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White Collar Crime Laws and Regulations in Ukraine

White Collar Crime Laws and Regulations in Ukraine

White Collar Crime Comparative Guide: 2022
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Contributed by Arzinger.

1. Legal Framework 

1.1. What is the legal framework for bribery and corruption in your jurisdiction?

The legal framework for bribery and corruption consists of: 

  •  the Criminal Code of Ukraine (Chapter XVII); 
  •  the Law of Ukraine No. 1700-VII On Corruption Prevention dated October 14, 2014;
  •  the Criminal Procedural Code of Ukraine (general criminal procedures, including those applying to corruption offenses and a whistleblower’s status in criminal proceedings);
  •  the Code of Administrative Offences of Ukraine (establishing administrative liability for some corruption-related offenses);
  •  The Labor Code of Ukraine (a whistleblower’s status as an employee and corresponding guarantees);
  •  the Law of Ukraine No. 922-VII On Public Procurement dated December 25, 2015 (compliance requirements for the bidders);
  •  Guidelines of the National Agency on Corruption Prevention.

1.2. Which international anti-corruption conventions apply?

  •  the United Nations Convention against Corruption, ratified by Ukraine on December 2, 2009;
  •  the United Nations Convention against Transnational Organized Crime, ratified by Ukraine on February 4, 2004.

1.3. What is the definition of bribery?

Money or other property, advantages, privileges, services, intangibles, or any other intangible or non-monetary benefits which are promised, offered, given, or received without any legal justification. 

1.4. Is private sector bribery covered by law? If yes, what is the relevant legislation?

Private sector bribery is covered by the Criminal Code of Ukraine, which establishes criminal liability for abuse of powers by officials of legal entities of private law (Article 364 (1)) bribing officials of legal entities of private law (Article 368 (3)). Therefore, even if neither the bribing person nor the bribed person belongs to the public sector, this bribery is covered by the Criminal Code of Ukraine. 

1.5. What is the definition of a public official and a foreign public official? Are employees at state-owned or state-controlled enterprises treated differently? Are there official lists of public officials, offices, or state-owned or state-controlled enterprises?

There is no unified definition of a public official. At the same time, the Law of Ukraine No. 1700-VII On Corruption Prevention dated October 14, 2014, defines the list of persons subject to this Law. Those subjects are: 

1) persons authorized to perform the functions of the state or local government:

a) the President of Ukraine, the Chairman of the Parliament of Ukraine, his First Deputy and Deputy, the Prime Minister of Ukraine, the First Deputy Prime Minister of Ukraine, the Vice Prime Ministers of Ukraine, ministers, other heads of central executive authorities who are not members of the Cabinet of Ministers of Ukraine and their deputies, the Head of the Security Service of Ukraine, the Prosecutor General, the Head of the National Bank of Ukraine, his First Deputy and Deputy, the Head and other members of the Accounting Chamber, the Ukrainian Parliament Commissioner for Human Rights, the Commissioner for the Protection of the State Language, the Chairman of the Parliament of the Autonomous Republic of Crimea, the Chairman of the Council of Ministers of the Autonomous Republic of Crimea;

b) the Members of the Parliament of Ukraine, the Members of the Parliament of the Autonomous Republic of Crimea, councilors of local councils, village, settlement, town, and city mayors;

c) civil servants, officials of local self-government;

d) military officials of the Armed Forces of Ukraine, the State Service for Special Communication and Information Protection of Ukraine, and of other military units established by law, except for military conscripts, cadets of higher military education institutions, cadets of higher education institutions which have in their structure military institutes, cadets of departments, sub-departments, and divisions of military training;

e) judges, judges of the Constitutional Court of Ukraine, the Head, Deputy Head, members and inspectors of the High Council of Justice, officials of the Secretariat of the High Council of Justice, the Head, Deputy Head, members, inspectors of the High Qualifications Commission of Judges of Ukraine, officials of the Secretariat of this Commission, officials of the State Judicial Administration of Ukraine, jurors (in the course of performing their duties in court);

f) rank and file and commanding officers of the State Penitentiary Service, the Tax Police, commanding officers of Civil Defense Authorities and Units, the State Bureau of Investigation, the National Anti-Corruption Bureau of Ukraine;

g) officers and public officials of the Prosecution Service Authorities, the Security Service of Ukraine, the State Bureau of Investigation, the National Anti-Corruption Bureau of Ukraine, the Diplomatic Service, the State Forest Protection, the State Protection of the Nature Reserve Fund, the central executive authority implementing the state tax policy and state customs policy;

