In procurement cases, prosecutor’s office mostly engages with the court in the interest of the Ministry of Economic Development and Trade or the procuring entity itself with the demand to recognize the procurement agreement invalid.
Since the prosecutor’s office is usually associated with opening criminal cases and the punitive function, let us start with that. The prosecutor’s office is not authorized to carry out general supervision. What does it mean? A prosecutor cannot “knock” on the door of an enterprise, institution or organization and inspect it at his or her own initiative.
The procedure of work of the prosecutor’s office is as follows:
1. the prosecutor enters data in the Unified State Register of Pre-Trial Investigations and
2. carries out procedural management of the pre-trial investigation, yet does not have the right to take any investigative action, such as questioning or searches. That is, prosecutor’s office can start a proceeding, but it will be investigative bodies that will be “knocking on doors.”
The source of information that to start an investigation can be:
1. a report filed on commission of a criminal violation
2. independent discovery of relevant information
What is interesting, when the prosecutor’s office receives an application on an illegally held tender, it is obliged to enter data into the Unified Register within 24 hours of receipt and start an investigation regardless of whether the application received has sufficient information on the crime committed or not. In the event of inaction and failure to enter data into the Unified Register, the prosecutor’s action can be disputed within 10 days.
Representation in the Economic Proceeding
Prosecutor’s office can represent the national interests not only in a criminal proceeding, but also in an economic one. This power is based on Economic Procedural Code of Ukraine (Art. 53) and the Law of Ukraine “On Prosecution” (Art. 23). The aforementioned articles specify that the prosecutor represents the legal interests of the state in court in case of a violation of threat of violation of the national interest.
What is the national interest in this case and what does it have to do with public procurement? In fact, all schools, kindergartens, hospitals and even state-owned enterprises which were created for public funds function in order to satisfy the needs of the state and its citizens. By procuring something, the institution satisfies the state’s need for certain goods/works/services. In case if such procurement is held illegally, the state is under threat to suffer losses in the form of failure to receive such goods/works/services, receipt of low-quality goods/works/services or their receipt for prices which are higher than the market prices. It applies to all kinds of procurement, both pre-threshold and above-threshold.
In order to prevent such situations, the prosecutor’s office can file a lawsuit with the court. In the lawsuit or complaint it explains:
1. the damages caused to the national interests;
2. the need to protect these interests;
3. the reason for the prosecutor to file a lawsuit with the court determined by the law;
4. it also states the body authorized by the state to perform respective functions in controversial legal relations.
In cases on public procurement, the prosecutor’s office mostly represents the interests of the Ministry of Economic Development and Trade or the procuring entity in court, demanding to recognize the procurement agreement invalid. While there are often difficulties with criminal proceedings in part of proving the fact of a criminal wrongdoing, economic proceedings are mostly well-substantiated and are mostly satisfied by the court. In this context, the work of prosecution is quite effective, but due to stalling of cases, the decisions are often made when the agreement has in fact been already implemented.
A remarkable example of this practice is the decision of Economic Court of Rivne Oblast. According to the case materials, in 2016, the procuring entity held a tender for procurement of gas and concluded an agreement with the value of UAH 1.4 million. In the course of investigation, it was established that the winning participant uploaded the tender proposal the next day after the electronic auction. Besides, the letter was in the “black list of AMCU” and was not allowed to participate in bidding during three years. Such actions of a participant constitute sufficient reason to deny the latter. Rivne local prosecutor’s office filed a lawsuit in the interests of the Ministry of Economic Development to recognize the bidding results and the agreement invalid. The court fully satisfied the prosecutor’s demands. However, as of the date when the decision was made by the court, the payment transferred under this agreement constituted UAH 1.2 million.