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Chambers Anti-Corruption 2019 Guide: Ukraine
Author: Julia Semeniy, Sergiy Grebenyuk, Sergiy Glushchenko, Orest Stasiuk
Source: Chambers Anti-Corruption 2019 Guide
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1. Offences

1.1 Legal Framework for Offences

1.1.1 International Conventions

Ukraine is signed up to the following conventions:

  • the Council of Europe Civil Law Convention on Corrup­tion, ratified on 9 September 2005;
  • the Council of Europe Criminal Law Convention on Cor­ruption, ratified on 27 November 2009;
  • the UN Convention against Corruption, ratified on 2 De­cember 2009; and
  • United Nations Convention against Transnational Organ­ized Crime, ratified on 4 February 2004 and the Protocols.

1.1.2 National Legislation

The Ukrainian anti-corruption-related rules are fragmented and scattered around various legal acts. The most relevant include:

  • the Law of Ukraine on the Prevention of Corruption of 14 October 2014, 1700-VII. (the 'Anti-corruption Law') estab­lishing a system of public service integrity and prevention of corruption (ie, rules on conflicts of interests, gifts, the asset-reporting process, protection of whistle-blowers, etc);
  • the Criminal Code of Ukraine of 5 April 2001, 2341-III (the 'Criminal Code of Ukraine, CCU) containing key offences entailing criminal liability (eg, bribery, extortion, trading in influence, embezzlement, illicit enrichment, etc); and
  • the Code of Administrative Offences of Ukraine of 7 De­cember 1984, 8073-X (the 'Code of Administrative Of­fences') containing key offences entailing administrative liability (eg, failure to prevent and resolve conflicts of inter­est, undertake required anti-corruption measures, disclose assets, etc).

1.1.3 Guidelines for the Interpretation and Enforcement of National Legislation

The Supreme Court is responsible for summarising court practice and publishing its legal positions in certain catego­ries of cases, including those which are corruption-related, in order to ensure uniform application of legislation by the courts (Article 45 of the Criminal Code of Ukraine contains a list of criminal offences viewed as corruption-related for the purposes of the criminal punishment). The Supreme Court also has powers to issue clarifications related to leg­islation enforcement during the resolution of court cases. While not binding, such positions and clarifications are gen­erally followed by the lower courts.

Currently, the relevant legal positions of the Plenum of the former Supreme Court of Ukraine were adopted more than a decade ago, and do not reflect subsequent changes in leg­islation, except for guidance on corruption-related admin­istrative offences. However, as the new Supreme Court was established only last year, it has not yet issued any clarifica­tions or positions on corruption-related offences.

Decisions of the Constitutional court of Ukraine (responsi­ble for interpretation of the Constitution and deciding on the conformity of the laws with its provisions) may also impact the implementation of criminal law provisions. For example, in a recent decision, the Constitutional Court of Ukraine declared unconstitutional a provision of the Criminal Proce­dure Code of Ukraine that provided for the automatic exten­sion (during preparatory hearing) of the measures securing criminal proceedings (eg, custody; house arrest).

Lastly, the National Agency on Corruption Prevention (the 'NACP') issues recommendations and (non-binding) clari­fications on anti-corruption legislation (eg, on conflict of interests; filling out of declarations) within its competence. Although not binding, such clarifications are generally relied upon both by the relevant public officials (subject to limita­tions established in anti-corruption legislation) and the law enforcement agencies. The NACP also makes decisions on the implementation of certain provisions of anti-corruption laws (eg, on typical anti-corruption programmes).

1.1.4 Recent Key Amendments to National Legislation

The key recent development in Ukrainian anti-corruption legislation was the adoption of the law on the Higher Anti-corruption Court (the 'HAC') in June 2018. This court will consider corruption-related cases, including those investi­gated by the National Anti-corruption Bureau of Ukraine (the 'NABU'); it will act as the first-level court, having an ap­pellate chamber within its structure. The process of adoption is expected be completed by the end of 2018 or the beginning of 2019, and will result in the existence of a separate branch of judicial and law-enforcement bodies whose role is spe­cifically to investigate and consider top corruption-related cases (the NABU, Specialised Anti-corruption Prosecutor's Office (the 'SAPO') and the HAC). At this stage, the selection of judges to the court and its appellate chamber is ongoing.

1.2 Classification and Constituent Elements

1.2.1 Bribery

Ukrainian bribery law operates with the notion of 'undue advantage, this being defined in the Anti-corruption Law as "money or other property, preferences, advantages, services, non-monetary assets, and any other advantage that is being illicitly promised, offered, delivered, or received by the person who is authorised to perform public or local self-government functions!' An almost identical definition is included into the Criminal Code of Ukraine and covers its relevant articles, including:

  • Article 354 - active and passive bribery of an employee (not officer) of a state enterprise, institution or organisation;
  • Article 364 - abuse of authority by a public official;
  • Article 364(1) - abuse of powers by a private legal entity officer;
  • Article 365(2) - abuse of powers by providers of public services;
  • Article 368 - passive bribery of a public official;
  • Article 368(3) Part 1 - active bribery of a private legal en­tity officer;
  • Article 368(3) Part 3 - passive bribery of a private legal entity officer;
  • Article 368(4) Part 1 - active bribery of providers of public services;
  • Article 368 (4) Part 3 - passive bribery of providers of pub­lic services;
  • Article 369 - active bribery of a public official;
  • Article 369(2) - active and passive trading in influence;
  • Article 370 - provocation of bribery.

Receiving a bribe constitutes an offence. Promise, offer, ac­ceptance of offer or promise, giving, requesting, soliciting or accepting of an undue advantage are also criminalised as complete offences in both the public and private sectors.

Hospitality

Generally, any hospitality expenditures (travel expenses, meals), gifts and promotional expenditures are prohibited if made for the purpose of influencing a public official's per­formance of his or her duties, or offered by a subordinated person.

