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Methodical Recommendations on the Preparation and Implementation of Anti-Corruption Programs

30/ 10/ 2017
  On 22 September 2017, the Ukrainian National Agency on Corruption Prevention (the Agency) by Decision No. 734 approved the Methodical Recommendations on the Preparation and Implementation of Anti-Corruption Programs (the Recommendations). The Recommendations provide practical advice to companies on the preparation and implementation of an anti-corruption program (the Program), conducting an assessment of corruption risks, carrying out internal investigations and taking general anti-corruption measures. As a reminder, any company that participates in public procurement procedures for projects valued at or exceeding UAH 20 million, or wishes to participate in such a procurement, must adopt the Program in accordance with the Model Anti-Corruption Program approved by Decision No. 75 of the Agency dated 2 March 2017. Preparing the Program The Program must be specific to the company, take into account the companys corruption risks, its size, structure, location, field of activities, the complexity of its business processes, the range of its business partners and the number of branches (representative offices), etc. Corruption risk assessment The corruption risk assessment should reflect the companys actual risks. The Recommendations propose detailed criteria for the risk assessment and the procedure for determining their priority. Corruption risk minimization Companies should implement the following measures: - allocate responsibilities among the employees who initiate and adopt decisions with respect to a particular transaction; - establish hierarchical levels of authority for decision-making; - limit the use of cash; - conduct trainings; - include anti-corruption clauses in agreements (including employment agreements); - protect confidential information, etc. Companies in the same industry may also take collective measures and, within their framework, introduce similar anti-corruption and ethical standards, initiate improvement of legislation and establish business associations. Anti-corruption measures The Recommendations also list some anti-corruption measures, in particular: - Training of employees must be regular, practical and based on examples from the companys activities; - Protection of and reward for whistleblowers such as one-off bounties, increasing their salaries or granting additional paid vacations at the companys expense; - Prevention of conflicts of interest: develop clear instructions to be followed in case of conflicts of interest and introduce a requirement for employees to declare their private interests in relevant fields; - Implementation of a gift policy and policy for other company expenses establishing clear thresholds (maximum amounts, frequency, etc.) Conducting internal investigations Conducting internal investigations must be governed by a separate procedure, which should set out the procedure and other rules for establishing an investigation commission, the terms for conducting investigations and for demand and receipt of explanations from company employees, etc. *   *   * All companies should check their Program and the procedure for internal investigations against the Recommendations because it is likely that in the event of a dispute, significant differences between the companys internal policies and the Recommendations may be used as a pretense for challenging the measures taken by the company against those who violate the requirements of the Program. Additional notes This LEGAL ALERT is issued to inform Baker McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.

On 22 September 2017, the Ukrainian National Agency on Corruption Prevention (the “Agency“) by Decision No. 734 approved the Methodical Recommendations on the Preparation and Implementation of Anti-Corruption Programs (the “Recommendations“). The Recommendations provide practical advice to companies on the preparation and implementation of an anti-corruption program (the “Program“), conducting an assessment of corruption risks, carrying out internal investigations and taking general anti-corruption measures.

As a reminder, any company that participates in public procurement procedures for projects valued at or exceeding UAH 20 million, or wishes to participate in such a procurement, must adopt the Program in accordance with the Model Anti-Corruption Program approved by Decision No. 75 of the Agency dated 2 March 2017.

Preparing the Program

The Program must be specific to the company, take into account the company’s corruption risks, its size, structure, location, field of activities, the complexity of its business processes, the range of its business partners and the number of branches (representative offices), etc.

Corruption risk assessment

The corruption risk assessment should reflect the company’s actual risks. The Recommendations propose detailed criteria for the risk assessment and the procedure for determining their priority.

Corruption risk minimization

Companies should implement the following measures:

– allocate responsibilities among the employees who initiate and adopt decisions with respect to a particular transaction;

– establish hierarchical levels of authority for decision-making;

– limit the use of cash;

– conduct trainings;

– include anti-corruption clauses in agreements (including employment agreements);

– protect confidential information, etc.

Companies in the same industry may also take collective measures and, within their framework, introduce similar anti-corruption and ethical standards, initiate improvement of legislation and establish business associations.

Anti-corruption measures

The Recommendations also list some anti-corruption measures, in particular:

– Training of employees must be regular, practical and based on examples from the company’s activities;
– Protection of and reward for whistleblowers such as one-off bounties, increasing their salaries or granting additional paid vacations at the company’s expense;
– Prevention of conflicts of interest: develop clear instructions to be followed in case of conflicts of interest and introduce a requirement for employees to declare their private interests in relevant fields;
– Implementation of a gift policy and policy for other company expenses establishing clear thresholds (maximum amounts, frequency, etc.)

Conducting internal investigations

Conducting internal investigations must be governed by a separate procedure, which should set out the procedure and other rules for establishing an investigation commission, the terms for conducting investigations and for demand and receipt of explanations from company employees, etc.

*   *   *

All companies should check their Program and the procedure for internal investigations against the Recommendations because it is likely that in the event of a dispute, significant differences between the company’s internal policies and the Recommendations may be used as a pretense for challenging the measures taken by the company against those who violate the requirements of the Program.

Additional notes

This LEGAL ALERT is issued to inform Baker McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.

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