For peace and prosperity, stopping corruption is key
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)
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)