Gifts corresponding to generally recognised hospitality are, however, allowed if they remain under limits established in the Anti-corruption Law. In particular, the value of a gift (donation) may not exceed the monthly minimum subsist­ence level for a working person, established as of the date of its receipt. Within a calendar year, an official is not allowed to receive gifts with a total value exceeding two monthly mini­mum subsistence levels for a working person (applicable as of 1 January of the relevant year) from the same source. Cur­rently, the value of gifts should not exceed around EUR60 per occasion, while the total value of gifts (donations) from one source should not exceed EUR120 (based on the current value of the monthly minimum subsistence level for working persons applicable from 1 July 2018 to 30 November 2018) per calendar year.

Relatedly, Ukrainian law does not recognise so-called facili­tation payments. Any payment made with the intention or purpose of influencing the actions of the recipient, whether the recipient will abuse his or her powers or not, is prohib­ited.

Prevention of Bribery

As regards prevention of bribery, the Criminal Code does not view the absence of a compliance programme as a crime. Nevertheless, a company may be held liable for failure to prevent a certain corruption-related crime (see 1.3.3 corpo­rate Liability, below). Relatedly, failure to notify the relevant state authorities (for public officials) or management and compliance officer of a company (for company officers) of a corrupt act may constitute an administrative offence under Article 1729 of the Code of Administrative Offences.

Public Officials

In Ukrainian legislation, there is no unified definition of a 'public official' that is applicable in all situations. Three key sources to consult with for understanding of the legal con­cept of 'public official' are the Law on Public Service (which includes a definition of 'public servant'), the Anti-corruption Law (which contains a list of persons who are subject to it), and the Criminal Code of Ukraine (which provides clarifi­cation regarding officials who can be 'bribed' or held crimi­nally liable for key corruption statutes).

For the purposes of Article 364 (abuse of authority by a public official), Article 368 (passive bribery of a public of­ficial), Article 368(2) (illicit enrichment) and Article 369 (ac­tive bribery of a public official), the Criminal Code defines 'public officials' as "persons who permanently, temporarily or by special authorisation carry out functions representative of authority or local self- government, as well as permanently or temporarily occupy, in state authorities, local self-government bodies, state or municipal enterprises, institutions or organi­sations, positions which are related to the performance of or­ganisational and managerial or administrative and economic functions, or perform such functions upon special authorisa­tion given to the person by an authorised state authority, local self-government body, central authority of state governance with special status, authorised body or person of an enterprise, institution or organisation, by court or by law!' Some of the elements of this definition are further clarified in Resolution of the Plenum of the Supreme Court of Ukraine 5 of 26 April 2002, 'on the court practice in cases of bribery.

Generally, the Criminal Code provides a three-prong test to define 'public official' which requires analysis of: posi­tion with state authorities and agencies, local government, state-owned enterprises (ie, permanent or temporary status); scope of authority; and assignment of organisational, mana­gerial, administrative or executive functions. It is notable that according to these factors, employees of state-controlled companies also may fall into this category.

Foreign Public Officials

Provisions on corrupt offences are extended to foreign of­ficials. In particular, the Criminal Code provides that 'public officials' shall also include: "officials of foreign states (persons who hold positions in the legislative, executive or judicial au­thority of a foreign state, in particular jurors, other persons who perform functions of the state for the foreign state, in particular for a state authority or a state enterprise), as well as foreign arbitrators, persons authorised to decide on civil, commercial or labour disputes in the foreign state in proceed­ings that are alternative to judicial, officials of international organisations (employees of an international organisation or any other persons authorised by such organisation to act on its behalf), members of international parliamentary assem­blies in which Ukraine participates, and judges and officials of international courts!'

Private Parties

Active and passive bribery between private parties in a com­mercial setting is criminalised by Article 368(3) Paragraph 1 and 3 of the Criminal Code.

1.2.2 Influence-Peddling

Trading in influence is criminalised in Ukraine, in particu­lar, under Article 369(2) of the Criminal Code. To trading in influence is defined as to "offer, promise or give an undue advantage to a person who offers or promises (agrees) to influ­ence the decision-making of a person authorised to perform functions of state, in exchange for such undue advantage (or for giving it to the third person)!' Accepting such an offer or promise (and receiving undue advantage) for influence under the above circumstances is also criminalised.

1.2.3 Financial Record-Keeping

There are a number of offences in the Criminal Code relating to inaccurate corporate books and records and/or dissemi­nation of false information, including:

  • Article 366 (forgery in office) - drawing up and issuing knowingly false official documents, putting any knowingly false information into official documents, or otherwise fab­ricating documents;
  • Article 366-1 (declaration of false information) - declara­tion of knowingly false information by a person authorised to perform functions of the state or local self-government, provided for in the Law of Ukraine 'On the Prevention of Corruption', or wilful non-submission of such a declara­tion;
  • Article 220-2 (falsification of financial documents and re­cords of a financial organisation) - hiding the insolven­cy of a financial institution or grounds that arise for the revocation of its licence (including dissemination of false information in order to hide signs of bankruptcy, persis­tent financial insolvency, grounds for licence revocation or recognition as insolvent);
  • Article 222 (financial fraud) - filing knowingly false infor­mation to government agencies, authorities of the Autono­mous Republic of Crimea or local government authorities, banks or other creditors in order to obtain subsidies, sub­ventions, grants, loans or tax credits, where no elements of criminal offence against property are involved.

Further, Article 172(6) of the Code of Administrative Of­fences establishes administrative liability for violation of the requirements of the income- and assets-reporting process.

1.2.4 Public Officials

Generally, misappropriation of public funds by a public of­ficial may entail criminal liability under Article 191 Part 2 of the Criminal Code, which prohibits "misappropriation, embezzlement or conversion of others' property due to abuse of office or by a person to whom it was entrusted or in whose control it was!'

Unlawful taking of interest by a public official may entail criminal liability under various provisions of the Criminal Code, including:

  • Article 368 - passive bribery of a public official;
  • Article 364 - abuse of authority by a public official; and/or
  • Article 191 - misappropriation, embezzlement or conver­sion of property by abuse of office.

