Swiss corruption investigators have pronounced their verdict on Ukraine (I)
Alexander DONETSKY | 11.06.2015 | WORLD | BUSINESS

Swiss corruption investigators have pronounced their verdict on Ukraine (I)

In May 2015, the Global Studies Institute of the University of Geneva published a major study on the state of corruption in Ukraine. They worked on this 180-page document from September 2013 until January 2014, based on material from previous years, and it is in many respects already outdated because of the drastically altered political situation in the country after the overthrow of the government. However, the study’s authors worked hard to identify the reasons why Ukraine has become the utterly corrupt state that it is today, and the investigators also looked into the history of how corrupt ties have developed in Ukrainian society.

As to whether what they have described in their report has any relevance to the situation in today’s Ukraine, the authors are open about their doubts: «We had a long reflection about the pertinence to continue this report among the OCO staff and given the chaotic situation in the country, the large amounts of money, technical and human assistance, that are delivered by western countries to Ukraine, and the current level of corruption, violence and administrative chaos, we reached the conclusion that this report can bring some information that can be useful during this standpoint in time which policy makers, from any country, can rely on for organizing further judicial, political and anticriminal policies and administration».

While comparing the level of corruption in the country before and after the coup, they draw conclusions that are quite shocking to the residents of Ukraine, who have grown accustomed to Europe’s official propaganda: «Public corruption and conflicts of interest have remained a significant problem for Ukraine, then and now. Any party engaging with Ukraine will have to interact with groups that are linked to oligarchic structures. If we observed a trend to a stronger verticalization of power driven by the former President Yanukovitch, the public corruption would have gone completely out of control after the collapse of the former regime». 

The Geneva investigators gave high marks to the steps taken by the «tyrant» and «extortionist» Yanukovych to combat bribery, noting that many of the legislative acts passed during his administration made life much more difficult for Ukrainian grifters, including highly placed officials. The main argument in favor of this position has been, however, the one-sided application of the anti-corruption measures, which have been used primarily against the former president’s political opponents. In the text of the report there is no trace of the usual condemnation of the indictment of former Interior Minister Yuri Lutsenko that is typical in the European press, and the corruption dossier of Yulia Tymochenko was issued as a separate chapter in the Addendum to the document.

The difference between the corruption of public officials under Yanukovych and corruption under Poroshenko, according to the investigators, is that previously, state funds were embezzled using tenders, auctions, tax revenues, and foreign-exchange earnings, while now «the situation has only changed in that the money which now falls into this category does not come from the Ukrainian industries and services anymore, but more and more from foreign help: first it was coming from Russia, now it’s coming from the EU, the US, and the international organizations such as the International Monetary Fund, the World Bank, the EBRD, or the multilateral financial aids». The core of the corruption has increased dramatically due to new trends, «such as corporate raiding and corporate fraud [which] are relatively new developments in the country. The collapse of the institutions from May-June 2014 since now have boosted and diversified the traffics not only in criminalized goods [drugs, weapons, and human trafficking - A. D.] but also in basic consumption goods». 

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The authors of the document believe that groups of oligarchs and influence are the most significant factor in Ukrainian corruption, and also, accordingly, the scope of the corrupt practices, which is predicated on their proximity to the government in power: «The alliance between the oligarchs and the state has become entrenched at the highest levels of government, while at the local level, judges, police, local government officials and politicians have organized themselves into a corrupt network of mutual enrichment at the public expense». Moreover, many of these groups have ties to Soviet and post-Soviet organized crime groups. For example, the investigators take a hard look at the associations between Dmitry Firtash and the organized crime boss Semyon Mogilevich, as well as the links to the criminal activities of former Prime Minister Pavel Lazarenko.

However, the coup d’état and subsequent events have also changed the corrupt connections of Ukrainian oligarchs: «the civil war in the east, and episodically on the south of the country, have now exacerbated the tensions among the oligarchs, some of them seeing the war as an opportunity to seize further assets, redistribute the ‘cards’ by gaining more and more power and control over production tools, i.e. steel, coal, gas, electricity, communication, railways, etc». According to an unnamed NATO official working in Ukraine, currently five oligarchs who «acquire assets on the cheap» are being supported by the central government.

Examples are listed of some opportunities for corruption that have now opened up for the oligarchs and industrialists as a result of the fighting. One example involves providing gasoline for the military, whose needs have grown 150%. After adopting a simplified tender procedure for the army, it became possible to enter into contracts without public bidding. As a result, a company owned by one of the oligarchs charged 50% more for the kerosene it sold to the Ukrainian army, compared to the pre-war price. In May 2014, a company belonging to the same oligarch sold military technology for the army at a huge margin, «and even received the authorization of the Council of the Ministries of Ukraine to import military helmets with a price 16% above the competitors».

Speaking about the Defense Ministry on TV Channel 5, Ukraine’s assistant minister of defense, Yuri Biryukov, was quoted as saying that approximately 20% to 25% of the money intended for defensive needs was being stolen. He said this came to «about 450 million USD stolen from the Ukraine’s military». According to the authors of the study, «every 81 USD out of 100 USD spent was stolen on one defense factory».

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In the battle against corruption, the current government is primarily wagering on specially created public anti-corruption agencies. But even without knowing that the fight against corruption in today’s Ukraine immediately turned into nothing but a new pork barrel for that corruption, the Swiss criticized the very approach that was taken, in which instead of a single authority, two similar agencies - an Anti-Corruption Committee and an Anti-Corruption Bureau - were created. In their view, this only serves to fragment those efforts and introduces discord.

Even more criticism was directed at the lustration program, which was approved under a law adopted by the Ukrainian parliament, because «the lustration in itself does not cope with corruption through any rule of law, but merely applies an extra-judicial political process, which in turns reinforces the dependence of Justice to the political power».

Referring to the decision of the Venice Commission, the authors of the document note that «the lustration law contained some serious flaws; it called for revision of the lustration criteria, administrative decisions on lustration to be postponed, and that information on who is subject to lustration should only be published after a final court ruling was issued». Considering the draft of the law, they noted, «All three drafts are overly broad and vague and may set the stage for unlawful mass arbitrary political exclusion».

The Swiss researchers warn: «The lustration program might prove to be a disaster for Ukraine, especially in the law enforcement sector». The same applies to the judiciary: «Imposing the lustration inside the judicial apparel is a major political mistake». This was explained as follows: «First because it sacks out most of the indispensable professionals needed to ‘run the machine,’ but because it replaces a political allegiance by another one, under the will of building a more independent and corruption-free judicial administration. In fact, it just replaces the older officials with new ones that are submitted to the exact same rules, and everybody knows that the same causes will produce the very same effects».

By and large, the lustration of judicial employees will not produce the desired effect and could even exacerbate the situation: «The old sacked one will have no other possibility to turn even more corrupt if they want to survive economically and socially in a new Ukraine. This will undermine again the legitimacy of the judicial administration and make it even worse than it was before».

(To be continued)

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