Ukraine’s Cynical Efforts to Mandate Public Asset Disclosures for Anticorruption Advocates Must Be Stopped

In 2016, under pressure from anticorruption organizations, Ukraine’s parliament passed the “On Prevention of Corruption” law, which required high-level government officials and other civil servants to disclose their income and assets in a public online database. A year later, however, the parliament—in what seems to have been an act of retaliation—adopted an amendment to that law, and required all individuals who “carry out activities related to the prevention and counteraction of corruption” to also declare their assets by April 1, 2018, or face potential penalties (including fines or imprisonment of up to two years). The amendment, in other words, imposes on anticorruption advocates the same financial disclosure requirements that many of these advocates had insisted on imposing on Ukrainian public officials.

Imposing this disclosure requirement on anticorruption advocates was rationalized as promoting transparency, since foreign money often supports anti-graft work in Ukraine. Some have claimed that anticorruption activists are themselves corrupt and work with anticorruption organizations to enrich themselves. More generally, the amendment seems to be motivated by an impulse toward retaliation (or a version of fairness): The message seems to be, “If you people think these requirements are appropriate for us, then you should be willing to put up with them too.”

But anticorruption workers do not hold public office and are not supported by taxpayer money, and there is no good reason to subject them to the same demanding disclosure standards that are entirely appropriate for public servants. This obvious distinction is further reason to believe that this amendment is yet another measure in line with previous government efforts to discredit anticorruption activists. Imposing the disclosure requirement has been roundly criticized both domestically and internationally, with activist organizations also arguing that the amendment violates Ukraine’s Constitution (particularly rights to freedom of speech, association, and employment). Even Ukrainian President Petro Poroshenko has called the bill a “mistake,” and in July 2017 he submitted to parliament two draft laws that eliminate the asset disclosure obligation for individual anticorruption activists—but place even more stringent reporting requirements on anticorruption organizations. These draft laws drew further criticism, and as the April 1, 2018 asset disclosure deadline approached and passed, Ukraine’s parliament has refused to consider any changes to the law.

Leaving in place the requirement that those who help fight corruption must make the same kind of public asset disclosures as government officials will sabotage and chill anticorruption work. It is vital that domestic activists and the international community keep up the pressure on Ukraine to eliminate this requirement altogether, and to do so soon in order to remove the cloud of uncertainty that has fallen over all anticorruption advocacy since the April 1 deadline passed. The disclosure requirement as it stands threatens to undermine the fight against corruption in Ukraine in at least three ways: Continue reading

Guest Post: Global Forum or Global Farce on Asset Recovery?

GAB is delighted to welcome back Susan Hawley, Policy Director at Corruption Watch, to contribute today’s guest post:

The global record on recovering assets looted from public treasuries is not good. The World Bank and UNODC estimate that between $20-40 billion is stolen each year. Between 2006 and 2012, $2.6 billion stolen assets were frozen in so-called “destination” countries, and $423.5 million was returned. That means of the roughly $120 billion (taking the lowest end of the World Bank and UNODC’s estimate) thought to have been potentially looted globally in that 6 year period, only 0.3% was actually recovered.

To strengthen international efforts to combat this problem, the 2016 London Anti-Corruption Summit called for the creation of a Global Forum on Asset Recovery (GFAR); the World Bank and UNODC’s Stolen Asset Recovery Initiative organized the inaugural Global Forum on Asset Recovery (GFAR), in December 2017 in Washington, D.C., with the US and UK governments as co-hosts. The GFAR, which welcomed over 300 participants from 26 jurisdictions, focused on four countries: Nigeria, (thought to have to have lost $32 billion to corruption under previous President Goodluck Jonathan); Sri Lanka (where former President Rajapaksa allegedly stole up to $5.38 billion); Tunisia (where former ruler Ben Ali and his family are thought to have amassed wealth of over $13 billion); and Ukraine (where former president Yanukovych and his associates are thought to have stolen around $7.5 billion). These countries were selected for their political will to recover stolen assets and the considerable assets they have to recover.

The stated objectives for the GFAR were “progress on cases achieved by the four focus countries, increased capacity through technical sessions, renewed commitment to advancing asset recovery cases, and increased collaboration among involved jurisdictions.” As measured against these objectives, was the GFAR a success? Should it be a regular event? More generally, do asset recovery forums like this have sufficient positive impact to justify their cost? Continue reading

Fake News: An Emerging Threat to Anticorruption Activists

The reputation of the Anti-Corruption Action Centre (ANTAC), a Ukrainian anticorruption NGO, was called into question in May 2017, when a video featuring a report from the American “News24” network appeared on YouTube; the video reported on investigations into the finances of Vitaliy Shabunin, the head of the ANTAC board. A few months later, in September 2017, Ukraine’s NewsOne featured a live broadcast of a sitting of the US Congressional Committee on Financial Issues in relation to alleged corruption in the National Bank of Ukraine (NBU). The hearing focused largely on the conduct of Valeriya Hontareva, who had championed reforms of the banking sector to prevent misuse of the system by business tycoons. The panelists suggested that Ms. Hontareva was herself corrupt and being investigated by the US Congress.

Reports that leading figures fighting for more integrity in Ukraine might themselves be corrupt are, of course, disturbing. What’s even more disturbing is the fact that both of these stories were completely fabricated. News24 does not exist. The news anchor who appeared in the purported News24 video was an American actor named Michael-John Wolfe, hired through the site Fiverr.com. As for the broadcast of the hearing before the “US Congressional Committee on Financial Issues”—there is no such committee. The so-called “hearing” was in fact a private event organized by lobbyists (including former congressman Connie Mack), held in a room in the basement of the US Capitol without the attendance of any current members of Congress. (Representative Ron Estes (R-KS) sponsored the room’s booking, apparently in violation House ethics guidelines.)

