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Two points lost. Ukraine’s score in Corruption Perceptions Index 2019 is 30 points out of 100. We have gone back to the level of 2017 and now rank 126th out of 180 countries. Our neighbors in the index are Kyrgyzstan, Azerbaijan and Djibouti.

Among its neighbors, Ukraine is ahead of Russia, which maintains its position (28 points, rank 137). Out of the remaining neighbors, Poland is the expected leader with 58 points (rank 41), followed by Slovakia (50 points, rank 59). Belarus gained 1 point and now ranks 66th with 45 points. Some of our neighbors have lost points this year: Romania lost 3 points, Hungary — 2 points, and Moldova — 1 point. 

CPI leaders are mostly the same. The first place is shared by New Zealand and Denmark with 87 points each. Notably, 8 out of 10 countries in the top 10 are representatives of Western and Northern Europe. 

The bottom of the list is occupied by countries with long-lasting unstable political situation, military conflicts and uneven control of the government over the territory — Somalia (9), South Sudan (12) and Syria (13). 

Compared to the previous year, Armenia gained more points than any other country in the region (+7, to a total of 42). After the revolution in 2018 and formation of the new parliament, the government is moving towards building the anti-corruption policy. Despite the numerous positive decisions, issues such as conflict of interest and opacity and lack of accountability in public authorities remain. 

Two points lost. Ukraine’s score in Corruption Perceptions Index 2019 is 30 points out of 100. We have gone back to the level of 2017 and now rank 126th out of 180 countries. Our neighbors in the index are Kyrgyzstan, Azerbaijan and Djibouti.

Why has Ukraine’s score deteriorated?

Ukraine’s score is based on 9 different sources. In three, it improved slightly, in three, no change has happened, in the remaining three, its score decreased.

The biggest loss is the loss of 13 points in the research Global Insight Country Risk Ratings. The risk in question is whether people and companies in the country are likely to encounter bribery or other corrupt business practices in their economic activity, including public contracting and everyday work. 

It should, however, be noted that, similar to other indices, the CPI can be slow to reflect what is happening on the ground in many countries. It sometimes takes months, if not years, to account for real-world events in the CPI. Even when countries address corruption issues head-on, sometimes they experience worse scores on the CPI, at least initially, as scandals come to light.

The CPI is based on research for the past two years. Since the beginning of 2017, reforms and anti-corruption struggle in Ukraine started somewhat rolling back. The authorities made increasingly active attempts to restrict the independence of anti-corruption agencies, stalled the launch of the High Anti-Corruption Court, came up with arbitrary legislative restrictions. Not to mention the political bias of the NACP, the failed judicial reform and the lack of the proper reform of anti-corruption agencies. 

Not only did the authorities hardly listen to the advice of the civil society and international partners, they sometimes actively obstructed the required changes. During the past two years, the government ignored most recommendations, some of which were critically important for the country. 

It should be noted, however, that Ukraine’s lowest score was in 2013 (25 points) — the last year of Yanukovych and his regime in the country. Since the Revolution of Dignity, Ukraine has been gaining points steadily, if slowly. The previous administration was evidently not determined enough to fight against corruption, which led to their loss at the presidential and parliamentary elections.

Countries which fight against corruption successfully are those which observe the rule of law, ensure independence of oversight agencies and where society has a negative attitude to abuse of power and public funds for personal gain.

The new team headed by the President effectively received their power, together with responsibility, in August 2019, thus the results of their work will be reflected in the next CPI. We urge the President and the Parliament majority to remember about separation of powers, formalized in the Constitution of Ukraine, and the rule of law. The balance of the legislative, executive and judicial powers and the powers of the President should be maintained regardless of the political needs and interests of private individuals. 

Ukraine’s score is based on 9 different sources. In three, it improved slightly, in three, no change has happened, in the remaining three, its score decreased.

