Why We Shouldn’t Be Overly Concerned About Corruption in the Reconstruction of Ukraine

Though the war in Ukraine continues to rage, scholars and policymakers around the world have already begun to look ahead to what it will take to help rebuild the country—a project that the Ukrainian government estimates will cost upwards of $750 billion, and which will likely entail substantial international assistance from a broad coalition of countries. Any project of this magnitude—one that involves large government contracts for construction, supplies, and other services—raises concerns about corruption. Indeed, concerns about the potential for widespread corruption in the reconstruction of Ukraine have already been voiced on this blog and elsewhere (see, for example, here, and here). But while this concern should be taken seriously, it should not be exaggerated. There are at least three reasons why the potential for corruption in the Ukrainian reconstruction process, while real, may not be nearly as severe as some of the current pessimistic commentary suggests:

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Preventing Corruption in the Reconstruction of Ukraine

It is clear Russia’s attempt to break Ukrainians’ will to fight by attacking the nation’s critical infrastructure is failing. No matter how much destruction its daily bombardments wreak on power plants, district heating systems, and the other facilities that support daily life, Ukrainians remain determined to recover every inch of territory the invaders now hold.

Helping to shore up Ukraine’s determination is the commitment its Western partners have made to financing Ukraine’s reconstruction. But as donors pledge their support, concerns are being raised about corruption. It is no secret that at the time Russia attacked, Ukraine was still struggling with the ingrained corruption it inherited from Soviet rule and the post-Soviet oligarchs who grabbed money and power in the first years of independence.

The Ukrainian government must the lead the fight against corruption during reconstruction, and draft legislation now circulating in Kyiv recognizes this. All funds would be channeled through an independent government entity with a 20-person board of directors of which 15 would be drawn from donor organizations and five would be Ukrainian officials. That the majority will be drawn from outside Ukraine is a critical provision, one that should reassure donors that oversight will not be wanting.

A second critical provision is that the entity would have a strong internal audit department reporting directly to the board of directors. The proposed bill provides the department would conduct financial audits, ensure the fund operates within the law, that information the board requested was supplied, and that managers did not act beyond their authorized duties.

As important as these provisions are, they are mainly backwards looking, aimed at identifying where corruption has occurred. More important is preventing it from occurring in the first place.

Ukrainian officials and their partners should thus include strong prevention measures in the final draft. All contractors should have an anticorruption compliance program that has been independently certified to be compliance with the standards for an antibribery management system found in ISO 37001. The legislation should also create a prevention department. One model is that the Millennium Challenge Corporation has. Its unit trains grantees responsible for overseeing construction projects in the creation of a risk register and development of an action plan to reduce if not eliminate corruption in both the award and execution of construction contracts. Regular field visits monitor how well grantees are doing in implementing their action plan.

Current estimates are that rebuilding Ukraine will run upwards of $350 billion, a number sure to grow as Russian bombs continue to fall. That Western nations are prepared to invest such an extraordinary sum in rebuilding a victim of aggression is the most reassuring sign to date that despite economic turmoil, social upheaval, and the election of demagogues, there is indeed a broad and deep global consensus on the value of a liberal, democratic order. Every step possible should be taken to ensure corruption does not undermine it.

New Podcast Episode, Featuring Andrii Borovyk and Gretta Fenner

A new episode of KickBack: The Global Anticorruption Podcast is now available.I know that I said in the post announcing the episode from a couple weeks back that that one would be the last post before our summer vacation, but I spoke too soon–last week I had the opportunity to speak with Andrii Borovyk, the Executive Director of Transparency International’s Ukraine chapter, and Gretta Fenner, the Managing Director of the Basel Institute on Governance, about addressing corruption risks inherent in emergency aid to Ukraine during the current conflict and the anticipated future infusion of funds to assist with post-war reconstruction. (Full disclosure: I am on the Board of Directors for Transparency International Ukraine, an unpaid position, and in that capacity I have worked with Andrii, though not directly on this issue.) After sharing their respective backgrounds in the field, Andrii and Gretta discuss how Russia’s aggression affected anticorruption advocacy work within Ukraine, and emphasize the importance for both domestic and international actors to strengthen institutions and mechanisms to prevent corruption in aid and reconstruction efforts. The conversation touches on, among other things, the challenges of pushing an anticorruption agenda in a time of national emergency, the role that aid conditionalities can play in promoting effective reform, and the importance of open, accessible, and centralized public information repositories. You can also find both this episode and an archive of prior episodes at the following locations: This really will be the last podcast episode before we go on summer break, but we will be releasing new episodes in September. The Global Anticorruption Blog is also going to go on summer hiatus during August, though I may post occasionally if something particularly important and time-sensitive comes up. As always, I’ll remind you that KickBack is a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN), encourage you to subscribe, and invite you to suggest for people or topics you’d like to hear on the podcast by sending me a message.

