3.1. General restrictions and duties

The legal status of various categories of officials is stipulated by laws/regulations governing the activities of respective bodies/persons. In particular, the legal status of GO (government officials)is identified in the Law of Ukraine "On State Service" and covers their responsibilities, rights, limitations and liability.

One of the anticorruption responsibilities of a GO is annual submission of information about his/her income and financial liabilities, including outside of Ukraine, covering this person and his/her family members, and in some cases - also his/her and family members' real estate and valuable movable property, bank deposits and securities¹.

There are also specific regulations concerning the procedure for employing a GO, his/her promotion, material and social benefits, disciplinary liability, termination of state service, etc.

3.1.1. The persons listed above in clauses 2.2.1 - 2.2.3 are prohibited from using their official powers and associated opportunities with the purpose of gaining illegal benefit or in connection with the acceptance of a promise / offer of such a benefit for themselves or other persons, including²:

1. To illegally assist individuals or legal entities in their economic activities, obtaining subsidies, subventions, grants, credits, or perks, and concluding contracts (including the contracts for the procurement of goods, works, and services for public funds);
2. To illegally assist in appointing a person to a position;
3. To illegally intervene in the activities of state authorities, local government bodies, or officials;
4. To illegally provide advantage to individuals or legal entities in connection with the preparation of drafts, issuance of normative-legal acts and adoption of decisions, and approval (harmonization) of opinions.

3.1.2. The persons listed above in clause 2.2.1 are prohibited (however such restrictions do not extend to the deputies of the Verkhovna Rada of the Autonomous Republic of Crimea, deputies of local councils (apart from those who perform their duties in the relevant councils on a permanent basis), members of the Higher Council of Justice (apart from those who work in the Higher Council of Justice on a permanent basis), and people’s assessors and jurors³ from:

1. being engaged in other paid or entrepreneurial activities (apart from teaching, scientific, and creative activities, medical practice, and sports coaching and referee practices);
2. acting as members of management bodies or supervisory boards of profit-making enterprises or organizations (apart from cases where such persons perform the functions of managing shares (stakes, equity) owned by the state or a territorial community, and represent the interests of the State or territorial community in company boards (supervisory boards) or auditing commissions of economic companies);

3.1.3. The persons listed above in clause 2.2.1 who resigned from their positions or otherwise terminated activities associated with state and local government responsibilities, are prohibited for a period of 1 year from the date of termination from:

1. entering into employment agreements (contracts) or to engage in legal transactions in the realm of entrepreneurial activity with legal entities, if such persons within a period of 1 year prior to the date of termination of the performance of state or local government functions, executed the authority involving the supervision, overseeing, or the preparation or the adoption of the relevant decision affecting the activities of such legal entities;
2. disclosing or otherwise using in their own interests the information obtained in the course of their official duties;
3. representing the interests of any persons in judicial proceedings (including those considered by courts) where the other party is the body (bodies) where they worked.

3.1.4. Persons listed above in clause 2.2.1 and subclause (a) of clause 2.2.2. are obliged to submit a declaration concerning the property, income, expenses, and obligations of financial nature for the previous year, annually by April 01, at the place of their employment (service).

3.1.5. The persons listed above in clause 2.2.1 and subclauses (a)-(b) of clause 2.2.2. are obliged:

1. to take measures to prevent any conflict of interests;
2. to inform without delay their direct superior of the existence of a conflict of interests.

3.1.6. The persons listed above in clauses 2.2.1 - 2.2.3 are prohibited from:

1. refusing to provide individuals or legal entities with the information that must be provided to the individuals or legal entities by law;
2. not providing the information that must be provided pursuant to the law in due time, or from providing false or incomplete information.

Individuals and legal entities are not allowed to finance public authorities or local self-governed bodies, to grant them material and/or intangible assistance, to perform works free of charge, to render services free of charge, to transfer means or other property, except for the cases stipulated by the laws and the international treaties of Ukraine⁴.

In our opinion, these legal provisions prevent the financing of trips of the persons working in the public sector and the financing of the accompanying services, which should be reflected in the relevant section of the Compliance Policy concerning Ukraine.

