The state-owned enterprise Ukrhydroenergo spent about 2 million hryvnias on liability insurance for its top managers in the event of criminal prosecution. In fact, the state-owned company is creating a financial "reserve parachute" for management in case of arrests, indictments, or lawsuits.
According to the terms of the contract, the insurance covers the costs of legal defense of managers, including lawyers' fees. In addition, partial compensation for bail as a preventive measure, payment for psychological assistance, as well as the costs of so-called "reputation restoration" are provided. In other words, if a manager is brought to criminal responsibility, the financial consequences will not be borne by him personally, but by the state-owned enterprise he heads.
In essence, this means shifting personal responsibility for management decisions to the company itself, and therefore to the state budget. In the event of an arrest or suspicion against a manager, the costs of his defense will be paid from the company's funds, not from the official's own pocket.
It is noteworthy that a similar practice has already been demonstrated earlier in another strategic state-owned company, Energoatom. There, the supervisory board took out similar insurance literally on the eve of its dissolution. At the time, it looked like a last-minute attempt to protect itself from possible inspections and investigations. In the case of Ukrhydroenergo, not only is a similar approach observed, but the same insurance partner is also involved.
Formally, such programs can be presented as a type of directors' liability insurance. However, in terms of its content, it is no longer the classic D&O insurance common in private business. Rather, it is about creating a reserve specifically for criminal risks - arrests, bails, trials, and public scandals.
In fact, the state, through its company, recognizes in advance the possibility that its top management may have serious problems with law enforcement agencies, and considers it normal to lay these risks in the company's expenses. This looks especially contrasting against the background of constant statements about corporate governance reform, management accountability, and the fight against corruption.
Instead of minimizing criminal risks through transparent procedures, legality of decisions, and real responsibility of managers, state-owned companies are increasingly choosing another path - simply insuring against possible consequences. And doing so not at their own expense, but at the expense of the enterprise, which is financed by the state.
