Corruption in Ukraine

Corruption is widespread in Ukrainian society. In 2012 Ernst & Young put Ukraine among the three most-corrupt nations from 43 surveyed—alongside Colombia and Brazil. In 2015 The Guardian called Ukraine “the most corrupt nation in Europe”. According to a poll conducted by Ernst & Young in 2017, experts considered Ukraine to be the ninth-most corrupt nation from 53 surveyed. According to Transparency International’s 2021 Corruption Perceptions Index, (a scale of least to most corrupt nations), Ukraine ranked 122nd out of 180 countries in 2021, the second most corrupt in Europe, with Russia the most at 136.

United States diplomats described Ukraine under Presidents Kuchma (in office from 1994 to 2005) and Yushchenko (in office from 2005 to 2010) as a kleptocracy, according to WikiLeaks cables.

Origins and scale

Ukrainian professor Oleh Bazaluk [uk] reports that the roots of the Ukrainian corruption stem from the Soviet nature of the Ukrainian political leaders, who used to be integrated into the Communist nomenklatura (ruling elite) before the collapse of the Soviet Union. The politicians created an authoritarian-oligarchic governance regime in Ukraine where the corruption became ubiquitous with no chances to implement a European choice of the Ukrainian people.

Prominent Ukrainian economist Oleh Havrylyshyn [uk] performed a comparison of the Ukrainian corruption in wide global context based on data provided by Transparency International. This research estimated the level of the corruption in Ukraine as comparable to countries of Sub-Saharan Africa with Uganda as the closest counterpart.

In a August 2020 survey by the Ilko Kucheriv Foundation for Democratic Initiatives [uk] 41.8% of respondents stated that corruption “is a shameful phenomenon that has no objective grounds” while 36% choose the option that corruption is “a component of social traditions.” Respondents from Southern and Western Ukraine more often chose the option of corruption being “a component of social traditions” (42.2% and 43.4%). The option “a shameful phenomenon that has no objective grounds” was more often chosen by respondents in Central Ukraine (47.5%) and Eastern Ukraine (53.45%).

Areas

Bribes are given to ensure that public services are delivered either in time or at all. Ukrainians stated they give bribes because they think it is customary and expected. Some of the biggest bribes involve more than US$1 million. According to a 2008 Management Systems International (MSI) sociological survey, the highest corruption levels were found in vehicle inspection (57.5%), the police (54.2%), health care (54%), the courts (49%) and higher education (43.6%). On 8 June 2011, Ukrainian President Viktor Yanukovych stated that corruption costs the state budget US$2.5 billion in revenues annually and that through corrupt dealings in public procurement 10% to 15% (US$7.4 billion) of the state budget “ends up in the pockets of officials”.

According to the United States Agency for International Development (USAID), the main causes of corruption in Ukraine are a weak justice system and an over-controlling non-transparent government combined with business-political ties and a weak civil society. Corruption is regularly discussed in the Ukrainian media.

In May 2016, the IMF mission chief for Ukraine stated that the reduction of corruption was a key test for continued international support. Some western analysts believe that large foreign loans are not encouraging reform, but enabling the corrupt extraction of funds out of the country. U.S. Assistant Secretary of State Victoria Nuland urged Ukraine to start prosecuting corrupt officials: “It’s time to start locking up people who have ripped off the Ukrainian population for too long and it is time to eradicate the cancer of corruption”.

Individual involvement in corruption

The biggest recipients of bribery are the police, the health service and the education system. In the late 2000s and early 2010s, around 67% of Ukrainians who had dealt with government said that they had been directly involved in corrupt transactions. In a survey in 2010, 30–49.9% of respondents admitted paying a bribe to a service provider during the past year; in a similar survey in 2007, 18–32% of respondents admitted paying a bribe. A comparable figure for the United Kingdom for 2011 was 1.9%. However, in a different survey in late 2008, only 21% responded that they or anyone living in their household had paid a bribe in any form in the previous 12 months; comparable figures for the US and UK were 2% and 3% respectively. In a GfK survey held in the summer of 2001 43% stated they never personally had given bribes.

In 2013, 74% would not report an incident of corruption; 24% were afraid of consequences, 63% believed it would not make any difference.

Political corruption

In the years after Ukrainian independence, election fraud was widespread, mainly through the use of “administrative resources”. On the other hand, according to Taras Kuzio election fraud in Ukraine can only reach five percent of the total vote. Following the initial rounds of voting in the 2004 presidential election, the Supreme Court of Ukraine ruled that due to the scale of the electoral fraud, it was impossible to establish the election results and ordered a revote. Afterwards outright vote rigging diminished, although politicians still claim(ed) election fraud, and administrative tricks to get more votes for a particular party have not vanished. The Ukrainian electorate remains highly skeptical about the honesty of the election process. Any voter who engages in election fraud faces a maximum sentence of two years in jail, though activists say no one has been punished for voter fraud since Ukrainian independence.

