No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Compliance

Criminal Liability of Legal Entities in Ukraine: Law in Action or Another Failed Attempt?

by Igor Svitlyk
November 24, 2014
in Compliance
Criminal Liability of Legal Entities in Ukraine: Law in Action or Another Failed Attempt?

with contributing author Lana Sinichkina

The history of criminal liability of legal entities in Ukraine is quite entertaining. The first attempt to bring this idea to life was made in 2009 with the adoption of the Law On Liability of Legal Entities for Corruption Offences (the “Law”). It was supposed to come into force right in the beginning of 2010. However, closer to year end, legislators decided that Ukraine was not ready yet for such a development and postponed the Law until April. Then until January 2011. And then, 10 days before January, it was decided that Ukraine was not ready at all. The Law was cancelled, but managed to stay in force for five days due to delays in publication procedure.

A more successful attempt was made in May 2013 and resulted in the adoption of the Euro-Integration Laws Package. Among those laws was one introducing changes to the Criminal Code establishing criminal liability of legal entities. The situation with its coming into force was opposite to the one described above: the law was supposed to take effect in September 2014, but made it much faster, arriving in late April almost unannounced. The reason for such haste was that the state required an instrument (or at least the appearance of one) for the punishment of legal entities engaged in unlawful activities in Crimea.

We believe the story above shows a pattern – the approach for the introduction of such a significant change in regulation wasn’t always weighed or well thought-out. And it should be no surprise that the essence has suffered.

Who is Liable Now and On What Grounds

So, starting from April of this year, any private legal entity can be held criminally liable (in certain cases public legal entities can also be brought to criminal liability). The exceptional grounds for that are listed in the Criminal Code. And while certain grounds are related to unlawful activities against state security and territorial integrity (read: against invasion of Crimea), the rest are related to the compliance sphere and thus the topic of our interest.

We were going to expand on mentioned grounds and tell about the law’s exclusions and limitations, but let’s instead take an imaginary company, Good Faith LLC, and assess the law from a practical angle.

The first major defect of the new regulation is that Good Faith LLC does not need to participate in any unlawful actions to face a risk of criminal liability. If a representative of Good Faith LLC is convicted of money laundering or bribing a private or public official (the “Crimes”), and it is proven that the representative acted in the name and for the benefit of Good Faith LLC, the latter may be brought to liability. Even if no such authorizations were actually given, the company is automatically guilty. We believe that such conditions should stimulate Good Faith LLC to look deeper into its business processes.

Necessary Measures to Prevent Corruption

Good Faith LLC can be also held liable if (1) it failed to enforce the anti-corruption measures established by legislation or its charter and (2) such failure resulted in commission of one or the Crimes. And now the time has come for Good Faith LLC to be puzzled, because currently no legislative act establishes anti-corruption measures to be enforced by private companies. Therefore, unless Good Faith LLC established anti-corruption measures to be implemented in its charter, the analyzed ground is unenforceable.

Sadly, even if Good Faith LLC puts a lot of effort into implementing various anti-corruption procedures, it won’t be taken into account when making a decision about the company’s liability. So Good Faith LLC may think that it’s not worth the effort. Without a doubt, the leniency clause such as in the UK Bribery Act (which releases the company from liability if it proves that it had in place adequate procedures to prevent employees from unlawful conduct) would help Good Faith LLC to reconsider and undertake implementation of effective anti-corruption procedures.

Sanctions

If despite all efforts, someone was bribed by Good Faith LLC’s representative, the company may face a fine in the amount of twice the obtained illegal benefit. If no illegal benefit was obtained or its amount is impossible to determine, the fine could reach up to UAH 1.275 million.  The Criminal Code does not provide clear guidance on when the illegal benefit is considered as obtained by the company. Most probably it will be a question of a proof – in case money was wired to Good Faith LLC accounts, kept on its premises or in any other way was under the company’s control, the company is left with almost no chances to get out.

The Bottom Line 

The criminal liability of legal entities has been a reality in Ukraine for almost half a year. But has anything changed? Most probably the reviewed changes did not stimulate Good Faith LLC to adopt anti-corruption programs. In our opinion, the law’s has completely failed in its role as a deterrent.  What about its enforcement?  Well… nothing. Open registries of court decisions show that not a single case on a legal entity’s criminal liability was considered by Ukrainian courts. So enforcement practice also has not become a deterrent. Thus, we believe that the answer to the question in the title of this article is quite obvious.

Some may claim that not enough time has passed and that the state has had other problems that had to be prioritized over fighting corruption in the private sector. But we believe that the main problem with the analyzed law is that it wasn’t initially intended to resolve pressing problems in the compliance sphere. It was rather a façade that allowed Ukraine to broadcast the message to the international community that it is complying with its obligations. Therefore, our imaginary Good Faith LLC shouldn’t worry too much – the risks of facing criminal liability are quite remote. The situation may change, though, if the government implements its latest anti-corruption initiatives. These initiatives are a good subject to discuss in the next article.


Previous Post

EY FIDS Launches New Technology Tool to Enhance Third-Party Risk Management

Next Post

New NTSB Ruling Clarifies FAA Regulations on Drones, Says Attorney Tim Adelman

Igor Svitlyk

Igor Svitlyk

Igor Svitlyk headshot 12-5-14Igor Svitlyk is an associate in the Kyiv, Ukraine office of Arzinger Law Firm. His practice focuses on anti-corruption compliance, white-collar crime, life sciences and public procurement areas. Igor has assisted major international and local companies with development and implementation of anti-corruption policies and advised on various compliance matters. Mr. Svitlyk is also Anti-Corruption Working Group Chair at the American Chamber of Commerce in Ukraine. Within this working group, Igor participates in the development of anti-corruption legislation in Ukraine and the assessment of its effectiveness. Igor can be reached at Igor.Svitlyk@arzinger.ua.

Related Posts

Fox_DOJ Speeches_f

Analysis of Recent DOJ Statements

by Corporate Compliance Insights
March 23, 2023

DOJ leaders provide insight into agency's plans. Analysis of Recent Statements DOJ Shaping the Future of Corporate Criminal Enforcement What’s...

Fox_2023 ECCP Update_f

2023 Evaluation of Corporate Compliance Programs

by Corporate Compliance Insights
March 23, 2023

Keeping up with 2023 changes to DOJ guidelines. Additions, Deletions & Changes From 2020 2023 Evaluation of Corporate Compliance Programs...

encompass update

Encompass Launches pKYC Maturity Model

by Corporate Compliance Insights
March 22, 2023

KYC automation platform Encompass has unveiled a new perpetual Know Your Customer (pKYC) maturity model designed to help banks improve...

consilio onna partnership

Consilio, Onna Seek to Streamline eDiscovery for Cloud Apps

by Corporate Compliance Insights
March 22, 2023

Legal technology provider Consilio has launched a new platform, Sightline Collect, powered by data management supplier Onna. The platform is...

Next Post
New NTSB Ruling Clarifies FAA Regulations on Drones, Says Attorney Tim Adelman

New NTSB Ruling Clarifies FAA Regulations on Drones, Says Attorney Tim Adelman

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT