Ukraine Adopts New Anti-corruption Laws

Asters, Kyiv, Ukraine,
Mon, Nov 17, 2014

• The Law of Ukraine "On the Fundamentals of Anticorruption Policy in Ukraine (Anti-Corruption Strategy) to Be Effective within 2014-2017";
• The Law of Ukraine "On the National Anticorruption Bureau of Ukraine";
• The Law of Ukraine "On Prevention of Corruption"; and
• The Law of Ukraine "On Amendments to Certain Legislative Acts with Respect to Determination of Ultimate Beneficiaries of Legal Entities and Public Officials".

The Law of Ukraine "On the Fundamentals of Anticorruption Policy in Ukraine (Anti-Corruption Strategy) to Be Effective within 2014-2017" sets priority measures aimed at reducing the level of corruption in Ukraine and forming a fundamental framework for further anti-corruption reforms. Among these are:

1. Forming and implementing state anti-corruption policy, including (but not limited to):
   • establishing a special independent state anti-corruption authority;
   • controlling compliance with the conflict of interest rules; and
   • increasing participation of the public in the fight against corruption.
2. Preventing corruption, including (but not limited to):
   • establishing transparent funding of political parties and their activities;
   • adopting a comprehensive legal framework for political lobbying;
   • rolling out effective anti-corruption programs by central executive authorities and state-owned enterprises;
   • reducing corruption within public procurement via reforming the laws that regulate public procurement and increasing the public procurement transparency;
   • reducing corruption within the judicial system of Ukraine; and
   • putting into place rules on disclosure of the ultimate beneficiaries during registration of legal entities.
3. Punishing corruption, including (but not limited to):
   • establishing an independent agency to deal with corruption among top-level officials.
4. Promoting public intolerance to corruption.
5. Evaluating anti-corruption strategy effectiveness, including (but not limited to):
   • conducting annual extensive statistical surveys and analyses in relation to effectiveness of adopted anti-corruption legislation;
   • determining the level of implementation of international standards in the field of anti-corruption policy; and
   • preparing by a special body of annual national report on the implementation of anti-corruption policy principles.

The other three newly adopted laws to certain extent implement the provisions of the aforesaid Anti-Corruption Strategy. Namely, the Law of Ukraine "On the National Anti-Corruption Bureau of Ukraine" sets up a special state law-enforcement office aimed at fighting corruption among top-level officials. The National Anti-Corruption Bureau (the ACB) will be responsible for conducting pre-trial investigation of corruption cases, examine suspects for decency and identify funds and property for further confiscation. Under this Law, the ACB shall be formed by the President of Ukraine. The Director of the ACB shall be appointed and dismissed by the President of Ukraine upon consent of the Verkhovna Rada. 1/3 members of the Verkhovna Rada may give a no-confidence vote to the Director entailing his/her resignation.

The Law of Ukraine "On Prevention of Corruption" provides for a comprehensive reform of the anti-corruption framework to be developed in line with international standards and best practices existing in the foreign states. This shall include (but not limited to):

1. Establishing the National Commission for the Prevention of Corruption;
2. Introducing the new terminology, including "gift", "potential conflict of interest" and "actual conflict of interest", "offence related to corruption";
3. Altering the limit for cost of the one-time gift, as well as the total cost of gifts allowed to be obtained from a single source within the year;
4. Addressing the issue of identification and resolution of conflict of interest cases;
5. Developing and approving the rules of ethical conduct of public officials of local self-government bodies;
6. Tightening rules on monitoring income and expense statements of public servants and officials;
7. Obliging companies subject to the public procurement procedure under the Law of Ukraine "On Public Procurement" to implement anti-corruption compliance programs and appoint compliance officers to be in charge of these programs.

Separately, the Law abolishes the Law of Ukraine "On Principles of Prevention and Fighting Corruption" and the Law of Ukraine "On the Rules of Ethical Behaviour".

In turn, the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine with Respect to Determination of Ultimate Beneficiaries of Legal Entities and Public Officials" amends the Economic Code, the Criminal Code, the Criminal Procedure Code, as well as the laws "On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime and Terrorism Financing", "On State Registration of Legal Entities and Individual Entrepreneurs", "On State Registration of Proprietary Rights to Immovable Property and their Encumbrances" and several other changes aimed at establishing a mechanism for the determination of an individual – the ultimate beneficiary of legal entities, as well as a free access to the State Register of Property Rights to Immovable Property.

Adoption of the aforesaid laws is very welcomed for two reasons. First, they are important in the context of the fulfilment of Ukraine's obligations to the international organizations and the implementation of the EU-Ukraine Association Agreement. Second, they harmonize the Ukrainian legislation with European standards and thus improve overall investment climate in Ukraine.

For further information please contact Asters' counsel Yaroslav Petrov
and associate Sergiy Glushchenko.