In relation to favouritism by a public official, granting an unjustified advantage to a third person may fall under scope of Article 364 of the Criminal Code of Ukraine (abuse of au­thority), which reads as follows: "abuse of authority or office, i.e. wilful use by official of authority or office contrary to the service interests with a purpose to obtain undue advantage for itself or other individual or legal entity' where it caused any substantial damage to legally protected rights, freedoms and interests of individual, or state or public interests, or interests of legal entities.

Also, the Law of Ukraine On Public Service 889 of 10 De­cember 2015 (the 'Public Service Law') obliges public serv­ants to be politically impartial. Article 10 of this law states that public servants must implement legal directives inde­pendently of their own political views or the political affilia­tion of the authority. Relatedly, public servants of the highest category are not allowed to be members of a political party or members of the local council. It is prohibited for any public servant to be involved in political campaigns or in events organised by political parties, or to use their public office for any political purposes.

There is no specific law on nepotism in Ukraine. However, the Anti-corruption Law and the Public Service Law pro­vide certain indirect regulations and limitations relating to nepotism. Article 27 of the Anti-corruption Law prohibits public officials to be in direct subordination, or have in di­rect subordination, any close persons. If such subordination occurs, an official has to report and undertake measures to resolve the situation, as in the case of conflict of interest. Accordingly, the subordinated person is required to either change their position in order to avoid direct subordination to the close person, or to resign.

1.2.5 Intermediaries

The Criminal Code of Ukraine contains no specific article targeting an intermediary in provision or receipt of bribe. Nevertheless, an intermediary may still be held liable under the general rules of complicity (eg, as accessory or co-prin­cipal), taking into account his or her intent and, in whose interest, and on whose side and initiative he or she acted.

1.3 Scope

1.3.1 Geographical Reach of Applicable Legislation

Generally, the Criminal Code of Ukraine applies to offences committed abroad by Ukrainian citizens and stateless per­sons permanently residing in Ukraine. More specifically, the Criminal Code applies to certain corrupt acts committed outside Ukraine by foreigners or stateless persons who do not permanently reside in Ukraine, either in complicity with an official who is a Ukrainian citizen or with the participa­tion of such an official (eg, in cases where a corrupt payment is made outside Ukraine but relates to an act which occurs in Ukraine).

1.3.2 Corporate Liability

In Ukraine, companies are not considered subjects of crimi­nal offences in the same way that individuals are. However, 'measures of a criminal law nature' may apply to a company if its authorised person commits certain corruption offences on behalf and in the interest of the company. Apart from this, as mentioned in 1.2.1 Bribery, above, a company may be responsible for failure to prevent a corruption-related crime (ie, bribery of various officials or abuse of influence).

Importantly, application of the 'measures of a criminal law nature' to the company is not autonomous in the sense that such corporate liability is linked to that of the 'authorised person' who committed the offence. Put differently, such measures are secondary to individual liability and require 'commission of the crime', inter alia, by the authorised per­son on behalf and in the interests of the legal entity.

1.4 Limitation Periods

Under the Criminal Code, the statute of limitation for cor­ruption offences is, in most instances, three or five years. In certain cases, however, the limitation period may exceed ten years.

Importantly, this statute of limitation is not suspended dur­ing the time in which a person enjoys immunity from pros­ecution.

Under the Code of Administrative Offences, the statute of limitation for administrative corruption offences is two years.

2. Defences and Exceptions

2.1 Defences

Ukrainian law does not provide for any statutory defences for bribery (such as exemption for facilitation payments, or the availability of a compliance programme as protection from the imposition of criminal punishment in cases of brib­ery of various officials or undue influence by its officials), or other corruption-related offences.

In criminal proceedings, the general defence would be to challenge the prosecution (which bears the burden of proof) to prove the constitutive elements of the relevant corruption-related offence.

Further, the Criminal Procedure Code of Ukraine provides for the possibility of:

  • challenge a notice of suspicion issued by the prosecution before an investigative judge (if such a notice is served, an individual becomes a suspect and might be subject to rel­evant restrictive measures in a criminal proceeding);
  • request that the court recognise evidence provided by the prosecution as improper or inadmissible; and
  • file an appeal and cassation appeal against the judgment rendered.

The above Criminal Procedure Code also enables partici­pants in the criminal proceeding to request its closure on a procedural basis (eg, like based on a reasonable term of pre-trial investigation principle).

The fine imposed on legal entities could be less (within the range established) if a company proves that measures were taken by its "authorised person" (eg, director, shareholder) to prevent a criminal offence from occurring (please also refer to 2.5 Safe Harbour or Amnesty Programme, below).

2.2 Exceptions

As there are no statutory defences, no exceptions apply.

2.3 De Minimis exceptions

There are no de minimis exceptions for bribery offences, whether bribery of public officials, employees of the state, municipal enterprises, institutions and organisations, or commercial bribery.

The threshold for criminal responsibility for misappropria­tion, embezzlement or conversion of property by malversa­tion is insignificant (around EUR5), while for some other corruption-related offences such thresholds are much high­er. As an example, criminal liability for unjust enrichment starts from around EUR27,000 (there is no administrative liability for unjust enrichment below this amount).

2.4 Exempt Sectors/Industries

Ukrainian laws provide no exceptions from bribery and other corruption-related offences for any particular indus­tries or sectors.

State and municipal authorities and organisations (fully funded by state or municipal funds) are exempt from the fines applicable to legal entities if their officials or employees are convicted for bribery-related offences, as well as some other offences.

2.5 Safe Harbour or amnesty Programme

Ukrainian laws do not offer much in relation to safe harbour programmes based on self-reporting or adequate compli­ance procedures.

An individual who offers, promises or gives a bribe (im­proper advantage) to a public official or other person (except foreign public officials) can be fully released from criminal liability if he or she self-reports to law enforcement following such actions (before such authority learns about the offence from other sources) and provides active assistance with the disclosure of the offence.

For other corruption-related offences, self-reporting is viewed as a mitigating circumstance, although it should be noted that, for such offences, it is not permitted to impose a punishment under the lowest threshold established or to impose a lighter main punishment. Where applicable, reme­diation efforts are also viewed as a mitigating circumstance for corruption-related offences.

