Business Corruption

Licensing of land lots for resource extraction to private companies is considered to be a venue for corrupt practices. Laws for licensing resource extraction land plots, such as open auction, are by-passed by licensing state-owned companies who then sub-license to private companies within joint private-public venture contracts. Free from public-private licensing regulations requiring transparency etc., the sub-licensing company can then non-transparently award the licence to another private company under the guise of commercial secrecy. In 2007, an auction administrator was chosen to administer the allocation of resource extraction lots. However, the circumstances behind the selection have been questioned by observers because the company that won the competition to administer the lots, Multiservice, was already under the scrutiny of the Anti-Monopoly Committee.

Companies report that bribery is not uncommon when dealing with environmental inspections in Ukraine. For instance, Global Integrity 2009 reports that business inspections by government officials to ensure public environmental standards are usually carried out in an arbitrary and ad-hoc manner, and bribes are extracted from companies in return for favourable treatment or expedited processing.

At the end of February 2009, the headquarters of Ukraine's national natural gas company Naftogaz Ukrainy were raided by the national intelligence agency, SBU, in connection with an anti-corruption investigation, as reported in a 2009 article by All Headline News. According to the source, the company had allegedly made a secret agreement to market USD 3.9 billion worth of natural gas despite a disputed title.

Political Corruption

Ukraine's industrial regions are still influenced by economic oligarchs who will sometimes try to secure protectionist practices for industries in their home regions, according to the USAID and MSI Corruption Assessment 2006. There have been examples of vote-buying in Parliament in order to secure protectionist advantages in some markets, such as vehicles, sugar and vegetable oil.

The role of the RosUkrEnergo gas trading company, which is the sole provider of natural gas from Russia and Central Asia to Ukraine, remains somewhat mysterious, as reported in a 2007 article by Zerkalo Nedeli. According to the article, RosUkrEnergo, which was formed by the Russian energy giant Gazprom, exists to act as a middleman between high-level Russian and Ukrainian political figures; this, in turn, could facilitate corruption. This perception is supported by the Freedom House 2009, according to which, the fact that Ukraine in 2008 continued to buy Russian and Central Asian natural gas from the RosUkrEnergo, set up in 2004 to take over from the discredited EuralTransGaz, demonstrates the lack of transparency at the highest level of the economy and political system.

In July 2010, the former first deputy head of national oil and gas company Naftohaz Ukrayiny was arrested on suspicion of embezzlement through abuse of office related to the seizure of 11 billion cubic metres of gas by former government from the gas intermediary RosUkrEnergo in 2009, according to the US Department of State 2010.

In December 2010, a corruption probe was launched against former Prime Minister Yulia Timoshenko on charges of misuse of state funds and abuse of office while serving as prime minister. The probe involved alleged misspending of USD 425 million, which the government received in 2009 for the sale of carbon emission rights under the Kyoto Protocol. According to the Protocol rules, funds from the sale of carbon credits can only be used for tasks that aim to reduce emissions of pollutants. Timoshenko is accused of using these funds to cover pension arrears when finances were stretched by the global financial crisis. In October 2011, she was found guilty of abuse of office, sentenced to seven years in prison, and ordered to pay the state USD 188 million, according to a 2011 article by Euronews. Timoshenko has stated that the court verdict is politically-motivated, according to a December 2010 article by BBC News. In addition, former environment minister was detained on charges of abuse of office, also in connection with the use of funds from carbon credits.