Since the Euromaidan Revolution of 2014 that led to a change of the Ukrainian government, Ukraine has been pursuing large-scale anti-corruption reforms. The country has reformed its police force, created several anti-corruption agencies, and established the Anti-Corruption Court. It also significantly strengthened various transparency requirements for government officials and refined its public procurement processes.
Notwithstanding those improvements, Ukraine still faces criticism by key international partners, such as International Monetary Fund, for its slow progress in the anti-corruption area.
As part of its ongoing anti-bribery efforts, on October 17, 2019, Ukrainian Parliament passed whistleblower related amendments to Ukrainian anti-corruption laws (Whistleblower Amendments or Amendments) that were approved by the Ukrainian President on November 13, 2019. The new rules on whistleblowers are unprecedented for Ukraine and will enter into force on January 1, 2020.
As noted in the President Office’s press release, the key goal of the Amendments is to ensure that Ukraine’s national laws are in compliance with relevant international standards and best practices. The new rules set out specifics of the whistleblower status, relevant protections, and processes.
According to the Amendments, a whistleblower is defined as an individual who reports information about corruption or related violations obtained in the course of the individual’s employment, professional, business, community, academic, or government service activities. Under the Whistleblower Amendments, those who report corruption-related crimes causing damage to the government of an equivalent of $397,000 or more are eligible for a 10% award (with a maximum award up to an equivalent of $517,000).
The courts are going to determine the whistleblower award based on several factors, including the importance of the shared information, and will divide the award among whistleblowers reporting the same misconduct. The new rules preclude rewarding a whistleblower (i) who submits the report in the scope of a plea agreement, (ii) who is an accomplice in the offense at issue, or (iii) who had an opportunity to officially report a violation within the framework of job responsibilities.
The Amendments guarantee whistleblowers and their families free legal assistance, confidentiality, witness protection, non-retaliation in the context of their employment, and personal liability exemption. The new rules also lay out specific measures addressing possible employment-related discrimination. For example, if a whistleblower’s employment is terminated, the employer is required to pay the whistleblower’s average salary for up to a year.
The Whistleblower Amendments set out various reporting options — through designated telephone lines, official web-sites, other electronic means, as well as through mass media, journalists, various governmental agencies, public organizations, and trade unions.
Under the new rules, all government agencies, state-owned enterprises, and private companies that participate in public procurement (for contracts worth an equivalent of $826,500 or more) are required to:
- Introduce a culture of reporting possible corruption-related violations and relevant incentives;
- Assist and consult employees on reporting;
- Define internal procedures on reporting (note that the Amendments permit anonymous reports);
- Define internal procedures related to review of complaints (the new rules provide ten days for preliminary review of a complaint and up to 45 days for subsequent substantive review); and
- Implement internal reporting channels or “regular” reporting channels (defined as reporting to anti-corruption government agencies).
Finally, the new rules introduce sanctions for disclosing information related to a whistleblower’s identity and for terminating a whistleblower’s employment. Those amendments include (i) an Administrative Code provision stipulating a fine and a one-year disqualification from occupying certain positions for disclosing information about whistleblowers and (ii) a Criminal Code provision sanction for firing a whistleblower in the form of authorizing a fine, a disqualification from occupying certain positions for up to three years, or a two-three-year term of “correctional work.”
As stated in the President Office’s press release, these new rules are intended to prevent corruption to ensure economic development of Ukraine. They are consistent with Ukraine’s anti-corruption reforms and are designed to encourage reporting corruption within Ukraine, which could potentially affect companies subject to the FCPA that are doing business in Ukraine.