Is the salvation of business hidden in the competition for the election of a new head of the BEB?

For several weeks, the saga of electing a new head of the Bureau of Economic Security has been ongoing. And on July 7, the Cabinet of Ministers rejected the decision of the Commission for the selection of the BEB director to appoint Oleksandr Tsyvinsky to the position of head of the department and decided to hold the competition again. And while these “ritual dances” are taking place, Ukrainian business constantly complains about over-regulation, pressure from the authorities, especially law enforcement agencies, including the BEB itself. UNN decided to find out what business really wants, whether the election of a new head of the Bureau will solve its problems, and whether there are other ways to relieve tension.

What does business want?Transparent and clear rules of the game – this is what both large and small businesses repeat like a mantra. In each sphere or industry, there may be their own special needs: some, like representatives of retail trade, are most concerned about competition distortions due to the use of the VAT exemption mechanism for importing goods worth less than 150 euros from international trading platforms, while others are concerned about shadow businesses that try to completely remove their goods or services from the sight of regulatory bodies.

White business today is interested in not having pressure on business, and is interested in fighting gray business. This is the interest of white business. The interest of gray business is that no one touches anyone, and it is possible to agree 

But in general, law-abiding business wants and is interested in equal conditions for everyone. And this applies not only to regulation, but also to the attitude of the law enforcement system.

Recently, Prosecutor General of Ukraine Ruslan Kravchenko announced a figure of more than 20,000 criminal proceedings against business entities. This figure, of course, was formed not in one day, and not even in one year. And as it turned out, many of these proceedings have not been investigated for years.

The role of BEB and the competition that became a stumbling blockEstablished in 2021, the BEB became the central body with law enforcement functions, whose task is to combat economic crimes that cause damage to the state. With the creation of this body, problems should have begun for shadow businesses, those who evade taxes, smuggle counterfeit goods, and generally multiply their profits in every possible way bypassing established legislative norms. But in reality, it seems that problems have begun for everyone, except for the categories outlined above.

Even at the beginning of the Bureau’s work, analysts noted that most of the proceedings that ended up in court were Part 1 of Article 204 of the Criminal Code: illegal production, storage, sale, or transportation for sale of excisable goods (the sanction provides for a fine). At the same time, the market for illegal excisable goods continued and continues to grow in Ukraine. According to Kantar Ukraine, a research company, Ukraine lost UAH 21.9 billion in 2024 alone due to the illegal tobacco market. We dare to assume that other illegal markets cause no less damage. According to approximate estimates, annual losses to the state budget from the “shadow economy” reach UAH 900 billion. And illegal players are known, it seems, even to schoolchildren. Meanwhile, the BEB arranges “mask shows”, for example, for businesses that are included in the so-called White Business Club – that is, those that have a high level of trust from regulatory bodies.

And these cases are not isolated. Lawyer Oleksandr Babikov believes that the BEB makes the activity of honest and transparent business almost impossible.

Because those who work according to gray or black schemes, they initially lay down schemes to stimulate BEB employees, in order to avoid criminal liability 

The reasons for this situation are likely rooted in many aspects, starting from legislative gaps and the institutional structure of the body itself. But the human factor is no less significant. In general, the BEB was not supposed to be a direct successor to the tax police, which had previously been called upon to fight crimes in the field of economic security, but actually failed this task. However, as experts believe, the Bureau became precisely a direct descendant of this body.

Volodymyr Dubrovsky, senior economist at the Case Ukraine expert center, believes that the entry of old personnel from the tax police into the BEB brought an “unfavorable corporate structure for business” to the new structure.

At the same time, Dubrovsky suggests that holding an objective competition for the selection of the head of the Bureau will create conditions for its transformation into a modern structure without a hostile attitude towards business, which, instead, will really fight the shadow economy.

Analyst Serhiy Fursa believes that the body needs to be created from scratch, otherwise it will not function properly. And holding a transparent competition is the first step.

But what kind of transparent competition is it? And who should be responsible for its conduct? Many analysts agree that it cannot lie solely on the shoulders of public activists or foreign observers who will not be responsible for their decision.  

This is an issue that should be exclusively within the competence of those bodies, institutions, officials who are elected by the people of Ukraine, and not foreign observers who are in no way responsible for the consequences of their vote and the election of the said candidate 

And while the issue with the competition and even more so with the complete reboot of the BEB literally remains “suspended”. And it is not known whether it will bring the expected result. Business, however, remains alone with its problems.

What can be done right now?Surprisingly, the answer to this question came from another law enforcement agency. Recently, the newly appointed Prosecutor General of Ukraine Ruslan Kravchenko literally announced a change in approaches to criminal proceedings against business. The first thing he promised was to check all more than 20,000 criminal proceedings that we mentioned above.

Based on the results of this check, he promised to take the following steps:

·        close proceedings that have not been investigated for years and do not have objective data confirming the elements or event of a crime;

·        in criminal proceedings where sufficient evidence has not yet been collected to make a lawful decision, necessary examinations will be appointed to establish the truth, the results of which will determine the fate of these proceedings;

·        criminal proceedings in which expert conclusions have already been made or persons have been notified of suspicion will be sent to court. 

At the same time, he emphasized transparency and the right of business to fair protection.

And today, we are already seeing the first results. A week has passed and 3756 criminal proceedings have been closed.

These are proceedings that have not been investigated for years; they did not contain objective data confirming the elements or event of a crime; ultimately, they had no judicial prospect. As for other cases: in more than 4700 proceedings, necessary examinations have been appointed and are already being conducted; 120 proceedings have been sent to court. The work continues 

And while the BEB reboot is expected, such a compromise option can bring relief to businesses that find themselves under pressure from the system.

However, unfortunately, it demonstrates a deep crisis, which indicates that the election of a new head of the Bureau will not change anything by itself.