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71INTERNATIONAL LAW AND FOREIGN LEGISLATION
CORRUPTION AND POLITICAL CRISIS IN UKRAINE
DOI: http:Mx.doi.org/10.14420/en.2014.1J
Alexei Ivanov, Candidate for a Master's Degree of Jurisprudence of the International Institute of State Service and Administration of Russian Presidential Academy of National Economy and Public Administration, e-mail: [email protected].
Ivan Bogun, Bachelor of Jurisprudence at National Juridical Academy of Ukraine named after Yaroslav the Wise.
Abstract. The article reviews issues ofcorruption and political crisis in Ukraine
in the context of international organisations reports that estimate corruption levels and entrepreneurial climate worldwide. The article examines countries of the European Union and member states of the Customs Union, asseses the political crisis in Ukraine.
Keywords: corruption, Ukraine, politics, member states of the European Union,
member states of the Customs Union, legislation, crisis.
With its tentacles сorruption embraced all spheres of public administration in Ukraine, affected all branches of Ukrainian national authorities, and constituted a principal source of political crisis in the county. We can only suppose how Ukrainian society would have responded the decision to stop Euro-integration and redirect the development vector towards the Customs Union, granted the state had been strictly observing the constitutional law, freedoms and guarantees. What would have happened, if the same change occurred under condition that independent courts were functioning normally, the state were performing effective political housecleaning (instead of just making show), carrying out anti-corruption foreign and domestic policy and providing for a favourable entrepreneurial environment?! Indeed, can the states held together by bonds of customs agreements boast of having healthy, transparent economics or of being «corruption free»? We have reasons to believe that Ukraine’s refusal to sign an agreement about association with the European Union was a mere pretext! We drew this conclusion on the basis of analysing the situation in Ukraine after 2010, i.e. after Yanukovich came to power. For this purpose we used analytic and statistical data received in Ukraine and in other countries. We studied reports of international organisations that give appraisals of corruption levels, anti-corruption policies, and conditions for developing entrepreneurial business for countries all over the world. For comparative examination there were chosen states and republics that are member
states of the Eurasian Economic Community Customs Union on the one hand, and member states of the European Union (EU) on the other hand. The research covers the period from 2009 to 2013.
International Assessments
According to annual CPI1 (Corruption Perceptions Index) reports prepared by the nongovernmental international organisation Transparency International, whose aim is to fight corruption and research corruption levels on a global basis, Ukraine's position can be described as steady stagnation over the last 5 years. So, in the annual report for 2012 experts declared that Ukraine ranked the lowest among European countries according to its corruption level. It takes 144-th place among 174 countries with no European countries having a worse position.
The Corruption Perceptions Index is determined by international experts made by financial organisations and advocating rights legal organisations on the basis of cross-sectional opinion surveys among general public all over the world. On the ground of this information the rating is compiled, and the state with the best Corruption Perceptions Index (CPI) for the given year ranks first. Figure 1 shows ratings of Ukraine in comparison with the member states of the Eurasian Economic Community Customs Union (Russia, Belarus, Kazakhstan).
Fig. 1. Corruption Perceptions Index from 2009 to 2013 (Ukraine, Russia, Belarus, Kazakhstan)
This chart shows that the CPI ratings of the member states of the Customs Union and Ukraine are, firstly, similar, and, secondly, very low. Only Kazakhstan managed to approach the top hundred of leading countries when in 2010 it was ranked 105 in the rating, but this position was beheld for a short while only, since already in 2011 the country went down to the 120-th place, and in 2013 it lost its positions entirely by dropping to the 140-th place. In fact, Kazakhstan's ranking
1 Indeks vospriiatiia korruptcii // Transparency International Rossija: Tsentr antikorruptsionnykh issle-dovanii i initsiativ. - URL: http://www.transparency.org.ru/indeks-vospriiatiia-korruptcii. [Corruption Perceptions Index // Transparency International Russia: centre of anti corruption research and initiatives]
is almost as low as Ukraine's now, which ranks 144. Russia, on the contrary, is demonstrating positive dynamics: in 2009 it ranked 146, but in 2013 it rose to the 127-th place.
