ON APRIL 29, 2021, A DISCUSSION ON ANTI-CORRUPTION COMPLIANCE WAS HELD WITH THE PARTICIPATION OF THE KHARKIV REGIONAL COUNCIL FOR JUSTICE REFORM (RJC) OF THE EU PROJECT “PRAVO-JUSTICE”.
THE LEGAL COMMUNITY OF THE REGION HAD THE OPPORTUNITY TO DISCUSS EXISTING PROBLEMS IN PREVENTING CORRUPTION IN THE ACTIVITIES OF STATE AND MUNICIPAL ENTERPRISES, AS WELL AS GOVERNMENT AGENCIES WITH REPRESENTATIVES OF THE NACP AND THE PUBLIC COUNCIL AT THE NACP AND TOGETHER PROPOSE WAYS TO SOLVE THEM. The discussion was moderated by Roman Chumak, coordinator of the Kharkiv RPRP, attorney, managing partner of the Ares law firm. “The issue of fighting corruption is extremely relevant for Ukraine. The anti-corruption legislation adopted in recent years significantly tightens and changes the standards of doing business in Ukraine. Therefore, deviations from these legal and ethical requirements can lead to serious consequences, including criminal liability. That is why successful anti-corruption compliance is extremely important in the activities of both business and state-owned enterprises,” emphasized Oksana Tsymbrivska, Chief National Expert of the EU Project “Pravo-Justice”, National Coordinator of the National Coordination of the National Reforms Project.
According to Vitaliy Tkachenko, anti-corruption compliance consultant and author of studies on combating corruption in the security and defense sector, energy and transport sectors, the public has a false impression that the most dangerous corrupt officials are state and local authorities, as well as law enforcement and regulatory agencies.
In fact, the threat to the state and society is primarily posed by corrupt practices of officials of state-owned and municipal enterprises.
This is because it causes significant material losses, reputational damage to the enterprise and the state as a whole, and impedes foreign investment.
To prevent these corrupt practices, the Law of Ukraine “On Prevention of Corruption” introduced two interrelated institutions in 2014: the institution of an anti-corruption program and the institution of authorized units or persons responsible for implementing this anti-corruption program.
However, today the effectiveness of such authorized persons remains extremely low, and their activities are limited to writing anti-corruption programs and risk assessment. “As of today, the legislative regulation of the legal status and duties, the procedure for appointing the commissioner does not meet the needs required for the effective functioning of the institution of authorized persons. In this regard , immediate legislative changes are required,” said Vitaliy Tkachenko.
Vitaliy Tkachenko named the following factors that impede the activities of authorized legal entities:

• The formal approach of the management to such positions and the lack of proper conditions for the exercise of their functions and powers.
• Low awareness of the concepts of “anti-corruption activities” and “anti-corruption commissioner” among the staff of enterprises.
• The problem of legislative regulation of the procedure for appointing authorized persons.
  Currently, they are appointed by the management, which is interested in having a controlled person in this position.
  Dependence on the management also significantly limits the activities of the authorized persons.
• The lack of legislative consolidation of qualification requirements for commissioners, which gives rise to complete discretion in the appointment of a commissioner.
• The powers of authorized persons should be specified in legislation.
  Currently, such powers are regulated by NACP orders, but should be regulated by law.
• The issue of working with whistleblowers and their protection is unresolved.
• The low professional level of the commissioners themselves, etc.

In his turn, Yevhen Riyako, attorney at law, managing partner of RIYAKO&PARTNERS and representative of the Kharkiv ACCJ, spoke in more detail about the activities of anti-corruption commissioners in public procurement.
In particular, he emphasized the following problematic issues:

• Low level of verification of affiliated parties among tenderers, as well as verification of the reality and completeness of services provided by them under similar contracts in the past.
• Unbusinesslike behavior of tenderers and customers.
  For example, it is not uncommon for the winner of a legitimate tender to be extorted from the contract at the stage of signing the contract.
• Lack of the right of the Commissioner to monitor the lifestyle of top employees of enterprises who may commit corruption.