Guest Post: Anticorruption Recommendations for the Ukraine Recovery Conference

Today’s guest post is from Gretta Fenner, Managing Director of the Basel Institute on Governance, and Andrii Borovyk, Executive Director of Transparency International Ukraine.

Today and tomorrow, delegates from around the world are gathering at the Ukraine Recovery Conference in Lugano, Switzerland, and we hope that this conference will result in firm pledges by the international community to finance Ukraine’s post-war recovery and reconstruction. But as readers of this blog are well aware, huge infusions of money into countries recovering from war or natural disasters are a tempting target for kleptocrats, organized criminal groups, and other corrupt actors. And although Ukraine has steadily strengthened its anticorruption defenses since 2014, those defenses are not yet sufficiently robust to ensure reconstruction funds are spent with integrity.

For this reason, the Basel Institute on Governance and Transparency International Ukraine are advocating that the Ukraine Recovery Conference, and any future efforts to provide reconstruction funding for Ukraine, embrace a set of anticorruption measures to be integrated into the reconstruction process. The recommended measures include, among others:

  • prioritizing the leadership selection process and reforms of Ukraine’s anticorruption institutions, including courts;
  • using transparent procurement systems, such as Ukraine’s award-winning e-procurement system Prozorro, for reconstruction projects; and
  • strengthening asset recovery systems so that money stolen through corruption in the past can be used to help fuel reconstruction efforts.

You can see the full recommendations here in English (and here in Ukrainian ), and you can also download a shorter infographic that summarizes the key points.

The Anticorruption Campaigner’s Guide to Asset Seizure

Anticorruption campaigners have long argued that Western governments should be more aggressive in freezing and seizing the assets of kleptocrats and corrupt oligarchs. While targeting illicit assets has been part of the West’s anticorruption arsenal for many years, attention to this tactic has surged in response to Russia’s invasion of Ukraine. Almost as soon as Russian troops crossed the border into Ukrainian territory, not only did Western governments impose an array of economic sanctions on Russian institutions and individuals close to the Putin regime, but also—assisted by journalists who identified dozens of properties, collectively worth billions—Western law enforcement agencies began seizing Russian oligarchs’ private jetsvacation homes, and superyachts.

Many people who are unfamiliar with this area—and even some who are—might naturally wonder about the legal basis for targeting these assets. And indeed, the law in this area has some important nuances that are not always fully appreciated in mainstream media reporting and popular commentary. Continue reading

New Podcast, Featuring Anastasia Kirilenko

A new episode of KickBack: The Global Anticorruption Podcast is now available. During the ongoing emergency in Ukraine, as Russia’s unprovoked military aggression throws the region and the world into crisis, my colleagues at the Interdisciplinary Corruption Research Network (ICRN) and I featuring on KickBack experts who can shed greater light on how issues related to corruption relate to the ongoing crisis. And rather than keeping to our usual schedule of releasing new episodes every two weeks, we will release new episodes as soon as they are available. In the new episode, my ICRN colleague Christopher Starke interviews Anastasia Kirilenko, an investigative journalist and the co-producer of Putin and the Mafia, a documentary about Vladimir Putin’s connections with organized crime. In their conversation, Christopher and Anastasia discuss the themes of this documentary, and also discuss the role of media and civil society in Russia, the role of oligarchs in Russian politics, and what the international anticorruption community could do to more effectively promote change within Russia. You can also find both this episode and an archive of prior episodes at the following locations: KickBack is a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN). If you like it, please subscribe/follow, and tell all your friends. And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.

The Corruption of Italian Democracy: Russian Influence Over Italy’s League

Italy’s largest far-right policy, La Lega (“the League”), has long had close ties with Putin’s regime in Russia. The League’s leader, Matteo Salvini, has been a vocal supporter of Putin for years (see also here, here, and here), and in 2017 the League signed a formal cooperation agreement with Putin’s United Russia party. Even before then, the League (then known as Lega Nord, the “Northern League”) often advocated within Italy and the EU for Russian interests. Notably, while the EU imposed sanctions on Russia after Russia’s illegal annexation of Crimea in 2014, the League opposed sanctions and tried (unsuccessfully) to upend the solidarity necessary to keep EU sanction in place. That opposition to sanctions only intensified after the 2017 cooperation agreement: At a 2018 conference in Moscow, Salvini—then Italy’s Interior Minister–insisted that Italy would work “day and night” to repeal the 2014 sanctions. Salvini’s efforts proved unsuccessful, as he was unable to convince his coalition partners to change Italy’s stance. But the Kremlin still benefitted from the League’s vocal opposition to sanctions, as it showed that Russia wasn’t isolated diplomatically and that the West is internally divided.

