NATIONAL INTEGRITY SYSTEM ASSESSMENT UKRAINE 2015 Transparency International Ukraine is a national chapter of the global anti-corruption non-governmental network Transparency International, which has over 90 national chapters and works in more than 100 countries around the world. The mission of TI Ukraine is to limit the expansion of the level of corruption in Ukraine by promoting transparency, accountability, and integrity of public authorities and civil society. www.ti-ukraine.org/en ©2015 Transparency International Ukraine. All rights reserved. Author: Transparency International Ukraine © Cover photo: Flickr/centralniak Every effort has been made to verify the accuracy of the information contained in this report. All information was believed to be correct as of June 2015. Nevertheless, Transparency International Ukraine cannot accept responsibility for the consequences of its use for other purposes or in other contexts. This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of Transparency International Ukraine and can in no way be taken to reflect the views of the European Union. This project is funded by the European Union TABLE OF CONTENTS I. INTRODUCTORY INFORMATION 3 ACKNOWLEDGEMENTS 7 II. ABOUT THE ASSESSMENT OF THE NATIONAL INTEGRITY SYSTEM 9 III. EXECUTIVE SUMMARY 11 1. General overview 11 2. Strongest and the weakest pillars of the NIS 12 3. The reasons for the weakness of NIS pillars 14 IV. COUNTRY PROFILE – THE FOUNDATIONS FOR THE NA- TIONAL INTEGRITY SYSTEM 23 V. CORRUPTION PROFILE 28 VI. ANTI-CORRUPTION ACTIVITIES 32 VII. NATIONAL INTEGRITY SYSTEM 37 1. Legislature 37 2. Executive 50 3. Judiciary 60 4. Public Sector 70 5. Law Enforcement Agencies 88 6. Electoral Management Body 99 7. Ombudsman 112 NATIONAL INTEGRITY SYSTEM ASSESSMENT 1 8. Supreme Audit Institution 122 9. Anti-Corruption Agencies 132 10. Political parties 157 11. Media 170 12. Civil Society 180 13. Business 192 VIII. CONCLUSION 204 2 NATIONAL INTEGRITY SYSTEM ASSESSMENT I. INTRODUCTORY INFORMATION LEAD RESEARCHER Denys Kovryzhenko AUTHORS Olena Chebanenko Chapter VII: 6, 10, 12 Denys Kovryzhenko Chapters II-VI, VII (except for 6, 10, 12); VIII, IX RESEARCH REVIEW Andrew McDevitt, Transparency International Secretariat Julie Anne Miranda-Brobeck, Transparency International Secretariat NATIONAL INTEGRITY SYSTEM ASSESSMENT 3 THE LIST OF MEMBERS OF THE ADVISORY GROUP Anti-corruption Action Centre, Executive Darya Kaleniuk Director Centre for Political and Legal Reforms, Director Mykola Khavroniuk for Academic Development, Professor Andriy Marusov Center for Political Studies and Analysis Ihor Svitlyk Arzinger law firm, lawyer Centre for Political and Legal Reforms, Deputy Victor Tymoshchuk Chair of the Board 4 NATIONAL INTEGRITY SYSTEM ASSESSMENT ACRONYMS AND ABBREVIATIONS ACA Anti-Corruption Agencies AMC Anti-Monopoly Committee BTI Bertelsmann Transformation Index CEC Central Election Commission CIDA Canadian International Development Agency CM CoE Committee of Ministers of the Council of Europe CMU Cabinet of Ministers of Ukraine CPC Criminal Procedure Code of Ukraine CPI Corruption Perceptions Index CSOs Civil Society Organisations CVU Committee of Voters of Ukraine EBRD European Bank for Reconstruction and Development ECtHR European Court of Human Rights EMB Electoral Management Body EU European Union GCB Global Corruption Barometer GCR Global Competitiveness Report GDP Gross Domestic Product GRECO Council’s of Europe Group of States against Corruption HACU Higher Administrative Court of Ukraine HCJ High Council of Justice HRW Human Rights Watch HQCJ High Qualification Commission of Judges ICC International Chamber of Commerce IFES International Foundation for Electoral Systems INTOSAI International Organisation of Supreme Audit Institutions IREX International Research and Exchanges Board IRF International Renaissance Foundation ISA International Standards on Auditing JSC Joint Stock Company MP Member of Parliament NACBU National Anti-Corruption Bureau of Ukraine NAPC National Agency for Prevention of Corruption NBC National Broadcasting Council NEC National Expert Commission for Protection of Public Morality NATIONAL INTEGRITY SYSTEM ASSESSMENT 5 ACRONYMS AND ABBREVIATIONS NGO Nongovernmental Organisation Office for Democratic Institutions and Human Rights of the Organisation for ODIHR Security and Co-operation in Europe Organisation for Economic Co-operation and Development / Anti-Corruption OECD/ACN Network for Eastern Europe and Central Asia OSCE Organisation for Security and Co-operation in Europe PACE Parliamentary Assembly of the Council of Europe SAI Supreme Audit Institution SCA State Court Administration SIGMA Support for Improvement in Governance and Management SSU Security Service