Venice Commission, G7 slam Ukraine’s financial disclosure bills for NGOs & activists

Venice Commission. Photo: espreso.tv

Venice Commission. Photo: espreso.tv 

Analysis & Opinion

The Venice Commission has intervened in the ongoing conflict between the Ukrainian government and anti-corruption activists. On 16 March, the Commission issued its recommendations, which read more like demands: that Ukraine cancels the requirement for anti-corruption activists to disclose their assets, and the president’s draft bills on additional reporting for NGOs be removed or narrowed down significantly. Moreover, it stated outright that Ukrainian officials are guided by “revenge” against the activists who made them disclose their assets. Only ten days are left before the deadline. Will Ukrainian politicians go through with their “revenge,” causing another standoff with Ukraine’s foreign partners?

In the last week, Ukraine’s legislation obliging anti-corruption activists to submit e-declarations on their assets on par with government officials has come under criticism of both the Venice Commission, an advisory body of the Council of Europe in the field of constitutional law, and the G7 group of countries.

On 16 March 2018, the Venice Commission and the OSCE/ODIHR released a joint statement slamming both the bill on e-declarations, which was adopted by the Ukrainian Parliament in March 2017, and two alternative bills proposed by President Poroshenko in July 2018. These bills drop the asset declaration requirements for anti-corruption activists, but replace them with burdensome tax reporting and enhanced public disclosure of detailed financial information of their NGOs.

“Stringent financial reporting and disclosure requirements for public activists, coupled with severe sanctions, are likely to have a chilling effect on civil society in Ukraine and should be removed in their entirety or significantly narrowed down … It is crucial that Ukraine’s plans to cancel the e-declaration requirements for anti-corruption activists, which likewise raise several serious human rights issues, are implemented as a matter of urgency, before 1 April 2018, the deadline for submission of the first declarations,” the statement reads.

Although the conclusions of the Venice Commission can’t contain political evaluations, the authors of the report which followed the declaration didn’t resist stating the obvious: e-declaration requirements for anti-corruption activists appear to be the government’s revenge against their “offenders”:

“A number of different interlocutors of the Venice Commission and OSCE/ODIHR delegation considered this measure as a retribution against those who had fought for the introduction of the strict e-declaration regime for public officials (including MPs), 15 which ‘has been challenged and faced hostility from its start’ and ‘has subsequently stalled in its implementation.’”

The recommendations of the Commission at several points sound like demands. However, Ukraine is not obliged to follow them.

If it doesn’t, this will, on the one hand, confirm the Ukrainian government’s and President Poroshenko’s fear of anti-corruption activists and prove their effectiveness. On the other hand, it will lead to three nearly irreparable consequences. First, it will raise the war between the government and civil society to a new level. Second, it will also worsen Ukraine’s relationships with the West. Third, Poroshenko’s image will take a hit.

The three laws

Let’s take a brief look at the legislation which has been criticized.

The bill “Amendments to the Law of Ukraine on Prevention of Corruption,” which requires anti-corruption activists to disclose their assets, was introduced in March 2017.

It obliges anti-corruption NGOs and those assisting them, civic activists who fight corruption, as well as candidates to local councils, or presidential candidates, to submit electronic declarations on their property and income. All the above-mentioned persons will be obliged to declare their property already in April 2018 unless the legislation is canceled.

Activists criticize the law as moving Ukraine closer to an authoritarian regime, alleging that the legislation contains mechanisms which can paralyze the work of NGOs. Namely, the law contains vague definitions, and the failure to submit declarations might result in criminal proceeding for the civic activists.

Read also: Supporting transparency or fighting it? New law on assets declarations for NGOs raises scandal in Ukraine

Another dangerous aspect of the law is that it forces the subcontractors of anti-corruption NGOs to submit declarations as well – even if the subcontractor is a janitor cleaning the office of an anti-corruption NGO. Moreover, the law can be interpreted to include anyone who received a free pen or lunch from an NGO as part of an anti-corruption training, a recent response by the National Agency on Prevention Corruption reveals.

This can significantly narrow down the number of people who would want to work with such organizations. In fact, it already has. Tymofiy Mylovanov, the founder of the Kyiv School of Economics which brings world-level economy lectors to Ukraine, wrote on his fb that one of the directors of his School has already resigned, fearing the burdensome e-declaration process, and four others are thinking about doing the same.

The law was seen as absurd because unlike state officials, activists don’t use state funds and therefore don’t need to report to Ukrainian taxpayers. It also has been criticized by Ukraine’s western partners, who have called to repeal it.

