For three months, TI Ukraine investigated how the NACP was implementing lifestyle monitoring of officials as a financial control measure. We also analyzed international and previous national (albeit short-term) experiences of using this tool. 

So, according to what algorithm should such checks be implemented in compliance with the legislation of Ukraine? And what are the main conclusions about the lifestyle monitoring procedure that we have come to as a result? 

Previously, we explained in detail what exactly the procedure for monitoring the lifestyle of officials means. Such a check should help identify officials who declare modest incomes, but use luxury cars, buy estates, visit expensive resorts, and so on. Such cases are traced not only by journalistic investigations, but also at the national level. The authorized body is the NACP.

It is worth noting that lifestyle monitoring is a fairly new and rather peculiar procedure. The attempt by the rebooted NACP to regulate lifestyle monitoring last year can hardly be called successful. Considering the importance of the procedure’s proper functioning, a number of national and international experts commented on its regulation.

To avoid these and other errors based on our research we have identified some gaps and inaccuracies that require improvements for the procedure to function properly. Among them are:

  • Lack of a procedure for monitoring the lifestyle of declaration entities. The NACP violated the law and twice evaded the legal requirement to determine such a procedure. Instead, unpublished methodological recommendations are applied which are not even submitted for state registration to the Ministry of Justice. In addition, there was no broad and open discussion of them. The criteria by which the NACP determines when it is necessary to approve the procedure as a mandatory regulatory legal act, and when to limit itself to recommendations, remain unclear. And in general, we had doubts that interference in the private life of declarants occurred “according to the law,” as required by the ECHR.
  • Terminology. As part of the upcoming discussion, it is necessary to define the concepts of “lifestyle,” “standard of living,” “compliance with the standard of living,” and so on. After all, the legislation does not envisage such definitions. This should be done so that a declaration entity clearly understands what exactly they are being monitored within the framework of this procedure and so that inappropriate discretion and potential different approaches and abuses could be avoided. This is particularly important because, unfortunately, the NACP has not been able to develop practical criteria for distinguishing the lifestyle monitoring procedure from full verification of declarations. After all, it is necessary to avoid duplication of these procedures which already involve only “desk” study by the same means.
  • Selectivity of monitoring.It will consist in checking only those declaration entities whose standard of living possibly does not comply with the declared assets. Its component may be prioritization according to certain criteria, for example, by official position. Random selection of declarants for monitoring should not be introduced because it is not effective. But it is absolutely necessary to introduce automatic distribution of such monitoring among NACP employees — the legislation does allow this.
  • Deadlines.The procedure should be limited to clear deadlines, for example, 60 days + 30 for extension. So far, the NACP has set only “reasonable” deadlines which is an insufficient and a very relative concept. It is also important to distinguish from the general list of powers of NAPC employees the rights that they may use during monitoring; this has not yet been done. After all, interference in privacy can be considered excessive and disproportionate to the goal pursued, according to the analysis of the ECHR’s practice.
  • Defining the approach.It allows you to distinguish between the consequences of monitoring. After all, there are two of them — a full verification of the declaration or sending a justified conclusion to, for example, the NABU.

Thus, the analysis of the second attempt to regulate the NACP with new methodological recommendations has shown that there are still fundamental problems, as well as the biggest flaw in regulating the procedure, namely, the lack of a procedure for implementing the lifestyle monitoring as a regulatory legal act registered with the Ministry of Justice.

Therefore, the main recommendations of TI Ukraine for the NACP are:

  • to cancel the methodological recommendations of the NACP on the procedure for selective lifestyle monitoring of declaration entities;
  • to conduct a broad and open discussion of the procedure for monitoring the lifestyle of declaration entities in order to receive comments and suggestions from the public, experts, and an unlimited number of persons, then process such comments and prepare a draft procedure for monitoring the lifestyle of declaration entities;
  • based on the results of a broad and open discussion, to approve by the order of the NACP head the procedure for monitoring the lifestyle of declaration entities, submit it for state registration, and publish it.

Will the NACP listen to these and other recommendations? 

The most realistic way now seems to be to keep the lifestyle monitoring mechanism in the legislation, but with its proper bylaw regulation. Only if its improvement comes to a deadlock, it is worth considering the option of removing the lifestyle monitoring procedure from the legislation. This would allow the NACP to focus more on the procedure of full inspections. It is worth mentioning that international standards also provide for only one procedure for verifying declarations, and not many of them.

However, it is still premature to talk about the complete abolition of monitoring the lifestyle of declaration entities. Ukrainian judicial practice on this issue has also not yet been developed. International experience in conducting lifestyle monitoring does not allow us to recommend this procedure for implementation in other countries, and one of the countries that was actively applying this monitoring recently has refused to conduct it at all.

Time will tell how effective such a mechanism can be in the Ukrainian reality. And we in TI Ukraine will continue to closely monitor the situation.