Ukraine's judicial system is undermined by the executive branch and suffers from widespread corruption and nepotism (HRR 2016). Businesses report that irregular payments and bribes in exchange for favorable judgments are common (GCR 2015-2016). Three out of five Ukrainians consider judges to be corrupt (GCB 2015). The process of dispute settlement is ineffective because of an inadequate legal framework and poor enforcement of arbitration decisions which further weakens investor confidence (ICS 2017). Judicial unpredictability and an inadequate institutional framework are additional problems for the business and investment climate (EEAS 2016). Reforms of the judiciary, adopted in mid-2016, providing for a new Supreme Court, the strengthening of judicial independence by appointing judges via a judicial council rather than parliament, and making the court system simpler (EEAS 2016). The High Qualification Commission has thus far selected 120 judges of the new Supreme Court, while overriding the Public Integrity Council's vetoes of a quarter of the nominees against whom there were allegations of evidence of corruption: The selection is, nevertheless, still pending the approval of the president (Kyiv Post, Aug. 2018). The implementation of the reforms was still underway at the time of review. Enforcing a contract takes significantly less time than the regional average, but costs are nearly twice as high as the regional average (DB 2017).

In January 2017, judge Artur Yemelianov was suspended after prosecutors opened a case against him alleging that Yemelianov engaged in rigging of the case allocation process to ensure judges delivered his preferred outcome (Reuters, May 2017). Yemelianov denies all accusations of wrongdoing (Reuters, May 2017).

Companies face significant risks when dealing with the Ukrainian police. More than half of Ukrainians consider the police to be corrupt (GCB 2015). The police have often been able to act with impunity (HRR 2016). The United Human Rights mission in Ukraine has highlighted frequent impunity for law enforcement abuses, which they attribute to pressure on the judiciary, as well as the inability and unwillingness of the country's prosecutors to investigate the abuses (HRR 2016). In 2015, hundreds of police officers were fired for alleged corruption (Reuters, May 2016). However, there have been growing tensions between the police and the prosecutorial service, threatening to undermine reforms (Reuters, May 2016). Companies do not trust the police to uphold law and order (GCR 2016-2017).

Foreign companies expanding to Ukraine should beware of the high risks of corruption within the country's public services. Corruption is the most problematic factor for doing business in Ukraine, and dealing with government administrative requirements is burdensome (GCR 2016-2017). Nearly nine out of ten businesses indicate they face corruption when doing business in Ukraine (UACC 2015). Companies indicate that bribery is common in the process of obtaining utility services (GCR 2015-2016). The freedom of private businesses to operate in a competitive market without excessive government interference has considerably improved since Euromaidan in 2014 (BTI 2016). The most commonly cited reasons by businesses for engaging in corruption are still given as "to accelerate procedures" and "to have access to certain services" (UACC 2015). While obtaining a construction permit takes fewer steps and is done relatively quickly, the costs associated with the process are over three times higher in Ukraine than in the rest of Europe (DB 2017). Starting a business is relatively easy in Ukraine; it involves only four steps and it takes only half the time of the regional average (DB 2017).

Companies face a significant risk of corruption when dealing with Ukraine's land administration. Almost three-quarters of companies indicate they expect to give gifts when obtaining a construction permit (ES 2013). The constitution protects property rights, but in practice, these rights are weakly enforced owing to an inefficient court system subject to political influence and extensive corruption (BTI 2016). In effect, companies report insufficient confidence in the protection of property rights (GCR 2016-2017). Expropriation is permitted under the law in criminal cases and failure to meet investment obligations in privatization programs (ICS 2017). Companies should also be aware that due to the ongoing conflict in Eastern Ukraine, the military may legally expropriate private property for military purposes (ICS 2017). The number of procedures and the length of time required to register property slightly exceed corresponding values for the region (DB 2017).

Companies have to deal with red tape and high corruption risks when interacting with Ukrainian tax authorities. Corrupt tax officials are a pervasive problem for small and medium-sized businesses (FitW 2016). Irregular payments and bribes are common when making tax payments (GCR 2015-2016). Tax regulations are among the most problematic factors for doing business (GCR 2016-2017). Companies also report that officers illegally pressure businesses to extort kickbacks in return for illegal tax cuts (UACC 2015). Before Euromaidan in 2014, the government frequently used the tax authorities to oppress the opposition; these practices have decreased in frequency since (BTI 2016). The courts now frequently deny requests by the prosecutor for unfounded tax inspections (Kyiv Post, Jul. 2017). Courts are increasingly giving fair treatment to private companies, whereas they would give primacy to protecting the state budget in the past (Kyiv Post, Jul. 2017). Companies spend 50% more time complying with regulatory requirements for filing taxes in Ukraine than in other countries in the region (DB 2017).