Later Poroshenko recognized the law as a “general mistake.” A working group to amend the law was created in the Parliament based on the President’s Office. However, a number of activists refused to take part in the group from the very beginning, assuming that Poroshenko and the government will only play for time to make the activists eventually declare their assets.

Nevertheless, two bills called to cancel these e-declarations were introduced.

#6674 “On Amendments to Certain Legislative Acts On Providing Public Information On the Financing of the Activities of Public Associations and the Use of International Technical Assistance.”

#6675 “On Making the Corresponding Changes to the Tax Code.”

These bills cancel the e-declarations requirement for anti-corruption activists. However, it replaces it with additional burdens on all NGOs and severe penalties for non-compliance. Just one mistake in such a report can lead to the abolishment of the non-profit status of an NGO.

The cancellation will be backdated for the last year, meaning the organization will have to pay taxes for the whole previous year as if it had been carrying out profitable activity.

Overall, it seems that the government really did decide to follow the tactic of playing for time. Only only one plenary session of the Verkhovna Rada is left for making the final step. Starting from 1 April 2018, anti-corruption activists are required by law to declare their assets.

Venice Commission recommendations

In its statement, the Venice Commission and the OSCE/ODIHR said that the new financial reporting and disclosure regime, if introduced, would conflict with freedom of association, the right to respect for private life and the prohibition of discrimination, the opinion reads. Even if there were indications of money laundering, the correct response would be criminal investigations against specific NGOs, and not blanket reporting requirements.

To ensure compliance of the draft laws with Council of Europe and other international human rights standards and OSCE commitments, the Venice Commission and the OSCE/ODIHR released their recommendations. Here are the main points.

  • To cancel the e-declaration requirements for anti-corruption activists introduced in March 2017 before the deadline of 1 April 2018.
  • To remove the new disclosure requirements under draft laws #6674 and #6675 in their entirety or, at a minimum, narrow them down substantially. In particular:

significantly increase the income threshold for determining the organizations covered by the new requirements (at present, it stands at €14 350 annual income);
remove the requirement to publicly disclose the ten most-paid employees of NGOs and of some of the donors and contractors of such organizations;
remove disclosure requirements for individuals who receive income from donors of international technical assistance.

  • If it will be passed, to alleviate the sanctions of draft law No. 6675 so as to ensure better clarity as well as proportionality, by:

allowing to correct potential mistakes;
– extending the range of available sanctions so they are proportionate to different types and degrees of violations of the rules;
removing loss of organizations’ non-profit status from the list of sanctions or, at a minimum, making it clear that this can only be imposed – preferably by a court;
– to ensure NGOs are included in the lawmaking process and are allowed to submit their views on them in good time, prior to the adoption of the draft laws.

G7 supports Venice Commission recommendations

The group of G7 countries also supported the recommendations of the Venice Commission to Ukraine on the subject.

“G7 firmly stands behind the recommendations of the Venice Commission to cancel the requirements and looks forward to a legislative solution that implements these recommendations or postpones application of the law by April 1,”says the Twitter account of the Canadian Chair of the G7 Ambassadors’ Support Group in Kyiv.

“E-declaration requirements for anti-corruption activists and international SOE supervisory board members are not consistent with Ukraine’s international obligations and best practices, negatively affect international assistance and obstruct the fight against corruption,” adds the source.

Ten days left

The Ukrainian parliament majority can, of course, ignore the demand of the experts. Doing will be easy: there are only ten days left until the deadline for declarations, and the Venice Commission’s recommendations are controversial. On the one hand, it recommends canceling the e-declaration requirements before the deadline on 1 Aprile, on the other hand – to conduct inclusive consultations with NGOs regarding the two alternative bills, making sure no rash decisions are adopted. This is impossible to do in the remaining one plenary week.

However, the parliament can get out of this collision, writes European Pravda editor Serhiy Sydorenko: they can abolish the e-declarations requirement for anti-corruption activists right away through the draft law 6271, and rework the other two bills later on.

Will Ukrainian parliamentarians listen to the opinion of the Council of Europe, or will the mentioned desire for retribution take over? We will find out this week.

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Edited by: Alya Shandra

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  • Alex George

    I expect Poroshenko’s hands are tied to some degree by his coalition – he is forced to make concessions to lawmakers who are anti-reform in order to retain power. However the harsh truth is that Ukraine’s ability to defend itself is being seriously impeded by corruption. The Kyiv government must recognise this and stop repressing those organisations that call for reform, if it wants to survive.