These three countries firmly started down the road of fighting corruption and transparently making reforms a few years after associating with the European Union but are still led by oligarchs. Now, substantial corruption is being concealed while lawsuits are stalled.

Rampant Corruption with Little Punishment in the World of Oligarchs: Ukraine, Moldova, Georgia

Marina CIOBANU, Viorica TATARU

Ukraine, Moldova, and Georgia are three post-Soviet countries facing similar problems because of one phenomenon: oligarchs. Although the nature of their influence in the three countries differs, their effects on society are similar: limited political pluralism, the seizure of state institutions, increased corruption at high levels, control of the judiciary, and blocked reforms. We have watched how these three countries

run by oligarchs fight corruption and punish those who commit abuses. Of the three, Georgia stands out due to the fact that it took early and radical measures to eradicate most corruption. Moldova and Ukraine declared their commitment to carrying out this fight and did modernize their legal infrastructures but lacked genuine political will, so the results expected by society and by external partners were not achieved.

Georgia outranks Moldova and Ukraine on the Corruption Perception Index. In 2016, Transparency International placed Georgia 44th among the 176 countries monitored with a score of 57 points. The index is calculated on a scale of 0 to 100 in which “0” means completely corrupt and “100” means a total lack of corruption. Moldova scored 30 points in 2016 and ranked 123rd, its worst score in the past five years. Ukraine, like Russia, ranked 131st.

Ukraine: The State has the Monopoly on Condemning the Corrupt

In Ukraine it is possible to start lawsuits against the most corrupt, but the problem is with the outcome which should boil down to two options: condemnation and confiscation of property. It does not happen, however, because, “The monopoly on sentencing people to prison is held by the state,” said Vitalii Shabunin, Director of the Anti-Corruption Action Center of Ukraine, an NGO that has been fighting for five years for state institutions to do their jobs and punish high-level corruption.

After the tragic events on the Maidan in 2013–2014, several institutions were created to fight corruption following recommendations from European partners, but their efficiency remains questionable.

Mr Shabunin explained how courts are used for political interests and as tools to block the work of the National Anticorruption Bureau of Ukraine (NABU), an independent institution created in April 2015 following the model of the National Anticorruption Directorate (NAD) in Romania. NABU, he says, tried to investigate the most high-profile cases of corruption and money laundering, but criminal investigations were limited and discouraged when, for example, judges refused to subpoena documents from companies or state institutions. Apparently, although NABU was created as part of the reforms undertaken by Ukraine in line with European standards, it is free to act only if it does not affect the interests of influential people.

Vitaliy Shabunin, Director of the NGO Anti-Corruption Action Center of Ukraine

On April 20, 2017, NABU officers detained former MP Nikolai Martynenko for irregularities in the use of the budget of the state company VostGok (a combined mining enterprise specializing in the extraction and processing of uranium ore). The former people’s representative had allegedly cost the state over EUR 14.4 million. Martynenko was later accused of embezzling EUR 6.4 million over four years from the accounts of the state enterprise Energoatom in complicity with three other officials by falsely increasing tenders and favoring a Czech company. The Czech company then transferred money to the accounts of an offshore company in Panama completely managed by MP Martynenko.

Mr Shabunin mentioned that it was one of the first cases in the history of Ukraine when an oligarch, minor but nonetheless with significant influence in politics, was under investigation for corruption.

Another incident confirming that NABU is a structure to be feared is that MP Alexandr Onishchenko fled the country in June 2016 when Ukraine’s Prosecutor General asked the Verkhovna Rada, the unicameral parliament of Ukraine, to deprive him of immunity so he could be arrested for illegal transactions in the natural gas sector.

Nikolai Martynenko. Source of photo:

In August 2017, Nikolai. Martynenko lost a case in a Swiss court regarding the transfer of information about the Swiss accounts of his company in Panama to Ukrainian law enforcement.

