GRECO calls for improved anti-corruption legislation and greater transparency of political funding.
The Council of Europe Group of States against Corruption [GRECO] has issued its third report on Ukraine, in which it warns that “determined action in the area of political financing is clearly required in order to foster citizens’ trust in Ukraine’s democratic system, its politicians and political parties. Parties and election candidates could become dependent on powerful business or shadow financing as they rely entirely on private funding.
The report states that provisions on public sector bribery need to be expanded to cover non-material gain, private sector bribery, trading in influence has not been fully addressed, and improvements are needed on sanctions.
GRECO also criticizes Ukraine for not implementing previous obligations, in particular, creating an independent anti-corruption body.
In Theme 1: Incriminations, GRECO addresses the following recommendations to Ukraine:
i. to amend current criminal legislation in respect of bribery in the private sector in order to clearly cover the full range of persons who direct or work for, in any capacity, any private sector entity as provided for in Articles 7 and 8 of the Criminal Law Convention on Corruption (ETS 173) (paragraph 60);
ii. to introduce the concepts of “promising” and “requesting” an advantage and “accepting an offer or a promise” in the provisions of the Criminal Code on active and passive bribery in the public and private sectors and trading in influence (paragraph 63);
iii. to take the legislative measures necessary to ensure that the provisions of the Criminal Code on active and passive bribery in the public sector cover clearly any form of (undue) advantage (in the meaning of the Criminal Law Convention on Corruption, ETS 173), including material and non-material advantages – whether they have an identifiable market value or not – and advantages of low value (paragraph 65);
iv. to ensure that the criminal offences of active and passive bribery in the public and private sectors and trading in influence are construed in such a way as to cover unambiguously, instances where the advantage is not intended for the official him/herself but for a third person, whether natural or legal (paragraph 67);
v. to increase in a consistent manner the criminal sanctions available for basic offences of active and passive bribery in the public and private sectors and to ensure full compliance with Article 19, paragraph 1 of the Criminal Law Convention on Corruption (ETS 173) (paragraph 69);
vi. to analyse and accordingly revise the automatic – and mandatorily total – exemption from punishment granted to perpetrators of active bribery who report to law enforcement authorities (paragraph 71);
vii. to ensure that Ukraine has jurisdiction over all bribery and trading in influence offences committed abroad by non-citizens, involving Ukrainian public officials, members of Ukrainian public assemblies, Ukrainian officials of international organisations, Ukrainian members of international parliamentary assemblies and Ukrainian judges or officials of international courts (paragraph 73).
77. In conformity with Rule 30.2 of the Rules of Procedure, GRECO invites the authorities of Ukraine
to present a report on the implementation of the above-mentioned recommendations by 30 April 2013.
78. Finally, GRECO invites the authorities of Ukraine to authorize, as soon as possible, the publication of the report, to translate the report into the national language and to make this translation public.
In Theme II: Transparency of Party Funding, it says the following in its conclusion and recommendations:
93. Ensuring transparency of political funding is a relatively new concern in Ukraine. The country has gradually introduced legislation on political funding which is still evolving. There are plans, inter alia, to prepare new legislation on general party financing by mid 2013. The GET, while principally welcoming such plans, wishes to stress the need for rapid improvements – before 2013, if possible – to transparency in both party and election campaign funding, taking into account the present report and its recommendations. At present, the system of transparency falls short of the standards established by Recommendation Rec(2003)4 of the Committee of Ministers of the Council of Europe on Common Rules against Corruption in the Funding of Political Parties and Electoral Campaigns. The current regulations, which are dispersed in numerous laws, lack coherence and clarity. In the area of regular party funding, permitted funding sources are not precisely defined and regulated. Such important areas as donations in kind and financing by entities related to a party are not addressed. No detailed and comprehensive information is made available to a monitoring body and to the public at large. While the transparency regulations applicable to election campaign funding are more precise, they still show some important gaps and can at present easily be circumvented. Moreover, the disclosure obligations in this area are insufficient and the current monitoring mechanism lacks the necessary powers and resources to carry out in-depth, proactive supervision and to effectively detect and disclose any case of undue influence in connection with campaign funding. To conclude, in both areas there is a need to take significant measures to enhance transparency and ensure supervision by an independent monitoring mechanism and by the public. Under the present regime, virtually no irregularities have been brought to light and led to the imposition of – scarcely regulated – sanctions, despite a prevalent belief that significant portions of political financing stem from hidden or even prohibited sources – e.g. contributions to election campaigns made in cash or in excess of the legal limits, use of party resources not included in the election funds, support by third parties etc. In this context, it is a matter of great concern that parties and election candidates rely entirely on private funding, that is to say their own funds, subscriptions and donations – as they are currently not entitled to any direct State aid, which after being officially introduced in 2003 was abolished in 2007. In the current situation, there is a clear risk that parties and election candidates become highly dependent on powerful businesses or on shadow financing. For the sake of transparency, the authorities are urged to put the introduction of State aid high on the political agenda again. To conclude, determined action in the area of political financing is certainly required in order to foster citizens’ trust in Ukraine’s democratic system, in its politicians and political parties.
