Corruption Perceptions Index—2022

On July 28, the new Prosecutor General Andrii Kostin appointed Oleksandr Klymenko head of the Specialized Anti-Corruption Prosecutor's Office (SAPO). This appointment was blocked since December 2021 by the chair and individual members of the selection commission, since, in six months, the commission could not confirm its own scores by votes. On July 19, 2022, the SAPO selection commission did approve the overall rating and voted to submit this decision to the Prosecutor General. The president repeatedly promised the International Monetary Fund, US President Joe Biden, and other partners to elect the head, but these commitments were not fulfilled in time.

To prevent such situations in the future, we need to clearly enshrine in the law the participation of independent experts in competitions, the criteria for a full-fledged check of candidates for professional qualities and integrity, and the decision-making process of the commission. More attention should be paid to the selection of the commission members. In the case of the SAPO competition, the parliament elected 7 members of the commission only on the third attempt, allowing people without experience in anti-corruption activities.

Since the Anti-Corruption Prosecutor’s Office received an independent head, the NABU-SAPO served several senior officials with charges: among them are ex-head of the State Fiscal Service Roman Nasirov, oligarch Oleh Bakhmatiuk, MP Anna Kolisnyk, ex-head of the NBU Kyrylo Shevchenko, and in 2023 — ex-deputy Minister of Communities, Territories and Infrastructure Development Vasyl Lozynskyi and Reni mayor Ihor Plekhov.

The competition for the position of the NABU Director began before the full-scale war, but after February 24, it was suspended and resumed in August 2022. At the time of the publication of CPI-2022, candidates had already passed the test for knowledge of legislation and general abilities, and on January 16, 2023, the commission announced the names of 22 participants, who had passed to the stage of practical tasks and interviews.

The biggest risk of this competition is its delay, but now, there is every reason to believe that the members of the selection commission understand the importance of promptly completing the competitive selection and complying with Ukraine’s obligations to the EU. Moreover, in 2022, the President signed a discriminatory law with new requirements for the NABU Director. This initiative of MPs, although a better substitute for the controversial «Klochko’s draft law», is more harmful, than useful.

The competition for the ARMA head was problematic from the beginning. The commission was formed on the fourth attempt. Subsequently, the commission members delayed the publication of the procedure for holding the competition and the rules of their work up to the deadline for submitting documents. Thus, only 12 lawyers submitted documents back then. Transparency International Ukraine analyzed all candidates and concluded that the majority of applicants did not meet the criteria of integrity and proper professionalism. On August 15, 2022, the commission for the selection of the ARMA Head concluded that none of the candidates received the necessary six votes.

Thus, the Cabinet of Ministers extended the competition to elect the head of the ARMA. The commission had to conduct a new selection in the prescribed manner — in 3.5 months, that is, until mid-January 2023, but did not fulfill such an obligation. From November 29 to December 13, 2022, the collection of candidates’ documents continued, and the commission published the Procedure for Holding the Competition. To date, 19 candidates have submitted their documents for participation, but no stage of the competition has yet taken place.

Transparency International Ukraine has previously indicated several risks in the flawed approaches to this selection. We are convinced that now the commission is responsible for the professionalism and transparency of the competition. Let us remind you that the Agency has been working without a head for more than three years.

In 2023, the selection of a new head of the NACP will also be among. the above competitions. So, it would be great if before the start of this competition, all the above remarks will have been considered.

On June 20, 2022, with a delay of more than a year and a half, the Verkhovna Rada supported the draft law approving the Anti-Corruption Strategy for 2021-2025 in the second reading and in general. On September 30, 2020, the relevant draft law No.4135 was identified by Volodymyr Zelenskyy as urgent.

Let us remind you that Ukraine has not had an Anti-Corruption Strategy since the beginning of 2018, so, in fact, we are left with 3 years to implement the strategy and not 5 because the terms in it have not changed.

In addition, in the second reading, MPs deprived the Anti-Corruption Strategy of several important provisions. Thus, the document no longer provides for a competitive selection of the Prosecutor General, and safeguards to dismiss the Prosecutor General outside the framework of exhaustive grounds were removed. In addition, MPs removed the provision on conducting an independent assessment (audit) of the NABU and SAPO effectiveness with the participation of independent experts and the legislative consolidation that in the absence of the SAPO head, all the powers should be exercised by the first deputy (now, the Prosecutor General performs such a function).

Unfortunately, these and other changes have weakened the Anti-Corruption Strategy.

The legislation provides for the creation of a special consultative and advisory body at the NACP — the Coordination Working Group on Anti-Corruption Policy. Representatives of international technical assistance projects, civil society, and the private sector are no longer mentioned in the adopted version of the law, although their participation was foreseen in the draft Strategy. This hinders coordination of government agencies on the implementation of the Anti-Corruption Strategy and the measures of the State Anti-Corruption Program for its implementation, as well as diminishes opportunities to prepare proposals on the formation and implementation of the state anti-corruption policy.

