Anti-corruption measures.

Yuri Kushnir, Partner at Kushnir, Yakymyak and Partners law firm, focuses on investments, banking & finance, tax consulting, and cross-border commercial transactions. He has considerable experience in implementing anti-corrupt measures (as required under US FCPA) by Ukrainian subsidiaries of multinational corporations.

Anti-corruption measures for legal entities

The corruption is perceived to be probably the biggest burden on the way of country’s reform implementation and sustainable development. Recently upgraded legislation on corruption prevention aims, among other, to assist companies in Ukraine to conduct business with integrity and minimize risks to be involved in corrupt practices.
What corporate world operating in Ukraine should know about new anti-corruption legislative requirements?
The law prescribes the following two proactive measures for legal entities established in Ukraine:

  • adoption of anti-corruption program, and
  • appointment of Commissioner for anti-corruption program (Commissioner).
Starting from 26.04.2015 the above requirements shall become compulsory for companies willing to participate in public procurement, as well as companies with over 50% of state or municipal shareholding, which employ over 50 employees and have yearly turnover of over UAH 70 Mio. In particular, failing to adopt anti-corruption program and/or appoint the Commissioner will result in disqualification of a company bidding in public procurement processes.
Company CEO and shareholders shall be primarily responsible for evaluation of corruption risks and implementation of counter-corruptive measures. The law also encourages using independent experts for identifying and eliminating corruptive risks in the company’s activities, including conducting respective audits.

Company’s Anti-Corruption Program

The anti-corruption program shall be adopted by company CEO following discussion with the employees, and shall be readily available for them. The provisions of such anti-corruption program shall be included into labour agreements, as well as may be referred to in the contracts concluded by the company.
The law sets forth the list of requirements, which anti-corruption program shall satisfy. In particular, the program shall contain:

  • the provisions regulating its scope and circle of application;
  • exclusive list and description of anti-corrupt measures, standards, procedures and the way of their implementation, periodic evaluation of the corruption risks;
  • professional code of conduct for company employees;
  • procedure for appointment, powers and responsibilities of the Commissioner; procedures for his/her periodic report to shareholders;
  • confidentiality in communication with the Commissioner, protection for whistleblowers etc.

Company Commissioner for anti-corruption program

To qualify for the position of the Commissioner a candidate shall be over 30 years old, with completed higher legal or business education, high professional and moral standards. While the Commissioner shall be appointed by the company CEO or shareholders as set forth in anti-corruption program, his/her dismissal shall be approved by the National Agency for Corruption Prevention (Agency) in case the company is participating in public procurement or has over 50% public shareholding as described above. In all other instances the company shall inform the Agency about the Commissioner’s dismissal within 2 days, and promptly appoint the new candidate.
While further legislative initiatives are expected to supplement the package of anti-corruption laws in the nearest future, the business community is advised to take note of the above legislative requirements and be ready for their implementation.

Yuri Kushnir
Partner of Kushnir, Yakymyak & Partners Law Firm
Kyiv Post Legal Quarterly December 19, 2014, Vol.1, Issue 4