LOBBYING IN UKRAINE

Authors: Mikhail Sokolov, Oleksandr Ilkov and Oleksandr Sakharenko (Kesarev)

Constitution: The Constitution is the main law of Ukraine, which, among other things: defines the basic rights, freedoms and responsibilities of a person, citizen, society and the state; defines the form of government and administrative-territorial structure of Ukraine; establishes the procedure and principles of the functioning of representative, executive and judicial authorities; and establishes principles of local self-government.

The Constitution has the highest legal force. Laws and other legal acts shall be adopted on its basis and must comply with it. International treaties in force agreed upon by the parliament shall be part of the national legislation.

The Constitution guarantees the right to freedom of thought, speech and peaceful assembly, and of free expression of views and beliefs. It enshrines the right to freedom of association to citizens and to parties and civil organisations for the realisation and protection of their rights and freedoms and the satisfaction of their interests. It guarantees the right of citizens to participate in the management of state affairs, to freely elect and be elected to bodies of state power and local self-government.

It also enshrines the right to send individual or collective written appeals, or personally apply to bodies of state power, local self-government bodies and officials and officers of these bodies, which are obliged to consider appeals and to give a substantiated answer within the time period established by law.

Every person is guaranteed the right to appeal against decisions, actions or inactivity of the bodies of state power and of local self-government, officials and officers in court.

Legislative system: Ukraine is a republic with a mixed form of government. The sole body of legislative power is the parliament - the unicameral Verkhovna Rada (the Rada), which has the exclusive right to pass laws. The constitutional composition of the Rada is 450 members of the parliament (MPs) elected on the basis of general and direct suffrage by the majority, proportional system by secret ballot for five years.

Of the 450 MPs, 225 are elected on a proportional system with a 5 per cent threshold barrier and 225 are elected according to the majority system in single-mandate constituencies (423 MPs are actually elected). To make decisions by simple majority, at least 226 votes of MPs are required.

The government is formed by the Rada on the basis of a coalition. The government is controlled by and accountable to the Rada; it is responsible to the President and the Rada.

The President is the head of state with broad powers in the field of national security, defence and foreign policy, and may issue binding decrees and orders.

In Ukraine, the only source of law is a normative legal act; judicial precedents and customs do not exist in Ukrainian legal practice. The hierarchical system of normative legal acts of Ukraine can be represented as follows:

• the Constitution;
• the laws of Ukraine;
• decrees and orders of the President;
• decrees and orders of the Cabinet of Ministers of Ukraine (CMU); and
• normative acts of ministries and agencies.

With regard to all of these acts, the procedure for agreement and public discussion shall be applied, and therefore advocacy and lobbying efforts can be directed towards them.

National subdivisions: Ukraine is a unitary state. The country includes the following territorial administrative units: 24 regions; and Kiev. All territorial administrative units of Ukraine have their representative (elected) and executive (appointed) bodies, which are empowered to adopt decisions that are effective within their territorial units. Such decisions may concern, in particular, local taxes and fees, development programmes, and limitations to and rules of trade.

In 2014-15, the process of decentralisation started with a large share of powers, especially in the area of public finance and budget, being transferred to the local level. This has resulted in significantly higher incomes received by local budgets leading to more extensive procurement programmes at the local level.

Consultation process: After the events of 2013-14 in Ukraine, the list of tools and the degree of influence of business and the public on the processes of development of legal and regulatory acts and decision-making by the authorities has significantly increased. Today, these tools include:

• formal (provided by law) mechanisms of public consultation on public policy and draft legal acts drafted by executive authorities and the parliament; and
• informal platforms (discussion platforms that operate on a regular basis under business and industry associations, expert platforms, etc).

The mechanism of public consultation on state policy and draft legal acts

Consultations on policy and draft acts developed by the executive authorities

According to the CMU Resolution on Approval of the Procedure for Involving Citizens in the Development and Implementation of State Policies, consultations with the public are mandatory for drafts of: legal acts that have great social significance and are related to the rights and obligations of citizens, as well as acts that provide for privileges, benefits to certain categories of economic entities and delegation of powers of executive bodies or local self-government bodies; regulatory acts; and state and regional programmes of economic, social and cultural development and decisions on the status of their implementation.

The organisation and conducting of consultations with the public is initiated by an executive body, which prepares proposals for the implementation of state policy in the relevant field, or is the main developer of the draft legal or regulatory act.

