A deluge of new corruption probes and legislation passed last month are set to stymie Ukraine’s national anti-corruption bureau (NABU), a relatively new institution in a country that, despite reforms, still ranks among the most corrupt in the region.

Il presidente ucraino Petro Poroshenko a Strasburgo.  REUTERS/Christian Hartmann
Il presidente ucraino Petro Poroshenko a Strasburgo. REUTERS/Christian Hartmann

Starting this week, the prosecutor’s office will transfer some 3,500 cases that were registered before late 2015 to NABU – which was previously exempt from investigating cases brought before its creation and has protested that its team of 200-odd detectives cannot handle the caseload. NABU also pleaded with President Petro Poroshenko to veto a new law passed in October, which they say would place overly cumbersome restrictions on investigators.

The development came as the anti-corruption bureau launched a probe into suspected extortion by employees of its sister agency, the National Agency on Corruption Prevention (NAZK). NAZK, originally a cornerstone of Western-backed reforms, is the subject of mounting allegations that it has delayed investigating public officials’ financial disclosures for evidence of illegal activity. Critics have also slammed the agency for being used by Poroshenko to attack his opponents rather than investigate corruption.

Ironically, both stories broke the very same week that the European Parliament issued a new report applauding the progress of reforms in Ukraine, Georgia, and Moldova since the last Eastern Partnership summit in 2015, saying they might eventually – emphasis on eventually – be ready for EU membership. But the NABU and NAZK affairs are only the lates instances of entrenched corruption in a country that still has far to go before it can even dream of joining the bloc.

After all, state capture isn’t limited to only a few cases. Poroshenko was also closely implicated with the nationalization of PrivatBank, Ukraine’s largest commercial lender, in late 2016. While the government initially framed the move as a necessary step to save it from going under and show the International Monetary Fund (IMF) that Ukraine’s financial house was in order, the evidence suggests that it was in fact a power grab by Poroshenko and his cronies at the National Bank of Ukraine (NBU).

After all, prior to the takeover, PrivatBank had weathered a series of crises relatively well. A mere two months before the bank was taken over, Poroshenko had said the lender had sufficient liquidity, and international accounting firm EY backed up his assessment. EY, hired by the NBU to carry out an audit of PrivatBank in late 2016, concluded that the level of related-party loans at PrivatBank was only 4.7%. Yet NBU Governor Valeria Gontareva suggested otherwise, claiming that the number of related-party loans was closer to 99-100% -- figures the NBU later used to justify the nationalization.

The discrepancy raises questions about the motivations behind the takeover, especially given Gontareva’s personal history. Her position at NBU was her
first in the public sector after she worked as head of the ICU financial group – which helped arrange the sale of Poroshenko’s candy empire, Roshen, through a number of offshore companies that allowed the president to maintain control of his business stakes even after joining office. As a result, Gontareva’s intervention has sparked theories that she was acting as a proxy to help the government gain oversight of a major lender.

Unfortunately, it’s not only anti-corruption and financial institutions that are under the president’s influence but key judicial agencies, as well. Several weeks ago, NABU opened an investigation into General Prosecutor Yuriy Lutsenko for unlawful enrichment. Like Gontareva, Lutsenko is a close associate of Poroshenko, having formerly served as head of the
president’s parliamentary group. His appointment in May 2016 sparked outrage among lawmakers and citizens who had hoped for an independent general prosecutor who would boost Ukraine’s plans to tackle corruption. Not least among their concerns was Lutsenko’s utter lack of legal training or prior experience in the department. Luckily for him, however, Parliament soon changed the law requiring the general prosecutor to have a legal background before filling the job. His appointment was a death knell for an office that had previously been unafraid to target Poroshenko and his cronies when they were in the opposition.

Law enforcement, too, is not free from government manipulation. The Security Service of Ukraine (SBU), for instance, is notorious for being used as a tool by Kiev to crack down on dissenters. Over the past several months, as part of a wider campaign against anti-corruption activists, the SBU, policemen, and prosecutors have been harassing members of Patients of Ukraine and the All-Ukrainian Network of People Living with HIV/AIDS, alleging that these organizations “misused” cash from the Global Fund to Fight AIDS, Tuberculosis, and Malaria. What’s more likely is that these activists are being targeted for the role they played
in pushing officials to hand pharmaceutical procurement responsibilities from the Ministry of Health to UNICEF and the UN Development Fund – which has now caused Ukraine’s “pharma mafia,” which includes many SBU officials, to lose considerable cash from their procurement scams.

Perhaps not surprisingly, institutional corruption is not the only issue in Ukraine. The president himself has also been personally implicated in a number of shady cases, notably through his business empire. Though he professeshis wish to introduce a new anti-corruption law by 2018, for instance, he
still has yet to fulfil the promise he made when he took office to sell his business stakes to avoid conflicts of interest.

If one adds to the already toxic mix the simmering war in the country’s eastern provinces, it becomes clear that Ukraine is a long way from fulfilling the dreams of the 2014 Euromaidan Revolution. With presidential elections coming up in 2019, Kiev stands at another crossroads – and Brussels should not forget the role that it can play to prod the country in the right direction and make sure that a corrupt and venal elite is held responsible.


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