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Sergiy Grebenyuk: On the path of protecting investors’ rights in Ukraine
Автор: Гребенюк Сергій
Джерело: Kyiv Post, 3 серпня 2021 р.

Protection of investors’ rights, rule of law, judicial reform, and attracting high-caliber foreign direct investment continue to be at the top of the agenda of the American Chamber of Commerce (AmCham) in 2021. Guaranteeing investment and property rights, eradicating corruption, establishing a level playing field, implementing real and effective judicial reform, rule of law, fair justice, ensuring transparent selection of judges of all levels are the highest strategic priorities for AmCham members and set forth in AmCham’s 10 Steps for Ukraine’s Economic Recovery and Growth 2021, which has been shared broadly with top government officials and within the business community. This is what every citizen and every CEO wants.

According to Ukraine Business Climate Survey: A Year of Lockdown, conducted by AmCham in partnership with Citi Ukraine in March 2021, 74% of businesses identified rule of law as the Ukrainian government’s #1 focus to achieve economic recovery and growth in 2021. Ukraine’s economy will grow only with more foreign direct investment. If we want to attract more FDI, we need to secure the investments and assets of those companies that are already here. How can we do it? Guaranteed rule of law is the answer. Thus, efficient operations of the Prosecutor General’s Office and fair justice are important components to ensure rule of law, thus improving Ukraine’s investment climate and boosting economic growth.

A year of cooperation between PGO and AmCham

In May 2020, when the situation with investors’ right protection became critical, representatives of the major business associations, the business ombudsman, the head of the executive committee of the National Reforms Council Mikheil Saakashvili and Prosecutor General Iryna Venediktova gathered to find ways to resolve the problem that hampered business activities.

Over 40 focused meetings resulted in the formation of the first-ever Office for the Protection of Investor’s Rights within the PGO. Since the beginning of this intense cooperation, AmCham has brought forward 29 cases from its members who sought fairness, transparency, and concrete actions taken to protect investor rights (17 in 2020 and 12 thus far in 2021). The establishment of the office, headed by Oleksiy Boniuk, and the leadership demonstrated by Venediktova and her team is a positive development for investors and the business community. As of today, fair justice and the safeguarding of investor rights have been fully restored in eight matters, and significant progress has been made in a high number of other cases, with resolution anticipated prior to year-end.

It was important to share positive outcomes and communicate successes to safeguard investors’ confidence and optimism with regard to doing business in Ukraine. After a year of persistent joint work, we see growing interest from bonafide companies to ensure their rights are fully protected. It is also a great example for other state authorities that such mutually beneficial cooperation brings real value for both the country and companies and prevents the outflow of FDI. Thus, joint efforts of AmCham Ukraine leadership and the Prosecutor General’s Office broke all stereotypes and proved that it is possible to protect the rights of transparent investors in Ukraine. We put every effort into enlarging the list of bona fide investors whose rights are renewed and protected on the ground.

My experience shows that the office is efficient and consistent in its work. Several examples show that such an approach provides investors more confidence in the local business climate. A spotlight example would be a case of an AmCham member company that works with the Ukrainian state sector. Despite the transparency of its business, the company was subject to constant procedural pressure in criminal proceedings. This included groundless searches, seizure of documents and equipment, etc., and cases opened that lasted for a year. Moreover, false information was spread about the company online and among counterparties, threatening their reputation and business activities. We approached the Office with a well-grounded position regarding the baseless nature of the allegations made and obtained their support. The Office took essential steps to restore justice: the case was thoroughly analyzed and taken under PGO’s procedural supervision; it was transferred to another investigative body to ensure that the investigators in charge of the case were independent and impartial; harassment was stopped, and the case was ultimately closed once, due process was completed, within a reasonable timeframe.

The Office for the Protection of Investor’s rights within the PGO supports both international and domestic companies. Another AmCham member – a promising, young Ukrainian tech company suffered continuous harassment from a local enforcement agent threatening to open an ungrounded criminal case against its management. Once a spotlight was shone on such actions, and this matter escalated to the Office, the harassment stopped almost immediately, and an investigation has been launched relating to the individual behind such actions.

