Interview with former anti-graft agency head Novikov

Oleksandr Novikov, former head of Ukraine’s National Agency on Corruption Prevention (NACP), on public officials’ asset declarations, corruption around military recruitment, and international sponsors of the war in Ukraine. NV Radio interviewed Novikov on Jan. 15.

NV: Your four-year term of office as the NACP head expires on Jan. 15. Does that make you sad?

Novikov: I’m proud of the result that the NACP team managed to achieve in these four years. I’m sure this is a team that is able, together with other anti-corruption bodies and honest authorities, to make Ukraine an honest country, free of corruption. That’s why I’m proud, not sad.

NV: For a while, the asset declaration register has been closed due to the war. How do you think it affected the work of Ukraine’s anti-corruption system in general?

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Novikov: A total of 90% of Ukrainian citizens, or even 100%, are NACP allies in overcoming any corruption practices, and 100% of journalists are also allies. Obviously, the lack of a public declaration register doesn’t let us work together with you as much as possible to detect any cases of bribery, any cases of corruption, and most importantly to make it impossible to make use of any ill-gotten wealth. The declaration register exposes one’s wealth to citizens, which means there is no point in abusing your official position. Of course, the lack of public declarations has greatly reduced our ability to detect illicit assets.

NV: Now that the register is open, can you give us a few examples of declarations that surprised you, inviting a deeper scrutiny of how some officials might have accrued their wealth?

Novikov: I cannot name specific declarations. We, as a state authority, can only talk about the results of inspections. As of today, several dozens of full declaration audits have been initiated based on NACP’s work. The agency may announce the conclusions on Feb. 10.

What did this system show? It showed that, unfortunately, in the previous period (and in this period, I’m sure, the results will be the same) NACP identified cases of illegal enrichment or unsubstantiated assets in more than 1,000 declarations out of 800,000.

Unsubstantiated assets are defined as wealth not backed by legal income, up to UAH 8 million ($210,944), while illegal enrichment of more than UAH 8 million is a crime. Together with our colleagues from the Specialized Anti-Corruption Prosecutor’s Office (SAPO), we collect up to UAH 8 million through the court, and if it’s over UAH 8 million, [we collect] together with the National Anti-Corruption Bureau of Ukraine (NABU), or other law enforcement agencies, along with confiscation of property and criminal prosecution.

NV: How does this scrutiny work? Is it done by an algorithm of some sort, or do people have sift through huge swaths of data?

Novikov: The NACP team did something incredible during the [first] year of the war. If NACP had access to only 39% of the data specified in the declaration and other registers before the war, today the agency is the declarant itself, because we give these data to the declarant to fill out the declarations, have access from 79% to 82% data. This allows, firstly, to automatically check up to 30% of declarations and issue certificates of financial integrity to officials. We did this before the new year and issued 156,000 such certificates.

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In fact, what we saw during the checks is that over 90% of officials (and that’s why our state is so stable) are honest and work in the public interest. All others who didn’t specify the relevant information in the declaration or who specified more property than earned income [could justify], are graded by the system according to a certain list of risks. We start checking such officials from the first suspicious declaration. In one example, a person declared UAH 200 million ($5.2 million) in cash, while he and his wife earned UAH 6 million ($161,087) during their lifetime. Obviously, this suggests illegal enrichment.

NV: Please clarify about 156,000 certificates, do they refer to potentially dishonest officials?

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Novikov: These 156,000 certificates (were issued) before the new year, and now it’s 178,000. On the contrary, it’s about honest officials. By the way, you can go right now to the declaration register and take a look. It’s indicated opposite their names that the declaration has passed an automated check, and you can see a green check mark.

I want to explain why we do this. In fact, the ultimate goal of anti-corruption bodies is to build a culture of integrity. It’s precisely not to divert resources to investigating honest people that we have created an automated verification procedure. And they are the majority in Ukraine.

NV: The system determined that 178,000 are honest officials, out of over 800,000 declarants. That’s a rather modest number.

Novikov: So far, not all 800,000 declarations have been submitted for the previous year, but only about 600,000. We hope this figure will reach over 200,000. That is, 30% will receive such certificates.

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And the discrepancies are not always explained by some corruption offences. In 99% of cases, this is not related to corruption. Those declarations that show large amounts of cash fail to pass an automated check as we have to ask the declarant where this large amount of cash comes from. Declarations with accounts opened abroad also fail to pass the check. Currently, many women with children who work for the state have submitted declarations while living abroad. Whoever has property abroad, we have to check the circumstances of acquiring such property. And many similar cases.

