The coronavirus pandemic has brought the global market into the steep diving condition. The global economy has slowed to the level of 2009 crisis.

And what is happening on the legal market of Ukraine? What practices will develop, which ones will downgrade on the list of priorities? In which sectors will there be more inquiries for «criminal» lawyers?

Denys Bugay, VB PARTNERS Partner has shared his thoughts and forecasts in his interview for Yurydychna Gazeta.

1.Denys, what has changed in your company’s work when introducing the quarantine in Ukraine?

As regards our company, our lawyers did not go to the «remote work». Support service, BD department and some assistants are working remotely. Therefore, it will be enough easy for us to recommence our activities. We look forward to the return of our colleagues to maximize the effectiveness and synergy of our work in the clients’ interests.

The quarantine will not result in significant changes. However, the crisis, that follows it, will have a significant impact, in particular on the legal market. New practices will not appear, and some practices will increase their relevance – a bankruptcy, White-Collar Crimes, a dispute resolution, and partially a tax practice. Banking practices will also be popular, since a large number of clients will default, and banks will need a service to work with distressed assets.

I am sure that the state will strengthen a tax press in order to replenish the state treasury, being now practically empty. It will be replenished by putting pressure on the business and increasing tax revenues. It will be difficult for such practices as the real estate and construction, M&A, corporate law.

I do not believe in investment activity in the near future. Western investors have been hit hard in their home jurisdictions, and they will first solve their local problems before investing in Ukraine.

2. How matters stand with the WCC practice now? Does an upward trend continue?

White-Collar Crime practice did not slow its development. It slowed slightly it down. We have the largest scope of work in the proceedings of the National Anti-Corruption Bureau of Ukraine (NABU) and the Higher Anti-Corruption Court (HACC). Colleagues in these bodies are quite energetic and keeping a high pace of work. Virus did not significantly affect their activities.

A year ago, the country’s political power has changed, and traditionally new politicians are actively trying to pursue their predecessors. As a result, we have dozens of criminal proceedings.

The repeated substitution of managers of the State Bureau of Investigation (SBI), absence of a permanent head there and the next substitution of the Prosecutor General suspended a number of criminal processes. I am sure that after the quarantine ends, law enforcement officers will return to their usual activities – to actively intervene in our clients’ business activities.

3. How to evaluate the work effectiveness of such newly created anti-corruption bodies as NABU and SAPO?

NABU and SAPO show a high activity. Only in the first two months of 2020, they have served more notices of suspicion than in the previous six months of 2019, and more than for the entire 2018.

Thus, according to the results of work in 2018, 79 persons were notified of suspicion; for the second half of 2019 – 84 persons. For the first three months of 2020 – 80 persons.

We note that the SAPO detectives and prosecutors quickly learn and form new approaches when investigating WCC crimes.

I can assess it on an example of banking investigations. This category of cases is quite close to our company. Five years ago, investigators did not know which side to approach these cases. Today, experienced and progressive groups of investigators are already joined to investigation. They are able to investigate criminal proceedings in banking sector with a huge volume of transactions and cash flows not only in Ukraine but also abroad.

An interesting trend is an active use of international cooperation as a means of collecting evidence. There is a part of proceedings where an accusation or suspicion is based mainly on the evidence obtained as a result of international cooperation.

In particular, such an international legal assistance is actively used by the NABU. The geography of cooperation is quite wide – 64 countries. NABU is most actively trying to receive information from Latvia, Cyprus, Great Britain, Germany and Switzerland.

From the beginning of its activities and until 2018, NABU has sent 291 requests (128 were completed, i.e. 48%). But already in 2018, detectives sent more than 200 requests, while the level of completion has increased and amounted to 65%. Now we are waiting for the statistics of 2019.

4. How has the anti-corruption bodies’ work affected the WCC practices intensity?

Strengthening the anti-corruption infrastructure of NABU/SAPO, expanding their regulatory and technical capabilities, as well as the HACC active work will be a key trend in the White-Collar Crime practice in coming years. We will see dozens of sentences, including, I hope, acquittals.

