Ukraine: one year after Yanukovych

On the one year anniversary of the flight of Viktor Yanukovych from Ukraine, the former president appeared on Russia television calling for an end to the hostilities. Yanukovych, who is subject to a warrant by Interpol, should be in court, not on TV.

Yanukovych is wanted in Kiev in connection with embezzlement charges. Russia has refused to extradite him or seize the assets he has in Russia and Yanukovych has worked hard to hide the assets he has in Ukraine and globally (see below.)

Transparency International’s chapters in Ukraine and Russia have taken stock of the fight against corruption in Ukraine in the year since the Maidan demonstrations and the fight to bring Yanukovych and his cronies to justice. On both counts, much more needs to be done.

Fighting corruption in Ukraine

Unfortunately, Ukrainians say corruption is as high in Ukraine today as it was when Yanukovych fled the country. Transparency International Ukraine has assessed why this is given that the new government has made fighting corruption a top priority and civic organisations have worked to develop a package of anti-corruption laws.

The key causes that are stopping the fight against corruption in Ukraine are rooted in the Yanukovych legacy of cronyism that persisted from before his time and during his presidency. But it is also exacerbated by the collapse in the national economy brought about by the devaluation of the currency and the continued unrest and war.

Our Ukrainian chapter has highlighted three key actions that the Ukrainian authorities and the international community must take immediately:

Create and support an independent judiciary

Yanukovych filled key public positions, including the heads of law enforcement and the courts with his cronies, turning them into hotbeds of corruption rather than independent arms of the state. The courts are not enforcing laws. In addition because of lack of funds many positions are left vacant and those who remain in jobs do not seek changes.

Parliament must revise the constitution to guarantee independence of the judiciary and judicial appointments.

The National Anti-Corruption Bureau and National Corruption Prevention Agency must start their activities

The parliament and the president, with the support of civil society, have adopted radical new anti-corruption laws but they are not yet implemented or enforced. The new laws create the legal framework for establishing an anti-corruption bureau and introducing legislation to create public registries of business ownership which will make retrieving stolen assets easier and hiding them harder.

International partners, including the World Bank, the International Monetary Fund (IMF) and the European Union, must support these activities with both financial and expert aid.

Political parties and the media are still financially beholden to their oligarch sponsors who resist change

With no state funds, key institutions are dependent on financing from vested interests and oligarchs. There is little transparency or accountability to see where the money to fund political parties and media outlets comes from.

International support (the World Bank, the IMF and the European Union) is required to sever the link between vested interests and political power.

Bringing Yanukovych to justice

The illustration below shows the complex ownership structure of assets that belong to Yanukovych. In the past year investigators have gone a long way in identifying how Yanukovych and his allies, including his former prime minister, Nikolai Yanovich Azarov, have been able to invest in companies and property around the world using shell companies and proxy owners to hide behind.

Yanukovych’s alleged network of assets

Key:

Blue = companies where the owners are known

Yellow = non-Ukrainian companies (companies based in Austria, British Virgin Islands, Cyprus, Isle of Man, Netherlands, St. Kitts and Nevis, Switzerland, United Kingdom)

Purple = people including Yanukovych, Azarov, Klyuev (former vice prime minister) and others connected to the former president.

Source: Transparency International Russia

Although the assets of Yanukovych and others have been frozen in the European Union countries, Switzerland, the United States and Austria, they will require an extension to keep this in force, subject to legislation in the respective countries.

Investigations by Transparency International Russia have found that during the past year a significant part of the property owned by Yanukovych has been officially re-registered under third parties, making it difficult to determine the true ownership of the assets. For example, a residence on Yanukovych’s hunting estate was officially re-registered to a man who has connections with Yanukovych.

There will need to be significant international will – particularly in Russia – to ensure that the assets stolen from the Ukrainian people during the Yanukovych regime are returned to the state.

Transparency International calls for:

• Investigations to be opened in Ukraine and in countries where companies and assets are based to ascertain the real owners of the many assets alleged to be owned by Yanukovych and Azarov and their respective families.
• Immediate and greater cooperation between the judicial authorities in the European Union member states, Ukraine and Russia to follow up on allegations of embezzlement and corruption.
• Extradition of Yanukovych and Azarov from Russia to face potential charges or prosecution in Ukraine.