14th Kyiv Post CEO Breakfast debates state of law enforcement in Ukraine - May. 31, 2018

Ukraine’s law enforcement — from police to prosecutors and judges — form a widely distrusted institution that is, on the one hand, failing to deliver justice to Ukrainians while, on the other hand, abusing its powers by harassing law-abiding businesses and political opponents for no legitimate reasons.

Not much was said to dispel these perceptions during the 14th Kyiv Post CEO Breakfast, sponsored by DHL and S&P law firm, on May 31 in the InterContinental Kyiv. Some improvement was noted in the responsiveness of law enforcement agencies and also there was an acknowledgment that some investigations of wrongdoing or illegal activity have been legitimate. Moreover, instances in which judges are ruling fairly and according to the law were noted.

But, in general, participants talked about unjustified searches of businesses that amounted to harassment and that took lots of time, money and effort to battle in courts. And, despite the passage of a Dec. 7 meant to curb raids on businesses and hold law enforcement more accountable, more searches of businesses are being conducted in recent years under President Petro Poroshenko’s tenure, which began on June 7, 2014.

Support was voiced for curbing the powers of the Security Service of Ukraine, known as the SBU, the secretive successor of the Soviet KGB. Its 27,000 employees insert themselves in almost all sectors of Ukrainian life, including economic activity, and answer only to the president. Proposals have stalled to limit the powers of the SBU to counter-intelligence and counter-terrorism, cut its workforce to 10,000 people and put it under the control of parliament.

Additionally, the 15,000 people working in the General Prosecutor’s Office are still seen as opening and closing cases on political demand or for bribes, while obstructing the work of the new anti-corruption institutions such as the National Anti-Corruption Bureau of Ukraine.

Another idea is to create a single law enforcement agency responsible for investigating all economic crimes. Now, the responsibilities are spread out among multiple agencies.

Meanwhile, murders, major cases of corruption and other illegal activity go uninvestigated.

The creation of a truly independent judicial system — one in which politicians no longer decide who goes to prison and who doesn’t — is seen as a key to attracting more foreign direct investment. Ukraine’s FDI stock stood at a paltry $1.6 billion in 2017 after bank refinancing is subtracted.

Soviet attitudes persist that look upon legitimate businesses as targets for investigation and seizure of assets, while ignoring real crimes, such as fraud and theft of intellectual property.

It adds up to a situation in which businesses trying to operate transparently face hurdles and are at a competitive disadvantage, while some competitors ignore rules with impunity. And these startling statistics show the problem: Ukraine’s foreign direct investment is only 2 percent of the gross domestic product and capital outflows from the nation amount to 45 percent of GDP.

Participants of the 14th Kyiv Post CEO Breakfast, sponsored by DHL and S&P law firm, on May 31 in the InterContinental Kyiv, included:

Anders Aslund, senior fellow, Atlantic Council

Algirdas Semeta, Ukraine’s business ombudsman

Valentyn Nalyvaichenko, ex-head of Security Service of Ukraine

Sergiy Gorbatiuk, deputy prosecutor general

Markiyan Lubkivskiy, adviser to ex-Security Service of Ukraine head Valentyn Nalyvaichenko

Yevhen Kravtsov, acting CEO of Ukrzaliznytsia

Guilhem Granier, country chairman, Sanofi Ukraine

Lenna Koszarny, CEO and founding partner, Horizon Capital

Peter Kerekgyarto, general director & country chairman, Shell Retail Ukraine

Brian Handley, general director, TSUM Kyiv

Sergi Milman, founder and CEO, YouControl