On December 1, amendments to the Procedure for conducting a full check of declarations developed by the NACP came into force. A little more than a year has passed since the last changes to a similar document, when the NACP again decided to change everything.
The previous version of the Procedure was balanced and considered most of the comments from the public. However, this document was not destined to be tested in practice because the Agency updated it almost simultaneously with the resumption of mandatory filing of declarations. Thus, new changes to the Full Check Procedure came into force on December 1, 2023.
The updated procedure was submitted for discussion with the public, and Transparency International Ukraine provided its comments and suggestions to it, but, unfortunately, none of them were considered by the Agency. These changes have now taken effect, and we can share our analysis and comments publicly.
What has changed?
- Declarations of candidates for positions are excluded from the declarations that can be selected for full verification. This is a formal change, which we do not object to because the NACP has not conducted such checks before.
- The definition of the object of a declaration is added; this is the object, information about which is specified or should be specified in the declaration in accordance with Article 46 of the Law on Prevention of Corruption. This is a justified change that allows recording a broader definition of objects of declaration at the level of the procedure.
- Now, during the full verification of the declaration, the authorized persons of the NACP can use the information collected as a result of a special check. It is also more of a formal change that is not critical.
- The updated procedure provides that a full verification of the declaration will not be carried out in respect of previously checked declaration objects, if no violations were detected during such a verification. However, the version of this provision is somewhat at odds with the version of the recently adopted draft law 10262, which allows the Agency to check previously verified property and assets in the declaration when the NACP has received new information about them or if there are new sources of information that were not known or not available to the NACP during the previous check. It is important to harmonize the procedure with the specified law in this part.
- Based on the results of the full verification of the declaration, officials will be able to review all the materials and receive copies of them upon written request. This is a step that corresponds to the amendments to the specialized law in the autumn of 2023.
- However, the main change proposed by the updated procedure is the introduction of automated full verification of the declaration, which will replace manual full check by an authorized person. Individual declarations might still be checked by a person, but there will be much fewer of them.
What does automation of a full check mean?
Automated verification of the declaration will be carried out within 15 days. Based on its results, the NACP will form a certificate on the results of the automated verification of the declaration, and this certificate will be sent to the personal account of the declarant in the Register.
An automated full check will be carried out by comparing the information in the declaration with the data in registers, data banks, title documents, etc., through the software of the Unified State Register of Declarations.
Transparency International Ukraine is conceptually against this, both for reasons of the inappropriate nature of automation, when a full check should remain a manual procedure, and for reasons of “outdated” registers. These databases may contain incorrect or incomplete information, and title documents may also be falsified. Therefore, such sources are not completely reliable and require human evaluation.
Moreover, given the introduction of the “data for declarations” function by the NACP, which invites the declarant to use information from the registers immediately when filling out the declaration, there will be less and less information that will differ from the information in the registers. This generally calls into question the need to introduce automated full verification. In addition, the legislative regulation of full verification of declarations in the Law on Prevention of Corruption did not change so much as to talk about the legislative foundation of automated full checks.
Based on these changes, it is proposed to update the definition of “false information.” Thus, the NACP proposes to note that it differs from information from title documents, court decisions (which have entered into force), registers, data banks, etc., by an amount exceeding 100 subsistence minimums for able-bodied persons as of the date of submitting the declaration. Or it may be information that does not allow identifying a family member of the declaration entity or the object of declaration. The NACP ties its hands, limiting itself only to information from registers and other specified sources, which may also be incorrect.
The previous definition of false information provided for a broader one, in particular that such data “are untrue or false, which was confirmed by the National Agency during the full verification of the declaration.” In our opinion, this definition should have been preserved.
In addition to false information, the concept of “inaccurate information” has also been added to the Procedure. It duplicates the definition of “false information” above. The only difference is that the amount of discrepancy between the declared assets and the registers and databases should be less than 100 subsistence minimums for able-bodied persons as of the date of submitting the declaration. In addition, “inaccurate” information is information that, although not true, in combination with other data makes it possible to identify a family member of the declaration entity or the object of declaration.
Thus, the NACP wants to correct a long-known problem with spending time checking for minor discrepancies. The motivation is justified, but this should not be solved through the introduction of automation of full checks. Instead, it would be better to settle the issue of “inaccurate information” in the procedure of logical and arithmetic control (LAC); according to its results, the declarations are awarded the risk index and selected for full verification. However, the LAC rules are currently closed to the public by the decision of the NACP, so we are not able to give specific recommendations on them.