Kateryna Gupalo, co-chair of the Legal Committee of the American Chamber of Commerce in Ukraine, Partner, Head of White-Collar Crime Practice at Arzinger: “Being bound by the attorney-client privilege, we are limited in the disclosure of cases entrusted to us. At the same time, we can recall one of the first cases – the case of the national investor Econia, where the PGO, in close cooperation with the Office for the Protection of Investor’s Rights, concluded that the pre-trial investigation was ineffective and transferred the case to another pre-trial investigation body. This resulted at the end of unlawful and unjustified pressure on Econia, its management, and its founders. That was one of the first results of AmCham’s interactions with the Office for the Protection of Investor’s Rights. Also, in cases where we represent victims – members of AmCham, it is possible to ensure effective investigation of cases exactly because of the involvement of the Office. We are grateful to the Office for the Protection of Investor’s Rights for the constructiveness and look forward to further productive cooperation to protect investors’ rights.”

Iryna Venediktova, Prosecutor General: “Among the priority areas in which the PGO managed to make progress in a year are: combating counterfeiting of drugs, illegal use of marks for goods, and assessing the legality of inspections of goods at customs on behalf of law enforcement agencies. In order to prevent pressure on business in many criminal proceedings, the actions of investigators and prosecutors were assessed in principle, as a result of which the investigative body was changed, and final legitimate decisions were made. Reform of the Prosecutor General’s Office is not only about the cleansing of staff but also about systematic work on building an independent institution with European development standards.”

AmCham continues to work closely on eliminating pressure on businesses and enhancing the credibility of law enforcement agencies. Meanwhile, we are also working on a legislative basis. In this regard, a joint working group was established, which in cooperation with international partners and professional lawyers, is working to develop Standards for the prosecutor’s supervision of compliance with the law during particular investigative (search) actions and the application of criminal proceedings in the field of investment protection. This unified document will radically change the situation at all levels of the PGO and develop a mechanism for the prosecutor to make decisions considering the balance between the tasks of the criminal process and the protection of investment activities. The draft standards are ready and, after approval, will be shortly presented to the broader audience.

Oleksiy Boniuk, head of the Office for the Protection of Investor’s Rights within Prosecutor General’s Office: “Throughout the year, dozens of working meetings with AmCham representatives were held, and control was established in all criminal proceedings against which AmCham applied. It is a positive signal. A number of successful cases in which illegal interference was stopped and investors’ rights were protected result from the systematic fight of a specialized unit with such negative phenomena as raider attacks and law enforcement agencies’ pressure on the business. As a result of measures taken by the PGO within one of the cases, this provided sufficient comfort to the investors that they are proceeding with a further $100 million investment in Ukraine’s economy.”

Lenna Koszarny, chair of AmCham Ukraine Board of Directors, founding partner, and CEO of Horizon Capital: “The business community welcomes these tangible steps taken by Prosecutor General Iryna Venediktova and Head of the Office for the Protection of Investor’ Rights Oleksiy Boniuk to protect investor’s rights. Political will, trust, transparency, and rule of law are critical to attracting the $5-10 billion of annual investment that Ukraine requires to grow its economy, create jobs, and provide services to citizens that they deserve. We understand that the system must be changed, and this is a process, at the same time, while reforms are underway, Ukrainian officials cannot forget about existing investors who, in the case of AmCham members, have invested over $50 billion to Ukraine’s economy over the years. These are Ukraine’s greatest ambassadors – who will invest more and are best-positioned to promote Ukraine globally as an investment destination. Thank you to the PGO leadership for listening, analyzing, acting, and ensuring justice is served for those operating legitimate, transparent businesses.”

Sergiy Grebenyuk is co-chair of the Legal Committee of the American Chamber of Commerce in Ukraine and partner, head of the white-collar crime practice, at Asters.