United States diplomats have claimed the privatization of several Ukrainian state enterprises were rigged in favor of political friends. On a regional level, corruption has been discovered in connection with land allocation.

Ukrainian politicians have regularly accused each other of corruption while claiming to fight it themselves. After going undercover in the Reforms for the Future parliamentary faction in early 2012, Roman Zabzalyuk claimed this faction “bought” its members for “US$500,000 (for a ‘defection’ from other parliamentary groups), and then they pay a monthly salary of $20,000-25,000”; in contrast, according to Reforms for the Future, Zabzalyuk had pretended he was “suffering a very serious disease” and the group had managed to raise some $100,000 for Zabzalyuk to undergo surgery in Israel.

Since July 1, 2011, the President, Chairman of the Verkhovna Rada, Prime Minister, Prosecutor General, ministers and other Ukrainian top officials have been liable for prosecution for corruption. Kost Bondarenko (chairman of the board of the Institute of Ukrainian Politics), claims that before 2010, there was an unwritten rule in Ukrainian politics, “No charges were brought against members of the outgoing government, and their successors never had to worry about what tomorrow might bring”; but in 2010 and 2011, “criminal charges were brought against 78 members of the former government; and more than 500 criminal cases have been opened against sitting officials.”. However, since 2010 the Ukrainian press brought up thousands of examples of criminal cases in which state officials, as well as politicians and businessmen linked to the ruling Party of Regions, were shown leniency unprecedented for the general population of suspects.

Minister of Internal Affairs Vitaliy Zakharchenko stated in March 2012 that since 2010 about 400 politicians had faced criminal charges in connection with corruption; most of them from the Party of Regions, followed by Bloc Yulia Tymoshenko and Our Ukraine–People’s Self-Defense Bloc members. It is unclear how many of those charges have since been proved by the courts.

Ukrainian media, particularly the Ukrayinska Pravda, regularly unveil a millionaire lifestyle of Ukrainian politicians and public servants, utterly at odds with their declared official incomes.

According to historian Andrew Wilson, as of 2016 progress in reducing corruption was poor. A 2015 survey showed that 72% of adults blamed “corruption of power” for the lack of progress in reform.

An October 2016 requirement for MPs to declare their wealth led to a declared cumulative wealth of about $460 million for the 413 MPs. Reacting to public criticism, MPs cancelled a salary rise that would have doubled their monthly salary. This measure was part of an Anti-Corruption Package passed into law in October 2014, which was a requirement of international financial support for Ukraine and a prerequisite to eligibility for visa-free travel within the European Union.

Local politics

Several Ukrainian mayors have been suspected of using their posts to serve their own business interests.

Serhiy Odarych, former mayor of Cherkasy, has been suspected of causing a 600,000 hryvnia loss to the city budget.

Juridical corruption

“There could even be cases of the revocation of investment, because legal uncertainty is very deep, and the actions of regional authorities are willful.”

German Ambassador to Ukraine Hans-Jurgen Heimsoeth, late September 2011

Ukrainian politicians and analysts have described the system of justice in Ukraine as “rotten to the core” and have complained about political pressure put on judges and corruption. Independent lawyers and human rights activists have complained Ukrainian judges regularly come under pressure to hand down a certain verdict. Ukraine’s court system is widely regarded as corrupt. A Ukrainian Justice Ministry survey in 2009 revealed that only 10% of respondents trusted the nation’s court system. Less than 30% believed that it was still possible to get a fair trial.

Although judicial independence exists in principle, in practise there is little separation of juridical and political powers. Judges are subjected to pressure by political and business interests.

A 2017 Reuters article quotes then-PM Volodomyr Groysman, saying that “the weakest link in our fight against corruption is the Ukrainian court”; giving an example of 30 judges “with annual salaries ranging from US$10,000-13,000” who own Porsches. As another example, on May 22, 2012 Volodymyr Rokytskyi, Deputy Head of Ukraine’s Security Service, was photographed in public wearing a US$32,000 luxury wristwatch—despite the fact that its price amounts to his yearly official income—at a joint Ukrainian-American event dedicated to fighting illegal drugs. Ukrainian judges have been arrested while taking bribes.

Critics have also complained that officials and their children (the latter are known as “mazhory”) receive favourable sentences compared with common citizens.

Kyiv Post reported in November 2018 that several candidates for a post in the new High Anti-Corruption Court of Ukraine were themselves suspected/associated with corruption.

