PHOTO CREDIT: SACCI TEAM PROGRESS REPORT SUPPORT TO ANTI-CORRUPTION CHAMPION INSTITUTIONS (SACCI) PROJECT IN UKRAINE January 1, 2020 – March 31, 2020 This report is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this report are the sole responsibility of Management Systems International, Inc., a Tetra Tech Company, and do not necessarily reflect the views of USAID or the United States Government. This document was prepared by Management Systems International, a Tetra Tech company, for the “Support to Anti-Corruption Champion Institutions” (SACCI) Project, USAID Contract AID-121-C-17- 00003. CONTENTS ACRONYMS AND ABBREVIATIONS 1 CONTEXT UPDATE 3 EXECUTIVE SUMMARY 6 KEY NARRATIVE ACHIEVEMENTS 12 Crosscutting Activities 12 OBJECTIVE 1: KEY GOVERNMENT INSTITUTIONS EMPOWERED TO FIGHT CORRUPTION 14 ER 1.1: Comprehensive Anti-Corruption Legal and Policy Framework Developed and Adopted 14 ER 1.2: Government Capacity to Develop and Implement Anti-Corruption Policies, Tools, and Mechanisms Strengthened 14 OBJECTIVE 2: PUBLIC SUPPORT FOR AND ENGAGEMENT IN ANTI-CORRUPTION EFFORTS INCREASED 19 ER 2.1: Government Outreach on Anti-Corruption Reforms and Successes Improved 19 ER 2.2: Engagement of Citizens in the Fight against Corruption Increased 21 OBJECTIVE 3: PUBLIC TOLERANCE OF CORRUPT PRACTICES REDUCED 22 ER 3.1: Public Understanding of Corruption and Its Costs Increased 22 ER 3.2: Youth Increasingly Reject Corruption as a Social Norm 24 PROGRESS AGAINST TARGETS 26 PERFORMANCE MONITORING, EVALUATION, AND LEARNING 26 ENVIRONMENTAL MONITORING 26 PROGRESS ON LINKS TO OTHER ACTIVITIES 26 PROGRESS ON LINKS TO HOST GOVERNMENT 27 LESSONS LEARNED 27 PROGRESS ON INCLUSIVE DEVELOPMENT 27 FINANCIAL INFORMATION 28 SUB-AWARD DETAILS 28 ADMINISTRATION ACTIVITIES 28 ATTACHMENTS 31 ANNEX 1. PERFORMANCE DATA TABLE, SUB-AWARDS TABLE, AND FUTURE ACTIVITIES TABLE 31 ANNEX 2. PUBLIC OUTREACH DOCUMENTS 32 ACRONYMS AND ABBREVIATIONS ACCP Anti-Corruption Council under the President ACREC Anti-Corruption Research and Education Centre AnTAC Anti-Corruption Action Center AU Authorized Unit AWP Annual Work Plan CMU Cabinet of Ministers of Ukraine CoST Construction Sector Transparency Initiative CRA Corruption Risk Assessment CSO Civil Society Organization ENGAGE Enhance Non-Governmental Actors and Grassroots Engagement EUACI EU Anti-Corruption Initiative FLEX Future Leaders Exchange Program GOU Government of Ukraine GRECO Group of States against Corruption IDP Internally Displaced Person IFES International Foundation for Electoral Systems IIFA Institutional Integrity Framework Assessment IT Information Technology ITA International Technical Assistance MARAD Maritime Administration (MIU) MDT Ministry for Digital Transformation MEL Monitoring, Evaluation, and Learning MESU Ministry of Education and Science MIU Ministry of Infrastructure MOH Ministry of Health MP Member of Parliament NABU National Anti-Corruption Bureau of Ukraine NACS National Agency for Civil Service NAPC National Agency for Prevention of Corruption NaUKMA National University of Kyiv-Mohyla Academy NGO Nongovernmental Organization OSA Oblast State Administration PEA Political Economy Analysis POC Public Oversight Council RC Regional Coordinators SAIUP Strengthening Academic Integrity in Ukraine Project SCMU Secretariat of the Cabinet of Ministers SMM Social Media Marketing SOE State-Owned Enterprise SOSA Sumy Oblast State Administration STTA Short-Term Technical Assistance TIU Transparency International Ukraine ULA Ukraine Leadership Academy UCU Ukrainian Catholic University UCMC Ukraine Crisis Media Center USAID/Ukraine – Support to Anti-Corruption Champion Institutions (SACCI) Program | Quarterly Progress Report 1 USAID United States Agency for International Development UShU Ukrainian School of Governance VRU Verkhovna Rada of Ukraine WCH White Collar Hundred USAID/Ukraine – Support to Anti-Corruption Champion Institutions (SACCI) Program | Quarterly Progress Report 2 CONTEXT UPDATE This reporting period saw significant shakeups in Ukraine’s political arena with the dismissal of most of the Cabinet of Ministers of Ukraine (CMU) as well as leading reformers in the civil service and justice sector. Coupled with the COVID-19 outbreak, these changes in the country’s high-level management significantly influenced the course of this reporting period and will continue to influence Ukraine’s governance and anti-corruption trajectory. During the reporting period, the political situation began changing drastically. The head of the Office of the President, Andriy Bohdan, was dismissed in mid-February and replaced with attorney Andriy Yermak. Before heading the Office of the President, Mr. Yermak served on President Zelenskyy’s team, and his