We will be able to ensure a qualitatively new level of work of the Bureau in the interests of the state and society

 

The editorial board of the Kyiv Diplomatic Magazine is closely monitoring the progress of the anti-corruption reform. In particular, attention is focused on the competitive selection for the position of Director of the Bureau of Economic Security of Ukraine (BEU) - the body responsible for combating financial crimes, including fraud, tax evasion, smuggling and money laundering. One of the candidates is Attila Kovchi, a prosecutor of the Prosecutor General's Office, who previously applied for the position of Director when the Bureau was first created. We discussed the issue of international cooperation of the BEU of Ukraine with Mr. Kovchi.

 

1. Kovchi, you are participating in the competition for the position of Chairman of the ESBU. What motivated you to submit your candidacy?

There are several reasons for my participation in the competition for the position of Director of the Economic Security Bureau of Ukraine, but I will focus on the main ones.

It's not just about submitting a candidacy - I represent a holistic vision, a vision of what model should be used to build the Bureau's further activities as a law enforcement agency with a powerful analytical component.

I am convinced that this vision is as close as possible to the one that the authors laid down in the idea of creating this body during the development and adoption of the Law of Ukraine "On the Economic Security Bureau of Ukraine" in 2021.

Over 15 years of my professional life have been dedicated to the development of pre-trial investigation bodies, improving practices for protecting the economic interests of the state. I have directly participated in developing effective methods for investigating economic crimes, ensuring high standards of evidence in proceedings, in particular regarding tax evasion.

Given the above, it is particularly regrettable to me to see a situation in the activities of the modern ESBU in which the positive experience gained has been lost and the standards of pre-trial investigation have been leveled.

This situation has very specific negative consequences.

First, the state suffers significant reputational and economic losses due to the inefficiency and corruption-proneness of current law enforcement practices.

Secondly, trust in the very idea of reform has been destroyed - due to pressure on business and formalism in investigations. We are talking about numerous cases of groundless and unlawful pressure on business, during which criminal proceedings were registered against a certain business structure on trumped-up grounds, searches were conducted, documents and property were seized, and they were arrested, after which month after month passed, but no decision was made based on the results of the pre-trial investigation.

Thirdly, the Bureau did not actually implement systematic analytics, which led to the use of even analytical products as tools for illegal pressure on business.

The situation with personnel integrity is also critical: first, two committees at a joint meeting, and then the Temporary Investigative Commission of the Verkhovna Rada of Ukraine, gave a negative assessment to the non-transparent policy of personnel selection for the ESBU, the practice of appointing the winner of the competition with the simultaneous transfer of him to another position and the appointment of another participant in the competition to the same position, failure to take into account the position of the Public Control Council at the ESBU, the lack of results of work on combating the illegal production and circulation of tobacco products, etc.

The Bureau de facto continued to function in the logic of the unreformed tax police, with all its inherent negative tendencies. This contradicted the expectations of society and the concept of a new law enforcement agency in the field of economic security.

Since the situation did not improve, in June 2024, the Verkhovna Rada of Ukraine, by adopting a relevant bill, initiated the process of rebooting the ESBU.

The situation can only be changed through a deep transformation of the Bureau in all areas of its activity. I managed to form a team of highly qualified specialists motivated to create a modern, effective and transparent law enforcement agency. Our approach is based on the implementation of strategic management, the key tool of which is the risk-based approach, clearly stipulated in the relevant Law.

I am confident that only teamwork will allow us to implement the large-scale task of reforming the Bureau. Together, we have developed a common vision: the ESBU should operate on the principles of strict adherence to the rule of law, transparency, open interaction with business and civil society, zero tolerance for corruption, priority for the protection of honest business, and real efficiency.

If I am appointed, key team members will implement this vision in leadership positions within the ESBU leadership. We will be able to ensure a qualitatively new level of work of the Bureau in the interests of the state and society, implementing the best international practices of the modern law enforcement model.

 

2. How will your professional experience help in reforming ESBU?

 My experience working in investigative units is a powerful professional background that is absolutely necessary to work effectively as the Director of a pre-trial investigation body.

In the past, I have personally investigated or, as a manager, organized the investigation of hundreds of criminal proceedings for tax evasion, with at least 90% of such proceedings being investigated and referred to court.

Accordingly, no more than 10% of criminal proceedings were closed at the pre-trial investigation stage because the investigator, based on the results of the investigation, concluded that there was no element of a crime.

Such decisions were made under strict procedural supervision by the prosecutor's office, which did not allow a criminal case to be sent to court until it was convinced that there was sufficient evidence to prove the person's guilt in court, and vice versa - did not allow the proceedings to be closed in the opposite case.