At the beginning of 2019, Transparency International Ukraine provided 12 recommendations which could have improved Ukraine’s CPI score. As of the end of the year, only 6 were completely or partially implemented, and even that happened in the last quarter of 2019. 

Fully implemented recommendations (2)

Monopoly of the SBU for wiretapping (lawful interception of telecom networks) has been abolished, as has public monopoly for forensic reviews, which renders stalling of the investigation in this part impossible. 

The Verkhovna Rada has also established the procedure of serving special subjects with charges. This formal moment used to be abused quite a lot by the defense, as they demanded personal presence of the Prosecutor General or his deputies. 

Yet, the Criminal Procedural Code retains the provisions which negatively affect the quality and effectiveness of pretrial investigations, especially when it comes to corruption-related crimes. For instance, detectives are restricted in the duration of the investigation, which may lead to less comprehensive findings. 

On June 6, 2019, the Constitutional Court of Ukraine abolished discriminatory electronic declarations for anti-corruption activists. The Court concluded that this restricts the constitutionally guaranteed freedom of political and civic activity and may be used as a tool of persecution. 

Partially implemented recommendations (4) 

On October 18, the law rebooting the NACP came into effect. The Agency got rid of its formerly collegiate decision-making, and its Head was selected with the participation of international experts. At the end of the year, the NACP obtained automatic access to three registers required for verification of e-declarations. 

However, when the acting Head was in the office, full verification did not take place. There is also no technical possibility yet to distribute declarations for verification automatically among the authorized Agency staff. Thus, adequate automatic verification of declarations and lifestyle monitoring are yet to be implemented. The Head of the National Agency was appointed on January 15, 2020.

After the off-schedule parliamentary elections, the new draft law in the sphere of public procurement was passed on September 19, 2019. The new Law of Ukraine “On Public Procurement” will come into effect on April 19, 2020, and is harmonized with EU standards. However, the issue of effective procurement monitoring by the State Audit Service remains important. The results of procurement monitoring leave much to be desired as both sanctions and monitored tenders are quite few. 

The Parliament provided an opportunity for privatization of 500 state-owned enterprises through the electronic system of auctions ProZorro.Sale. In October 2019, the Parliament abolished the prohibition for privatization of a number of state-owned enterprises. 

In October 2019, the Code of Bankruptcy Procedures came into effect and the Cabinet of Ministers Directive on electronic auctions for sale of property of insolvent enterprises through the ProZorro.Sale system was passed. 

The practice of open budgets is noticeably growing. Among other things, there is a public budget portal for citizens, administered by the Ministry of Finance of Ukraine.

Last year, the Government approved the composition of supervisory boards in the following state-owned enterprises: Seaport Administration of Ukraine, Boryspil International Airport, Ukrzaliznytsia, Ukrhydroenergo. However, the process of creation of supervisory boards under utility companies in local communities did not accelerate. Among the biggest Ukrainian cities, only Chernivtsi, Ternopil and Mariupol city councils passed the respective regulations on the creation of supervisory boards. 

Recommendations which have not been implemented (6)

Ensuring the effective work of the beneficial owners register

A working group made up of representatives of public institutions and experts has been created, but the verification mechanism has not yet been launched. 

Increased oversight of political party funding

The legislation on regulation of political advertising and restriction of its volume has not yet been passed. Liability of parties for violation of the campaign laws has not increased, either. The Parliament has formalized the obligation of parties to file public e-reporting; yet, it is yet to be implemented.

In December 2019, the President signed the new Electoral Code. The document stipulates changes in the electoral system and deposits for the candidates and parties at elections of all levels. For instance, the deposits for local councils have been raised almost times forty (compared to 2015). 

Change in the formation of judicial governance bodies

The Parliament has supported the draft law on the activity of judicial governance agencies. This initiative was supposed to regulate problematic issues in the activity of the High Qualification Commission of Judges of Ukraine and the High Council of Justice. However, the law does not provide for a reboot of the HQCJ. And the Council itself will still be making a number of final decisions. The document also does not stipulate engagement of representatives of the public in the reboot of judicial governance agencies.

