While searching the chambers of Anton Chernushenko, the head of the Kyiv Court of Appeals, authorities uncovered evidence of corruption. Mr. Chernushenko has since gone into hiding. Photo: Gordonua.com

The VoxUkraine Corruption Brief: The Good, the Bad, and the Murky

By: Mike Duane

Special thanks to: Viktoriia Gnatenko and Anton Marchuk

Corruption continued to lead headlines in Ukraine over the past month. A prominent Kyiv judge was found-out for accepting bribes in exchange for preferential rulings, two high profile prosecutors were arrested following a corruption sting that has scandalized the General Prosecutor’s Office, and a dramatic shootout in the western Ukrainian city of Mucachevo brought regional corruption and power dynamics into the national limelight.

A Disappearing Act

On June 20, authorities raided the chambers of Anton Chernushenko, the head of the Kyiv Court of Appeals. What they found was incriminating: $6,500 in cash, the keys to five cars, and gift certificates for 14.5 tons of gasoline. During the raid, Mr. Chernushenko did not help his case. He was uncooperative and at one point was caught on video attempting to hide cash in his robes. Investigators also uncovered damning text messages on his phone, which suggested that he and his son, Dmytro Chernushenko, ran a scheme trading preferential rulings in exchange for bribes.

On the face of it, this appears to be the kind of clear-cut case of corruption that would lead to an immediate arrest. However, Mr. Chernushenko was allowed to walk free after the search because of Ukraine’s immunity laws, which protect both parliamentarians and judges from criminal prosecution. The well-intentioned laws, designed to insulate key national figures from politically motivated witch-hunts, have instead shielded criminals from justice for years. At this time, immunity can only be removed on a case-by-case basis by a vote of parliament. This is time consuming process that has allowed the likes of notorious MP Serhiy Klyuyev to go into hiding before police are able to make an arrest.

Mr. Chernushenko has now become the latest in a long line of former officials to pull a disappearing act and vanish just as their immunity was lifted. From the time Attorney General Viktor Shokin submitted the request to revoke his immunity, to the time Parliament approved the measure on June 30, 10 days had elapsed. The delay gave Mr. Chernushenko ample time to plan his escape — he failed to show up to work on July 1 and hasn’t been seen since. This has become an all too familiar pattern in Ukraine, in which dramatic actions are taken to expose corruption only to be followed by foot-dragging that gives the accused time to go into hiding. Without a comprehensive law that removes the immunity of judges, and parliamentarians, the accused will continue to get a free pass.

Money, other evidence of crime found in search of chambers of head of Kyiv Court of Appeals; judge denies wrongdoing

All That Money — Where Does It Go?

Public officials have numerous schemes to hide the money they make through corrupt schemes. One popular method is to put cash and assets in the name of relatives or trusted confidants. This is how politicians and high-ranking civil servants can lead luxurious lifestyles while earning relatively meager wages. However, a recent article by Katya Gorchinkskaya in Radio Free Europe suggests that some Kyiv judges may be laundering money through a little known loophole in the tax system.

As Ms. Gorchinkskaya explains, five judges of the Kyiv Administrative Court were either very lucky or very well liked last year because they all became hryvnia millionaires — and not from their civil servant salary. Instead, they each declared to have received gifts, prizes, or winnings far in excess of their official salary. The most egregious example is Judge Olena Sokoleva who declared an income of 1.4 million UAH (roughly $65,000) despite an official income 258,000 UAH (roughly $11,500). She declared the $50,000 in additional earnings under the “gifts, prizes and winnings” category, which conveniently does not require a line item detail of the income source. These declarations are certainly suspicious, but there is currently no effective mechanism that allows the state to investigate these types of issues.

Change may be on the horizon. As part of Ukraine’s new anti-corruption apparatus, the Anti-Corruption Prevention agency (NAPC) will be charged with auditing the income and asset declarations of public servants. Cases like the one described above would be reflagged if wrongdoing were suspected, referred to the National Anti-Corruption Bureau for investigation, and prosecuted by the special anti-corruption prosecutor if necessary. However, political meddling has plagued the NAPC, drawing the new agency’s political independence into question. A recent lawsuit against the government by Transparency International suggests that politicians are already stacking the odds against the new organization. Unless the NAPC becomes a strong, well-functioning organization, Ukrainians will be left to wonder whether their public servants are corrupt, or just really lucky. (For more information on the anti-corruption apparatus, please check out our last corruption brief)

Just Sack Them All?

