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EXCLUSIVE Corruption Watch

'Combat Corruption, or Die' – Interview With the Head of NABU's Supervisory Council

For the first time, rich and influential Ukrainian business leaders and politicians are being investigated and some have been convicted as the result of anti-corruption reform implementation.

Mar. 6, 2023

In an exclusive interview with Kyiv Post, the head of the Civil Oversight Council for the National Anti-corruption Bureau of Ukraine  (NABU), Mark Savchuk, discussed investigations into the Ministry of Defense (MoD), commented on the recent cases involving technocrats Andriy Pivovarsky, Andriy Kobolev, and other top officials, and explained the mechanism of Western weapons control.

 What about the recent corruption scandal in the defense ministry? Several officials have resigned, including the deputy minister. Is the anti-corruption agency carrying out investigations?

 Yes, they are. When this corruption scandal started, the minister was active in communicating what was happening inside the ministry. Currently, several law enforcement agencies are conducting investigations there.

How many investigations are they carrying out– hundreds?

 Not that many, but a lot. The minister asked the Parliament to establish a special working group. This task force would check every document that the Ministry of Defense has, and he shared these documents with law enforcement agencies. Right now, several investigations are active, and we have to give some time for them to arrive at some conclusions.

 The scandal itself brought some light on what the problems are in the Ministry of Defense. Currently, the parliament members are trying to solve those issues and to attract more suppliers to the MoD purchasing process, increase competition among the firms and lower the prices.

 The ministry has two new deputies appointed after the scandal, who are highly professional, and I am optimistic about reforming the ministry in order to produce a more effective and efficient army.

 Despite widespread public rumors and discussions, the Minister of Defense, Oleksiy Reznikov, has stayed in his post. Why did the President make such a decision?

 There are two reasons for this. First, the minister was  not  implicated in the corruption scandals in the ministry. He is not a person of interest in any of these investigations.

 Is there any evidence that Reznikov was involved in corruption?

 No, exactly. If he had been, he would’ve had to resign immediately.

 My second point is that the Minister of Defense has built cooperation with Western counterparts such as the Secretary of Defense of the United States. Changing the person heading the negotiations for the arms supplies could have a negative impact. He has personal relationships with these people and removing him right now would be a mistake. That is why the President didn't make a change in the Cabinet of Ministers.

 What about the funds that the Ministry of Defense uses? Is it Western money or is it Ukrainian taxpayers’?

 The Western governments can't directly pay for our war. One hundred percent of what the MoD spends is Ukrainian taxpayer money. The financial aid that we get from our partners is used to fund nonmilitary expenditures and social needs.

 Is there any risk for Western weapons to be stolen in Ukraine?

 Every single country that supplies Ukraine with various weapons has a particular person working with the Ukrainian government that controls how these weapons are used. For example, we have a person from the United States working in Ukraine who has the right to know where all the US weapons are, and the Ukrainian side physically shows where the arms are if the representative requires that.

 We don't have any single incident with any government from the West saying they don't know how their weapons are being used. All Western governments have people here who have access to all the information concerning the weapons they’ve supplied.

 What about recent discussions about investigations against technocrats and former officials since 2014? Andriy Pyvovarsky achieved some results in reforming, and Andriy Kobolev won the case against Gazprom. Critics say that this jeopardizes corporate governance reform and the anti-corruption infrastructure. What do you think about these cases?

 I would like our law enforcement agency, the NABU, to be perfect, but unfortunately, they are not. The allegations against Kobolev on the kickbacks he got after the Stockholm arbitrage and the allegations against Pybovarsky on the deregulation reform he implemented are questionable. The Supervisory Council thinks that law enforcement agencies are interpreting the law incorrectly.

 In the Kobolev case, they accused Kobolev of damage that had been done to the Ukrainian budget, but looking closer at what his team did after defeating Gazprom - Ukrainian budget gained $4.6 billion. No harm has been done there.

 It is actually the opposite – this team brought a lot of money to Ukraine and a lot of respect from the EU because they defeated one of the biggest oil and gas companies in the world. Ukraine showed that it is stronger than Russian Gazprom. To say that the person who achieved this is corrupted is weird. In my opinion, law enforcement agencies are making a mistake.

 In the Pyvovarskycase about deregulation, the investigation should look at the complex effect on the economy after the implementation of deregulation reform. If deregulation leads to increasing business activities and Ukraine making more money than before, this shows a positive case of deregulation.

 However, when you conduct deregulation reform, it is expected that next year, if you look at specific deregulated government revenue streams, the budget will earn less money than it did before. It doesn't mean deregulation is wrong because, as a result, business activity will increase, and the country gets more revenue. The overall net budget benefit is higher than before the deregulation.

 That's the situation with Pyvovarsky. Law enforcement agencies need to understand the bigger picture and look at the law precisely. Our Western partners and the IMF were recommending deregulation in this situation. From my point of view, law enforcement is making a mistake bringing its legal case against Pyvovarsky.

 Are there any success stories?

 Sure, we shouldn't concentrate just on these two individual cases. NABU has done a lot of tremendous work, and we finally have significant cases in court on some prominent people in Ukraine that most would never suspect of having problems with the law.

 First, Maksym Mykytas is a famous real estate entrepreneur who bribed local officials to get land on which to build large projects. He was caught bribing the Mayor of Dnipro. It was the second time he had  done this. He was arrested immediately and I think he will be convicted.

 Also, we have Roman Nasirov, former head of the State Tax Service. Again, people that hold such high positions have never had problems with law enforcement agencies before because they bribe everyone. So, this is quite an achievement. Nasirov is in jail and waiting for the verdict of the court. I am sure he will go to prison.

 We have legal cases against lawmakers from the last convocation and the current convocation. Last week a member of the President's party, Servant of the People, was convicted of trying to bribe a police officer, and he was caught on camera doing that. That is why, in court, he admitted that he attempted to bribe the officer. Now he is not a member of Parliament.

 For the first time, we have rich and influential people convicted due to anti-corruption reform implementation.

 Now there are applicants competing to be head of the NABU. What about the commission? Is it transparent?

 Yes, it is transparent. The committee is open to receiving feedback from any applicants. As a result, one person tied to the government moved out of the selection process. The committee is working transparently and trying to select the best applicant. However, due to the war, the competition is challenging. Some strong candidates can't apply or compete because they are fighting at the front.

 What about public control? Is it weakening in wartime?

 Yes, that was an issue for the first six months of the war. Activists were busy with the war, and monitoring during that time was impossible. However, the corruption scandals in the ministry of defense were initiated by journalist investigations. So, now Ukrainian civil society is strong, is doing its job, and is aggressive in demanding reforms from the government. Our Western partners should engage more with our civil society for the implementation of the reforms, as well.

 Did the tolerance for corruption change during the war in Ukraine?

 People in Ukraine feel much less tolerance for corruption which is good. However, these feelings could be used to manipulate and create fakes. We will push President Zelensky and his office to implement anti-corruption reforms because we don't have any choice. We must reform or die.

 There was an annexation of Crimea because Ukraine was weak due to corruption. Also, a full-scale invasion partly happened because Ukraine has been weakened by corruption.

 We need to combat corruption in Ukraine once and for all.