Commissioned criminal cases against businesses are perceived by foreign partners as risks

Ukrainian companies attempting to operate in international markets continue to face problems related to politically motivated criminal prosecutions by domestic law enforcement agencies. The existence of criminal proceedings negatively affects compliance abroad and creates additional reputational risks for businesses. The problem is particularly acute when such cases show signs of being politically motivated or are used as a tool to pressure entrepreneurs, UNN writes.

Despite the efforts of the Prosecutor General's Office to minimize criminal cases aimed at pressuring businesses, the problem of using criminal proceedings as a tool to eliminate competitors remains acute in Ukraine. Experts and business community representatives note that such practices create a negative image not only for a specific company but also for the country as a whole, as foreign partners assess the risks of cooperation with Ukrainian businesses through the prism of the legal system. Often, partners refuse to cooperate with companies that are involved in criminal proceedings, and foreign banks refuse to open accounts, which is an obstacle for the company's further entry into the international market.

Reputational risk for companies

Serhiy Shabovta, Head of the All-Ukrainian Association of Security Market Operators and an international security expert, believes that the practice of politically motivated criminal proceedings remains one of the serious systemic problems of the Ukrainian state. According to him, the mechanism of such cases has become so widespread that it has virtually turned into a tool for influencing business.

The government changes, the clients change, but the mechanism of politically motivated criminal cases, unfortunately, has become such a scourge for Ukraine, as a separate state, that it simply cannot be conveyed.

The international expert emphasizes that the problem lies not only in the criminal proceedings themselves but in undermining the basic principle of private property protection. When the law enforcement system is used for pressure, it destroys trust in the legal field as a whole.

We see a situation where the mechanism of private property is being destroyed in every possible way by the state itself, whether through customs, tax pressures, or through the criminal actions of one or another branch of the law enforcement system.

According to him, a clear indicator of the situation is the fight against raiding. Formally, such cases are investigated, but in fact, serious criminal articles are almost never applied.

I recently conducted a study on the situation of the Ukrainian market in its relations with our law enforcement system. And, unfortunately, what is noted, and we give at least some signals that, for example, raiding has not disappeared in Ukraine as a crime against, first of all, private property, as a crime against Ukrainian business.

Shabovta noted that, for example, in cases of raiding, law enforcement officers often use only a "light" article on document forgery, while articles on illegal seizure of property are practically not applied. There are no open cases under such articles.

In his opinion, such a situation creates an atmosphere of uncertainty for business and at the same time demonstrates the weakness of state institutions to international partners.

The West carefully checks Ukrainian businesses

At the same time, entrepreneurs working with European partners note that the West is increasingly thoroughly checking potential counterparties from Ukraine.

Serhiy Dorotych, head of the public organization "SAVE FOP" (Save Individual Entrepreneurs), who has experience working with partners from Belgium and Spain, noted in a comment to UNN that the first document required by foreign institutions is a certificate of no criminal record for the company's head.

The first thing they require is a certificate of no criminal record for the head. The second is an explanation of the company's activities. This is a standard package of documents for cooperation.

According to him, such a practice is part of the verification system used by European companies and financial institutions before starting cooperation.

The West clearly analyzes with whom it enters into any relations.

Similar requirements apply when opening accounts in European banks. The presence of any legal problems or suspicious circumstances in the biographies of company executives can be a reason for refusing cooperation.

Criminal cases as a compliance factor

Experts note that for Western partners, the mere fact of a criminal proceeding, even without suspicion or an indictment, can be a sufficient signal to refuse cooperation. This significantly worsens the investment climate in Ukraine.

Excessive pressure from law enforcement, sometimes baseless initiation of criminal cases, not only do they not create an investment climate, they even encourage the curtailment of businesses that previously operated in Ukraine.

In the international compliance system, companies check partners through open registries, media, and specialized databases. If criminal cases or accusations appear in the information field, this automatically increases the risk of cooperation.

As a result, a company may lose an important international contract or access to financial instruments simply because, for example, their direct competitors decided to order them to law enforcement instead of fair competition.

One example of such behavior could be the situation that arose around the "Konstanta" group of airlines, when a number of criminal cases were opened against them, apparently at the behest of competitors.

In particular, the NGO "ATO Veterans Council", which is associated with the company "Ukrainian Helicopters", appealed to a number of Ukrainian law enforcement agencies with statements about alleged offenses by companies belonging to the "Konstanta" group. Later, these statements were picked up by a number of other public organizations known for working on orders against business representatives. This was obviously done as part of the struggle for UN contracts for humanitarian missions to African countries.

A number of criminal proceedings were opened against the "Konstanta" group of companies, some of which have since been closed due to the absence of a crime. However, several cases are still "under investigation", including by the Security Service of Ukraine. This may be due to the fact that former high-ranking law enforcement officers work at "Ukrainian Helicopters", who apparently still have influence over colleagues in investigative bodies.

One such criminal proceeding, No. 12022000000001276, was registered on November 25, 2022, by the Main Investigative Department of the National Police based on a statement by Pavlo Moshkovsky, head of the NGO "ATO Veterans Council".

In his statement, the "activist" claimed that the "Konstanta" group of companies was allegedly involved in aiding the aggressor state, and that the company's management wanted to seize SE "Antonov" and the "Ukrainian Helicopters" company itself.

The Main Investigative Department of the National Police investigated the case under Article 111-2 of the Criminal Code of Ukraine (aiding the aggressor state) until 2025, although the Criminal Procedure Code clearly assigns such crimes to the jurisdiction of the Security Service of Ukraine. Apparently realizing the futility of this criminal proceeding, it was "dropped" to the SBU, where it still "hangs".

Over four years of investigation into this proceeding, no violations have been established by the investigation, no person has been served with a notice of suspicion, and no materials have been submitted to court.

The fact of such a criminal proceeding itself undermines the reputation of companies operating in the international market. However, obviously, this was not the only goal of the clients. They wanted a complete cessation of competitors' activities.

Indeed, during the investigation, the "Konstanta" group of companies underwent several dozen searches, during which investigators seized and have not yet returned important technical documentation and equipment necessary for the functioning of the enterprises, and the companies' bank accounts were frozen. The totality of such actions jeopardized the fulfillment of not only international contracts but also defense orders in Ukraine.

Lawyers interviewed by UNN note that this is a classic example of politically motivated persecution of business representatives.

Thus, politically motivated criminal proceedings in Ukraine have long ceased to be merely a problem for individual companies and have turned into a systemic factor that harms the international reputation of all Ukrainian businesses and worsens the country's investment climate. It is obvious that as long as the law enforcement process is used as a tool for pressure, settling scores, or eliminating competitors, Ukrainian enterprises lose contracts, face problems during compliance, receive refusals from foreign banks and partners, and are forced to spend resources not on development, but on protection from baseless persecutions. And all this directly hits the country's economy.