Should the Security Service of Ukraine (SBU) fight economic crimes? Research of Ukrainian practices and international experience

Surveying of foreign investors shows that the repressive actions of law enforcements are one of the TOP-10 obstacles to raising capital in Ukraine. Survey data is proved by statistics: during the 2HY17, the Business Ombudsman Council received 27 complaints from enterprises on the actions of the Security Service of Ukraine. It exceeds the number of complaints related to customs matters. SBU’s intervention in the economic activity of enterprises has a negative impact on the investment climate in Ukraine, since in many cases it concerns the companies with foreign investments and those engaged in high-tech industries. For example, the report of the Business Ombudsman Council for 4Q17 contains some investigations of the Council following the complaints from an importer of food ingredients and pesticide trader, which resulted in removing the SBU’s bans to the activities of these enterprises.

Centre for Economic Strategy decided to investigate the extent to which the SBU intervenes in the economic activities of enterprises, as well as to assess the consequences of this problem for the economic development of Ukraine.

In order to attract the public’s attention and start a public discussion on the feasibility of involving the Security Service of Ukraine in the fight against economic crimes, the project set the following objectives:

To describe the problem and to determine the extent of the SBU’s involvement in the economic activities of the enterprises.

To assess the consequences of this problem for the economic development of Ukraine.

To discuss with a wide circle of interested parties the expediency of involving the SBU in combating economic crime and preserving their tasks and organizational capacities.

To identify the models for legislative regulation of the problem, to discuss their pros and cons.

The survey conducted within the study has proved that businesses feel the pressure of law enforcements, which has a negative impact on the country’s overall economic performance. In particular, the pressure of law enforcement agencies does not allow one to fully attract foreign direct investments, which in turn affect the economic growth rates. Currently, the level of foreign direct investment in Ukraine is the lowest compared to other European countries.

Respondents suggest depriving the SBU of the powers of pre-trial investigation in the above-mentioned areas. Moreover, they also recommend creating a single body with clearly defined powers and jurisdiction in investigating economic, financial and tax crimes.

The results of the survey were presented to the public discussion during the round table devoted to the study of existing problems in combating economic crimes, which took place on July 09, 2018, in Kyiv.

The final results of the study (including the survey findings) are presented in the analytical note “SHOULD SBU BE DEPRIVED OF THE FUNCTION OF INVESTIGATING ECONOMIC CRIMES? An Economic Overview on the Reform of Law Enforcements in Ukraine.” The project is carried out by the Centre for Economic Strategy with the financial support of the International Renaissance Foundation and the support of the Frederick Naumann Foundation for Freedom.