For peace and pros­per­ity, stop­ping cor­rup­tion is key

Kyiv Post - - Opinion -

A call to ac­tion on sus­tain­able de­vel­op­ment, se­cu­rity and peace was the theme for this year’s bian­nual In­ter­na­tional Anti-Cor­rup­tion Con­fer­ence, which took place on Oct. 22–24 in Copen­hagen, Den­mark.

This global fo­rum brings to­gether law­mak­ers, civil so­ci­ety ac­tivists and busi­ness ex­ec­u­tives in an ef­fort to pro­mote co­op­er­a­tion and tackle the global chal­lenges posed by cor­rup­tion.

This year, the con­fer­ence fo­cused on the threats that cor­rup­tion, il­licit fi­nan­cial flows and the trans­parency of busi­ness pose to demo­cratic in­sti­tu­tions and na­tional se­cu­rity.

And Den­mark wasn’t cho­sen ac­ci­den­tally as the host coun­try. The coun­try proudly holds sec­ond place in Trans­parency In­ter­na­tional’s

most re­cent Cor­rup­tion In­dex, last pub­lished in 2017, and is also a cham­pion for demo­cratic val­ues and anti-cor­rup­tion ini­tia­tives.

It was ironic, there­fore, that the con­fer­ence was over­shad­owed at times by a re­cent cor­rup­tion scan­dal in­volv­ing the big­gest com­mer­cial bank in Den­mark. Danske Bank stands ac­cused of laun­der­ing 200 bil­lion eu­ros of il­licit Rus­sian money.

This topic be­came one of the top nar­ra­tives of the con­fer­ence: Dan­ish Prime Min­is­ter Lars Ras­mussen com­mented that the rev­e­la­tion had caused out­rage through­out Dan­ish so­ci­ety. Peo­ple felt shocked and of­fended by the scan­dal as “fraud and money laun­der­ing un­der­mine one of the most im­por­tant pil­lars in our so­ci­ety: our trust in in­sti­tu­tions, com­pa­nies and in each other,” he said.

The Danske Bank scan­dal has once again proven that no coun­try is im­mune to cor­rup­tion.

Even the most de­vel­oped na­tions have vul­ner­a­bil­i­ties that can be ex­ploited by cor­rupt of­fi­cials while or­ga­nized crime and toxic money can eas­ily find its way into Western fi­nan­cial sys­tems.

Mean­while, crooked pub­lic of­fi­cials and their fam­i­lies can still all too eas­ily find safe havens and en­joy lux­u­ri­ous life­styles in Euro­pean coun­tries, with the aid of golden visa schemes and the pur­chase of cit­i­zen­ship.

Solv­ing such is­sues is an im­por­tant task for Western coun­tries, which should act promptly to stop such an in­vis­i­ble in­va­sion be­fore it com­pro­mises demo­cratic in­sti­tu­tions. And it’s not only a task for bankers and con­sul­tants: govern­ments and their re­spec­tive so­ci­eties should also pay closer at­ten­tion to whom they let in and whose money they al­low to be parked in their banks.

Due dili­gence when it comes to clients is no longer just bor­ing bu­reau­cracy.

In­stead, it has be­come a cru­cial safe­guard for the econ­omy; even an im­por­tant mat­ter for na­tional se­cu­rity and should be im­ple­mented by prop­erly iden­ti­fy­ing and ver­i­fy­ing the ben­e­fi­cial own­er­ship of com­pa­nies. Proper vet­ting should elim­i­nate the se­cret own­er­ship of prop­erty, give con­trol over the ori­gin of funds and the wealth of “in­vestors.”

The Anti-Cor­rup­tion Ac­tion Cen­ter un­der­stands the dif­fi­cul­ties that fi­nan­cial in­sti­tu­tions face while iden­ti­fy­ing for­eign pub­lic of­fi­cials among their clients who could be un­will­ing to act with in­tegrity.

Ukrainian civil so­ci­ety, as it strives to tackle cor­rup­tion through in­creased ac­count­abil­ity, aims to ease the process of the in­ter­na­tional iden­ti­fi­ca­tion of Ukrainian pub­lic of­fi­cials and their rel­a­tives.

Dur­ing the Copen­hagen con­fer­ence, our or­ga­ni­za­tion pre­sented the Regis­ter of Do­mes­tic Po­lit­i­cally Ex­posed Per­sons of Ukraine, which was de­vel­oped by our team in 2016. This database we have de­vel­oped is meant to fa­cil­i­tate the due dili­gence of for­eign banks and pre­vent the laun­der­ing of money linked to cor­rup­tion in Ukraine, through bet­ter iden­ti­fi­ca­tion of such Ukrainian cit­i­zens and the source of their wealth.

The regis­ter so far in­cludes in­for­ma­tion on more than 12,000 Ukrainian pub­lic of­fi­cials and 18,000 close as­so­ciates and fam­ily mem­bers, as well as a fur­ther 13,000 con­nected le­gal en­ti­ties and in­for­ma­tion from as­set dec­la­ra­tions.

