Tide turns against corruption in Ukraine one year after Maidan

By bne IntelliNews February 24, 2015

Graham Stack in Kyiv -


One year after opposition protests ousted Ukrainian president Viktor Yanukovych, the fight against Ukraine's endemic corruption has begun for real – and the tide has started to turn.

“Corruption has not been eliminated since Maidan but it has been noticeably driven back where it was most visible,” says Oleksa Shalayskiy, founder of NGO Nashi Groshi, - meaning 'Our Money' in Ukrainian.

Allegations of spiralling corruption under the administration of Yanukovych fuelled opposition protests that rocked Kyiv in the winter of 2013-2014 and led to his ousting on 22 February 2014. One year later, corruption remains endemic - Transparency International ranked Ukraine as the world's 28th most corrupt country out of 175 in 2014 - but the tide has started to turn, say campaigners.

Nashi Groshi has been on the front line of the fight against corruption in Ukraine since 2011, monitoring public procurement by comparing prices paid by state organisations and companies with market prices, and establishing links between the winners of rigged tenders and state officials.

“We see clearly in public tenders – the size of kickbacks has fallen from around 50% under Yanukukovych to 35%-40% in 2014, and is currently at around 15% in 2015,” Shalayskiy tells bne IntelliNews.

“In 2014 two islands of corruption in state procurement remained – that was [state-owned gas producer] Ukrgazvidobuvanie and Ukrainian Railways, despite having new CEO's appointed after Maidan,” says Shalayskiy. “But in both cases the new CEOs have been fired and in the first case arrested. Now there is a chance that in both companies corruption can be stamped out.”

Apart from public procurement fraud, anti-corruption efforts have also eliminated numerous rent-seeking schemes - where legal red tape creates profitable business for private structures linked to officials, says Shalayskiy. Thousands of such schemes existed covering the whole spectrum of state regulation, and many are now being eradicated.

Shalayskiy lists a number of such “schemes” that had existed for years but are now ended: the requirement for cargo ships entering port to have ballast water certified as clean before shedding it; appointments as official suppliers of car licence plates; appointments to sell property confiscated by the state in lieu of taxes.

“If we can describe a scheme accurately, and get support from anti-corruption MPs, it gets closed down very quickly,” says Shalayskiy. “We celebrate roughly one success per week, where documenting a corrupt scheme leads to the firing of the official responsible. Law enforcement officials have even started to come to us for help in investigations,” he adds.

Hidden corruption

Shalayskiy acknowledges that corruption remains strong in the hidden sectors, where NGOs such as Nashi Groshi have no access to data. This include the tax and customs services and the state treasury. Black market schemes for tax evasion continue to operate with the suspected collusion of tax officials. “Every businessman knows the names of the platforms providing such services,” says Shalayskiy. Kickbacks are also still required for exporters to have VAT returned, as well as for suppliers to the state to receive payment from the treasury.

The other sphere where corruption remains unchanged, says Shalayskiy, is the everyday level of policing, education and medicine. “This is the reason people feel that nothing has changed in the country, because they still may have to pay bribes in everyday life. The fact is, doctors, teachers and policemen cannot afford not to be corrupt – if they cannot supplement their income with informal payments, they will have to quit their jobs and find other work.” Entry-level state employees – even with many years of university education in the case of doctors - are paid around UAH2000 per month, which after Ukraine's currency collapse is now only worth around $70. “No one can live on that salary,” says Shalayskiy.

New institutions

Transparency International's Andrei Marusov likewise believes that while corruption remains immense in Ukraine, there has been progress since Maidan in creating institutions to combat it:

“The creation of the National Anti-Corruption Bureau, the National Agency for Anti-Corruption and a number of legal amendments, for instance increasing jail time for corruption offences, are all milestones, meaning that the tools to fight corruption will soon be available,” says Marusov.

The greatest hopes rest on the National Anti-Corruption Bureau (NAB), which will start work later in the year. The NAB is tasked with investigating corruption among top office holders, with law enforcement obliged to act on its findings.

Its success will depend on the reputation and independence of its head, but there are difficulties finding a suitable candidate within Ukraine, says Marusov.

Ukraine is now holding a competitive application process for the position, open to all comers – in itself a small revolution - with 161 applications received, and sessions of the application commission streamed online. The appointment commission will select the three most qualified candidates, and President Petro Poroshenko will then nominate one of these to parliament for approval as head of the NAB.

Transparency International examined the applications of five leading Ukrainian contenders for the position and found major deficiencies in all five – ranging from past connection to corrupt schemes, to most of their income being declared as earned by spouses “And these people are our top contenders for the position of chief anti-corruption official,” laments Marusov.

Fresh blood

Perhaps for this reason, the candidate believed preferred by President Petro Poroshenko is Georgian David Sakvarelidze, a member of former Georgian President Mikheil Saakashvili's team of reformers, who was made deputy prosecutor general on February 16.

Because many qualified Ukrainians have a chequered past, under Poroshenko's watch around a dozen reform-minded foreigners have been named to top posts or given adviser status. Four Georgian deputy ministers are to be appointed alone to the justice ministry, following Georgian appointees to the health and interior ministries. Poroshenko named Saakashvili himself presidential adviser and head of the Advisory International Council for Reforms on February 13.

Another source of fresh blood in the political elite have been journalists and civil society activists who entered parliament in October 2014. Former leading journalist and anti-corruption campaigner Serhiy Leschenko is now MP in Poroshenko's eponymous party.

Leschenko acknowledges that corruption remains endemic in Ukraine one year after the ousting of Yanukovych. “But at least we have not seen any gigantic corruption over the past year comparable to that under Yanukovych,” he says.

Leschenko believes that one new appointment should now make an enormous difference in the anti-corruption fight. In an historic first for Ukraine, prosecutor general Vitaly Yarema resigned on February 9, after Leschenko gave voice to mounting public dissatisfaction at Yarema's inactivity. The new prosecutor general, Viktor Schokin, has already made two arrests of leading former Yanukovych officials in one week, the first such arrests since the ousting of Yanukovych one year ago.

Leschenko argues that going forward it will be crucial to prosecute current officials, rather than rounding up Yanukovych's gang. “Nothing sends a more powerful signal to the elite that the rules of the game have changed than the sight of one of their own going to jail,” he said.

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