I’d like to add the fact that some officials passed an automated check, received a certificate of financial integrity, doesn’t mean that NACP cannot check these declarations. If you, Dmytro, or your fellow journalists or citizens suddenly see that the declaration has indeed passed an automated check, but the person drives a car that is not in the declaration, or uses the house, let us know and we’ll run a full audit on them.

NV: And what to do when a person tells you and me on camera that they rents a house for UAH 100 ($2,63) a month?

Novikov: Good question. NACP knows how to respond to such cases. I would like to remind you that two weeks ago, the chairman of the Supreme Court was found guilty of receiving a gift in the form of renting a house at an undervalued price, based on the protocol I drafted. He paid UAH 1,000 ($26,37) in annual rent for an apartment in downtown Kyiv. Clearly, that is not a legitimate market rate. And the court recovered from him compensation for this illegal gift worth UAH 1 million ($26,368).

NV: Is it still widespread to try and hide some of your assets by transferring them to relatives, friends, bodyguards, and so on?

Novikov: Such schemes are very active. I would say they’re not only used by politicians, but also by law enforcement officers.

There are already several court decisions on the recovery of such assets from officials, in particular from judges. In total, we handed over 31 materials to SAPO for the confiscation of such property registered to other persons.

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One of the materials even concerns an employee of the Office of the Prosecutor General’s internal security unit. Unfortunately, our colleagues from SAPO refused to file a lawsuit in that case. He registered an apartment in his 89-year-old grandfather’s name.

Today, I once again signed an appeal to the SAPO head. I hope he’ll file a lawsuit on this fact. Because a person who monitors the integrity of prosecutors cannot own property registered to other persons without appropriate legal income.

NV: Is it possible to somehow interfere with the automated inspection system?

Novikov: Before being appointed as the NACP head, I had worked in the prosecutor’s office for 16 years and eight years in the Office of the Prosecutor General. Interference with the external independent testing system, which enables students to enroll in universities for free, was one of the big cases where I led the investigation.

With this experience, I came to NACP and that’s why we’ve built a system that provides logging of any operations in the risk analysis system. Therefore, I’m sure that malicious tampering is impossible. If someone tries to interfere, it will be recorded. Russia attacks us every day, every week, trying to get access to our data. Therefore, NACP’s cyber security system is top-notch.

NV: What can you say about corruption risks in the work of military recruitment centers and military medical commissions?

Novikov: We found there are anomalies in the recruitment centers in Poltava and Kyiv oblasts, which indicate the existence of corruption schemes in some medical commissions. Because these are obvious anomalies that aren’t related to diseases, etc.

We provided the government, the Defense Ministry, and the Health Ministry with specific recommendations on how to make [corruption] in the military medical commissions impossible.

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These recommendations included clearly defined the lists of diseases that don’t guarantee an exemption from military service, a unified approach to appointing military medical commission members, deadlines for making final conclusions, and unified payment procedures for military and civilian doctors involved.

To date, those have not been implemented yet. We hope the government, the Defense Ministry and the Health Ministry will soon resolve this issue. We won’t have such situations as with Mr. [former Odesa military commissar Yevhen] Borysov, employees of the Lviv or Dnipropetrovsk military medical commissions or recruitment centers, when they clearly benefited from corruption schemes, as evidenced by the detected cases of their illegal enrichment.

NV: Do you think these recommendations can be included in the mobilization bill?

Novikov: Unfortunately, the government had failed to send us the mobilization bill [for feedback], which led to the parliamentary Committee on Anti-Corruption Policy directly noting the presence of corruption risks in it. If such a bill is submitted (and the law provides for it, the government simply violated the procedure by not sending us this bill), I hope all these recommendations will be included in the bill, following NACP’s advice.

Otherwise, we’ll get even more corruption. The tougher the punishment, the tougher the work of recruitment centers and military medical commissions, the bribery there will be. These corruption risks can be managed only by building systems where all decision-making criteria are properly defined, where recruitment centers employees receive a decent salary. I’m sure that more than 90% of them are honest.

NV: NACP launched a list of international sponsors of war. How did it work?

Novikov: Six large transnational corporations have already left Russia thanks to this mechanism. And this is the only tool of geopolitical influence on transnational corporations on the part of Ukraine. This is a long-range economic weapon, a reputational one, which reduces Russia’s financial capabilities, as well as a technological weapon because Western business is about new technologies.

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Those were three Greek logistics companies, the largest global paper producer Mondi, the largest Indian diamond producer, the Irish Peninsula Petroleum. But these are the only ones that have exited the Russian market after we put them on the list.

There are dozens more companies—and I cannot name them—which have left Russia out of fear of being included in this list. They are large transnational corporations, operating in every country around the world. Just last week, one of the Chinese companies requested a meeting with NACP to provide us with documents confirming withdrawal from Russia.

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Read the original article on The New Voice of Ukraine