How Tatarov and Shurma plan to reshape the Economic Security Bureau

NV’s sources believe that the reform of Ukraine’s Economic Security Bureau (ESB) will begin in 3-6 months. However, the Bankova (colloquial term for the President’s Office, after the street in Kyiv it is located on) plans to implement its own approach: to turn the bureau into a superior state body that will even control the National Anti-Corruption Bureau of Ukraine (NABU) in the economic component of investigations.

In December, the International Monetary Fund (IMF) will review its program with Ukraine for the second time. At stake is a $15 billion extension of the program over the next few years. More than $100 billion in donor funds will be forthcoming if the government successfully implements the reform program.

NV’s sources in the Verkhovna Rada (Ukrainian parliament) are confident that the IMF plans to add a new benchmark to its conditions for continued cooperation: a re-staffing of the ESB through an independent competitive hiring process overseen by international experts.

The NABU was created in 2015 with Artem Sytnyk as its director. If independent leadership is selected for the ESB, the body will leave the President’s Office orbit and will be able to cause a considerable upheaval in the power vertical. ESB has this potential because it combines the investigative and control functions transferred to it from Ukraine’s SBU security service and the Fiscal Service. However, it seems that due to the inevitability of the ESB’s reset, the President’s Office decided to somewhat spoil the idea of ​​combining economic investigations into a single law enforcement agency.

NV received a draft law that is being developed at the Justice Ministry.

The document calls for making a number of changes to the Criminal Code. The main innovation will be that the ESB will turn into a supervisory body for the NABU. The detectives of the Anti-Corruption Bureau will be required to inform and coordinate with ESB detectives on the conduct of investigative actions in matters that concern business activities. This, in turn, risks resulting in constant information leakages.

NV has looked into how the behind-the-scenes struggle over the ESB reboot is unfolding.

The Tatarov Economic Security Bureau

In November 2021, the ESB became operational in Ukraine as the only body responsible for dealing with economic crimes. Since then, the media has written regularly about how the agency has come under the political influence of the deputy head of the President’s Office, Oleh Tatarov, who is responsible for cooperation with law enforcement at the Bankova.

Former tax man Volodymyr Melnyk had his name appear in the press as the Bankova’s favored candidate even before the results of the hiring competition were announced. Melnyk has repeatedly denied Tatarov's patronage over the body he heads. In response to criticism, he promised a fight against economic crime and voiced the ambitious goal of "reducing the share of the shadow economy."

The first competitive hiring wave at the ESB turned into a festival of the old guard. 80% of positions for detectives and analysts were filled by members of the infamous Fiscal Service.

"The authorities have turned ESB into a powerful homunculus for the nightmare of business under the control of Tatarov," Vitaly Shabunin, head of the board of the Anti-Corruption Center, wrote on his Telegram channel last week.

"Tatarov does not like the reboot of the ESB, as an independent head of a law enforcement agency would be a nightmare for the OP." He believes that the President’s Office has been using the ESB to suppress oligarch Ihor Kolomoisky as a source of important information pertaining to various corruption investigations.  In September, the Bureau, together with the SBU, were the first to charge Kolomoisky in the Privatbank case. Thus, Shabunin believes, the oligarch has ended up in the hands of the SBU, instead of those of the anti-corruption authorities. This week, the Supreme Anti-Corruption Court canceled all indictments against the oligarch which NABU and the Special Anticorruption Prosecutor had been preparing for several years, citing the statute of limitations.

"The ESB limited themselves to one small paragraph and handed a charge in the half-billion-dollar case to only Kolomoisky. They supported the closed hearing in court, so that no one could see what kind of circus they were really staging," added Shabunin.

Doubts about Kolomoisky remaining under indictment were a trigger for G7 ambassadors in Ukraine. "[The ambassadors] clearly saw that the ESB needs to be rebooted," a source in the leadership of a Rada committee explained to NV.

A little more discreetly, the European Business Association (EBA) also called on the country's leadership to reboot the Bureau. The organization believes that the business community is interested in reducing the shadow sector of the economy, and not in increasing pressure on transparent big business. Danylo Hetmantsev, the head of the parliamentary Finance Committee and a member of Zelenskyy’s team, unexpectedly emerged as a situational ally of reformers and business in rebooting the ESB.

