The vast corruption of Ukraine’s sanctions regime

Soon after Russia invaded Ukraine, a former US government official visited Kiev to inquire how he could help to supply humanitarian aid to the people on the front line. He had formed a non-profit agency, raised $2 million and provided over 70 ambulances to help Ukrainian soldiers and citizens. But during his visit he was shocked to learn about the high level of corruption.

‘Sanctioning successful companies should not be done to clear out competitors or punish someone you don’t like’

While driving to Nikolaev, George Tuka, a former deputy minister, briefed him on how corruption was endemic and intractable in Ukraine. ‘I don’t believe you’, replied the former official, who had received high honours for his humanitarian work during the war. ‘You’re just saying that because you are a political opponent of Zelensky.’ But during his next visit the American, a former senior official in the US Agency for International Development, was sitting in the car with Tuka when the radio announced the then head of the Ukrainian Supreme Court, Vsevolod Kniaziev, had been arrested and detained on suspicion of taking a bribe (Kniaziev’s trial has not yet taken place and he denies any wrongdoing). Tuka was furious and swore loudly. The American then understood and accepted corruption could not be ignored just because Ukraine was being invaded by Russia.

Corruption remains a problem in Ukraine, especially regarding sanctions. ‘Corruption in Ukraine is unprecedented’, Tuka told me. Western readers will be surprised to learn that at least 17 Ukrainian companies and at least 1,611 citizens have been sanctioned by the Ukrainian government. The precise figures are not available because the nationality of those sanctioned are not listed. ‘Nobody’s safe’, says Julia Kiryanova, CEO of Smart Holding, an investment conglomerate, which has been targeted and subjected to police raids, seizure of assets and criminal charges on vague national security grounds. She claims that sanctions are used to force a fire sale of profitable firms which will be exploited by politically connected Ukrainian businessmen to enrich themselves.