Corruption in the public sector

In 2015 corruption allegations were made against Energoatom, Ukraine’s state nuclear power operator. In March 2016, Energoatom’s assets and bank accounts were frozen by Ukrainian courts over allegedly unpaid debts, against which Energoatom is appealing.

As of 2016, many of Ukraine’s major provincial highways are in very poor condition, with an Ukravtodor official stating that 97% of roads are in need of repair. The road repair budget was set at about 20 billion hryvnias, but corruption causes the budget to be poorly spent.

Corruption in higher education

Higher education in Ukraine is plagued with bribery. In 2011 33% of all students claimed they have encountered corruption in their school, 29% heard about cases of corruption from other students, while 38% had not encountered corruption. According to Transparency International research done in 2008, 47.3% of university students stated that a bribe had been demanded from them; of those, 29% had paid this bribe freely. Students can “buy” a college entry, exam results, marking doctoral and/or master’s theses.

Bribes range from US$10 to US$50 for an exam pass to several thousand for entry to a university. According to government sources, bribes vary from US$80 to US$21,500. Salaries of teachers and professors are low in Ukraine compared with other professions; this may cause them to be tempted to demand bribes. According to Ararat Osipian entire corruption hierarchies have formed in Ukraine’s colleges and universities. These hierarchies have evolved since the 1990s as the result of uncontrolled and rampant corruption. Ararat claims that corrupt ruling regimes control corrupt universities and force them into compliance, including during the elections. This was aided by universities largely remain Stalinist type bureaucracies, unable to transform.

Until 2015 university autonomy was nonexistent. In 2015 the Ukrainian parliament passed a new law on higher education to give universities more autonomy, including control over their own finances. The aim was to encourage private investment, fundraising and the creation of endowments.

Ukrainian government officials have been caught with fake university diplomas.

Corruption and business

The Organisation for Economic Co-operation and Development has stated corruption is a “significant obstacle” to doing business in Ukraine.

Research conducted by Ernst & Young in 2011 and 2012 showed that the practice of top managers accepting bribes increased by 9 percent in 2011 and 15 percent in 2012. Another 4 percent were ready to pay bribes in order to hide the details of their financial performance.

Politician Natalia Korolevska has estimated that “Corruption has forced business to go in the shadow where now we have 45% of our economy”.

The representative of one United Kingdom-based company has claimed non-Ukrainian companies often lose contracts if they will not pay bribes or fail to “out-bribe” their competitors. Ukrainians and business representatives have claimed “Business ventures above a certain level require palm-greasing of some functionary at some level”.

Corruption in the social security system

In 2012 President Viktor Yanukovych reported that only about 23 percent of social service funds go to those who actually need it. The Ukrainian media have featured many stories revealing that even parliamentarians illegally receive social benefits, fraudulently claiming to be war and Chernobyl veterans.

Corruption in healthcare

Though medical care in state-run hospitals is theoretically free for Ukrainians, patients’ paying money there to ensure they receive the treatment required is widespread.

In June 2012 advocacy groups accused Health Ministry officials of embezzling money that should be used to treat AIDS patients by buying AIDS drugs at hugely inflated prices and then receiving kickbacks.

Costs of corruption

According to Ararat Osipian due to endemic corruption, Ukraine failed to sustain its economic growth trends. The corruption, perceived as reckless, that marked President Viktor Yanukovich’s rule contributed to his downfall in 2014 and left the country’s army ill-equipped to counter Russia’s invasion of Crimea.

In 2008 Transparency International estimated that 30 to 50 percent of all Ukrainians had faced government corruption. Juhani Grossmann (working for an a.o. Management Systems International project) claimed in 2009 that “Ukrainians pay roughly ₴3.5 billion, or more than US$400 million, in bribes annually.” The previous year, he claimed that the figure was US$700 million.

Government actions

Corruption has become an immediate threat to the constitutional rights and freedoms of citizens.

— President Yanukovych (April 7, 2011)

After his election in late 2004 President Viktor Yushchenko promised a “War on Corruption”. Several officials were indeed arrested and/or questioned early 2005 (among them later ministers in the Azarov Government Borys Kolesnikov and Yuri Boyko). Former Security Service of Ukraine Chairman Oleksandr Turchynov claimed that in the summer of 2005 Yushchenko prevented an investigation into allegedly fraudulent practices in the transport of Turkmen natural gas to Ukraine and prevented the arrest of Boyko for abuse of office while heading Naftogaz:

In a 20 September 2005 interview with Radio Free Europe/Radio Liberty, “Turchynov stated that Yushchenko told him in mid-August to stop ‘persecuting my men’ and that the investigation of RosUkrEnergo was ‘creating a conflict with Russian President Vladimir Putin'”. A survey conducted in November 2008 showed that 73% of people in Ukraine considered the second Tymoshenko Government’s actions against corruption to be ineffective; comparable figures for the U.S. and the UK were 73% and 39%. In a survey in 2001, when Kuchma was President, 80% of Ukrainians “totally/fairly agreed” with the statement: “The present government has no real interest in punishing corruption”.

