In recent years, the issue of the actions of the Bureau of Economic Security of Ukraine (BES) toward business owners and managers has gained particular significance. Amid heightened public demand for combating economic crime and ensuring fair entrepreneurial activity, the BES is positioned by the state as an institution with a new philosophy — an analytical approach, focused on prevention rather than repressive punitive practices. However, in practice, the platform for coexistence between the state and business remains vulnerable to old schemes and methods of coercion.

Mechanisms of BES Influence on Business

1. Criminal Prosecution
   The BES has been granted exclusive powers to investigate various economic crimes, including:
   • tax evasion, non-payment of taxes, fees, and mandatory charges (Art. 212 of the Criminal Code of Ukraine),
   • illegal use of trademarks and service marks (Art. 229 of the Criminal Code of Ukraine),
   • financial fraud and manipulations,
   • smuggling, especially of excisable goods.

The investigation process includes:

• entering information in the Unified Register of Pretrial Investigations (URPI),
• searches at enterprises,
• seizure of documents, servers, and equipment,
• questioning of owners and management,
• arrests of company assets and bank accounts.

BES detectives actively use covert investigative (search) actions — from phone tapping to accessing organizational electronic databases.

2. Disciplinary and Administrative Penalties
   In addition to criminal liability, the BES initiates administrative and disciplinary procedures:
   • drawing up reports of administrative offenses (for example, under Art. 185-13 of the Code of Administrative Offenses, regarding non-fulfillment of lawful BES employee requirements),
   • imposition of fines,
   • destruction of illegal goods by court decision (as in the case of tobacco products).
3. Systematic Pressure through Control and Inspections
   The BES is authorized to initiate and carry out inspections for compliance with tax and financial legislation by businesses. In fact, any owner or director can find themselves under suspicion. Business entities come to the attention of the BES both during regular operations and based on statements from “anonymous sources” or competitors.

Case Examples and Real Consequences for Business

• Notable BES Interventions
  • Tax evasion cases involving tens of millions of hryvnias: a large enterprise owned by a well-known businessman was exposed in tax evasion schemes; some companies were indirectly owned through partner structures.
  • Atypical measures: courts ordered preventive measures for directors — including house arrest or setting bail in the millions.
  • Seizure of property and equipment: for most participants in economic investigations this results in almost a complete shutdown of business operations and paralysis of activities.

Statistics and Effectiveness of Penalties
Despite the loud rhetoric, the real percentage of cases resulting in strict punishment is low. According to judicial register reviews:

• of all cases under Art. 212 of the Criminal Code, only 4 resulted in guilty verdicts;
• none of these verdicts involved actual imprisonment — most were suspended sentences or releases due to statutes of limitations.

Reputational Impact and Current Issues
Created as an alternative to the tax police — infamous for its pressure — the BES avoids old patterns only in declarations. In practice, the following persist:

• reliance on forceful tactics and pressure on business,
• use of ongoing criminal cases to create a “background pressure” (currently over 1.2 million such cases, growing by about 300,000 per year),
• embedding “influence risk” in business models — entrepreneurs often secretly pay corruption rents or bribes to close fabricated cases.

Political Component and State Control
There is a lack of trust in the transparency of BES leadership appointments, conflicts over director selection, and political expediency outweigh professionalism.
Control over the BES is seen as a strategic tool for influencing big business; refusal to appoint an independent director was perceived by business associations as a threat to investment protection and a basis for government impunity.
Entrepreneurs cite manifestations of political influence through economic security instruments as their main risks.

Legal Risks for Owners and Directors
Criminal case structures focus on personal responsibility of both owners and directors, as current practice dictates it is primarily they who give explanations, become suspects, and later defendants.
The inclusion of even unsubstantiated information in the URPI serves as grounds for entirely lawful searches, equipment seizure, account blocking, and results in reputational damage and losses.
Directors and shareholders are responsible for both “deliberate” economic crimes (e.g., fictitious bankruptcy or money laundering) and “formal” violations — even accounting errors or minor arithmetic discrepancies.

Other Side: Is the BES Analytical Approach Working?
Modern legal doctrine accepts professional business–law enforcement dialogue only when an analytical approach is applied. Yet:

• Experts and practitioners point to total distrust in leadership selection competitions for the BES, generating risks of the agency being used in “manual mode.”
• Criminal cases are often opened for minor violations or on anonymous complaints, nullifying the idea of risk-oriented analysis.

Challenges, Prospects, and Recommendations

• Ukrainian businesses expect real changes in the state’s approach to economic security and transparency in BES leadership appointments;
• International financial partners directly link BES reform with Ukraine’s macro-financial support and commitments to the IMF and EU;
• Without an impartial structure that will replace business “terror” with analytics and digital transparency, domestic business will remain in a state of “legal pessimism.”

Conclusion
The BES acts simultaneously as a punitive body and a tool of “operational influence” — with the potential to become the new tax police or a step toward a civilized economic order. In practice, despite legislative changes and loud declarations, business owners and directors remain vulnerable to sudden searches, open criminal cases, asset blocking, and reputational pressure. An effective balance between genuine crimes and contrived cases should form the nucleus of the as-yet-unrealized reform.

Material prepared by: Yevhen Murchenko — Head of the Criminal Law and Procedure Practice, Law Association “Legal Company WINNER“