5 Years of E-Declaration: Mission Possible?

On September 1, 2016, electronic declaration of officials was launched in Ukraine. Thus, our country has finally taken one of the most important steps towards real prevention of corruption. However, was it such a breakthrough as we expected?

During September-October 2016, almost 120,000 high-rank officials completed the requirement of the law and submitted their first annual e-declarations for 2015 to the Unified State Register. Global anti-corruption movement Transparency International and our accredited chapter in Ukraine welcomed the completion of the first round of e-declarations and called for proper verification of declarations and sources of assets origin declared by high-rank officials.

The first massive fortunes of officials that were made public surprised and raised many questions among Ukrainians. It is not surprising that this year the introduction of electronic declaration of officials’ incomes was recognized one of the country’s greatest successes. The start was set, but then what?

The first e-declaration resulted in the first obstacles.

Here, it is worth recalling that a public electronic declaration with a broad indication of assets and a potential 2 years in prison for lying in the declaration or evading its submission has replaced ineffective paper declarations. Until September 2016, such declarations were submitted in a limited content form (instead of 17 sections of the e-declaration, there were 6) and stored in the personnel department of the body where the declarant worked. The tax agency “checked” these documents, and for lying in these papers, declarants were almost not in danger. 

Already according to the results of 2016, all officials, not just high-rank ones, submitted public declarations to the unified register. It was then, before the deadline for submission, that the register, administered and maintained by the SE Ukrainian special systems, faced the first major functional problems. 

The NACP then stated it received 1,176,431 of annual declarations, but it came at a heavy cost. It was extremely difficult to fill out and submit such a document — the system did not load, and it did not always allow you to log in to your personal account to fill out the declaration. Because of this, the deadline for submitting declarations for new declarants even had to be extended for a month — until May 1, 2017. 

Similar problems were observed the following year, but on a smaller scale, and eventually disappeared in the future. However, another big scandal — the fact of falsification of an electronic key of NACP’s ex-member to simulate hacking of the register of declarations — was not investigated properly.

How were the first e-declarations checked?

The NACP would not approve the procedure for full verification of declarations for too long. TI Ukraine even repeatedly urged that the Agency should develop and the Ministry of Justice should register the documents necessary to start checking the declarations of officials as soon as possible, but there were no significant steps in this direction for a long time.

In the end, on the third attempt, such a procedure was adopted, although not without public comments on its version. For example, the Agency was allowed to check only what WAS declared, and not what IS to be declared, which gave unscrupulous declarants a considerable field for “maneuvers.”  

At the same time, such checks were performed manually, and not in automated mode. Although, from the technical side, the necessary modules were ready, the NACP refused to approve them for unknown reasons. In addition, the Agency did not have automated access to all the necessary registers, which also significantly limited the possibilities for full and high-quality verification of declarations. 

A year after the launch of e-declaration, the NACP was able to complete only 39 checks of declarations; however, this work raised doubts about its completeness and impartiality. In such a situation, the NABU, which, for its part, had problems with obtaining access to the register of declarations from the NACP, managed to independently analyze the declarations of officials, which in general duplicated the functions imposed on two different institutions.

The effectiveness of implementing e-declaration has raised more and more doubts, as has the work of the entire National Agency on Corruption Prevention.

Therefore, in the spring of 2017, the public came out with the first statement about the need to “reboot” the NACP. In particular, the statement pointed out the facts of using the Agency for selective prosecution of individual declarants and even activists. In the autumn of 2017, whistleblowers from the NACP itself publicly announced the falsification of checks of electronic declarations and the accountability of the NACP to the Presidential Administration and the SBU, after which the NABU opened a corresponding case.  

The suspension of Nataliia Korchak, the then head of the NACP, which we at TI Ukraine called for as well, never happened, and the Prosecutor General’s Office quickly referred this case from the NABU to the SBU. At the same time, we detected that even after 2 months, the SBU did not take any active actions to confirm or refute the facts of outside influence of officials on decision-making in the NACP. We noticed that “it is difficult to talk about a proper pre-trial investigation of criminal proceedings by a body whose officials may have been involved in influencing the NACP.”