Public consultation should last for at least one month, and will be conducted in the form of:

• public discussion (direct form) - conferences, public hearings, roundtables, meetings, meetings with the public, public reception rooms, all forms of debate and discussions; or
• study of public opinion (indirect form) - conducting sociological research, analysis of media materials to determine the position of various social groups, analysis of comments and suggestions expressed in the appeals of citizens.

The public website ‘Civil Society and Government’ (http://civic.kmu.gov.ua/consult_mvc_kmu/news/article) and the websites of executive authorities are used for public consultation in the form of electronic consultations.

For coordination of public consultations and monitoring of consideration of public opinion, the permanent collegial elected consultative and advisory bodies - public councils - work under the executive bodies. They consist of public officials, representatives of non-governmental organisations (NGOs) and industry associations, experts, etc.

The results of the consultations shall be summarised and taken into account in the development of relevant policies and regulations, but they are not legally binding.

According to the Law on the Principles of State Regulatory Policy in the Field of Economic Activity, each draft regulatory act with an appropriate analysis of regulatory influence should be made public with the aim of obtaining comments and suggestions from individuals and legal entities and their associations.

Consultations regarding the draft acts developed by the Rada

The Rada’s procedural regulation determines the following forms of public consultation: parliamentary and committee hearings; and functioning of working groups under Rada’s committees.

Parliamentary hearings are held with the aim of studying issues of internal and foreign policy of the state, which are of public interest and require legislative regulation. Proposals for holding parliamentary hearings shall be submitted to the Rada by subjects, who are empowered with a right of legislative initiative.

Representatives of relevant executive bodies, leading specialists in a particular field, representatives of NGOs, business, etc, can be invited to participate in the hearings.

As a result of hearings, the Rada shall adopt resolution approving recommendations that should be taken into account by public authorities, enterprises, institutions and organisations irrespective of subordination and forms of ownership.

Committee hearings concern a narrower range of issues than parliamentary hearings - they can discuss specific issues and draft decisions. Representatives of the public, the expert community and business are more actively invited to participate in the committee hearings, which provides them with additional means of influence.

In order to harmonise the provisions of specific draft regulations, working groups can be set up under the Rada’s committees, which may include various stakeholders (the public, businesses, experts, etc).

Informal platforms

A number of influential platforms function on a permanent basis that were created by business or expert communities, which are places for open discussion of certain draft legal acts with decision makers or other stakeholders. The official positions of these platforms with respect to various regulatory issues is an important factor in influencing the position of the state, as they represent a concentrated and consistent expression of the position of business, experts and opinion leaders.

These platforms include the American Chamber of Commerce, the European Business Association and the Reanimation Package of Reforms, which is an expert initiative.

In addition, in advocacy, the role of industry associations, which represent individual segments of production and service sectors, has grown significantly lately. The state is increasingly bringing industry associations into the discussion of relevant draft decisions.

Judiciary: According to the Constitution, the judiciary is one of the three independent branches of government. The judicial system in Ukraine is based on the principles of territoriality and specialisation.

Justice is exercised by judges. In cases determined by law, justice shall be carried out with participation of jurors.

The Supreme Court is the highest court in Ukraine’s judicial system. According to the law, higher specialised courts may function at this level (the Supreme Intellectual Property Court and Supreme Anti-corruption Court are being set up in Ukraine).

The Supreme Anti-corruption Court is the supreme specialist court that executes justice to protect persons, society and the state from corruption and relevant crimes and provide judicial control over pretrial investigation of these crimes. The Supreme Anti-corruption Court executes justice as the court of the first instance and the instance of appeal. Specifics of the court’s formation is a right of the Public Council of International Experts, in addition to the High Council of Justice, to influence the decision on appointment of judges of this court. The court is in the process of being set up and should be operational by June 2019.

The protection of rights, freedoms and interests of a person in the field of public-law relations is the responsibility of the administrative courts.

A judge holds a position permanently. Appointment to the post of judge shall be exercised by the President upon the submission of candidates by the High Council of Justice (on a competitive basis).

The High Council of Justice consists of 21 members, who, in appropriate proportions, are elected or appointed by the Congress of Judges, the President, the Rada, the Congress of Advocates, the All-Ukrainian Conference of Prosecutors, and the Congress of Representatives of Legal Higher Educational and Scientific Institutions.

