You're reading: US, UK will organize forum next year to help Ukraine recover stolen assets abroad

How does Ukraine, which by all measures should be a rich country, manage to stay so poor? A big answer is corruption.

Over the past decade an estimated $100 billion in illicit funds has gushed out of the country. But new commitments Ukraine signed up to at a recent anti-corruption summit could cut that figure drastically.

Delegates from more than 40 countries attended the United Kingdom’s Anti-Corruption Summit in London on May 12, which was devoted to launching a coordinated, worldwide effort to end graft in all countries.

Ukraine is no exception. In fact, Ukraine was one of the priority topics at the summit.

So was Britain, a top destination for parking ill-gotten gains for corrupt officials from around the world. It often goes into expensive London real estate. Lax British legislation on offshore companies, which allows corrupt officials to cover their financial tracks, doesn’t help either.

British officials, during the summit, declared they would help nations like Ukraine to return stolen assets that had been hidden in the United Kingdom – that is, as long as their law enforcement agencies cooperate with British authorities in the effort.

Tax Service Chief Roman Nasirov represented Ukraine at the summit, after President Petro Poroshenko cancelled to oversee the appointment of new Prosecutor General Yuriy Lutsenko.

At the summit, Ukraine committed to enacting legislation that would allow foreign law enforcement access to the country’s list of beneficial owners of companies. It also promised to work with the International Anti-Corruption Law Enforcement Center, and said it would implement the Organization of Economic Cooperation and Development Anti-Bribery Convention in order to better cooperate with foreign law enforcement.

Efforts to boost law enforcement cooperation between states will be followed up with another special event in 2017.

Next year’s global asset recovery forum will focus on returning corruptly obtained assets to Ukraine, as well as to Sri Lanka, Tunisia, and Nigeria. Announced by the British government but to be held in the United States, the forum will attempt to foster cooperation between international law enforcement in order to return stolen assets to the four countries. Ukraine has committed to attend the event.

The full amount of money stolen from Ukraine’s economy is difficult to estimate because of the shady and complex schemes applied by businesspeople, many of whom are politicians or oligarchs or who have strong influence on government.

But the estimates that have been made are astounding. According to one study done by Global Financial Integrity, a non-profit think tank and watchdog, between 2004 and 2013 Ukraine lost about $11.6 billion a year because of corrupt financial schemes. Ousted President Viktor Yanukovych’s corrupt circle alone managed to rob the country of about $40 billion during his four years in office, it is reckoned.

Almost none of it has been recovered, partly because Ukraine’s prosecutors and courts are obstructing investigations.

Property registry, beneficial ownership?

The summit has followed years of criticism that the U.K. allows corrupt foreign officials to conceal their money in the country, either through bank accounts registered to shell companies, or in the form of anonymously owned real estate.

Rachel Davies, the head of advocacy and research at corruption watchdog Transparency International – U.K., said that anonymity in ownership “creates an environment in which the corrupt can hide.”

Daria Kaleniuk, executive director at the Anticorruption Action Centre in Ukraine, who attended the summit, said that Ukraine’s involvement in international anti-corruption efforts represented a step forward.

“It is additional leverage for civil society,” she said, commenting on the summit’s potential impact.

Another of Ukraine’s commitments was to agree to launch an e-declaration system for public officials by August, and to expand its public registry of final beneficiaries of every Ukrainian company.

According to Kaleniuk, expanding the registry would mean naming and verifying the beneficial owners of every company in the country.

Any company that did not name its beneficiary would be automatically prevented from participating in public procurement projects and would also be banned from receiving state loans.

The register should be improved to verify the identiy of the beneficial owner by the state tax and anti-monopoly agencies, Kaleniuk said.

“It’s important not to overdo it, and not give excessive powers to Ukraine’s non-reformed regulatory authorities, which might start going after legitimate businesses,” she said.

Ukraine’s commitments, if fulfilled, would in turn allow the country’s law enforcement to access the British registry of beneficiaries – a move that could help track money that has been taken out of Ukraine by corrupt officials.

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It is difficult to estimate how much exactly Ukrainians make because of non-transparent business practices. But, according to Ukraine’s Focus Magazine, the country’s top 100 richest control a third of the nation’s and the top 10 alone own more than 16 percent.

No home for assets

However, without the political will to prosecute corrupt officials at home in Ukraine, experts say that access to the British registry would have little effect.

In fact, Ukrainian prosecutors’ inaction or obstruction has already allowed many suspected financial crimes to go uninvestigated or unpunished.

Mykola Zlochevsky, Ukraine’s former ecology minister, had $23 million in frozen British bank accounts released in January after a British court found that there was insufficient evidence of a crime. The ruling came after General Prosecutor’s Office in Ukraine failed to send evidence and told the British court that no investigation was under way.

Yevgen Chernyak, an analyst at Transparency International-Ukraine, told the Kyiv Post that the return of estimated €200 million of frozen Yanukovych-era assets from the European Union would only be possible after Yanukovych was tried and convicted.

“If there is no conviction in Ukraine, there is no home to return to,” Chernyak said.