In May 2017, Ukrainian law enforcement agencies arrested 23 former high-ranking tax officials on suspicion of helping former President Yanukovych to steal nearly USD 4 billion from the state's coffers (RadioFreeEurope, May 2017).

Ukraine's customs administration is susceptible to corruption. Corrupt activities at the border represent the single most problematic factor for trade, and burdensome tariffs and demanding customs procedures increase business costs (GETR 2016). Companies indicate that irregular payments and bribes are highly common (GETR 2016). Companies rate the efficiency of the clearance process as well as the time predictability of the process as poor (GETR 2016). Dealing with import procedures takes on average significantly more time than elsewhere in the region (DB 2017). USAID stopped its funding of an anti-corruption project at the Odessa seaport customs facility, citing a lack of cooperation from the local authorities (Reuters, Dec 2016).

The public procurement system in Ukraine carries high risks of corruption. Companies indicate that bribes are highly common in public procurement procedures (GCR 2015-2016). Companies further report that diversion of public funds due to corruption and favoritism in decisions of government officials are very common (GCR 2016-2017). About one in six companies indicates that corrupt practices give access to government tenders (UACC 2015). Many of Ukraine's State-Owned Enterprises (SOEs) are unable to compete with private companies since they frequently operate at a loss and are subsidized by the government (ICS 2017). Reportedly, over UAH 150 billion of procurement funds were embezzled between 2010-2014 (OECD 2015). Allegations also exist that USD 1,8 billion in foreign aid was embezzled (Harper's, Aug. 2015). President Poroshenko owns a chocolate corporation that saw profits grow by 900% from 2013 to 2014 after he ascended to the presidency (Information, Mar. 2015), suggesting extensive corruption and embezzlement by top-level Ukrainian officials.

A new law entered into force in 2016, requiring that all procurement with a value over UAH 200,000 (goods) or UAH 1,5 million (services) has to be conducted via the new e-procurement system (Lexology, Feb. 2016). Additional information on procurement regulations, tender notices and procedures can be found on the Ministry of Economic Affairs' web-portal on public procurement.

Companies are recommended to use a specialized public procurement due diligence tool to mitigate the corruption risks related to public procurement in India.

There is a high risk of corruption in Ukraine's natural resource sector. The country's natural resources are exploited by the elite for political largesse and filling their party war chests (FT, Oct. 2016). Extraction and transportation of Ukrainian natural gas and oil are monopolized and controlled by the state-owned company Naftogaz (ICS 2017). Naftogaz has largely been cleaned up from corruption (The Economist, May 2017). Ukraine does not fully comply with EITI transparency standards yet and its legislation on transparency standards for the extractive industries is lacking (OECD 2015).

The former head of Ukraine's parliamentary energy committee, Mykola Martynenko, has been detained on charges that he embezzled USD 17,3 million by selling uranium concentrate at inflated prices (OCCRP, Apr. 2017).

The Criminal Code of Ukraine criminalizes active and passive bribery, attempted corruption, extortion, bribery of a foreign public official, money laundering, abuse of office and facilitation payments. The Law On Principles of Preventing and Counteracting Corruption is aimed at preventing and combating corruption in the public sector and requires financial reporting by state officials. The law regulates conflicts of interest by government officials, gifts and hospitality, and public official asset disclosure and introduces a broad list of officials who can be held liable for corruption offenses. Corporations are criminally liable for committing corruption offenses. Law No.1261-VII provides regulations that expand the jurisdictional reach of the anti-corruption legislation to apply to foreign persons working in the private sector. Government officials are obligated to file an electronic asset declaration according to Law No. 1022-VII. Ukraine's Constitution states the president is not allowed to perform any kind of paid professional activity or to be a member of a board of directors of any corporation that aims to generate profit. The law provides for protection of whistleblowers: Individuals reporting corruption are legally protected from dismissal or disciplinary action. Sanctions for corruption offenses are fines of up to twice the amount of illegally obtained benefits, penalties, and other measures including seizure of unlawfully obtained property The Law On the Fundamentals of Anticorruption Policy in Ukraine provides for the independent National Anti-Corruption Bureau to curb corruption among top-level officials, the monitoring of the implementation of conflict of interest regulations, transparent funding of political parties and annual reporting on the implementation of anti-corruption policy principles. In 2017, Ukraine announced that certain entities, particularly companies engaging in public procurement processes worth over AUH 20 million, will be obligated to comply with the "Typical Anti-Corruption Program for Legal Entities" (Lexology, Apr. 2017). The measures in this program include yearly corruption self-assessments, an obligation to instruct personnel on anti-corruption laws, and an obligation to establish internal procedures to protect employees who blow the whistle on internal violations (Lexology, Apr. 2017). Ukraine's anti-corruption legislation has thus far not been effectively implemented (BTI 2016). Ukraine has ratified the United Nations Convention against Corruption and is party to the Council of Europe anti-corruption conventions.