Figure 2 shows ratings of some countries (Germany, France, Italy, the Netherlands) that are member states of the European Union (EU). These countries were chosen out of 28 current member states of the European Union against a number of criteria. Firstly, they were among the first six countries that originally composed the foundation of the European Union. Secondly, these are large countries with fully developed geopolitics and economics, and with population of more than 15 million people.
Fig. 2. Corruption Perceptions Index from 2009 to 2013 (Germany, France, Italy, the Netherlands)
The present chart shows that member states of the European Union steadily rank among the top thirty of world nations with positive CPI. The only exception is Italy, which has recently been unable to go higher than the 60-th place.
Group of States against Corruption (GRECO)1 is an international organisation established under the Council of Europe in 1999. The objective of this organisation is providing participating countries for assistance and support to facilitate their fight against corruption by setting up anti-corruption standards in the area of legal regulation, which would be most efficient and suitable for the given state. The Group consists of 49 states, and Ukraine joined GRECO in 2006.
GRECO started monitoring compliance of Ukrainian legislation in the area of fight against corruption in early 2007. GRECO experts determined as their priority tasks assessing the following aspects: measures taken by Ukrainian authorities to decriminalise corruption acts; transparency degree in funding political parties; and compliance of the national legislation with requirements of the Criminal Law
Convention on Corruption dated 27 January, 19991. The GRECO final compliance report contained a positive appraisal of the efforts aimed to establish criminal responsibility for violations of law related to corruption, among them for unlawful acquisition of wealth. The report also contained 7 recommendations concerning criminalisation of socially dangerous acts connected with corruption and 9 recommendations that deal with issues of transparency with regard to funding political parties. In April 2013 Ukraine was due to inform GRECO on how the given recommendations would have been implemented.
Summarizing the results of GRECo expert compliance report for 20 1 32 we can conclude that the work aimed to revise Section XVII of the Criminal Code was assessed as positive. In 2011 the said Section replaced the previous one, which was titled “Crimes Concerning Official Activities”. The new title of Section XVII is «Crimes Concerning Official Activities and Professional Activities, Related to Rendering Public Services». Experts noted in particular Article 368 of the Criminal Code «Acceptance of an Offer, Promise or Getting Unlawful Profit by a Civil Servant” and Article 369 of the Criminal Code “Offering or Giving Unlawful Profit by a Civil Servant». The said articles stipulate the area of corruption crimes committed by civil servants, as well as by persons who provoke civil servants to commit such crimes.
Further on it should be noted that Ukraine implemented fully only 3 out of 16 recommendations given by GRECO in 2007, while 7 recommendations were implemented in part, and the rest 6 recommendations were not implemented at all. Thus, the effecting of anti-corruption law reform in Ukraine can be considered partial and satisfactory.
We also analysed annual reports of the World Bank Group «Doing Business» from 2009 to 2013. These reports present annual research conducted in developing countries that assess how easily it is to carry out entrepreneurial activities, including key aspects of their annual cycle. A high ranking on the ease of doing business index means the regulatory environment is more conductive to operation of a local business. An important area to be evaluated is regulatory and legal framework, stipulating entrepreneurial activities. The report «Doing Business 2013» was titled «Smarter Regulations for Small and Medium», which in itself proves how important it is to study this very enterprise sector; the report present assessment results of 185 countries.
Analysis of entrepreneurial climate in the states under examination was included into this research for the following valid reasons. Firstly, it is business that forms the economic foundation of any developed state, which is evidenced by its contribution into GDP of such countries. To illustrate the statement, we will refer to the fact that share of small and medium businesses into GDP of member states of the EU is at least 50% (Germany, France, Italy). Unfortunately, Ukraine and member states of the Customs Union cannot boast of such figures (in Ukraine SMB share in GDP according to various evaluations is 10-12%, in Russia and Kazakhstan - 15-20%, in Belarus - 25-30%). Secondly, states with a high rating of anti-corruption policies are generally noted with comfortable conditions for
1 Criminal Law Convention on Corruption, Strasbourg, 27.01.1999 // Consultant-Plus. - URL: http:// base.consultant.ru/cons/cgi/online.cgi?req=doc;base=LAW;n=121544.
