EU should develop strategy to support reforms in Ukraine aimed at eradicating corruption at state level – report of EU auditors

BRUSSELS. Sept 24 (Interfax-Ukraine) – The European Court of Auditors (ECA) states that the EU’s support for reforms aimed at combating corruption at a high state level is not effective enough, and recommends developing an appropriate strategy.

This is stated in a special report of the European Court of Auditors (ECA) released on Thursday.

Presenting the report on Thursday from Luxembourg during a video press conference, Juhan Parts, the member of the European Courts of Auditors responsible for the report, noted that in the document they do not criticize the Ukrainian authorities, their subject of audit is the European Commission, the European External Action Service (EEAS).

Talking about the main provisions of the report, Parts said that the first one is well known. They said in the report that Ukraine had been suffering from grand corruption and state capture for many years. This is not only a matter of widespread corruption, he said, they call such situations state capture. This means that the oligarchs have a great influence on the current government, politics, business, and the media. This is the root cause of corruption in general. This is a reality, he said, adding that they had studied that phenomenon in detail in order to better understand the nature and how this structure works. To address the root cause, they need to better study this phenomenon – how this oligarchic system works, which had even led to a problem in cultural terms, and this makes the fight against this problem even more difficult.

He noted that, despite a number of initiatives from the EU, the investment of large resources and the use of various instruments, such as the conditions necessary for the provision of a macro-financial assistance program, the provision of a visa-free regime, and so on, the oligarchic influence had not changed much.

The auditor noted that there is a slight improvement, but all these changes – the creation of some institutions, the adoption of some laws – could easily be reversed … He voiced general assessment saying that there is no breakthrough on this front, no changes.

According to him, the EU has long been aware of the links between oligarchs, high-ranking officials, politicians, judges, state-owned enterprises and the media.

He said that the ECA believes that the EU’s approach to supporting Ukraine did not focus on the fight against corruption and the "capture" of the state. (From the EU side) it is necessary to distinguish between big and small corruption, which is absent today. Therefore, the auditors recommend developing a strategy for large corruption that will not be the same as for small one. He called that the weakness of EU action.

They cited a visa-free regime as an example.

The ECA says that the system had not been revised, although two of the three conditions for receiving EU support had not been met. Despite the various support that the EU offered Ukraine, oligarchs and privileged circles continue to undermine the rule of law in Ukraine, jeopardizing the country’s development. Ukraine needs a purposeful and effective strategy to combat the power of the oligarchs and reduce the capture of the state. The EU can play a much more important role than it played until now, the press release says.

The auditors believe that the EU should rethink its strategy as a whole, as today there are too many actions in too different areas.

The auditor said that the Commission calls this a multidimensional approach, which is appropriate, but there must be a well-defined strategy on how to work in different sectors. Therefore, according to him, their main message lies in a well-thought-out strategy that takes into account the logic of working in different sectors.

In addition, the report notes that on the ground, the EU assistance has yielded only limited results. "On the ground, EU aid has delivered only limited results. Its support for fighting anticompetitive structures and behaviours has focused on corporate governance and aligning Ukrainian laws with EU norms. With the exception of grants for independent media sources and activists, EU support has not focused on identifying grand corruption schemes involving public enterprises. But since so many companies in Ukraine are corrupt monopolies or oligopolies, the auditors argue that the EU should have acted more directly to remove obstacles to free and fair competition," the auditors say.

They also think that the EU support for judicial reform has also not yielded sufficient results. "Nevertheless, EU projects and capacity-building assistance have helped in redrafting the Ukrainian Constitution, as well as a large number of laws. They also supported the creation of a new Supreme Court, the auditors acknowledge. But these achievements are constantly at risk, with numerous attempts to bypass laws and water down reforms. These have caused major setbacks that EU measures have not been able to mitigate," the ECA says.

Similarly, the main anti-corruption institutions that the EU helped to set up "are still struggling to make their presence felt."

"The entire system for investigating, prosecuting and judging high-level corruption cases is very fragile. While the High Anti-Corruption Court has started to show promising results, its effectiveness, independence and sustainability are regularly called into question," the report says.

Parts called the last important provision of the document the urgent need to weaken the levers of influence of the oligarchs, and this should be done from the point of view of money laundering.

Parts said that in their report they emphasized the importance of anti-money laundering activities for the purpose of (this action) to be the influence of the oligarchs. To this end, they recommend that the Commission analyze and devise a special model for (applying) preventive measures for oligarchs and people who are under their influence and who are suspected of corruption in terms of entering the EU and using their capital there. In other words, the EU should also take a step not only in Ukraine, but also in the EU itself, in order to weaken their levers of influence.

Based on the findings of the report, the auditors recommend that the European Commission, the European External Action Service and the European Advisory Mission to Ukraine develop and implement concrete actions aimed at combating major corruption; assess and adjust the scope of their support for civil society organizations and investigative journalism; help remove barriers to free and fair competition; improve monitoring and reporting to inform and take corrective action where necessary; emphasize integrity and commitment to reform when providing support for capacity building; support digitization of registers; and to establish stricter conditions for support from the European Commission.