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Weekly analytics for 2 – 8 November 2021

09.11.2021

Political Points of the Centre of Policy and Legal Reform include a weekly expert analysis of the most important process in Ukraine in areas of constitutionalism, political parties and elections, governance and public administration reform, judiciary, combating corruption, criminal justice, etc.

If you want to receive expert Points for the last week of the current month every Tuesday by mail, please send an e-mail to media@pravo.org.ua.

President signed «Law on Oligarchs»

Event

On 5 November, President signed the Law of Ukraine «On the Prevention of Threats to National Security Associated with the Excessive Influence of Persons of Significant Economic and Political Importance in Public Life (Oligarchs)» (the Law No 1780-IX), adopted by Verkhovna Rada on 23 September. This act sets the task of establishing the criteria, mechanism, and consequences of recognizing individuals as oligarchs. A decision on recognizing a person as an oligarch shall be taken by the National Security and Defense Council (NSDC) upon recommendation of the Cabinet of Ministers of Ukraine, a NSDC member, the National Bank of Ukraine, the Security Service of Ukraine, or the Antimonopoly Committee of Ukraine. Such a person shall be included in a special Register and, as a result, he/she is subject to various legal restrictions and additional obligations. The same applies to people who have contact with an oligarch.

CPLR’s assessment

The Law No 1780-IX does not establish a consistent system for preventing the excessive influence of oligarchs, but it is a populist tool with the possibility of its selective use in the fight against political or economic competitors. Certain provisions of the Law No 1780-IX do have signs of inconsistency with articles 8, 19, 24, 38, 106 and 107 of the Constitution of Ukraine, in particular:

    • stipulated by the Law powers of the NSDC, as a coordinating authority on the issues of national security and defense under the President of Ukraine, contradict the constitutional nature of this authority. In this regard, the President of Ukraine is in fact endowed with unconstitutional powers and this creates the preconditions for unbalancing the current mechanism of public governance in Ukraine. In addition, given the instability of democratic traditions in Ukraine, the application of the mechanism of this Law creates risks of usurpation of power by those officials who will own these tools;
    • submission to the NSDC for recognition of a person as an oligarch, as well as the decision of the NSDC on this issue, will be based on subjective judgments of the relevant official, and not because of objective monitoring of all subjects of Ukrainian economic and political life. That is, the relevant subjects have the opportunity to abuse this Law without formally violating it, in order to achieve their own political goals. Such a legislative mechanism is a gross violation of the principle of legal certainty, and on this, in fact, the whole law is built;
    • many provisions of the Law also have defects of legal certainty, which allows for their ambiguous interpretation and application in practice, as well as potentially carries the risk of violating the constitutional human and citizen’s rights and freedoms (in particular, the criteria on which a person is recognized as an oligarch; activities that fall under the concept of «participation in political life», signs of significant influence on the media; the obligation of a public servant to submit a declaration on contacts in case of contact with a person included in the Register of Oligarchs or their representative; a list of exceptions when a declaration on contacts is not submitted; the procedure on submitting a declaration on contacts and its content; provisions on bringing a person to political and/or disciplinary responsibility ­­— the scope and essence of these types of liability are not disclosed at all in the Law; the concept of «impeccable business reputation», etc.);
    • legal consequences of including a person in the Register of Oligarchs provided for in subsections 1 and 2 of section “one” of Article 7 of the Law No 1780-IX, which contain a comprehensive ban on financing any political agitation and financing of political parties, are inconsistent with articles 24 and 38 of the Constitution of Ukraine. Thus, the de facto prohibition to persons that are included in the Register of Oligarchs to finance the activities of political parties (including within the electoral process), as well as to finance any political agitation violates the constitutional principle of equality of citizens of Ukraine (sections «one» and «two» of Article 24 of the Constitution of Ukraine) and restricts the constitutional right of citizens to freely elect and be elected to state authorities and local self-government (section «one» of Article 38).

In addition, there are procedural shortcomings of the consideration and adoption of the Law No 1780-IX. Even though the procedure for consideration and adoption of the Law № 1780-IX did not have direct signs of inconsistency of Article 93 of the Constitution of Ukraine and did not violate the provisions of Article 119-1 of the Rules of Procedure of the Verkhovna Rada of Ukraine, a hasty adoption of the draft law did not allow to the people’s deputies of Ukraine carefully to examine what the final version of the bill was adopted by them in the second reading and as a whole as the Law № 1780-IX. This logic of legislation reviewing and adoption significantly undermines the legitimacy of the process and the quality of Parliament’s final legislative product.

