Ukraine Country Profile

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Business Corruption in Ukraine

High levels of corruption among Ukraine’s top officials represents a major obstacle for foreign investment in the country. The private business interests of Ukrainian oligarchs have been influential in policy-making processes, forcing SMEs out of the market. A weak judiciary, persistent extortion of companies by administrative bodies and burdensome regulation have severely hampered fair competition. Furthermore, companies face challenges when dealing with Ukrainian customs administration and discriminatory tax inspections.

Ukraine has adopted a comprehensive legal framework for dealing with corruption. The anti-corruption law, 'On the Principles of Preventing and Combating Corruption', was amended in 2012 to provide for the formation of a National Anti-Corruption Committee. The law now includes an income declaration requirement for public officials. In addition, the anti-corruption legislation regulates conflicts of interest by government officials and criminalises gifts and hospitality. Facilitation payments are not allowed under Ukrainian law. Nevertheless, the anti-corruption regulations have had a minimal effect on the level of fraud in political circles because of a weak rule of law and an absence of adequate enforcement. The 2012 amendments to the Ukrainian public procurement regulations have eradicated transparency within government procurement, allowing for the embezzlement of state funds. Abuse of power by politicians for illegitimate private gain is indicated as the main reason for the unattractiveness of Ukraine’s business climate, according to recent reports by the US Department of State and the Heritage Foundation.

The public will to fight against corrupt politicians and business elites culminated in a strong wave of public demonstrations against Victor Yanukovych’s regime in November 2013. The Euromaidan (Євромайдан) - the ongoing civil unrest in Ukraine - has resulted in significant changes to the political climate of Ukraine. For more detailed information about current political events in Ukraine, visit General Information and Euromaidan Demonstrations.

Detailed descriptions of corruption levels in a number of sectors of the Ukrainian economy are outlined in the profile’s Corruption Levels. For a more detailed analysis of the Ukrainian government anti-corruption activities, visit Public Anti-Corruption Initiatives. Private Anti-Corruption Initiatives provides information on the country’s media environment and the civil society’s anti-corruption levels.

 

Publication date: March 2014

Data verified by GAN Integrity Solutions

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