HSE University Anti-Corruption Portal
Ukraine Amends Its Anti-Corruption Legislation

Ukraine has adopted a law amending the provisions regulating the participation in corporate governing bodies, transfer of securities to trust management and declaration of property.

Law No. 1443-IX “On Amendments to Some Legal Acts of Ukraine Improving Certain Elements of the Declaration System” (Про внесення змін до деяких законів України щодо вдосконаленняокремих аспектів декларування), in particular:

1)  obliges officials, within 15 days since their appointment, to take action to suspend their entrepreneurial activities and express their refusal to participate in the governing body, other executive or oversight bodies, the supervisory board of a commercial organisation (except for the cases where the individual fulfills the functions of securities (shares) management that are owned by the State or a territorial unit, and represents their interests in the council (supervisory board) or the audit commission of the organisation);

2)  provides for the need to transfer securities to trust management only in the event that their total par value exceeds 0.25 per cent of the subsistence minimum for the employable population, and the number of shares does not exceed five per cent of the voting stock of the organisation; it also extends the deadline for transferring the shares to the trustee from 30 to 60 days;

3)  removes the obligation to declare the operations of purchase, sale or exchange of foreign currency or the changes in the property status of the declarant which these can lead to, as well as the technically equipped office spaces that are public reception rooms of MPs (can be used by MPs).

The Law, however, was severely criticised also by the anti-corruption authority of Ukraine.

Firstly, as the President of the National Agency on Corruption Prevention (NACP) stressed, officials can take advantage of the provisions of the Law to combine their work in the public administration with business management. In particular, the wording “take action aimed at ending” which substitutes the previous “direct prohibition” of the participation in the corporate governing bodies and undertaking entrepreneurial activities, in fact, leaves a loophole for officials allowing them to simply pretend that they have made an attempt to stop participating in commercial or entrepreneurial activities, taking this action “for the record”, rather than actually doing so. According to the head of the anti-corruption policy department of the NACP, although the adoption of such norms is aimed at providing officials with enough time to legally shed the relevant status, these provisions should be necessarily tied to specific outputs to ensure they are effectively implemented.

Secondly, the exclusion of the information about the acquisition, sale and exchange of currency has raised questions. Against this backdrop, as the representatives of the NACP pointed out, the so-called “spikes in exchange rates” that are frequent in the country and the use of a double currency conversion can mean, in particular, that officials will get a considerable income without reflecting it in the declaration due to the new amendments. Additionally, if the NACP or law enforcement bodies suspect that an official has received an undue advantage, the latter can explain that these undeclared funds come from a profitable exchange of currency. In examining the draft of the Law, President of Ukraine Volodymyr Zelensky suggested keeping the obligation to declare this information in the event that the total amount of relevant operations exceeds 50 subsistence minimums, but the Law was adopted without this caveat.

Finally, the fact that the deadline for transferring securities to trust management was doubled has also been criticised: according to Mr. Zelensky, there was not any reasonable need to increase the previously established 30-day deadline; nevertheless, the version of the Law containing the extended deadline was adopted. 

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