Why Ukraine’s wartime anti-corruption quest gives ground for cautious optimism

Recent cases of Ukraine’s anti-corruption institutions against former top-ranking officials, such as ex-Naftogaz CEO Andriy Koboliev or ex-Minister of Infrastructure Volodymyr Omelian, have divided public opinion in Ukraine. While some pundits and lawyers have noticed signs of political persecution behind the cases above, others insist that anti-corruption institutions must be allowed to do their job without unnecessary pressure.

There is no doubt that to be genuinely effective, anti-corruption institutions must remain independent and unbiased. Ukraine is not an exception to this universal rule.

The architecture of the anti-corruption system

Ukraine’s specialized anti-corruption institutions were created less than a decade ago following the success of anti-governmental protests in 2014 (known as Euromaidan or the Revolution of Dignity) against the corrupt pro-Russian President of Ukraine, Viktor Yanukovych. After Yanukovych was ousted and fled to Russia, anti-corruption reforms began. The fight against corruption in Ukraine has never stopped despite the ongoing Russian invasion. The reforms of anti-corruption institutions in Ukraine continue simultaneously with the resistance of Ukrainians on the battlefield of the Russo-Ukrainian war.

According to the Law of Ukraine, “On Prevention of Corruption,” corruption is a criminal offense undertaken by officials that acquire illicit benefits or abuse power for one’s personal gain. Recognition of corruption as a problem inherent in all societies occurred internationally with the adoption of the UN Convention against Corruption in 2003. The Convention has been ratified by 180 states and signed by 140 countries. Ukraine ratified the Convention in 2006, and in 2010 it entered into force as a part of Ukrainian legislation.

In 2011, Ukraine joined the global initiative Open Government Partnership aimed at overcoming corruption, increasing transparency and accountability of the state apparatus, implementing e-governance, engaging active citizens in governance processes, etc. Within the framework of the Open Government Partnership initiative, Ukraine has implemented such successful projects as:

• Public funding of political parties
• A unified state web portal with free access to open data
• A unified web portal for the use of budgetary funds
• Electronic open-source government procurement system ProZorro
• Electronic petitions
• Implementation of Extractives Industries Transparency Initiative (EITI) standards
• Electronic declarations, which publicly disclose official’s incomes and assets via an open, directly accessible digital system
• Online service for verification of educational documents

However, for decades the fight against corruption in Ukraine has remained more of a catchy slogan used by political parties during election campaigns than an honest attempt to eradicate corruption as the biggest obstacle to economic growth and development of the country. The lack of independent anti-corruption institutions did not allow Ukraine to create an effective mechanism needed to prevent and fight against corruption among officials.

The situation changed dramatically after the success of anti-governmental protests in Ukraine in 2013-2014, known as Euromaidan or the Revolution of Dignity. The newly elected parliament and President of Ukraine Petro Poroshenko signed and ratified the European Union-Ukraine Association Agreement, which reignited and institutionalized the process of anti-corruption reforms in Ukraine.

A Ukrainian lawyer, former head of the legal department and deputy chief of staff of the Supreme Court of Ukraine, Mykola Khavroniuk is generally optimistic about the work of the anti-corruption institutions in Ukraine.

In his interview with Euromaidan Press, Khavroniuk noted that establishing independent anti-corruption institutions in Ukraine is a crucial step that helps track down corrupt practices and punish officials involved in corruption. On the other hand, Khavroniuk stressed the importance of solving problems that prevent Ukrainian anti-corruption institutions from doing their job more effectively.

“In general, I assess this process positively [establishment of independent anti-corruption institutions in Ukraine]. Without the National Anti-Corruption Bureau (NABU), Specialized Anti-Corruption Prosecutor’s Office (SAPO), and High Anti-Corruption Court (HACC), we would have been in a bad situation,” Khavroniuk said. “The fact that these three bodies have been created has allowed us to start a real fight against criminal corruption, and there is some success that we can be proud of. Before the HACC was created, cases against corrupt officials were stacked in other courts without consideration for months and years. Perhaps, such cases would have never been considered at all. I am very positive about the work of the NABU. In particular, the work related to developing strategic documents and verifying declarations. However, we have a problem with the Agency for Investigation and Management of Assets (ARMA). There is a long delay with the appointment of the ARMA’s head, which is no good. I also negatively assess the fact that SAPO has no proper autonomy.”