The CPLR experts believe that prohibitions and restrictions of the Law No 1780-IX does not affect the solution of the problem with oligarchic system, hence the application of comprehensive legislative solutions and practical steps are needed in this case. To destroy the oligarchic system in Ukraine, it is necessary to ensure, for instance:

1) true independence of:

    • courts (particularly through the formation of the professional staff of High Council of Justice with high moral qualities);
    • the Prosecutor’s Office (primarily political independence of the Prosecutor General and strengthening guarantees of procedural independence of prosecutors);
    • the Constitutional Court of Ukraine (by ensuring the compliance of its judges with high moral qualities and a recognized level of professionalism on the basis of a fair competitive selection of future judges by a unified competition commission);
    • the Antimonopoly Committee (to fulfil the constitutional tasks of preventing the abuse of the monopoly position in the market, illegal restriction of competition, and unfair competition);
    • the Central Election Commission (including its non-admission to the elections as candidates to the positions of the President of Ukraine and people’s deputies of Ukraine of all persons who have grossly violated the election legislation);

2) the inevitability of criminal prosecution for committing corruption offenses;
3) the impossibility of concentrating the media in the hands of one person;
4) non-interference of owners with the editorial policy of the mass media;
5) complete prohibition of political advertising on television and radio, except for pre-election debates of candidates to elected office, outdoor advertising in settlements and within the right of ways of motor roads;
6) tough control over finances of political parties;
7) full transparency and legality of public finance management;
8) adequate recruiting procedure to the positions of senior civil service, which would allow the appointment of independent professionals;
9) screening actions toward the laws lobbied by oligarchs in previous years in order to create economic benefits for themselves, and their repealing;
10) improvement of legislation and the practice of its application to guarantee property rights and prevent raiding;
11) development and effective implementation of the legislation on lobbying activities;
12) taking measures to develop and support (simplified financial reporting, deregulation, etc.) competitive business;
13) destruction of «grey» tax schemes, elimination of existing schemes of tax evasion, ensuring the inevitability of punishment for tax evasion in large and especially large amounts and for laundering criminally obtained assets in large and especially large amounts;
14) increase of the legislative amount of damage caused by a crime offense as a criterion of the NABU jurisdiction from 500 to 5,000 subsistence minimums (over UAH 10 million), and revision of the list of persons whose actions are subject to investigation by NABU (Article 216 of the Code of Criminal Proceedings), leaving there only top officials;
15) strengthening the institutional capacity of the State Bureau of Investigation – the appointment of the Head for a permanent office, the adoption of a real strategy of activity, the prioritization of investigations in the direction of serious official crimes, etc;
16) real control over the implementation of the aforesaid and other necessary actions.

Systematic and consistent application of the above-mentioned and other measures will much better help to achieve the goal set by the Law No 1780-IX.

Parliament takes the first step towards reducing the negative impact of the DACK

Event

On November 2, the Verkhovna Rada adopted draft law №5067 “On Amendments to the Code of Administrative Justice of Ukraine concerning the Supreme Court’s jurisdiction over cases in a first instance”.

CPLR’s assessment

    1. Draft law №5067 was introduced by the President in February 2021 (along with draft laws №5068 and 5069 on the reform of the High Council of Justice, which have already been adopted as laws) in order to fulfill Ukraine’s commitments to the International Monetary Fund and the European Union. The draft law provides for the transfer of cases involving disputes against regulations (including regulatory acts and decisions on tariffs for the population) of the Government, ministries, other central executive bodies, the National Bank, or other authorities whose jurisdiction extend to the entire territory of Ukraine from the jurisdiction of the District Administrative Court of Kyiv (DACK) to the Supreme Court. In essence, the draft law aims to partially resolve the issue of the DACK, whose activities are accompanied by numerous corruption scandals (more details are available in weekly analyses for July 13-20, 2020 and April 6-12, 2021).

Another way to address this issue is contained in the draft law on the DACK’s liquidation which was introduced by the President in April 2021 but, despite being designated as urgent, has not yet been submitted to Parliament’s consideration.

    1. The CPLR’s experts have already assessed draft law №5067 and noted that it should be revised in terms of extending the Supreme Court’s jurisdiction over certain categories of cases concerning individual decisions, where the DACK’s abuse presents the highest risk. The proposed transfer of jurisdiction can only be considered as a temporary measure, given that the Cassation Administrative Court, which is proposed to assume jurisdiction over transferred cases, is one of the most overburdened sections of the Supreme Court; as such, the transfer will negatively affect the timeliness and quality of the Court’s proceedings.

According to CPLR experts, the only way to comprehensively and effectively address the issue of the DACK is as follows:

    • Establishing the High Administrative Court (modeled after the High Anti-Corruption Court) for hearing of administrative cases of national importance in the first instance. The President’s Strategy for the Development of the Justice System and Constitutional Judiciary for 2021-2023 provides for the study on feasibility of establishing such a court.
    • Merging the DACK and the District Administrative Court of Kyiv Region into one court, which will be formed on a competitive basis.

The President attempts to select the SBI Director contrary to the Constitution

Event

On October 28, the first meeting of the competition commission for the selection of the SBI Director was held at the President’s Office. The Commission approved the procedure and terms of the competition, the rules of its work, as well as announced the launch of the competition itself and of the acceptance of applications.

The Commission consists of 6 members, 3 of which are delegated by the President and 3 by the Verkhovna Rada. The Cabinet of Ministers has not yet delegated its 3 members, who should be selected based on proposals from the international organizations that Ukraine cooperates with in the area of preventing and combating corruption in accordance with international agreements.