Adequate compliance procedures, as well as other measures taken by companies to prevent the commission of criminal offences by their officials or representatives, could result in the imposition of a lesser fine (within the established range). At the same time, the law establishes fixed amounts for fines in cases where the improper advantage is obtained by a le­gal entity and it is possible to calculate its amount, and it would be unlikely in such case that the courts would apply a more lenient punishment. No case law is yet available in this regard.

Under Ukrainian law, in the case of imposition of punish­ment, a legal entity is responsible for full compensation of damages caused as well as of the amount of undue advantage that was or could have been received.

No specific amnesty programmes are designed for bribery or other corruption-related offences. As a general rule, in­dividuals convicted for such offences may only be partially released from the punishment imposed (if at least two thirds of the punishment is served) and in accordance with the Law on Amnesty.

At the same time, the relevant Law on Amnesty may ex­clude from its scope individuals convicted for bribery or other corruption-related offences (as in 2017); or individuals convicted for certain corruption-related offences (as in 2014, for acceptance of proposal, promise or receipt of improper advantage by public official). Also, punishments imposed for corruption-related offences could be replaced by the more lenient punishments (if at least half of the punishment is served).

3. Penalties

3.1 Penalties on Conviction

The penalties for the offences listed above are established in the Criminal Code of Ukraine. In the case of corruption-related offences, they vary from fine to imprisonment, and include public works, corrective works, arrest and restraint of liberty. As additional punishment, forfeiture of property, derivation of the right to occupy certain positions or engage in certain activities also apply (optionally or mandatory) as well as a fine. All fines are set in relation to the minimum subsistence level for working adult individuals, a figure which is subject to regular review. The below fines are in place as of November 2018, and are based on the current exchange rate from local currency to EUR.

Generally, penalties depend on the nature of the criminal offence (eg, receipt of bribe, unjust enrichment, improper influence, or abuse of office), the type of official who com­mitted the offence or to whom the improper advantage was offered (eg, private or public; rank of public official), the amount to which the criminal offence relates (eg, significant, large-scale, especially large-scale), and other circumstances (eg, if the offence was committed repeatedly, or as part of a conspiracy).

As an example, receipt of a bribe by an official occupying an especially responsible position (ie, the President, minis­ters, members of parliament, judges of the Supreme Court or heads of the other central state bodies) is punished by eight to 12 years of imprisonment, while receipt of a bribe by an official occupying a responsible position (ie, other judges or prosecutors) is punished by five to ten years of imprisonment. In both instances, forfeiture of property and prohibition from occupying certain positions for up to three years are also applied. Acceptance of a promise or proposal to receive a bribe, or a request to provide it, are punished in the same way.

Receipt of a bribe by other public officials is punished by a fine (from EUR530 to EUR800), arrest for three to six months or by imprisonment for two to four years with prohi­bition from occupying certain positions for up to three years (without forfeiture of property). Acceptance of a promise or proposal to receive bribe are punished in the same way. Article 368 of the Criminal Code of Ukraine also establishes aggravated circumstances for commitment of this offence by other public officials. As an example, if the amount of a bribe received by such an other public official is large, then the same penalties are applied as in the case of commitment of this offence by an official occupying a responsible position (as outlined above).

Lighter punishment is envisaged for the receipt of a bribe by a person providing public services (eg, a notary, private executor or court expert) and by officials of private legal enti­ties. Such an offence (without aggravated circumstances) is punished by a fine ranging from EUR400 to EUR530, one to two years' corrective labours, arrest for up to six months, restraint of liberty for two to five years or imprisonment for the same term with derivation of the right to occupy certain positions or engage in certain activities for up to three years.

Receipt of a bribe by an official of a private legal entity (with­out aggravated circumstances) is punished by a fine of be­tween EUR265 and EUR400 or corrective works for up to two years, by arrest for up to six months, restraint of liberty for up to three years or imprisonment for the same term with derivation of the right to occupy certain positions or engage in certain activities for up to two years. Acceptance of a promise or proposal to receive a bribe are punished in the same way.

Punishment for the bribing of officials will also depend on their status. Bribing an official occupying an especially re­sponsible position is punished by imprisonment for between five and ten years and possible forfeiture of property; bribing an official occupying a responsible position is punished by imprisonment for between four and eight years.

Bribing other officials (without aggravated circumstances) is punished by a fine (from EUR265 to EUR400), restraint of liberty from two to four years or imprisonment for the same period, and does not involve forfeiture of property.

A lighter punishment is established for bribing officials of private legal entities or person providing public services. In such cases, the above offences (without aggravated circum­stances) result in a fine (from EUR80 to EUR200), 100 to 200 hours of public works, restraint of liberty up to two years or imprisonment for the same term.

Legal entities might be punished for certain offences (includ­ing bribery of various officials or undue influence) commit­ted by their officials or representatives, or for their failure to take measures to prevent the corruption which resulted in the commitment of the same offences by its employees (not officials). In the above instances, the penalty is in the form of a fine (double the amount amount of the undue advantage unlawfully received by such an entity). If the undue advan­tage was not received or its amount cannot be calculated, the court applies a fine, dependent on a gravity of the criminal offence, of between EUR2,600 and EUR26,500.

The penalty for abuse of power or official position depends on the amount of damages and may result in arrest for up to six months, restrain of liberty for up to three years orimpris-onment for the same term, with a fine of between EUR130 and EUR400 and a deprivation of the right to occupy certain positions or engage in certain activities for up to three years. If the damages exceeded EUR7,000, the offence is punished by imprisonment from three to six years with deprivation of the right to occupy certain positions or engage in cer­tain activities for up to three years, and a fine ranging from EUR265 to EUR530.

The penalty for misappropriation, embezzlement or conver­sion of property by abuse of office depends on the amount of the funds in question and/or other aggravated circum­stances. Such an offence is punished by a restrain of liberty for up to five years or imprisonment for the same term with a deprivation of the right to occupy certain position and engage in certain activities for up to three years. The severity of the punishment increases in the case of aggravated cir­cumstances. The most severe penalty applies if the offence is committed by an organised group or the amount in question is especially large (ie, greater than EUR16,500).

