Ukraine's Corruption Fight Faces Suspicions of Political Plot

A string of cases by Ukraine's anti-corruption bodies against widely respected officials in the administration of President Volodymyr Zelensky's predecessor has prompted accusations of a political plot and alarmed foreign donors.

Endemic corruption in Ukraine has long been used as an argument by those who oppose the massive Western support for its forces battling Russia's invasion. Concerns over any mishandling of the fight against graft under Zelensky could raise questions not only over current support, but also over the prospect for reconstruction funds when the fighting ends.

The cases that have most jolted outside observers are those of three technocratic reformers in the administration of former President Petro Poroshenko who were highly regarded internationally as being competent—and none of whom has been accused of abusing official power for personal gain.

The accused three are former Infrastructure Minister Volodymyr Omelyan, his predecessor Andriy Pivovarsky, and former head of state gas company Naftogaz Andriy Kobolyev.

"Targeting reformers who came into government out of a sense of civic duty and who, by all accounts, did their jobs well, will threaten Ukraine's ability to attract talented executives to enter public service, and it could dampen the willingness of outside corporate investors to put money into reconstruction projects," Josh Rudolph, head of the Malign Finance & Corruption team at the German Marshall Fund's Alliance for Securing Democracy, told Newsweek.

"I've spoken with a number of investment executives, with current and former senior officials in Washington, Brussels, London, Berlin, with figures from international financial institutions who follow Ukrainian state-owned companies as closely as anyone in the Western world," Rudolph added, "and it's spooking them that reputable reformers who do not appear to have engaged in corruption are being brought up on charges like these."

Zelensky's office did not respond to Newsweek's requests for comment.

Ukraine's anti-corruption institutions have made progress since the ouster of former President Viktor Yanukovich following the 2014 Euromaidan revolution, with the setting up of a National Anti-Corruption Bureau of Ukraine (NABU) and a Specialized Anti-Corruption Prosecutor's Office (SAPO) under Poroshenko.

But progress has been uneven, including under Zelensky, who defeated Poroshenko in a 2019 election.

"There are still corrupt patronage networks throughout Ukraine, at all levels, and those would seem like more appropriate targets for investigation and prosecutions," said Rudolph, referring to the cases against the three reformers.

Others echo his sentiments.

"On the merits, these cases make no sense whatsoever," Bohdan Vitvitsky, a former U.S. federal prosecutor who served as a special advisor to Ukraine's Prosecutor General from 2016-2017, told Newsweek. "I don't know the extent to which the current prosecutors are listening to or trying to anticipate what Zelensky's administration might want, but there are definitely signs of a vendetta against Poroshenko and Poroshenko's people. That's clear."

Suspicions have been aroused within Ukraine as well. Newsweek conducted multiple interviews with Ukrainian anti-corruption activists, investigative journalists, members of parliament, business figures, and current and former officials.

When asked which of Ukraine's power players most deserved to receive increased scrutiny from anti-corruption organs, they came up with a very different list of names.

Although charges against the trio of reformers have been brought by Ukraine's anti-corruption bodies, they are not charges of corruption.

Omelyan was accused of causing harm to the state budget by implementing a policy, approved by the then-cabinet of ministers in 2017, that cut port fees by 20 percent as part of a wider push towards deregulation. He was ultimately acquitted by three separate courts and is now serving in the Ukrainian Armed Forces.

Omelyan had no problem with the anti-corruption body investigating him, he told Newsweek.

"But to find nothing, and then to bring an accusation that the judges found too absurd to be believed? I was offended. In a country with so many corrupt schemes, the most suspicious government minister they could find was me?" he said.

Pivovarsky, his predecessor, was issued a note of suspicion in March regarding a similar alleged offense. He stands accused of implementing a 2015 policy that set aside half the fees at the port of Pivdenny to pay a private company for deepening the port.

He was accused even though the total $30 million collected remains frozen in a special account as the company, TransInvestService, used its own funds to complete the work.

"There isn't even the allegation that the decision about the port fees benefited me or anyone associated with me personally," Pivovarsky told Newsweek. "Investigators have simply started going through statutes to try to find a way to make an argument that, according to some narrow reading of the law, I committed a technical violation."

Kobolyev stands accused of accepting a bonus that, the indictment alleges, exceeded a regulation limiting extra compensation for the heads of state firms to approximately $1 million. The bonus was awarded following a 2018 arbitration settlement in which Naftogaz recovered $4.6 billion from Russian gas giant Gazprom. After the court victory, the Naftogaz supervisory board voted to give 1% of the sum to top executives as an incentive—with $22 million going to Kobolyev while his successor, Yuriy Vitrenko, took home close to $17 million. Kobolyev, who is currently wearing an ankle bracelet, faces up to 12 years in prison.

