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Ukraine’s elite-exposing e-declarations, explained | #UAreforms

Ukraine’s elite-exposing e-declarations, explained | #UAreforms

The anti-corruption drive in Ukraine has had top state officials expose their wealth in electronic declarations submitted on 31 October. The amounts exposed have left many Ukrainians fuming over the exposition of opulence in an impoverished country de-facto at war.

Will Ukraine’s e-declarations help battle the rampant corruption in the country, and, if so, how? Euromaidan Press explored.

What happened? 

Around 60,000 Ukrainian top officials and their family members have submitted some 103,000 electronic declarations showing their monetary assets, apartments, cars, luxury items, and companies. Their declarations are available online to anybody on the site of Ukraine’s newly created National Agency for Prevention of Corruption (NAPC). And this only the first stage – the second one, which will be carried out in January-April 2017, will involve those who hold senior positions within the State Owned Enterprises, of which there are more than a thousand in the country.

What did the declarations reveal? 

The amounts of money were staggering. Altogether, the officials declared UAH 26.8 bn ($ 1.04 bn), of which 6.17 bn was in the bank and 16.17 bn was in cash, according to texty. That equals the amount of the latest IMF loan to Ukraine.

410 Ukrainian MPs declared monetary assets worth UAH 12 bn ($470.3 mn), according to Opora, Ukraine’s largest election monitoring group. In a country where the average monthly salary is a little over $200, the average MP of the Parliament had over a million dollars of savings.

The amounts of cash were staggering, too. MP Bohdan Dubnevych topped the list, declaring $ 11.5 mn and UAH 137 mn in cash, which would weigh 428 kg (in bills of the highest denomination). Top officials like President Poroshenko, Prime Minister Hroysman, and Interior Minister Avakov also declared hundreds of thousands of hryvnias and dollars in cash. The ever-cynical Ukrainian humor has even swiftly responded with a calculator for choosing the right storage for the loot – from a wallet for the hundred bucks to a tanker for the quadrillion of dollars.

The declarations also gave a taste of the luxury items possessed by the officials, placing them under fire for living the posh life while the rest of the population crowdfunds basic necessities for the Ukrainian soldiers in Donbas.

Why so much cash? 

The Ukrainian economy is essentially a cash-driven one, with about half of it in the shadows. Traditionally, Ukrainians, be they millionaires or paupers, have little faith in the banking system. In result, the majority of the population physically stores their savings and avoids getting them into the system.

Why should people know about this, anyway?

To prevent corruption and bribes. Civil servants receive a salary from the state budget. The only legal way for them to earn additional money is by working part-time, but only as a teacher, doctor, artist, researcher, sports instructor or referee. Civil servants can’t be involved in business, either directly or through a mandate. Therefore, if a servant of the state has expensive cars and property exceeding the declared incomes, her honesty must be placed under scrutiny. And in Ukraine, the official salaries are quite low compared to those in western countries.

Doesn’t this violate personal privacy? 

According to Ukrainian law, information about a person’s property and assets is confidential, but civil servants are an exception because their wealth is important public information. Other countries also follow this rule. Great Britain was the first to make declarations public in 1974. The USA and majority of EU countries followed suit. Independent Ukraine started using declarations in 1997.

So if the declarations were there before, what changed?

Previously, they declarations were paper and extremely difficult to get access to. Now all the declarations are online and within a minute’s reach. Also, now there are more categories: property under construction, cars with a price $5,300, cash over $2,700, loans, intellectual property. Also, the dates of purchases make it possible to track whether the official could buy an item with the salary he/she had that year. Now an official won’t be able to “write off” their cars or property as belonging to their spouse – property of family members has to be declared, too, as well as property that the official de-facto uses, even though it belongs to someone else. Providing false information will now be punishable by a fine of up to $2,000 or two years in prison.

What will happen to the declarations now? 

The NAPC will study them, starting from the top echelons of power, MPs, judges, and prosecutors. As there are currently only 340 employees in the NAPC, this won’t be fast. NAPC will check whether the officials or their families hid anything from the public eye, and will search where the money came from with the help of the tax office. If an official declares a UAH 200,000 income but spends a million, there is obviously something fishy going on. If journalists catch an official making a hyper-expensive purchase, that will also be a reason for the NAPC to investigate.

So will all those officials be fired?

Nope. Everything they obtained before 2015 will not be checked, even if it’s clear that corruption was involved. So these declarations will essentially be the “zero reference point.” Only those whose incomes and expenditures don’t match, or who didn’t declare property, will be brought to responsibility.

What about all that cash?

It is yet unclear what will be done regarding the heaps of declared cash. Guessing where some very large sums came from is pointless, and neither the NAPC, or the National Anti-Corruption Bureau, an investigative anti-corruption initiative, have the resources to investigate all but the most questionable. As Prosecutor General Lutsenko announced on 1 November, those who had declared sums of cash or bank accounts of $100,000 or more and gifts of over $10,000 will be subject to scrutiny.

How did these declarations happen in the first place?

The system of e-declarations was adopted from the 5th attempt as a demand from the IMF and the EU for receiving the visa-free regime. The creation of a mechanism that would prevent corruption and identify wrongdoing officials was a key demand of the anti-corruption initiatives.

Wasn’t there a scandal involving these e-declarations? 

More than a scandal – the launch of the system was sabotaged on multiple occasions, as shown in a helpful summary by Vox Ukraine. The launch of the e-declarations was planned to take place on 1 June 2016, 1 April 2016, and the end of 2015, but didn’t take place due to legislative sabotage. Then, in mid-August 2016, the NAPC launched the declaration process without a certificate that would make the results legally accountable. After the intervention of the IMF and EU ambassadors, Ukraine’s national information security agency finally provided the necessary certificate. However, attempts of sabotage were made two more times by legislative projects submitted to parliament in 2016. The Ukrainian MPs proposed to hide the assets from public scrutiny, soften the demands for declaring costly presents, loans, etc. With the intervention of the EU, IMF, and a number of civic organizations, the original plans for the declarations were retained.

How does this help fight corruption? 

Though the revealed declarations caused shock and outrage among Ukrainians, it’s unlikely that there will be an outcome of mass arrests – it is physically impossible for 340 analysts to scrutinize all 120,000 declarations to the point of bringing all cases to court. However, anti-corruption activists say that this system is a turning point – kleptocracy doesn’t fare well under public scrutiny. It is for this reason that the old guard of officials attempted to delay the e-declarations system 4 times and to sabotage it  5 times. The e-declarations system provides crucial instruments – transparency and the law – to exterminate corruption. But punishment for corruption will not come immediately. This will still need a fight.

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