2 Compliance Report on Ukraine. - URL: http://www.coe.int/t/dghl/monitoring/greco/
evaluations/round3/GrecoRC3(2013)14_Ukraine_EN.pdf.
enterprises as well. This appears to be a regular pattern: a low corruption brings about a favourable business climate, which results in economic development. Fig. 3 compares Ukraine with the member states of the Customs Union in the context of reports “Doing Business”.
Fig. 3. Ratings according to reports “Doing Business” from 2009 to 2013 (Ukraine, Russia, Belarus, Kazakhstan)
Fig. 3 clearly shows that Ukraine has the worst ratings, and only in 2013 it was ranked higher than 140. Kazakhstan and Belarus have had the best ratings in this group during last years: they have been steadily ranked between 40 and 60.
Fig. 4. Rating according to reports “Doing Business” from 2009 to 2013 (Germany, France, Italy, the Netherlands)
Fig. 4 present information on the same member states of the European Union that we examined in the context of reports on CPI in Fig. 2.
All the countries presented in Fig. 4 except Italy, which ranked lowly in Fig.2 as well, demonstrate stable positive dynamics and rate in the top 30 among the countries with the best climate for business.
Anti-corruption policy and legal regulation in the field of fighting against corruption in Ukraine The United Nations Convention against Corruption (UNCAC) can be considered the first international anti-corruption legal act, which was adopted in 2003. Its 71 Articles are divided into 8 Chapters. It should be noted that in 2006 Ukraine ratified the aforenamed United Nations Convention by passing the Law of Ukraine «On Ratification of the United Nations Convention against Corruption», which made incorporating its provisions into national legislation a high priority task. In order to achieve compliance of Ukrainian legislation with international requirements, parliamentarians developed the «Legislative package of anti-corruption proposals» that included the following draft laws of Ukraine: «On principles of preventing and counteracting corruption», «On responsibility of juridical persons for commission of a corruption offence» and «On introduction of alterations into certain legislative acts of Ukraine related to the responsibility for corruption offences». All the legislative proposals were examined by experts of the Council of Europe.
Legislation of Ukraine on preventing and countering corruption The main regulatory legal act stipulating the given sphere of activities is the «National Anti-Corruption Strategy for the period from 2011 to 2015»; the corresponding Decree of the President of Ukraine No. 1001 was signed on 21 October, 2011. The priority task of the Strategy is to level down corruption by eliminating its causes, and also by taking such preventive measures in cases of corruption threats that would be based on legality and the intolerance attituade on behalf of the society.
The legal platform of anti-corruption policy and legal regulation in the field of countering corruption was formed by the Law of Ukraine under No. 3206-VI dated 07.04.2011 «On principles of preventing and counteracting corruption»1. The said law comprises VII Sections divided into 33 Articles and final provisions. Among other things, Article 1 defines corruption, corruption offence, conflict of interest, and unjustified benefit. Article 2 reviews legislation in what concerns preventing and countering corruption; it also takes into consideration international cooperation in the area of fighting corruption, secured by the fact that Ukraine signed international treaties and agreements. Article 4 gives a detailed list of subjects to responsibility for corruption offences. Article 13 is titled “Codes of conduct», and it is aimed at both civil officers and entrepreneurs. It is worthwhile to pay special attention to Article 15 «Anti-corruption expertise of drafts of regulatory legal acts», since in this case it is possible to draw an analogy with the Russian legislation, specifically with Federal Law No. 172 «On anti-corruption expertise of regulatory legal acts and drafts of regulatory legal acts».
1 Law of Ukraine «On principles of preventing and counteracting corruption» dd 07.04.2011 No. 3206-VI // Kodeksy.com.ua.
After incorporation of the above-said law into Ukrainian legislation there were introduced certain alterations that concerned both the Criminal Code of Ukraine and the Ukrainian Code of Laws on acts punishable under administrative law. They passed the corresponding regulatory legal act, namely Law No. 4711-VI «On alteration of selected legislative acts of Ukraine in the context of adoption of the Law of Ukraine «On principles of preventing and counteracting corruption».
