So, having gained access to a variety of registers, they will have to identify tax evasion schemes, assess the potential level of losses, ways to eliminate them, and, based on the results, make proposals for making individual changes to regulatory legal acts. On the basis of all the data, they will create a Unified Information System of the Bureau of Economic Security of Ukraine.
- Control and transparency
The 15-member Public Control Council will monitor the results of the agency’s work. Among them, there should not be former law enforcement officers, deputies, politicians, and the competitive selection will be carried out in a rather exotic way for Ukraine, by way of rating Internet voting of citizens.
The BEB director annually prepares reports on the work of his department. If the government finds the results unsatisfactory, the Director of the Bureau will be forced to leave his post.
- Financing and wages
For the not yet created Bureau of Economic Security, 23 million USD was provided in the 2020 budget. Later, officials admitted that the unrealized item of expenditure allowed the funds to be redistributed to other areas, including bonuses to the offices of the Ministry of Finance. In the current budget, a little over 21 million USD has been allocated for the work of the Bureau of Economic Security.
In addition, financial and logistical support can be provided through international technical assistance. In general, this money is hardly enough for a couple of months of work, given the statutory payment rules.
Thus, the minimum salary for an employee with a special title (detective or analyst) is 20 living wages – 1600 USD, for civil servants and other employees of BEB - at least three official salaries (the minimum salary is 95 USD). In this case, the final amount of payment depends on the service life, rank, qualifications, work intensity.
- Further organizational work
After the law comes into force, the tax police will have to stop the operational-search activity, and all operational-search cases within three months either close or start a pre-trial investigation into the fact.
No matter how applauded the adoption of the law on the Bureau of Economic Security, the most important stage is its implementation. And here, as always, the devil is in the details, or rather, in the legislative changes that accompanied the creation of the Bureau of Economic Security, and by-laws that have yet to be developed.
The law on the Bureau of Economic Security introduced important amendments to the Law of Ukraine "On Combating Terrorism" and the Law of Ukraine "On the Security Service of Ukraine." Now, instead of the tax police, the Economic Security Bureau is entrusted with, among other things, the following functions: the implementation of the control and authorization procedure for the movement of goods (cargo) in the area of the anti-terrorist operation, the identification, analysis, and verification of financial transactions that may be related to the financing of terrorism.
Fight against corruption and organized criminal activity in the sphere of economic management was excluded from the tasks of the SBU, but the classical counterintelligence function of combating terrorism, including its financing, remained on this list. According to lawyers, in practice, this can create confusion in the delimitation of the areas of responsibility of the Bureau of Economic Security and SBU employees, which in no way contributes to the creation of a monopoly of the new body on investigating crimes in the economic sphere.
However, experts expect that a new "Department of Critical Infrastructure Protection" will deal with the investigation of economic crimes instead. This means that there is a possibility that the creation of a "single body for combating crime in the economic sphere" runs the risk of being a fiction: the signs in the SBU and the National Police change, but the powers remain. Thus, the Bureau of Economic Security, in fact, will only replace the tax police, which currently has about 4,500 employees – about the same as they plan to recruit in the Bureau.
In order to avoid such a scenario, the most important are the changes to the Criminal and Criminal Procedure Codes of Ukraine. Recently, under the dome of the Verkhovna Rada of Ukraine, they have already voted in the first reading for the corresponding bill No. 3959-1.
“Experts have already noted that this draft of amendments to legislation is not the best: there was another version of the draft. But for some reason this was adopted as a basis. Now we are studying it and preparing a number of amendments for the second reading because in its current form it is ineffective. It is necessary to expand the list of articles under investigation by the BEB in order to cover a greater number of crimes related to the sphere of economics, and for fraud to determine the limits of the financial loss at which the investigation can be carried out in the National Police and in the BEB. or fortune-tellers should remain the prerogative of the police," Oleg Hetman, a member of the Supervisory Board of the Ukrainian Business Council and an expert of the Economic Expert Platform, explains.
The norms of the draft law in its current version allow for different interpretations of the jurisdiction of crimes to different bodies. Thus, the deputies plan to supplement the Criminal Code with a new article 222-2 ("Fraud with value-added tax"), which should be investigated by the Bureau of Economic Security detectives. However, lawyers warn that the same actions can also be qualified under articles of fraud, embezzlement of property through abuse of office, forgery, official forgery (Articles 190, 191, 358, 366), which are being investigated by other law enforcement agencies.
The bill also specifies that the Bureau of Economic Security will be under investigation by Art. 21 of the Criminal Code, most of which were previously dealt with in the tax police: forgery of securities, bringing the bank to insolvency, illegal privatization, evasion of payment of ERUs, illegal circulation of excisable goods and others. However, the experts do not consider this list to be sufficient and exhaustive for the Bureau to investigate economic crimes only. The Ukrainian Business Council draws attention to certain articles concerning crimes against the environment and industrial safety, for which the police, for formal reasons, can initiate criminal prosecution and pressure on the business.