Vadym Melnyk has extensive experience in the field of economic security, having worked in various state institutions, including the State Fiscal Service, before establishing the Economic Security Bureau of Ukraine (ESBU). The ESBU’s activities have been accompanied by constant criticism and preparations for a so-called “reset” of the agency following the adoption of new legislation by the Verkhovna Rada. Considering this, as well as the current situation, economic challenges, security, and the need to reform the existing law enforcement system, we decided to talk with Mr. Melnyk, who agreed to an exclusive interview with Ukraine Business News (UBN).
- What were your main challenges when launching the Economic Security Bureau of Ukraine (ESBU), and how did they impact its effectiveness? Why, in your opinion, was it not possible to fully establish the new agency, which has been subject to constant criticism?
The main challenge was the legislated three-month deadline for launching the ESBU. I had to create an entirely new law enforcement agency based on an analytical foundation in a very short timeframe. Doubts about the feasibility of such a rapid launch were voiced from all sides. No other agency had faced such strict conditions, yet my team and I managed to achieve this despite all the difficulties. Importantly, we avoided any violations during the recruitment process, assembling the first team of employees who became the foundation of the newly created ESBU.
Among the challenges was also a lack of sufficient funding and resources. For instance, the budget allocation for agency development was set at zero. There was no time for proper staff training, and we faced the influence of entrenched corrupt structures, the difficulty of integrating new approaches into an outdated system, and insufficient time. For comparison, other agencies like NABU had 1.5 years to establish themselves, and the SBI had 3.5 years, all without the complications of a full-scale war or funding issues.
These factors prevented the ESBU from reaching full operational capacity and fully achieving its objectives. While we are seeing some results now, it’s important to understand that these outcomes stem from the actions and decisions made during the initial stages of the agency’s operation. Only now is the ESBU beginning to operate on a more systemic level.
Returning to the question of why it wasn’t possible, I wouldn’t frame it that way. Yes, we can talk about the lack of autonomy from old structures, challenges with staffing, and insufficient implementation of new technologies and analytical tools. But it would be incorrect to say the agency failed to be created, as it was launched under extraordinarily tight deadlines and in the midst of a full-scale war.
There was a clear understanding that the agency would be under intense public scrutiny, with significant risks of reputational damage and criticism. Despite this, I remain convinced that Ukraine needs an agency like the ESBU. That is why I decided to take on the responsibility of launching it, despite personal risks, so that over time it could crystallize into the structure it was designed to be – an analytical body that combats causes (schemes) rather than effects (individual businesses or enterprises).
Analytical activity is not just about identifying violations and misconduct but primarily about identifying systemic issues and gaps that could lead to crimes, and thus focusing on prevention: informing government bodies about discovered loopholes or proposing legislative changes.
If you ask whether the ESBU needs a reset now, my answer would be a firm yes! Yes, if it helps transform it – or crystallize it – into the analytical structure I described earlier, unblocking its operations and providing the necessary support for sustainable performance.
- What do you see as the main threats to Ukraine’s economic security today, and how would you assess the current state of anti-corruption efforts in the country? What steps are needed to improve the effectiveness of anti-corruption measures?
As cliché as it may sound, corruption remains the primary threat, having metastasized across all levels. Other significant threats include the shadow economy, abuses in public procurement, and the weakness of the judicial system.
It is incorrect to say there has been no progress in combating corruption. Recently, we’ve seen numerous cases of misconduct uncovered and officials at various levels held accountable. Unfortunately, society, in my opinion, often misinterprets such news. These arrests should not be viewed as evidence of widespread corruption but rather as signs of intensified efforts to combat it. Nevertheless, despite ongoing efforts, I believe more decisive actions and systemic reforms are needed – measures that address root causes rather than symptoms. Simply catching a small fry, who is just a link in a larger chain of corruption, won’t dismantle the long-standing scheme.
How can this be achieved?
By introducing transparent procedures, strengthening the independence of anti-corruption bodies (including through greater oversight and involvement of our Western partners), and actively leveraging modern technologies for monitoring and control. The more we digitize and automate processes, the fewer opportunities there will be for manipulation. For instance, the Diia platform has transformed access to documents – what once took weeks and often required “gratitude” to officials can now be done in a few clicks without unnecessary bureaucracy. While this primarily combats petty corruption, the same approach can disrupt more complex schemes.
Additionally, we must maximize civic engagement and foster a will for action and change among citizens. If thousands of people actively monitor the activities of specific agencies, any potential abuses or harmful intentions will become impossible to hide.
The most crucial aspect, however, is coordinated, systemic, and joint efforts by law enforcement agencies under the supervision of the Prosecutor General’s Office. For instance, one of the Deputy Prosecutors General (and their counterparts in regional offices) could be made responsible for overseeing the work of law enforcement bodies tackling economic crimes. Until the ESBU is fully operational and equipped to be the sole economic enforcement body, this approach could ensure a unified center for procedural oversight. This would eliminate duplication of efforts among various law enforcement agencies, improve coordination in investigating economic crimes, and increase the accountability of prosecutorial bodies, which is currently dispersed across various branches.
