"BEB" IN THE ECONOMIC SECURITY SYSTEM OF UKRAINE
The establishment of a new law enforcement agency — the Bureau of Economic Security (BEB) — is attracting increasing attention in society and not only among experts. Objectively formed conditions required the renewal of this direction: on the one hand, business demanded a reduction in administrative and corruption pressure and assessed its risk at 57%, and on the other, the state needed to create an effective mechanism for protecting economic interests (the risk level of targeted organized crime activity in certain areas of economic activity ranged from 60% to 71%).
Along with this, Russian aggression has made its own adjustments to this process. Back in 2019, when studying hybrid threats, emphasis was placed on the high level of risk (45%) of the emergence of new criminal schemes in the economic sphere as an element of encroachment on the economic integrity of Ukraine. During the war, news in the media increasingly draws attention to numerous offenses related to humanitarian aid. At the same time, predicting threats during the period of Ukraine's recovery, it is already necessary to assess the risks associated with the use of international financial assistance against the background of systemic criminal phenomena: organized economic crime, embezzlement of state funds, money laundering, corruption, etc.
And the situation is extremely striking. Assessing the risks of organized criminal activity in our country's economy in 2021:
— 15% of criminal organizations operate on a transnational level;
— almost 9% of criminal organizations have existed for more than 15 years;
— 33% of criminal organizations have significant experience in criminal economic activity;
— almost 20% of criminal organizations are characterized by connections with “thieves in law”;
— 12% of criminal organizations operate with financial resources exceeding UAH 250 million per month;
— in 9% of criminal organizations, the annual amount of funds received as a result of illegal activities exceeds UAH 500 million;
— 58% of criminal organizations have a good understanding of the methods of law enforcement agencies and use countermeasures;
— 63% of criminal organizations systematically use corrupt connections, and in 19% of cases these are connections in law enforcement agencies;
— in 38% of the criminal activity has increased, –
the conclusion is one – the presence of a formed, “professional”, organized economic criminal infrastructure.
Which institution is able to minimize the destructive impact of systemic criminal phenomena on the country’s economy? Does the BEB have the appropriate capabilities?
For more than one year, the Ukrainian professional community has been fighting for the creation of a new law enforcement agency, limiting pressure on business, placing great hopes on the formation of capabilities for effective protection of the economic interests of the entire society. And they got what, in a very short period of time, is called in society, not without irony, “BEB”!
Most experts who monitor the processes of the formation of BEB, analyzing the results of the newly created agency, place the main emphasis on statistical data related to the criminal and legal activity of BEB. But they do not take into account what has long been noted not only by domestic experts, but also by foreign ones: state statistics, in particular the ERDR, do not reflect the real state of economic crime in the country.
Criminal liability is only one of the instruments of social security and ensures the inevitability of punishment for committed crimes, but, taking into account the high corruption risks in our society and so on, the probability of this is extremely low, and therefore we do not resort to the analysis of real court verdicts for economic crimes in past periods, which are characterized by insignificance against the background of those systemic criminal manifestations that require an urgent and adequate response from the state.
That is why for almost a decade in Ukraine, the implementation of a modern philosophy of law enforcement and a management model based on analytical intelligence has been considered a priority. And certain achievements have taken place, since a number of norms of the Law of Ukraine “On BEB” implement exactly this approach. The key areas provided for are the development of information and analytical activities, proactivity in the BEB activities, ensuring, first of all, the prevention of crime in the system of economic security of the state.
The system-forming component of the implementation of key areas is a risk-oriented approach in the activities of the Bureau of Economic Security and the implementation of risk management based on their assessment.
In accordance with clause 5, article 12 of the Law "On the Bureau of Economic Security", the procedure for applying a risk-oriented approach is approved by the order of the Bureau of Economic Security, and in accordance with clause 5, article 13, the procedure for conducting a set of measures to assess risks in the economic sphere is approved by the Cabinet of Ministers of Ukraine.
To date, the specified documents have not been developed and approved, which is the absence of appropriate legal regulation, in fact, of the key area of activity of the Bureau of Economic Security already in the second year of official activity of the state body.
Formally, this is a failure to comply with a direct provision of the Law. In accordance with clause 3, article 12, "The risk-oriented approach must be proportional to the nature and scale of the activities of the Bureau of Economic Security of Ukraine in the relevant field."
In essence, the Law directly indicates that the BEB must determine its work (directions, economic sectors, criminal prosecution, seizure of assets, etc.) on the basis of a previously conducted risk assessment in the field of economic security of Ukraine. That is, the subject of activity of BEB employees (according to the Law) is determined by the level of risk according to criteria that are “related to the nature and type of illegal action, industry-specific features of systemic criminal phenomena, financial losses of the state from optimizing tax payments, etc.” (clause 2 of Article 12).
