UNIC held discussions with state-owned enterprises on the impact of OECD anti-corruption standards on their operations

On December 18, the OECD supported a UNIC seminar for state-owned enterprises on “How the OECD anti-bribery standards and instruments will help support doing business honestly in Ukraine”.

The event brought together OECD experts, the best UNIC specialists, and state-owned enterprises on a single communication platform. It continued a series of OECD events aimed at raising awareness and open discussion of the organization's anti-corruption standards among the business community and state-owned enterprises in Ukraine.

The OECD sets global anti-corruption standards in various areas, including business integrity of state-owned enterprises. In Ukraine, such enterprises make up a significant part of the economy, providing public services, and are the largest employers. However, currently, only a small share of Ukrainian state-owned companies are establishing a compliance function or already have successful practices in this area.

Among other things, the speakers of the event highlighted the impact of the OECD anti-bribery and corporate governance standards and recommendations on the activities of Ukrainian state-owned enterprises. They also discussed in detail the role and main functions of compliance officers, various approaches to structuring and organizing the work of compliance units, their subordination and independence, as well as the "tone from the top" as one of the main criteria for the formation of an effective system of prevention of violations at state-owned enterprises.

During the open discussion, the seminar participants, representatives of state-owned enterprises, emphasized the challenges they faced in implementing compliance controls. In particular, they raised the issues of effective harmonization of international and Ukrainian legislation, implementation of international standards in internal policies, and development of a clear plan for their implementation, optimization of functions, and ensuring independence of those responsible for anti-corruption measures, their subordination and role in the company's structure, as well as the need to stimulate and promote the "top-down" approach among the company's management. The results of this discussion will form the basis for further dialogue with the Government of Ukraine and a step-by-step plan for cooperation with the OECD in 2024.

According to Оlexandra Onysko, OECD, in 2023, Ukraine strengthened its cooperation with the OECD by signing a partnership agreement that provides for a four-year program of support for reforms and reconstruction and includes, among other things, anti-corruption initiatives and integrity checks of state-owned enterprises: "One of the important issues within the framework of Ukraine's accession to the OECD Working Group will be the implementation and enforcement of the legislative and law enforcement criteria and standards of the OECD Anti-Bribery Convention, which will affect the work of business and the public sector in Ukraine. In particular, Ukraine will be obliged to investigate and apply effective and dissuasive sanctions for bribery in international business transactions. Among the important criteria that will affect state-owned companies will be the introduction of liability for bribery for legal entities, the criminalization of laundering the proceeds of bribery abroad and the strengthening of requirements for internal control and audit at state-owned enterprises."

Today, the OECD has a number of guidelines for state-owned enterprises that address corporate governance, anti-corruption and integrity, and the implementation of the organization's rules. "Ukraine is already actively participating in the meetings of the OECD Working Group on State Ownership and Privatization. It is worth noting that the OECD is currently involved in the development of a draft law on improving corporate governance of legal entities in which the state is a shareholder (founder, participant)," said Alison McMeekin, OECD. - Knowledge-sharing seminars are also planned to be held soon to support the implementation of the recommendations formulated in the Ukrainian corporate governance review, which was completed by the OECD in 2021. The main recommendations are related to eliminating inconsistencies in the legal framework, strengthening corporate sector reform and ownership policy, applying the principle of competitive neutrality, professionalizing the compliance function and implementing it in all state-owned enterprises."

"Compliance is a part of monitoring all financial crimes, so, in my opinion, a compliance officer in the public sector should deal with anti-corruption because corruption is the biggest compliance risk for a state-owned company," said Glib Bakalov, NEC “Ukrenergo”. "The compliance officer should have sufficient authority, depending on where this function is located in the organization, as well as sufficient remuneration. In addition, this employee should have an indirect reporting line that is appropriate for his or her position in the organization. For example, the compliance officer should report to the highest possible level of management and should have direct access to the relevant committees of the Management Board and the Supervisory Board."

Olga Shenk, CMS Cameron McKenna, added that the compliance function must be separate from the company's management: "Regarding the hierarchy of responsibility, the compliance officer must be independent of the CEO, control and have leverage over him. And if the CEO and the compliance officer work simultaneously, then the compliance officer works in harmony with the executive body, so the system is implemented and works smoothly."

For reference: The workshop was organized by the OECD Anti-Corruption Network for Eastern Europe and Central Asia (ACN) in partnership with the Ukrainian Network of Integrity and Compliance (UNIC). Funding is provided by the Ministry of Foreign Affairs of Sweden as part of the OECD Anti-Corruption Support Project in Ukraine.