NABU says bail system can become part of ‘criminal economy’
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Head of the NABU detectives unit, Oleksandr Abakumov (Photo: Video screenshot / NABU)
Ukraine needs urgent legislative changes to the rules governing bail payments because the system can in some cases become part of a “criminal economy” and effectively serve as “payment for silence,” Oleksandr Abakumov, head of a detective unit at the National Anti-Corruption Bureau of Ukraine (NABU), said on Aug. 21.
Abakumov said in a Facebook post that the issue had been highlighted by the latest case investigated by NABU and the Specialized Anti-Corruption Prosecutor’s Office (SAPO).
Bail in criminal proceedings is intended to guarantee a suspect’s proper conduct and compliance with obligations imposed by a court, he said. In practice, however, it can sometimes become “an element of the criminal economy.”
Abakumov pointed to the Midas case as an example.
Millions of hryvnias have been posted as bail for senior officials from the accounts of companies that formally have no connection to those individuals and conduct questionable business activities, he said.
The founders and directors of those companies are often unable to explain why they suddenly decided to post bail for the suspects, Abakumov added.
“They cannot explain it because behind the facade of these front persons are other people — the real beneficiaries of these companies,” he said. “People who do not want their involvement to become known.”
Abakumov said the money used in such schemes comes from cash accumulated through alleged illegal activity.
For the suspect’s benefit, that cash is effectively exchanged for non-cash funds already held in company accounts. The company then formally acts as the bail payer and transfers the money to the designated account, he said.
NABU has also identified fees charged for providing such a service in the Midas case, Abakumov said.
According to the bureau, the fees amounted to 10%, 15% and in some cases as much as 30% of the bail amount.
“So this is no longer simply a way to help a particular suspect,” he said. “It is also quite a profitable business.”
Abakumov said the financial monitoring system should intervene in such cases, as one of its main functions is to combat the laundering of proceeds from crime.
In practice, however, the money is transferred, bail is posted and the suspect is released, he said.
“And then bail effectively becomes payment for silence — an expense incurred by the criminal environment to preserve itself,” Abakumov wrote.
A suspect may subsequently also receive help leaving the country, he added.
“And bail ends up becoming cashback for the state,” Abakumov said.
He argued that both the rules for setting bail and the procedure for posting it require prompt legislative changes.
Draft law No. 15388, which has already been registered in parliament, could provide the basis for such reforms, he said.
“The state must check a company that suddenly decides to post tens of millions of hryvnias in bail for a suspect,” Abakumov said. “Who is its real owner? Where did it get the money? What relationship connects the bail payer with the suspect?”
The key question, he added, is whether the money has a lawful origin.
“Bail must remain an effective preventive measure, not cashback from stolen assets,” Abakumov said.
NABU and SAPO uncover alleged laundering scheme
NABU and SAPO announced Operation Forrest Gump on Aug. 19, saying investigators had uncovered an organized group that may involve a current and former member of parliament, Presidential Office officials and other individuals.
The anti-corruption agencies said the operation targeted high-level corruption and exposed a group allegedly responsible for organizing and facilitating the laundering of criminal proceeds.
Investigators said the scheme involved UAH 150 million (about $3.36 million) in cash that was moved through a series of accounts belonging to front companies and brought into legal circulation to post bail for one of the alleged members of the criminal organization in the Midas case.
According to investigators, members of the alleged group included:
- a deputy head of the Presidential Office of Ukraine;
- a former member of parliament;
- the chairman of the management board of a state-owned bank;
- the chairman of the supervisory board of a state-owned bank;
- and other individuals.
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