Recently, Ukraine has been stirred up by a series of large-scale corruption scandals.

After a journalistic investigation into the overestimation of the cost of products for the military, the whole Ukraine was shocked when NABU employees detained the Deputy Minister for the Development of Communities, Territories and Infrastructure while receiving an illegal benefit of USD 400,000. Subsequently, another journalistic investigation appeared regarding the alleged acquisition of valuable real estate by an MP in the center of Kyiv. Recently, journalists have also published the data indicating the possible illegal receipt of gifts by Deputy Prosecutor General Oleksii Symonenko.

These events confirmed that even during a full-scale war, corruption did not disappear among Ukrainian officials. At the same time, to maintain the trust of society and international partners, it is important to identify such cases among officials and bring such persons to justice.

An essential step for this should be the restoration of the submission of electronic declarations by officials and MPs. 

The relevant draft law No.8071 was approved in November by the relevant Committee of the Verkhovna Rada, but has not yet been approved by the parliament even in the first reading.

So far, officials and MPs have not filed a declaration even for 2021. Indeed, in March 2022, considering the full-scale invasion of russia, the Verkhovna Rada exempted all public servants from such an obligation.

Under the conditions of that time, such a step could be considered justified. However, today there are no obstacles for officials working far from the war zone to fill in information about their income.

The ambassadors of the G7 countries to Ukraine have already called the immediate restoration of declaration one of the priorities for 2023 for Ukraine. At the same time, to start negotiations on Ukraine’s accession to the EU, we need to implement the recommendation to enhance the fight against corruption.

Maintaining public and international partners’ trust in the government is critical in the face of war. After the recent corruption scandals, the restoration of declaration would be an important signal to the public and our international partners that Ukraine remains committed to the fight against corruption, and budget funds from Ukrainian taxpayers and assistance from international partners are used responsibly.

The public demands to restore the obligation for officials to submit electronic declarations immediately, adopting the draft law No. 8071 as a basis and promptly finalizing it for adoption in the second reading. 

Transparency International Ukraine

Anti-Corruption Action Centre

All-Ukrainian Association “Automaidan”

StateWatch

Anti-Corruption Research and Education Centre (ACREC)

CHESNO Movement

Anti-Corruption Headquarters

NACP Public Council

Institute of Legislative Ideas

CSO “Civil Control Platform”

NABU Civil Oversight Council 

DEJURE Foundation

Bihus.Info

Kharkiv Anti-Corruption Centre

CSOs demand that MPs adopt draft law No. 8071 as soon as possible, which restores the submission and verification of electronic declarations.

Electronic declaration is one of the important achievements in reforms after the Revolution of Dignity, which contributed to a number of investigations and sentences against MPs, ministers, and judges. However, in the first weeks of the full-scale invasion of Russia, the obligatory submission of declarations was suspended.

Only a third of all officials submitted their declarations for 2021. Most likely, next year the number of declarations submitted will decrease even more because, if their submission turns into a “voluntary” matter, then de facto it means dismantling one of the key anti-corruption reforms. It is quite simple to predict the consequences of delay with the restoration of declaration, since something similar happened three years ago with the submission of financial reporting of political parties. The only difference is that if the parties uncontrollably dispose of hundreds of millions of hryvnias from the national budget, then officials and MPs influence the use of hundreds of billion hryvnias of Ukrainian taxpayers and funds from partners of Ukraine.

Failure to submit declarations and lack of their verification contributes to corruption and abuse, which in current conditions are even more dangerous for the state and society.

After the 9 months of the war, it became obvious: unless the process of electronic declaration submission is restored, the investigation and anti-corruption authorities will, in fact, be unable to identify and hold officials liable for illicit enrichment and lies in declarations.

Therefore, in the near future, the institution of electronic declaration may lose its effectiveness, and the anti-corruption reform will fall back for 8 years.

The head of the Servant of the People’s faction, David Arakhamia, has submitted draft law No. 8071 “On Amendments to Certain Laws of Ukraine on the Implementation of Financial Control Measures to Prevent Corruption.” This initiative restores the submission of electronic declarations by officials for whom it was an obligation before the war.

