Protecting Business or Opening Doors for Corruption: Analysis of Draft Law No. 12439 Before the Second Reading

On August 27, 2025, the Verkhovna Rada Law Enforcement Committee recommended that Parliament adopt Draft Law No. 12439 in the second reading and as a whole. The draft law is aimed at improving safeguards for business entities during criminal proceedings. 

According to TI Ukraine experts, under the pretext of protecting business, this draft law creates new loopholes for corrupt actors. Even before the first reading, it contained numerous problematic provisions, such as a two-month limit on asset seizure, which would make the recovery of illicit assets impossible. Following revisions, the draft law has been supplemented with additional harmful amendments.

The first issue to highlight is the closed nature of the Law Enforcement Committee. All requests to allow TI Ukraine representatives to attend the session were ignored. This continues the committee’s shameful practice of operating behind closed doors, as it did in July when it endorsed the scandalous Draft Law No. 12414 without the involvement of civil society, and even without some of the committee’s own members.

Brief conclusions:

• MPs have somewhat improved the regulation of asset seizures compared to the first version of this draft law.
• The draft includes proposals to amend the Criminal Code that would broaden the range of circumstances excluding criminal liability.
• There is a risk of investigative strategies being disclosed through the consideration of complaints against refusals to grant access to case files before the investigation is completed.
• In most corruption cases, it would become impossible to conduct urgent searches, which would negatively affect the quality of investigations.

Our proposals: 

• Do not amend the Criminal Code to expand the list of circumstances that exclude criminal liability.
• Limit the range of persons entitled to request access to pre-trial investigation materials before its completion, and specify that a decision refusing such access may be appealed only to a higher-level prosecutor.
• Include corruption offenses in the list of criminal offenses in which urgent searches may be conducted. 
• Take into account other proposals for improving the draft law previously expressed by TI Ukraine and the expert community before the first reading.

According to TI Ukraine experts, under the pretext of protecting business, this draft law creates new loopholes for corrupt actors. Even before the first reading, it contained numerous problematic provisions, such as a two-month limit on asset seizure, which would make the recovery of illicit assets impossible. Following revisions, the draft law has been supplemented with additional harmful amendments.

Key risks of the draft law before the second reading

Most of our conclusions regarding the problems of the draft law in its initial version remain valid. However, the second reading has introduced new risks as well, which we describe in detail below.

1. Actions taken in accordance with official positions of state authorities as grounds for excluding criminal liability

The authors of the amendments propose that actions of an individual should not be considered a criminal offense if they were taken on the basis of clarifications issued by central executive authorities regarding the application of tax, customs, or public procurement legislation.

This provision entails serious corruption risks, in particular:

• There is no established procedure for verifying the legality of such clarifications or for appealing them. It remains unclear what should happen if a clarification were issued ultra vires or in contradiction to existing legislation.
• The concept of “actions taken on the basis of clarifications” is not clearly defined. In practice, business entities engage in ordinary economic activities rather than “executing” clarifications of state bodies, which means offenses could be disguised as compliance with such clarifications.

Above all, this provision contradicts the very essence of anti-corruption efforts, which invariably concern the unlawful nexus between power and those who exploit it for personal gain. Under the proposed norms, individuals with sufficient influence could obtain favorable clarifications from central executive authorities for their own benefit and thereby avoid liability for violations.

It is particularly striking that this provision would cover clarifications of customs legislation—an area that, according to business surveys, has consistently ranked as the most corruption-prone for four consecutive years. It therefore appears that MPs, in a draft law ostensibly aimed at protecting business interests, have failed to take this aspect into account.

It should be noted that similar provisions already exist in tax law. For example, a person cannot be charged interest if they acted in accordance with a tax consultation or a Supreme Court decision. However, the Tax Code contains critical safeguards: individual tax consultations can shield from financial liability only if they are officially registered in a special state database. Moreover, if an individual consultation contradicts a general one, the latter prevails as it has superior legal force.

The new draft law would extend grounds for excluding criminal liability under the Criminal Code beyond taxation to also cover customs and public procurement legislation.

In seeking to enhance business protection by inserting new provisions into the Criminal Code, the committee overlooked that clarifications of legislation cannot substitute the law itself. The absence of sufficient clarity and precision in legislation undermines protection against arbitrary interference by public authorities in property rights, as underscored by the ECtHR in Shchokin v. Ukraine. In this way, the authorities attempt to “pull the wool over the eyes” of business, absolving themselves of responsibility for legislative quality while creating additional corruption risks.

Furthermore, clarifications issued by state bodies may be vague and merely repeat statutory provisions, opening the door to ambiguous interpretations and complicating the determination of whether a business was acting lawfully.

