Business under pressure: who and how can protect Ukrainian entrepreneurs from unjustified persecution
11 September 19:04
ANALYSIS FROM 
The Ukrainian government has long declared its desire to stop the unreasonable pressure of regulatory authorities on business. We can recall several initiatives such as the “Stop Stop Mask Show” alone. Now we can talk about another such attempt. How is it planned to stop the pressure on business – found out
Those who compared the latest reshuffle of the Ukrainian government to “moving beds” may be right in many ways, but certainly not in all. Nevertheless, new people in new positions often show additional activity, generate new ideas and initiatives. This is also true in relations with business.
For example, the new Prime Minister Yulia Svyrydenko immediately “pleased” the business with a moratorium on inspections by regulatory authorities. However, as it turned out a little later, only low-risk businesses could count on limiting the interest of the tax and customs authorities. The Ministry of Economy announced the expansion of the capabilities of a digital feedback tool between business and the state called Pulse. The Office of the Prosecutor General, headed by its new head Ruslan Kravchenko, launched a portal for appeals, verification and response to cases of pressure on business called StopTisk in early September. Simply put, business representatives now have a channel for complaining about law enforcement misconduct.
According to Oksana Yesypenko, attorney at law and senior associate at VB Partners, this innovation can already be considered a recognition of the problem.
The creation of the StopPressure portal by the Prosecutor General’s Office was a symbolic recognition that the problem has become systemic. “The very need for such a tool indicates the depth of the crisis of trust between business and law enforcement agencies,” the expert believes.
According to her, the authorities have repeatedly tried to solve problems related to illegal pressure on business in various ways, but none of the attempts have been successful. So the pressure continues. And those who are supposed to protect business interests confirm this.
Areas of greatest risk
Publications
According to the statistics of business appeals to the Business Ombudsman Council, the top 5 categories include the following: 58% of complaints relate to tax issues, 13% to law enforcement actions, 7% to state regulators, 5% to customs issues, and 4% to local governments. Authorities that businesses complain about most often: The State Tax Service and regional tax authorities, the State Customs Service, law enforcement agencies – the Prosecutor General’s Office, the National Police, the Bureau of Economic Security of Ukraine, and the State Bureau of Investigation.
Oksana Esypenko, attorney at law and senior associate at VB Partners, based on her own experience in defending the interests of business representatives, states that today, unfortunately, almost every entrepreneur has to deal with law enforcement agencies in one form or another.
The CPC empowers all 5 currently operating pre-trial investigation bodies (the National Police, the Security Service of Ukraine, the Bureau of Economic Security of Ukraine, the State Bureau of Investigation and the NABU – ed.) And they are actively exercising this right. In particular, the BES currently generates the largest volume of work with cases of tax evasion. At the same time, entrepreneurs continue to complain that they are being inspected simultaneously and for the same reason by different units of the same or different pre-trial investigation bodies,” the lawyer notes.
The Federation of Employers of Ukraine is one of the organizations that defends the interests of business representatives. Daria Svystula, Head of the Federation’s Business and Property Rights Protection Committee , details the types of requests for assistance most often made by business representatives who have had experience with law enforcement.
In their appeals to the Federation of Employers of Ukraine, business representatives mostly focus on the opening of criminal proceedings and searches without sufficient grounds; excessive seizures of products and assets, which leads to blocking of economic activity; failure to return the arrested for a long time, even after the arrests are lifted; violation of the rules of jurisdiction in cases of economic crimes; inaction of law enforcement and prosecutors in terms of non-enforcement of court decisions or delay of procedural actions, – emphasizes
Legislative safeguards
It is noteworthy that when announcing the launch of the StopTsyk portal and inviting business representatives to complain about law enforcement misconduct, the Prosecutor General’s Office mentioned the same violations that the Federation of Employers emphasizes. In other words, the “risk zones” are well known to those who control the activities of law enforcement agencies. These include searches without a court order, unreasonable seizure of documents and seizure of property or accounts, failure to comply with court decisions on the return of property, delaying pre-trial investigations, obstructing the operation of an enterprise or access to property, excessive summonses for interrogations, restrictions on the right to defense, and disclosure of investigation data. And not only that. But to what extent these “problem areas” can be localized by complaints and appeals is the question.