One solution to corruption in the civil service and judiciary that is popular among experts and the public alike is lustration. Lustration is essentially the formal process of removing government officials from previous regimes that threaten to undermine progress. In many post-soviet countries this has meant firing judges, prosecutors and civil servants with ties to the previous communist, and typically repressive, regime. In Ukraine, the focus of lustration has been removing Yanukovych era officials. Typically, lustration can take many forms ranging from firing entire categories of civil servants and barring them from working for the government again, or to a more moderate version that requires everyone to reapply for their position in a competitive process.

Ukraine has not embraced either of these approaches. On one hand, the international community has pressured Ukraine to take a more tepid approach that avoids political score settling. On the other hand, entrenched interests within the country have stalled lustration efforts. Many of the judges who served former president Yanukovych and prosecuted Maidan protesters — particularly those in higher-level courts — continue to work freely in the judiciary.

One glaring example of how ineffective Ukraine’s lustration has been is the case of Oleh Valendyuk. As reported by Radio Free Europe, Mr. Valendyuk was a deputy department chief at the Ukrainian Prosecutor-General’s Office under former President Yanukovych. When the country’s law on lustration took effect in October 2014, Mr. Valendyuk was targeted for lustration due to his ties with the previous regime. However, he was able to use his political connections and insider knowledge to avoid lustration. The man who made the decision to remove him from the lustration list was another Yanukovych ally who remains in the judicial system, Viktor Danylyshyn. It was Mr. Danylyshyn who ordered a ban on public gatherings in an attempt to stymie Maidan protesters in November 2013.

It is clear that current attempts to cleanse the judicial system of officials who are either corrupt or have ties to the previous regime have thus far been ineffective. Similar issues have plagued the lustration process in the prosecutor’s office and the civil service. However, there is little political will within the country or from the international community for a more robust version of lustration. Under the circumstances, it falls to the media, investigative journalists, and civil society to continue creating public pressure to cleanse the government.

Turmoil in the Ministries:

Ukrainian Health Minister Alexander Kvitashvili, a Georgian who led healthcare reform in his home county, was brought in to reform Ukraine’s dysfunctional health system. However, after only six months in his post he was forced to step down. Critics claimed that he had been ineffective in reforming the healthcare sector. However, supporters noted that he had met stiff resistance from entrenched interests both within his own agency and from the parliament. They note, for instance, that at the same time lawmakers were lambasting Mr. Kvitashvili for not doing enough to change the system, they were refusing to consider the reform bills he had submitted.

With little cooperation from his own ministry or from the parliament, it should come as little surprise that Mr. Kvitashvili was not able to succeed. Whether Mr. Kvitashvili was truly ineffective or scapegoated for political purposes will remain up for debate. However, what is clear is that without strong political support either from the President or the parliament, chances are Mr. Kvitashvili’s successor will meet a similar fate.

Another high-profile shake-up happened on July 2 when the Minister of Ecology and Natural Resources, Ihor Shevchenko, was forced out by Parliament following allegations of ethics violations. Opponents charge that in the midst of an ecological catastrophe, a raging fire at the BRSM Oil Depot, the former minister accepted a ride on the private jet of wealthy Ukrainian MP Oleksandr Onyshchenko from the UEFA Champion’s League Final. Whether Mr. Shevchenko was just trying to return as quickly as possible to deal with the unfolding ecological disaster at BRSM, or was neglecting his duty and accepting favors from a lawmaker in return for preferential treatment is unclear.

What is clear is that Mr. Shevchenko’s tenure had been controversial and he routinely feuded with Prime Minister Yatsenyuk. As the allegations surfaced, the Prime Minister moved quickly to remove him from office. In response, Mr. Shevchenko went on the offensive, accusing Mr. Yatsenyuk of stalling reforms and engaging in corruption. Sadly, these accusations and counter accusations are par for the course in Ukrainian politics, but offer little in the way of results or improvements for the Ukrainian people. Instead, these very public, and constant, squabbles at the ministry level erode the nation’s morale.

Heads roll as Ukraine’s reforms falter

Caught Red-Handed — Scandal at General Prosecutor’s Office

The General Prosecutor’s Office (GPO) is widely regarded as corrupt and in dire need of reform. Acknowledging the problem, President Poroshenko handpicked the well-respected former Georgian prosecutor, Davit Sakvarelidze, to lead the agency’s reform effort. Mr. Sakvarelidze is known for being tough on corruption and he appears to be living up to that reputation. When a local business complained of being extorted by the GPO, Mr. Sakvarelidze did not shy away from launching an investigation, eventually organizing a sting operation that caught two high-level prosecutors accepting a 3.15 million hryvnia bribe. The prosecutors who accepted the bribe are Deputy Prosecutor of Kyiv Region Oleksandr Korniets and the Deputy Head of the (PGO) Main Investigation Department Volodymr Shapakin.

