When compulsory asset and income declarations for Ukrainian officials were finally enforced in 2016, the scale of the wealth amassed was a shock even to a country well inured to endemic corruption. For example, Ukraine’s 423 MPs declared a total of £394 million – an average of £930,000 per person. In a country where the average monthly salary is just £163 it is not surprising that there have been calls for criminal investigations.
What’s different this time?
More than 100,000 officials submitted electronic declarations, the details of which are made available to the public via the National Agency for Corruption Prevention. While public officials have been asked to declare their assets before, this is the first time declarations have been integrated, making it easier to expose financial malfeasance. The new system has revealed information on assets including shareholdings, private property, liquid assets, bank accounts, gifts and foreign assets. It also includes information about the assets of immediate family members.
There was also added pressure from international partners. Asset and income declaration was a key requirement of the IMF in exchange for the release of bailout funds and it was one of the conditions set out by the EU for a visa-free regime.
Verification, criminal investigations and legal loopholes
While the process of verifying the declarations – checking chronology and omissions – has already started, there is no clear timeline for full verification of sources of suspicious illegal enrichment. It is also unlikely that these disclosures will lead to immediate convictions. Rather they will serve as minimum standards of allowable wealth creation for the future due to a number of legal loopholes and limitations on the criminal responsibility of public officials.
Firstly, the law covering illegal enrichment for public officials only came into effect in mid-2015. Thus, while public officials have declared all their assets, the law can only be applied only to assets acquired after 2015 and any assets obtained before this date are excluded from any investigation.
Secondly, it is almost impossible to question public officials over tax evasion because the current legislation does not ascribe criminal responsibility for such offenses; a fine is the only punishment. While omission to declare assets worth more than £10,500 may lead to 2 years in prison, proving illegal enrichment and tax evasion is currently almost impossible. Thus, public officials have declared most of their assets because the penalty for omission exceeds the penalty for the crime.
Finally, MPs and judges are protected by immunity which means that even when criminal investigations are successful, prison sentences for senior public officials are likely to be rare. Waiving parliamentary immunity needs to be voted on by MPs themselves and there have been several cases of MPs fleeing the country ahead of a vote to prosecute them, such as Serhiy Klyuyev and Oleksandr Onyshchenko.
Risk of politically motivated investigations
Three different anti-corruption bodies – The General Prosecutor’s Office, the National Agency for Corruption Prevention and the National Anti-corruption Bureau – have all announced their intentions to start investigations. Competition between them has added to the confusion and they are accusing each other of incompetence and impotence.
The lack of priorities and a clear procedure means there is a risk that these investigations become politically motivated. Currently, there are two cases of pre-trial investigations of declared assets based on claims made by an MP against a colleague. Such practices may be used for political gain or to solve feuds between public authorities. Any convictions in such cases would see less influential public officials being sacrificed in the name of transparency and anti-corruption as a way to appease civil society and international partners.
Despite its flaws, this initiative is a significant step in tackling corruption. It is important for civil society and journalists to keep up the pressure for criminal investigations to be completed. The publically-available database makes it possible to uncover the sometimes murky connections between public officials via their involvement in different companies and can thus help reveal conflicts of interest. Pressure from international partners will continue to serve as additional motivation. The IMF, the US embassy in Ukraine and other international partners have all emphasized the importance of investigations into declared assets as a way of tackling public corruption.
The next round of declarations, in 2017, will provide better grounds for imposing criminal responsibility for illegal enrichment as already submitted declarations will serve as a baseline for comparison. There are also plans to further improve the system by integrating information from tax authorities and land and property rights registers.
Kateryna Boguslavska, Academy Fellow, Russia and Eurasia Programme.