President Volodymyr Zelenskyy signed the law on the establishment of the Bureau of Economic Security on March 22. And the Cabinet of Ministers adopted a resolution on its establishment on May 12. It is too early to talk about the full-fledged launch of the Bureau, and , taking advantage of the pause, is analyzing what the new institution will be like.
What is BES?
The new structure is intended to combat various types of financial crimes—from tax evasion to smuggling. It will get the functionality of several agencies at once—the SSU, the National Police, and the tax police. The mission of these institutions in terms of economic relations is now transferred to the Bureau of Economic Security. 587 million UAH have already been allocated for its functioning.
And about the status of the Bureau. In the process of adopting the law, significant changes have occurred to it. The body should be nationwide, but its creators recalled in good time the story with NABU, or rather, with NABU and the Constitutional Court. The CCU recognized the powers to establish NABU on the basis of the law alone as inconsistent with the Basic Law. Therefore, BES was transferred into the custody of the Cabinet of Ministers and was simply called the "state" one.
Consequently, the government has the right to annually hear the reports of the BES Chairperson and recognize the work of the Bureau as unsatisfactory. With, accordingly, the subsequent resignation of its head. The danger here is that each new prime minister may want to change the head of the BES according to "his interests." It is not necessary that this will happen, but such an opportunity may be attractive to any head of the Cabinet. Although officially the head of the BES is appointed for 5 years.
And if every time the main fighter against economic crime will be put in conditions when his loyalty to the prime minister will have to be proved "by deed, not by word," we will not go far with such a BES. The new institution will quickly turn into a nursery for new "relatives" or "dear friends". Therefore, we might forget about the investigation of economic crimes.
Of course, this is a pessimistic scenario. Financial analyst Oleksiy Kushch, in the comments to , for example, emphasizes that the Bureau of Economic Security can become a real breakthrough in terms of relations between government and business.
«I was always annoyed by the showing off of our security officials, who, in the style of a "Gdlyan-Ivanov" group of investigators of the Soviet era, showed a video with dollar bills laid out on the tables. How many dollars can fit on an office desk? A couple of hundred thousand... And our corruption is capitalized to tens of billions.»
Economist and financial analyst
During his tenure as an advisor to the president of the Association of the Banks of Ukraine, Kushch, as an expert, took part in the due diligence of one scheme with promissory notes in a state bank, "that were somehow exchanged for Eurobonds."
"Even then, I was amazed at how one can quickly and efficiently unravel the tangle of financial crimes while sitting in front of a computer monitor. The Bureau of Economic Security should become the very analytical center that would combat corruption using financial and tax algorithms, and not in our usual "masquerade" style," he said.
«The very philosophy of relations between business and the state must change. Instead of playing the game of surplus appropriation system—openness and cooperation based on the principle of mutual benefit. How it will be in practice, we will see in the near future. The establishment of the Bureau of Economic Security is included in the pool of Zelenskyy's promises, as well as the elimination of "economic units" in the SSU.»
Economist and financial analyst
Combat squads of the Bureau
However, there is one thing. The expert sees the Bureau staff as some kind of intellectual analysts who "sit behind a computer monitor" and solve crimes. The reality is somewhat different. One that can bring us back to the times of Leonid Kuchma, when the tax police organized the "masquerades" mentioned by Kushch. At that time, with the help of the fiscal authorities, the government committed massacre of political opponents. For example, of the media oppositional to Kuchma. Their accounting records were inspected in this way.
Now those times are gone. But here's what is indicative. The Bureau of Economic Security will have a significant human resource. The number of its "combat units" is planned at the level of 4,000 people (to compare: in the Tax Police there are 4,600 of them). The "BES men" while "communicating" with the suspects are allowed to use both special equipment and firearms. And it is not difficult for a man with a weapon, in principle, to convince the interlocutor of many things.
"The bill that was voted for does not meet the expectations of the business. The business wanted to have an analytical bureau that would really deal with the investigation of economic crimes. What we see today, this new body, that is, the Bureau of Economic Security, is quite militarized."
Executive Director at European Business Association (EBA)
Though the tone of the Bureau's work will largely depend on who will head it. The BES chairperson will be appointed on the proposal of the Prime Minister, who will choose among the three best candidates. And these candidates will be proposed by a contest committee of nine people. And the contest committee will be formed, in turn, by the NSDC, the parliament and the government.
’s sources say that the Chairperson of the Verkhovna Rada Committee on Finance, Tax and Customs Policy Danylo Hetmantsev may head the Bureau. He will be a rather strict executive, focused on "tightening the screws." This Hetmantsev’s style is evidenced by some of the ideas that have recently been articulated. For example, from time to time Hetmantsev comes up with an initiative to expand the range of taxes and fees, as well as increase VAT from the current 20% to 22-24%. And for that he is sometimes harshly criticized by both private entrepreneurs and supporters of tax liberalization.