h) the Chairman, the Deputy Chairman of the National Agency on Corruption Prevention;

i) members of the Central Election Commission;

j) police officers;

k) officers and public officials of other state authorities, government authorities of the Autonomous Republic of Crimea;

l) members of collegial state authorities, including those authorized to consider complaints about violations of public procurement law;

m) Head of the Office of the President of Ukraine, his First Deputy, and Deputies, Commissioners, Press Secretary of the President of Ukraine;

n) Secretary of the National Security and Defense Council of Ukraine, his/her assistants and advisers, assistants, and advisers to the President of Ukraine (except for persons holding positions of patronage service and persons performing duties on a voluntary basis);

2) persons who, for the purposes of the Law, are equated to persons authorized to perform the functions of state or local government:

a) officials of legal entities of public law not mentioned above, members of the Council of the National Bank of Ukraine (except for the Head of the National Bank of Ukraine), persons who are members of the Supervisory Board of a state bank, for-profit state-owned enterprise or organization, an economic company in which the state owns more than 50% of authorized capital shares;

b) persons who are not civil servants or local self-government officials but those who render public services (auditors, notaries, private executors, appraisers and experts, trustees in bankruptcy, independent brokers, members of labor arbitration, arbitrators in the exercise of their functions, other persons stipulated by law);

c) representatives of public associations, scientific institutions, educational institutions, experts with the relevant qualification, and other persons who are members of the Competition Commissions or Disciplinary Commissions set up under the Law of Ukraine On Civil Service, the Law of Ukraine On the Service in Local Self-Government Bodies, other laws (except for non-resident foreigners who are part of such commissions), the Public Integrity Council established under the Law of Ukraine On the Judicial System and Status of Judges, and are not the persons mentioned above;

d) persons recognized as having significant economic and political weight in public life (oligarchs) in accordance with the Law of Ukraine On Prevention of Threats to National Security Related to Excessive Influence of Persons with Significant Economic or Political Weight in Public Life (Oligarchs);

3) persons permanently or temporarily holding positions related to the implementation of organizational administrative or administrative-economic duties or specially authorized to perform such duties in legal entities of private law, regardless of the legal form and form of incorporation, and other persons who are not officers but who work or provide services under contract with enterprise, institution or organization (in some instances stipulated by law);

4) candidates for the President of Ukraine and candidates for Members of Parliament of Ukraine registered under the procedure established by law.

The definition of a foreign public official and the unified list of public officials, offices, and state-owned and state-controlled enterprises are absent. Nevertheless, a definition of a foreign public official may, inter alia, refer to the following persons:

  •  a person who acts in an official capacity for a legislative, administrative, or judicial body in a foreign country;
  •  an official of an international public organization and members of international parliamentary assemblies and international institutions; and
  •  a judge of an international commercial arbitration tribunal.

Employees of state-owned enterprises fall under Section 2.a. They are equated to public officials for the purposes of the Law On Corruption Prevention, so they are not treated differently.

The above-cited list of persons subject to the Law On Corruption Prevention is an official list, there are no other ones.

1.6. Are there any regulations on political donations?

Financing the political parties is governed by the Law of Ukraine No. 2365-III On Political Parties dated April 5, 2001. 

The contribution to support the political party is money; other property; advantages; privileges; services; loans; intangible assets; any other benefits of an intangible or non-monetary nature, including membership fees of members of the political party; third party sponsorship of events or other activities in support of the party; goods, works, services provided or received free of charge or on preferential terms (at a price lower than the market value of identical or similar jobs, goods, and services in the relevant market) received by the political party or its local organization.