The Anti-Corruption Committee approved this document back on October 18, 2022, but it has not yet been submitted to the Verkhovna Rada. Possibly, some MPs are delaying the restoration of electronic declaration on purpose as it demonstrated the effectiveness in corruption prevention.

CSOs urge MPs to include in the agenda and vote for draft law No. 8071, which restores the submission of electronic declarations.

 

Signatories:

NACP Public Council

Anti-Corruption Headquarters

Institute of Legislative Ideas

All-Ukrainian Association “Automaidan”

StateWatch

Bihus.Info

CHESNO Movement

Centre for Economic Strategy

Civic Platform ACT!

Zaporizhzhia Investigation Center

Anti-Corruption Research and Education Centre

Women’s Anticorruption Movement

CSO “On Edge”

DEJURE Foundation

CSO “Civil Control Platform”

CSO “Nivroku”

Center for Public Monitoring and Research

CSO Anti-Corruption Action Centre

Transparency International Ukraine CSO

CSO Center for Investigative Journalism “Syla Pravdy”

Centre of Policy and Legal Reform

On September 16, amendments to the Procedure for Conducting Full Verification of Declarations came into force. What are these changes — we explain below.

The Procedure was last updated in early 2021. Therefore, the need for change is long overdue due to several problems that the National Agency faced in practice during the full verification of declarations. Eliminating these problems for more effective work of the NACP is important, since it is during a full check that signs of corruption crimes such as illicit enrichment or unfounded assets can be detected.

Thus, the main changes in the Procedure for conducting a full check of declarations are the following:

• The assets purchased with funds received before the public service will also be checked. 

The NACP will now verify the accuracy of the valuation not only regarding assets owned or disposed of by public officials and acquired with funds received during the public service, but also regarding assets acquired with previously received funds. This refers to the time when officials were already subject to the requirements for filing declarations and restrictions on receiving gifts, which are provided for by the Law “On Prevention of Corruption.”

The motivation here is the need to check the legitimacy of the sources of funds for the acquisition of assets, regardless of how much time the person was in a particular position. Situations may occur when the declarant received revenues before the public service or in between.

However, the innovation applies only to officials who perform the functions of the state or local self-government and those equated with them. That is, persons who are not officials and who perform work or provide services in accordance with the contract with the enterprise, institution, organization, as well as candidates for the President of Ukraine and candidates for MPs of Ukraine, are not affected by the changes.

• Copies of the documents may be requested from the declarants. 

This is necessary to confirm the accuracy of the information specified in the declaration regarding assets located outside Ukraine, as well as other assets, if the NACP does not have information about them. Declarants may also submit written explanations for such assets. ​​

Here, it is important to ensure the rights of the declarants: that the new obligation does not become too burdensome for them, as well as to regulate the issue of bringing the declarants to administrative liability if they do not provide the requested documents.

• New grounds for extending the term were added: the transfer of the authorized person to another position (which does not provide for full verification), as well as the exclusion of the powers to conduct full verifications of declarations from the official duties of the authorized person.

It is worth emphasizing that such changes may be a reason for pressure on authorized persons due to the exclusion of the powers to conduct full verifications from their duties. This cannot be allowed to happen.

• It is possible now to suspend the period for issuing a certificate on the results of the verification for up to 14 calendar days in the event of temporary incapacity for work of the authorized person of the NACP or their business trip.

In addition, the course of action is regulated, in case the authorized person made a typo or an arithmetical error in the certificate.

• Electronic accounting of full declaration checks will be introduced.

From now on, the NACP will carry out the accounting of the full verifications and their results in electronic form in the electronic document management system, and not in the register.

The main changes to the Procedure for conducting a full check of the declaration are for the most part sensible, but some issues still need to be worked on. In particular, the NACP should ensure that the rights of the declarants are adequately protected during the collection of information and prevent possible pressure on the Agency’s authorized persons.

TI Ukraine will monitor how the updated Procedure works in practice. The organization expects that the declaration checks will become more effective and hopes that this will allow the NACP to cope with the future workload after restoring the obligation to file declarations.

Let us remind you that the NACP has started public discussions of the State Anti-Corruption Program for 2023-2025.

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.