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Brief analysis of amendments adopted on e-declarations for anti-corruption NGOs and activists

Brief analysis of amendments adopted on 23 March 2017 on e-declarations for anti-corruption NGOs and activists, made by UNDP experts.

Description

The draft law no. 6172 was submitted in the Parliament on 10 March 2017 by the President and it originally aimed to exclude certain military servicemen from the duty to submit e-declarations through amendments in the Corruption Prevention Law. On 14 March, the Parliament passed the draft law in the first reading.

The Anti-Corruption Committee of the parliament prepared the draft law for the second (final) reading, while several MPs proposed amendments that went beyond the original scope of the draft law. Among them amendments by MP T.Chornovol which have not been supported in the Committee but were upheld during the plenary vote of the parliament on 23 March.

As was noted in the opinion of the Legal Department of the Parliament, such extension of the scope of the draft law contradicted the Parliament’s Rules of Procedure.

The President swiftly signed the adopted amendments into law and they entered into force on 30 March 2017.

The amendments, inter alia, extended the scope of declarants who are covered by the Corruption Prevention Law’s provisions on financial control (Chapter VII of the Law). The following persons have become subject to financial control requirements, including the obligation to file detailed e-declarations on the web-site of the National Agency for Corruption Prevention (NACP)

  • Civil society representatives, experts, academics, others who are members of the selection panels created under the new Law on Civil Service to carry out the competitive selection of civil servants.
  • Members of the Civic Integrity Council that was set up under the 2016 Law on the Judiciary and takes part in the evaluation of judicial candidates.
  • Members of civic councils, councils of civic control that are created at the state authorities and take part in preparation of issues on appointments, preparation, monitoring, implementation evaluation of anti-corruption programmes”. According to the NACP clarification, this covers members not of all civic councils, but only those that deal with anti-corruption. However, the wording “preparation, monitoring, implementation evaluation of anti-corruption programmes” is ambiguous. It is not clear when the obligation to file e-declarations arises for the council members, e.g. does it arise once the relevant civic council reviews any anti-corruption related issue?
  • individuals who: 

receive funds, property in the framework of implementation in Ukraine of programmes (projects) of technical and other assistance, including non-repayable assistance, in the area of prevention, counteraction to corruption (directly or through third persons or in any other way as provided by the relevant programme (project));

systematically, during the year, perform work, provide services with regard to implementation of standards in the area of anti-corruption policy, monitoring of anti-corruption policy in Ukraine, preparing proposals concerning designing, implementing such policy – if funding (payment) for such works, services is carried out directly or through third persons at the expense of technical or other assistance, including non-repaybale assistance, in the area of prevention, counteraction to corruption;

This provision covers:

Staff of NGOs, experts, consultants, etc. who receive salary or fees from donor-funded anti-corruption projects implemented in Ukraine, either directly from the project or through other persons/entities (implementing organisation, sub-contractor, grantee, etc.),

Individuals who provide/supply any auxiliary services or products, if payment for such services (products) comes – directly or indirectly – from donor-funded anti-corruption project implemented in Ukraine. This covers e.g. interpreters, persons providing printing or catering services, janitors, etc. However, to qualify, the relevant payment (fees, expenses) should be provided for in the project’s description (e.g. its budget).

Participants of seminars, trainings, other events organized at the expense of an anti-corruption donor-funded project (if such persons accept any benefits, even of low value, e.g. handout materials, meals, travel costs, accommodation).

Individuals who are “heads or members of the highest management body, other management bodies of civic associations, other non-entrepreneurial partnerships that carry out activity connected with prevention, counteraction to corruption, implementation of standards in the area of anti-corruption policy, monitoring of anti-corruption policy in Ukraine, preparing proposals concerning designing, implementing such policy and/or take part in events connected with prevention, counteraction to corruption”. This provision covers:

All members of civic associations, other non-entrepreneurial partnerships because “highest management body” of an association (partnership) is a general gathering of the organisation or similar body comprising all members of the organisation.

Members of management bodies of civic associations, other non-entrepreneurial partnerships. This includes board members, directors, heads of the organisation, but does not include members of supervisory boards because they are “supervisory”, not “management” bodies.

