1. Evaluation of reform policies of the Parliament and Government during the period of September 2019 – January 2020 and its compliance with the Toronto Principles (based on the analysis of the Government Program, the plans of the ministries and the adopted/rejected regulatory acts)
Over the past six years, Ukraine has developed an anti-corruption infrastructure to detect and investigate high-level corruption offenses and to punish them. Thus, in 2015, the National Anti-Corruption Bureau of Ukraine (NABU) was established. Under the procedural guidance of prosecutors of the Specialized Anti-Corruption Prosecutor's Office (SAPO), it conducted investigations of 986 cases involving high-ranking officials, 265 of which were sent to the court and 41 sentences were delivered. The High Anti-Corruption Court of Ukraine (hereafter - HACC) began its work on September 5, 2019. National Agency of Ukraine for detection, investigation and management of assets received from corruption and other crimes (hereafter - ARMA) was established with the aim to identify, trace and manage the corrupt assets.
Important steps were taken in order to increase transparency: an integrated electronic declaration system was implemented; state registers were published in accordance with the open data standards. Public procurement is carried out through the open electronic procurement system ProZorro, which has already saved $4.7 billion of the budgetary funds since 2016. Its activities are supported by the monitoring ecosystem DOZORRO. ProZorro.Sale brought $1.037 billion into the state budget, made it possible to transparently sell assets of the bankrupt and state property, as well as to conduct small-scale privatization.
The Toronto Principles have identified a number of priority measures for 2019-2023 in the area of corruption prevention and counteraction, some of which have already been implemented during September 2019 - August 2020 by adopting the necessary legislation and its further implementation.
Legislative strengthening of NABU's powers and launch of HACC took place in the area of combating corruption. The regulation of the procedure of transferring the cases to HACC from the courts of general jurisdiction has helped to focus its work on high-level cases. HACC is provided with the necessary financial resources, but is housed at a temporary facility. The employees’ selection for the apparatus was carried out based on an open competition. As of the first half of 2020, 203 criminal proceedings and 5,792 petitions, complaints, statements at the stage of pre-trial investigation were pending in HACC, and sentences were carried out in 29 cases.
Lawmakers strengthened the powers of NABU by granting the institution the right to wiretap (to receive the information from communication channels) directly, rather than through the resources of the Security Service of Ukraine (hereafter - SBU). However, such powers have not yet been implemented in practice, as they require the purchase and installation of the appropriate equipment. Moreover, on September 16, 2020, the Constitutional Court of Ukraine (hereinafter - CCU) recognized certain provisions of the Law of Ukraine "On the National Anti-Corruption Bureau of Ukraine" as inconsistent with the Constitution of Ukraine. It refers to the powers of the President of Ukraine to form NABU, appoint and dismiss the Director of NABU; to appoint three persons to the contest commission for the position of NABU Director; to appoint one member of the external control commission to conduct an independent evaluation (audit) of the effectiveness of NABU, its operational and institutional independence; to approve the Regulations on the Public Control Council and on the procedure for its formation. The CCU gave three months to the Parliament to harmonize the laws with the Constitution of Ukraine.
The Verkhovna Rada of Ukraine (hereafter – the Parliament) abolished the monopoly of state expert centres for criminal expertise, which was introduced in October 2017. This will shorten the time required for the examinations, which hinder pre-trial investigations, as well as reduce possibilities to exert the pressure on experts.
In addition, by legal act No. 263-IX from 31 October 2019, the Parliament reinstated the criminal liability of officials for illegal enrichment, which was abolished in February 2019 by the CCU, and launched the institution of civil confiscation of assets unreasonably acquired by the state officials. These cases will be investigated by NABU, procedural guidance will be exercised by the SAPO, while consideration of the cases will be carried out by HACC.
Prevention of corruption has also shown some progress. On 15 January 2020, the Government declared Alexander Novikov to be the new Head of the National Agency on Corruption Prevention (hereafter – NACP). The NACP's accountability was also strengthening and would undergo an independent audit every two years. At the same time, the recent legislative changes have not strengthened the role and effectiveness of persons authorized to prevent corruption, who will continue to depend on the authorities. As for today, the NACP can only suspend their unfair release if they are the whistle-blowers. The NACP has presented a new Anti-Corruption Strategy for the country, which has been approved by the Cabinet of Ministers of Ukraine, but is still yet to be approved by the Parliament.
The Parliament adopted a new Law on Public Procurement, which entered into force on 19 April 2020 and was harmonized with the standards of the European Union. The law is aimed at improving the electronic system, reducing the thresholds for competitive procurement procedures and increasing accountability for violations in this area.
In October 2019, the Law on State and Municipal Property Lease was adopted. It implemented a simple and transparent procedure for the leasing of state and municipal property through ProZorro.Sale. In addition, state and municipal property inventory databases, which will complicate the concealment of misuse of such property, should appear.