Ukraine joined the Group of States Against Corruption in 2006.

Over the years, several anti-corruption laws have been passed by the Ukrainian parliament. In September 2011 the National Anti-Corruption Committee was introduced.

Just like his predecessor Yushchenko, President Viktor Yanukovych (and his Azarov Government) made the fight against corruption a spearhead in his domestic policies. Political opponents of Yanukovych accused him of using his anti-corruption campaign for politically motivated trials; the general public in Ukraine largely shared this view. President Yanukovych denied this.

Kost Bondarenko, chairman of the board of the Institute of Ukrainian Politics, claims the main sponsors of President Yanukovych’s Party of Regions are unhappy that some Ukrainian politicians have been criminally charged “because they no longer feel above the law”. The International Association of Anti-Corruption Authorities spoke in April 2011 of “remarkable successes in fighting corruption in 2010”. The EU Ambassador to Ukraine, Jose Manuel Pinto Teixeira, stated at an investment conference on February 28, 2012 that Yanukovych’s pledges of reform “have regrettably produced no such results.”

In May 2014, an Anti-Corruption Initiative was established. In December, it appointed Lithuanian economist and former European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud Algirdas Šemeta as Business Ombudsman.

The National Anti-Corruption Bureau of Ukraine (NABU) was established in June 2014 after its predecessor, the National Anti-Corruption Committee was considered a failure.

In 2015, President Petro Poroshenko sacked Ihor Kolomoisky — the billionaire governor of the key industrial region of Dnipropetrovsk. It came after armed men suspected of links to Kolomoisky briefly occupied the offices of a state-owned oil firm in the capital Kyiv.

On 14 June 2018, a law came into force requiring that cases concerning corruption be brought directly to the High Anti-Corruption Court of Ukraine. In June 2018 President Poroshenko expected the court to be established before the end of 2018. On 5 September 2019 the High Anti-Corruption Court did start to work.

Due to IMF concern that oligarchs would use the courts to seize bailout money, parliament passed a bill on 13 May 2020 to prevent courts from reversing bank nationalizations. The bill would combat a lawsuit by oligarch Ihor Kolomoisky and others seeking to regain control of PrivatBank, the recipient of a $5.5 billion 2016 bailout and an alleged “money laundering machine” under Kolomoisky.

On 27 October 2020, the Constitutional Court of Ukraine ruled that anti-corruption legislation, including the mandatory electronic declaration of income, was unconstitutional. President Zelensky warned that if parliament did not restore these anti-corruption laws, foreign aid, loans and a visa-free travel to the European Union were at risk. The Governor of the National Bank of Ukraine reported that Ukraine will not receive the scheduled $700 million IMF load before the end of 2020 because of the issue. IMF assessment teams had not visited Kyiv for eight months, which is necessary for further IMF loan tranches to be released.

On 4 December 2020, the Ukrainian parliament restored anti-corruption legislation shut down by the court decision, when it reauthorised criminal penalties for officials who provide false information about their incomes. On 29 December 2020 President Volodymyr Zelensky suspended the Constitutional Court’s chairperson Oleksandr Tupytskyi [uk] for two months in an effort to overturn the court’s October 2020 decision.

Extent

According to Ukrainians the most corrupt are the judiciary, the police, public servants, the health service and parliament.

Corruption Perceptions Index ratings

Corruption Perceptions Index ratings in Ukraine 1998-2018. Lower scores reflect higher corruption levels, higher scores mean lower corruption levels.

Transparency International produces an annual report listing each country’s Corruption Perceptions Index score. This “score relates to perceptions of the degree of corruption as seen by business people and country analysts and, through 2011, ranged between 10 (highly clean) and 0 (highly corrupt).” In the 2010 report, the least corrupt country listed was Denmark with a score of 9.3, and the most corrupt of the 178 countries listed was Somalia with a score of 1.1. From 2012 on, the scores were presented on a 0-100 scale. In the 2016 report, Denmark was still the least corrupt country listed with a score of 90, and Somalia was still the most corrupt of the 176 countries listed, with a score of 10. By comparison, Germany, Luxembourg and the United Kingdom tied as 10th least corrupt countries with a score of 81, and the United States was 18th least corrupt with a score of 74.

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