of Ukraine TI Transparency International TRBs Television and Radio Stations UCAN Ukrainian Civic Action Network Project UNCAC United Nations Convention against Corruption United Nations Committee on the Elimination of Discrimination against UN CEDAW Women UNDP United Nations Development Program UNITER Ukraine National Initiatives to Enhance Reforms UNODC United Nations Office on Drugs and Crime UPAC Support to Good Governance: Project against Corruption in Ukraine USAID United States Agency for International Development VRU Verkhovna Rada of Ukraine (the Legislature) WB World Bank WTO World Trade Organisation 6 NATIONAL INTEGRITY SYSTEM ASSESSMENT ACKNOWLEDGEMENTS For many years, Ukraine’s Government has been failing to implement effective reforms aimed to curb corruption in the country. Lack of significant efforts aimed to combat corruption is reflected in permanently low scores for Ukraine under the key international corruption-related indexes, including TI Corruption Perception Index. Starting from 2010, when the former President Yanukovych came to power, the situation in terms of addressing the issue of corruption changed for the worse. The President himself, key members of the Government, judges and senior officials used their posts for personal enrichment and building a political regime that could hardly be considered democratic. Although within the EU-Ukraine Association talks the former Government adopted some anti-corruption legal instruments, most of them were not enforced in practice, and cases of corruption uncovered by civil society activists and the media mostly went unsanctioned. The Government’s refusal to sign the EU-Ukraine Association Agreement in November 2013, wide- scale corruption and the authoritarian regime built by Oleksii KHMARA, Yanukovych resulted in citizen protests known as the Transparency International Ukraine, Revolution of Dignity which ended with Yanukovych’s Executive Director escape from the country and a change of Government June 2015 in power. The deteriorated situation in the national economy, the annexation of Crimea by the Russian Federation and an undeclared war in Ukraine’s East between the Government and armed separatists forced the Government to seek the support of Western democracies and major international financial institutions, such as the IMF. The latter connected their support to implementation of a number of reforms in the country, including comprehensive reforms of the various governance institutions and anti-corruption reform. Early presidential and parliamentary elections held in 2014 established preconditions for more effective anti- corruption policy in the country. While the legislature succeeded in adopting a number of important anti-corruption laws in the end of 2014, much work still has to be done to decrease the level of corruption in Ukraine. This work includes comprehensive constitutional reform to strengthen independence of law enforcement agencies and the judiciary and restriction of MP immunities, establishment of the National Anti- Corruption Bureau of Ukraine and National Agency for Prevention of Corruption, creation of an adequate environment for doing business and investment in the economy, reform of the Accounting Chamber and comprehensive political finance reform. On behalf of Transparency International Ukraine, I am pleased to present the study on the National Integrity System of Ukraine, a comprehensive assessment of the NATIONAL INTEGRITY SYSTEM ASSESSMENT 7 legal basis for and actual practice of the functioning of Ukraine’s key institutions responsible for prevention of corruption. This study covers the period from the end of 2010 to the beginning of 2015 and aims to suggest precise and realistic proposals for comprehensive anti-corruption reform in Ukraine. I would like to thank the authors who produced the NIS assessment report, as well as TI-Secretariat team who supervised implementation of the project, in particular, Andrew McDevitt, Giulia Sorbi and Emilija Taseva. Thanks also go to members of the advisory group who dedicated their time to ensure reliability and comprehensiveness of the NIS assessment and verified the NIS pillar scores, and interviewees who provided the authors with the information on the actual performance of the pillars covered by the NIS assessment. Last but not least, I would like to express my deep gratitude to the European Union for its generous support in funding this project. 8 NATIONAL INTEGRITY SYSTEM ASSESSMENT II. ABOUT THE ASSESSMENT OF THE NATIONAL INTEGRITY SYSTEM The National Integrity System (NIS) comprises the principle governance institutions in a country that are responsible for the fight against corruption. These institutions include not only various