Undermining Ukraine’s Anticorruption Agency and Special Corruption Prosecutor: What It Means for Whistleblowers

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Tuesday’s approval of a law curing the independence of Ukraine’s anticorruption agency and the special prosecutor for corruption has sparked a furious backlash from citizens, NGOs, and Ukraine’s international partners. In today’s Guest Post Oksana Nesterenko, the Executive Director of the Anti-Corruption Research and Educational Center of the National University of Kyiv-Mohyla Academy, and Andrii Biletskyi, Senior Policy Analyst at the Center, explain its impact on a critical element in the fight against corruption: Ukrainians’ willingness to blow the whistle on corrupt officials and their private sector accomplices.

The big, disappointing story in Ukraine this week was the fast-tracked passage of legislation curbing the independence of NABU, the anticorruption agency, and SAPO, the special prosecutor for corruption.

Passage of what is now Law No. 4555-IX dealt a serious blow to the independence of the two agencies responsible for tackling high-level corruption. It gives the Prosecutor General sweeping powers to control both of them: authority to issue binding written instructions to either, order inspections into specific pre-trial investigations, reassign NABU-led cases to other law enforcement bodies (including the internal security service Sluzhba Bezpeky Ukrayiny), close cases at the request of the defense, and unilaterally appoint members of prosecutorial teams.

The law triggered protests across Ukraine, with people taking to the streets nationwide to voice their opposition. Western partners — including the European Union and the Organization for Economic Cooperation and Development (OECD) — have already expressed serious concerns, casting doubt on Ukraine’s future steps toward European integration and its ability to attract needed investment.

In response to this backlash — which the Ukrainian authorities clearly did not expect, President Zelensky has submitted Bill No. 13533 to the Ukrainian Parliament aimed at restoring the independence of anti-corruption institutions (here). Some Members of Parliament have also registered an alternative bill (here). However, it’s still too early to proclaim that NABU and SAPO are out of the woods.

While we wait for the air to clear, and we hope for repeal of the law, let’s talk now about what it means for whistleblowers so long as it remains in force.

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Guest Post: The Forgotten History of Anti-Money Laundering Law: Where Did It Go Wrong?

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Anton Moiseienko, Senior Lecturer and Research Director at the Australian National University Law School, introduces GAB readers to his new book on AML with the following observation —

The contemporary anti-money laundering (AML) regime effectively prevents criminal infiltration of the economy and delivers value for money. Said no one, ever.

Critiques of AML efforts abound among practitioners, policymakers and scholars alike. This near-universal lack of confidence in today’s financial crime rules is the starting point of my new book Doing Business with Criminals: Between Exclusion and Surveillance, which explores the objectives, unintended consequences, and history of the global AML regime.

The sheer degree of discontent with the existing framework begs the question of what went wrong. There has been no shortage of literature seeking to provide an explanation or proffer a solution. Seminal works include Peter Alldridge’s What Went Wrong with Money Laundering Law?(2016) and Nicholas Gilmour and Tristram Hicks’s The War on Dirty Money (2023). A valuable recent contribution is the article ‘How Well Does the Money Laundering Control System Work?’ by Mirko Nazzari and Peter Reuter, published in Crime and Justice and reviewed by Rick Messick on this blog.

These books and articles make varied and useful contributions, as do many other studies. Still, several further avenues need to be pursued to advance the debate on how to address the problem. They include revisiting the history of AML to understand why today’s widely criticised regime has evolved in the way it has – and, crucially, how that history has defined its current objectives.

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Ukrainian Anticorruption Agencies Under Attack

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Ukraine’s National Anticorruption Bureau (NABU), the independent agency responsible for investigating corruption, was searched July 21 by agents of the State Security Office and the Prosecutor General’s Office. In a post on X, NABU says no warrant or other legal authorization was presented to justify the search (here).

On Tuesday, the day after the search, Parliament approved legislation putting both NABU and the Special Anti-Corruption Prosecutor’s Office (SAP), which is responsible for prosecuting NABU cases, under the control of the Prosecutor General of Ukraine, an appointee of the Ukrainian President (here).

Both actions come a little more than a week after security service personnel searched the home and office of Vitaly Shabunin, a leading anticorruption activist.

The searches and the legislation were justified on two grounds. First, NABU and SAP have abused their powers. Second, and more significantly and darkly, the two are alleged to have ties to Russia and are furthering its interests.

The grounds for these actions seem shaky to say the least. A July 16 letter (original here; translation here) by Ukrainian civil society organizations shows the allegations levelled at Shabunin are without foundation. It also observes that all first appeared on anonymous Telegram channels.

Close observers say there may be cases where NABU or SAP or both were overly aggressive, but that is a far cry from doing Russia’s bidding. And indeed the real fear is that it is the critics of a vigorous anticorruption campaign who are doing the aggressor’s bidding.