“Such people can fall under the purview of NABU. Why then cannot oligarchs on the front line undergo investigation? If an oligarch does not become a public official, he does not appear in criminal lawsuits. Everything is done by the people controlled by him. For example, the company of oligarch Rinat Akhmetov makes a profit because a state authority decided it should. Despite clearly having a role in this scheme, Akhmetov cannot be charged. In a case that involves the National Bank of Ukraine, the court indicted the bank’s governor but not the oligarch who owns the bank through which funds were withdrawn,”

Shabunin explained, noting that for justice to work the country needs to be “cleansed” of the people who were placed in strategic positions by oligarchs. In the same vein, the expert points out that the ultimate goal is not to punish oligarchs but rather to cut the “tentacles” they use to exert their influence in the state.

The methods oligarchs use to influence justice vary.  Sometimes judges are bribed, other times judgments are “bought,” while a third more successfully implemented strategy is promoting certain judges in the system from regional to higher courts.

Rinat Ahmetov

When it comes to serious conflicts (for example, when President Poroshenko wanted to prove to oligarch Ihor Kolomoyskyi that he was the boss), the judge simply acted on the direct orders of the  President in the lawsuit against a person from Kolomoyskyi’s circle. “It was political influence,” Mr Shabunin explained and also said that in order to have the entire judiciary available to one person, it is enough to control the key institution that decides on the careers of judges, i.e., the High Council of Justice (HJC).

Igor Kolomoiskii

The HCJ was created in 2016 as part of the reorganization of the former Superior Council of Justice. This collegial body was touted as one of the changes implemented under the judicial system reform trumpeted in 2014 by President Petro Poroshenko. The HCJ is precisely the authority responsible for establishing a system of professional and incorruptible judges and for defending their independence. Its duties include the appointment, dismissal, and examination of disciplinary procedures concerning judges and recently of prosecutors as well. The HCJ chooses the judges for the Supreme Court of Ukraine and sends their names to President Poroshenko for confirmation. The independence of the HCJ and, accordingly, the integrity of the judges in this body give rise to questions when we analyze its composition and the biography of HCJ Chairman Ihor Benedysiuk, as well as his ties with President Poroshenko.

Petro Poroshenko

Justice Benedysiuk’s position was defined when the constitutional rules on the detention and arrest of judges were effectively changed. President Poroshenko promised that any judge caught in the act of bribery would be detained and arrested without any special dispensation, but the HCJ then introduced the practice of requesting the prior agreement of the Council. In this way, an important part of the judicial reform was compromised and a significant tool for influencing judges and protecting those faithful to the government was established. This “reformed” body, led by a chairman promoted to senior positions in the system by President Poroshenko, stopped live broadcasts of the meetings of the disciplinary board which examines cases that involve judges, including those who had helped to suppress the Maidan protests in 2013–2014.

Many members of the HCJ are former lawyers for the President or are people who stood for membership in his party. Some members are suspected of corruption, e.g. Pavel Grechkovsky who was arrested in September 2016. He allegedly received the first payment of a EUR 424,000 bribe for influencing a court judgment. The court released him on bail of EUR 123,000 and has not pronounced judgment yet. Grechkovsky is still a member of the HCJ and as a member of the disciplinary board assesses the integrity of judges.

An obvious example that the country’s president has a colossal influence on anti-corruption institutions occurred in April 2016 when investigative journalist Anna Babinets found evidence in the Panama Papers leak that the head of state had not given up the Roshen factory, his chocolate empire, although he had promised to do so before being elected. The journalist proved that when bloody military actions were taking place in eastern Ukraine costing dozens of soldiers’ lives daily, the president was implementing a scheme to transfer his business to an offshore zone.

“In our country there is no structure that can investigate the president. When we published the story about Poroshenko’s offshore businesses, initially almost everyone claimed that there was nothing criminal about them. In the first five hours, the Prosecutor General’s Office said there were no violations, so an investigation was made without leaving the office, as I understand it,”

Anna Babinets, investigative journalist of OCCRP, Ukraine

“In our country there is no structure that can investigate the president. When we published the story about Poroshenko’s offshore businesses, initially almost everyone claimed that there was nothing criminal about them. In the first five hours, the Prosecutor General’s Office said there were no violations, so an investigation was made without leaving the office, as I understand it,” Ms Babinets said, stating that lesser political figures may be investigated after journalistic investigations are published but that those cases generally fail to proceed, and the corrupt are thus saved.