Yevgeniy Riyako also emphasized the need to increase the motivation of the commissioners.
On the one hand, by establishing disciplinary and financial liability of the manager for failure to comply with the requirements or requests of the Commissioner, which is currently absent.
On the other hand, through the responsibility of the Commissioner himself. “The Commissioner should be a person who accepts such conditions and is ready to do everything to ensure that his transparent actions to detect corruption do not fall under any shadow,” emphasized Yevhen Riyako.
Ksenia Goduieva, Senior Detective of the NABU’s Internal Control Department, who was present at the discussion, spoke about the bureau’s activities in accordance with the ISO 37001 anti-corruption standard. “The standard covers the full cycle: from prevention, i.e. preventing violations, to the moment of prosecution. In addition, the standard covers procedures for internal interaction between NABU departments,” said Ksenia Goduieva.
According to her, the NABU does not have anti-corruption commissioners like other government agencies.
These functions are performed by the Internal Control Department.
At the same time, the Commission for Corruption Risk Assessment and Internal Control, which includes heads of all independent units, is the key actor in implementing the standard.
Its powers include responding to any allegations of violations of the standard by NABU employees or other stakeholders.
For his part, Pavlo Ivanin, PhD, member of the Public Council at the NACP, Deputy Chairman of the Board of the NGO “Network of Anti-Corruption Centers”, shared the results of a study of the work of anti-corruption commissioners in state and local executive authorities conducted by the NACP in 2020.
In particular:

• As of the end of 2020, 13% of central executive authorities ignored the need to create an authorized unit or appoint an authorized person.
• 7% of state bodies do not comply with the rule on the subordination of the authorized representative to the head of the body.
• 16% of the positions of anti-corruption commissioners in state and local authorities remain vacant.
• 44% of the authorized state authorities do not conduct any anti-corruption cooperation activities with subordinate institutions.
• Only 80% of the surveyed agencies take measures to inform employees about corruption.
• Only 16% of authorities have implemented mechanisms to encourage corruption whistleblowers.

“We must focus, on the one hand, on increasing the independence and effectiveness of the Anti-Corruption Commissioner, and, on the other hand, on increasing the responsibility of the Commissioner himself for the way he conducts his activities. I have to admit that the Commissioner’s work is currently limited to submitting formal reports to the NAPC and not doing any real work at the enterprise,“ emphasized Pavlo Ivanin.
Following the discussion, the participants identified the following recommendations to improve the efficiency of the work of anti-corruption commissioners:

• Develop training programs and conduct outreach to managers and staff to better understand that compliance with anti-corruption standards helps reduce losses and avoid further problems with law enforcement agencies.
• Through legislative changes, introduce a competitive selection of commissioners for a certain period of time with the involvement of NACP representatives as supervisors.
• Establish qualification requirements for commissioners in legislation, including education and experience in anti-corruption or law enforcement.
  Also, to make it impossible to appoint persons who have committed corrupt acts in the past.
• To specify in law the functional responsibilities of the Commissioner, especially with regard to access to information and conducting official inspections and internal investigations.
• Introduce a report on the implementation of the anti-corruption program at the enterprise with a description of whether corruption has been committed.

Background:Regional Justice Reform Councils (RJRCs) were established with the support ofthe EU Pravo-Justice Project and operate in Chernivtsi, Dnipro, Kharkiv, Lviv, Odesa oblasts and Donbas. To date, members of the Councils have been actively involved in the preparation of a draft law on mediation, amendments to the Bankruptcy Code, proposals to improve legislation on enforcement proceedings, the introduction of an electronic court, and discussions on the concept of transitional justice. The RECs act as permanent working groups that promote the implementation of reforms in accordance with the bottom-up principle: by bringing region-specific challenges and their potential solutions to the level of central authorities.