HSE University Anti-Corruption Portal
Ukraine to Have a Law on Oligarchs

The Verkhovna Rada (parliament) of Ukraine has approved a bill defining the status of oligarchs and imposing anti-corruption standards on them.

Bill No. 5599 “On the Prevention of Threats to National Security Related to the Excessive Influence of Persons of Significant Economic and Political Importance in Public Life (Oligarchs)” (Прозапобігання загрозам національній безпеці, пов'язаним із надмірним впливом осіб, які маютьзначну економічну або політичну вагу в суспільному житті (олігархів)), initiated by Ukraine’s President Volodymyr Zelenskyy, is aimed at overcoming conflict of interest caused by the merger of politicians, media and big business and its impact on public decision-making.

The main innovation provided for by the document is the establishment of a Register of oligarchs that will incorporate all persons corresponding to at least three of the following criteria: 

  • participation in political activities (holding of senior public positions, positions in the civil service or positions in the governing bodies of political parties, or close relations with the individuals holding such positions, financing of political parties etc.);
  • exercise of considerable influence on the media (for example, when the individual owns (is a founder) of a media outlet);
  • beneficial ownership of the enterprises that enjoy a monopolistic position in the market and maintenance of the rights of the beneficiary for at least a year;
  • beneficial ownership and ownership of economic entities (except for the media assets) whose confirmed value exceeds 1 million of subsistence minimums (roughly 83 million USD).

In the event that the individual included in the Register ceases to comply with at least two of the indicated criteria, he/she may be excluded from the list of oligarchs.

The Register will contain general information about each oligarch, the list of his/her assets and the information about politically exposed persons with whom he/she has had contacts.

In order to obtain relevant information the bill imposes the obligation to file “declarations of contacts” on the senior public officials, including the president, prime minister, judges, heads of public bodies, military personnel holding ranks of senior officers, heads of State-owned enterprises etc. In this context, the contacts include meetings and conversations also via videoconferencing, by phone or means of electronic communication with oligarchs or their representatives, except for the situations where the interaction takes place only in the course of events live-streamed on radio, television or Internet, court sessions or official events initiated by authorities.

These declarations should contain the following information:

  • information about the declarant and the oligarch (representative of the oligarch) with whom he/she interacted; 
  • date and venue of the meeting (conversation);
  • summary of the conversation.

The relevant document must be filed a day after the meeting (conversation) with the oligarch (representative of the oligarch) at the latest. The failure to submit the declaration entails disciplinary or political (with respect to the top public officials holding political positions) liability, except for the situations where the oligarch included in the Register had not informed the interlocutor about the fact that he/she is included in the Register prior to the meeting.

The obligation to maintain the Register and grant the status of oligarch is imposed on the National Security and Defence Council of Ukraine (NSDC) that examines relevant issues upon the request of the Cabinet of Ministers, Security Service of Ukraine, National Bank of Ukraine, an NSDC member or the NSDC Antimonopoly Committee. 

Besides defining the list of oligarchs, the bill provides for the imposition of a number of restrictions, prohibitions and obligations on these individuals. 

Firstly, the persons included in the Register, will have to file their asset declarations on an equal basis with civil servants and other individuals in line with the procedure defined by Law of 14 October 2014 No. 1700-VII “On the Prevention of Corruption”.

Secondly, the oligarchs are prohibited to:

1) Make contributions to political parties and candidates’ election funds conducting election campaigns (except for the oligarch’s own election funds) or to political parties, investing their own money or providing goods, works, services personally, through associates or organisations beneficially owned by the oligarch;

2) Finance any forms of political campaigning and organisation of rallies in the course of which political demands and appeals are made;

3) Participate as a buyer (including beneficially own the buyer) in acquiring the rights to the facilities subject to the “large-scale privatization” – the selling of public enterprises whose book value exceeds 250 million UAH (roughly 9,4 million USD). 

At the moment of writing the bill had not yet been signed; consequently, it had not been published as a law. The law will come into force six months after it is signed. At the same time, the act, according to its drafters, will have a limited duration (ten years) and will be a first step towards the elimination of the oligarchic system in Ukraine. Based on this law, antitrust laws, a law regulating lobbying activities and other legal acts “aimed at reformatting the system of economic and social relations” in the country will be developed.

It is necessary to highlight that the Verkhovna Rada debated the bill on an expedite basis even before the conclusion of its examination by the European Commission for Democracy through Law, which received the bill in early September. As a consequence, some experts and politicians are concerned that the law will be subsequently exploited by the president to pressurise his “competitors”: for instance, Ukraine’s Minister of Justice Denys Maliuska believes that the first persons to be included in the Register of oligarchs can be Ihor Kolomoyskyi, whose growing political influence has been openly opposed by Mr. Zelenskyy over recent times, and former president of Ukraine Petro Poroshenko. 

As a result, several days after the approval by the Verkhovna Rada it was decided to resend the bill to the Venice Commission upon its signature by the president. This decision will be a historical precedent: bills have always been submitted to the attention of the Commission for examination only in their original version.

UPD. On September 23, 2021 the law was passed, it will effective May 7, 2022.

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