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Managing Partner, Gracers Law Firm
WCC & Anti-Corruption Trends
Criminal Law Practice has, for several years now, been leading in terms of its development rate on the Ukrainian legal services market. The segment, which has recently been seen as the exclusive domain of solo practitioners, is at present increasingly turning into a competitive and cooperative area for both field-specific boutiques and WCC units of large law firms. Where there’s demand, there’s supply. Shifting the accusatory accent towards large businesses and public personalities, as well as the added complexity of criminal proceedings, requires comprehensive, high-quality defense, which solo practitioners are usually not able to ensure. There are cases with hundreds of suspects, so how could one person defend them? Each person involved should have a lawyer and the defense should adhere to a universal strategy and a common understanding of what they do and how they should do that.
Shift of Accents
In Ukraine, the authorities aspire to satisfy obvious public demand for sensational “spring time imprisonment”. We see an increase in permanent pressure on business, politicians and officials on part of law-enforcement agencies, which often do not follow even basic legislative standards and rules. Unfortunately, the political element often dominates the legal one.
Let’s take a simple example, that of the revocation of immunity for MPs. From 1 January 2020, the approval of Parliament to bring a Member of Parliament to responsibility is no longer required. For the first time, a new procedure was implemented in early March. Just one opposition People’s Deputy has been served with charges under Article 346 of the Criminal Code of Ukraine, ’threat or violence against a statesman (the President of Ukraine)’. Without going into the essence and conflicts related to bringing MPs to responsibility, we can predict an increase in the number of politically-motivated proceedings. This could happen not least because it is a great way to meet the aforementioned “public demand”, as the authorities will ensure public entertainment.
At the same time, the state continues to consider criminal prosecution as one of the tools to fill the state budget. Subsequently, the share of economic crimes is increasing, including those with a corruption element.
Hence the shift of logic of both criminal prosecution and the related defense. When we talk of a criminal case at the present time, we primarily mean theft, embezzlement, tax evasion, all kinds of corruption offenses. It is necessary, both for the investigation and the defense in such cases, to not only be familiar with criminal law and proceedings, but also to be an expert in matters of financial monitoring, taxation, to understand the economic essence of proceedings and activities.
All law-enforcement agencies — the National Anti-Corruption Bureau of Ukraine, the Security Service of Ukraine, the State Bureau of Investigation, the Prosecutor-General’s Office, report primarily on the prosecution of people who allegedly stole a lot of money from the state. The past year was marked by the serving of charges to politicians and well-known businessmen, beneficiaries and top managers of banks. However, such proceedings are very rarely continued in court hearings and, especially, followed by a guilty verdict. In fact, inefficiency in this area was one of the public reasons for the resignation of the Prosecutor-General.
It is quite clear that this heightened interest is caused by so-called anti-corruption cases, as the state has for many years been declaring the fight against corruption among its main priorities. A kind of “crown” was the beginning of the procedural activities by the High Anti-Corruption Court of Ukraine. On the other hand, the interdepartmental confrontation between anti-corruption bodies — the National Anti-Corruption Bureau of Ukraine and the Specialized Anti-Corruption Prosecutor’s Office — had a negative effect on the process of preventing corruption.
In the part of legislative support for the anticorruption campaign, we should note the reinstatement of the article on unlawful enrichment in the Criminal Code of Ukraine. As we know, in February 2019 the Constitutional Court of Ukraine declared Article 3682 of the Criminal Code as violating the Constitution of Ukraine, which was followed by the closure of a number of headline-making criminal proceedings.
On 31 October 2019, the Law of Ukraine On Amending Certain Legislative Acts of Ukraine regarding the Confiscation of Illegal Assets of Persons Authorized to Perform the Functions of a State or Local Self-Government and the Punishment for the Acquisition of Such Assets, No. 263-IX was adopted. In the wording of the new Article 3685, which supplemented the Criminal Code of Ukraine, unlawful enrichment is determined as the acquisition by a person authorized to perform the functions of a state or local self-government of assets worth more than 6,500 tax-exempt minimum incomes of citizens than his/her legal income. At the same time, the definition of “asset” includes both traditional monetary means (including cash, funds held in bank accounts or deposited with banks or other financial institutions) and other property, property rights, intangible assets (in an amount to decrease financial obligations), as well as cryptocurrencies, and works or services provided to a person authorized to perform the functions of the state or local self-government. It is specifically noted that when determining the difference between the value of acquired assets and legal income, assets that are the subject of proceedings related to recognition of assets unlawful and their recovery for the benefit of the state, as well as assets recovered for the benefit of the state within the framework of such proceeding, are not taken into account.
