Fabricated criminal proceedings harm the reputation of Ukrainian companies on the international stage

Ukrainian businesses still face undue pressure from law enforcement agencies. This situation often goes far beyond competitive wars and directly affects companies' ability to operate in international markets. Custom-ordered criminal prosecutions, even in the absence of official suspicions or indictments, lead to reputational losses for companies, writes UNN.

Criminal proceedings as a reputational risk

In order to be able to operate in international markets, companies must undergo compliance checks. This is a system of verification of a company's adherence to legislation, regulatory requirements, industry standards, and internal ethical norms. Compliance prevents fines, legal sanctions, and reputational risks, ensuring honest business conduct and transparency.

In international practice, business partners, banks, insurance companies, and investors conduct thorough checks of their potential counterparties. Due diligence and compliance procedures involve analyzing open sources, court registers, and any mentions of the company in the context of criminal cases.

Therefore, for Ukrainian businesses, the very fact of open criminal proceedings often becomes a serious blow to their business reputation and a significant obstacle to entering international markets. Even criminal proceedings that can be opened without evidence and not progress for years are perceived as a risk factor in international business practice.

For a foreign partner, the principle is simple: if there is a criminal dispute around a company, even without proven guilt, it can create legal and financial risks. In many cases, business partners simply refuse to cooperate to avoid potential problems.

This same principle applies to relations with foreign banks and financial institutions. Under international anti-money laundering (AML) standards, banks are obliged to check clients and their sources of income. Information about criminal proceedings automatically falls into the list of risk factors, and often companies involved in criminal cases are denied cooperation – account opening, transaction blocking, etc.

As a result, a company, even without a court conviction or a substantiated notice of suspicion, loses the opportunity to fully operate in the international market and becomes a hostage to custom-ordered criminal prosecution. In Ukraine, such an instrument is often used to eliminate competitors in the market.

SBU persecution as a tool of competitive warfare in the aviation market

Although recently the situation with law enforcement pressure on business in Ukraine has significantly improved and the number of custom-ordered criminal proceedings has significantly decreased, cases of persecution still exist. Obviously, one of the most striking examples is the competitive war in the air transport market, where the Security Service of Ukraine has become a tool for eliminating rivals.

For understanding: there are two major players in the air transport market – the company "Ukrainian Helicopters" and the "Konstanta" group of companies. Both are actively fighting for international contracts, in particular, UN humanitarian missions in African countries.

However, instead of active competition during international tenders, the struggle moved into the realm of criminal prosecution. The NGO "Council of ATO Veterans", 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 out orders against business representatives.

A number of criminal proceedings were opened against the "Konstanta" group of companies, some of which have already 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 obviously still have influence on 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 the head of the NGO "Council of ATO Veterans" Pavlo Moshkovskyi.

In his statement, the "activist" claimed that the "Konstanta" group of companies was allegedly involved in aiding the aggressor state, and the management of the enterprises wanted to seize SE "Antonov" and the company "Ukrainian Helicopters" 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. Obviously, realizing the futility of this criminal proceeding, it was "dropped" to the SBU, where it still "hangs."

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

The fact of such criminal proceedings itself undermines the reputation of companies operating in the international market. However, obviously, this was not the only goal of the customers. 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 custom-ordered persecution of business representatives.

Losses for the country's economy

As noted above, in international practice, compliance and due diligence checks of counterparties are standard. Therefore, the problem of custom-ordered or artificially prolonged criminal proceedings has a much broader dimension than individual conflicts between business and the law enforcement system. The consequences of such actions directly affect the country's economy as a whole.

When Ukrainian companies lose the opportunity to work normally in foreign markets due to reputational risks, the state loses foreign exchange earnings, tax revenues, investments, and opportunities for export development.

This is especially painful in high-tech industries, such as aircraft manufacturing, defense industry, or IT, where international cooperation is a key condition for development. And in the conditions of a full-scale invasion, when the sky over Ukraine remains closed for civil aviation for years, it is generally about preserving the industry as such.

Therefore, in a situation where the Ukrainian economy largely depends on exports and international cooperation, the issue of combating custom-ordered criminal cases goes far beyond an internal legal problem. In fact, it is about preserving the competitiveness of Ukrainian business in international markets and the air transport industry, which can further become one of the drivers of post-war economic recovery.