In March 2017
the Cabinet of Ministers of Ukraine approved a bill on the establishment of the
Service of Financial Investigations (the “Service”).
The main purpose of this bill is to eliminate the Tax Police and optimize the
system of law-enforcement agencies dealing with financial crimes.
Currently,
there are four law-enforcement agencies in Ukraine counteracting financial
crimes:
- the Tax
Police;
- the
Department of Economic Security of the National Police;
- the
Department of Counter-Intelligence Economic Security of the Security Service of
Ukraine (the “SSU”);
- The
investigative bodies of the State Prosecutor’s Office.
Once the law
is adopted, the Service will be richly endowed with all the powers as to
detection and pre-trial investigation of crimes in economic, financial and tax areas. Thus,
there will arise “a monster” taking on all the powers on combating crimes in the
economic sphere.
The
establishment of the Service will mean not only “extermination” of the Tax
Police, but also the elimination of the Department of Economic Security of the
National Police. In the meanwhile, the
powers of the Department of Counter-Intelligence Economic Security of the SSU will be considerably narrowed.
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| Co-authored by Anton Havryk |
It is planned
that the Service will investigate crimes related to the use of financial
resources, tax and the turnover of excisable goods, to name but a few.
Approximately
thirty sections of the Criminal Code of Ukraine will fall under the
jurisdiction of the Service, including such popular ones, as:
- section 191
- misappropriation of property through the abuse of office;
- section 212
- tax evasion;
- section 222
- financial fraud;
- section 358
- forgery of documents, seals, stamps and forms, sale or use of forged -
documents, stamps, seals.
The
establishment of the Service can be regarded as a certain kind of lustration
process aimed at the Tax Police and other law enforcement agencies concerned
with financial crimes.
The bill
provides that the Service will filled by quite a new staff. Persons who have
been working at law-enforcement agencies counteracting financial crimes since
2010 onwards will not be admitted to the recruitment process.
In our
opinion, the admission criteria are not clearly formulated.
If, for
instance, to talk of once employees of the National Police (former Militia),
one may take note of the following. The road to the Service is surely opened for district inspectors (sheriffs). On the contrary, this road
is unequivocally closed for former
servicemen of the Department of Economic Security of National Police. The
latter are considered to be former employees of a law-enforcement agency
concerned with financial crimes.
There is a
much more difficult situation with investigating officers and former employees
of the once legendary Organised Crime Department of the National Police. Those
two categories of the servicemen were only
partially involved in dealing with financial crimes (along with dealing
with ordinary crimes). The moot point here is whether they can be allowed to
the recruitment process.
The officers
of the Service, just as those of National Anti-Corruption Bureau of Ukraine
(the “NABU”), will be called
detectives. There will be no intelligence and investigating officers as they
currently exist in the Tax Police and other law-enforcement agencies
responsible for financial crimes.
It is planned
that the detectives of the Service will have decent salaries. For example, the
usual detective’s salary will be 20 living wages, which is about 32 000
hryvnias. This approach is used following the example of the NABU to reduce the
temptation of the Service’s detectives to continue “deep rooted corrupt
practices”.
In our
opinion, the creation of the Service may be of a great benefit to Ukraine. At least, the beneficial effect is visible in
the concentration of powers to investigate financial crimes in one body. This
will lead to the elimination of the duplication of the functions of
law-enforcement agencies and may improve the efficiency of investigation.
For example,
it is well possible today that the same criminal offences, say, related to
taxation, are being investigated by different law-enforcement agencies. If
information on a VAT evasion gets to the National Police, the offence may be
qualified and investigated under section 191 of the Criminal Code of Ukraine
(misappropriation of property through the abuse of office). If the same
information gets to the Tax Police, the offence may be qualified and
investigated under section 212 of the Criminal Code of Ukraine (tax evasion).
The creation of the Service must bring an end to such a wrongful practice.
However, the
real and much more significant beneficial effect will take place, if only the
reform fully succeeds. Instead of the currently existing law-enforcement
agencies with excellent “corruption track records” we will have the new
independent agency totally free from corrupt practices.
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