The bill curbing NABU and SAP’s independence is now before President Zelensky for signature or veto. The European Union, which made the independence of NABU and SAP a condition for continued support, have weighed in with Zelensky. Pictures from demonstrations in Kyiv urging a veto (by GAB special correspondent) are below. More demonstrations planned for Wednesday.

UN Human Rights Council: Reducing Corruption, Promoting Human Rights Inextricably Linked

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On July 7 the U.N. Human Rights Council approved without dissent a resolution stressing the close link between the advancement of human rights and the fight against corruption. It unequivocally and without qualification proclaims what advocates of each have long recognized:

“the promotion and protection of human rights and the prevention of and fight against corruption are mutually reinforcing;”

U.N. Human Rights Council REsolution 59/6

Importantly, the resolution spells out how corruption fighters and human rights advocates can work together to achieve the two objectives. And to further this cooperation, it mandates:

  • A comprehensive, new study by the Human Rights Council Advisory Committee to develop concrete guidelines for implementing States’ procedural and substantive human rights obligations in the context of preventing and combating corruption, with broad consultation of stakeholders, including civil society.
  • The encouragement for Human Rights Council mechanisms to consider corruption’s impact within their existing mandates.
  • Stronger policy coherence across United Nations processes in Geneva, Vienna, and New York on corruption and its human rights implications.

The resolution’s passage is the latest effort by the UNCAC Coalition, a global network of almost 400 civil society organizations in over 120 countries, to foster ties between those working to advance human rights and those fighting corruption. Its other work towards this end includes:

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Are Money Laundering Laws of Any Value?

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Not really.  That’s the answer Mirko Nazzari and Peter Reuter provide at the conclusion to their comprehensive review of the evidence on the impact of the global AML scheme.

Nazzari, a postdoctoral research fellow in Political Science at the Università degli Studi di Sassari, and Reuter, a Distinguished University Professor in the School of Public Policy and Department of Criminology, University of Maryland, find no evidence antimoney laundering laws have deterred the laundering of the proceeds of crime. For one reason, the U.S. and other wealthy countries, which pushed the poorer nations of the world to follow them in enacting complex, expensive AML controls, have failed to implement critical elements of the control system themselves (inclusion of lawyers and real estate professionals in the U.S. for example). Another reason: banks, especially large, multinational ones, have failed to comply (flouted?) the laws and national regulators done little to see they do.

The one redeeming factor is the help AML regimes provide law enforcement agencies when making cases against those whose crimes generate huge sums of money. The authors summarize findings from the U.S. that show that the suspicious transaction reports banks, casinos, and other institutions must file frequently support investigations of drug traffickers, human smugglers and other criminals who launder large sums, providing additional details of their activities or corroborating evidence.

The 86-page article (here) appears in the journal Crime and Justice but unfortunately behind a paywall. It is likely to be made public shortly given the importance of the article to so many around the globe. In the meantime, the abstract and a few notable highlights are below.

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Formal Review of Italy’s Compliance with OECD Antibribery Convention Requested

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In a June 5 submission to Kathleen Roussel, Chair of the OECD Working Group on Bribery, three NGOs have asked the group to find Italy has failed to prevent political interference in a case where, in the face of overwhelming evidence, Italian oil giant Eni, Shell, and accomplices were acquitted of paying a $1.1 billion bribe to acquire rights to Nigerian oil field license OPL-245 (here).

As a party to the OECD Antibribery Convention, Italy pledged that the investigation and prosecution of foreign bribery cases would not “be influenced by considerations of national economic interest. . . or the identity of the natural or legal persons involved” (article 5). In their submission, the NGOs list 60 different instances where politics, Eni’s nationality, or both compromised the case. The evidence includes:

  • Admissions by Italian officials Eni associates conspired with state officials to “pollute” the OPL 245 investigation
  • The current trial of Eni’s former chief legal counsel for his alleged role in the plot
  • The termination of the OPL 245 prosecutions on overtly political grounds
  • The disciplining and criminal conviction of the two First Instance court prosecutors on charges that an independent judicial expert has described as “questionable conjectures

The complaining NGOs are Corner House Research of the United Kingdom; Hawkmoth, a Netherlands-stichting; and Nigeria’s HEDA Resource Centre.

The Working Group on Bribery is responsible for monitoring compliance with the Convention, and the NGOs’ submission is now circulating among its members. The Convention remains a signal commitment in the global fight against corruption.The Working Group should act promptly and decisively to see Italy observes its commitment to eradicating foreign bribery – no matter the political implications or the bribe payor’s identity.

Causes and Trends of Corruption Risk in Europe

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Alina Mungiu-Pippidi and Iva Parvanova just released a report on corruption in 41 European nations, EU members plus those seeking to join the EU and those that neighbor these countries. A joint publication of Bridge//Gap and LUISS, the highlights include:

  • Non-EU states (Norway, Switzerland, UK) outperform most EU members, while Turkey and Bosnia lag furthest behind.
  • Accession countries and new member states perform well on transparency indicators, sometimes better than more developed countries.
  • Oligarchization is on the rise, especially in Turkey, Cyprus and Hungary.