All NABU proceedings are complex in nature, and require a significant time investment, and work of a whole team of lawyers and assistants. A peculiarity is conditioned by a large number of investigative/procedural actions sometimes occurring simultaneously in several jurisdictions, and all this is under the scrutiny of society.

5. The Higher Anti-Corruption Court of Ukraine has been operating now for 8 months. Is it possible to make intermediate conclusions regarding its work?

The start of the HAAC operation was quite successful. The colleagues, who were appointed as the judges, and those, who were responsible for an organizational preparation for the start of a new higher specialized court, dealt with all the points very quickly and professionally. The Court is fully functioning.

According to my observations, judges demonstrate a fairly high pace when considering cases, trying to comply with a reasonable time. Our first impression regarding its hearings (we have already held more than 100 hearings) is quite positive.

However, I cannot say that the Court is fully prepared to be an independent arbitrator. The appellate court’s practice is of a particular concern. Our internal analytics show that the HACC’s Appeals Chamber supports prosecution in 90% of cases. Judges in their decisions either uphold the decision as taken by an investigating judge, without mitigation, or make harsher decisions at the prosecutor’s request.

The «pledge race» is also of concern. It seems that the Court is trying to compensate for the absence of convictions with the Hryvnia million pledges. Such an approach distorts the purpose and meaning of pledge – minimizing risks and the suspect’s proper behavior.  Pledge is not a punishment or compensation for damages. It is only a tool to ensure criminal proceedings.

Of course, we are pleased with the public statements of «anti-corruption» judges to consider their work and court as an independent element, as a part of judicial system, but not the third link in the anti-corruption body infrastructure. However, for now, we state the fact that in most cases the words do not meet the actions.

Let’s wait for the first ten sentences, after which it will be possible to make conclusions about whether the legal community expectations in respect of the HACC’s activities have been satisfied.

6. What are the forecasts regarding the further development of White-Collar Crime practice?

My forecast is a rapid development.

Firstly, return of the institution of criminal liability for an illicit enrichment will significantly affect the practice. Taking into account a large number of new politicians and officials, this will provide a huge field for the work of both NABU and SAPO. After the first period of declaration, we will see dozens, if not a hundred, of new criminal cases and trials. Because I suppose, the new political elite’s representatives will be absolutely negligent when filling out their declarations.

Secondly, there are and will be a lot of cases in the banking sector. In previous years law enforcement officers have looked more toward liquidated banks, giving an eye to their top management and shareholders. The situation has changed – now successfully functioning banks and even the «holy of holies» – the National Bank of Ukraine are under the gun. The number of inquiries from banks on the WCC issues is significantly increasing. Previously, 90% of banking requests were litigation and restructuring. Today, almost every bank has a criminal case.

Criminal banking cases top a chart of top news. The end of 2019 was especially «rich» in the cases of this kind. A notice of suspicion was served to Konstiantyn Zhevago, the top manager and shareholder of Finance and Credit Bank, and a part of his assets was seized. Notices of suspicion were served to former managers of Vector Bank, Mykhailivskyi Bank and Pivdencombank, and this list is not complete.

Among the most resonant news are as follows: serving a notice of suspicion to, and gross detention of the Board’s Chairman of Ukreximbank and, of course,  NABU high-profile case against the National Bank’s top officials and Oleg Bakhmatiuk, a VAB-bank shareholder. Serving notes of suspicion to the Board’s members of the National Bank is an «innovation», which law enforcement did not allow earlier. The last case proves the NABU entering the «banking market».

Thirdly, such a direction of White-Collar Crime as Investigations is gaining popularity day after day. More and more companies are ready to conduct an investigation to identify internal and external fraudsters, since the business advantages and benefits are already obvious:  fraudulent activities cessation, fraudulent network elimination; guilty party punishment, compensation for damages; minimization of a top manager’s responsibility for the frauds committed by employees; implementation of a risk management system maximally minimizing fraud, etc.

Autor: Denys Bugay, Attorney, Head of White Collar Crime Practice at VB PARTNERS