Making contributions to political parties is not allowed for:

  •  foreigners and stateless persons;
  •  anonymous persons or persons under a pseudonym;
  •  Ukrainian citizens under the age of 18 or who, by the procedure established by law, are declared incapable;
  •  individuals who are parties to the contracts on the purchase of works, goods, or services for the needs of the state or territorial (municipal) community for the total amount of more than 50 subsistence minimums for able-bodied persons established on January 1 of the year in which the contribution is made, during the term of such contract and a year after its termination.
  •  the state authorities and local self-government bodies;
  •  state and municipal enterprises, institutions, and organizations;
  •  legal entities with at least 10% of the authorized capital or voting rights directly or indirectly belonging to the state and local self-government bodies;
  •  legal entities whose ultimate beneficial owners (controllers) are the persons mentioned in subparagraphs a., c. - i. of paragraph 1 of article 3 and in subparagraph a. of paragraph 2 of article 3 of the Law of Ukraine On Prevention of Corruption (these provisions are described in Section 1.5.);
  •  foreign states, foreign legal entities, legal entities with at least 10% of the authorized capital or voting rights directly or indirectly belonging to non-residents, as well as legal entities whose ultimate beneficial owners (controllers) are foreigners or stateless persons;
  •  unregistered public associations, charitable or religious organizations, and other political parties.

1.7. Are there any defenses available?

Ukrainian law does not provide for any special defenses for bribery offenses. 

1.8. Is there an exemption for facilitation payments?

Ukrainian legislation does not recognize facilitation payments. Any payment made with the intention or purpose of influencing a public official’s actions is illegal. Payments to public officials are very likely to be considered an unlawful benefit, even if they fall within the permitted value of gifts.

1.9. What are the criminal sanctions for bribery? Are there any civil and administrative sanctions related to bribery cases?

The following criminal sanctions may be applied for committing corruption and corruption-related offenses:

  •  fine (UAH 850 – 85,000) (approximately USD 30 – 3,000);
  •  corrective labor (up to two years)
  •  community service (up to 200 hours):
  •  arrest (up to six months);
  •  restriction of liberty (up to five years); 
  •  imprisonment (up to 15 years); 
  •  deprivation of the right to occupy certain positions or engage in certain activities (up to 10 years);
  •  confiscation of property.

Administrative sanctions for corruption-related offenses under the Code of Administrative Offences of Ukraine are the following:

  •  fine (UAH 850 – 42,500) (approximately USD 30 – 1,500) 
  •  confiscation of the profit derived; 
  •  confiscation of the gift received;
  •  deprivation of the right to occupy certain positions or engage in certain activities (up to one year).

1.10. Does the national bribery and corruption law apply beyond national boundaries?

Ukrainian anti-corruption legislation is not extraterritorial. However, Ukrainian citizens and stateless persons permanently residing in Ukraine are liable under the Criminal Code of Ukraine for committing corruption offenses abroad. 

Foreigners and stateless persons that do not permanently reside in Ukraine may be prosecuted in Ukraine if any of the following conditions are met: 

(a) corruption offense is committed abroad in collaboration with public officials who are Ukrainian citizens; 

(b) unlawful benefits were offered, promised, or provided to public officials who are Ukrainian citizens; or 

(c) they accepted an offer or promise of unlawful benefits or received such benefits from public officials who are Ukrainian citizens.

Foreign companies could be found liable for corruption offenses committed in Ukraine.

1.11. What are the limitation periods for bribery offenses?

The statute of limitations for corruption offenses is, in most instances, three or five years. In some cases, the limitation period may exceed 10 years.

1.12. Are there any planned amendments or developments to the national bribery and corruption law?

Due to the circumstances of the Russian aggression and martial law established in Ukraine, we do not exclude amendments to the anti-corruption legislation regarding restrictions on gifts received by public officials from volunteers to support the country’s defense forces. On April 21, 2022, a relevant draft law was adopted in the first reading.

2. Gifts and Hospitality

2.1. How are gifts and hospitality treated?

A gift is defined as money or other property, benefits, privileges, services, or intangible assets that are provided/received free of charge or at a price below the minimum market level.

Providing gifts is regulated only for the persons specified in paragraphs 1. and 2. of Section 1.5.

Depending on their character and the circumstances of their providing, gifts, and hospitality can be prohibited, limitedly permitted, or permitted.

1. Prohibited Gifts

1. The persons are prohibited to demand, request, receive gifts for themselves or for their relatives from legal entities or individuals directly or through other persons:

1) in connection with the performance by such persons of activities related to the performance of the functions of the state or local self-government;

2) if the person giving a gift is subordinate to the person.

2. Limitedly Permitted Gifts

The persons may accept gifts that comply with generally accepted notions of hospitality, except the prohibited ones if the value of such gifts does not exceed the threshold (see Section 2.3.).

3. Permitted Gifts

The threshold value does not extend to gifts that:

1) are given by close relatives;

2) are received as publicly available discounts on goods, services, publicly available gains, prizes, awards, and bonuses.