This streamlined approach would also reduce pressure on businesses. While not a panacea, it would steer efforts toward effective measures like risk-based approaches, improved procedures for evidence collection and evaluation, and a shift from outdated and inefficient law enforcement models to modern, innovative practices.
2.1 A clarifying question arises: Why didn’t you implement these measures during your tenure at the ESBU?
Let me responsibly disclose a “big secret”: these measures were being implemented. Many of these initiatives were started, but they required more time and support from other state bodies. To be frank, some of the measures were blocked due to resistance from entrenched structures.
That said, together with like-minded colleagues, I focused on building the agency with a primary emphasis on developing its analytical capabilities. Moreover, during meetings with the business community, I consistently emphasized the creation of specific risk criteria for analysts to identify the causes of schemes and their organizers. This approach would allow us to avoid wasting time on unnecessary raids on legitimate businesses and instead concentrate on schemers, fraudsters, and illicit actors.
At the same time, while we were constructing the analytical framework, we faced significant challenges with material and technical resources as well as funding, which I mentioned earlier. To give you an idea, this analytical body didn’t even have its own server, and we couldn’t purchase one because no funds were allocated for this purpose. Furthermore, when we connected to the registries and databases of other agencies, such as the tax or customs authorities, we often encountered delays and, in some cases, outright resistance. Yet, we still managed to get it done.
We worked on all possible measures and, despite opposition, succeeded in launching the agency. Unfortunately, there simply wasn’t enough time to fully scale and implement all the necessary mechanisms.
2.2 Were there any challenges during your work? For example, restrictions or difficulties in staffing, or perhaps pressure from above?
To be completely honest, the most difficult aspect of the job was the lack of understanding – a fundamental misunderstanding of how an analytical body with law enforcement functions should operate. I emphasize, analytical. To grasp the extent of this misunderstanding, one only needs to look at the KPIs assigned to the agency by the relevant Verkhovna Rada committee. In short, they focused on indictments, indictments, and more indictments – with just one mention of analytical work.
But I wasn’t interested in painting a pretty picture for anyone by hitting indictment quotas, as this approach leads nowhere. Such actions simply waste resources on searches and disrupt the work of legitimate businesses. I’ve already mentioned, and I must repeat, that the primary focus should be on the root cause – the criminal scheme – not just the consequences, such as the businesses that exploit these schemes. It’s crucial to ensure the inevitability of punishment, but this punishment must target those who create and sustain illegal schemes, including those who provide corrupt protection for such operations. In other words, we need to create conditions where these schemes cannot exist in the first place.
Furthermore, there was pressure to deliver statistics on criminal cases and convictions just a few months after the agency’s launch. But any reasonable person would understand that this is physically impossible due to procedural and legal constraints. And somehow, the tangible results that were achieved went unnoticed. For instance, we swiftly seized Russian and Belarusian train cars and transferred them to ARMA (Asset Recovery and Management Agency) for further use by Ukrzaliznytsia, which generated over a billion hryvnias in revenue for the state budget within a year. There were many such examples because our priority was to increase revenue during wartime, not to inflate statistics by keeping assets frozen and paralyzed.
Thus, the main challenges were misunderstanding and reluctance to act.
In addition, there were, of course, difficulties in recruiting competent staff due to the limited labor market and the high requirements for new specialists. Even completing the agency’s staffing was impossible due to a lack of funding – it was staffed at only 20% of its required capacity. We even initiated discussions with leading universities to implement internship programs for final-year students at the ESBU and to establish a dedicated training center to build a new talent pipeline and develop skilled professionals. Unfortunately, we ran out of time to fully implement these initiatives.
- What key lessons have you learned from your experience leading the ESBU, and how would you apply this knowledge in future projects?
First and foremost, societal support is essential, as it enables the formation of clear and firm political will. Unfortunately, instead of addressing the question, “how can we achieve this?”, a significant portion of society succumbed to manipulation by those who sought to influence staffing decisions at the ESBU or discredit the newly established agency because they could not exert corrupt influence over me.
As a result, the narrative shifted from institutionalizing the agency and its functions to calls for an ESBU reset. Proper budget funding was blocked, and it became difficult to attract effective personnel – why would someone join a team that faces demands for a reset and potential dismissal in the near future? Those who supported the reset weakened the ESBU as a state institution for several years and created preconditions for future political dependency.
This is why I emphasize the importance of independence from political influence, the necessity of ongoing training and professional development for staff, and the value of transparent and automated processes. Additionally, future efforts should focus on implementing modern technologies, ensuring the independence of anti-corruption bodies, and strengthening international cooperation.
