On 7 April 2011, the Ukrainian Parliament adopted a draft new law on Prevention and Combating Corruption in Ukraine (the “Anti-Corruption Law”). The Anti-Corruption Law is yet to be signed in to law by the Ukrainian President and officially promulgated but is scheduled to become effective on 1 July 2011 (with minor exceptions).
The Anti-Corruption Law establishes a new, comprehensive and progressive framework for the prevention and prosecution of corruption offences, including various restrictions and safeguards such as:
- declaring both profits and expenses by civil servants;
- a ban on engaging in commercial activities;
- pre-appointment verification of candidates’ statements in job applications; and
- the examination of draft pieces of legislation by the Ministry of Justice.
In particular, the Anti-Corruption Law determines what constitutes corruption, the persons who may be held liable for committing corruption offences. The Anti-Corruption Law also enunciates the state agencies and officials who are vested with the powers to implement measures to prevent and prosecute the corruption.
The Anti-Corruption Law defines a corruption offence as ‘the use of office with the aim of obtaining or accepting illegal benefit, or the offering of illegal benefit by a person liable for a corrupt offence, or by another person at the former’s request’.
The following categories of employees may be held liable for corruption offences:
- Individuals performing functions of the state or local government, including the president, members of the Cabinet of Ministers, parliament and local councils, civil servants, military staff and judges;
- Officers of state-funded entities, heads of NGOs in receipt of public funds and individuals that provide public services (e.g. auditors, notaries, insolvency officers, appraisers and arbitrators);
- Officials of foreign states and international organisations;
- Foreign arbitrators and international court judges; and
- Officers of private business entities, regardless of the structure of the business entity (company, partnership etc).
The Anti-Corruption Law also provides detailed provisions on accepting gifts by incumbents. For instance, any hospitality received by a person in accordance with the commonly accepted standard is not treated as corruption, unless the value of the hospitality is in excess of 50% of the statutory minimum monthly salary, or the total value of the hospitality received from one person within a year is in excess of one month’s statutory minimum monthly salary.
However, the Anti-Corruption Law also has a number of drawbacks, for example:
- the law does not prescribe any corruption offence liability for business entities;
- there is no mandatory obligation on state officials’ relatives to declare their profits and expenses;
- the distinction between the corruption offence and the crime of bribery is somewhat unclear.
Notwithstanding these drawbacks, provided that it is rigorously enforced by Ukrainian authorities, the new Anti-Corruption Law is likely to improve the investment climate in Ukraine.