On the 17th of May 2012 the Ukrainian Parliament Verkhovna Rada passed the Law of Ukraine «On principles of ethical conduct» No. 4722-VI. Provisions of the Code of Conduct of civil officers in member states of the Council of Europe served as the foundation for the said Ukrainian regulatory legal act. This Code of Conduct provides for enforceability of these legal norms by law.
On the 18th of April 2013 the Verkhovna Rada of Ukraine passed the law of Ukraine «On alteration of some legislative acts of Ukraine as to bring national legislation up to standards set by the Criminal Law Convention on Corruption» (No. 221-VII). This law in fact carries into effect recommendations given by international organisations in regard to countering corruption.
These are main laws that stipulate countering corruption in Ukraine. The present papers do not include research of sublegislative regulatory legal acts that are subsequent to the enumerated legal standards. Thus, the country has such a vast regulatory and legal framework aimed to prevent and counteract corruption that it can envied even by some European states, successfully counteracting corruption.
Some statistics about preventing and counteracting corruption
The annual report on preventing and countering corruption for 2012 prepared by the Ministry of Justice of Ukraine1 displays the following:
- 83% of Ukrainian population call bribery a common phenomenon;
- 53% of citizens experienced corruption in state and municipal educational
institutions.
In 2011 organs of the prosecutor's office and the Ministry of Internal Affairs of Ukraine revealed about 17,000 official crimes, which is by 25% more than in 2010. Bribery is the most common of crimes committed in public offices.
Majority of citizens face corruption when they need various services:
- in health care institutions - 60.3% (in 2002 - 54.2%);
- at customs - 42.1% (in 2002 - 38.6%);
- when looking for a job in public services - 36.2% (in 2002 - 31%);
- when asking for welfare social payments - 20.4% (in 2002 - 16.3%);
- in courts - 12%.
1,330 people were brought to responsibility for commission of corruption crimes; 624 of them are local officers, 385 people are qualified as employees of internal affairs agencies.
Totally Corrupt Administrative Authorities The format of the article does not allow us to research the whole scope of corruption with regard to official venality in full. For this reason we chose to dwell upon only what we consider to be key points and episodes, and to do it in the maximally compressed form.
The Minister of Justice of Ukraine Pavel Petrenko stated1: for reasons connected with corruption of former Ukrainian authorities the state budget short-received about 300 bln. grivnas of income ($27 bln.) only in 2013.
The nominal GDP of Ukraine according to the results of 2013 amounted to 1 trillion 455 billion grivnas, whereas the state budget revenue was only 339.2 billion grivnas. Thus, the Ministry of Justice evaluated corruption losses of the budget of Ukraine as 21% of GdP, or 88% of the state budget.
According to the «Rating of Tender Champions» prepared by Forbes-Ukraine, companies that belong to Alexander Yanukovich, the elder son of Viktor Yanukovich, for the last two years received 62.5 bln grivnas (261.6 bln roubles) from the state by tender, i.e. on the competitive bidding basis. The tenders concerned such industries as coal-mining, railway, construction and energetics.
At the same time his All-Ukraine Development Bank («Vseukrainski Bank Razvitiya»), where Alexander Yanukovich is the sole owner, is rapidly developing, so that by the beginning of 2013 its assets grew by 750%. The Elder Yanukovich, as they nicknamed Alexander, is a wealthy person, whose assets are appraised at 510 million dollars. However, before his father became the President Alexander had been just a modest dentist in Donetsk, nothing of note, so to say. We cannot but consider it an evidence of conflict of interest and corruption of the state elite.
In 2011 Ukraine faced a loud corruption scandal. The state company Chernomorneftegaz, engaged in the exploration and production of oil and gas, purchased an oil platform from a British intermediator firm for 400 million dollars. Perfunctory expert and journalistic investigations2 revealed one fact, which was then widely discussed, namely that the actual price of that platform at the manufacturing factory was 250 million dollars, thus the «kickback» amounted to 150 million dollars, which is 60% of the nominal cost of the product. Experts are confident that the Minister of Energy Yuri Boyko could not possibly huddle such a transaction without approval and support from President Yanukovich. Then what about legal regulation of state purchases? That's what we call double standards.