In 2019, more than UAH 1 billion of revenues was brought to the state budget through small-scale privatization. The big privatization will start through ProZorro.Sale. Since 21 October 2019, the sale of property in bankruptcy cases of individuals or legal entities has been conducted only through electronic auctions in the two-tier electronic trading system “ProZorro.Sale”.
2. Current challenges / issues in the relevant policy area
Lack of an effective system of checks and balances that can only be built by enhancing the efficiency and independence of institutions is a considerable challenge for Ukraine. Ukraine is a parliamentary-presidential republic and must meet all the hallmarks of this form of government.
Despite significant progress in anti-corruption reform, some of the challenges outlined in the Toronto Principles are still relevant. Some reforms are not moving, and pressure on independent institutions is continuing. The NABU audit has not yet been conducted, and the provisions of the law on the NABU that allow it to become politically motivated have not been changed. The corresponding legal act was registered in the Parliament on 3 January 2020 under No. 2714. The procedure for appointing a NABU Director following the procedure of selecting the Head of the updated NACP with the involvement of independent international experts recommended by donors which support Ukraine in the area of anti-corruption needs improvement. If the selection procedure will not change, there is a risk that the current one will be neglected due to the affiliation of all the members of the selection board in one political party.
Restoration of confidence in the SAPO is also among the important Toronto Principles to be implemented. The Head of the SAPO resigned, his deputy became the acting, but some of the powers were vested in the Attorney General, who made the institution dependent on his Office. The current selection procedure foresees a decisive role in the selection committee for the representatives of the Parliament, so it is important to change it. There are no additional guarantees for the independence of the SAPO as a separate institution.
Contrary to the provisions of the Law of Ukraine on National Security, the systematic reform of the Security Service of Ukraine has not been launched. It continues to perform its atypical functions in the areas of combating corruption, combating economic crime and organized crime, resulting in abuse of power. The draft law on the Security Service of Ukraine is being considered by the Parliament, and in May 2020 it has been sent for preparation for the second reading. An analysis of this bill revealed the authors' lack of a comprehensive vision of the reform, as well as an effort to expand rather than get rid of atypical functions.
Personnel changes in the Government did not affect the leadership of the Ministry of Internal Affairs of Ukraine, despite the demands of civil society to dismiss the Minister. Despite the fact that the Minister dismissed the National Police's Economics Protection Department in September 2019, police continued to investigate economic crimes, while the creation of a new law enforcement agency - the Bureau of Financial Investigation (BFI), which would take over the investigations of such crimes from the police, the SSU and the tax police, was blocked in the Parliament.
The implementation of sectoral reforms should have prevented corruption, as it was often the result of poor governance and lack of the reform. However, such sectoral reforms were often unsystematic, incomplete, unsupported by adequate funding and implemented slowly due to institutional weakness of the authorities, low salaries of civil servants, which lead to negative staff selection and lack of project-based approach to implementation of changes.
However, the unreformed judicial system remains the greatest threat to the sustainability of reforms in all the areas. The Parliament passed Law No. 193-IX from 16 October 2019 on restarting and clearing the judicial administration, however, most provisions of the law were later declared unconstitutional. Hence, from November 2019 to September 2020, no progress was made.
3. Recommendations for priority actions in 2020-2021
- ensure that the judiciary is cleared of malign judges at all levels as effectively as possible; unlock reform by urgently adopting a law that will diminish the impact of HCJ on judicial reform and, accordingly, minimize its potential for further sabotage, strengthen the role of independent experts in the selection of new members of the judicial administration, change the procedure for dismissing questionable High Court justices;
- dopt the new law on NABU and SAPO audit;
- improve the law on NABU to eliminate provisions that could potentially be declared unconstitutional;
- improve the competitive selection process of the Head of NABU with the involvement of international experts;
- change the competitive procedure for the selection of the SAPO leader with the involvement of international experts, and provide additional guarantees for the independence of the SAPO as a separate institution;
- adopt the law, which will allow for more effective implementation of the ARMA asset management function;
- adopt a new law on the SSU to deprive the service of atypical law enforcement, anti-corruption, economic crime, and organized crime combatting powers by turning the SSU into a special service agency focused on combating terrorism and countering foreign intelligence;
- deprive the National Police of the right to investigate economic crimes;
- adopt a new BFI law with the guarantee of an independent competitive selection procedure of its Head;
- improve legislation on the parliamentary immunity;
- ensure the obligation to conduct and take into account the conclusions of the anti-corruption examination of draft regulations and current regulatory legislation;
- extend the definition of "whistle-blower" to areas other than corruption: human rights violations, the environment, security of food and household goods, public interests in line with the EU Directive on the protection of whistle-blowers and the best international practices.