2.2. Does the law give any specific guidance on gifts and hospitality in the public and private sectors?

Gifts and hospitality are generally governed only in the public sector, however, its definition is quite broad (includes persons specified in paragraphs 1. and 2. of Section 1.5.)

2.3. Are there limitations on the value of benefits (gifts and hospitality) and/or any other benefit) that may be given to a government/public official? If so, please describe those limitations and their bases? 

Yes, there are such limitations (see Section 2.1.). The value of such gifts should not exceed one subsistence minimum for able-bodied persons, set on the day of acceptance of the gift, (for a single acceptance), and the total value of such gifts received from a single person or group of persons during the year should not exceed two subsistence minimums for able-bodied persons. set on January 1 of the year in which the gifts are accepted. As of January 1, 2022, one subsistence minimum for able-bodied persons is UAH 2,481 (approximately USD 80).

2.4. Are there any defenses or exceptions to the limitations (e.g. reasonable promotional expenses)?

See Section 2.1.

3. Anti-corruption compliance

3.1. Are companies required to have anti-corruption compliance procedures in place?

Taking measures in respect of preventing and countering corruption is largely voluntary for companies, although some companies are required to adopt anti-corruption programs:

  •  state, municipal enterprises, companies (in which the state or municipal share exceeds 50%), where the average number of employees for the reporting (financial) year exceeds 50 people, and the gross income from the sales of products (works, services) for this period exceeds UAH 70 million (approximately USD 2.3 million);
  •  legal entities that are participants of the public procurement procedure, if the cost of procurement of goods, services, and works is equal to or exceeds UAH 20 million.

It is also binding for these companies to appoint a person responsible for the implementation of the anti-corruption program.

3.2. Is there any official guidance on anti-corruption compliance?

The National Agency on Corruption Prevention publishes guidance on anti-corruption legislation, including anti-corruption compliance, on its website. In particular, it has developed a Model Anti-Corruption Program.

3.3. Does the law protect whistleblowers reporting bribery and corruption allegations?

Yes, it does. A whistleblower has the following rights and guarantees:

  •  to receive information about the status and results of the report;
  •  to submit evidence; 
  •  to give explanations, testify, or refuse to do either of these;
  •  to get free legal aid in connection with the protection of the rights as a whistleblower;
  •  to have the costs related to the protection of the rights as a whistleblower, attorney’s fees, and court fees reimbursed;
  •  confidentiality and anonymity;
  •  security in case of threat to life, property, and housing;
  •  to a reward;
  •  psychological help;
  •  to be exempted from legal liability in certain cases;
  •  employment guarantees, such as not to be dismissed or denied being hired, not to be brought to disciplinary liability, not to be subjected to any negative measures by the employer;
  •  compensation in case of employment guarantees violated

A whistleblower’s rights and guarantees in most cases extend to his/her close relatives.

4. Corporate criminal liability

4.1. Can corporate entities be held liable for bribery and corruption? If so, what is the nature and scope of such liability?

Legal entities are subject to measures of a criminal law nature, which, in fact, is a quasi-criminal liability. Such measures may be applied for certain offenses (including bribery of various officials or undue influence) committed by legal entity’s officials or representatives or for their failure to take measures to prevent the corruption, which resulted in the commitment of the same offenses by its employees (not officials). 

In the above instances, the penalty is a fine (double the amount of the undue advantage unlawfully received by such an entity). If the undue advantage was not obtained or its amount cannot be calculated, the court applies a fine, depending on the gravity of the criminal offense.

Measures of a criminal law nature must be imposed within the investigation of the criminal offense conducted by the legal entity’s official, representative, or employee. Thus, those measures are secondary to the primary criminal offense and may not be applied independently. Consequently, a legal entity is not an autonomous subject of criminal liability. 

4.2. Can a company be liable for a bribery offense committed by an entity controlled or owned by it? Are there requirements for the parent to avoid liability in these situations?

A legal entity may be subject to measures of a criminal law nature only if its official, representative, or employee commits a corruption offense on behalf and/or in the interests of this company. Consequently, Ukrainian legislation does not entail criminal liability for parent companies for corruption offenses committed by their subsidiaries.

4.3. Can a company be liable for corrupt actions of a third-party agent engaged to help it obtain or retain business or business advantage (such as government or regulatory actions or approvals)? If so, are there measures recognized in law, enforcement, or regulatory guidance to mitigate this liability?