That is, on the basis of risk assessment (and only in this way), with the physical presence of the appropriate analytical product, a BEB work plan should be developed for at least a year, and preferably for the period of martial law (because the threats are of a different nature), which indicates the implementation of the direct norm of the Law and is a justification for the estimate of expenditure of state funds on BEB activities.
It is clear that in the current situation, this problem will not be in the spotlight, but the management of the BEB should anticipate that very soon the issue of the targeted use of budget funds may be raised by the Accounting Chamber of Ukraine!
An important component of development is the level of competence of the BEB management. In a number of speeches in the media, the Director of the BEB stated that the BEB is an “analytical body with law enforcement functions”. Something new! How is this? Exceptional incompetence!
A “law enforcement body” does not require a formal legal definition (the legislator uses various legal constructs, in particular the Central Executive Committee), it is only necessary to pay attention to the powers (tasks) (Article 8 of the Law on the BEB) – the “pre-trial investigation” of certain types of crimes already emphasizes law enforcement activities. At the same time, analytics is an auxiliary tool in the investigation of crimes (Article 9 of the Law on the BEB).
Incompetence also lies in the fact that the new law enforcement agency has nothing to do with new approaches to activity. In fact, this is a daily pursuit of what has long been done. The question is: what is the effectiveness of three hundred BEB employees within Ukraine, or at least the city of Kyiv (last year in Kyiv there were at least 110 criminal organizations in the economy on a systemic criminal basis)?
The competencies of the new approaches involve proactivity in BEB activities: knowledge of the criminal environment in the economy, determination of the highest priority areas of activity, understanding the vulnerabilities of the system and maximum impact on the criminal infrastructure and its destructive impact on the economy, while optimizing costs. This is a modern approach that BEB management is unable to even understand today!
The absence of such competencies excludes any effectiveness even with a staff of 4 thousand employees, as provided for by the Law.
The situation with the appointment of BEB employees does not require analysis at all. One has only to recall the minutes of the meeting of the RGC No. 7 of 07/18/22 and the disagreement with the appointment of "... an odious person with a dubious reputation ..." to a leading position in the BEB. Against this background, it is extremely regrettable to recall the discussion in the VRU committees on the principle of personnel selection in the BEB, the results of which were reduced to zero. One word - BEBics!
Thus, imitation of personnel selection, imitation of competencies, imitation of activities ... is such a state of affairs permissible in the BEB? To answer this question, everyone who has read the above analysis should answer one question! Can we imagine any imitation in the defense of the country in the current conditions of Putin's aggression? Otherwise, corruption and organized crime in the economy will not be overcome!
«ESB» IN THE ECONOMIC SECURITY SYSTEM OF UKRAINE
The formation of a new law enforcement agency — the Economic Security Bureau (ESB) — is attracting more and more attention in society and not only experts. Objectively formed conditions required the renewal of this direction: on the one hand, business demanded a reduction in administrative and corruption pressure and assessed its risk at the level of 57%, and on the other hand, the state needed to create an effective mechanism for the protection of economic interests (the level of risk of purposeful activity of organized crime according to in certain areas of economic activity reached from 60% to 71%).
Along with this, the Russian aggression made adjustments to this process as well. Back in 2019, when investigating hybrid threats, emphasis was placed on the high level of risk (45%) of the emergence of new criminal schemes in the economic sphere, as an element of encroachment on the economic integrity of Ukraine. During the war, more and more often, news in the media draws attention to numerous crimes related to humanitarian aid. At the same time, predicting threats during the recovery period of Ukraine, it is already necessary to assess the risks associated with the use of international financial aid against the background of systemic criminal phenomena: organized economic crime, appropriation of state funds, money laundering, corruption, etc.
And the situation is extremely impressive. Assessing the risks of organized criminal activity in the economy of our country in 2021:
— 15% of organized armed groups conduct their activities at the transnational level;
— almost 9% of organized armed groups have existed for more than 15 years;
— 33% of organized armed groups have significant experience in criminal economic activity;
— almost 20% of organized armed groups are characterized by connections with «thieves in law»;
— 12% of organized armed groups operate monthly with financial resources of more than UAH 250 million;
— in 9% of organized armed groups, the annual amount of funds received as a result of illegal activity exceeds UAH 500 million;
— 58% of the organized armed groups have a good understanding of the methods of law enforcement and use countermeasures;
— 63% of organized armed groups systemically use corruption connections, and in 19% of cases these are connections in law enforcement bodies;
— in 38% of organized armed groups, the scale of criminal activity increased, —
one conclusion — the presence of a formed, «professional», organized economic criminal infrastructure.
Which institution is capable of minimizing the destructive impact of systemic criminal phenomena in the country’s economy? Does the BES have the appropriate capabilities?
For more than one year, the Ukrainian professional community has campaigned for the creation of a new law enforcement agency, limiting pressure on business, placing high hopes on the formation of capabilities to effectively protect the economic interests of the entire society. And we got what is called in a very short period of time in the society not without irony — «BES»!
