Ukraine's parallel war on corruption to unlock door to West

U.S. President Joe Biden and Ukraine's President Volodymyr Zelenskiy walk down the Colonnade to the Oval Office at the White House in Washington, U.S., December 21, 2022. REUTERS/Leah Millis
  • Ukraine steps up fight on high-level corruption
  • Reopens high-profile cases, launches new probes
  • Anti-graft drive intensifies even amid war
  • Seen as key to reassuring donors, joining EU

KYIV, Dec 23 (Reuters) - To an outsider, it may seem an unlikely time for Ukraine to double down on the battle against corruption, as missiles rain down on cities and citizens fight for their lives.

Nonetheless, anti-graft agencies have revived a years-old investigation into an official scheme they say led to electricity customers overpaying by more than $1 billion, plus a case that stalled in 2020 into the alleged theft of over $350 million in assets and funds from a state-controlled oil company.

They've launched new actions too, including this month the arrest in absentia of an ex-state bank boss over his suspected role in the embezzlement of $5 million. He denies wrongdoing.

"Every week, there are one or two big developments plus seven or eight smaller ones that are still important," said legal expert Vadym Valko, who monitors the work of anti-corruption authorities in Ukraine, which is fighting to rid itself of oligarchs and strengthen its vulnerable institutions.

The activity reflects a parallel war Kyiv is waging against high-level graft, according to Reuters interviews with half a dozen Ukrainian anti-corruption monitors and officials. The drive is deemed urgent enough for the government to devote resources to, even during Russia's invasion.

Indeed, anti-corruption agencies flag their work almost daily in a flurry of statements and social media posts. In November alone, they reported having launched investigations into 44 new criminal cases, issued 17 notices of suspicion to people being investigated and sent six indictments to court.

In 2022, prosecutors have filed at least 109 indictments in 42 cases, the Specialized Anti-Corruption Prosecutor's Office (SAPO) told Reuters, adding that 25 convictions had been handed down.

The work can't wait, according to the people interviewed, because curbing endemic corruption is key to reassuring Western partners preparing to send tens of billions of dollars of aid that will be needed to rebuild the country in coming years.

It would also be crucial, they say, to winning a status that guarantees Ukraine's long-term security from any future aggression: membership of the European Union, which says getting on top of graft is a must for candidacy talks to begin.

"It's extraordinarily important right now for Ukraine to demonstrate itself as a predictable partner," said Yaroslav Yurchyshyn, first deputy head of the parliamentary committee on anti-corruption policy, referring to Western donors.

"In reality there are two wars going on in Ukraine at once: an open one with Russia, and another with the post-Soviet corrupt past that's happening within."

ZELENSKIY ON BOARD

The anti-corruption drive is backed by President Volodymyr Zelenskiy, who vowed this month that Ukraine would fight both high-level corruption and Russia's invasion at the same time.

"The story of reform continues," the actor turned wartime leader, who was elected in 2019 on pledges to clean up Ukraine, said in his nightly address.

"It continues even during this kind of war."

Anti-corruption efforts, which continued after the Feb. 24 invasion, were stepped up over the summer under a new director of SAPO, according to the experts and officials.

Oleksandr Klymenko took the position in July after Zelenskiy publicly demanded that his appointment be confirmed because the committee that had selected him more than half a year earlier still hadn't formally signed off on the move.

"Without a full-fledged head of such an institution, its full-fledged functioning is impossible," Zelenskiy said at the time.

Klymenko has provided the administrative muscle to kickstart some cases that had been gathering dust, while also advancing new ones, the people said.

For example, SAPO announced in late September that Klymenko had reopened the case over the scheme that allegedly overcharged electricity consumers. It had been repeatedly opened and closed for two years due to procedural errors and shortcomings, SAPO prosecutors said at the time of the hold-ups.

In announcing its revival, Klymenko's office said the case files hadn't been reviewed by prosecutors thoroughly enough and assigned a new team to the investigation, which involves at least 15 suspects, mostly current and former officials.

In late October, anti-corruption officials announced they had issued new notices of suspicion in the case, when suspects are informed they are being investigated.

In the alleged plot to take more than $350 million from the oil company, prosecutors in early September issued eight people with notices of suspicion that had been awaiting approval from SAPO since early 2020.