Such a high rate of sending cases to court was ensured by the fact that investigators refused to initiate criminal proceedings in all cases where, even before the investigation began, there was no prospect of sending the case to court.

If the materials of the investigative inspection did not clearly indicate the nature of the crime, such a case was not opened, investigators did not disturb the business, searches, seizure of documents, interrogations were not conducted, and arrests of accounts and property were not imposed.

That is, a situation occurred that was the opposite of the one we, unfortunately, have today in the practice of the Bureau of Economic Security.

In addition, strict standards and requirements were established that the investigator had to meet in order to be able to refer the case to court. For example, the fact of tax evasion had to be described in detail in the audit report conducted by the tax service, and based on the results of the audit, a tax notice-decision had to be issued on additional tax assessments and the application of penalties for their untimely payment. Taxpayers appealed such notice-decision to a higher-level tax authority or to the court.

There could be no question of any referral of a criminal case to court if the notification-decision turned out to be canceled, since this meant that the taxpayer had no outstanding tax obligations to the state.

Another mandatory condition for sending the case to court was that the amount of taxes the payer intentionally evaded had to be confirmed by a forensic accounting expert opinion. If the expert opinion did not confirm the amount for some reason, the case was closed.

Adhering to high standards of pre-trial investigation is precisely about protecting the legitimate interests of business.

Unfortunately, in the modern ESBU, these standards and requirements have been largely leveled, and a policy of free registration of any criminal proceedings prevails, which unties the hands of detectives and gives them an unreasonably wide range of powers - to investigate criminal proceedings against any business and on any, real or invented, grounds.

Among other things, I intend to radically change this situation, to change the very format of relations between the authorities and business, in which the Bureau will deal only with real tax evasion schemes, schemes for embezzlement of budget funds, that is, those schemes in which the economic interests of the state are most harmed; it will focus resources and efforts on reducing the possibilities of organized economic crime, exercising a proactive influence on the criminal component of the shadow economy, while minimizing the negative impact on the activities of legal businesses and preventing abuses by ESBU employees.

The upcoming reform of the ESBU is a chance to create a truly effective law enforcement agency in Ukraine, which will be a significant step towards building a modern European state.

 

3. You are a proponent of a risk-based approach. Please tell us how you plan to change the operations of ESBU, and what a risk-based approach to business will mean in practice?

 The risk-based approach is a bit of a novelty for Ukrainian law enforcement agencies, but at the same time, it is a common, even basic management practice abroad. In most civilized countries, risk management is the basis for decision-making in the areas of security, finance, anti-corruption policy, etc.

The essence of this approach is that no management decision should be made based on the subjective perceptions or prejudices of the manager.

First of all, it is a strategic management tool. Risk assessment forms a clear understanding of the management regarding the priority among a wide range of threats to the economic security of the state, the vulnerability of the economic security system in the state, and the institutional capacity of security actors, including the ESBU.

The complex combination of these components makes it possible to clarify the cause-and-effect relationships of negative processes occurring in the economy and to form a well-founded internal policy of the Bureau. The result of the Bureau's proactive activities should be a reduction in the risks of the spread of criminal practices, and therefore - the normalization of economic relations in the country.

Secondly, this means that in the activities of the ESBU, priorities are not set randomly, but according to the level of threat to the economic security of the state. By identifying systemic signs of crime and formalizing them in risk criteria, analysts clearly orient the detectives' activities towards the activity of entities that build their business on the provision of criminal services in economic relations, mainly in the forms of organized crime, using corrupt connections, shadow schemes and a whole range of opportunities characteristic of organized crime.

These are just two aspects of the wide range of possibilities of a risk-based approach in law enforcement.

It should be emphasized: the implementation of a risk-based approach in the activities of the ESBU is not my initiative as a candidate. It is a clear requirement of the Law.

Article 12 of the Law of Ukraine "On the Economic Security Bureau of Ukraine" directly stipulates: the activities of the Bureau must be based on a risk-oriented approach, therefore my goal is to fulfill the requirement of the law by changing the very model of the Bureau's activities.

 

4. What role will international cooperation play in your strategy? With which countries and organizations do you plan to develop partnerships?

International cooperation is one of the key areas of activity of the Bureau, which includes two main vectors: multilateral cooperation and bilateral partnerships with law enforcement agencies of partner countries.

Within the framework of the multilateral format, we plan active interaction with authoritative structures such as Interpol, Europol, the CARIN network, the European Anti-Fraud Office (OLAF), the Organization for Economic Cooperation and Development (OECD), as well as specialized projects of the United Nations Office on Drugs and Crime (UNODC), which deal with combating financial crimes and money laundering.