Yuriy Nikolov, Editor-in-Chief of the online publication Nashi Groshi, also says that in the past three years there have been high-profile arrests in Ukraine. He added, however, that no one stays behind bars. “There have been cases when officials were arrested during cabinet meetings. The country’s biggest firefighter was arrested during a government meeting right in front of the cameras. It happened two years ago, but two years later, he has not yet gone to prison,” Mr Nokolov said. The reform of the judicial system continues to be implemented with serious violations; the results will be very important for the future of Ukraine.

Yuriy Nikolov, Editor-in-Chief of Nashi Groshi

Moldova: “Awkward” Judges Are Crucified

Corruption in the Moldovan judiciary and the politicization of the Superior Council of the Magistracy (SCM), which is similar to the Superior Council of Justice in Ukraine, have been discussed in recent years in civil society and by judges who were thrown out of the system. The most recent indication that the integrity and professionalism of a judge are not criteria for acceptance in the system, especially in leadership positions, is the situation on October 20, 2017 when the General Assembly of Judges elected six judges with integrity issues to positions on the SCM. Two candidates for those positions who had criticized the system publicly were passed over.

“It seems that the ideal candidates for this SCM are blind, deaf, and dumb judges. Colleagues who are critical of the system have been regularly crucified. It is tragic that they try crucifying the judiciary as a whole. The fact that judges don’t abide by the oath they made when they were invested in office and don’t resist this institutionalized disaster is a catastrophe not only for the judiciary but also for all the citizens of this country from whose work we are paid,” Judge Gheorghe Balan told dozens of his colleagues on October 20, 2017, noting that he entered the contest to prove to partners from the European Union, among others, how corrupt the system is.

“Sometimes I get the impression that someone deliberately wants to induce fear among judges so they can manipulate us,”

Viorica Puica, Judge

Viorica Puică (Source of photo: Ziarul de Gardă)
In recent years, Judge Viorica Puica has repeatedly been a candidate for the Supreme Court, but although she often got the highest score, she was never appointed by the Superior Council of Magistracy.

In September 2016, 16 current and former judges in Moldova were detained under accusations of involvement in the laundering of USD 20 billion from Russia. Although the role of judges in this case was known back in 2014, detentions occurred two and a half years after the crime was committed. At present, no one has been charged and no one is behind bars. On the other hand, Judge Domnica Manole was thrown out of the system for having adopted a decision that was unhelpful to the ruling party.

Not a single judge who has been investigated, tried and convicted in the past eight years by the Moldovan judiciary is behind bars today. Although at least 40 cases involving judges were initiated

during this period, only one judge was sentenced to prison, but he managed to flee from the courtroom and has not been found by the police despite being on the wanted list for nearly three years.

During this time, European institutions injected EUR 28.2 million into the state budget for the reform of the judiciary, but fueled by internal corruption, public trust in justice continued to fall dramatically from 26% in 2012 to 8% in 2016.  According to the Public Opinion Barometer, this spring only 2% of respondents said they have “a great deal of trust” in the judicial system while 22% said they have “some trust,” and 73% said they “don’t quite trust” it or “don’t trust it at all.”

Although important figures such as former Prime Minister Vlad Filat and former MP Veaceslav Platon who have been labeled “the no. 1 embezzlers in the CIS,” have lately been investigated and accused, lawsuits against them can be categorized as political as they were initiated only when these people had conflicts with oligarch Vladimir Plahotniuc. While Filat and Platon are behind bars, controversial businessman and mayor of Orhei City Ilan Shor, an important participant in the “theft of the century,” is free even though his name appears in the Kroll Report as someone who was connected to the transactions that led to the disappearance of one billion dollars from Moldova. Kroll is the US auditing company investigating how through complex transactions three financial institutions that accounted for about one-third of the country’s bank assets issued loans totaling one billion dollars, i.e. 15% of the country’s GDP. This loan has not been reimbursed yet. Moreover, in October 2016, MPs and the former head of state enacted a package of seven laws placing the reimbursement of the billion on the shoulders of Moldovan citizens.