How can Ukraine make anti-corruption institutions more effective? Top lawyer explains

Furthermore, Khavroniuk negatively assesses the fact that Ukraine does not conduct audits of the National Anti-Corruption Bureau (NABU), Specialized Anti-Corruption Prosecutor’s Office (SAPO), and the National Agency of Corruption Prevention (NAZK). No law in Ukraine stipulates the audit of the SAPO. Although the audit of NABU and NAZK can be conducted according to Ukraine’s legislation, it has never been carried out.

In an interview with the Euromaidan Press, the head of the Ukrainian non-profit organization Together Against Corruption, Oksana Velychko, noted that the failure to organize transparent and independent work of anti-corruption institutions properly cripples the adequate performance of the entire anti-corruption system in Ukraine and remains one of the biggest challenges.

“If we talk about the National Agency of Corruption Prevention (NAZK), this body has been quite ineffective for a long time because of political appointments,” Velychko said. “The authorities strive to control the heads of anti-corruption institutions to weaken them as much as possible so that they don’t get too far ahead of themselves. That is why so much attention is paid to the selection procedures for these anti-corruption bodies.”

A newly appointed NABU head

The National Anti-Corruption Bureau of Ukraine (NABU) is a law enforcement agency investigating and preventing corruption among officials. It was created in 2014, following Ukraine’s Revolution of Dignity, as part of the country’s efforts to reform its law enforcement and judicial systems. NABU can investigate the activity of public officials at all levels, including high-ranking politicians and bureaucrats, and works closely with SAPO to prepare cases for prosecution. The bureau is an independent institution directly accountable to the Ukrainian Parliament.

Since its establishment, NABU has investigated numerous high-profile corruption cases, including those involving senior politicians and business figures. It has faced harsh criticism and attempts to undermine its work, including from powerful political forces. Still, it has generally been seen as a positive development in Ukraine’s efforts to fight corruption.

Overall, the establishment of NABU represents a significant step forward in Ukraine’s fight against corruption, but considerable challenges remain in ensuring its effectiveness and independence. Recently, Ukraine’s key anti-corruption institution finally got a chief after a long delay. On 6 March 2023, Ukraine’s government appointed Semen Kryvonos as Ukraine’s National Anti-Corruption Bureau (NABU) director. The government chose Kryvonos from three candidates proposed by an independent commission that evaluated applicants.

Ukraine’s key anticorruption body finally gets a chief; key watchdog is unhappy

Four out of five independent commission members voted for Semen Kryvonos as the new NABU head. Two other commission members, Karen Greenaway, and Oleksiy Savchuk, refused to vote, stating that none of the three shortlisted candidates was fully qualified for the job. The appointment of the NABU head was among the critical conditions of the European Union that Ukraine had to meet to start negotiations on EU membership. This appointment was the last step needed to complete new Ukraine’s anti-corruption institutions, which have already shown promising results by the first 100 verdicts of the High Anti-Corruption Court (HACC). Some of Ukraine’s anti-corruption watchdogs voiced cautions about possible links of the new NABU head with the President’s office of Ukraine.

Furthermore, the previous experience of a new NABU head has nothing to do with anti-corruption work, according to the Anti-Corruption Action Center. Kryvonos was the head of Ukraine’s State Inspection of Architecture and Urban Planning before the new appointment.

On top of that, Kryvonos was the subject of an anti-corruption investigation by journalists of the Sckhemy project (Radio Liberty).  Kryvonos was involved in two cases related to bribery worth $120,000: in one of the cases, he was a corruption whistleblower, while in the other, according to the investigation, he demanded a bribe. The second case was closed without further legal proceedings. Kryvonos was not found guilty.

Investigations against top-ranking officials

Recently, NABU has been entangled in several scandals related to high-profile cases against former and current top officials. In particular, the case against the former chief executive officer of Ukrainian largest national oil and gas company Naftogaz, Andriy Koboliev, has stirred heated debates in Ukraine.

