Should SBU be deprived of the function of investigating economic crimes?

Involvement of the Security Service of Ukraine (SBU) in combating economic crimes has a negative impact on the economy of the country. Therefore, the function of investigating economic crimes should be separated from the national security function, which will prevent law enforcement agencies from misusing their powers.

This conclusion is made by the analysts of the Centre for Economic Strategy, the authors of the analytical note “Should the SBU be Deprived of the Function of Investigating Economic Crimes? An Economic Overview on the Reform of Law Enforcements in Ukraine.”

Economic Effects

In order to assess the actual damage caused by the actions of law enforcement agencies, we have used open sources of information and requested data from the affected enterprises. CES analysts also took into account the inflation indices and brought all losses to the UAH value in 2018. According to our estimates, the average damage from the contacts of the SBU per one enterprise is equal to UAH 8.23 ​​million.

International VS Ukrainian practices

According to the international practice, there are two most typical models of organizing economic crime investigations – by the police or by fiscal / economic control bodies. It is typical for both models to separate the sphere of economic crimes from the general sphere of fighting against crime. At the same time, in Ukraine, the functions of investigating economic crimes are the responsibilities of several structures – the General Prosecutor’s Office of Ukraine (GPU), the Security Service of Ukraine (SBU), the Ministry of Internal Affairs of Ukraine (National Police Investigation Service), the National Anti-Corruption Bureau of Ukraine, and the State Fiscal Service of Ukraine. In 2017, most cases in the area of ​​economic crimes were mainly initiated by the Ministry of Internal Affairs and the State Fiscal Service of Ukraine. In the overwhelming majority of cases, each law enforcement agency had a certain specialization in the cases instituted.

Business and Law Enforcement Agencies: Ukrainian Realities

According to the results of business and expert surveys, as well as based on the data of the Business Ombudsman Council, the authors of the study found out that business complaints against the SBU mainly concern the unlawfulness of their actions, abuse of power and unlawful pressure on business. Moreover, the impact of the actions of the SBU can relate to the business climate of the country as a whole, because the impossibility of timely implementation of investment projects through the actions of law enforcement agencies causes a considerable damage to the international reputation of Ukraine.
“It is worth noting that there is no civilized format of work between SBU and business. After all, the primary objective of the investigation of economic crimes at the enterprises is to eliminate market distortions that arise because of the existence of unfair rules of the game, and to obtain a fair compensation for the actions taken in the interests of the state. Any actions of the law enforcement agencies that are not aimed at this result are inappropriate and useless,” – the authors of the research emphasize.