So far, the bank fraud has not been completely resolved, and the final beneficiaries of the theft are not behind bars.

“Moreover, to date the country’s leadership has done nothing to bring to justice the leaders of the state institutions that failed to prevent the crime, i.e., the former governor of the National Bank, the former head of the National Anticorruption Center, the Director of the Information and Security Service, and the Prosecutor General,”

claimed Ianina Spinei an expert from Transparency International Moldova. She argues that this flaw is one of the reasons why the country’s external partners blocked macro financing for Moldova.

Vlad Filat

Vladimir Plahotniuc

Ianina Spinei, expert from Transparency International Moldova

Vladislav Gribincea

The European Union has recently announced that Moldovan authorities had failed to meet the conditions required for the last financial transfer of about EUR 28 million under the judicial reform program. Vladislav Gribincea, Chairman of the Legal Resource Center of Moldova, explained that this money has actually been spent by Moldovan authorities and that the EU was only to reimburse it. “The millions won’t come, so the state budget will have a deficit of about EUR 30 million,” the expert noted.

The EU has discontinued budget support payments not just for the reform of the judiciary but also in other areas. So far it is not known when funding will be resumed. Meanwhile, arrears are growing. The National Integrity Agency, the structure that should monitor the assets and interests of officials, has also not worked for a year and three months. Thanks to the involvement of government authorities, their income and

property statements are no longer verified by any institution; all notifications on this subject are archived and stored for future integrity inspectors who exist only on paper. This is because the National Integrity Agency, which was reformed with European funding, is not functioning since the selection of its chair has been stalled.

What a billion dollars looks like (Source of photo: Ziarul de Gardă)
An artist created an installation to illustrate what a billion USD actually looks like. It weighs over 5 tons; the banknotes are the exact size of a $100 bill.

Georgia: Independence of the Judicial System Threatened by Political Interests

While in a stronger position than the other two countries in international rankings regarding the independence of the judiciary and perceptions of corruption, Georgia also has problems in these areas. Nana Biganishvili, Editor-in-Chief of the video project Monitor Studio, says that during Mikhail Saakashvili’s leadership, political lawsuits were much more common than they are now when the country is controlled from the shadows by oligarch Bidzina Ivanishvili. At that time, the investigative journalist says, statistics

were showing 0% acquittals. “The human rights situation has improved, but still there are problems. Until 2012, we used to make very serious investigations about violations of human rights including by the judiciary. Today it is different. We have high-profile detentions for corruption like the recent one at the Tbilisi mayor’s office,” said Ms Biganishvili who does not deny that the case at the mayor’s office might involve political interests.

“The human rights situation has improved, but still there are problems. Until 2012, we used to make very serious investigations about violations of human rights including by the judiciary. Today it is different. We have high-profile detentions for corruption like the recent one at the Tbilisi mayor’s office,” .

Nana Biganishvili, Editor-in-Chief of Monitor Studio, Tbilisi

While complaining of poverty, low wages, and insufficient pensions and accusing authorities of acting in their own interests instead of solving the country’s problems, most Georgians are proud that in a relatively short time corruption disappeared from state institutions and that any attempt to bribe a policeman, an official, or a lawyer is punished so harshly that everyone prefers paying big fines to offering money in exchange for solving problems.

At the same time, Giorgi Kanashvili, Director of the Caucasian House Center for Cultural Relations, says that high-level corruption is still occurring, and it might encourage a return to the old system. “The Prosecutor’s Office, I think, is quite free in its actions as long as it does not interfere with political interests. Both the Prosecutor’s Office and courts are in principle free,” he believes.

