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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert


Ukrainian taxpayers’ every fourth hryvnia ends up in corrupt pockets. Parliament takes first step to change rules of game
16 May, 2013 - 10:41
Sketch by Anatolii KAZANSKY from The Day’s archives, 1998

On May 14, the Verkhovna Rada passed one of the mandatory European integration bills. It provides for a uniform register of persons who committed corruption offenses. Under this law the authorities must draw up and make public “black lists” of bureaucrats guilty of theft of public funds.

Bill No. 2837 “On Changes to Certain Legislative Acts of Ukraine Concerning the Implementation of the National Anticorruption Policy” (authors: Pavlo Petrenko, Batkivshchyna; Viktor Chumak (UDAR); Serhii Tihipko, Party of Regions, and Oleh Makhnitsky, Svoboda) received 373 yeas from 417 MPs duly registered as being in attendance. There were no nays, no MPs abstained, although 44 did not take part in the vote.

Interestingly, among those who did not take part in the vote were Valerii Khomutynnik, chairman of the VR committee on taxation and customs policy, and Vladyslav Lukianov, ex-chairman of the budget committee, currently first deputy chairman of the VR committee on entrepreneurship, regulatory and antimonopoly policy. Khomutynnik could not be reached by phone. Lukianov could and he told The Day that he was approaching the speaker when the vote took place and could not press the button, but that he would press the nay button: “This bill considerably increases the number of relatives that will have to be included in the financial return. This matter could be discussed without taking such rash measures… Naturally, an official accused of any wrongdoing will be relieved of his post, but it is anyone’s guess how long this will last; also, if any of that official’s relatives is found to have done something wrong, how this will affect that official and whether this will be constitutional… If a single person can cause some damage – well, we’re getting back to the year 1937 when the whole family was held responsible for the wrongdoing of its member. The law must be carefully considered. I had my proposals and critical remarks concerning this bill, but the voting took place with some violations of the rules. Other MPs also wanted to make critical remarks, but the bill had by then been passed.”

Lukianov is convinced that few of the MPs who voted for the bill in the first and second readings knew what they were doing: “We are trying to build a transparent democracy and sometimes take very long steps that can split our pants. Few MPs realized what bill they were passing.” When asked why vote for something you don’t understand, Lukianov replied: “There is an agreed stand. We must quickly pass all European integration bills; we must do our utmost so Ukraine can sign an association agreement with the EU.”

Community activists fighting corruption their own way feel sure that the passage of the bill is a victory. “This law is a great step forward in combating political corruption in Ukraine,” says Vitalii Shabunin, chairman of the board, Anticorruption Center, adding that translating this law into life will be the next step – but that this will be seen only in a year’s time.

No one knows how many names these “black lists” will contain, but it is safe to assume that there will be hundreds, maybe thousands. Unfortunately, experts predict that the real corruption sharks will not be there: “As a rule, top corruption figures are not included in such lists. There will be the names of those who carry out their orders, who are expendable material,” Shabunin told The Day. He went on to say that, nevertheless, it would be interesting to examine such lists to see whether some of the people listed are still employed in government structures. Every name on these lists belongs to a person found guilty of an administrative offense. In other words, such a person cannot hold any administrative posts and that if s/he does – and even worse so, if this person is entrusted with handling taxpayer money and is paid from the central budget – this is a crime.

What is to be done if a blacklisted person is still in civil service? Bill No. 2837 has no answer to this question. Says Shabunin: “The law does not determine the guilt and punishment, yet here one has to reckon with the lever of elementary political pressure on the official who keeps such a person on payroll. This official will be asked what right he had to give the job to a person whose guilt had been proven in court and whether that person had committed an offense acting on that official’s orders.”

According to Shabunin, the most interesting aspect about Bill No. 2837 is not the black list. Under this law, the financial returns of all officials, rank and position notwithstanding, must be in the public domain while the minimum sum of expenditures to be accounted for is lowered almost twofold. There is also a mechanism of monitoring these officials’ financial returns.

“This bill can make the financial returns submitted by government officials into a real tool of control over their activities. Most importantly, these returns will specify the legal entities owned by the families of these officials. Now people will know why the wives of some such officials are among the wealthiest women of Ukraine. In other words, you can check a given legal entity, its owners, and see whether this entity has miraculously won some government tenders or whether this entity owns companies that have won such tenders, even if hidden in the veil of offshore companies. This law offers room for analysis and that’s the main thing,” stresses Shabunin.

He adds that this bill must become an effective tool in the hands of journalists and community activists in combating political corruption. The activists, however, point out that the bill lacks an important clause imposing liability for false information in the financial returns submitted by civil servants. The Anticorruption Center insists on criminal prosecution. “In the United States a civil servant failing to provide truthful information in the financial return is automatically relieved of his post and receives five years in jail,” says Shabunin.

He stresses that combating corruption “always starts with the ability to see it. Without this everything else (liability, [black] lists, fines) makes no sense. Once you detect an act of corruption, nonfeasance or impunity, you can do something about it.” Shabunin says in this context it is especially important for parliament to vote as synchronously for Bill No. 2207 which is being considered by the Verkhovna Rada and which is as important.

Recently some one hundred media people, among them noted investigative journalists, composed an open message addressing the heads of VR factions, urging them to pass Bill No. 2207 forthwith. This bill allows government-run businesses to hold tenders provided they publish information about what they have purchased, from whom and at what price.

“Let these government-run enterprises hold tenders without all that time-consuming paperwork. We believe that this will help business, but our citizens must know what is being bought with their money, from whom and how much it costs. Bill No. 2207 is an agreement between the state and the taxpayer. It reduces the red tape and makes the whole affair transparent,” says Yurii Nikolov, founder of nashigroshi.org, a key website that exposes acts of embezzlement.

As the opposition was fighting over the languages issue in front of the Ukrainian Home last July, the Verkhovna Rada passed Bill No. 5044-VI “On Amendments to Certain Legislative Acts of Ukraine on Public Procurement.” The president signed it. The new law deleted from the Economic Code the clauses that previously allowed government-run businesses to hold tenders to purchase goods and services, along with exempting from the Law “On State Procurement Procedures” utilities and companies where the government held the controlling interest or part of the share capital. In other words, parliament allowed two-thirds of the central budget to be managed “off-screen.”

After enacting Bill No. 5044 half of the budget appropriations for procurement went into the shadows. During the first two months of the new fiscal year investigative journalists spotted 66 billion hryvnias missing. “We compared the results of tenders according to Visnyk derzhavnykh zakupivel [The State Procurement Messenger] in January-February 2013 and 2012 and came up with a twofold decline, from 133 billion last year to 66 billion in 2013. These two months are very characteristic, considering that tenders accounted for one-fourth of the annual amount of procurement (UAH 520.2 billion) in January and February,” reads the open message to the heads of VR factions.

Findings provided by the Accounting Chamber are even more interesting (The Day has a copy of the 2012 report). The document reads that “the risks of unlawful and ineffective usage of funds of the State Budget of Ukraine have considerably increased.” An analysis of state procurement in 2011 shows that 24.9 percent of public funds (over 100 billion hryvnias, compared to 53.6 billion allocated for the entire medical/health care sector in 2013) were used away from the public eye. In other words, every fourth hryvnia paid by the Ukrainian taxpayer in 2011 was misused at best, or went into a corrupt pocket at worst. Even more thrilling in this context are the Ukrainian laws on property taxes and charges for workers with listed funds.

By Alla DUBROVYK, The Day