Non-entrepreneurial partnerships covers a broad range of non-profit associations (e.g. charities, political parties, trade unions, religious organisations, creative unions, union of attorneys, self-regulatory associations, etc.). Members and management of these organisations become subject to financial control requirements in the Law if the organisation is engaged in any anti-corruption activity (“carry out activity connected with prevention, counteraction to corruption, implementation of standards in the area of anti-corruption policy, monitoring of anti-corruption policy in Ukraine, preparing proposals concerning designing, implementing such policy and/or take part in events connected with prevention, counteraction to corruption”)

Private entrepreneurs/legal entities: amendments do not cover individuals who are private entrepreneurs or legal entities. If an individual received fees, salary from a donor-funded anti-corruption project in Ukraine but received them in capacity of a private entrepreneur (a distinct legal status in Ukraine) he/she becomes a declarant only when the money is transferred to his/her personal account, i.e. transferred to the same individual but without the private entrepreneur status.

Foreigners: The amendments are broadly worded (they speak of “individuals”) and therefore include foreign nationals in their scope. If a foreigner (e.g. foreign staff of the anti-corruption project implemented in Ukraine, foreign experts/consultants brought in for a short-term assignment) is – directly or indirectly – paid for by the anti-corruption project implemented in Ukraine or provided with any property funded by the project (e.g. travel costs, per diems, accommodation), he/she becomes subject to financial control requirements in the Corruption Prevention Law.

The amendments also supposedly extended e-declarations to candidates for elected positions. But candidates have already been covered by the previous wording of the Law (Article 45.3). The same concerns persons who are members of the supervisory boards of state banks, state enterprises and other for-profit state organisations the draft law supposedly extended e-declaration requirements to them as well, but they have already been covered as “officials of legal entities of public law” (Article 3.2.a). There was no need to duplicate obligation to submit e-declarations for these persons, except to cover up the main goal – to extend e-declarations to anti-corruption NGOs and activists.

Financial control requirements: Financial control requirements that were extended to new individuals (anti-corruption NGOs members and management, experts, etc.) are not limited to submission of e-declarations. The financial control chapter of the Law includes other provisions as well, namely:

  • obligation to submit an electronic notification of significant changes in declarant’s assets (to be submitted within 10 days after receiving an income or purchasing property above the threshold of UAH 80,000 in 2017 or about USD 3,000);
  • obligation to notify the NACP if the declarant or his/her family member opens an account in a non-resident bank;
  • lifestyle monitoring which the NACP may conduct with regard to declarants based on external information or its own initiative (lifestyle monitoring provides for comparison of the person’s assets and expenses with declared income and assets).

The new categories of declarants (members and managers of anti-corruption NGOs, activists, experts, etc.) will have to file their first e-declarations in 2018 and such declarations will cover the period from the day of enactment of the amendments (30 March 2017) till 31 December 2017. However, the delayed enforcement concerns only one financial control obligation – the submission of e-declarations, the rest (notifications of significant changes and foreign bank accounts opening – see above) – entered into force on 30 March 2017 and have to be enforced starting from that date. This means that any “new” declarant (e.g. anti-corruption NGO member or an individual receiving funds from a donor-funded anti-corruption project in Ukraine), starting from 30 March 2017, has to notify the NACP through its web-site of any qualifying significant changes in his/her assets or about opening a bank account in the foreign bank. The NACP may also apply to new declarants the lifestyle monitoring procedure once it becomes effective (the NACP adopted the procedure, but the Ministry of Justice has yet to register it).

The amendments provided that some of the “new” declarants do not have to disclose expenditures in their e-declarations. But, for unknown reason, from among the new declarants this exemption covers only: 1) declarants who are members of the selection panels under Civil Service Law, civic councils, etc.; 2) members and managers of NGOs engaged in anti-corruption activities. (This exemption also refers to a non-existent paragraph in Article 3.1.5 of the Law – an example of poor wording and hasty consideration)

The amendments also extended the deadline for annual declarations to be submitted in 2017 for certain declarants. Those who file such declarations for the first time (i.e. those who were not covered by the first wave of e-declarations during September-October 2016) have the new deadline till 1 May, instead of 1 April. As another example of poor drafting: this extension concerns only “annual” declarations, which is only one type of declarations filed; this means that declarants who terminated their public office in 2016 and, due to this, had to file for the first time their declarations following such termination by 1 April 2017 were not covered by the extension (even though they encountered the same technical problems with the submission as other filers).

