Ukraine: New proposal would require CSO directors to declare income and assets

On September 11, 2023 a new draft law introducing public financial reporting obligation for the leadership of public associations was submitted to the Parliament. The Draft Law No. 10035 on Amendments to Article 23 of the Law of Ukraine on Public Association to ensure openness for the society of information about financial reporting of public associations provides that directors and persons in higher management positions of public associations, as well as legal entities created by them (companies, enterprises), are obliged to annually submit information on their income and assets. This information is then to be published on the website of the Central Executive Authority. 
 

What triggered this proposal?

Civil society believes the draft law could have been triggered by the fact that a wide circle of CSOs recently criticised corruption scandals among MPs, prompting the Parliament to adopt law No. 8071, which restores the verification of electronic declarations.

The National Agency for the Prevention of Corruption published a statement, signed by the multiple CSOsThe statement was signed by the following CSOs: Anti-corruption Headquarters, Institute of Legislative Ideas, All-Ukrainian association Automaidan, StateWatch, Bihus.Info, HONEST movement, Center for Economic Strategy, Civic platform Action!, Zaporizhzhia Center of Investigation, Anti-Corruption Research and Education Centre, Women's Anti-Corruption Movement, NGO On the verge, DEJURE Foundation, NGO Public Control Platform, NGO Nivroku, Center for public monitoring and research, NGO Center for Combating Corruption, NGO Transparency International Ukraine, NGO Center for Journalistic Investigations Strength of Truth, Center for Political and Legal Reforms.. The statement underscores the decisive role of electronic declaration in Ukraine’s anti-corruption reforms after the Revolution of Dignity, which contributed to a number of investigations and sentences against deputies, ministers and judges. However, in the first weeks of the full-scale Russian invasion, mandatory filing of declarations was suspended due to security concerns.

Activists emphasized that the sustainability of anti-corruption reforms directly depends on the declaration mechanisms: failure to submit and verify such declarations increases corruption and abuse, which are even more harmful to society under the current circumstances.
 

How does the proposal threaten civil society?

The explanatory note seems to misinterpret international standards, using accountability and transparency as justification to introduce restrictions, and identifying governing bodies with the organisations as a whole. The proposed provisions do not distinguish between different types of organisations, their reporting obligations and the issue of non-profitability. Moreover, the draft law fails to take into account the requirements of the current Law on Public Associations, which already guarantees extensive transparency of CSO activities.

As legal entities, CSOs submit financial statements to the tax authorities, as well as publish them on their own official websites. Today, a clear legislative mechanism allows tax authorities to deprive public organisations of their non-profit status if funds are misused, or even if the organisation does not provide the information required by law fully or in a timely manner. 

Current legislation obliges CSOs to submit financial statements to authorised state bodies and establishes clear sanctions for the violation of this requirement. The proposed draft law therefore would just put additional, undue administrative burdens on CSOs in the name of transparency, restricting the environment they work in.