On September 26, 2023, the President of Ukraine signed the Law "On Amendments to Certain Legislative Acts of Ukraine on Minimizing Potential Oligarchic Influence on Political Parties, Improving Mechanisms of Public Financing, and State Control over the Activities of Political Parties" (No. 3337). This decision restores the obligation of all political parties to report on their finances and property, as well as the functions of the National Agency on Corruption Prevention (NACP) to verify these reports. The document will come into force 90 days after its official publication.
For more than 3.5 years, political parties have not reported to the NACP due to COVID-19, formerly, and martial law since 2022.
"The NACP welcomes the resumption of the reporting obligations of political parties and the verification of reports. Finally, the National Agency will be able to check what the parties spent public funds on over the past three years, who financed them, and whether there were any pro-Russian forces among the contributors. Finally, the public will be able to control the activities of the parties. In addition, ensuring the transparency of political funding is important for Ukraine's integration into the EU and fulfillment of international obligations. We are grateful to all those who, together with the NACP, defended the return of political party reporting," said NACP Head Oleksandr Novikov.
This law was prepared on the basis of the government draft law No. 9419 developed by the NACP. The document proposes not only to restore reporting and verification of political parties but also mechanisms to significantly minimize potential oligarchic influence on political parties and electoral processes. In particular, by ensuring transparency of the sources of funds used to support political parties. The draft law also envisaged improvement of the process of state funding the statutory activities of political parties. These changes are planned in the State Anti-Corruption Program for 2023-2025. Therefore, Law No. 3337 will be only the first step towards further systemic changes in the rules of political financing and comprehensive reform of political finance.
What does the law provide for?
1.Parliamentary parties will be obliged to submit previously unreported reports (for 2020-2023) on property, income, expenses, and financial liabilities (hereinafter referred to as "reports") within 90 days after the law comes into force.
2.Other political parties will report 120 days after the law enters into force.
3.The term for verification of NACP reports is set at 90 days.
4.The law regulates the right of political parties to refuse to make a monetary contribution at their own discretion before the day of submission of the report.
5.A special mechanism is provided for the submission and verification of reports for the period of non-submission (2020-2023) due to the presence of local organizations in the temporarily occupied territories, the loss of financial documents due to martial law, etc. The party is released from liability for submitting incomplete information in the report. For example, if the documents are lost, the party must provide documents confirming this.
6.The funds of a political party, including the funds of state financing of the statutory activities of a political party, may be placed in a current or deposit account in state-owned banks to receive passive income in the form of interest.
7.Financing from the state budget is provided not only for parliamentary parties but also for parties that received 3% of the vote in the elections but did not get into Parliament (previously it was 5%). This provision will come into effect after the parliamentary elections.
Why is it important?
The adoption of the Draft Law will help implement the recommendations of the Venice Commission on ways to counter oligarchization in Ukraine. In particular, they include improving the rules for financing political parties and election campaigns and existing control mechanisms. In addition, it will ensure the implementation of two of the seven points of the European Commission's requirements for the start of negotiations on Ukraine's membership in the European Union.