94. In view of the above, GRECO addresses the following recommendations to Ukraine:
i. to harmonise the provisions on campaign financing contained in the Law on Parliamentary Elections, the Law on Presidential Elections and the Law on Local
Elections (paragraph 76); ii. to find ways to ensure that transparency regulations of the election laws are not circumvented by indirect contributions to election funds, via parties’ or candidates’“own funds”, or by contributions which do not pass through the election funds, including funding by third parties and donations in kind (paragraph 78);
iii. (i) to require that in all elections the complete campaign accounts are made easily accessible to the public, within timeframes specified by law; and (ii) to explore ways of sharing campaign finance information with the public prior to the election (e.g. through interim reports) (paragraph 79);
iv. to adopt a comprehensive and consistent legal framework for general party funding that would be in line with the transparency standards set by the election laws – promoting in particular recourse to the banking system in order to make party income more traceable (paragraph 81);
v. to clearly define and regulate donations – including indirect contributions such as donations in kind, to be evaluated at their market value –, loans and other permitted sources of political party funding and to ensure that membership fees are not used to circumvent the rules on donations (paragraph 82);
vi. to (i) clearly define the content and form of annual accounts of political parties, following a uniform format and accompanied by adequate source documents; (ii) ensure that income (specifying, in particular, individual donations above a certain value together with the identity of the donor), expenditure, debts and assets are accounted for in a comprehensive manner; (iii) consolidate the accounts to include local party branches as well as other entities which are related directly or indirectly to the political party or under its control; and (iv) require that the annual accounts are subject to the scrutiny of an independent monitoring mechanism and made easily accessible to the public, within timeframes specified by law (paragraph 84);
vii. to introduce independent auditing of party and election campaign accounts by certified auditors (paragraph 85);
viii. to ensure that an independent mechanism is in place for well coordinated monitoring of the funding of political parties and election campaigns which is given the mandate, the authority, as well as the financial and personnel resources to effectively and pro-actively supervise such funding, to investigate alleged infringements of political financing regulations and, as appropriate, to impose sanctions (paragraph 89);
ix. to ensure that (i) all infringements of the existing and yet to be established rules on financing of political parties and election campaigns are clearly defined and made subject to an appropriate range of effective, proportionate and dissuasive sanctions;
(ii) any party representatives and election candidates themselves are liable for infringements of party and campaign funding rules; and (iii) the limitation periods applicable to these offences are sufficiently long to allow the competent authorities to effectively supervise and investigate political funding (paragraph 92).
95. In conformity with Rule 30.2 of the Rules of Procedure, GRECO invites the authorities of Ukraine to present a report on the implementation of the above-mentioned recommendations by 30 April 2013.
96. Finally, GRECO invites the authorities of Ukraine to authorise, as soon as possible, the publication of the report, to translate the report into the national language and to make this translation public.
The two reports can be downloaded from the GRECO website
GRECO was established in 1999 by the Council of Europe to monitor states’ compliance with the organisation’s anti-corruption standards. It currently comprises 48 European states and the United States of America.