Joint Statement On Restoring Political Party Reporting Deadlines

Background:

On April 2, 2020, a range of legal changes titled, “On Amendments to Certain Legislative Acts of Ukraine Aimed at Providing Additional Social and Economic Guarantees in Connection with the Spread of Coronavirus Disease (COVID-19)” came into force. These amendments included changes to Ukraine’s Political Party Law which deferred political parties’ obligations to submit quarterly reports on property, income, expenditures, and financial liabilities. Specifically, Section VI of the “Final Provisions” of the Law of Ukraine “On Political Parties in Ukraine” was supplemented by paragraph 5, which established that “political parties’ reports on property, income, expenditures, and financial liabilities, provided for in Article 17 of this Law, shall be submitted no later than on the fortieth day after the end of the measures to prevent the occurrence and spread of coronavirus disease (COVID-19), provided for by the quarantine established by the Cabinet of Ministers of Ukraine.”

This change, not unexpectedly, resulted in a steady decline of political party reporting over the course of 2020. Out of the 360 parties registered and expected to submit regular quarterly reports, 243 parties submitted their reports in the first quarter (January-March 2020); 187 parties in quarter two (April-June 2020), and 82 by quarter three (July-September 2020). At the same time, among the political parties represented in the parliament, only one reported for the second quarter of this year, and none of the parties reported for the third quarter. The latter is particularly concerning, as parliamentary parties receive funds from the state budget to finance their statutory activities, and could avoid reporting on these until after the deferral period.

The delayed submission of quarterly financial reports by political parties, including those whose local branches took part in local elections on October 25, 2020, adversely affects campaign finance transparency and political party accountability.

Many political parties used their own funds to finance pre-election campaigning expenditures during the local elections (it is common practice in Ukraine for parties and candidates to transfer funds from their party/candidate accounts to use for election campaigns through their election accounts). In many cases, the actual sources of the election funds remain unknown until political parties submit their quarterly reports (as the quarterly report includes the sources of funding for the party accounts, which, in many cases, fund the election accounts) to the National Agency for Corruption Prevention (NACP). In Kyiv, 90 percent of funds used by candidates and parties contesting local elections in Kyiv (UAH 288 million) came from the party accounts. The origin of these funds will only be revealed after the publication of quarterly financial reports of political parties, which are currently deferred.

The deferral ties the hands of civil society and the NACP to carry out their political finance oversight and regulatory responsibilities. This in turn significantly lowers the level of transparency of political finance and accountability of political parties/candidates before society and the state. Moreover, the current status quo means that citizens and voters do not have timely information about the parties for whom they may or may not vote.

As the quarantine continues, the number of unfilled quarterly financial reports needing to be filed after the deferral period will continue to increase. The eventual submission of a large amount of back-dated reports will place an undue burden on the NACP and will negatively impact its ability to carry out its duties.

Recommendations:

While the NACP is expected to launch its new e-declaration system for political party/candidate financial reporting in early 2021, the current legal framework does allow political parties to submit reports on property, income, expenditures, and financial liabilities using postal services. This option could mitigate some concerns that may have contributed to the decision to impose a deferral in the first place.

Considering the abovementioned, we call on:

1. Verkhovna Rada of Ukraine – to restore the previous text of Section VI of the “Final Provisions” of the Law of Ukraine “On Political Parties in Ukraine,” which will renew the obligation of political parties to submit reports on property, income, expenditures, and financial liabilities quarterly.
2. Political parties – deferral notwithstanding, to adhere to the principles of transparency, integrity, and accountability in their activities and submit reports on property, income, expenditures, and financial liabilities to the NACP within the deadline envisaged in Article 17 of the Law of Ukraine “On Political Parties in Ukraine,” meaning every quarter.

Signatories:

International Foundation of Electoral Systems (IFES)

Civil Movement CHESNO

Civil Network OPORA

Centre of Policy and Legal Reforms

Committee of Voters of Ukraine

Odesa Regional Organization of Committee of Voters of Ukraine

Centre for Journalist Investigations “Syla Pravdy”

Bihus.Info

Integrity UA

[1] Parties that make use of the standing deferral are expected to submit all back-dated quarterly reports that fall within the current deferral period after the deferral period expires.