Ukraine's Constitution provides for freedom of the press, but in practice, journalists face several restrictions on their work. Journalists occasionally face violence and harassment, but the situation has considerably improved since Euromaidan (FotP 2016). Self-censorship remains widespread (FotP 2016). A new law requires journalists who report on government corruption to file public declarations of their assets, in an attempt to deter journalists (HRW, Apr. 2017). Freedom of access to government information varies; but local governments, in particular, do oftentimes not comply with requests for information (FotP 2016). The majority of media outlets in Ukraine are privately owned by a small number of wealthy businessmen (FotP 2016). The government has started the process of privatizing much of the print media (FotP 2016). Internet access is generally unrestricted (FotP 2016). Ukraine's media environment is considered 'partly free' (FotP 2016).

Civil society organizations (CSOs) in Ukraine are developed and represent a wide variety of interests. Civil society generally operates without major restrictions (BTI 2016). CSOs have grown in capacity and have been crucial in driving the development of the rule of law since the Euromaidan revolution (NiT 2017). Many former activists have entered parliament following the Euromaidan protests (BTI 2016). However, the influence of extremist organizations has similarly grown (NiT 2017). CSOs have been instrumental in the anti-corruption drive in Ukraine (BTI 2016).

• World Bank: Doing Business 2017.
• Freedom House: Nations in Transit 2017.
• US Department of State: Investment Climate Statement 2017.
• Kyiv Post: "Oleg Sukhov: Reformer and anti-reformer of the week", 18 August, 2017.
• Kyiv Post: "Specialist Sees Improvement in Ukraine's Tax Collection System", 3 July 2017.
• The Economist: "Ukraine is Struggling with Corruption Sometimes Successfully", 25 May 2017.
• Reuters: "Fighting Corruption, Ukraine Starts to Judge its Judges", 25 May 2017.
• Radio Free Europe: "Ukraine Arrests More Than 20 Former Tax Officials In 'Biggest-Ever' Corruption Crackdown", 24 May 2017.
• OCCRP: "Ukraine Detains Two Top Officials in Uranium Corruption Probe", 24 April 2017.
• Lexology: "Ukraine: Typical Anti-Corruption Program for Legal Entity is Approved", 20 April 2017.
• Human Rights Watch: "Ukraine: New Law Targets Anti-Corruption Activists, Journalists", 5 April 2017.
• World Economic Forum: Global Competitiveness Report 2016-2017.
• World Economic Forum: The Global Enabling Trade Report 2016.
• Bertelsmann Foundation: Bertelsmann Transformation Index 2016.
• European External Action Service: Association Implementation Report on Ukraine 2016.
• Freedom House: Freedom of the Press 2016.
• Freedom House: Freedom in the World 2016.
• US Department of State: Human Rights Practice Report 2016.
• Reuters: "USAID Ends Funding for Troubled Ukraine Customs Reform", 30 December 2016.
• Financial Times: "Ukraine: Still Far To Go In Fighting Energy Corruption", 18 October 2016.
• Reuters: "New Police force Finds Old Habits Die Hard in Ukraine", 17 May 2016.
• Lexology: "Ukraine: New Law Creating An Electronic Procurement System Came into Legal Effect", 22 February 2016.
• OECD: Round 3 Monitoring of the Istanbul Anti-Corruption Plan 2015.
• Transparency International: Global Corruption Barometer 2015.
• American Chamber of Commerce in Ukraine: Chamber Corruption Perception Survey 2015.
• World Economic Forum: Global Competitiveness Report 2015-2016.
• Harper's: "Undelivered Goods: How USD 1,8 Billion in Aid to Ukraine Was Funneled to The Outposts of The International Finance Galaxy", 13 August 2015.
• Information: 'Porosjenko fortsíŚtter oligarkiet i Ukraine', 23 March 2015.
• World Bank: Enterprise Surveys 2013.