We be­lieve that our ex­pe­ri­ence should be ex­trap­o­lated to other coun­tries by the cre­ation of open, re­gional data­bases on such peo­ple.

Not only Ukraine’s civil so­ci­ety, but also pub­lic of­fi­cials from the Min­istry of Jus­tice have had a say about Ukraine’s progress in anti-money laun­der­ing at the con­fer­ence in Copen­hagen. Both Pavlo Pe­trenko, Ukrainian Min­is­ter of Jus­tice and his Deputy Olena Suk­manova, boasted about Ukrainian achieve­ments on the open­ing of a regis­ter on ben­e­fi­cial own­er­ship.

Ac­cord­ing to of­fi­cials, Ukraine is way ahead of other coun­tries in iden­ti­fi­ca­tion of ben­e­fi­cial own­ers of com­pa­nies, while proper ver­i­fi­ca­tion mech­a­nisms have been put in place to iden­tify the real per­sons be­hind the com­pa­nies. But the re­al­ity is less op­ti­mistic. Ukrainian ef­forts in this sphere are long over­due and haven’t been fully im­ple­mented.

Ukraine made com­mit­ments to the Euro­pean Union to set up ef­fec­tive mech­a­nisms of com­pany own­er­ship ver­i­fi­ca­tion back in 2015, while ap­prov­ing the launch of Macro Fi­nan­cial As­sis­tance.

Re­cently, the con­di­tion­al­ity was pro­longed un­til Fe­bru­ary 2019 due to a lack of re­sults.

Even the new tech­ni­cal ver­sion of a Ukrainian Busi­ness Regis­ter, promised years ago, is still not func­tion­ing, mean­ing that there still no ef­fec­tive gov­ern­men­tal con­trol over in­for­ma­tion on the ben­e­fi­cial own­ers of com­pa­nies — so Ukraine can’t yet hope to lead oth­ers by prac­ti­cal ex­am­ple.

The con­fer­ence brought to­gether lots of ex­pe­ri­ence and ex­per­tise and again re­minded that all the coun­tries have their own chal­lenges — al­though dif­fer­ent — when it comes to cor­rup­tion. But the con­fer­ence also high­lighted that sus­tain­able de­vel­op­ment and se­cu­rity are achiev­able only by com­mon ac­tions and when coun­tries work to­gether.

The Ukrainian ex­am­ple proves this: its most suc­cess­ful re­forms, im­ple­mented af­ter 2014, have been suc­cess­ful thanks to syn­er­getic co­op­er­a­tion of re­form-minded ac­tors in govern­ment, civil so­ci­ety, and in­ter­na­tional part­ners.

Be­sides sup­port­ing the demo­cratic trans­for­ma­tion of de­vel­op­ing coun­tries on lo­ca­tion, Western coun­tries should stop en­abling klep­toc­ra­cies in their own coun­tries too.

They need to learn how to ef­fec­tively dis­tin­guish dirty money from clean money while, as a mat­ter of prin­ci­ple, re­ject the for­mer.

Ma­tur­ing democ­ra­cies should learn from each other’s ex­pe­ri­ence, and Ukrainian civil so­ci­ety is ready to share our lessons.

The most cru­cial el­e­ment of any anti-cor­rup­tion ini­tia­tive is govern­ment lead­er­ship and the po­lit­i­cal will to start the trans­for­ma­tion.

But it should also be noted that tack­ling cor­rup­tion is also im­pos­si­ble with­out strong civil so­ci­ety and free a press — govern­ments should take mea­sures to pro­tect ac­tivists and in­ves­tiga­tive jour­nal­ists from per­se­cu­tion and vi­o­lent at­tacks.

Tetiana Shevchuk is a lawyer with the Anti-Cor­rup­tion Ac­tion Cen­ter in Kyiv.

Par­tic­i­pants take part on Oct. 22, 2018, in the open­ing de­bate at the In­ter­na­tional Anti-Cor­rup­tion Con­fer­ence ti­tled "To­gether for de­vel­op­ment, peace and se­cu­rity: now is the time to act" in Copen­hagen, Den­mark. (AFP)

TETIANA SHEVCHUK

Daria Kale­niuk, ex­ec­u­tive di­rec­tor of the Anti-Cor­rup­tion Ac­tion Cen­ter, speaks at a rally against dis­cred­ited Chief Anti-Cor­rup­tion Pros­e­cu­tor Nazar Kholod­nyt­sky on July 17. The back­pack she is wear­ing sym­bol­izes the back­pack sup­ply scan­dal in­volv­ing In­te­rior Min­is­ter Arsen Avakov's son Olek­sandr, and Avakov's for­mer deputy, Ser­hiy Che­b­o­tar. (Oleg Pe­tra­siuk)

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