Continuing the topic of the LAC, the updated procedure defines the risk rating indicator of the declaration and describes the risk assessment of the declaration in a separate section, further “mixing” the newly created automated full verification and the LAC procedure.
In addition, only those declarations that cannot be checked automatically or that will not pass automated verification will be subject to full verification by an authorized person. First of all, we are talking about cases when false information, signs of a conflict of interest, unfounded assets, illegal enrichment, or inaccuracies in the valuation of declared assets were revealed in the declarations. The declarations of judges and judges of the Constitutional Court of Ukraine will not be checked automatically, only manually.
However, the new procedure provides that a full check by an authorized person will not be carried out if such a declaration was previously checked automatically. The NACP also limits itself relying on such a provision because it does not consider that information can be changed in the registers. The only possible basis for a “manual” full verification of previously verified declarations may be for the NACP to receive information about the possible false information in the declaration.
As we mentioned above, the adopted draft law 10262, which concerns e-declaration and is designed to implement the requirements of the European Commission, lifts the NACP’s ban on checking property that has already been previously checked, and no violations have been found in relation to it. Thus, according to the law, if the Agency becomes aware of new information regarding the already checked objects, it may check them again.
***
In our criticism of the Agency’s new approach to full checks, we were also guided by the report of the Commission on the first external independent assessment of the NACP performance for 2020-2021. The auditors indicated: “The NACP informed the Commission that the issue of the possibility of conducting a full check in an automated mode using the Register’s software is being studied. The Commission would like to express doubts that full verification of declarations can be carried out in an automated mode because under the current mandate of the NACP, the procedure was developed for manual verification by authorized persons of the NACP.”
With this “splitting” of the full check, the NACP plans to cover the need to check a large array of declarations that must be submitted after the resumption of mandatory declaration. As for the other changes adopted in the procedure, they are rather formal and correspond to the already developed practice of the NACP.
It is important to note that international experience does not imply a complete verification not only of all submitted declarations, but even of half or a third of them. In many countries, the number of verified declarations is small, and this is quite an acceptable practice (for example, Romania conducts approximately 4,000 checks of declarations per year). The OECD states that manual in-depth verification of declarations is a mandatory step. The NACP external independent audit criteria require only 1,000 declarations to be checked annually.
The requirements to check all or most of the declarations are rather populist statements that do not take into account the objective state of affairs. After all, back in 2017, the model of verification of declarations introduced in Ukraine, which did not provide for automated full checks, was recognized as meeting international standards. In our opinion, given the context of the region, in the case of Ukraine, we should move towards conducting about 5,000 manual full checks per year, guided by the previous version of the NACP procedure, which did not provide for automated full checks, and further improvement of the procedure.
Transparency International Ukraine believes that one should not look for simple solutions to complex problems. The introduction of automated full checks might increase the number of checks, but not their quality. Therefore, there is a risk that declarants lacking integrity might still avoid liability due to the shortcomings of the new procedure that we indicated above.
In general, we can conclude that the new iteration of the procedure is unjustified from the perspective of the goal set by the NACP because:
– not every declaration submitted for two years will be selected for a full check; only the “riskiest” declarations should be covered, in accordance with the rules of logical and arithmetic control. The number of declarations that will be subject to manual full verification can be reduced by changing the rules of logical and arithmetic control without introducing a new procedure using the very LAC system. Another problem that prevents this from happening is the NACP illegally restricting access to these rules;
– Full manual checks can be optimized through the Agency’s new approach to the verification of small, insignificant discrepancies in declarations, unless they entail any legal liability. Unfortunately, the practice of the Agency included several cases where such clarifications took a long time during a full check. Instead, the NACP should focus on identifying signs that could indicate illicit enrichment, unjustified assets, conflict of interest, or other offenses. After all, every year, the NACP will be able to detect more and more cases of illicit enrichment or unjustified assets;
– in addition, the need to increase the Agency’s resources to conduct full checks of declarations manually, in the manner provided for by the Law, is obvious. One of the options for this is the transfer of NACP employees from the structural unit of lifestyle monitoring to the structural unit of full checks of declarations, as we advised back in 2020 in our Study of the Capacity, Management and Interaction of Anti-Corruption Infrastructure Bodies of Ukraine.
However, there are still gaps in the e-declaration system, which we covered earlier. There is also another draft law 9587-d with negative provisions on mitigating the liability for lies in the e-declaration, which was voted by parliamentarians, but not signed by the President.