Finally, the thresholds of penalties for certain corruption-related offences allow for the special confiscation (ie, seizure) of the property that is the subject of the criminal offence, or its related tools or proceeds.

Penalties for corruption-related offences prescribed in the Code of Administrative Offences of Ukraine also depend on the nature and type of the offences, and include a fine from around EUR26 to EUR1,300 with forfeiture of the received income or a gift (where applicable) and deprivation of the right to occupy certain positions or engage in certain activi­ties for one year.

3.2 Guidelines applicable to the assessment of Penalties

The Criminal Code of Ukraine provides for penalties them­selves as well as the main rules for their application. As a general rule, the court shall impose punishment within the limits prescribed by a sanction of the article under which a person is convicted, taking into consideration the gravity of the committed offence, the character of the guilty person and any circumstances mitigating or aggravating the pun­ishment.

The Criminal Code of Ukraine does contain a non-exclusive list of circumstances that have a mitigating effect on a pun­ishment (eg, surrender, sincere repentance and assistance in the exposure of the criminal offence, or compensation of damages caused) and, in principle, enables courts to impose punishments below the minimum penalty established in the respective articles if a number of mitigating circumstances apply. However, corruption-related criminal offences are exempt from this provision and other relevant provisions.

The Criminal Code of Ukraine defines repetition of an of­fence as an aggravating circumstance, meaning that punish­ment will be more severe than for an offence committed once only (this is also true for offences committed as part of a con­spiracy, for which there are also harsh consequences). Some articles establishing liability for corruption-related crimes also view the repetition of an offence as an aggravated form of the offence, and provide for more severe punishment in such cases. As an example, bribing of a public official (in­cluding the promise of an offer to bribe) is punished by fine or restraint of liberty for two to four years or imprisonment for the same period, while repetition of such an offence leads to imprisonment for three to six years as well as a fine and possible forfeiture of property.

Corruption-related offences are also exempt from the provi­sions that provide for the release of individuals from crimi­nal liability in the case of low- or medium-gravity or negli­gent offences committed for the first time under established conditions (eg, in the case of surrender, sincere repentance and assistance in the exposure of the criminal offence and compensation of the damaged caused).

The Criminal Code of Ukraine also governs the application of criminal penalties to the legal entity. In such cases courts shall consider the gravity of the criminal offence, the de­gree of consummation of the criminal intent, the nature and amount of the undue advantage received (or that could have been received) by the legal entity and the measures which were taken by a legal entity to prevent the criminal offence from occurring.

Certain guidance on the application of the rules established in the Criminal Code of Ukraine is provided in resolutions of the former Supreme Court of Ukraine and clarifications of the current Supreme Court (addressing, for example, cumu­lative offences, repeated offences, choice the penalty when there are several possible alternatives, and the application of relevant type of penalty). However, there are no unified documents or guides addressing issues of sentencing (ie, equivalent to something like the Sentencing Guidelines in the US).

Under the Code of Administrative Offences of Ukraine, the courts shall impose punishments within the limits pre­scribed by a sanction of the respective article, considering the nature of the committed offence, the character of the guilty person, their degree of guilt, the financial situation and any circumstances either mitigating (eg, sincere repent­ance or compensation of damages) or aggravating the pun­ishment.

4. Compliance and Disclosure

4.1 National Legislation and duties to Prevent Corruption

Apart from some additional regulation concerning public officials, the national legislation describes duties for prevent­ing corruption rather generally. Legal entities shall ensure that they develop and take measures that are necessary and reasonable in order to prevent and combat corruption. Spe­cifically, CEOs and shareholders of legal entities shall evalu­ate corruption risks on regular basis and take the relevant anti-corruption measures.

Officers and other employees of all legal entities shall comply with the following requirements:

  • not to commit or participate in the commitment of cor­ruption offences related to the activity of the legal entity;
  • to refrain from any behaviour that may be regarded as a preparation to commit a corruption offence related to the activity of the legal entity;
  • to promptly notify the compliance officer, CEO or share­holders if any incitement to commit a corruption offence related to the activity of the legal entity occurs, or if a cor­ruption offence was committed by another employee or other person; and
  • to promptly notify the compliance officer, CEO or share­holders of an actual or potential conflict of interests.

Setting up an anti-corruption programme is obligatory for 'qualifying entities', ie:

  • state-owned and municipal companies, as well as compa­nies where the state or municipal-owned share is higher than 50%, if the average number of employees in a given year exceeds 50 and the gross revenue exceeds UAH70 mil­lion (around EUR2.2 million); and
  • legal entities that are participants to public procurement procedure or preliminary qualification for such procedure where the value of procurement is no less than UAH20 million (around EUR625,000).

The anti-corruption programme of a qualifying entity should be based on the Model Anti-Corruption Programme of a Legal Entity (the 'model anti-corruption programme') ap­proved by the National Agency for Preventing Corruption. This anti-corruption programme should be implemented by a responsible officer appointed by the qualifying entity (the 'compliance officer').

The Model Anti-Corruption Programme provides more de­tails regarding duties to prevent corruption. Those include:

  • regular (at least annual) evaluation of corrupt risks;
  • regular anti-corruption training;
  • anti-corruption verification of business partners;
  • implementation of a whistle-blowing mechanism;
  • implementation of procedures to prevent and settle con­flicts of interests;
  • conducting internal investigations; and
  • establishing internal restrictions on gifts.

Other legal entities may implement anti-corruption pro­grammes on a voluntary basis. For such entities, the said Model Anti-Corruption Programme is not binding.

4.2 Disclosure of Violations of Anti-bribery and Anti-corruption Provisions

There are not generally any disclosure obligations, except that notification be given to a compliance officer, CEO or shareholders of a legal entity, as described in 4.1 national Legislation and duties to Prevent corruption, above. The Model Anti-Corruption Programme applicable to the quali­fying entities does, however, require the CEO or sharehold­ers of a legal entity to immediately inform the competent authorities in the event that signs are found of a corruption offence entailing administrative or criminal liability.