Restoring the credibility of the Specialized Anti-Corruption Prosecutor’s Office

After having been elected, the President and his team held a meeting with heads of the NABU and the SAPO, urging them to cooperate and work effectively. Afterwards, there was no public tension between the two institutions. However, restoring the credibility of SAPO and its leadership is only possible based on the results of the High Anti-Corruption Court and guilty verdicts for officials guilty of grand corruption.

Stripping the SBU and the National Police of the powers to investigate economic crimes

No significant steps were made towards this in 2019. The authorities expressed the intention to do this — for instance, in August 2019, the MIA announced the dissolution of the Economy Protection Department under the National Police. However, this is nothing but a symbolic step, since the relevant provisions of the Criminal Procedural Code remain in force. It is also necessary to strip the SBU of its uncharacteristic functions of a pretrial investigation agency and have the agency focus on counterintelligence and analysis. 

It should also be noted that there have been incomplete attempts to pass a draft law on creation of the Bureau of Financial Investigations. 

Punishing those guilty of attacks on anti-corruption activists

In 2019, there were attempts to reinforce the investigation, but it is slow in over 50 cases of attacks and pressure against activists and does not meet the society’s expectations. A vivid example of this is the investigation of the tragic death of Kateryna Handziuk, where the society is yet to get the answers it demands. 

At the beginning of 2019, Transparency International Ukraine provided 12 recommendations which could have improved Ukraine’s CPI score. As of the end of the year, only 6 were completely or partially implemented, and even that happened in the last quarter of 2019. 

Recommendations for 2020 to reduce the level of corruption

To reduce the level of corruption and help the public and the business community trust the authorities, the following changes need to be implemented.

1) Form an independent and professional judiciary.

Introduce a new procedure for appointment of the members of the High Qualification Commission of Judges and the High Council of Justice.

Ensure effective cleansing of corrupt judges from the system at every level. Engage the public and international experts in this process.

2) Ensure the independence and capacity of anti-corruption agencies.

Formalize the operational capacity of the SAPO and the institutional independence of the NABU and the SIB.

Carry out independent external audit of their activity with engagement of international partners.

Improve legislation concerning the institute of MP immunity, whistleblowers and management functions of the ARMA.

3) Strip the Security Service of Ukraine and the National Police of the powers to fight against economic crime.

Amend the Law “On the Security Service of Ukraine” removing the provisions enabling the service to pressure the business under the pretext of fighting economic crime. Strip other law enforcement agencies of these powers as well. Create the Bureau of Financial Investigations instead.

4) Improve the effectiveness of political corruption prevention systems.

Improve the regulations and principles of private funding of political parties.

Ensure effective public funding of political parties.

Optimize procedures connected with financial reporting filed by political parties, improve the effectiveness of public oversight and legal responsibility for observance of party funding legislation.

5) Ensure an open accountable process of public property privatization.

Launch a transparent process of preparation and sales of public property. Ensure that the package of relevant legislative changes for acceleration of privatization is passed.

Ensure accountability of enterprises remaining in public property.

Global trends 2019

What is important about CPI is that its unified approach makes it possible to compare the data from different countries. While this approach disregards the peculiarities of each country, it takes into account the global context. For instance, the previous Index demonstrated that low levels of democracy and freedom tend to go hand in hand with high levels of corruption.

Overall, CPI 2019 demonstrates a global negative trend. The index shows a staggering lack of political integrity, which leads to a high level of corruption, including the negative impact of big money on politics. More than two-thirds of countries score below 50 on the CPI, with an average score of just 43. The situation has been similar in the recent years. 

Since 2012, only 22 countries significantly improved their CPI scores (e.g., Greece, Guyana, Estonia) and 21 countries significantly decreased their scores (e.g., Canada, Australia, Nicaragua). The remaining countries made little or no progress in the fight against corruption in recent years.