On 19 January 2023, the NABU and the SAPO notified Andriy Koboliev of suspicion of embezzling more than UAH 229 million in 2018 (which Koboliev received as a bonus for the victory of Naftogaz over Russia’s gas monopolist Gazprom at the Gas Sales Arbitration in 2018).

The SAPO suspects Andriy Koboliev took possession of a much larger bonus for his work than is allowed by law. The SAPO asked the court to give a warrant for the arrest of Andriy Koboliev or set bail for him at UAH 365 million ($9.9 million).

Case against Ukraine’s ex-Naftogaz chief: political persecution or effective anti-corruption work?

Koboliev now faces seven to 12 years in prison. The NABU and the SAPO believe Koboliev illegally rewarded himself with an extraordinary bonus in 2018. According to the NABU’s investigation, Koboliev, contrary to the law, issued an order to bonus the company’s employees, based on which he was paid almost UAH 261 million (around $10 million) for winning the Gas Sales Arbitration. According to the Supervisory Board of Naftogaz decision, apart from Koboliev, 41 Naftogaz employees lawfully received a bonus for the Gas Sales Arbitration victory.

While the NABU and the SAPO believe Koboliev illegally rewarded himself with an extraordinary bonus in 2018, the ex-Naftogaz chief claims he did not reward himself and it was the Supervisory Board of Naftogaz that legally decided on the bonus. The NABU insists that the statutory amount of such bonus payments for Ukrainian officials could not exceed UAH 37.48 million, according to Ukraine’s legislation, namely resolution no. 859 of the Cabinet of Ministers (Ukraine’s government) regulating the size of bonuses.

According to Koboliev’s lawyer Oleksiy Nosov, the SAPO and NABU refer to the resolution on bonus restrictions that did not apply to the head of Naftogaz in 2018, at the time when the said bonuses were awarded to Koboliev. Oleksiy Nosov claims that the SAPO and NABU refer to the resolution on bonus restrictions that did not apply to the head of Naftogaz in 2018, at the time when the said bonuses were awarded to Koboliev. Therefore, the Supervisory Board of Naftogaz made the decision about bonuses in a legal way, according to Nosov.

“Koboliev did not issue bonuses to himself and only himself. This is an assumption of the investigation, not a legal construction. Koboliev, as the Chairman of the Board, was obliged to sign the documents, including the bonus order, to implement the decision of the Supervisory Board of Naftogaz. This is an immediate requirement of the company’s internal documents. The bonus order contains the names of forty-one people to whom the bonus, 1% of the total amount of the Gas Sales Arbitration victory in Stockholm, was distributed,” Oleksiy Nosov claimed in court.

Subsequently, Oleksiy Nosov provided the court with email correspondence between the Supervisory Board members to confirm that they had initiated the payment of bonuses to Andriy Koboliev and the other company employees. However, the court considers that the evidence and circumstances presented by the prosecution are sufficient for the investigation to continue.

“I often hear these words ‘The court will figure everything out.’ I do not think it is correct. Detectives of the NABU and SAPO had to figure everything out. That is what the anti-corruption institutions were created for in the first place,” Koboliev said in his interview with Radio NV. “Now I face an opportunity to spend some time in a detention center behind bars waiting for detectives to figure everything out. It should not be this way. Being inside this process, I have noticed that anti-corruption institutions afford to act in an old Soviet-style manner, which is not what justice looks like to me. I do not want to comment if the case against me has any political motivation behind it, but this case will definitely have political consequences,” Koboliev added.

The HACC left without consideration a new NABU and SAPO motion to extend the pre-trial investigation of Koboliev’s case.

Thus, the previous decision of the investigating judge of 12 April remains in force. On 14 April 2023, the NABU informed former Naftogaz CEO Andriy Koboliev and his defense lawyers that the investigation was completed.

Top Ukrainian officials resign in anti-corruption drive

Mykola Khavroniuk, a respected Ukrainian lawyer and former head of the legal department of the Supreme Court of Ukraine, told Euromaidan Press that it does not matter whether the case against Koboliev is politically motivated; what matters is the establishment of legal facts by the independent anti-corruption institutions.