Although attempts to tarnish the reputations of activists and reformers are not new, the two incidents described above reveal that anti-anti-corruption forces are beginning to deploy the “fake news” tactics that garnered so much attention in recent elections, especially though not exclusively in the United States. And while in these incidents fake news was used as an offensive strategy, fake news has also been deployed defensively, for example by the wealthy and influential Gupta family in South Africa, to shake off allegations of corruption.

Although these efforts in Ukraine seem clumsy and easily exposed, it is likely that fake news will be an increasingly difficult challenge for anticorruption efforts in the years to come. The fake news phenomenon threatens to undermine anticorruption efforts in a variety of ways: Continue reading

A Ukrainian Anticorruption Court Is an Essential Step Toward the Rule of Law

Since the Maidan movement that overthrew the last Ukrainian government, Ukrainian anticorruption activists have demanded, among other reforms, the creation of a specialized anticorruption court. Many of Ukraine’s Western backers likewise consider the creation of such a court to be an essential step in addressing the country’s systemic corruption problem, and in recent months, protests have broken out on the street in support of the court. In what appears to be a major victory for the domestic and international advocates of a special anticorruption court, President Poroshenko agreed in principle to create such a court this past October—although the details will need to be worked out.

Not everyone is convinced that the creation of a specialized anticorruption court is as important as its backers think. In a thoughtful post last month, Helen articulated the skeptical view, arguing that the specialized anticorruption court will likely not live up to expectations, and that domestic and international actors are placing too much emphasis on the creation of this particular institution. But Helen both underestimates the importance of a specialized anticorruption court in the Ukrainian context, and is overly pessimistic about its prospects for effectiveness. That said, she is right to highlight how things could go awry if the creation of the specialized anticorruption court is not done right.

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No Silver Bullet: Why Ukrainian Anticorruption Activists Should Not Fixate on Creating a Specialized Anticorruption Court

Ukrainian civil society activists have been aggressively campaigning for the establishment of an independent anticorruption court (see, for example, here, here, and here), in which international donors and other partners would participate in the selection of judges. Until very recently, President Poroshenko had vigorously resisted this campaign, asserting that “all courts in the country should be anti-corruption,” and proposing instead to have an anticorruption chamber within the current court system as part of his judicial reform plan. Yet in a surprising turn of events, on October 4th President Poroshenko appeared to yield to the demand of activists and international pressure to create such a court.

Poroshenko’s flip-flop seems to be a major victory for anticorruption activists in Ukraine. Yet it might be too early to celebrate. As promising as it sounds, a specialized anticorruption court is unlikely to live up to Ukrainian activists’ expectations. In a country like Ukraine—an oligarchic democracy in which governmental power is not delineated clearly by the constitution or legal framework, the executive is not effectively checked by the judiciary, and businesses are entangled with politics—the creation of a new judicial body is unlikely to be a game-changer. Moreover, in focusing so much on the campaign to create a specialized anticorruption court, domestic and international activists may be diverting energy and resources from more important issues, such as reforming the Prosecutor General’s Office (PGO), strengthening the role of the National Anti-Corruption Bureau of Ukraine (NABU), and adopting more comprehensive political and economic reforms reduce the clout of the country’s oligarchs.

There are two main reasons that the proposed Ukrainian anticorruption court is unlikely to live up to activists’ expectations:

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Getting Serious (and Technical) About Procurement Corruption: The Transparent Public Procurement Rating Project

For corruption fighters, public procurement is notable for two reasons. One, it is damnably complex. Two, it is often permeated with corrupt deals.  The latter makes it a critical target of anticorruption policy, the former a tough nut to crack. The thicket of laws, regulations, standard bidding documents, and practices that govern procurement means civil society groups advocating counter corruption measures are often at sea.  Lacking expertise on this bewildering set of rules, they can do little more than campaign in general terms for reform, urging steps like “greater transparency” or “tougher penalties” for corrupt activities.

But as anyone knows who has tried to persuade a government of uncertain will and commitment to adopt effective anticorruption policies, the devil is in the details.  Unless one has mastered the details of public procurement, a government can do all sorts of things to “improve transparency” or “crack down on procurement scofflaws” that are nothing but public relations gambits. So it is a pleasure to report that civil society organizations in Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine have joined to form the Transparent Public Procurement Rating Project, which provides a way for staff to master the details of the public procurement and to thus be able to present detailed proposals for rooting corruption out of their nation’s public procurement systems.    Continue reading

Chasing Dirty Money: A Public Database of Ukrainian PEPs

Two weeks ago I posted Ferreting Out Kleptocrats’ Buddies: The Ukrainian Solution which described a list of Ukrainian public officials, their relatives, and close associates that a Ukrainian NGO had compiled. Banks and other financial institutions are required by national antimoney laundering laws to ask these individuals, “politically exposed persons” in antimoney laundering lingo, how they came by their money before doing business with them.  The idea is to keep money obtained through corrupt and other criminal means from polluting the financial system.  The hope is that such controls will either discourage PEPs from stealing from the public or, if not, open up one more way to catch those who have.

As Ferreting Out explained, currently the institutions subject to the antimoney laundering laws rely on PEP lists sold by large international companies, lists that often omit many names that should be on them.  Despite antimoney laundering laws in place around the globe, Ukrainian PEPs are spiriting money out of the country and into foreign financial institutions, real estate, and other investments at an alarming rate.  To help staunch the flow, the Ukrainian Anticorruption Action Center developed and published its own list of Ukrainian PEPs.  The list draws on many local sources and was compiled to complement the ones peddled by commercial vendors.

Center staff presented their work last weekend at the IMF-World Bank Annual Meetings.  A summary of their presentation with a link to the database follows. Continue reading