Ukraine Country Profile

Snapshot of the Ukraine Country Profile


Ukraine's former President, Viktor Yushchenko, made fighting corruption a top priority for his administration. However, traditions of transparent decision-making and societal understanding of corporate governance have been lacking. Moreover, there has been a high tolerance for corrupt practices throughout society, and the mindsets of political and economic elites on federal as well as regional levels have been slowing the country's progress towards efficient standards of opposing corruption. Both petty and grand scale corruption are thriving in Ukraine as a result, and corruption has had such a sustained impact on companies, state decision-making and the daily lives of citizens that it is perceived by many as a normal part of life. Ukraine's incumbent President, Viktor Yanukovych has begun his anti-corruption efforts by setting up a National Anti-Corruption Committee in February 2010, which has been ordered to draft anti-corruption legislation by the end of April. New legislation should help combat corrupt practices more effectively, as cited in a March 2010 article by RIA Novosti.

Positive developments in relation to corruption and investments:

  • The acknowledgement by government that corruption exists in Ukraine represents a significant change in political attitude towards corruption.
  • National and local authorities in Ukraine have developed nearly 200 one-stop shops intended to cut the number of standard company registration procedures.
  • InvestUkraine, a non-profit investment promotion agency, was established in August 2005 with the support of the government, intended to function as a parastatal one-stop shop for investors. The agency hosts networking conferences and events and has developed a wide range of partnerships with international donors and organisations as well as domestic organisations working with anti-corruption.

Risk of corruption:

  • The most frequent areas in which companies encounter corruption in Ukraine are business licensing, taxation and customs. Corrupt practices are still seen by public officials as low risk behaviour, and officials have grown accustomed to supplementing their (low) salaries through corruption.
  • There are also reports of government agencies creating fiscal targets for inspection agencies, thus creating quotas for the collection of fines instead of fining in accordance with objective criteria. This leads to the arbitrary fining of companies and greater relative risks for doing business in Ukraine.
  • On a more general level, entering the Ukrainian market will almost always require local agents or consultants who can facilitate making the necessary connections or market entry, and some of these third parties might use monetary or other inducements as a method of operation.
  • Dispute settlement is reportedly weak, unfair and biased, and companies have little faith in the judiciary's ability to work with vague laws and regulations that leave ample room for subjective interpretation and corruption to occur.