09/08/2018 - Corruption is one of the main obstacles to carrying out long-awaited reforms of state-owned enterprises (SOEs) in Ukraine, according to a new OECD report.

SOEs make up a substantial part of the Ukrainian economy, provide key public services, and represent the largest employer in the country. However, most operate at a loss and the biggest are mired in corruption and political graft scandals.

While the government recently announced major SOE reform, it has so far failed to ensure a clear role of the state as owner and proper supervision to protect them from political interference.

The report identifies areas that need to be addressed and makes a number of recommendations to Ukraine, including to:

• Reduce the large number of SOEs
• Issue a state ownership policy, reduce the number of ownership entities, and find a way to exercise ownership rights through a single entity staffed with professional civil servants and shielded from undue political interference
• Abandon corporate forms reserved for SOEs only. In particular, eliminate unitary enterprises, most of which are still not obliged to have supervisory boards or undergo external independent audits, which opens them up to corruption
• Establish supervisory boards and select chief executive officers through an independent and competitive process, and protect them from outside pressure and improper interference in their activities
• Provide for effective financial control over SOEs ensuring that audit functions are not used for political or other improper interference in their operations
• Rigorously implement the new law on privatisation, properly resource pre-privatisation and privatisation processes and ensure its full transparency and integrity
• Introduce tailor-made anti-corruption programmes in SOEs. Appoint Anti-Corruption Commissioners through open competitions, and ensure they are properly trained and have sufficient resources
• Ensure that the Law on Prevention of Corruption, including the requirement to declare assets, clearly and consistently applies to supervisory boards and management of SOEs

The full report and recommendations is available here. 

The report is published under the Istanbul Anti-Corruption Action Plan, an initiative launched in 2003 under the Anti-Corruption Network for Eastern Europe and Central Asia (ACN), which is a part of the OECD Working Group on Bribery's outreach work. More information is available at www.oecd.org/corruption/acn/.

For further information, please contact Tanya Khavanska at the OECD’s Anti-Corruption Division at +33 1 45 24 91 39 or Tanya.KHAVANSKA@oecd.org. 

Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.