Then, in December 2017, the NACP even tried to block the work of the NABU on their own analysis of declarations. The Agency issued an explanation that before conducting a pre-trial investigation by the law enforcement agency of a possible false declaration, the NACP needs to conduct a full check of such a declaration, and without it, a pre-trial investigation cannot begin. The position of the NACP was widely criticized by experts, and later this approach was canceled. However, TI Ukraine pointed out other problems with emasculation of e-declaration.

Already in the autumn of 2019, the Verkhovna Rada adopted a law on rebooting the National Agency on Corruption Prevention. But was this a positive thing for the field of e-declaration?

Both yes and no. At the end of 2019, the NACP finally received the necessary access to all 16 registers that would help check declarations. This made it possible to fully launch automated verification of declarations, which significantly simplified this process. Before that, with the system of logical and arithmetic control (LAC), which was launched with moans and groans only in September 2018, only 140,000 declarations were checked for compliance with the information of 13 state registers and databases. By the way, due to the delay in the launch of the LAC, Ukraine lost a tranche of EUR 600 mln from the EU because automatic verification of declarations was one of the four unfulfilled requirements.

After gaining access to the registers and electing a new sole head of the Agency, the situation should have changed significantly. However, unfortunately, this did not solve all the problems with e-declaration. 

What are the drawbacks of e-declaration now?

So far, everything is not easy with the LAC. In 2018, the rules of such control were at least public. But already under the new leadership of the NACP in 2021, a paradox arose when it would seem that automated checks became less transparent, and it was simply impossible to fully understand exactly how such checks were conducted. Until now, the rules of the LAC are concealed contrary to the law, which, as expected, caused indignation among the public. By the way, the latest version of the LAC rules, published in 2020, was criticized. 

Unfortunately, also until now, special procedures for checking the declarations of intelligence officers, counterintelligence officers, and other employees of the SBU, as well as 10 other state bodies remain closed. 

Such declarations are checked not by ordinary NACP’s authorized agents, but by the Agency’s internal control unit, which is inconsistent with the legislation. TI Ukraine mentioned this contradiction in its study of capacity, management, and interaction of anti-corruption infrastructure; however, although the study was published in the fall of 2020, so far, no changes have occurred in this direction. Other TI Ukraine’s studies regarding the second measure of financial control — lifestyle monitoring also pointed out, for example, the problem of proper differentiation of this tool with verification of declarations, which has not yet been solved.

We must not forget about the infamous KAC decision of October 27, 2020, which actually put all checks of declarations that were taking place at that time to a halt. Moreover, those involved in cases under the article of the Criminal Code for false declaration, which was invalidated by the Constitutional Court, we were able to breathe the sigh of relief. The Parliament restored the relevant powers of the NACP only just before 2021. The parliamentarians adopted the improvement of criminal liability for false declaration only in the summer of 2021, and it did not apply to declarations submitted for 2020, which, by the way, are now unavailable on some other platforms, except for the official NACP Register, due to problems with the open API — this situation has been lingering for almost 9 months.

In March 2021, the NACP started verification of declarations, including judicial ones. Given the updated legislation, the NACP and NABU should focus on finding signs of illicit enrichment or unfounded assets, rather than looking for inaccurate information in declarations. Additionally, the National Agency needs to properly regulate the lifestyle monitoring procedure as needed to apply it for finding illicit enrichment or unexplained assets.

So, will e-declaration become a story with a happy ending? 

So far, we can’t say that in 5 years of its existence, this tool has fully reached its potential. However, everything is still possible in the forces of the National Agency! 

Everything will change quite noticeably if the NACP takes the most careful approach to full checks of declarations. In this way, the Agency will be able to build confidence in the effectiveness and impartiality of the implementation of this tool, as well as improve the perception of the institution itself.