As already mentioned, a legal entity may be subject to measures of a criminal law nature only if its official, representative, or employee committed a criminal corruption offense. If during the investigation of a criminal offense it is discovered that the third-party agent acted in conspiracy with the legal entity’s official (representative/employee), and this official is also brought to liability as a co-principal offender, the legal entity may be subject to the measures of a criminal law nature. However, if a third-party agent is brought to criminal liability, and a legal entity’s official/representative/employee is not, the company may not be subject to the measures of a criminal law nature.

4.4. What are the sanctions for the corporate criminal entity?

The following measures of a criminal law nature may be applied to legal entities:

1) fine;

2) confiscation of property;

3) liquidation.

5. Criminal proceedings into bribery and corruption cases

5.1. What authorities can prosecute corruption crimes?

Depending on the nature of the crime and offender, it can be the National Police of Ukraine, the National Anti-Corruption Bureau of Ukraine, the National Bureau of Investigation of Ukraine, and the Bureau of Economic Security of Ukraine.

5.2. Is there a legal obligation to report bribery and corruption cases? If so, to whom does it apply and what are the sanctions for failing to meet such an obligation?

No, there is not. However, there are sanctions for the concealment of bribery and corruption cases. 

5.3. Is there any civil or administrative enforcement against corruption crimes? 

Civil enforcement is possible if the victim brings a claim for compensation of material or moral damages inflicted by a corruption crime,

Some minor corruption-related offenses are prosecuted under the Code of Administrative Offences of Ukraine. These, inter alia, include:

  •  violation of restrictions on having multiple jobs and combining a job with other activities;
  •  violation of statutory restrictions on the receipt of gifts;
  •  violation of financial control requirements;
  •  violation of the requirements for the prevention and settlement of conflicts of interest;
  •  illegal use of information made known to a person in connection with the performance of official or other statutory powers;
  •  failure to take measures to counter corruption;

5.4. What powers do the authorities have generally to gather information when investigating corruption crimes?

The powers of the authorities to gather information in respect of corruption crimes are the same as with respect to any other crimes. They include interrogations, searching, requests for obtaining information and documents, temporary access to belongings and documents, wiretapping, control over the commission of a crime, examinations, and so forth.

5.5. Is there any form of leniency law in your jurisdiction, allowing a party to a bribery or corruption crime to voluntarily confess to the crime in exchange for a release from liability or reduction of the penalty?

There is a general rule applicable to all crimes stating that confessing to a crime is a factor mitigating punishment.

5.6. Can a person plea bargain in corruption cases? If so, how is such a process conducted? 

Yes, he/she can, under general conditions of plea bargaining.

The prosecutor and the suspect or the accused can enter into a guilty plea agreement. This agreement may be entered into in criminal investigations if the crime:

  •  is a criminal misdemeanor, medium grave, or grave crime;
  •  is a crime of severe gravity investigated by the National Anti-Corruption Bureau of Ukraine, if the suspect or accused reports commitment of the crime investigated by the National Anti-Corruption Bureau of Ukraine by another person, and such information is confirmed by evidence; 
  •  is a crime of severe gravity, committed with a prior conspiracy of a group of persons, organized group, criminal organization, or terrorist group, provided that a suspect who is not an organizer of such a group or organization reports criminal acts of other members of the group or organization, and such information is confirmed by evidence.

The level of gravity of the crime is determined depending on the maximum amount of fine or term of imprisonment provided in the Criminal Code of Ukraine.

The plea bargaining agreement may be initiated by the prosecutor as well as by the suspect or the accused at any time from the notification of suspicion to the court entering into the deliberation room.

If the plea bargaining agreement is concluded, the suspect or accused cannot appeal his/her verdict, he/she cannot keep silent during the trial, interrogate witnesses for the prosecution, call witnesses for the defense, or give evidence in his/her favor.

The court checks if there are any grounds for refusing to approve the plea bargaining agreement. If there are not, the court gives a verdict by which it approves the agreement and imposes a penalty as agreed by the parties. 

Guide Contributors For Ukraine

Lana Sinichkina

Partner, Co-head of Life Sciences & Healthcare Practice

Lana.Sinichkina@arzinger.ua

+38 044 390 55 33

 

Volodymyr Svintsitskyi

Senior Associate, Life Sciences & Healthcare practice

Volodymyr.Svintsitskyi@arzinger.ua

+38 044 390 55 33

 

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