Since the Anti-Corruption Strategy came into effect (July 10, 2022), legislation grants the Cabinet 6 months to approve the State Anti-Corruption Program. However, despite calls from the public and international partners, the government did not approve this important document until January 10, 2023.

Ensure transparent accounting of public property — not implemented.

In 2022, there were no significant changes in the accounting of public property. The single state register of state-owned objects, which includes more than 1 million state-owned objects, remains closed to the general public. The information in the register is not made public, and only entities managing such property, balance keepers, state authorities and their officials can receive an extract regarding individual objects. Such state of affairs is justified given the security risks.

Information about state-owned objects is collected by the State Property Fund (SPFU) based on the information received from entities managing such property. However, not all authorized management bodies provide this information in a timely and reliable manner. Therefore, legislative changes which would strengthen control over the provision of the aforementioned data remain important but not yet implemented in 2022.

Continuation of the path to privatization — implemented.

With the beginning of russia's full-scale aggression, the dynamics of small-scale privatization in Ukraine significantly decreased. The SPFU temporarily suspended the announcement of electronic auctions on privatization. In total, only 29 auctions for the sale of state-owned objects took place during the first six months of the year.

But the adoption of amendments to the relevant legislation at the end of July gave a new impetus to the privatization procedures. During the period of martial law, legislators simplified the procedure for preparing objects for privatization and the terms of sale, reduced the period of the auctions, and allowed submission of documents in the electronic form. In addition, they took into consideration the TI Ukraine’s recommendations on the inadmissibility of full closure of information on the participants and winners of auctions, as well as the agreements concluded.

After the restoration of privatization, during September-December, the SPFU held 150 small-scsale privatization auctions, which provided UAH 1.1 billion to the national budget. In total, over 2022, the State Property Fund successfully carried out 193 auctions of small-scale privatization, bringing UAH 1.7 billion to the national budget.

Another step to continue the privatization was simplification of the procedure for the sale of state-owned and municipal property in tax lien. This decision unblocks the privatization of state-owned objects with a total initial price of UAH 1 billion, and tax debts of UAH 300 million will be paid by future buyers.

Significant changes also affected the sphere of large-scale privatization. The Parliament retained the possibility of holding auctions for the sale of large state-owned objects during martial law. In the future, such auctions will be held in the electronic format through the Prozorro.Sale system. These changes will not only significantly accelerate the process of preparing large state-owned objects for privatization, but will also ensure their transparent sale with real competition at the market price.

Almost immediately after the start of the full-scale invasion, the Cabinet of Ministers allowed to buy everything needed directly without auctions. To this end, the Government passed the special Resolution No. 169. Simultaneously, the law “On Public Procurement” remained in effect. This gave rise to uncertainty and debate about how to conduct procurement on a case-by-case basis.

During March-October 2022, Resolution No. 169 had ten (!) versions. Most of them postponed the reporting (disclosure of information) about the contracts concluded under this Resolution until the future — after the end of martial law. Because of this, we currently do not see part of the agreements concluded in the first six months of the full-scale invasion, do not know their value and terms.

The uncertainty was resolved in the fall. On September 10, 2022, the Verkhovna Rada empowered the Cabinet of Ministers to regulate wartime procurement by special Law of Ukraine No. 2526-IX. In compliance with this law, the Cabinet of Ministers adopted a new Resolution No. 1178, which determined the peculiarities of procurement. In essence, the government has provided for a new type of procurement procedure — “open bidding with peculiarities,” which is partly based on the procedure under the Law, but differs from it.

In terms of the recommendation to keep procurement under the Law of Ukraine “On Public Procurement”, such a step may appear negative. But in the conditions of war, it was actually necessary because it increased the level of legal certainty, predictability, and transparency of public procurement during martial law, while also making it competitive. A significant part of procurement transactions returned to the public space, which allowed to continue public control over them. The new bidding procedure even has its advantages, which it would be advisable to retain after the end of the war.

The new features of procurement during martial law also include certain exceptions, i.e., they allow direct procurement transactions without auctions under certain conditions. However, these exceptions are justified, in particular, by the need to take urgent measures in the conditions of war, as well as to limit access to information that can be used by the enemy.

At the same time, direct procurement can also be abused. Appealing to the issue of security or urgency, procuring entities may sign direct agreements and not publish them, even when there is no danger in releasing the information or when only sensitive data could be withheld. The scandal of January 2023 with overpayments on food procurement for the military is an example of such abuses. Instead, to prevent corruption and ensure quality, procurement should be as transparent as possible.

There is also a threat that reconstruction procurement may be withdrawn from the scope of Prozorro.

Certain draft laws of 2021, which entailed such risks, were removed from the agenda in 2022. However, certain harmful laws were passed anyway.