Archive for September 25th, 2017


A new Financial Investigation Service – Under which umbrella?

September 25, 2017

Ukraine is considering, perhaps rightly, the creation of an independent Financial Investigation Service.

The rationale behind this being that financial investigations should be conducted by a single entity with that singular remit – rather than spread across various agencies and divisions with varying degrees of professional competence, as is currently the case.

Minister of Justice Pavel Petrenko is rightly adamant that the independence of this new entity be codified and thus preserved by statute.  “……the procedural and functional independence of this service should be absolute.”  

He is also robustly of the belief that the new service should have codified parameters regarding powers and guidelines regarding how it interacts with government and business.

Nothing to disagree with thus far – and certainly with regard to how a new FIS would interact with business, the time should have long since passed when the sight of fully kitted SBU members are broadcast upon Ukrainian television daily conducting raids with National Police and/or other law enforcement bodies on business and government premises.

The SBU’s core competencies are counterintelligence and counterterrorism – their place is not kicking down doors to businesses, fully kitted up, making the execution of every court warrant look like a dry run through the SAS Killing House.   Firstly there is simply no need for it.  Secondly they have far better things to do in the current circumstances.  Thirdly the perception it projects is entirely disproportional to the threats faced when executing 99% of warrants.

Perhaps the only exceptions would be due to police (or other law enforcement bodies) having insufficient personnel available when executing a warrant – and that in turn would suggest an inability to draft in sufficient personnel to do so – which in turn would suggest matters of timeliness relating to the target/warrant execution.

However, as is always the case in Ukrainian politics, the primary question appears to be under which ministry the new independent FIS should sit.  Naturally, as this is Ukraine, there will have to be a minister responsible for a non-ministerial independent body that will apparently be the sole body charged with financial investigations.

Justice Minister Petrenko has dropped the Finance Ministry into the hat of potential overlords.

However, the obvious question is whether such a new and independent investigative body should have a ministerial overlord at all.

The UK Serious Fraud Office, another non-ministerial independent financial crime investigative body is directly responsible to the Attorney General.

That said, in Ukraine the current Attorney General is Yuri Lutsenko – a man who was, is and will remain a politician, and who was installed, having had the law amended specifically to facilitate his absence of a law degree, for no other apparent reason that to insure presidential/Bankova control over the Prosecutor General’s Office.

It follows therefore that there would be no less attempt at political influence under Yuri Lutsenko’s umbrella than there would be from a Minister of Finacne.  The (at least intended) independent NABU on a daily basis fights off the attempts of Yuri Lutsenko to subordinate and control it (on behalf of The Bankova).  (Quite simply the current, (and probably subsequent) leadership are just not brave enough to allow the prosecutors or judiciary full, complete and interference-free independence.)

Having mentioned NABU, which is charged with dealing exclusively with corruption within the political, judicial and civil service elites, care will have to be taken when drafting statute that would make financial investigations the sole purview of a Financial Investigation Service.  Undoubtedly almost all NABU investigations will have a financial crime aspect or aspect that involves criminal finances within.

There is going to be a smudging of the investigative lines unless extreme care is taken – or indeed there may be a deliberate intent to smudge those lines to facilitate claims and counterclaims to statutory jurisdiction over investigations.

Will any consideration be made to provide by statute any wiretapping ability, or will the new independent entity be entirely reliant upon a politically compliant SBU for such intelligence and/or evidence as NABU is now?

Although it is easy to state “follow the money”, financial investigations are frequently complex, always slow moving, and often difficult to successfully prosecute – so avoiding a turf war over investigative jurisdiction (and perhaps a defence relating to that investigative jurisdiction) would seem to be a priority.

Perhaps the new FIS should be a division within NABU?  Ergo avoiding jurisdiction issues set in statute and also avoiding the direct political influence over (intended) independent investigative institutions – those institutions that by their very nature will investigate the nation’s political and business elite (if and when it is possible to separate them).   Clearly there will be no political will to further expand a thus far untamed NABU, but that does not negate considering it as a potential home for a new FIS.

That said, perhaps a new independent FIS would sit better as a specific division within the National Police – thus part of the Ministry of Interior empire?  After all, financial crime is not the preserve of the Ukrainian elite alone, and therefore being a “common crime” is it not predominantly a policing matter?

Perhaps the best home for a new and independent FIS can only be identified once the statute clearly setting out the parameters, powers and scope of its investigative role have been adopted – but as is always the case when powers are taken from one, and surrendered by another, the existing institutions and their political masters are hardly likely to make this a sensible and seamless process.

Perhaps therefore if not necessarily more prudent, it may be at least more likely, that a decision upon the political and/or institutional home will have to be taken before any statute will be allowed to gather sufficient votes to pass through the Verkhovna Rada, thus creating a new and independent Financial Investigation Service.

How swiftly this can or will be progressed with so many eyes already on elections 2 years hence, will be interesting to observe.

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