Notably, corruption is more pervasive in countries where big money can flow freely into electoral campaigns and where governments listen only to the voices of wealthy or well-connected individuals. Curbing corruption is only possible when the influence of big money on politics is restricted and there is broad consultation in policy decisions.

Countries that perform well on the CPI also have stronger enforcement of campaign finance regulations and broader consultation in policy decisions. Conversely, countries with lower CPI scores experience an uneven balance of power, where a few wealthy individuals control government purse strings and decision-making.

Transparency International has made global universal recommendations to curb corruption effectively. Apart from the above-mentioned oversight of party funding, separation of power and reinforcing checks and balances, it is necessary to:

  • Manage conflicts of interest and address “revolving doors”;
  • Regulate lobbying activities by promoting open and meaningful access to decision-making;
  • Empower citizens and protect activists, whistleblowers and journalists.

More than two-thirds of countries score below 50 on the CPI, with an average score of just 43. The situation has been similar in the recent years. 

CPI research: how does it work?

Corruption Perceptions Index (CPI) is an index compiled annually since 1995 by the global organization Transparency International. The organization itself does not conduct any surveys, instead relying upon 13 surveys and assessments of reputable international organizations and think tanks.

The key figures of the Index are the scores, not the ranks. The minimum score (0 points) means that corruption basically replaces the government, while the maximum score (100 points) means that there is almost no perceived corruption. The Index only assesses corruption in the public sector. 

CPI sources use survey data from investors, business people, market analysts, etc., and the CPI reflects the private sector’s opinions and perceptions of corruption in the public sector.

It’s important to remember that CPI measures perception of corruption, not its actual level. The fact that country X has a higher score than country Y does not necessarily mean that country X is less corrupt: it means that the former is perceived as less corrupt.

In 2017, the CPI received the European Commission’s stamp of approval for its sound statistical approach.

The CPI measures the perception of public corruption, namely the following aspects: bribery, diversion of public funds, use of public office for private gain, nepotism in the civil service, state capture, the government’s ability to enforce integrity mechanisms, the effective prosecution of corrupt officials, red tape and excessive bureaucratic burden, the existence of adequate laws on financial disclosure, conflict of interest prevention and access to information, and legal protection for whistleblowers, journalists and investigators.

Why do we still need the CPI?

– The CPI covers more countries than any of the individual sources alone;

– The CPI compensates for eventual errors among sources by taking the average of at least 3 different sources and as many as 13;

– The CPI’s scale (0-100) introduces more precision in comparison to other sources that may have scales of 1-5 or 1-7 (and where many countries are equally ranked);

– The CPI reconciles different view points on the issue of public sector corruption and is more neutral when handling different political regimes.

For reference

Transparency International is an anti-corruption organization founded in 1993 in Berlin by former World Bank director Peter Eigen. Currently, the chair of the Board is Delia Ferreira. Transparency International operates in more than 100 countries worldwide. The organization is best known for its Corruption Perceptions Index and Global Corruption Barometer. According to Global Go To Think Index Tank 2017, Transparency International ranked 51st out of 173 global think tanks and was the leader among 65 think tanks working on issues of open and good governance. 

Transparency International Ukraine is an accredited chapter of the global movement Transparency International with a comprehensive approach to development and implementation of changes for reduction of the corruption levels. TI Ukraine has administered and transferred to the government such electronic systems as ProZorro, ProZorro.Sale, eHealth, and E-Data. Our other ongoing projects include the City Transparency Ranking and building of the DOZORRO community for control over public procurement.

For media inquiries: Olesia Koval, koval@ti-ukraine.org, 093-808-82-78.

CPI sources use survey data from investors, business people, market analysts, etc., and the CPI reflects the private sector’s opinions and perceptions of corruption in the public sector.

Data and methodology