In parallel, we will develop bilateral cooperation with colleagues from similar institutions in other countries, in particular from the European Union, the USA, Canada, the UK and other partners. We plan to initiate the preparation of interagency cooperation agreements, create conditions for the regular exchange of analytical information on tax fraud, financing of organized crime and money laundering.

In addition, we are focused on using the best European and OECD methodologies to combat such crimes. Separately, we will work on creating a common platform for coordinating the Bureau's actions with international financial intelligence, which will increase the effectiveness of our work in the global security space.

 

5. Do you see any opportunities to involve international experts and specialists in the work of the ESBU? If so, in what areas?

I intend to create a group of advisors under the Director of the Bureau, to which we will invite reputable international experts with deep knowledge and successful experience in combating economic crimes in their countries.

It will be a team of 4-5 people from countries such as the UK, Italy, the Netherlands and the US. I will make public the exact areas these advisors will cover and who will be part of the group as soon as the relevant agreements are reached.

I am confident that this format of cooperation will make it possible to effectively implement the best global practices in the activities of the Bureau of Economic Security.

 

6. What foreign models of combating economic crime, in your opinion, can be effectively applied in Ukraine?

Our team is a passionate supporter of a law enforcement model that has been effectively used in Western countries for decades — the Intelligence-Led Policing (ILP) model, i.e. "policing guided by analytical intelligence."

The essence of this model is that the basis for making management decisions and operational actions is a preliminary in-depth analytical process. It allows law enforcement agencies to concentrate their efforts on the most significant threats, instead of wasting resources on secondary or incidental cases.

At the same time, it must be said that in developed countries with modern law enforcement and security systems, the process of improving the model used by law enforcement agencies is constant and characterized by certain innovations, in particular, regarding the use of IT technologies and the latest analytical methods.

However, the key issues remain the effectiveness and proactivity of law enforcement activities, crime prevention, reducing the risk of antisocial behavior, and adherence to the fundamental values of a democratic society.

 

7. How do you plan to strengthen international information exchange on financial crimes? Are there any plans to integrate ESBU into global analytical platforms?

We will not only actively integrate into global processes of combating organized economic crime, but also send our employees to Western partners for training, exchange of experience, and improvement of knowledge and skills. It is extremely important to study and implement in practice the foreign experience of those developed countries of the world that base their activities on the values of a democratic society.

Given the innovation of the ESBU in terms of the model, organization, and development of analytical intelligence, methodological principles are key, in particular, Europol's methodology for assessing the threats of organized crime SOCTA and the experience of European countries in implementing appropriate law enforcement policies focused on the positive consequences of such activities.

 

8. Are you proposing to introduce an institution of benign neglect of a smaller problem in order to solve a larger one? Let's look at examples of current high-profile cases. Which of them do you consider to be smaller problems, and which ones can be compromised for?

It should be clarified: I am not proposing to create some separate legal institution of benign neglect.

This is the essence of the risk-based approach enshrined in the Law of Ukraine “On the Economic Security Bureau of Ukraine.” This approach is the principle of conscious priority management: we do not refuse to respond to offenses, but we concentrate our efforts where the harm to the state is systemic and large-scale.

Benign neglect is not about compromising with the law, it is about a responsible attitude towards the use of our operational and detective capabilities and analytical potential. It is about a clear understanding of the purpose of the ESBU as an agency that must fight not with minor symptoms, but with deep-seated threats to economic security.

Let me give you an example. We have a fact: a person is selling illegal cigarettes. Formally, this is an offense, and it can be proven in court. But will this change the overall crime situation? No, because the real threat is not this person, but the organizers of the scheme, who manage illegal production, control the circulation, launder money through shell companies, and hide profits offshore.

Therefore, the right management decision is to focus on the person behind the multi-billion dollar counterfeit flows, rather than wasting resources on a small, easily replaceable link. This is what benign neglect is: a conscious choice in favor of a more significant goal.

Such a focus is not an avoidance of responsibility, but the fulfillment of our function in essence. The ESBU was created as a new type of analytical and law enforcement agency that must think systematically and act strategically. We cannot afford to waste time and energy on something that does not significantly affect economic security. state.

Benign neglect is not an innovation, but a practical implementation of the risk-based approach provided for by law. And it is in such a model that ESBU can be effective and efficient.

 

9. Many of Ukraine's international partners emphasize the importance of transparency in the fight against corruption. How do you plan to ensure the openness of the ESBU's work at the international level?

The activities of the Bureau will be as open and transparent as physically possible and as far as this does not contradict the requirements of the law.

We will publish all regulatory legal acts, orders and regulations of the Bureau, except for those prohibited from publication.

We will ensure transparency and strict adherence to legality during personnel certification and competitions for vacant positions, and we will actively involve the Public Control Council at the ESBU, media representatives, and foreign experts in this process.

