Weekly analytics for 03 — 09 January

Bureau of Economic Security: when is this law enforcement agency expected to be reformed?

Event

On December 29, 2023, the Cabinet of Ministers approved the draft Law “On amendments to the Criminal Procedure Code of Ukraine and other legislative acts to improve the work of the Bureau of Economic Security of Ukraine”. In particular, the draft Law concerns the improvement of the mechanism for the enforcement of rulings of an investigating judge or a court on temporary access to belongings and documents and on search of other property, the jurisdiction over certain criminal offenses, ensuring transparency and clarity of the competitive procedures for the election of the BES director, as well as the Commission for the evaluation (audit) of the efficiency of the BES activities.

The draft law was developed as part of the implementation of structural fiscal reforms envisioned by the Memoranda on economic and financial policy of March 24, 2023 and June 19, 2023, in order to improve the legal framework for the BES activities. According to the revised program provided for the Extended Fund Facility (EFF) of $17.5 billion, the relevant legislative initiative on “reboot of the BES” should be adopted by the end of June 2024.

CPLR’s assessment 

The government’s initiative on the Bureau of Economic Security reform has a long history. This relatively new pre-trial investigation body that started operating in 2021 has gained negative reputation among parliamentarians, expert community, and civil society. Despite the intentions to reform the tax police, increase the effectiveness of combating financial and economic criminal offenses, and transition from “forcible” to “analytical” methods of investigation, particularly in order to reduce pressure on business, the goals of this reform were never achieved.

As a result, in 2022, the Parliament’s Temporary investigative commission was established to investigate possible violations of the Ukrainian legislation by officials of the Bureau of Economic Security of Ukraine, state authorities, and other state bodies exercising powers in the area of economic security, which could have led to a decrease in revenues to state and local budgets. The TIC’s report contains critical remarks on the work of this body and emphasizes the need for its reform.

In February 2023, the Parliament’s Committee on finance, tax and custom policy found the work of the Bureau of Economic Security’s leadership unsatisfactory and recommended the Government to “reboot” the Bureau’s leadership, as well as to clarify the competition procedure for positions in this body and to evaluate its employees.

Eventually, on October 13, 2023, the specialized Committee recommended the Parliament to adopt the draft law №10088 “On priority measures for reforming the BES” as a basis and its alternative draft law №10088-1. These draft laws provide for:

– announcing a new competition for the position of the BES Director by the Cabinet of Ministers;
– conducting a new transparent competition for the position of the Head of the Bureau of Economic Security (with majority of international experts in the competition commission, following the example of the National Anti-Corruption Bureau and the National Agency for Corruption Prevention);
– conducting evaluation of current employees of the Bureau. It is proposed to carry out this evaluation within a year in accordance with the Procedure approved by the BES Director, with the evaluation being conducted by the personnel commission in the central office. Its purpose is to assess for professional competence, level of knowledge and skills, professional ethics, integrity, and conflict of interest.

Finally, on November 8, 2023, the European Commission issued its Report on Ukraine’s accession to the European Union, namely an assessment of the reform of Ukraine’s legal system and its progress towards meeting the requirements of the EU acquis. Among others, the document contains seven references to the need for a quality reform of the BES and states that the launch of this body has not achieved the goal that was set for it. Therefore, reforming the BES is not only a matter of national policy, but also one of the requirements on the path towards European integration.

Thus, despite the work that has already been done to develop steps to reform the BES and its respective approval by the Parliament’s specialized Committee, the Government in some ways restarted the process of implementing the EU recommendation from scratch. On December 29, 2023, the Cabinet of Ministers approved the draft law “On amendments to the Criminal Procedure Code of Ukraine and other legislative acts to improve the work of the Bureau of Economic Security of Ukraine”, which will soon be submitted to the Parliament. It has been criticized by parliamentarians and the public, as it does not achieve the goal of comprehensive reform of this pre-trial investigation body and postpones it until the end/abolition of martial law, creates preconditions for manipulation of the categories of positions subject to evaluation, etc.

In January 2024, the Speaker of the Verkhovna Rada of Ukraine Ruslan Stefanchuk, responding to this criticism, noted that the draft law on reforming the BES of Ukraine “must be developed in compliance with NATO and EU standards, otherwise we may lose the trust of our partners”.

Therefore, as of today, the reform of the Bureau of Economic Security is in doubt, as there is lack of state policy on this issue, nor is there a uniform vision among those involved in this process. On one hand, there are parliamentary initiatives and preliminary work carried out by the TIC, which enables justification for the need to reform this body. On the other hand, the Government has its own vision, which can be called competing, as it is moderate in nature. At the same time, both the EU and other international partners expect Ukraine to take systematic steps to improve the fight against financial and economic criminal offenses and to reduce pressure on business, in particular by improving the efficiency of the specialized pre-trial investigation body.

Therefore, the reform of the BES is one of the priorities in the area of reform of law enforcement agencies in 2024. To ensure the implementation of quality, systematic reform of this law enforcement agency as quickly as possible, it is crucially important to achieve a consolidated vision among the Government, the Parliament, and the professional community.