"Legally, officially, on paper, I am the most highly compensated head Naftogaz has ever had, by a wide margin," Kobolyev told Newsweek. "But in actual fact, I am the least wealthy, because I never took a single bribe."

He noted that former Prime Minister Volodymyr Groysman had said he did not like the political ramifications of the bonus decision, but had not challenged its legality.

Oleksiy Honcharenko, a deputy in Ukraine's parliament from Poroshenko's European Solidarity party, argued that Kobolyev's decision to accept such a large sum was not "smart" and likely marked "the end of his hopes for a political career," but he did not see a reason to suspect that it had been illegal.

"I'm not a jurist, but I did not see anything illegal in it," Honcharenko told Newsweek. "After the fact, we implemented a decision to limit such payments to civil servants and to top managers of state companies."

In an effort to defend the investigations and prosecutions of the three men, some pro-reform figures in Kyiv point out that technocrats can also engage in corruption.

"There are people who are sympathetic to them because they were known to be reformers," Olena Shcherban of AntAC, a Kyiv-based anti-corruption civil society organization, told Newsweek in relation to the three cases in question, "but it happens sometimes that good people who have done good things in the past do bad things in the present."

"It is necessary to conduct investigations no matter what the reputation of the figure in question might be, and no matter what kinds of influential friends they might have in Washington," she said.

The three reformers being prosecuted all agreed that investigations were necessary, but voiced frustration at the pace of the fight against an entrenched culture corruption.

"If the three of us really were the most suspicious figures in Ukraine, that would actually be great news," Pivovarsky said. "It would mean that Ukraine has become Singapore."

Singapore was ranked as the fifth-least corrupt country in the world in the 2022 Corruption Perceptions Index produced by Transparency International, receiving a score of 83 out of 100. Ukraine was placed in the lower third, with a score of just 33, placing it in the company of Algeria, the Philippines, and Zambia.

Despite agreeing that Omelyan, Pivovarsky, and Kobolyev were far from being Ukraine's most suspicious former civil servants, Shcherban said the anti-corruption agencies lacked the resources to catch the national figures most widely suspected of being corrupt.

"It is clear that the political powers-that-be do not wish to expand NABU's workforce, nor its capacity to conduct investigations unimpeded. Under these circumstances, it is extremely difficult for NABU and SAPO to fulfill their mission," she said.

NABU detectives, speaking on condition of anonymity, said they were doing their best to fulfill their missions and that nobody was above the law.

"Even if we are prevented by outside interference from catching the big fish, that is not a reason not to try to catch smaller fish," one such NABU detective told Newsweek.

This is not to say that Ukraine's anti-corruption bodies have had no successes.

Since July 2022, when former NABU detective Oleksandr Klymenko was appointed head prosecutor as SAPO, a raft of long-frozen cases has begun to make its way to the Anti-Corruption Court—including against the former heads of the central bank, the state property fund and the state fiscal service.

Anastasia Radina, a former AntAC activist who, in 2019, became a member of parliament from Zelensky's Servant of the People party, told Newsweek that cases stalled previously by different political players were now progressing.

"NABU does not do political cases, and SAPO does not do political cases," Radina said.

Omeylan disagrees. He says the cases against him started after he refused a senior official's request to stop criticizing Zelensky and the head of his office, with the prospect of a good job offer if he complied.

"A week later, my house was searched by the State Investigative Bureau 'by mistake.' They said that they had come to the wrong address, but I interpreted it as a warning that I ought to think over the proposal I had received the previous week," he explained. "A few days after that, I was invited to NABU's office, and I was informed of the charges against me."

The United States has given Ukraine more than $40 billion in security assistance since the Russian invasion and critics of the support provided by President Joe Biden's administration have frequently cited corruption in Ukraine as a reason for greater caution.

Reached for comment about the questions over the three corruption cases, a U.S. State Department spokesperson defended Kyiv's record, arguing that "corruption is a legacy of Ukraine's past"—and had been used by Russia to keep it under control.

The spokesperson added that U.S. officials "continue to support Ukraine's leading anti-corruption bodies as they continue to strengthen their capabilities to better identify, target, and prosecute high-level corruption," but clarified that "regarding cases being investigated by NABU, these are matters for Ukraine's justice system."

But for Kobolyev, the prosecutions of himself and the others looked suspiciously as though they could have been engineered by self-interested officials to target those who might be best placed in the eyes of Western donors to oversee reconstruction funds.

"These investigations and prosecutions are an attempt to make it look as if we are just as untrustworthy as those self-interested officials are," he said. "We are in court not because anyone genuinely suspects us of corruption, but because no one suspects us of corruption."