Giorgi Kanashvili

Police stations in Tbilisi are built of glass

He added that one important aspect needs to be mentioned: With the coming of Bidzina Ivanishvili’s leadership, the “faces” of the judiciary started changing. “In the first years after the fall of Saakashvili’s regime, whatever the Prosecutor’s Office initiated was blocked by the courts because there were still judges appointed by the former government. The situation has gradually changed, i.e. more and more people loyal to the current leadership have been appointed to various positions. Slowly, the system has been ‘cleared’ of key people though we have to admit that the Georgian Dream party has not eliminated all of them. People still work in many ministries who were appointed by or were loyal to the National Party, i.e. to Saakashvili,” he pointed out.

In her turn, Natia Koberidze, journalist and Representative of the National Committee of the International Press Institute in Georgia who has been doing her PhD studies in Estonia for the past two years focusing on the reforms implemented by the government, claims that the attempt to change tradition has failed: Judges and prosecutors continue to be used for political interests and for selective justice. She mentioned in this regard the football player and former Energy Minister Kakha Kaladze who became the Mayor of Tbilisi this October as a candidate of the Georgian Dream party.

“There are allegations that Kakha Kaladze is a very corrupt person. He is friendly with the criminal world. He has been repeatedly seen and photographed and evidence has been presented that he has a special relationship with criminal gangs in different countries. A number of journalistic investigations showed that he exceeded his duties as Energy Minister and began negotiations with Gazprom. He insisted that Georgia must sign a contract with Gazprom in spite of the global trend of exiting the Russian market. Georgia stopped consuming Russian gas back in 2008 because it is nothing but a political weapon against neighboring countries such as Georgia with weak and vulnerable gas resources. However, Mr Kaladze did everything possible to bring us back into the Russian market and signed a contract under completely non-transparent conditions despite massive protests against it. Subsequently, the Prime Minister declared that the country had no need to sign this contract.

Kakha Kaladze

Can you imagine what role Kaladze would have played if the Prime Minister had not been able to influence a minister? We don’t know yet what consequences will follow,” Ms Koberidze explained mentioning that no investigation has been initiated in this case on the decision of Ivanishvili who is allegedly a Gazprom shareholder. In the context of selective justice, corruption, and political influence in the judicial system, quite a serious problem noted by journalists in Georgia is access to information of public interest. Journalist Koberidze points out that this access has always been problematic especially in matters involving data held by the Ministry of Internal Affairs and the Ministry of Defense

“There are many cases when journalists go to court and win lawsuits against state structures that have no right to refuse access to information of public interest, especially within the deadline stipulated by law. The Ministry of Justice headed by Minister Thea Tsulukiani very often ignores journalists’ requests. Recently, the court declared her an offender because she failed to provide information,” the journalist noted.

Limiting journalists’ access to information has been a problem in Moldova too, especially in recent years when by invoking the protection of personal data authorities try to hide convictions in political cases or acquittals of people loyal to the system.

“Recently, we have seen a clear trend in abusive interpretations by public authorities that use the Law on Personal Data Protection as a cover to refuse providing information of public interest. The law contains subjective and very vague stipulations that leave room for abuse,” said Nadejda Hriptievschi, Program Director at the Legal Resource Center of Moldova, after investigative journalists joined a protest in front of the SCM at the beginning of October asking the Council not to adopt a regulation that limited access to information.

Protest of the Superior Council of Magistracy (Source of photo: Ziarul de Gardă)
Although there is a regulation according to which court judgments are to be anonymous only in certain cases, authorities are now preparing a draft law stipulating that it will no longer be possible to search for court judgments online by the names of litigants.

We can conclude by saying with certainty that Georgia has undertaken a series of reforms of its judicial system, but much more effort is needed to reduce the influence of politics. In Moldova, the most problematic of the issues identified concern both the appointment and promotion of judges and the use of closed hearings in high-profile cases. Ukraine is in the process of judicial reform, but this sector is still perceived as one of the most corrupt.