Comments:

Adopted amendments distort the intention and purpose of the Corruption Prevention Law’s provisions on e-declarations. The latter were aimed at public officials who receive remuneration from public funds, operate with public money, influence public policy and can abuse their position for personal gain. No such rationale can be found with regard to civil society, anti-corruption watchdog organisations, activists and experts.

The UN Convention against Corruption (Article 52), provides that each State Party shall consider establishing, in accordance with its domestic law, effective financial disclosure systems for appropriate public officials and shall provide for appropriate sanctions for non-compliance. No such measures are required or recommended for the civil society or other non-public actors. As the International Center for Not-for-Profit Law (ICNL) noted in its analysis, We are not aware of examples where the same income disclosure requirements and relevant penalties applicable to qualified government officials as an anti-corruption measure, would apply to private individuals who do not possess any government-granted authority.

The amendments will have a chilling effect on the anti-corruption civic activity. Not only staff, experts of anti-corruption NGOs and donor implementing organisations fall under the new provisions, but also some of their contractors and service-providers, participants of anti-corruption trainings and seminars (if they obtain any material benefit in the process). As such, amendments restrict civil society, create an unfriendly environment for its operation.

The amendments include many ambiguous provisions and definitions, they may be subject to a broad interpretation and abuse, which makes them prone to corruption and contrary to the rule of law principles. There is no clear definition of what is meant by the anti-corruption activity (a key concept of the amendments) that makes an organisation and its staff, contractors, etc. subject to the new requirements. The enforcement agencies have a broad discretion in interpreting the new provisions.

The amendments also put significant compliance burden and costs on the civil society sector, who will have to make sure that all persons involved in the anti-corruption and their work are compliant with the e-declaration requirement.

It also exposes them to administrative or criminal sanctions for non-submission, late submission or submission of false information in the declarations. Even the possibility of such sanctions will have a chilling effect on the sector.

The amendments originally covered also management of mass media, but during the plenary discussion the media were excluded from the text. However, many investigative journalists and their organisations are registered as NGOs and as such are covered by the new e-declarations provisions. This will have a chilling effect on the investigative journalism as well.

Amendments cover members of the selection panels that take part in the competitive selection of civil servants or are members of the judicial integrity civic board taking part in the judicial candidates selection. This will discourage experts, activists from taking part in such selections, moreover that such work is not paid for. This will reduce transparency and integrity of the selection process, will undermine the civil service and the judicial reforms.

The amendments are discriminatory in nature, as they single out NGOs, experts and activists of one specific area (anti-corruption). As noted in the ICNL analysis: “the Ukrainian Amendments are the only ones we are aware of, which single out individuals engaged in anti-corruption activities as subjects for such reporting and disclosure requirements. This can be potentially damaging as it allows corrupt government officials to facilitate investigation of information provided in the declarations, making it easier to harass individuals carrying out anti-corruption activities, even if all information in their e-declarations is correct, and threatening them with penalties”.

The amendments violate the right to free association by putting excessive burden on civic associations and their operation.

They also violate the right to privacy. E-declarations require automatic disclosure of significant amount of personal data of the declarant and of his/her family members. While such interference is justified with regard to public officials, it is not justified with regard to members of the general public who exercise certain civic activities. Such interference is not necessary in a democratic society, does not pursue any legitimate purpose and is excessive and disproportionate in any case.

As noted in the Human Rights Watch statement: “…laws that are designed to – or in practice have – a chilling effect on members of civil society and on media reporting on abuse of state power and public office are not a justified interference with freedom of expression standards under international law. Insofar as public officials are already required to comply with the measures that would now extend to private journalists and activists, the European Court of Human Rights and the UN Human Rights Committee, which interprets the ICCPR, have repeatedly held that public officials may be subject to greater scrutiny than others. Restrictions that prevent such scrutiny are in general not compatible with freedom of expressions standards. Likewise, even if the interference into the personal finances of journalists and activists had a legitimate aim, to base that interference simply on the work they do is not justified as either necessary or proportionate.”

As such, the amendments contradict the Constitution of Ukraine and Ukraine’s international obligations under the European Convention on Human Rights and the International Covenant on Civil and Political Rights.