#05 May 2013

In focus – Fraud and Corruption

Anti-corruption initiatives have become a worldwide trend over the last few years. The far-reaching consequences of the US Foreign Corrupt Practices Act (FCPA) and UK Bribery Act ensured a global impact on doing business and legal services in particular. In developed countries the role of banks and other financial institutions in preventing corruption and fraudulent practice is extremely high

Expert Opinion

Risk Alert: Bribery Red Flags and Schemes

Andriy V. Kirmach

No one doubts that Ukraine has a corruption problem. The Ukrainian President reported that the country suffered budgetary losses of over USD 2.5 billion in 2012 because of corruption. According to the 2012 Corruption Perception Index published by Transparency International Ukraine shares 144th place out of 174 countries together with Bangladesh, Cameroon, Republic of Congo, Syria and the South African Republic...

In Re

Operation of the UK Bribery Act in Ukraine

Svetlana Y. Kovalska

The Bribery Act was adopted by the UK Parliament in 2010 and has been in force since 1 July 2011. It was described as having near-universal jurisdiction since it allows prosecution of both individuals and companies with links to the United Kingdom (UK), regardless of where the crime occurred. Two offences were introduced by the Bribery Act allowing prosecution for a crime committed outside the UK: bribing a foreign official and failure of a commercial organisation to prevent bribery...

Internal Anti-Corruption Investigations: to Get out of Trouble

Oleg A. Klymchuk, Alexander Weigelt

Internal anti-corruption (anti-bribery) investigation is becoming an increasingly common, integral part of the compliance system of many international and larger local companies, which seriously and globally consider their reputation and negative legal consequences related to that. The enactment of the UK Bribery Act and US Foreign Corrupt Practice Act has raised additional concerns for businesses operating in Ukraine. This article is dedicated to legal aspects of internal anti-corruption investigations in Ukraine as well as new legal developments in this regard...

Bankruptcy Fraud Schemes in Ukraine

Anna F. Tyshchenko

Bankruptcy is a necessary legal institution that has many purposes. In my opinion, the most important one is to ensure that economic problems and impossibility to continue business will affect the bankrupts counterparts as little as possible or will not affect them at all. Still, national practice shows the opposite meaning of this term. It is widely known that in Ukraine bankruptcy is frequently used as a tool to clean up a business and to get rid of undesired creditors. In the main the reason for such a trend is not imperfect legislation but the committing of fraud and other crimes that may be referred to as criminal bankruptcy

Incorporating Surveillance Operation (Fraud and Corruption) Guidelines v. Personal Data Protection

Oleg P. Zagnitko, Olena S. Nagorianska

A guideline on prevention and fight of the fraud is one of the core practices in corporate governance.

Low tolerance of corruption became a principle in socially responsible business conduct. In addition to the regulatory focus in Ukraine, there are international instruments ratified by the Verkhovna Rada as well as laws of other countries, such as the United States of America, the United Kingdom, Germany trying to extend their jurisdiction extraterritorially through parent companies and headquarters located in their respective territories

Hot Issue

Financial Institution Fraud

Pavlo I. Odnokoz

One of the recent trends in the Ukrainian banking sector is multi-million sales of non-performing loans (the NPL). The highly anticipated sales, usually with significant discounts, have attracted a lot of interest from investors seeking to acquire such assets to make extra profits. According to the official statistics of the National Bank of Ukraine, the total amount of NPL in the banking system came to USD 9.5 billion as of 1 March 2013, which constitutes approximately 9.3% of all loan portfolios of Ukrainian banks


A Creation of Special Importance

Yaroslav V. Romanchuk

The establishment of the Ministry of Income and Charges of Ukraine is the most significant and courageous step in all the years of our countrys independence.

Under the permanent global crisis, almost all countries are reforming their tax systems, and Ukraine is no exception. Unfortunately, our tax system serves more as a fiscal than a stimulating one. This requires radical change. Besides, there is an urgent need to optimize staff numbers and to reduce maintenance costs


Fertile Ground

The Ukrainian agrarian sector was the most dynamically developing and promising one over the last few years. The favorable geographical advantages and strategic importance of the sector create a fertile ground for investments, expansion, innovations, and regulatory initiatives. The vertical integration in the sector and consolidation of land resources, funds attraction and regulatory field are among the hottest topics for agribusiness on the eve of the season. Our May panelist team examines the recent developments

Ivan Zievakov

Certainly, the introduction of an agricultural receipts agency is aimed at attracting financing to the Ukrainian agricultural sector. This is not to say that before the On Agricultural Receipts Act of Ukraine came into force there were no legal mechanisms to attract financing for future harvests in Ukraine. There used to be futures contracts, as well as the possibility of transferring to pledge a future harvest according to Article 576 of the Civil Code of Ukraine

Gabriel Aslanian

For different tax and regulatory reasons, lenders usually distinguish between different companies making up the group while structuring agroholding financing transactions. As a matter of practice, fundraising achievements of the companies holding the majority of the groups assets (so-called propcos) are modest. At the same time, parent companies located in foreign jurisdictions, which have no production base, but exercise control over the other companies, are the groups fund raising leaders. In this case the affiliated assets of propcos are used as collateral

Sophia Savruk

The Draft Act On the Land Market No.9001 that was considered by the Ukrainian Parliament at the end of 2011 was returned to its authors, who were instructed to address the most important issues of operations with all categories of land. However, some reformatory provisions of this Draft regarding operations with agricultural land met with a strong reaction from the public and had to be returned for further improvements

Marianna Bek

Ukraine has been drafting its organic legislation more than 12 years, but these efforts did not meet with success. Therefore, the Ukrainian organic industrys development without legal basis is very slow today. For instance, in 2012 the share of internal organic production in total agricultural production accounted for 0.5% in the light of 10%, scheduled for 2015 by the State Program of Ukrainian agriculture development until 2015

Anna Melnychuk

The agricultural sector involves a great deal of business risks. Therefore, Ukrainian agricultural companies require reliable and efficient insurance mechanisms. Even though the Ukrainian government has not endorsed legislative procedures for certain types of compulsory insurance (e.g., liability insurance for producers, using or storing pesticides and agrochemicals), recent trends in agricultural insurance brought a range of perspectives for agricultural producers

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