KYIV – The Verkhovna Rada of Ukraine fast-tracked the adoption of a bill on December 4 that reinstates an integral law designed to combat graft, safeguard financial transparency and hold public officials and lawmakers accountable regarding their asset holdings.
An uproar ensued as corruption watchdogs and think tanks criticized the bill for being too soft on Ukraine’s international commitments to fight graft on a systemic level as Kyiv faces a budget deficit of more than $2.7 billion for the end of the year and questions regarding whether a stalled multi-billion dollar lending program from the International Monetary Fund (IMF) would be renewed.
The new version of the law does not stipulate imprisonment for “falsifying or not filing an asset declaration,” Daria Kaleniuk, the executive director of the Anticorruption Action Center, told The Ukrainian Weekly.
President Volodymyr Zelenskyy has yet to sign the bill.
The previous law also made asset declarations public, which the Constitutional Court ruled to eliminate and which the National Security and Defense Council decided to keep in force.
Still, the watered down version of the law did not restore some of the powers that the National Anti-Corruption Protection Agency lost after the ruling, Ms. Kaleniuk noted, including “the ability to assess the veracity of asset declarations” of public officials.
Combating graft on a systemic level has been a precondition for Ukraine to receive foreign lending and assistance from the IMF, the European Union, the World Bank, as well as bilateral funding from the United States and other countries.
Hlib Vyshlynskiy at the Kyiv-based Center for Economic Strategy told The Weekly that the wording of the current law brings into question whether “it’s a remedy and whether it’s enough” to honor Kyiv’s previous commitments to the IMF to rejuvenate a $5 billion lending program to help the country’s struggling economy.
Ukraine has promised to maintain the independence of its anti-corruption institutions, as well as the central bank’s, he added.
“It all depends whether the Ukrainian authorities provided enough critical mass of actions that prove it will restore institutions that fight corruption and are under no risk for their independence to be undermined,” Mr. Vyshlynskiy said.
When the new law was passed, Mr. Zelenskyy expressed disappointment in a video address on social media, his preferred mode of communication. He lamented that offenses for violating the new law were not more severe, while saying it was a “devastating blow.”
Most of his Servant of the People party voted for the bill, as did members of European Solidarity, the party of former Ukrainian President Petro Poroshenko; the pro-Russian Opposition Platform – For Life; and the opposition Holos party.
The IMF has not publicly commented on the bill, whereas the EU provided Ukraine with $600 million of macro-financial assistance on December 9, which coincides with the United Nations’ International Corruption Day.
After a conference call with Prime Minister Denys Shmyhal on December 8, the EU’s foreign policy chief Josep Borrell said that, “even if [the new law is] a step in the right direction…[it] has several deficiencies and does not produce the necessary deterrent and corruption prevention effect.”
Timothy Ash, an emerging market sovereign strategist at London-based BlueBay Asset Management, wrote in an email to The Weekly that he supposes “the EU is trying to balance the desire to keep Ukraine engaged with frustrations on the anti-corruption agenda.” He also said that the law passed last week on asset declarations “falls short of EU expectations.”
Additionally, the Organization for Economic Cooperation and Development (OECDO said in a report last month that “if Ukraine does not receive its second scheduled IMF tranche this year, and the corruption agenda further derails, even the massive issue of international Eurobonds would not suffice to maintain the financial stability, and the country may risk insolvency in the midst of a political crisis and a weak public administration.”
Adding to the woes of Mr. Zelenskyy, who campaigned on a slate to uproot corruption as a newcomer to politics – is that the Council of Europe’s constitutional advisory body criticized the October Constitutional Court ruling that had undone much of the anti-graft architecture, which had been in place since 2014.
In an “urgent joint opinion” published on December 9, the Strasbourg-based Venice Commission said the ruling was “regrettable and soft,” the commission’s president Gianni Buquicchio tweeted on December 10.
Mr. Buquicchio cited the commission’s opinion, which concluded that the Constitutional Court’s ruling “lacks clear reasoning, has no firm basis in international law, and was possibly tainted with a major procedural flaw – an unresolved question of a conflict of interest of some judges.”
The commission’s opinion continued by saying that “this is regrettable, not only because of the immediate negative effect of this decision on the fight against corruption in Ukraine, but also because such decisions undermine public trust in constitutional justice in general.”
Going forward, the Ukrainian president does not have “the will or momentum” to push through more stringent anti-corruption legislation, said Mr. Vyshlynskiy of the Center for Economic Strategy.
“He needs a strong will that is compatible to principles that Soviet dissidents had and who fought the powers-that-be at all cost,” he said. “What I see is Mr. Zelenskyy having no real competence in statecraft and policies.”
On his part, Mr. Zelenskyy has said that he will not let up on his pledge for sweeping political change to reduce the influence of vested interests and to combat graft.
“Criminal liability for evading filing a declaration and entering into it deliberately false information” should be punishable with imprisonment, he said. “Corrupt officials should be held accountable under the law,” he stressed in a late November meeting of the National Council on Anti-Corruption Policy.