Civil Society Tools to Fight Corruption Oleksandra Ustinova, Bucharest, 7-8 September 2017

Anti-corruption Reform in Ukraine

NEW ANTI-CORRUPTION INSTRUMENTS Introduction of new electronic procurement system Prozorro made public procurements more accountable and transparent, and so far saved up to EUR 0.8 bln Transfer of drug procurement so far saved up to EUR 21 mln and allowed to treat more patients New procurement rules for state companies put EUR 1.5 bln under public control Introduction of new rules demanding transparency of financing of political parties

LOOPHOLES AND GRAY ZONES Lack of enforcement allows political parties to lie about the source of financing (e.g., reporting about fake donations) State companies are used as a source of profit and cash machines, the “black cash” is later used to guarantee the win during elections Ongoing armed conflict makes defence industry extremely profitable. Due to national security concerns and state of secrecy it is unavailable public control. Thus, controlling defence industry is priority for political parties. Currently most of the companies are controlled by the President’s party, BPP.

TYPICAL PARTY DONATION FRAUD Batkivshchyna Party was fined for reporting fake donations Party reported approx. EUR 250 000 donations from “beholders” Most of “donors” made the same donations and the same time None of the real persons listed as a “donor” remember donating money

TYPICAL TRADE OF INFLUENCE BY MP https://www.youtube.com/watch?time_continue=1&v=N4omnv6Zfa0

Case of Lviv Tank Armor Plant

MISAPPROPRIATION OF MILITARY BUDGET Management of State Enterprise Lviv Tank Armor Plant is suspected for embezzlemetnt of approx. EUR 1.2 mln In 2015, management of Plant conspired with fictive company to embezzle money during procurement of engines and spare parts for repair and construction of armored vehicles Currently, they are suspected for misappropriation funds done by abuse of office

TRAIL OF DEFECTIVE ENGINES In 2015, the plant procured old or malfunctioning for tanks engines indicating that they are new ones The procured engines were actually out of production since 1990’s In 2008-2009, the procured engines had been previously sold to private companies as scrap metal by the Ministry of Defense

Politicians Behind Most of the companiesin defence sector are devided for the sphere of interests between two main political parties, People’s Front and Block of Petro Poroshenko State companies are usually controlled through loyal management. In most cases, the profits are gained through non-transparent procurements or subcontracting of manufacturing or services to private companies During court hearings regarding arrest of the Director of Lviv Tank Armor Plant, 5 MPs (mostly from Block of Petro Poroshenko) asked to take him on bail

UKR.AW Project

Goals and Achievements The UKR.AW Project is a connecting link between journalists and law enforcement agencies. We help incorporate legal terminology into investigative journalism and write appeals to courts and controlling or supervisory agencies Idea of the project: “Corruption can be fought because corruption always has a name.” Stages of work: Fact Check – Appeal – Monitoring – Additional Actions – Follow Up

Case of “Kyoto Money”

EMBEZZLEMENT OF “GREEN” INVESTMENTS In 2008-2014, Ukraine received approx. EUR 470 mln as payments for unused emission units under Kyoto Protocol Approx. EUR 200 mln out of this payments was transferred to companies of MP Ivaniushchenko to perform construction works decreasing carbon footprint In most cases, construction works had various violations, was of low quality, unfinished or not performed at all

POLITICIANS BEHIND Ex-MP Yuriy Ivaniuchchenko was close friend and associate of Viktor Yanukovych Ivaniushchenko indirectly owned companies profiting from embezzlement of “Kyoto money” Ivanisuhchenko had his share in number of high-profiting and state dependent businesses, including oil&gas and alcohol production Ivaniushchenko was one of the key “sponsors” of Yanukovych’s party, the Party of Regions Ivaniushchenko was under EU sanctions in 2014-2017

Case of Irpin Major’s Construction Schemes

ILLEGAL CONSTRUCTION AND ILLICIT ENRICHMENT Major of small city of Irpin (25 km from Kyiv) declared ownership of 67 apartments in his city AntAC’s investigation revealed that apartments were received in newly constructed buildings Constructions were performed by companies close to city major Land for construction was received illegally In total, 890 ha of land was misappropriated

ILLEGAL CONSTRUCTION SCHEME City counsel adopted several illegal decisions transferring forest lands into the lands purposed for construction Land plots and respective construction permits were received by companies close to city major (through family or business ties) Newly constructed apartments were gifted or bought under market price by city major or his family City major is currently investigated for abuse of office and tax evasion

POLITICIANS BEHIND Irpin Major, Volodymyr Karpliuk, created his own party called New Faces New Faces Party was created to guarantee his win during major and local council elections in 2014. In June 2017, party was fined for lack of financial audit Karpiuk is associate of Petro Melnyk, who used to be one of influential reperesentatives of Party of Regions in Kyiv region, later convicted for bribery

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