Ukraine: From targeting anti-corruption NGOs to "a witch hunt on all civic activists"?

President Petro Poroshenko has kept his promise and moved to cancel legislation which effectively treated anti-corruption activists as civil servants, requiring them to fill out electronic e-declarations. While that move has been welcomed, alarm has been expressed at proposed amendments to the Tax Code affecting all civic organizations receiving foreign or state funding, but leaving untouched supposedly non-profit-making organizations created by political parties or business concerns.   

The requirement which the President is now proposing to remove was included in Law No. 6172 on amendments to the Law on Preventing Corruption and made it mandatory for civic activists, investigative journalists, etc. engaged in combatting corruption to provide e-declarations.  Although the requirement found a few defenders, there had been calls from most Ukrainian human rights and civic organizations and from western observers for him to veto the bill and frustration when, on March 27, he ignored such calls. The requirement was viewed as an opportunity to put pressure on NGOs, investigative journalists or activists, especially those most actively seeking to expose and eradicate corruption.  The requirement was also worded in such a vague manner as to make selective application virtually inevitable (details here). Concerns have been compounded over recent months by various forms of harassment of anti-corruption activists.

The President’s Press Service announced on July 8 that a package of draft bills had been tabled which would cancel the e-declaration requirement.  Two bills were mentioned: ‘On amendments to the Tax Code’ and ‘On amendments to some legislative acts on ensuring transparency for the public of information on the financing of the activities of NGOs and use of international technical aid’.

Poroshenko hopes that these will pass through their first reading this parliamentary session and says that only before the second reading will proposals be possible from civic organizations.  

The Press Service statement is very upbeat and suggests that representatives of civic organizations have been kept abreast of developments and their proposals taken into consideration.

That is certainly not the impression given by some of those present at meetings with the President.

Yaroslav Yurchyshyn, the Executive Director of Transparency International Ukraine pointed out that the bills had not been provided in advance and so they only spoke in general “about the approach of the amendments: openness of all NGOs, removal of discrimination on the basis of sphere of work”.  The conceptual approach is correct, he says, but “the devil is in the detail”,

Vitaliy Shabunin, Head of the Anti-Corruption Action Centre, writing in Ukrainska Pravda, was much more critical.  He considers that the version of the bill that the President showed them was unacceptable since “the proposed norms introduce an additional form of tax reporting for NGOs and give fiscal authorities total manual control over the activities of non-profit-making organizations”.

“In the hands of an unreformed fiscal service, such an instrument can become an effective way of blocking the work of organizations that are critical of the government”.

Shabunin went on to say that additional tax reporting is not a problem since honest organizations are willing to show where they get funding from and how they spend it.  He does note, however, that the bill only proposes this for those organizations that receive international grants or state funding. 

This leaves out of the picture altogether “the activities of political parties and pocket NGOs with Russian roots that carry out the orders of those political parties”. 

The imposition of penalties is also not correctly specified, since an NGO could face sanctions even though they had provided their returns on time, if the tax authority failed to publish them.

The amendments would also require specialists and experts commissioned by an NGO to publicly reveal not only income from donors and beneficiaries of international grants, but also expenses for third parties.  This, Shabunin notes, is more than even public officials are required to do in their e-declarations.  A mistake, however innocent, could result in their losing their special freelance tax status.

The Anti-Corruption Action Centre insists that such amendments are admissible only if they cover political parties and all non-profit-making organizations.

This position was also taken by prominent journalist and media specialist Natalya Ligacheva.  In fully endorsing Shabunin’s stand on the amendments, Ligacheva stressed that any such changes must apply equally to all non-profit-making organizations, including those linked with business.  The argument apparently voiced during the meeting with Poroshenko that ‘businesses pay enough taxes already’ cannot withstand scrutiny, she says.

“Business is aimed at making profit, and creates civic organizations specifically to lobby the opportunities for gaining profit.  Civic organizations, on the other hand, receive grants from western donors, work for the interests, not of business, but of society – those interests which the state itself and business either can’t or won’t promote and defend!”   A responsible government should be providing preferential treatment for structures which are effectively performing a publicly vital role in their place.

Similarly, any amendments must not impose requirements on tax subjects providing services to NGOs, while leaving those working for business untouched.

If more stringent demands are imposed on tax subjects working for NGOs, “this is certainly an NGO-witch hunt and OVERT obstruction of their work”.

Ligacheva stresses that it is to the public that civic organizations should be accountable. Her NGO Detector Media and countless others effectively do what these new amendments propose, but they do this and should do so to earn the public’s trust.

“Let the government primarily watch how public funding is spent, and what preferential treatment, through corruption from those state figures, businesses get, and not organize a witch hunt on all civic activists”.