It is also important to recall that Article 41 of the Criminal Code sets clear criteria for the legality of orders: they must be issued by a duly authorized person, in due form, within their competence, and must not contradict legislation or violate constitutional rights of individuals or legal entities. Moreover, an authorized person bears liability for carrying out a “manifestly criminal” order, thus creating an additional safeguard against abuse.

By contrast, the proposed new Article 41-1 contains no criteria for assessing the legality of clarifications but instead grants immunity for any actions “based on clarifications,” even if those clarifications contradict the law or are manifestly unlawful. This would create far greater opportunities for abuse. We therefore recommend removing these provisions from the draft law.

The proposed new Article 41-1 contains no criteria for assessing the legality of clarifications but instead grants immunity for any actions “based on clarifications,” even where such clarifications contradict the law or are manifestly unlawful, thereby creating far broader opportunities for abuse.

2. Premature disclosure of investigative secrets

The draft law proposes allowing appeals to an investigating judge against decisions of investigators to deny access to case materials, access to which at that stage could compromise the investigation.

In our view, such a provision risks breaching investigative secrecy and undermining the course of the investigation.

This danger is especially acute given that the prosecution would be obliged to disclose in court the content of materials to which access was denied and explain how such access could jeopardize the pre-trial investigation. This would inevitably harm the case, particularly in light of Article 306(3) of the Criminal Procedure Code, which requires that complaints against decisions, actions, or omissions during pre-trial investigation be considered in the mandatory presence of the complainant or their counsel or representative. Exercising this right would give these individuals direct access to the content of materials regardless of the investigating judge’s ruling on the complaint.

It is true that EU directives recognize the right to access case materials substantiating an arrest or detention. However, they also allow refusals where access could pose a serious risk to the life or fundamental rights of another person, or where refusal is strictly necessary to protect important public interests, including the integrity of an ongoing investigation.

In this context, it should be noted that under Draft Law No. 12439, appeals could also be lodged by representatives of persons subject to searches or whose property was seized.

EU implementation reports also show that some Member States do not provide for judicial review at the police investigation stage. In such cases, decisions are reviewed by a prosecutor or a higher-level prosecutor.

Accordingly, the proposed provision would impose excessive openness on investigative bodies and endanger investigative secrecy. The scope of persons entitled to request access should therefore be limited, and refusals to grant such access should be reviewed by a higher-level prosecutor.

The provision proposed by MPs would require excessive openness on the part of pre-trial investigation bodies, potentially compromising investigative secrecy. It is therefore necessary to limit the circle of persons entitled to request access to the materials.

3. Urgent searches will become practically impossible in corruption investigations

MPs propose narrowing the list of criminal offenses for which urgent searches may be conducted—an approach they had already pursued in the controversial Draft Law No. 12414. The narrowed list includes only one corruption-related offense: Article 368 of the Criminal Code (passive bribery).

Yet the need for urgent searches arises in other corruption-related offenses as well, for example, under Article 369-2 of the Criminal Code (trading in influence). Consider a scenario where a bribe recipient immediately seeks to exchange the funds at a currency exchange office: without the ability to conduct an urgent search of that office without prior judicial authorization, investigators would be unable to complete the evidence-gathering process.

We therefore recommend expanding the list of criminal offenses permitting urgent searches to cover other corruption-related offenses.

MPs propose narrowing the list of criminal offenses for which urgent searches may be conducted—an approach they had already pursued in the controversial Draft Law No. 12414.

Conclusions

TI Ukraine recommends that Parliament reject Draft Law No. 12439 in the version endorsed by the Verkhovna Rada Law Enforcement Committee on August 27, 2025. It is regrettable that, under the guise of protecting business, MPs are in fact hindering investigations into corruption offenses—the very offenses that often underpin and trigger such pressure on business.

Undoubtedly, business requires prompt safeguards against harassment through unfounded criminal proceedings. However, the chosen path of reform will cause more harm than good. Law enforcement officials who exert unlawful pressure on business are not following the law, they are violating it. Yet the proposed provisions of this draft law would obstruct the investigation of such abuses.

To ensure that Draft Law No. 12439 responds appropriately to existing challenges, we propose: 

• Not amending the Criminal Code to broaden the list of circumstances excluding criminal liability
• Limiting the circle of persons entitled to demand access to pre-trial investigation materials, and providing that refusals to grant such access be reviewed by a higher-level prosecutor
• Expanding the list of criminal offenses permitting urgent searches to include corruption-related offenses 
• Taking into account other proposals for improving the draft law that TI Ukraine had already put forward prior to the first reading.

Separately, we call on the President of Ukraine to sign the law adopted back in January 2025  on amendments to certain laws of Ukraine aimed at strengthening guarantees for the activities of media, journalists, and citizens’ access to information (Draft Law No. 11321). Had this law been in force, civil society organizations would have been able to attend committee sessions and oversee what MPs decide behind closed doors.