The decision of the Constitutional Court of Ukraine to deprive the National Bureau of the authority to invalidate illegal agreements in court protects the organizers of corruption schemes and actually legitimizes the embezzlement of funds of state enterprises during the procurement of goods, works and services at inflated prices. The Constitutional Court ruled on June 5, 2019, based on the lawsuit of the “Zaporozhye Ferroalloy Plant”.
The NABU authority to file claims for invalidation of agreements, envisaged by the Law from the beginning of its foundation and it has become an effective tool for the liquidation of corruption schemes at state enterprises. During four years of the NABUs work, the courts satisfied 35 claims of the National Bureau, canceling 97 illegal agreements. The relevant decisions came into force and became the basis for the return of more than 6 billion UAH to the state.
The parties to these agreements were the OJSC “Ukrnafta”, the LLC “Kotlas”, the OJSC “Azot”, the OJSC “Cherkassyoblenergo”, the OJSC “Zaporizhzhiaoblenergo”, the JSC “Zaporozhye Ferroalloy Plant”, the PJSC “Electrometallurgical Works “Dnіprospetsstal”, the LLC “Zaporizhye Titanium and Magnesium Combine”, the PrJSC “Energomerezha Holding Company”, the JSC “Kharkivoblenergo”, the Municipal Enterprise “KharkivVodokanal”, the LLC “Transferbutik”, the PJSC “Ukrzaliznytsia”, the Branch of the Center for the Provision of Production of the PJSC “Ukrzaliznytsia”, the LLC “Wog Aero Jet” (changed its name to “Volen Trade”), the State Enterprise “Management of Industrial Enterprises of the State Administration of Railway Transport of Ukraine”, the PJSC “Korosten Plant of Ferro-Concrete Sleepers”, the SE “Ukrainian Sea Ports Authority”, the LLC “Tekhmorhidrostroy“, the SE “Coal Company “Krasnolymanska”, the LLC “Dantrade Ltd”, the LLC “Torhivelnyi Dim-Resurs”.
In all these cases, the NABU proved in court that the relevant agreements signed by the state-owned companies caused damage or shortfall in income. Due to the ruling of the Constitutional Court of Ukraine, the most of these enslaving agreements can be restored in court.
In addition, the court decisions on the illegality of agreements and their invalidation are the elements of the evidence base on criminal proceedings as of the facts of corruption at state enterprises, investigated by the NABU Detectives. Due to the decision of the Constitutional Court of Ukraine, this evidence may be declared inadmissible in the criminal process.
Therefore, in its consequences, the decision of the Constitutional Court of Ukraine can be fatal for the entire anti-corruption reform of the country. It significantly strengthens the position of the organizers of corruption schemes and in fact deprives state enterprises of the opportunity to return stolen resources.
It should be reminded that this is the second time the Constitutional Court of Ukraine makes a decision that strikes at anti-corruption reform. Earlier, the Court declared to be unconstitutional the article of the Criminal Code of Ukraine on illegal enrichment. Therefore, millions of funds obtained from sources whose legality wasn’t proven are no longer considered a criminal offense in Ukraine. The NABU and the SAPO terminated completely 27 criminal proceedings and 38 — in parts of Article 368-2 of the Criminal Code of Ukraine. The total amount of the funds, the origin of which was investigated by the NABU Detectives in these cases, amounted to more than 500 million UAH.
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