4.3 Protection afforded to whistle-blowers

The Anti-corruption Law provides for the protectionary measures applicable to whistle-blowers, ie individuals mak­ing notification regarding the breach of anti-corruption re­quirements by others. Generally, a whistle-blower (or his or her family member) may not be dismissed or forced to leave a job or position, undergo disciplinary measures or other negative measures such as transfer to another job or posi­tion, evaluation, change of employment terms, refusal for promotion, salary reduction etc, or be threatened with such measures in connection with a notification he or she has made. The information regarding the whistle-blower shall only be disclosed if he or she consented to such disclosure.

Specific protectionary measures may be taken if there is a threat to life, housing, health or property of the whistle-blower (or his or her family) in connection with the respec­tive notification. These include:

 

  • personal guard; guarding of housing and property;
  • provision of special means of individual protection and a danger alarm;
  • use of technical means of control and tapping, visual sur­veillance;
  • change of documents and appearance;
  • change of job or school;
  • relocation;
  • accommodation with a pre-school or social protection in­stitution;
  • ensuring confidentiality of information regarding the per­son; and
  • closed trial.

 

4.4 Incentives for whistle-blowers

The law on NABU provides that the agency has the right to "financially and morally encourage individuals who assist in preventing, detecting, ceasing and investigating criminal of­fences!' However, no specific programme has been imple­mented in this regard and no cases of providing such incen­tives have been publicly reported.

4.5 Location of Relevant Provisions Regarding whistle-blowing

The relevant provisions are mainly located in the Anti-cor­ruption Law, the Law of Ukraine 'On Ensuring the Safety of Persons Who Participate in Criminal Proceedings', the Criminal Procedure Code of Ukraine, and the Model Anti-corruption Programme of a Legal Entity approved by Deci­sion of the National Agency on Preventing Corruption of 2 March 2017, 75.

5. Enforcement

5.1 Enforcement of anti-bribery and Anti-corruption Laws

Corruption-related criminal offences are enforced by the investigative authorities, prosecutors and courts (for more detail, see below). The enforcement process can commence on receipt of a complaint or relevant information from any other sources. If there is sufficient evidence, a notice of sus­picion is served to the individual, followed by an indictment. The case is then transferred to a court which, upon consid­eration of all the evidence, decides whether or not a person is guilty and determines the punishment (where applicable). The civil claims to recover damages caused by a criminal of­fence (where applicable) may be filed and considered within the criminal proceeding.

As to violations of anti-corruption laws falling under the scope of administrative offences (eg, breach of the rules gov­erning gifts), liability for which is set forth in the Code of Administrative Offences of Ukraine, the National Agency on Corruption Prevention (NACP), and police (except for one offence) are entitled to produce protocols (reports) on the administrative offence (containing information on the circumstances of the offence, evidence that confirms its com­mitment, etc), but decision on liability and the penalty to be imposed is taken by court.

The NACP (which became fully operational in August 2016) also deals with compliance issues (eg, it approves sample anti-corruption programmes for state and municipal enter­prises, as well as legal entities willing to participate in large public procurement). Further, the NACP has a right to adopt binding decisions implementing relevant provisions of anti-corruption laws (eg, classifying public positions according to anti-corruption risks, inter alia, for the purpose of declara­tions reviews) and to develop non-binding guidance on the provisions of anti-corruption laws.

As to civil enforcement, the Anti-corruption Law provides that transactions concluded in result of violations of its re­quirements may be recognised as invalid in court. The Civil and Commercial Codes of Ukraine also stipulate that trans­actions may be challenged in court (and recognised as null and void) if they contradict the interest of the state and so­ciety (providing the possibility to collect benefits received under such transactions to the state budget). Presently, the NABU tries to rely on the above provisions, filing relevant claims to the courts in support of the criminal investigation it conducts (where applicable).

5.2 Enforcement Body

In criminal proceedings, enforcement bodies include inves­tigative authorities, prosecutors and courts (presently the courts of general jurisdiction, and in future also HAC).

The investigative authorities conduct pre-trial investiga­tions (ie, they undertake investigative and other procedural measures to establish the perpetrator and collect evidence). Prosecutors provide procedural guidance and oversight of such investigations. This includes issuance of instructions to investigators, endorsement and approval of their actions and motions to investigative judges; submission of indictments to the court and supporting charges on trial. Prosecutors have the powers to initiate criminal proceeding with sub­sequent transfer of files to the relevant investigative body.

For certain actions (such as searches or appointment of ex­perts) investigators must the seek approval of the investiga­tive judges. The investigative judges are also responsible for deciding on the majority of measures to secure a criminal proceeding (eg, seizing property and placing of individuals in custody).

The Criminal Procedure Code of Ukraine provides that the corruption-related offences are investigated by the NABU, the police (nb, both the NABU and the police have a right to conduct intelligence operations) and, in certain instances, the State Investigations Bureau (which was recently put in operation).

NABU detectives investigate such offences if one of the be­low applies:

  • the offence involves top officials, eg, a President whose of­fice has been terminated, ministers, members of the par­liament and local councils, state servants of 'A' category, or heads of state or municipal enterprises;
  • the subject of the offence or damages caused by it exceed EUR28,700 (if committed by a public official or an official of a state or municipal enterprise); or
  • the offence involves bribing foreign or top officials.

The NABU also investigates the criminal offence of declara­tion of untrue information (Article 366-1 of the Criminal Code of Ukraine) and could investigate money laundering (Article 209 of the Criminal Code). Furthermore, in certain instances and if approved by the SAPO, the NABU can inves­tigate criminal offences subject to the competence of other investigative authorities.

The Specialised Anti-Corruption Prosecutor's Office (SAPO) oversees criminal investigations conducted by NABU detec­tives.

Investigators of the State Investigations Bureau will be re­sponsible for pre-trial investigations of such offences if com­mitted by officials of the NABU and the SAPO.

In all other instances, the relevant divisions of the national police are in charge of the pre-trial investigation of corrup­tion-related offences. Supervision is provided by prosecutors of the Prosecutor General's Office or other prosecution of­fices. The Prosecutor General's Office will also be responsi­ble for oversight of criminal investigations conducted by the State Investigations Bureau.