The money factor
The fact that more than half a billion hryvnia has already been spent on the establishment of the Bureau was mentioned above. But this is probably just the beginning. The position salaries of the BES officials have not yet been finally approved. Although it is known that those employees who have special ranks will receive a fee of at least 20 living wages. Today this minimum is 2,270 UAH, and if you multiply this amount by 20, you get 45,400 UAH.
And here we can agree with the head of the Ministry of Finance, who says that it is not a fact that another anti-corruption body that needs to be maintained with taxpayers' money will be able to more effectively influence the rates of solving economic crimes and, accordingly, fill the budget.
"There are big risks that by creating a monster in the field of economic security, we are not solving the problem, we are only multiplying it," says Serhii Marchenko. And this is, basically, true.
«We have experience in establishing new structures of law enforcement agencies, numerous anti-corruption agencies. So far, there is no result from their activities. There is a danger that the BES will also exist only formally. Carrying out investigations—yes, but will they have a logical conclusion?»
Let's include this question to the rhetorical ones. And note that imitation of work is not so bad. The main thing is that the BES does not become the reincarnation of those aggressive fiscal authorities of the beginning of the 2000s that were mentioned above. After all, it is not for nothing that the European Business Association reminds: 15% of complaints that came from business in 2020 were against the actions of law enforcement agencies. With the Bureau of Economic Security, a similar situation may repeat itself, especially since the criteria for economic crimes in the law are written out extremely vaguely.
But this is not the end of the story.
Everyone will go to jail
What will be discussed below is not directly related to the activities of the Bureau. But we cannot but mention these things. The fact is that now the Verkhovna Rada is considering a bill No. 3959-1 entitled "On Amending Certain Legislative Acts of Ukraine to Implement Some Provisions Regarding the Operation of the Bureau of Economic Security of Ukraine."
The bill contains an interesting proposal—amendments to Article 212 of the Criminal Code—"Tax evasion". The deputies want to increase the fine for this crime and introduce criminal liability for it up to 7 years in prison. Now this article does not provide for imprisonment at all. The sanction for it is a fine from 3,000 to 5,000 non-taxable minimum incomes of citizens or deprivation of the right to hold certain positions or be engaged in certain activities for up to three years.
The prospect of imprisoning entrepreneurs for up to 7 years is an alarming signal that the state is changing its priorities. It turns out that now it not so much wants to receive its taxes as to be able to punish entrepreneurs with a prison term. Why would it? Let's leave the question unanswered for now and look at another article.
Namely at Article 222-2, that provides for up to 12 years in prison for illegal VAT refunds or groundless filing of a VAT refund application. What can it be related to? Article 191 of the current Criminal Code ("misappropriation, embezzlement, or seizure of property through abuse of office") that provides for imprisonment for up to five years.
The initiative to make the punishment much stricter is already causing some feedback. For example, the European Business Association called the innovations with VAT "unacceptable" and called on the Speaker of the Verkhovna Rada Dmytro Razumkov and the people's deputies to withdraw the bill.
The second new law concerns smuggling—the investigation of this crime, as we remember, will also be in charge of the Bureau of Economic Security. And here it is worth remembering the bill No. 1445-их—quite fresh and submitted by the President personally. This document proposes to impose three new articles:
- 201-2 ("Smuggling of goods")—up to 11 years of imprisonment;
- 201-3 "Smuggling of excisable goods"—up to 12 years of imprisonment;
- 201-4 "inaccurate declaration of goods"—to 11 years of imprisonment for inaccuracies in the customs declaration.
What does all this have to do with BES? Directly—in no way. And indirectly, increasing the severity of these crimes gives law enforcement officers two main opportunities. The first one is to carry out covert investigative actions on the defendants, for example, wiretapping. And the second one is the possibility of arresting and keeping a person in custody for the purpose of not so much punishment as forcing a bribe. That is, there is a wide margin for blackmail and corruption.
Political scientist Kyrylo Sazonov expresses another concern related to the above mentioned. He says that the Bureau can be established, but the tax police can remain as well. As well as the unit "K", that exists within the SSU. And even counterintelligence will not be kept out.
«Business can be suspected of financing terrorism and voila! Counterintelligence is back in the game. Arrests of property, accounts, seizure of documents and other familiar games. There are more and more hungry mouths, there are not enough positions for everyone, and control is always more interesting in terms of money than doing business. Let's see what they will come up with.»
Well, let's see. The Bureau of Economic Security has not yet begun its work.