If about UAH 120 million passes through a certain trading platform daily, then the potential for abuse is rather high. And this is the average daily amount of trades that take place on the JSC Market Operator platform. But corruption risks in the company are minimized.
There is even a certificate about this, namely the international certificate of compliance of the company’s anti-corruption policy with the requirements of ISO 37001, issued by the International Organization for Standardization in 2021. The Market Operator was the second Ukrainian entity certified according to this standard. The first entity was the National Anti-Corruption Bureau of Ukraine, by the way.
“If the manager wants the company to be clean-handed, open, with zero tolerance for corruption, then he/she makes a certification decision,” believes Iaroslav Pavliuk, the anti-corruption officer of JSC Market Operator. In his previous official biography, he worked in the tax police, the Security Service of Ukraine at the energy sector companies in the relevant departments since 1997, and now he is responsible for the corruption cleanliness of the company with 125 employees, and through which millions of hryvnias pass every day. By the way, the separate position of the anti-corruption officer, and even the certificate itself, are not mandatory for the Market Operator. This results from increased attention to this issue and a desire to put a reliable barrier to corruption.
Unfortunately, the level of trust in state institutions, including state enterprises (and the Market Operator is a joint-stock company with one hundred percent of shares owned by the state) is quite low. Therefore the management of the company set for itself the highest possible goal so that there would be no reason for such bias. The certificate of compliance of the company’s anti-corruption policy is a confirmation for businesses (in this case – for participants in the electricity market) that the company does not take bribes, does not launder money, does not trade in insider information, or in any other way not allow manipulations of the electricity market. After all, it is the Market Operator that operates the day-ahead market (DAM), collecting all bids from sellers and buyers of electricity and determining the price of a kilowatt-hour in DAM, and also acts as the central counterparty of the intraday market (IDM), i.e., it is through the Market Operator that money passes for the transactions taking place in real-time in IDM.
“Trading in the electricity market is a constant game. Knowing how others play, you will definitely win,” explains Oleksandr Havva, Acting General Director of JSC Market Operator. That is why the processes in the company are organized to eliminate the leak of insider information. For example, people who work with numbers do not have access to the bids of DAM participants. Those who conduct auctions also do not have access to offers after the end of acceptance or invoicing. On the other hand, to ensure the anonymity of trades in DAM, the Market Operator employees responsible for the trading platform and conducting auctions work in a separate isolated room, and the procedure for accessing relevant information is strictly regulated.
“I am genuinely proud of the level of trust in the Market Operator, how information is stored here, how confidential it is, and how much attention we pay to this,” Oleksandr Havva admits. The head of the company also understands that for the successful implementation of the anti-corruption policy, only restrictions and controls are not enough; therefore, much attention is paid to informational and explanatory work with employees to explain to them corruption risks, responsibility for them, and ways to avoid them.
In fact, any company can try to be certified for compliance of its anti-corruption management system (ACMS) with international requirements. But for this, a company will have to carry out considerable preparatory work because the certificate’s requirements cover about eighty sub-items and are broader than those defined by the Anti-Corruption Law. For example, the Market Operator has an anti-corruption program, an anti-corruption policy, a code of conduct, regulation on internal investigations, regulation on working with whistleblowers, regulation on receiving gifts, regulation on anti-corruption inspections, rule on a corruption risk assessment group, reports on corruption risk assessments, has in place a separate hiring procedure preceded by an integrity check, conducts ongoing internal checks of employees, and has a mechanism for avoiding conflicts of interest. Before applying for certification, the company underwent an internal compliance audit and underwent a rigorous external audit by PECB MS accredited by the International Organization for Certification (ISO). Moreover, to eliminate corruption risks when choosing a certification body that will audit the Market Operator, the company gave up the right to independently hold a corresponding tender and instead addressed USAID with a related request. USAID selected the company for this task.
But the story does not end with obtaining the certificate because it should be periodically (in the first three years annually) reconfirmed, i.e., internal and external audits for compliance with the requirements of ISO 37001 should be conducted/passed. “The auditor requests documents, talks to people, inspects processes, work organization, results, awareness of the team,” – says Iaroslav Pavliuk. In 2021, the Market Operator successfully passed the first certification audit, which confirmed the compliance of its anti-corruption management system with international standards. This year also, despite the war and the office that was destroyed by a russian missile, at the end of November, the company successfully passed the second – confirmatory – audit, thus extending the certificate’s validity for another year.
Although Acting General Director Oleksandr Havva believes that the very first – preparatory – audit of JSC Market Operator was its partnership with USAID in the introduction of an anti-corruption policy at the company and the certification decision as early as 2019: “For the electricity market participants, USAID often serves as a marker that what is being done is right. And that is why we are pleased that USAID supported us. When USAID is involved in something, it means that there are no corruption risks there.”
U.S. Agency for International Development (USAID) is the leading development agency of the U.S. government. USAID has partnered with Ukraine since 1992, supporting Ukraine in building resilience against russia’s aggression and advancing its democratic and economic development. Currently, 42 USAID activities respond to immediate needs and advance Ukraine’s long-term development as an independent, sovereign, democratic, and prosperous society. Since the start of russia’s full-scale war on February 24, 2022, USAID has provided more than $10 billion in development and humanitarian assistance.