Currently, the Prosecution General's Office (and other pros­ecution offices as well) also conducts some criminal inves­tigation in corruption-related offences that were initiated prior to establishment of the NABU or before the prosecu­tion offices lost the right to conduct such investigations. This has led to certain disputes between the NABU and PGO over these cases.

Until establishment of the HAC, which is currently un­der way, consideration of corruption-related offences falls within the territorial jurisdiction of general courts. As of October 2018, among 166 cases transferred by the NABU to the courts for trial, the preparatory court sessions are still pending in 48 (due to different factors).

As to administrative offences, the NACP and police are gen­erally responsible for producing protocols on corruption-related offences and their submission to courts. Under the statistic available for 2017, the number of protocols prepared by the police exceeds the number of those completed by the NACP several times over.

Aside from the powers mentioned above, the NACP issues warnings to eliminate violations of anti-corruption require­ments and is entitled to challenge the acts and decisions adopted in result of such violation in the courts. Further­more the NACP, whose main responsibility is the review of declarations made by public officials, has the right to request explanations of information included in declarations and to carry out full examination of such declarations, where ap­plicable.

If the NACP detects that untrue information was included into declaration, it shall prepare the reasoned conclusion and transfer the latter to investigative bodies (as the offence may fall under Article 366-1 of the Criminal Code of Ukraine). The investigative authorities shall consider such a conclusion in due course.

5.3 Process of application for documentation

All investigative authorities have the same tools to collect evidence, which include intelligence, working with regis­ters, interrogations, requests, temporary access to items and documents, and searches.

Generally, the NABU and the police have access to informa­tion of all registers (eg, the companies register, real estate register and register of enforcement proceedings) held by the Ministry of Justice of Ukraine and other state or munici­pal authorities, as well as to all automated information data systems and databases (eg, of cargo, vehicles and individu­als crossing the Ukrainian border) administrated by such authorities.

Also, the NABU and the police are entitled to request in writing information and documents relevant to criminal proceeding from the state and municipal authorities, enter­prises, officials and individuals. Failure to respond to such a query may result in a temporary access or a search.

Further, the NABU and the police have a right to apply for temporary access to items and documents (ie, people or legal entities that possess required items or documents shall pro­vide the investigator with the possibility to review them and make the copies or seize originals of documents), or search warrants. Motions of the investigator for temporary access or search shall be approved by the prosecutor and granted by the investigative judge.

Relevant rulings could also be enforced (where applicable) abroad by means of international legal assistance (Ukraine is party to a number of bilateral treaties relating to crimi­nal matters, as well as to the 1959 European Convention on Mutual Assistance in Criminal Matters). This tool, as well as other types of international legal assistance, is actively used by the NABU (which recently reported that it submit­ted around 400 requests for international assistance, and that some proceedings key evidence was obtained from abroad). During pre-trial investigation, the NABU prepares and sends the requests for international legal assistance directly by itself, while the police does it via the PGO.

Information falling under the scope of bank secrecy could be obtained from banking institutions based on a court rul­ing (for temporary access or search). Also, the NABU and the police can obtain such information for a certain period upon written request to a bank (in relation to the accounts of relevant legal entitiesor individual entrepreneurs, but not private individuals). Such information shall be provided by banking institutions in respect to both legal entities and in­dividuals if requested by the National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other criminal offence (ARMA).

ARMA, which become fully operational last year, is a special governmental body responsible for tracing and management of assets, ie, property subject to seizure in criminal proceed­ings. ARMA traces such assets in response to requests made by the investigative authorities, prosecutor's office, or courts located in Ukraine and abroad (at pre-MLA level). Addition­ally, during criminal proceeding, it manages assets seized (under arrest) in the course of such a proceeding in order to preserve or maintain their commercial value.

5.4 Discretion for Mitigation

As a general rule, the court is to decide whether an indi­vidual is guilty and the penalty to be imposed (where ap­plicable). As stated above, for corruption-related offences the Criminal Code of Ukraine does not allow for imposition of a punishment which is lower the threshold established in its relevant provision, or for the choice of a lighter type of punishment. Neither do options such as release of per­sons committing criminal offences for the first time from criminal liability (under certain circumstances), or release of a person from the punishment (under certain conditions) apply to corruption-related offences.

As to different types of agreements (self-reporting is ad­dressed above), no procedure specifically targeting corrup­tion-related offences is available.

Currently, the Criminal Procedure Code provides for the possibility that the prosecutor and the suspect or the accused enter into a guilty plea agreement ('Plea Agreement').The law also sets the procedure by which such an agreement is concluded (ie, initiation, applicability and further approval by court), makes the requirements for its content and de­fines its consequences (including subsequent breach). A Plea Agreement may be entered into in criminal investigations targeting corruption-related offences if such offence:

  • falls under criminal misdemeanours, is of minor or me­dium gravity, or grave (see below);
  • amounts to especially grave criminal offences investigated by the NABU (if the suspect or accused provides informa­tion about commitment of the offence by other person, and such information is confirmed by evidence); and/or
  • is especially grave, committed by conspiracy, organised group or criminal organisation or terrorist group (only under specific circumstances).

By virtue of the above, the parties may bargain and agree upon the level of penalties to be applied. This might be im­portant, inter alia, when possible penalties range from fine to imprisonment. At the same time, such punishment shall be within the range prescribed in the respective article and is (along with the entire agreement) subject to approval by court.

The Criminal Code of Ukraine defines a minor criminal of­fence as an offence punished by deprivation of liberty for up to two years or by another lighter punishment (excluding a fine above EUR1,600 as the main punishment). A medium-gravity criminal offence is an offence punished by a fine of up to EUR5,300 or by deprivation of liberty for up to five years (Article 12). A grave criminal offence is defined as an offence punished by fine (as the main punishment) of up to EUR13,200 (as the main punishment) or by deprivation of liberty for up to ten years (Article 12).