He penned the Draft Law (1088−1), which includes the wishes of business and international partners regarding the relaunch of the Bureau. Among the main provisions: a new competitive procedure for the appointment of ESB’s director by the a majority vote of a selection committee of international experts; recertification of all the Bureau’s employees, both at the head office and at local divisions, just as it was with the election of the heads of the SAP, NABU, and NAZK (National Agency on Corruption Prevention).

In the spring of 2023, Hetmantsev eviscerated ESB’s work in the media, telling Interfax-Ukraine that , "the state is not paying sufficient attention to [the ESB’s] work because it is, to put it mildly, insufficient. That is why our [Western] partners are actually following the ESB’s activities and are just as dissatisfied with the results as we are. The ESB is the most important body in overseeing the use of the funds that they are providing us now and will provide for recovery. This is the number one body. And it is impossible to leave this domain in the state it is in now."

Read also: Oligarch Kolomoisky is blackmailing the government from jail, journalist alleges

Hetmantsev also pointed out that the ESB has stalled a key case involving the sale of Russian ammonia for several months, and that cinema chain Multiplex asked for protection from the Bureau’s detectives.  They filed a criminal case against the chain after the company paid its due debt to the national pension fund.

A game of two reforms

NV’s sources in the Rada say the time frame for the adoption of Hetmantsev's draft law is from three to six months. It has already been a month and a half since the document was included in the Rada’s agenda, but it has not yet been considered.

"There are more urgent European integration decisions. So far, the draft law on the reboot of the ESB is not in the memorandum’s benchmark. If it appears there, the adoption of the law will be an absolute priority for us," Hetmantsev explained.

On the other hand, Shabunin believes that the President’s Office is deliberately stalling in order to have time to prepare its own version of the ESB reform. The document itself is being developed by the Justice Ministry.

The Center for the Prevention of Corruption (CPC) claims to have familiarized itself with the government's draft law, which it says preserves the status quo in the ESB.

Read also: Shurma and Tatarov may soon leave President’s Office — Ukrainian MP

"This draft law makes the ESB the supervisor of all pre-trial investigation bodies in the business sector and gives it access to all information, search details, and documents required by other bodies. The ESB will understand who is investigating what and why. ESB agents will be allowed to be present at all searches carried out by other authorities. This is, first of all, physically impossible, and secondly, it is a tool for centralized control. For example, NABU is going to hand over a notice of suspicion to a high-profile suspect. NABU takes permission to search the suspect’s premises and must notify the ESB about it," explains Olena Shcherban, head lawyer for the CPC, detailing her own reservations about the government’s initiative.

One of the obvious results of these changes is that any ESB employee will be able to leak information on the progress of the investigation.

It remains to be seen, however, whether these provisions will be included in the final version of the bill.

Denys Malyuska, the head of the Justice Ministry, did not respond to NV's request to comment on the preparation of this law, and Serhiy Ionushas, ​​the head of the Rada’s Committee on Law Enforcement, where the draft law is to be sent, told NV that it has not yet been registered in the parliament.

Hetmantsev explained the logic of the government's actions: the ruling majority plans to adopt two bills at once — both the one he authored and the one from the ministry.

NV received a second unofficial confirmation of giving the Bureau exactly such powers from an interlocutor in the President’s Office in the circle of Rostyslav Shurma: "The ESB will be the only body that will investigate economic crimes. This will strengthen ESB's independence from anyone."

"[Rostyslav] Shurma and another well-known deputy head of the OP [Oleh Tatarov — ed.] are trying to make changes to the criminal code which involve the Cabinet of Ministers. We noticed it immediately. Our Western colleagues asked in the OP: what do you write there if all the changes in the ESB [Hetmantsev’s draft law— ed.] have been agreed upon with international partners?" said a chair of one Rada committee.

The government's commitment to reform the ESB is also mentioned in a letter from the White House insisting on reforms and is among the list of EU integration reforms. The EU and United States are not leaving Zelenskyy's team any chances to avoid a real reform of the ESB.

The Bankova will obviously try to advance the government bill in the next few months. The goal is to leave at least informal channels for situational awareness of investigations in both the ESB and NABU.

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Read the original article on The New Voice of Ukraine