The Federation of Employers of Ukraine, and not only there, believes that the most effective way is to amend the Criminal Procedure Code of Ukraine itself, which regulates every action of the parties in criminal proceedings. The Federation reminds that the relevant changes are set out in the draft law No. 12439 “On Amendments to the Criminal Procedure Code of Ukraine on Improving Guarantees of Protection of Business Entities in Criminal Proceedings”. This draft law emerged as a response to real business problems that have grown into a systemic threat to the country’s economy and became the basis for a meeting between business and President of Ukraine Volodymyr Zelenskyy. As a result, the Council for Entrepreneurship Support was established, which, together with the Federation of Employers of Ukraine, initiated changes and managed to consolidate the voice of business.
What procedural guarantees does the adoption of such a law promise to business? Daria Svystula, Head of the Business and Property Rights Protection Committee of the Federation of Employers of Ukraine, explains.
“For business, this means, for example, changing the practice of indefinite arrests of funds (Part 3 of Article 170 of the CPC), as a clear term of arrest is introduced – up to 4 months. Further extension is possible only upon a new, reasoned court decision. In other words, businesses will have predictability and the practice of “eternal arrests” will be put to an end. Another pain for businesses was when seized items or documents did not have the status of evidence for years, which blocked their return and use and often meant the suspension of business activities (Article 98 of the CPC). According to the new amendments, the investigator is obliged to make a timely decision to recognize things as evidence. Another problem that needs to be solved is that applications for temporary access to things could be considered for a long time, without any time limit (Article 163(4) and (8) of the CPC). The amendments set the maximum time limit for consideration of motions at 15 days. The delay in returning property after the seizure was canceled also created major problems for businesses (Article 174(5) and Article 175 of the CPC). The new law stipulates that if the seizure of property is canceled, it must be returned to the owner no later than 30 days later,” emphasizes Daria Svystula.
Also, according to the expert, the new law, if adopted, will reduce the possibility of abusing “urgent” searches outside the specified grounds for such searches (Articles 233, 234, 172, 309 of the CPC). Legislative innovations stipulate that everything seized during a search must be recorded in the protocol (Article 104(2), Article 105(2) of the CPC). If not, the evidence automatically becomes inadmissible in court. Also, while previously during interrogation (Article 96 of the CPC) only the investigator or prosecutor could ask questions to the victim, with the adoption of the law, business will no longer be “silent” and this will make the process more transparent and fair. Daria Svystula continues to analyze legislative changes.
Often, criminal proceedings were opened without sufficient grounds, which could be used as a tool of pressure. According to the innovations, only the head of the prosecutor’s office can now enter data into the URPTI on the opening of criminal proceedings under Article 191 of the Criminal Code of Ukraine and only if there is sufficient evidence (Article 214 of the CPC). Another pain for business: cases could be investigated by the “wrong” authority, which created room for manipulation and abuse. According to the new law, a party to the proceedings has the right to request a change of jurisdiction, and the prosecutor is obliged to promptly consider such a request (Article 216 of the CPC). It also restricts the possibility of filing repeated motions from law enforcement officers who have been exhausting businesses with such procedural actions. “The new law stipulates (part 8 of Article 132 of the CPC) that repeated petitions are possible only if there are new circumstances,” said Daria Svystula, Chairman of the Business and Property Rights Protection Committee of the Federation of Employers of Ukraine.
As a reminder, the draft law that improves guarantees of protection of business entities during criminal proceedings has already been supported by the Parliamentary Committee on Law Enforcement. The next step is to vote in the second reading.
But this law is not the only one that needs to be improved in the relations between controlling authorities and business. According to Oksana Esypenko, attorney at law and senior associate at VB Partners, the priority areas also include establishing an effective system of control and personal responsibility for pressure on business. Blocking of business activities, reputational losses, and restrictions on rights that entrepreneurs undoubtedly suffer as a result of ongoing criminal proceedings remain unpunished.
In short, the StopTsyk portal alone will not be enough to stop the pressure on business from numerous controlling authorities.
Author — Sergiy Vasilevich
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