Under Article 12 of the Criminal Code of Ukraine, an es­pecially grave criminal offence is one punished by a fine ex­ceeding 25,000 of tax-free income for individuals, ie, exceed­ing circa EUR13,200 (as the main punishment), deprivation of liberty for more than ten years or life imprisonment.

5.5 Jurisdictional reach of the Body/Bodies

As a general rule, the pre-trial investigation in criminal proceedings is conducted by an investigator of investigative authority, within whose territorial jurisdiction the a criminal offence has been committed. If the place of commitment of the criminal offence is unknown, or the offence was com­mitted outside of Ukraine's territory, the prosecutor decides which investigative authority will conduct pre-trial inves­tigation (considering the place where signs of the criminal offence were discovered, the location of the suspect or ma­jority of witnesses, the place where the criminal offence was completed or its consequences occurred). Disputes regard­ing jurisdiction are resolved by the head of the prosecution office of the higher level.

This being the case, investigators and prosecutors are enti­tled to carry out investigative actions and covert investigative activities (intelligence) within the territory under jurisdic­tion of another investigative authority, or to instruct the rel­evant investigative authority to carry out such actions.

Departments of the police (as stated above, the national po­lice is in charge of investigating corruption-related offences) are generally structured in line with the administrative ter­ritorial boundaries, ie, in towns (some towns still have no police departments; in large cities there is more than one department, structured according to the city districts), dis­tricts and regions.

The corruption-related offences are investigated by the respective authorities in accordance with territorial juris­diction. In complicated criminal proceedings, the case can be taken to a higher level or to the group of investigators (including investigators from different departments and/or divisions).

The NABU (which, as stated above, is entitled to investigate certain corruption offences) has its central office in Kyiv and has three territorial divisions (in major cities in western, southern and eastern Ukraine) whose territorial jurisdic­tion covers the respective regions of Ukraine.

According to the general rule, criminal proceedings shall be conducted by the court within whose territorial jurisdiction a criminal offence has been committed.

For those cases where several criminal offences have been committed, criminal proceedings shall be conducted by the court within whose territorial jurisdiction the graver crimi­nal offence has been committed. Where it is not possible to establish the place of commission of a criminal offence, the criminal proceedings shall be conducted by the court within whose territorial jurisdiction the pre-trial investigation has been completed.

In certain situations, cases can be transferred to court with­out a direct link to the territorial jurisdiction (eg, if it is im­possible to form a bench in the court of initial choice).

5.6 Recent Landmark Investigations or decisions Involving Bribery or corruption

The number of active anti-corruption investigations cur­rently being carried out is enormous - hundreds of new in­vestigations have made headlines over the past few years. It should be noted, however, that the situation regarding these investigations is far from perfect, due to shortcomings in the quality and motives of some investigators. Nevertheless, many of them could be described as unprecedented in terms of both law (eg, charges filed, set of provisions invoked) and practice (considering, inter alia, their scale and complexity) as well as the level of discussion sparked and media cover­age received.

As an example, in July 2018 the NABU completed a pre-trial investigation relating to a criminal proceeding against, inter alia, a businessman and a member of the Ukrainian parlia­ment. The charges include, among others, creation of and participation in a criminal organisation (Part 1 of Article 255 of the CCU); embezzlement of property by malversa­tion on an especially large scale (Part 4 of Article 28; Part 5 of Article 191 of the CCU); abuse of power by an officer of a private legal entity, with severe consequences (Part 4 of Article 28 and Part 4 of Article 364-1 of the CCU), and money laundering on an especially large scale (Part 3 of Ar­ticle 209 of the CCU). Under the Criminal Code of Ukraine, offences under Article 364-1 and Article 191 are viewed as corruption-related.

According to the prosecution, the individuals mentioned above managed a criminal organisation whose participants embezzled more than EUR23 million of funds from a state enterprise during 2013-2016 under joint operation agree­ments (extraction and sale of natural gas) via a corruption scheme. The extracted natural gas was sold to intermediaries at a price below its actual cost, and these intermediaries in turn sold it for much higher prices, transferring the margin abroad. Eight individuals entered into plea agreements with the prosecution within this and related criminal proceed­ings. Indictments regarding 12 of the accused have already been submitted to the court. Seven suspects, including the member of the parliament, are still wanted.

The individual at the centre of this investigation fully de­nies the charges and considers them politically motivated. A Spanish court granted permission to extradite him to Ukraine, but the process is still pending due to consideration of his request for political asylum. The outcome remains to be seen. In parallel, NABU completed pre-trial investigation in relation to this member of parliament in absentia and intends to proceed with indictment in the court.

In other criminal proceedings relating to the same individu­als, the former head of the State Fiscal Service of Ukraine is charged under Part 2 of Article 364 of the Criminal Code of Ukraine (abuse of power resulting in severe consequences).

Another significant corruption-related case concerned a member of the Higher Judicial Council, and resulted in their acquittal. In September 2015, a person was detained when accepting a large amount of funds from the representative of a private legal entity. According to the prosecution, these funds were to be transferred to a member of the Higher Judi­cial Council, allegedly in return for his influencing judges to ensure that the decision in a particular commercial dispute would be made in favour of the private entity. The amount in question was USD500,000. This being the case, the GPO brought the charges under Article 190 of the Criminal Code of Ukraine (fraud on an especially large scale or by an or­ganised group), but not under corruption-related articles.

After consideration by the court, the case resulted in acquit­tal - reportedly due to violations of the GPO (which was in charge of the investigation). Among other things, the court of the first level pointed out breach of competence, declared the key evidence inadmissible and questioned the motives of the investigation. The GPO intends to appeal.

5.7 Level of Sanctions imposed

As mentioned above, Ukrainian courts are empowered to decide on the level of sanctions. Nevertheless, in their im­position of punishment for corruption-related offences, the courts are bound by the type and level of penalties envisaged in respective provisions of the CCU (ie, they cannot apply a penalty below the thresholds established in the relevant provision of the CCU). Other grounds to lessen liability (eg, release from the punishment under Article 74 of the CCU, or pardon under Article 75 of the CCU) do not apply to such offences (from April 2015).

Penalties envisaged in the CCU for corruption-related of­fences vary signif