This post, republished here with permission, originally appeared on FCPA-RUCIS, where Michael Tooshi serves as Editor-in-Chief.
As the saga surrounding Ukraine’s European Union (EU) association talks has been leading the news headlines this month, FCPA-RUCIS will address some of the significant anti-corruption legislation that Ukraine adopted in preparation for its potential association agreement with the EU. Regardless of the outcome of the EuroMaidan demonstrations on Independence Square and elsewhere in the Ukrainian capital Kiev, the country’s new anti-corruption laws are scheduled to take effect this month and will continue to be implemented in 2014.
The most significant element in the legislation is the introduction of corporate criminal liability for companies whose employees or their authorized representatives have directly or indirectly offered to pay bribes to private entities or to public officials. The corporate criminal liability concept is incorporated in the new law “On the Amendment of Certain Legislative Acts” (Concerning Fulfillment of the Action Plan for Liberalization by the EU of a Visa Regime for Ukraine Relating to the Liability of Legal Entities) and applies to corporate and private bribery offenses under Ukrainian law. These novel provisions regarding corporate criminal liability are scheduled to take effect in September 2014. Previously, only corporate officers and employees could be held liable, not the corporate entity itself.
Penalties for such offenses are expected to be stiff. A new asset forfeiture (or “special confiscation”) law took effect on December 16, 2013 and has strong implications for companies that run afoul of certain corruption and anti-bribery statutes. Asset forfeiture comes into play where property, monetary funds or other assets of value were obtained as a result of corrupt activity or were used or intended to be used as instrumentalities in the commission of certain criminal offenses, including but not limited to the abuse of authority by a civil servant, forgery of official documents by a civil servant and unjust enrichment by a civil servant. The asset forfeiture provisions are incorporated into the Ukrainian criminal and criminal-procedure codes (Articles 96-1 and 96-2 of the criminal code) through the law “On the Amendment of the Ukrainian Criminal and Criminal Procedure Codes” (Concerning Fulfillment of the Action Plan for Liberalization by the EU of a Visa Regime for Ukraine) adopted on April 18, 2013. The new law has also revised criminal code provisions (Articles 368 and 369 of the criminal code) which had previously addressed “bribery” and which now characterize the offense as receiving an “unlawful benefit,” addressing both the receipt of unlawful benefits and the offer of such “unlawful benefits” to persons in positions of official authority. The criminal code no longer uses the term “bribery.”
Another significant aspect of the new anti-corruption law, which entered into force as of June 9, 2013, is a new whistleblower protection statute. The new law “On the Amendment of Certain Legislative Acts Relating to the Implementation of the State Anti-Corruption Policy” provides a prohibition against employers disciplining or terminating employees who supply information to the state authorities concerning corruption allegations. The new law provides such employees with remedies under Ukrainian employment law, namely, seeking damages under a wrongful termination theory.
Finally, the new laws foresee the creation of a uniform state register of corruption offenders to be published on the Ministry of Justice’s website. Information is to include the personal details such as names, place of business, the type of violation committed and the punishment that the individual received. The register is scheduled to become publicly available on the Ministry’s website in early January 2014.
Overall, Ukraine’s new anti-corruption legislation represents a significant step toward a more transparent business environment for corporations and the public officials who deal with them. Regardless of the outcome of Ukraine’s highly public European Union association debate, the new anti-corruption provisions are here to stay and their presence in the country’s legal landscape has made the need for robust compliance programs all the more relevant for companies that are operating in Ukraine presently or plan to do business in the country in 2014.