The CPLR’s assessment

The CPLR has repeatedly stressed that, in accordance with the provisions of the Constitution and the consistent practice of its interpretation as established by the Constitutional Court, the scope and limits of authority of the President and the Verkhovna Rada are determined exclusively by the Constitution and cannot be expanded by law. Accordingly, the formation of the above-mentioned competition commission was carried out contrary to the Constitution, since neither the President nor the Verkhovna Rada has the authority to form such a competition commissions.

Moreover, on October 19, in order to implement the CCU’s decisions№ 9-р/2020and № 11-р/2020, the Parliament adopted the Law “On Amendments to Certain Laws of Ukraine Concerning Bringing the Status of the National Anti-Corruption Bureau of Ukraine into Compliance with the Constitution of Ukraine” (Registration № 5459-1). Under this Law, the NABU is becoming a central executive body with a special status, and its Director is to be appointed by the Cabinet of Ministers based on a competitive selection organized and conducted by a commission formed exclusively by the Government. Earlier, the CCU stressed that both the NABU and the SBI have similar functional purpose, area of activity, and powers, and these features make them the central executive bodies.

As such, the President should not facilitate conducting a competition that has constitutional deficiencies, and instead should call on the Parliament to bring the Law “On the State Bureau of Investigation” in line with the Constitution, without waiting for the CCU’s decision in this case in response to the constitutional petition by 58 deputies of June 2, 2020. Therefore, the grounds for conducting the competition to fill the position of the SBI Director will exist only after bringing this Law in line with the provisions of the Constitution.

Separately, it should be also recalled that there is a constitutional petition by the former SBI Director Roman Truba, which is in the final stage of consideration by the CCU. Mr. Truba is disputing the provision of the Law № 305–IX“On Amendments to Certain Laws of Ukraine on Improving the Activities of the State Bureau of Investigation” of December 3, 2019 that resulted to early termination of tenure of the SBI’s then-leadership. The CCU’s decision in favor of Mr. Truba will mean that the SBI’s original leadership was dismissed in a manner contrary to the Constitution. The decision of the CCU № 4-р(ІІ)/2021, in which the Court stated that the Verkhovna Rada “cannot dismiss an individual employee or certain categories of employees and inform them of a possible future dismissal”, gives grounds to expect a similar decision in that case.

The Ethics Council charged with cleansing and renewing the High Council of Justice becomes effective

Event

On November 8, the High Council of Justice (HCJ) reported that there is currently no Head of the HCJ authorized by a law to approve the composition of the Ethics Council. According to the law, if the Head of the HCJ does not approve the Ethics Council’s staff within the period specified by law, the first three candidates from the list of the Council of Judges of Ukraine (CJU) and the first three candidates from the list of international and foreign organizations are considered appointed.

Based on the lists of delegated candidates, the following persons have become members of the Ethics Council as properly constituted:

Under the quota of international and foreign organizations:

    • Robert Cordy (retired judge of the Massachusetts Supreme Judicial Court);
    • Sir Anthony Hooper (retired judge of the Court of Appeal of England and Wales and member of the Public Council of International Experts that participated in the selection of judges to the High Anti-Corruption Court);
    • Lavly Perling (former Prosecutor General of the Republic of Estonia )

Under the quota of the CJU:

    • Lev Kyshakevych (Judge of the Supreme Court);
    • Yuriy Triasun (judge of Kyiv Court of Appeal);
    • Volodymyr Siverin (retired judge of Eastern Commercial Court of Appeal)

Regarding the latter two candidates, civil society organizations have discovered information that could indicate their non-compliance with the integrity criteria.

CPLR’s assessment

The Transitional Provisions of the Law “On the High Council of Justice” define an alternative mechanism for the empowerment of members of the Ethics Council in case the HCJ Head’s failure to appoint them from among the list of recommended candidates. In such circumstances, the first three candidates from the CJU list and the first three candidates from the list of international and foreign organizations will be considered appointed.

The HCJ received the list of candidates from international partners on September 13, and from the CJU – on November 2.

The Ethics Council is to become one of the key actors in the HCJ’s cleansing and renewal process. International experts will be included only in the inaugural composition of the Ethics Council (in the future, their quota will be filled by lawyers, prosecutors, and scholars). However, the international experts will have the deciding vote temporarily. According to the Law, the Ethics Council must review the current HCJ members’ integrity within 6 months and may assess the candidates to the HCJ during its entire tenure (6 years).

Currently, the HCJ has one vacant position from each of the scholars’ and the prosecutors’ quotas, as well as two vacant positions under the Parliament’s quota. Competitions for these positions (except for the prosecutors’ quota) were announced in late August – early September 2021. Additionally, there will be at least two more vacant positions on the HCJ under the judges’ quotain the near future. The Congress of Judges that will decide this issue is scheduled for December 22-23, 2021.

It should be recalled that the integrity assessment of current and future HCJ members by an independent commission with international participation is the public’s demand and one of Ukraine’s key obligations to the International Monetary Fund and the European Union.