Most of the experts who monitor the processes of formation of the BES, analyzing the results of the activities of the newly created body, put the main emphasis on statistical data related to the criminal and legal activity of the BES. But they do not take into account what has long been noted not only by domestic experts, but also by foreign ones: state statistics, in particular the Single Register of Pre-trial Investigation, do not reflect the real state of economic crime in the country.
Criminal responsibility is only one of the tools of social security and ensures the inevitability of punishment for committed crimes, but given the high corruption risks in our society and others, the probability of this is extremely low, and therefore we do not resort to the analysis of real court sentences for economic crimes in the past periods that are characterized by insignificance against the background of those systemic criminal manifestations that require an urgent and adequate response from the state.
That is why for almost a decade in Ukraine, the implementation of a modern philosophy of law enforcement activity and a management model based on analytical intelligence has been considered a priority. And certain achievements are taking place, as a number of norms of the Law of Ukraine «On ESB» implement exactly the specified approach. The key directions include the development of information and analytical activities, proactivity in the activities of the Security Intelligence Service, ensuring, first of all, the prevention of crime in the system of economic security of the state.
A system-forming component of the implementation of key areas is a risk-oriented approach in the activities of the ESB and the introduction of risk management based on their assessment.
According to Clause 5, Article 12 of the Law «About ESB», the procedure for applying a risk-oriented approach is approved by the order of the ESB, and Clause 5, Article 13, the procedure for carrying out a set of measures to assess risks in the economic sphere is approved by the Cabinet of Ministers of Ukraine.
Until now, the specified documents have not been developed and approved, and this is the lack of appropriate legal regulation, in fact, the key direction of the ESB’s activity already in the second year of official activity of the state body.
Formally, this is non-fulfillment of a direct provision of the Law. According to clause 3 of Article 12, «The risk-oriented approach must be proportional to the nature and scope of the activity of the Bureau of Economic Security of Ukraine in the relevant field.»
In essence, the Law directly indicates that the ESB should determine its work (in particular, economic spheres, criminal prosecution, seizure of assets, etc.) on the basis of a previously conducted assessment of risks in the sphere of economic security of Ukraine. That is, the subject of activity of ESB employees (according to the Law) is determined by the level of risk according to criteria «related to the nature and type of illegal action, branch specifics of systemic criminal phenomena, financial losses of the state from optimization of tax payment, etc.» (clause 2 of article 12).
That is, on the basis of risk assessment (and only on this basis), with the physical availability of the corresponding analytical product, a work plan of the ESB must be developed for at least a year, and preferably for the period of martial law (because of threats of a different nature), which indicates the implementation of the direct provision of the Law and is the justification for the estimate of the expenditure of state funds on the activities of the ESB.
It is clear that under the current state of affairs, the mentioned problem will not be in the center of attention, but the management of ESB should anticipate that the Accounting Chamber of Ukraine may very soon ask questions about the targeted use of budget funds!
An important component of development is the level of competence of BES management. In a number of media appearances, the Director of the ESB stated that the BES is an «analytical body with law enforcement functions.» Something new! How is it? Exceptional incompetence!
«Law enforcement body» does not need a formal legal definition (the legislator uses various legal constructions, in particular the Central Body of Executive Authority), it is only necessary to pay attention to the powers (tasks) (Article 8 of the Law on ESB) — the «pretrial investigation» of certain types of crimes already emphasizes law enforcement activity At the same time, analytics is an auxiliary tool in the investigation of crimes (Article 9 of the Law on ESB).
Incompetence also occurs in the fact that the new law enforcement body has nothing to do with new approaches to activity. In fact, it is a daily pursuit of what happened a long time ago. Question: what is the efficiency of three hundred ESB employees within Ukraine, or at least the city of Kyiv (as recently as last year in Kyiv there were at least 110 organized armed group in the economy on a systemic criminal basis)?
Competencies of the new approaches involve proactivity in the activities of the ESB: knowledge of the criminal environment in the economy, determination of the first priority areas of activity, understanding of system vulnerabilities and maximum impact on the criminal infrastructure and its destructive impact on the economy, while optimizing costs. This is a modern approach that the ESB management is unable to even understand today!
The lack of such competences excludes any efficiency even with a staff of 4,000 employees provided for by the Law.
The situation with the appointment of ESB employees does not require analysis at all. It is only necessary to recall the minutes of the RGK meeting No. 7 dated 18.07.22 and the disagreement with the appointment of «… an odious person with a dubious reputation…» to a leadership position in ESB. Against this background, it is extremely regrettable to recall the discussion in the committees of the Verkhovna Rada on the principles of personnel selection in the ESB, the results of which were reduced to zero. One word — BESes! Thus, simulation of personnel selection, simulation of competences, simulation of activity… is such a situation acceptable in the ESB? To answer this question, everyone who has read the above analysis should answer one question! Can we imagine any imitation in the defense of the country in the current conditions of Putin’s aggression? Otherwise, corruption and organized crime in the economy cannot be overcome!