On January 27, President Zelenskyy submitted to the Parliament a draft law on strengthening criminal liability for false declaration. The Parliament restored liability in December 2020, and its format was met with harsh criticism from the public and Ukraine’s international partners alike.

Brief conclusions:

  • the draft law is a step in the right direction, which improves the current situation with liability for false declarations. However, the sanctions provided for in it need to be strengthened further;
  • fines are slightly increased and imprisonment of up to 2 years is added for intentional failure to submit a declaration or lie in it in the amount of UAH 4.54 million (2,000 subsistence minimums for able-bodied persons) or above;
  • new criminal articles become criminal offenses of corruption and minor offenses, which increases the possibility and timeframe for prosecuting unscrupulous declarants.

 

Main recommendations:

  • provide for imprisonment at least for high-ranking officials for intentional falsehood in declarations of UAH 1.135 million (500 subsistence minimums for able-bodied persons) or above;
  • lower the threshold for the corpus delicti for declaring untruthful information—from UAH 4.54 million to UAH 2.27 million (from 2,000 to 1,000 subsistence minimums for able-bodied persons).

More details are provided further.

 

What happened?

On January 27, 2021, President of Ukraine Volodymyr Zelenskyy registered draft law No. 4651 on amendments to the Code of Ukraine on Administrative Violations, the Criminal Code of Ukraine on improving the issue of liability for declaring false information or failure to file a declaration of an individual authorized to perform the functions of state or local self-government.

The designated committee is the Committee on Law Enforcement, headed by Denys Monastyrskyi.

We remind you that on December 4, 2020, MPs passed the Law on reinstating criminal liability for false declarations, criticized by TI Ukraine. Transparency International Ukraine provided further information about the draft law in its legal analysis.

What Is Proposed? Commentary.

The draft law adds a criminal sanction in the form of imprisonment for up to 2 years for intentional failure to submit a declaration (current Article 366-3 of the Criminal Code of Ukraine). This is a step consistent with the recommendations of TI Ukraine for 2021 to reduce the level of corruption in Ukraine, and it merits support. Such a sanction is also added for filing knowingly untruthful information in the amount of more than 2,000 subsistence minimums for able-bodied persons (UAH 4.54 million).

Note that this liability threshold is lowered—currently, it constitutes 4,000 subsistence minimums for able-bodied persons (UAH 9.08 million). Lowering this upper threshold is a step in the right direction. However, further lowering could be considered—from 2,000 to 1,000 subsistence minimums for able-bodied persons (UAH 2.27 million). The factor explained below also speaks in favor of this recommendation.

At the same time, no imprisonment is provided for lies in the declaration for the amount of 500 to 2,000 subsistence minimums for able-bodied persons (UAH 1.135 to UAH 4.54 million)—only restriction of freedom for up to 2 years is provided. Transparency International Ukraine keeps insisting that it is necessary to provide an effective deterrent sanction in the form of imprisonment at least for high-ranking officials (persons who hold responsible or especially responsible positions) for intentional false information in declarations starting from UAH 1.135 million (500 subsistence minimums for able-bodied persons). We can see that now, this sanction is not provided for anyone in the draft law.

The draft law also proposes to slightly increase the amounts of fines for false declarations. This is also in line with the previous recommendations of Transparency International Ukraine. It is proposed to change the amount of fine for lies in declarations in the amount of 5000 to 2,000 subsistence minimums for able-bodied persons (UAH 1.135 to 4.54 million) from UAH 42,500 – 51,000 to UAH 51,000 – 68,000, and for lies in the amount of 2,000 subsistence minimums for able-bodied persons and above (UAH 4.54 million)—from UAH 51,000 – 85,000 to UAH 68,000—85,000.

Although these fines are lower than those proposed by TI Ukraine, it is also a step in the right direction. The draft law will make the new articles in the Criminal Code of Ukraine minor crimes as opposed to misdemeanors, which is also in line with the organization’s previous recommendation.

The draft law also fully takes into account another recommendation of TI Ukraine—to include new criminal articles to the list of corruption criminal offenses. This is exactly what the draft law envisages. The old Article 366-1 of the Criminal Code of Ukraine, which was declared unconstitutional by the Constitutional Court of Ukraine, is removed from this list, enshrined in the note to Art. 45 of the Criminal Code of Ukraine, and is replaced by two new ones—366-2 and 366-3, which MPs supported in December 2020.

This step removes the risk that an unscrupulous official will be exempt from criminal liability of 2 years pass between the commission of the misdemeanor which is not on the list of criminal offenses of corruption and the court decision coming into effect. For minor crimes punishable by imprisonment for a term of up to two years, this statute of limitations is extended from 2 to 3 years. 

At the same time, it makes sense to increase imprisonment in the new articles to 3 (5) years, so that the statute of limitations could be 5 years, as opposed to 3. This will increase the number of declarations available for verification and make the institution of e-declaration more effective, especially bearing in mind the danger of declaring the HACC unconstitutional as well.

Other changes in the draft law are a reasonable clarification of the subjects of administrative offenses provided for in the note to Art. 172-6 of the Code of Ukraine on Administrative Offenses “Violation of financial control requirements,” given the entry into force of the new version of the Law “On Corruption Prevention”, which revived the institution of e-declaration, together with the powers of the NACP. However, the draft law does not yet clarify the dispositions and names of the criminal articles themselves, in order for them to correspond to other terminology of the Law “On Corruption Prevention.”

Thus, draft law 4651, filed by the President of Ukraine, is a step in the right direction which improves the current situation with liability for false declarations. However, there is room for significant improvement.

Recommendations:

  • provide criminal punishment in the form of imprisonment at least for high-ranking officials (persons who hold responsible or especially responsible positions) for intentional false information in declarations starting from UAH 1.135 million (500 subsistence minimums for able-bodied persons). UAH 1,135,000 is a fairly reasonable amount, which approximately correlates with the rules on confiscation of unexplained assets;
  • lower the upper threshold for the corpus delicti for declaring untruthful information—from UAH 4.54 million to UAH 2.27 million (from 2,000 to 1,000 subsistence minimums for able-bodied persons);
  • consider the possibility of increasing the term of imprisonment—from 2 to 3 (5) years;
  • significantly raise criminal fines for intentional false information in declarations for amounts over UAH 1.135 — raise them to UAH 51,000—UAH 102,000 (3,000-6,000 non-taxable minimum incomes), and if the false information exceeds, for instance, UAH 2.27 (1,000 subsistence minimums for able-bodied persons) or it is a high-ranking official—UAH 102,000 to UAH 136,000(6,000-8,000,000 of non-taxable minimum incomes);
  • significantly raise criminal fines for intentional failure to file a declaration —raise them to UAH 102,000 – 136,000 (6,000-8,000 non-taxable minimum incomes), and if it is a high-ranking official who fails to file the declaration — then UAH 136,000—UAH 170,000 (8,000-10,000 non-taxable minimum incomes).
  • specify dispositions and names of the new criminal articles and coordinate them with the Law of Ukraine “On Corruption Prevention.”

 

The legal analysis has been prepared by TI Ukraine’s legal advisor Oleksandr Kalitenko