“I can see that anti-corruption institutions are truly independent,” Khavroniuk said. “When we talk about judicial independence, one of the indicators is the percentage of acquittals. This is just one of the indicators, but it is vital. In the days of Yanukovych [the former President of Ukraine who was indicted for state treason and is currently in Russia, a fugitive from justice], we had a percentage of acquittals in all courts far less than one percent, around 0,250% of all cases. Now the High Anti-Corruption Court shows it can safely deliver such acquittals.”

Other cases of the NABU against former officials that took an active part in reforms in Ukraine include the indictment against former Minister of Infrastructure of Ukraine Andriy Pyvovarskyi (the case of abuse of office in 2015) and the case against former Infrastructure Minister Volodymyr Omelian. The Supreme Court acquitted Omelian in the case of budget losses and closed the case against him on 28 March 2023.

Persecuting effective managers, such as Pyvovarsky, Omelian, and Koboliev, with such groundless suspicions is unacceptable. It causes significant damage to the state as an employer for highly qualified people, Andriy Guck, a Ukrainian lawyer at Ante Law Firm, wrote on Facebook.

“The NABU once again shows its inability to understand which cases and circumstances are worthy of suspicion and which are just old political garbage that has not been cleaned up in time,” Andriy Guck said.

The Chairman of the Board of the Anti-Corruption Action Center and head of the Public Control Council at the National Anti-Corruption Bureau of Ukraine, Vitaliy Shabunin, welcomes the constructive criticism of NABU activities by the public. However, Shabunin sees no problem with the cases against Koboliev, Omelian, and Pyvovarskyi as well, saying that these cases are just three out of 1212 cases against officials NABU is working on.

Masi Naiem, a lawyer and former Ukraine’s Armed Forces soldier who was severely wounded in combat during the ongoing Russian invasion of Ukraine, disagreed with Vitaliy Shabunin. Naiem believes that Pyvovarskyi, Omelian, and Koboliev were not involved in any corrupt practices, and cases against them attack successful top managers who have benefited the country.

“These are cases against people who implemented real reforms. Moreover, both Pyvovarsky and Koboliev created problems for Russia with their reforms. Koboliev sued Gazprom for billions of dollars and won (for which he received an award), and Pyvovarskyi created competition for Russian ports,” Naiem wrote on Facebook.

Cautious optimism

The fight against corruption is a great challenge for Ukraine, as crucial as establishing effective and independent anti-corruption institutions. The fact that Ukraine is moving in the right direction by establishing an independent anti-corruption system is not denied by anyone: either those who criticize NABU, SAPO, and HACC for their activity or those who are satisfied with their work.

Nevertheless, much work is ahead to make anti-corruption institutions in Ukraine more effective. This work may require introducing some changes to the legislation in the future.

According to Mykola Khavroniuk, the selection process that helps to pick up the best candidate and appoint heads of anti-corruption institutions needs to be changed to become more transparent and effective.

“The selection process is not sufficiently regulated in advance. The procedure should be unified for everyone,” Khavroniuk said in his interview with Euromaidan Press. “Because we end up with a situation where we select, say, judges of the High Anti-Corruption Court by one procedure, members of the High Council of Justice of Ukraine by another procedure, members of the High Qualification Commission of Judges by a third procedure, the head of the Specialized Anti-Corruption Prosecutor’s Office by a fourth procedure, some other prosecutors by a fifth procedure, the head of the NABU by a sixth procedure, and the head of the State Bureau of Investigation by a seventh procedure. This is not right. There must be a single procedure. There may be certain peculiarities for judges and prosecutors, but generally, there should be a single procedure. And the participation of the foreign element, the participation of the public, and the participation of scholars should be equally proportional. All this should be clearly regulated.”

For Ukraine, the fight against corruption is not just about effective governance. It is about the self-preservation of the Ukrainian state per se. The damage that corruption has done to the institutions in Ukraine over the past decades weakens the country’s ability to defend itself against Russia’s armed aggression. Thus, fighting against corrupt practices is another essential front where victory is utterly vital for the Ukrainian people.

At the end of the day, the demand of Ukrainian society to tackle corrupt practices and steady public attention to the work of anti-corruption institutions gives reasons for cautious optimism.

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