Recent corruption scandals at the Bureau of Economic Security of Ukraine (BES) once again raise questions about the effectiveness of this law enforcement agency, which was created to protect the state's economy. The detention of BES employees on suspicion of bribery and trafficking in criminal proceedings only strengthens public doubts about how well the BES is performing its key function—combating economic crimes rather than creating additional problems for business, writes UNN.
Corruption in the BES
According to Prosecutor General Ruslan Kravchenko, in two separate criminal proceedings, a senior detective of the BES territorial administration in the Kyiv region and an analyst of the Bureau's central office were exposed for using their official positions to obtain unlawful benefits.
According to the investigation, one of them demanded 15,000 dollars from a man who had previously appeared in a case involving the manufacture and sale of counterfeit money in exchange for not bringing him to criminal responsibility again. The other promised a representative of an enterprise to facilitate the issuance of a fuel storage license through his connections in the tax service for 2,000 dollars.
A system that is supposed to protect the state's economy cannot be a place for those who try to use their position for personal enrichment
People's deputies interviewed by UNN speak about the need for an audit of criminal proceedings investigated by the BES to check for potential contract-based motives. They also point to the need for a reboot and cleansing of the law enforcement agency.
What comes next is an audit of criminal proceedings and a check on the legality of their initiation; all of this is within the powers of the prosecution authorities. Therefore, I think they need to take a more thorough approach to the activities of the BES
It is obvious that, first and foremost, criminal proceedings that already raise questions in society and show all the signs of pressure on business should be checked. One of the most illustrative examples of such cases today is the criminal proceedings against a number of Ukrainian airlines that use aircraft leasing.
Five airlines in the crosshairs of the BES
As previously reported by UNN, the BES is investigating a number of criminal proceedings regarding at least five Ukrainian airlines, including UIA, Constanta Airline, Urga, N3OPERATIONS, and Skyline. These air carriers lease aircraft abroad from non-resident companies of Ukraine. The Bureau is convinced that the airlines should pay royalties in Ukraine—a fee charged for the use of intellectual property. At the same time, the fact that transport is not intellectual property is completely ignored, and Conventions on the avoidance of double taxation are in force between Ukraine and a number of countries. According to these agreements, Ukrainian companies pay taxes specifically for leasing in the countries where the leasing companies are residents.
It is on this legal construct, unsupported by legislation, that criminal proceedings for tax evasion are based. However, the problem is that such a position contradicts both international practice and judicial decisions that have already been established in Ukraine.
Why experts call these cases groundless
Ukrainian courts have repeatedly considered similar disputes regarding the rental and leasing of vehicles from non-residents.
In particular, in the case of Rail Logistics LLC, the court explicitly indicated that vehicles are not objects of intellectual property, and therefore payments for their rental or leasing cannot be considered royalties. Similar decisions by courts of various instances were made in other disputes—judges took the side of business. That is, Ukrainian judicial practice confirms a position obvious to the international market: an airplane, helicopter, or railway car is a vehicle, not an object of copyright or patent law.
This position is shared by specialized lawyers, tax experts, and specialists in the field of international taxation interviewed by UNN. They emphasize that international conventions on the avoidance of double taxation take precedence over internal interpretations of tax authorities, and leasing payments for transport cannot be equated to royalties.
That is why the criminal proceedings against the airlines increasingly resemble not a fight against economic crimes, but an attempt to create an artificial tax dispute through criminal prosecution mechanisms.
Risks for the entire industry
The situation is particularly dangerous due to the state in which Ukrainian civil aviation finds itself today. Due to the full-scale war, Ukrainian skies remain closed to civil aircraft. Domestic airlines are forced to operate abroad, incurring additional costs for basing the fleet, maintaining personnel, and maintaining the airworthiness of aircraft.
At the same time, it is these companies that continue to support Ukrainian pilots, engineers, technical personnel, and production competencies, which after the end of the war will become the basis for the development of civil aviation and post-war economic recovery.
The aviation sector is one of the areas where Ukraine can restore and further develop its leading positions in the global economy. Figuratively speaking, the key directions and key areas of development for the Ukrainian economy are clearly reflected on the Ukrainian state flag. That is, the blue color is the sky, and what is the sky—it's the aerospace sector, and what is a wheat field—it's the agricultural sector
Moreover, experts have repeatedly emphasized that civil and military aviation in Ukraine effectively form a single ecosystem. The same engineers, repair enterprises, and technical specialists work for both the civil sector and defense needs.
Therefore, any unfounded pressure on civil air carriers today actually hits not only business but also the strategic capabilities of the state in the future. In addition, if international lessors, due to the BES's persecution of the aviation business, begin to view Ukraine as a jurisdiction with unpredictable tax risks and a loose interpretation of international law, the consequence could be a refusal to cooperate with Ukrainian operators. For the industry, this would mean loss of access to aircraft, rising costs, and a further reduction in activities.
BES needs an audit
Political scientist Viktor Bobyrenko believes that recent scandals prove the need to return to the issue of rebooting the Bureau of Economic Security and strengthening control over the body's activities. According to him, internal security mechanisms must operate in any law enforcement structure to prevent the use of criminal proceedings as a source of illegal income.
We need to raise these issues again (rebooting the BES – ed.), to stir them up so they are heard. This includes rebooting and changing the leadership. Someone must be held accountable for such things
Former Deputy Director of the State Bureau of Investigation Oleksandr Babikov is also convinced that the fight against corruption is impossible without systemic changes. In his opinion, one of the key directions of the reform should be making it impossible to investigate contract-based criminal cases that are opened solely for pressure on business or extortion of funds.
Countering corruption is primarily a systemic approach where, first: it is impossible to investigate contract cases that are registered and investigated solely to extort money from entrepreneurs or citizens. It starts with minimizing state regulation... And again, a fair court
The expert also draws attention to the problem of using the criminal process as a tool of pressure through searches, seizures of property, and blocking the work of enterprises. "Everyone understands—a search was conducted, property was seized, someone was taken into custody—no one looks into why or if there is a crime there. But everyone understands that no one will return it (the seized property – ed.) until you pay money. And an investigating judge would rather refuse a defense lawyer ten times in returning property so as not to spoil relations with the law enforcement officer," Babikov noted.
It is obvious that if the state truly wants to cleanse the BES of corruption risks and restore business confidence, an audit of criminal proceedings should be one of the first steps of the body's new leadership. And it should start precisely with the cases regarding aircraft leasing.
The reason is simple: practically all independent experts interviewed by UNN agree on one conclusion—there are no legal grounds for the criminal prosecution of airlines in these cases. Moreover, existing judicial practice testifies to the opposite of the investigation's position.
Therefore, these specific proceedings could become a kind of test of the BES's readiness to abandon dubious cases that show signs of pressure on business.