Most importantly, citizens, businesses, and state institutions must learn to collaborate. Even if certain actions—or inactions—are disliked, it is better to challenge and expose them specifically, rather than paralyze the agency’s work with a reset. Criminals, fraudsters, and organizers of various schemes have access to significant illicit funds, which they use to support pseudo-activists, media outlets, and politicians. If the reset-and-work-stoppage approach becomes the norm, they will exploit this strategy after every successful operation targeting their schemes, orchestrating public outcry from “activists” demanding “resets” and the removal of “unqualified leaders.”
- What steps, in your opinion, should the state take to improve the performance of economic security agencies, particularly in the context of business complaints about pressure and high-profile cases in this area over the past year?
It is crucial to introduce clear risk assessment criteria that would eliminate undue pressure or the paralysis of legitimate businesses – in simple terms, to allow them to operate without interference. Using modern technologies and specialized IT solutions, analysts at the ESBU should identify cause-and-effect relationships and focus on dismantling criminal schemes.
Furthermore, it is necessary to implement a principle where cases involving businesses are entered into the Unified Register of Pre-Trial Investigations (URPI) based only on documentary audit findings. As for the shadow sector and illicit schemes, only strict and systemic measures will work. If there is no scheme, there is nothing to exploit or abuse. However, if someone does exploit a scheme, they must understand that law enforcement will not paralyze operations with unnecessary raids but instead obtain the necessary documentary evidence, conduct interrogations within the framework of a criminal investigation, and forward the materials to the State Tax Service for resolution. When there is an audit report, then discussions can take place, and only then will it be done correctly.
Additionally, it is essential to establish transparent and open control procedures, strengthen the legislative framework to protect businesses from unlawful pressure, and create effective feedback mechanisms for entrepreneurs. Communication with the business community must be constant.
- What international practices in the field of economic security could be beneficial for Ukraine?
In my personal opinion, it is essential to implement a compliance framework that includes internal and external audits, financial transaction monitoring, active collaboration with international anti-corruption organizations, and the use of advanced analytical tools for predicting and detecting economic crimes.
These measures would fundamentally change the approach and enable Ukraine to achieve both qualitative and quantitative results relatively quickly. What is needed is the political will to introduce such institutions and a systematic effort to build and implement them.
- What modern technologies or tools could be effective in combating economic crimes?
First and foremost, we must focus on prevention – implementing technologies that minimize the occurrence of crimes and make their prolonged concealment impossible, especially before millions are transferred abroad or the scheme’s organizer escapes to countries that do not extradite criminals. For example, how can we officially retrieve organizers of illegal online casinos in Ukraine from unrecognized territories like Northern Cyprus? Attempts to transfer funds abroad should be automatically blocked, rather than investigated, after funds belonging to Ukrainian citizens have already left the country.
At the same time, I fully support investigations, as crimes – if not prevented – must be uncovered and prosecuted. Ukrainian legislation already provides mechanisms for criminal prosecution beyond the country’s borders, seizure of assets, and more. However, this is a topic for a separate discussion.
Additionally, any tool that reduces human involvement and automates processes is a key step in combating not just economic crimes but corruption as a whole. These tools would not only detect existing schemes but also proactively prevent new ones from emerging. For example, blockchain technologies could ensure transparency in transactions, artificial intelligence systems could analyze large datasets, and automated monitoring and reporting systems could streamline oversight processes.
Another approach could involve widespread voluntary certification and linking risk assessment criteria to the use of certified contractors. For instance, goods stored in certified warehouses with electronic inventory tracking, video surveillance, and qualified staff are far harder to falsify for tax credit purposes compared to those in unverified warehouses, where it’s nearly impossible to gather reliable information or question witnesses about the stored goods.
Similarly, in the case of transportation companies, those seeking VAT refunds for goods sold and transported could reference contracts with certified companies that have GPS tracking, fuel consumption monitoring systems (since empty and loaded vehicles consume different amounts of fuel), and video recording. Conversely, transactions involving thousands of tons transported by unknown sole proprietors could be scrutinized for potential non-existent goods and the illegitimate formation of VAT tax credits.
Running an honest business should be profitable and convenient. If businesses adopt voluntary certification systems with objective control mechanisms to guard against fraud, they should receive support and incentives from the state.
- In conclusion, what key changes in approaches to ensuring economic security do you believe are necessary to achieve stability and transparency in Ukraine?
To build an effective economic security system, a clear and structured approach is required – one that combines the independence of anti-corruption bodies, active public engagement, and technological modernization. The focus must shift from reactive measures to proactive actions, creating conditions where corruption and economic crimes are identified at their inception.
When reforming law enforcement agencies, it is essential to ensure their work becomes a model to follow, rather than a source of frustration or calls for resets. Under such circumstances, the state will achieve long-term stability, where businesses can develop transparently, operate on equal footing, and no longer fear unethical practices.