I intend to initiate an internal audit of the Bureau's activities over the past four years, and will also facilitate the organization of an external independent audit with the participation of representatives of Ukraine's partner countries.

 

10. What priority steps do you plan to take to increase international investors' confidence in Ukraine's economic security?

 The issue of creating a safe investment climate is priority No. 1 for the Bureau. Unfortunately, the investment environment in Ukraine has long remained unstable and vulnerable to political risks. Systemic problems - corruption, ineffective justice and unpredictability of the regulatory environment - have objectively deterred international investors.

That is why I intend, as Director of the Bureau, to personally oversee this area of work, without delegating it to any of my deputies. This is not a matter of image — this is a matter of national security. We have no right to lose another decade due to distrust in state institutions.

The Bureau will begin systematic work on implementing tools that will give investors a sense of real protection. In particular, we are talking about prompt information about the risks of cooperation with fictitious or problematic economic agents; analytical support with the analysis of business practices that have signs of corruption or pose threats; responding to investor inquiries about manifestations of shadow pressure or fraud; creating a “white list” of bona fide counterparties in partnership with business associations; as well as developing business integrity standards and implementing joint preventive initiatives. We are not building another “power structure” — we are creating an institution of trust that operates alongside business in a complex but promising environment.

It is currently impossible to foresee all possible situations in the relationship between business and the Bureau, but today we plan to lay the foundation that will determine this relationship in the future - adherence to clear, transparent, and predictable rules.

The Bureau should not be a source of uncertainty, but an institutional guarantor of stable and clear business conditions. We must be guided by the principles of legality, strive for a balance of state and business interests, and demonstrate the system of values we profess: cooperation based on trust, not fear.

 

11. How do you assess the level of cooperation between Ukraine and international law enforcement agencies (Interpol, Europol, FATF) in the fight against financial crimes? What needs to be improved?

The real level of cooperation between Ukraine and international law enforcement agencies in the fight against financial crimes can be judged by the relatively modest results of such activities of domestic law enforcement agencies.

Areas for improving cooperation include training personnel, including abroad, implementing best international practices in the analytical and law enforcement activities of the Bureau, establishing operational exchange of information with international law enforcement agencies, and forming a culture of openness and dialogue.

 

12. What initiatives would you propose to increase the effectiveness of international sanctions against violators of Ukraine's economic security?

A separate area of ESBU's analytical activity will be the assessment of the effectiveness of current international sanctions, as well as the development, modeling of consequences and monitoring of the implementation of new sanctions restrictions. We are convinced that the initiation of sanctions should be based not only on political decisions, but also on detailed economic calculations taking into account all relevant factors - the scale of threats, impact on the market, the level of interconnection of the subjects of sanctions with the economy of Ukraine and partner countries.

The Bureau's task in this area will be to prepare thorough analytical materials and provide state bodies with substantiated proposals for the introduction, modification or abolition of sanctions. We will also ensure constant monitoring of the dynamics of the impact of sanctions on the economic security of the state in order to respond in real time to changing circumstances. This approach will allow to turn sanctions into an effective lever of economic deterrence and neutralization of threats.

 

13. Does ESBU plan to open representative offices or establish permanent working contacts with law enforcement agencies of the EU, the US, or other countries?

Considering that your magazine is directly related to diplomacy, I would like to emphasize the following. We plan to establish active, professional and mutually beneficial cooperation with law enforcement agencies of the EU, the USA and other countries. In close cooperation with the Ministry of Foreign Affairs of Ukraine, the Bureau's employees will be sent to international organizations and foreign states as authorized representatives to coordinate cooperation on issues within our competence. We also plan to actively participate in international conferences, forums and other events dedicated to economic security issues, as well as in professional exchange programs.

In addition, the Bureau's employees will participate in international investigative groups in accordance with the legislation of Ukraine and international treaties. We are open to involving foreign experts in the field of combating economic crime, and we are also ready to act as experts to participate in international formats. This will allow us to expand our capabilities, implement the best international practices, and increase the efficiency of operational and analytical work. For us, this is not only an element of foreign security policy, but also an important tool for internal modernization and professional growth of the institution.

 

14. What place do you see for ESBU in the global economic security system in 5-10 years?

In our vision, the Bureau of Economic Security of the 2030 model is a modern law enforcement agency with a powerful analytical center, with real powers and access to information arrays of state bodies, armed with the latest methodology of analytical intelligence, risk-oriented and predictive in nature, capable of effectively countering systemic criminal manifestations in the economy, within its competence to provide substantiated recommendations to government bodies and local governments on reducing the risks of the spread of economic crime, a body that enjoys the trust of society, government bodies and business.

Oleksandr Kondratenko, Antonina Linnik

Photos by Julia Novicka.