Afterwards, Mr. Sakvarelidze’s team, along with members of the SBU, raided the homes and offices of Mr. Korniets and Mr. Shapakin. The raid uncovered over $400,000 worth of cash, securities, and jewels and the two were arrested. However, during the raid the Attorney General’s right-hand man, First Deputy Prosecutor Volodymyr Huzyr, attempted to disrupt the search. He was unsuccessful, but soon after brought charges against Mr. Sakvarelidze — a move that was widely viewed as an attempt at intimidation. These actions led to speculation that Mr. Huzyr and Attorney General were attempting to protect the corrupt prosecutors. The situation quickly deteriorated and President Poroshenko was forced to hold an emergency meeting to broker a truce between the two camps within the GPO.

So What’s Going On?

What at first looked like just another splashy anti-corruption raid appears to have developed into a real struggle for control over the future of the GPO. On the one hand, the old guard represented by Attorney General Shokin and his Deputy Mr. Huzyr is seen as protecting corrupt allies and stonewalling reform. On the other hand, Mr. Sakvarelidze is seen as a potential alternative that can move the agency forward.

In the aftermath of the raid, prominent civil society organizations demanded Mr. Shokin’s ouster, members of parliament circulated a petition calling for his dismissal, and the parliament’s anti-corruption committee voted to remove him from office. These efforts appear unlikely to succeed, but they do suggest that Mr. Shokin’s grip on power may be slipping — as evidenced by Mr. Huzyr’s July 28 resignation under mounting political pressure. Meanwhile, Mr. Sakvarelidze has received strong support from the President. It is unclear what the future holds for the GPO, but the recent controversy shows that the balance of power within the agency may be shifting in favor of reform.

Two prosecutors arrested in bribe sting

Alleged attempt to protect prosecutors accused of corruption triggers scandal

Regional Corruption Takes Center Stage

Although most high-profile cases occur in Kyiv, Ukraine’s regions also suffer from crippling corruption and local strongmen often operate with impunity. A recent and dramatic shootout in the western Ukrainian city of Mucachevo, between members of Ukraine’s Right Sector and local police, brought this reality to the fore. According to Mustafa Nayem, an MP and former Journalist, the conflict was over who would control the region’s illegal cigarette smuggling business. It appears that the Right Sector is attempting to control the lucrative trade, wresting it away from parliamentarian Myhailo Lanyo who has been suspected of controlling it for years.

In response to the violent events, President Poroshenko sent military units to stabilize the situation and has appointed Hennadiy Moskal as the new head of the Zakarpattya regional administration. Mr. Moskal is the well-respected former Governor of the Luhansk region who most recently served as the Chairman of Luhansk State Military and Civil Administration. For his part, Mr. Moskal has already tried to tamp down reactionary, anti Right Sector rhetoric. He argues that the local groups calling themselves Right Sector have little connection to those fighting on the front. Meanwhile, the SBU launched an investigation into the circumstances surrounding the shootout, which prompted Mr. Lanyo to flee the country.

Following the destabilizing events in western Ukraine, the need to reign in regional corruption and local strongmen is clear. Not only does regional dysfunction undermine national reform efforts, but it also creates unease in Europe that could compromise Ukraine’s eventual EU integration. If Mr. Moskal can bring stability and rule of law to the Zakarpattya region, perhaps his efforts can serve as a template to restore order in other regions with challenging political dynamics, particularly in the war-riddled East.

The Path Forward

The news over the past month has certainly been mixed. With the number of high-profile cases of corruption, coupled with turnover at the ministerial level, there is reason for concern. While some view the recent spate of cases as evidence of a crackdown on corruption, critics contend that it is just more of the same government grandstanding. Outside of Kyiv, the mood appears to be more pessimistic. Most Ukrainians feel either that nothing has changed or that the situation in the country has worsened — particularly with a continuing war in the East. Serious and systematic reforms are needed, but these require political will and a stomach for swift action, which are absent in the country’s top-level politics.

However, there is still room for some cautious optimism. The national anti-corruption apparatus is taking shape and, if it functions properly, will play a key role in cleaning up the Ukrainian political system. Civil society remains very active and has been instrumental in crafting legislation and monitoring implementation. At the same time, the Ukraine’s leaders still have incentives to enact reform in exchange for much needed international financial assistance amid the country’s financial crisis. And indeed, the parliament has passed important bills that may eventually improve life for everyday Ukrainians. Whether these positives will create a foundation for stronger institutions and a government that is more responsive to its people remains to be seen. As is the case with most questions in Ukraine right now, only time will tell.

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