Packed with useful, objective information on trends in corruption and measures to curb it, the authors find the EU still needs to more to assess the extent and nature of corruption across the 41, recommending it “integrate national-level data across Member and candidate states, enabling cross-border tracking of individuals and companies involved in corruption through unified risk indicators.” They urge implementation of a “pan-European disbarment system …to prevent chronic-offender favorite companies from accessing public contracts.” In addition, they emphasize that corruption risks in public procurement should be managed at the contracting agency level “with officials held accountable for transparency and integrity benchmarks” rather than solely relying on after the fact criminal prosecutions.

The full text of the report is at: https://leap.luiss.it/publication-research/publications/a-mungiu-pippidi-i-parvanova-upholding-intergrity-the-causes-and-trends-of-corruption-risk-in-europe-41/.

Good News about the Fight Against Corruption: International Collaboration in Malawi

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Malawi’s Platform for Investigative Journalism reports that “the man widely accused of orchestrating one of the most brazen corruption schemes in Malawi’s history is now officially in the dock” (here).

As the Continent recounts (here), British-Malawian businessman Zuneth Sattar was indicted June 2 in the United Kingdom on 18 counts of bribery. The charging documents claim that in return for a raft of state contracts he bribed numerous high-ranking Malawian officials. Named in the documents are: a previous Vice President, the late Saulos Chilima; President Lazarus Chakwera’s chief of staff, Prince Kapondamgaga; former Malawi Police Inspector General George Kainja; former Anti-Corruption Bureau (ACB) Director General and Solicitor General Reyneck Matemba; and Brigadier Dan Kuwali, a law professor and commandant at the Malawi Defence Force College.

The charges show how critical transnational cooperation can be when it comes to nailing “big fish.”  They are the result of a several year collaboration between the UK’s National Crime Agency and Malawi’s Anti-Corruption Bureau (ACB).

The case also shows that cross-border cooperation is critical not only when it comes to rooting out the facts.

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Good News from Argentina: Web of Judicial Corruption Exposed

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Judge Marcelo Bailaque, a senior federal magistrate based in Rosario, has been arrested for his role in a complex corruption scheme that allowed drug traffickers and money launders to avoid prosecution.

What makes the arrest especially good news is that Rosario, a river port on the route between cocaine-producing Peru and Bolivia and customers in Europe, has been dubbed Argentina’s first “narcocity,” with gangland violence regularly leading to the deaths of innocents (here). His arrest is a critical step in dismantling the gangs and bringing peace and prosperity to the beautiful, colonial-era city.

Although the immunity Bailaque enjoys as a federal judge may slow the criminal case, the arrest prompted the immediate opening of a disciplinary one before the governing body of the judiciary (the Consejo de la Magistratura). It is now proceeding in parallel with the criminal investigation.

Bailaque was snared as part of a larger investigation led by the Rosario office of Argentina’s Procuraduría de Criminalidad Económica y Lavado de Activos. It found that Carlos Vaudagna, a now former regional director of the tax agency operated as an informal broker between individuals under criminal investigation and key members of the judiciary. Using his position and influence, Vaudagna secured favorable treatment for the suspects in return for bribes or other benefits, intervening directly or through intermediaries to obstruct investigations, delay proceedings, and influence judicial decisions. His conduct exposed a broader structure of collusion between segments of the judiciary and organized economic crime. Judge Bailaque is charged with playing a central role in the criminal scheme, enabling or tolerating illicit practices from his position on the federal bench.

This outcome represents a crucial milestone, not only in the pursuit of accountability in this case, but in the broader fight against corruption within the judiciary. Progress would not have been possible without the collaborative efforts of multiple agencies and the strong institutional backing for prosecutorial independence in Argentina.

For Spanish readers (and Google translate users) more on the investigation follows.

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Fighting Grand Corruption: Naomi Roht-Arriaza’s Indispensable Guide to Combatting Its Scourge

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The literature on grand corruption, a/k/a kleptocracy or state capture, continues to expand at an ever-increasing rate.

Investigative exposes, think tank and NGO policy papers, academic books and articles, court cases and legal commentaries, and yes, blogs like this one make it hard for full-time students of the phenomenon, let alone policymakers, journalists and activists, to stay abreast of the learning this vast outpouring of thinking is producing.  

Thanks to University of California Law Professor Naomi Roht-Arriaza‘s new book, what we know about grand corruption, what can be done to curb it, and how to make its victims whole is now available in a single, readable, useful volume.

The title – Fighting Grand Corruption: Transnational and Human Rights Approaches in Latin America and Beyond – advertises two of its most important contributions.

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