The League’s long history of cooperation with Moscow could be chalked up to shared ideology and policy goals. But it appears that corruption, not policy, might explain why the party is so close with Putin.

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New Podcast Episode, Featuring Svitlana Musiiaka

A new episode of KickBack: The Global Anticorruption Podcast is now available. During the ongoing emergency in Ukraine, as Russia’s unprovoked military aggression throws the region and the world into crisis, my colleagues at the Interdisciplinary Corruption Research Network (ICRN) and I running a special series on KickBack, featuring experts who can shed greater light on how issues related to corruption relate to the ongoing crisis. And rather than keeping to our usual schedule of releasing new episodes every two weeks, we will release new episodes as soon as they are available. In the new episode, ICRN Member and guest host Oksana Huss speaks with Svitlana Musiaaka, a Ukrainian lawyer and anticorruption specialist who currently serves as the Head of Research and Policy at NAKO, an independent Ukrainian civil society organization that focuses on combating corruption in the defense and security sector. The conversation opens with a discussion of Ms. Musiaaka’s professional background and the work of NAKO, and then proceeds to how Ukraine has worked on reforming its defense sector to promote transparency and effectiveness. She also emphasizes how reforms in Ukraine have helped the Ukrainian military’s performance against the Russian army, and concludes by discussing what the international community can do to support Ukraine now. You can also find both this episode and an archive of prior episodes at the following locations: KickBack is a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN). If you like it, please subscribe/follow, and tell all your friends. And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.

New Podcast Episode, Featuring Oksana Nesterenko

A new episode of KickBack: The Global Anticorruption Podcast is now available. During the ongoing emergency in Ukraine, as Russia’s unprovoked military aggression throws the region and the world into crisis, my colleagues at the Interdisciplinary Corruption Research Network (ICRN) and I are going to try as best as we can to feature on KickBack experts who can shed greater light on how issues related to corruption relate to the ongoing crisis. And rather than keeping to our usual schedule of releasing new episodes every two weeks, we will release new episodes as soon as they are available. In the new episode, I was privileged to welcome to the podcast Oksana Nesterenko, Associate Professor of Law at the National University of Kyiv-Mohyla and Executive Director of the Anti-Corruption Research and Education Centre. Professor Nesterenko was forced to leave Kyiv after the Russian attack, and she spoke with me from Poland, where she, like so many of her fellow citizens, is a refugee. In the first part of our conversation, Professor Nesterenko explains why the war between Russia and Ukraine is really a war of values, and why gradual reforms in Ukraine in the direction of liberal democracy and anticorruption threatened the Putin regime, and why this, rather than any actual military or security threat to Russia, is the real underlying reason for the Putin regime’s attempt to topple the current Ukrainian government. She also explains that Putin’s war is also an attempt to deflect domestic attention from his regime’s failures, including the government dysfunction caused by his corrupt approach to governance. She also provides an assessment of Ukrainian President Volodymyr Zelensky’s pre-war anticorruption efforts, emphasizing that from the perspective of anticorruption activists were disappointed in the lack of progress on some issues, but recognizing that as a politician he had to balance interests and demands from different stakeholders. In the final part of our conversation, we turn to the question of Russian (and Ukrainian) dirty money flowing into wealthy Western countries, and what more can and should be done to stop this. You can also find both this episode and an archive of prior episodes at the following locations: KickBack is a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN). If you like it, please subscribe/follow, and tell all your friends. And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.

New Podcast Episode, Featuring Igor Logvinenko

A new episode of KickBack: The Global Anticorruption Podcast is now available. During the ongoing emergency in Ukraine, as Russia’s unprovoked military aggression throws the region and the world into crisis, my colleagues at the Interdisciplinary Corruption Research Network (ICRN) and I are going to try as best as we can to feature on KickBack experts who can shed greater light on how issues related to corruption relate to the ongoing crisis. And rather than keeping to our usual schedule of releasing new episodes every two weeks, we will release new episodes as soon as they are available. In the new episode, I had the opportunity to speak to Igor Logvinenko, Associate Professor at Occidental College and author of Global Finance, Local Control: Corruption and Wealth in Contemporary Russia. In the first part of our conversation, Igor discusses Russia’s Russia’s historical corruption and current financial integration into world business, and we then turn to the impact of the current sanctions on Russia–including government sanctions on Russia and Russian companies, actions by private companies, and the use of targeted individual sanctions and asset seizures. In addition to discussing these issues in the context of the current war, Igor also discusses more broadly the role of Western financial systems, international financial integration, and the possibility for locally-driven structural changes to fight grand corruption. You can also find both this episode and an archive of prior episodes at the following locations: KickBack is a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN). If you like it, please subscribe/follow, and tell all your friends. And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.