responsibilities included negotiating an end to the armed conflict with Russia and reintegration of the Donbas region. He retained this responsibility in his new position. In March 2020, Prime Minister Oleksiy Honcharuk and his entire cabinet resigned. A newly appointed prime minister, Denys Shmyhal, proposed a new composition for the CMU. A few positions remained vacant as of the end of March. Most key ministers were replaced but several retained their positions—most notably, and to the dismay of many civil society observers, Minister of the Interior Arsen Avakov. SACCI’s counterpart institutions also experienced leadership changes. CMU Minister Dmytro Dubilet was replaced by Oleh Niemchynov; Vadym Gutsait took over the Ministry for Youth, Sports, and Culture; and Ilya Yemets was appointed to the minister of health post, which he had held in 2010–2011. However, his tenure was short-lived and on March 30, he was replaced by Maksym Stepanov, former Odesa oblast governor. Minister of Education Anna Novosad resigned from her position in protest of the appointment of Shmyhal, leaving her post vacant. In addition, the head of the National Agency for Civil Service (NACS), Oleksandr Starodubtsev, who had initiated large-scale reform of the civil service, was dismissed. Deputy Prime Minister and Minister for Digital Transformation Mykhailo Fedorov and Minister of Infrastructure Vladyslav Krykliy retained their positions. The president sought to justify the changes by emphasizing a need for more experienced operatives to lead the cabinet of ministers. During the reporting period, the composition of Ukraine’s political forces also changed. The Servant of the People Party’s unanimity in Parliament began to crumble. Discord in the party was evident during the passing of crucial draft laws on selling farmland. Party unity also fractured during contentious parliamentary legislative sessions on improving the banking system’s governance to include banning the return of nationalized banks to former owners, such as returning Privatbank to notorious oligarch Ihor Kolomoiskyi. Discussions on direct negotiation with the self-proclaimed authorities of the Donetsk People’s Republic (DNR) and Lugansk People’s Republic (LNR) were also affected by discord within the president’s party. Implementing land and banking reform is critical for Ukraine to meet conditions for the much-needed International Monetary Fund (IMF) financial stabilization loan of $5.5 billion over the next three years. On the last day of March, the Verkhovna Rada (VRU) adopted the land reform law, albeit with many amendments to the version passed at the first reading in November 2019. Also, the draft law on improved banking system governance was passed in the first reading only, with the support of other factions. Servant of the People did not have enough votes within their ranks to move these hotly debated draft laws to the president’s desk, even though they possessed a majority in the VRU. With Andriy Yermak as head of the Office of the President, new developments emerged in the Donbas military conflict. On March 11, the Trilateral Contact Group preliminarily agreed to establish an advisory USAID/Ukraine – Support to Anti-Corruption Champion Institutions (SACCI) Program | Quarterly Progress Report 3 Consultation Council elevating the self-proclaimed DNR and LNR to direct negotiators with Ukraine, reducing the Organization for Security and Co-operation in Europe’s role and placing Russia in the role of observer along with Germany and France. This decision, when made public by the media, triggered a strong backlash from opposing parties and civil society criticizing the presidential administration for concessions to Moscow. A dissenting group of parliamentary deputies from the Servant of the People Party joined opposition parties in voicing concerns about this decision, indicating the divergence of political streams within the president’s party. The COVID-19 pandemic prevented the official signing of the agreement, giving the Office of the President a chance to reassess its decision. In the meantime, violence in the occupied territories continues and prospects for reintegration remain unclear. The response to the outbreak of COVID-19 highlighted the administration’s deficiencies in crisis management. In March, Ukraine closed its borders and airspace and implemented other measures to prevent the virus’s spread. However, macroeconomic instability, slow and ineffective response to the outbreak, allegations of corruption in medical procurement, and accusations of poor preparedness for treatment of COVID-19 patients damaged public trust in the government. Leadership instability at the Ministry of Health raised concerns over whether