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The bill on oligarchs “Prepares extrajudicial dealings”

21.09.2021
Yevgeniy Zakharov

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Analysis of the draft law adopted in the first reading. The text for the second reading has not been published.


The Presidential Bill No. 5599 “On the prevention of threats to national security related to the excessive influence of persons of significant economic or political importance in public life (oligarchs)” in early July was adopted as a basis, and one could see a great wish to adopt it in September in full. Under the Bill, an oligarch is a person corresponding simultaneously to three signs out of four: (1) they participate in the political life; (2) they have a significant influence on media (being an owner and/or controller); (3) they own or control an entity that holds a monopoly position in the market; (4) they own assets worth at least 1 million living wages for the able-bodied, ie more than 75 million euros.

If you recall that TOP-100 of the richest men in Ukraine have assets of more than 100 million euros, that almost all of them participate in the political life (otherwise they would not be able to promote and protect their business in Ukraine) and greatly influence the media, then hundreds of people could fit this description.

It should be noted that it is much broader than the normal understanding: oligarch is a person who, having a significant wealth, uses it to influence the political life, normally, in order to gain new economic benefits.

This Bill proposes to create the Register of oligarchs and apply certain prohibitions and restrictions to persons who will be included in this Register. Thus, it is proposed to ban oligarchs from making contributions in support of political parties, to be a buyer in the process of privatization of large-scale privatization objects. The oligarch will not be able to actually own the media.

Who could be appointed an oligarch

Under the Bill, an oligarch is a person corresponding simultaneously to three signs out of four: (1) they participate in the political life; (2) they have a significant influence on media (being an owner and/or controller); (3) they own or control an entity that holds a monopoly position in the market; (4) they own assets worth at least 1 million living wages for the able-bodied, ie more than 75 million euros.

If you recall that TOP-100 of the richest men in Ukraine have assets of more than 100 million euros, that almost all of them participate in the political life (otherwise they would not be able to promote and protect their business in Ukraine) and greatly influence the media, then hundreds of people could fit this description.

It should be noted that it is much broader than the normal understanding: oligarch is a person who, having a significant wealth, uses it to influence the political life, normally, in order to gain new economic benefits.

Unconstitutionality

The Bill suggests to empower the National Security and Defence Council to recognize persons having relevant signs as oligarchs based on the petitions of the government, a member of NSDC, National Bank, Security Service or the Antimonopoly Committee, and the President – to enact such decisions.

However, under pt. 2 of Art. 19 of the Constitution of Ukraine Bodies of state power and bodies of local self-government and their officials are obliged to act only on the grounds, within the limits of authority, and in the manner envisaged by the Constitution and the laws of Ukraine”. Under pt. 2 of Art. 8 of the Constitution “Laws and other normative legal acts are adopted on the basis of the Constitution of Ukraine and shall conform to it”. Therefore, the President of Ukraine must act within his powers when issuing decrees.

The powers of the President of Ukraine are defined solely by the Constitution (para. 31 pt. 1 of Art. 106 of the Constitution of Ukraine), which was numerously emphasized by the Constitutional Court. Neither Art. 106 of the Constitution of Ukraine nor its other additions empower the President of Ukraine to adopt, approve or “enact” the decisions that provide special legal restrictions and additional obligations for certain citizens of Ukraine, with his decrees.

Under Art. 107 of the Constitution, “The Council of National Security and Defence of Ukraine is the co-ordinating body to the President of Ukraine on issues of national security and defence” based on the law. NSDC is the coordinating body “to the President of Ukraine”, and the decisions of the NSDC are enacted by the relevant Presidential Decrees, which means that that body could not be given powers that the President himself does not have.

Thus, the main idea of the Bill and, accordingly, all his provisions in general do not correspond to Articles 8, 19, 106 and 107 of the Constitution of Ukraine.

The Law on 5599 oligarchs

The Bill stipulates that the decision to recognize a person as an “oligarch” and enter him in the Register of Oligarchs “is made by the National Security and Defence Council on the basis of a suggestion from the Cabinet of Ministers of Ukraine, a member of the National Security and Defence Council, the National Bank of Ukraine, the SBU or the Antimonopoly Committee”. This issue is not regulated in more detail in the Bill.

Such a procedure for considering the issue of recognizing a person as an “oligarch” and imposing prohibitions and restrictions on him has signs of wrongdoing and creates opportunities for abuse. After all, the prohibitions and restrictions mentioned in the Bill are of a criminal nature in essence and severity, and therefore such extrajudicial procedures should be covered by the guarantees of the right to a fair trial under Article 6 of the European Convention on Human Rights, including the principles of the adversarial proceedings, impartiality and equality of all participants in the process.

However, this right is violated: the participation of an oligarch candidate is not provided on any stages – of preparation and introduction of petition to NSDC, its consideration and decision taking. The Bill does not contain safeguards against the possible selective application of such a procedure, and the decision to recognize a person as an “oligarch” under the Bill is not subject to appeal in court.

In addition, members of the National Security and Defence Council are hierarchically dependent on the President of Ukraine. Therefore, they cannot perform judicial functions, given that this violates the principle of impartiality of the court.

Censorship and control over media

The Bill de facto introduces censorship. For example, it is proposed to introduce standards for the presentation of information by the media, in relation to which there are signs of the oligarch’s influence. In particular, it concerns the restriction of information on domestic political, economic, social and religious issues in Ukraine.

Also, the sign of influence on the media persists if the media is sold by an oligarch included in the Register to a person who does not have an impeccable business reputation. Meaning, it is almost impossible to get rid of the sign of influence on the media, according to the Bill, and the sale of the media will not deprive the “oligarch” of his status.

In addition, traditionally for Ukraine, the media is a loss-making business, and there are almost no buyers who would be interested in buying media. Who would want to buy media with the :”oligarchic” stigma and tighter control over its activities?

Essentially, the idea of the Bill is to remove political opponents from the media market, and the media, which will be considered “oligarchic”, will be discriminated against compared to other media, because they will be subject to additional control measures, and then closed.

Conclusions

Bill No. 5599 in the edition for the second reading empowers the President of Ukraine and NSDC with a set of powers to significantly restrict the rights of a certain group of people in Ukrainian society – the so-called “oligarchs”. The norms of the Bill contradict the Constitution of Ukraine and international human rights standards.

Thus, the Constitution does not allow the President of Ukraine and the National Security and Defence Council to participate in the procedure of restricting the rights of “oligarchs”, and the proposed quasi-judicial mechanism does not meet the guarantees of the right to a fair trial, in particular, the guarantees of equality, adversarial proceedings.

Expanding the concept of “oligarch” compared to the conventional one will lead to the fact that the law will cover a large number of people who do not actually have an adverse impact on state and public life. Restrictions on the work of media associated with the oligarchs are censorship, which is banned in Ukraine.

Thus, the adoption of the law on oligarchs may well provoke a new round of persecution of political opponents, chaos and lawlessness.


The Ukrainian version was published by Radio Svoboda in “Tochka Zoru” section.

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