Criminal liability for unlawful enrichment is in force along with the institution of civil confiscation, which is applicable if the value of the assets is less than the “threshold” established in the Criminal Code of Ukraine.
On 1 January 2020, the Law of Ukraine On Amending the Law of Ukraine On Corruption Prevention Regarding Whistleblowers, No. 198-IX of 17 October 2019 came into force. This regulatory act establishes a remuneration mechanism for reporting a corruption or corruption-related offense. The specific amount of remuneration will be determined by the court within 10% of the monetary amount of the subject of a corruption offense or the amount of damage caused by the offence to the state. A guarantees and protection mechanism has also been established for whistleblowers and their relatives. In particular, they will be able to use all types of legal services within the framework of free secondary legal support or find a lawyer on their own, and legal, organizational, technical and other measures aimed at protecting against unlawful inroad as established in the Law of Ukraine “On ensuring the safety of persons involved in criminal proceedings” can also apply.
Chronic Investigation Problems
We see that law-enforcement officers have acquired some expertise in WCC cases. At the same time, the law-enforcement system is in no hurry to get rid of chronic problems related to formal approaches to an investigation, especially to headline-making ones, to ignoring basic procedural standards, to lacking proper communication, and to failing to clearly explain their actions.
On the whole, it seems that the logic of the activities of law-enforcement agencies is reduced to “first we run so that we see”. It’s their fault, and for this they are justly criticized.
Against the background of numerous examples of law-enforcement officers’ “raiding” businesses to obtain improper advantage, cases when law-enforcement agencies act exclusively within their powers and stop real crimes are blurred. Law-enforcement officers do two things wrong: they come to a business, as a rule, without conducting preparatory work, a set of necessary public and non-public search actions proving an offence. Secondly, they do not explain their objectives and tasks. It is clear that they are limited by the secrecy of the investigation, but they still have certain space for communication.
As for the actual results of their activities, formalized in the form of an indictment, it often leaves much to be desired. And the issue here is not that the actions of those against whom criminal proceedings are initiated contain no corpus delicti. Quite the opposite, as in most cases they do contain it! But a court, despite its alleged political bias as claimed at all levels, cannot turn a blind eye to gaps and blunders in the work of pre-trial investigation bodies, especially if the criminal case is conducted by a professional and experienced defense team, whose members can easily prove that the prosecution’s position is below criticism. It is important to remember that the earlier a lawyer is “invited” to a criminal proceeding, the easier it is later to competently and consistently build defense tactics and the greater the chances of success. Procedural errors made at any stage of the pre-trial investigation may become a trump card for a lawyer at a court hearing.
What are the Prospects?
First of all, business today is in need of protection against law-enforcement agencies, and given the speed of the new Parliament’s lawmaking activities, perhaps against lawmakers as well. With such a rapid turbo mode of parliamentary work, even the best intentions can turn out to have a completely different result. Time will prove the viability of all the innovations adopted under the slogan “reducing criminal pressure on business”. In the meantime, while experiments and reforms continue, the demand for the services of criminal lawyers will increase.
A logical question arises. What can really improve the work of pre-trial investigation bodies and reduce the criminal risks for business? Since I can assess the situation not only as a lawyer, but also as a former law-enforcement officer, I can claim that the answer should be sought not only and not so much in legislative support. Having worked for many years with the current versions of the Criminal and Criminal Procedure Codes of Ukraine, I cannot say that they are the only problem. Much more depends on establishing clear order for the activities of law-enforcement agencies, starting from the main ones. Reforming prosecution bodies should be indicative in this regard. It is necessary to ensure the real coordinating role of the Prosecutor-General’s Office in relation to other law-enforcement agencies. This has come to nothing in recent years; as every law-enforcement agency did whatever it wanted or liked. If the normal functioning of the law-enforcement system is restored, a dramatic review of criminal legislation will not be required. And a lot of different safeguards, like “stop the mask show”, have already been adopted.