It will take many scientific papers and monographs to present illegal privatization of various objects (plants, factories, ports) under the rule of President Yanukovich. We will turn our attention only to the so called privatization of such property objects, which allowed their owner to relax for a short while from his «oh so strained duty chart», entertain friends, hunt or, in the last resort, think about the future of Ukraine.
A short list of dubious privatization of «Mr. Yanukovich’s possessions» includes the following:
- The residency «Mezhigoriye». These «broad acres» actually spread over 137 hectares and include forests, a zoo with all kinds of animals, an artificial lake and a garage for 70 units of vehicles. In 2010 the highway that leads to the residency was paved with asphalt, and it cost the state treasury of Ukraine 50 mln grivnas, which was practically as much as in that same year was spent by the the state to repair all roads of Kiev. We should also note that from 1935 till 2007 the object in question was used as a state governmental residency.
1 Ministry of Justice of Ukraine: in 2013 for reasons connected with corruption of authorities the budget short-received about $27 bln. - URL: http://www.rbc.ru/rbcfreenews/20140401151517.shtml.
2 Nikolov Yu., Shalaiskiy A. The Oil Derrick for Boyko // ZN,UA. - URL; http://gazeta.zn.ua/
- The recreation center «Mys Ayah». The complex is situated at the Southern coast of the Crimea; it includes a four-storied hotel with 86 suites, 45 wooden cottages, and the own bathing beach on the coast. The recreation center borders on the closed wood, which is kind of a National Nature Reserve. The dubious privatization took place in 2007, after the redevelopment paid out from budgetary funds through the offices of the State Property Fund of Ukraine. The transaction was said to involve $800,000. An extensive park of 3.5 hectares was subjected to that privatization alongside with the estate property.
- The hunting area «Sukholuchiye». This game reserve was established in 1967; it covers the total area of 37.9 ha, including 17.4 ha of forests and 9 ha of water rights. In 2007 the Yanukoviches family rented this game reserve for a long-term. According to its new landlords' plan now the reserve is partially enclosed with a trench (7 m wide, 5 m deep), definitely to defend private life of public servants against trespassing on behalf of that very public.
- «The Tea-House of Yanukovich» is the ironic nickname of the four-storied palace situated only 7 kilometers far from Yalta on the grounds of the health resort «Chernomorsky». The name of the health resort in Ukrainian means «the Black Sea Resort», and the palace literally faces the sea. An exclusively picturesque park 6.5 ha in area that boasts of masterpieces of landscape architecture and a stylish vine-grove forms an exquisite frame for the building. Its interior, decor, exterior design and the view are no less gorgeous than those of an oriental sheiks' pleasure-domes. The health resort «went private» right after the Orange Revolution. Officially it belongs to the legal entity «Dolphin 2001». According to other sources the place belongs to Anton Prigodsky1, a close friend of Victor Yanukovich.
All the above-listed assets appeared in numerous criminal cases associated with illegal privatization and frauds. Yet, it should be noted that in spite of all unquestionable, conclusive, cogent, undeniable, incontrovertible evidence they were presented, courts never pronounced objective sentences, and as often as not such cases did not even get a hearing in the court. It happened primarily because legislative and judicial branches of the country are corrupt, while criminal trials in question concerned top public officers. Today investigation into so called «privatization cases» is resumed, and now we can cherish a hope for having just and objective court proceedings at last.
Summary
So we have come to a conclusion that the key role in the political crisis in Ukraine was played by totally corrupt authorities. Metastasize at that all branch state administration. Corruption metastasis invaded all branches of state administration. Conflict of interest in the area of public purchases, astronomic «kickbacks» of budgetary funds, and the juggle «privatization» of various national assets got to be the trivial round for Ukraine. Mind you, all this was taking place under a severe economic slump in the state. The legal framework regulating the area of fighting corruption de jure meets European standards, but de facto it functions selectively, if at all. By international procedures of evaluating corrupt practices and entrepreneurial climate applied for different countries all over the world, Ukrainian ratings are close enough to those of the member states of the
the Customs Union, but they are seriously behind the ratings displayed by the member states of the European Union covered by our research. The EU member states rank very high in all ratings. Their status is a result of a clear division of branches of power, independence of the court system, excluding double standards in matters of justice, a favourable climate for entrepreneurs and anti-corruption policy. We should always strive for the best.
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