On 14 October 2014 the Ukrainian Parliament (Verkhovna Rada) adopted a number of significant laws aimed at the prevention of and the fight against corruption (the "2014 Anti-Corruption Package").
The adoption of the 2014 Anti-Corruption Package is a direct response to the demands of the Ukrainian people during the “Revolution of Dignity” earlier this year. It also addresses the terms and conditions of the International Monetary Fund`s credit facility extended to Ukraine and the EU-Ukraine Association Agreement signed earlier this year. The 2014 Anti-Corruption Package is the first major institutionally important reform dealing with corruption passed by the Ukrainian government.
1. THE REFORM OF THE STATE PROSECUTOR`S OFFICE
The cornerstone of the 2014 Anti-Corruption Package is the long-awaited Law “On The Prosecution Service” (the “Prosecutors Law”) reforming the prosecution system (or prokuratura) in Ukraine. It marks a clear break with the Soviet antecedents of the existing system. The first attempts to reform the prokuratura were taken in 2001, but it was not until November 2013 that the Verkhovna Rada passed the Prosecutors Law in the first reading as a condition to signing the EU-Ukraine Association Agreement at that time, which did not, however, take place. However, the political will to pass the Prosecutors Law in second reading only surfaced following popular pressure offer the Revolution of Dignity.
The Prosecutors Law seriously curtails the previously vast and, to a large extent, arbitrary powers of Ukrainian prosecutors, paramount of which is the power of “general supervision”, which meant that a prosecutor could effectively inspect the activities of any company or state body without substantiating the grounds for inspection. The Prosecutors Law also removes the prosecutor`s investigative function and powers of arrest (including pre-trial detention). The functions and powers of the Prosecution Service are now limited to: (i) representing the state in criminal prosecutions before the courts, (ii) representing the rights and interests of citizens or the state in exceptional cases expressly stipulated by law, and (iii) monitoring compliance with the laws by law-enforcement bodies during intelligence operations, pre-trial investigations and enforcement of criminal sentences.
Further, the Prosecutors Law sets out new criteria and standards for prosecutors, that should reduce corruption, including a competitive hiring process, legislative guarantees of high salary rates and a transparent discipline procedure.
2. OTHER LAWS
Other laws included in the 2014 Anti-Corruption Package are the:
• Law “On the System of Specially Authorized Anti-Corruption Bodies”, which provides for the establishment of a dedicated anticorruption body – the National Anti-Corruption Bureau of Ukraine. The Anticorruption Bureau will supplement the existing system of law-enforcement bodies, being authorised to investigate crimes committed by high-ranking officials and preventing new crimes;
• Law “On the Prevention of Corruption”, which introduces a new special body to prevent corruption and a special procedure regarding the declarations income and expenses by public servants;
• Law “On Amendments to Certain Legislative Acts of Ukraine regarding Defining Final Beneficiary Owners of Legal Entities and Public Persons”. A key transparency and anti-corruption measure, this law introduces the mandatory disclosure of beneficial ownership of shares in Ukrainian companies and properties. It also introduces open access to information regarding ownership of real estate, including land;
• Law “On the Fundamentals of the State Anti-Corruption Policy in Ukraine (Anti-Corruption Strategy) for 2014 – 2017”, which sets out the general consolidated strategy of the President, Government and Parliament regarding anticorruption initiatives.
The 2014 Anti-Corruption Package appears to be a significant initial step in fighting corruption and facilitating the creation of an attractive business environment in Ukraine.
These laws require signature by the President, after which they will enter into legal force.
Daniel Bilak, Managing Partner, Daniel.Bilak@cms-cmck.com
Sergiy Gryshko, Senior Associate, Sergiy.Gryshko@cms-cmck.com
Mykola Heletiy, Lawyer, Mykola.Heletiy@cms-cmck.com