March 31, 2017

New bill forces graft watchdogs to file declarations of assets


KYIV – Controversial amendments to the nation’s “e-declaration” law that require corruption watchdogs registered in Ukraine to file asset declarations went into effect on March 30.

President Petro Poroshenko signed the bill this week after the Verkhovna Rada approved changes to Ukraine’s anti-corruption legislation on March 23.

The measure obliges employees of civil society groups that monitor graft and the vendors with whom they conduct business to disclose their incomes and purchasing activity. Their first asset declarations are due in 2018.

Non-governmental organizations that fight corruption will now join the 50,000 high-level public officials, including the president, the prime minister, Cabinet members, lawmakers, judges, prosecutors, local government officials and managers of state-owned companies who must file electronic declarations.

Representatives of the U.S. and the European Commission, as well as the British government, said the provision was detrimental to Ukraine’s reform efforts.

“Members of civil society play a vital role for transparency; targeting them is a step backwards,” the U.S. Embassy in Kyiv tweeted.

U.S. Embassy press attaché Geoff Anisman was unavailable for comment.

British Ambassador to Ukraine Judith Gough described the new reporting requirement as “a serious step back” for Ukraine that could “limit NGOs’ capacity” and “expose them to pressure.”

However, as a condition for receiving Western aid for its battle-scarred economy, Kyiv has had to make headway on eliminating widespread public corruption. Apart from the e-declaration system for public officials, the government has instituted a much-lauded electronic public procurement system that has already saved millions of dollars.

Members of Ukraine’s civil society called the new measure discriminatory and said it will also affect journalists who uncover corruption because many work for non-profit groups.

Citing the Bureau of Investigative Journalism, Oksana Romaniuk, director of the media watchdog Institute of Mass Information, said many journalism outlets are “registered not as mass media but as civil society organizations.”

By definition, corruption watchdogs shouldn’t be lumped into to the anti-corruption bill because they don’t work in the public sector, said Iryna Bekeshkina, director of the Democratic Initiatives Foundation.

Noting that the policy center she heads could be classified as a “vendor” under the provision because it also conducts public opinion polls on corruption, the sociologist said that “civil society groups don’t belong in the public sector and civil activists don’t have decision-making power in government.”

She continued: “If you want to make their [civil society groups’] declarations public (because they actually draft reports and submit declarations to the tax authorities) – then adopt the respective laws, but not in the one on corruption.”

Among the groups that will be affected by the new law is the Anti-Corruption Action Center, whose team includes analysts, lawyers, journalists and others who seek change in a country where corruption goes unpunished.

Mr. Poroshenko said the amendments were necessary to exclude lower-ranking soldiers from having to file asset disclosures. This week, after meeting with civil society leaders, he promised to protect non-profits and form a working group with them to draft additional amendments.

Some Western experts defended the provision.

“Non-governmental organizations in Ukraine receive most of their funding from foreign governments and often engage in lobbying and direct pressure on their government, which is legitimate but should be fully transparent,” wrote Adrian Karatnycky, a senior fellow at the Atlantic Council in Washington. “However, given their penchant for extreme transparency, civic activists have not themselves been equally transparent about their own wages and budgets.”

The e-declaration measure and the public procurement system – called ProZorro – are among the most popular reforms undertaken by the post-Maidan government, public opinion polls have consistently found.

Public anger erupted when the bloated assets of public officials – often incommensurate to their salaries – were disclosed. Calculations in October 2016 by the Reuters news agency found that the 24 members of Ukraine’s Cabinet hoarded nearly $7 million – just in cash. Luxurious yachts, watches, $10,000 wine bottles, $5,000 antique books and other assets were disclosed.

For example, Roman Nasirov, the former head of the State Fiscal Service, disclosed co-owning with his wife Swiss watches, diamond jewelry, fur coats, crystal, as well as $2.2 million in cash.

Meanwhile, the average monthly salary in Ukraine hovers at $200.

Incidentally, Mr. Nasirov was arrested on March 2 on suspicion of helping to embezzle about $75 million. Denying the charges, he has since been released on $3.7 million bail, for which his wife paid.

“When the Economy Ministry says that in some areas around 60 percent of the economy is in the shadows, then this is accounted for by the volume of cash registered by civil servants, officials and lawmakers,” Taras Kachka, deputy executive director at George Soros’s International Renaissance Foundation, told Reuters. “This is a reflection on the state of our society.”

Because of the vague language of the provision’s amendments, they could be used to put “pressure on NGOs, investigative journalists or activists,” said Halya Coynash of the Kharkiv Human Rights Protection Group. “The real aim is to put a clamp on those who continue asking inconvenient questions and demanding openness and accountability. Unfortunately, the president has now become complicit in this.”

Which is why the new provisions should be abolished, according to Jose Ugaz, chair of Transparency International, a corruption watchdog based in Berlin.

“These amendments are a vindictive retaliation by lawmakers who are angry that they are required to declare their wealth,” he said in a statement issued by the Transparency International Secretariat. “There is no justification for singling out anti-corruption groups.”