New anti-corruption cases include a probe launched in October into a former tax chief suspected of taking more than $20 million in kickbacks. Reuters was unable to contact the ex-official for comment.

A SAPO spokesperson said Klymenko was not prepared to comment on his work. The agency did not comment on the individual cases and the recent flurry of activity, but said it was currently working on 693 cases with its sister agency, the National Anti-Corruption Bureau of Ukraine (NABU).

PROSECUTORS: $2,500 A MONTH

The United States, which is supplying Ukraine with billions of dollars of weaponry to fight Russia, supports Kyiv's concurrent drive to root out corruption.

"We are actively engaged with the government of Ukraine to ensure accountability, even amidst the challenging conflict environment," a U.S. State Department spokesperson said.

There is the prospect of more money on the way as donors weigh the scale of their contributions to Ukraine's anticipated reconstruction, a project largely dependent on foreign aid.

Central Bank Governor Andriy Pyshnyi said this month he expected 18 billion euros ($19 billion) from the EU and $10 billion from Washington next year in immediate budgetary aid alone.

An EU Commission spokesperson said that financial, political and logistic support for Ukraine "will be linked to the accession agenda."

"Reform benchmarks will be key in this context," the spokesperson said. "These will initially be adapted and suited for war times, but should evolve towards strengthening in particular rule of law and anti-corruption."

Beating graft won't be easy in a country where experts say much of it is rooted in the chaos that followed the collapse of the Soviet Union.

Despite the progress of recent years, Ukraine still ranks 122 out of 180 countries in Transparency International's latest Corruption Perceptions Index.

Andrii Borovyk, executive director of Transparency's Ukraine office, welcomed the current anti-corruption drive but said the true measures of success would be the number of convictions and the state's success in recovering proceeds from corruption as well as its enforcement of asset declarations.

"We'll need to see what the final output will be," he told Reuters.

The stakes have never been higher since Kyiv embarked on an anti-graft campaign after the 2014 "Maidan" revolution cemented Ukraine's pro-European course.

Both SAPO and NABU were established in 2015. SAPO oversees investigations launched by NABU and sends them to the anti-corruption court, which began its work in 2019.

Collectively, they comprise the core of Ukraine's anti-graft law enforcement infrastructure, a collection of professional outfits where employees are comparatively well-paid.

SAPO prosecutors, for instance, earn at least $2,500 per month, or six times more than the Ukrainian monthly average. Business is brisk; the agency is currently in the process of hiring eight new prosecutors.

NABU is also searching for a new director, which the EU has said is a key position to fill for Ukraine's anti-graft efforts.

THE PEOPLE ARE WATCHING

Even amid the turmoil of war, the agencies are now more productive than in previous years, according to Olena Shcherban, deputy executive director of the Anticorruption Action Centre in Kyiv, a nonprofit think-tank partly funded by Western nations that campaigns for reforms and tracks Ukraine's progress.

"NABU and SAPO are working more effectively now than in the last couple of years combined," she said.

Anti-corruption authorities in Kyiv are aware that the West is watching.

Kateryna Butko, a civic activist serving on the SAPO selection committee, acknowledged that Ukraine's fight against graft is often plodding. She added that foreign donors had a clear incentive to ensure it succeeds by continuing to provide strong policy guidance.

"The work of our anti-corruption institutions is a guarantee that Western money won't be stolen," she said.

Ordinary Ukrainians will also be watching, as Kyiv's recent battlefield victories have buoyed hopes that the country can prevail in the war and successfully rebuild.

An October survey by the Kyiv International Institute of Sociology found at least 88% of the country believes Ukraine will be a prosperous EU member within 10 years.

Kyiv resident Kateryna, who was visiting the capital's Christmas tree with a friend, said that securing a military victory was the top priority for Ukraine.

But the 27-year-old, who didn't give her surname, said it was also important to establish a fair society to live in, instilled with a clear sense that no-one was above the law.

"We don't have that kind of understanding here yet."

Reporting by Dan Peleschuk; Additional reporting by Humeyra Pamuk and Andrea Shalal in Washington; Editing by Mike Collett-White and Pravin Char

Our Standards: The Thomson Reuters Trust Principles.