3.2. Gifts and other benefits⁵

Pursuant to the Law "Оn the Fundamentals of Corruption Prevention and Counteraction", the persons listed above in clause 2.2.1 and sub-clauses (a) and (b) of clause 2.2.2 (i.e. the persons authorized to perform the responsibilities of the State or local self-governed bodies and the persons who are regarded as being vested with such responsibilities) are forbidden to receive, directly or through other persons, gifts from legal entities or physical persons in the following cases⁶:

1. as a reward for decisions, actions or lack of action in the interests of the donator, adopted or performed both directly by such persons and with their concurrence by other officials and bodies;
2. if the person who makes a gift is a subordinate.

Although the Ukrainian legislation stipulates the prohibition of gifts, it does not define "gifts" or "business gifts".

The anticorruption regulations define "unlawful benefit", which can be interpreted as pecuniary funds or other assets, advantages, perks, services, or non-material assets which without lawful grounds are promised, offered, provided, or received without pay or at a price below the minimum market price⁷.

The basic criteria of an act of corruption is receiving or granting to a Corruption Infringer (i.e. person subject to anticorruption legislation) an unlawful benefit in connection with that person's official powers and related potential options.

Whereas the anticorruption regulations do not contain a definition of "gift", we can only assume that it may mean any material valuables that can be regarded as unlawful benefits. The basic difference between receiving an unlawful benefit and receiving a gift is absence of any interest on the part of a person who grants the benefit in an act by the person authorized to perform the responsibilities of the State or local self-governed bodies.

The Law "Оn the Fundamentals of Corruption Prevention and Counteraction" stipulates that the persons listed above in clause 2.2.1 and sub-clauses (a) and (b) of clause 2.2.2 (i.e. persons authorized to perform the responsibilities of the State or local self-governed bodies and persons who are regarded as being vested with such responsibilities) may accept gifts that fall within the generally accepted notions of hospitality, and donations, apart from cases above, provided that the value of such gifts does not exceed 50 percent of the minimal wage as fixed on the day when the gift was accepted (effective 1 April 2011 the minimal wage in Ukraine is UAH960, or approximately USD120), one time, and the aggregate value of such gifts (donations) received from one source within one year, does not exceed one minimal wage as of 1 January of the current year (effective 1 January 2011, the minimal wage in Ukraine is UAH941, or approximately USD118).

The limitation concerning the value of gifts does not apply to the gifts presented (made) by closely related persons or received as accessible to all discounts on goods, services, accessible to all winnings, prizes, premiums, and bonuses.

The Law "Оn the Fundamentals of Corruption Prevention and Counteraction" also stipulates that gifts received by these persons on behalf of the State, a territorial community, state or municipal institutions or organizations, shall be respectively deemed state or municipal property and shall be transferred to the body, institution, or organization in compliance with the procedure set by the Cabinet of Ministers of Ukraine.

It appears that the above provisions do not differentiate between "personal gifts" and "gifts for the State/ territorial community". While the Law clearly established the cost of a personal gift (it cannot exceed 50 percent of the minimal wage as of the day when the gift was accepted), there is no indication if this restriction is also applicable to the gifts received in the course of official events.

The Cabinet of Ministers of Ukraine has not developed a procedure for submitting the received gifts to a public authority, organization or legal entity, and there are no relevant clarifications so far from public authorities or judicial bodies. Therefore, some issues are yet to be clarified.

For other benefits please see clause 3.1. above.

We recommend indicating in the section of the Compliance Policy concerning Ukraine that value of a gift that can be given by a Company X employees to any representatives of the public sector cannot exceed 50 percent of the minimal wage as of the day on which the gift was accepted in UAH (or its USD equivalent according to the official UAH/USD exchange rate of the National Bank of Ukraine). Because both, the amount of the minimal wage and the official UAH/USD exchange rate of the National Bank of Ukraine, change from time to time, the Compliance Policy should indicate that these indicators should be checked by the Company X employees before making the gift.

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