The Constitutional Court decides on whether laws comply with the Constitution and, in cases provided for by Constitution, other acts of public authorities. The Court also carries out official interpretation of the Constitution.

General: There is no special regulation of lobbying and advocacy in Ukraine. However, for years this topic has been the subject of discussion in parliamentary, political and expert circles. Over the past 10 years, at least five draft laws on the regulation of lobbying and advocacy have been submitted to the Rada, of which three are currently officially registered; however, none of them is in the process of active consideration by the Rada at the moment.

To date, there are a number of public initiatives in Ukraine aimed at the development of relevant legislation. In addition, in spite of the lack of a formally recognised profession of lobbyist or government relations specialist, relevant associations exist and congresses that gather experts in this field to discuss industry issues are being held in Ukraine. Nevertheless, despite the urgency to regulate lobbying it should be stated that at the moment the level of public discussion over legalisation of lobbying is low, hence decreasing the probability of adoption of the respective legislation in the foreseeable future.

Currently, restrictions on lobbying are established at the level of anti-corruption legislation, which regulates conflicts of interest, and sets restrictions for civil servants, parliamentarians and employees of public enterprises.

Definition of lobbying: There is no definition of lobbying in Ukrainian legislation.

Registration and other disclosure: The registration of lobbyists is not envisaged by the current legislation because of a lack of regulation on lobbying and advocacy activities.

In this regard, the main subjects of advocacy for businesses and the public are business associations, industry associations of producers of goods and services, representatives of other NGOs and public initiatives. The regulation of their activities falls under the general legislative regulation of NGOs.

The Constitution and legislation guarantee the right to freedom of association in order to exercise and protect the rights and freedoms of citizens and to satisfy public interests in, among others, the economic, social, cultural and environmental spheres.

NGOs have the right to:

• apply to the bodies of state power and local self-government, and their officials and officers with policy proposals (remarks), applications (petitions) and complaints;
• receive public information from authorities and other administrators of public information; and
• participate in drafting legal and regulatory acts that are adopted by public authorities and local self-government and relate to the sphere of activity of a civil association and important issues of state and public life.

Registration of NGOs is conducted by the Ministry of Justice.

Activities subject to disclosure or registration: Civil associations are not obliged to disclose information about their interaction with representatives of authorities, businesses, etc.

Entities and persons subject to lobbying rules: Not applicable.

Lobbyist details: Not applicable.

Content of reports: Not applicable.

Financing of the registration regime: Registration of NGOs is conducted by the Ministry of Justice.

Public access to lobbying registers and reports: There are no lobbying registers because of a lack of regulation on lobbying. However, there is an open register of public associations, which can be accessed online at http://rgo.informjust.ua/.

Code of conduct: Ukrainian legislation does not provide for the mandatory adoption of ethical codes by public associations, but these associations have the right to accept such documents and encourage their members to comply with them.

Media: There is currently no legislation that regulates commercial interests’ use of the media to influence public policy outcomes. According to the Law on Television and Radio Broadcasting, television and radio organisations can be financed by, inter alia, credit, investments and tranches from owners and co-owners, and by sponsors and charity organisations. This creates the possibility for businesses to finance, and therefore influence, the media.

However, from a political point of view, these possibilities are limited by the fact that the majority of influential media outlets are owned or controlled by large businesses or tycoons, which only allow friendly or affiliated interests to use their media for political purposes. Owners and co-owners also often use their own media outlets to pursue their political agendas.

The legislation does provide for regulation of relations between media outlets and their owners. In particular, the Law on Television and Radio Broadcasting stipulates that the owners of a television and radio organisation cannot interfere with its creative activities other than by introducing changes to its editorial statute. The obligatory editorial statute should contain, inter alia, requirements regarding the creation and distribution of information, including about politicians and political parties during and after the election process. In addition, it should provide for the creation of an editorial council, in which half the members are appointed by the organisation’s owners and the other half by its creative staff. The above-mentioned obligations do not apply to print media.

There is also an ongoing discussion in Ukraine about stricter limitations on paid journalism.

General: According to the Law on Political Parties, political parties are non-profit organisations. The provision of material and financial support to political parties shall be carried out in the form of contributions to support the parties and state financing of statutory activities of political parties.

The following can be considered as contributions in support of the party: money or property; benefits; privileges; services; loans; intangible assets and benefits, including party membership fees, sponsorship of activities or activities in support of a party; goods; work; and services provided or received free or on preferential terms, which are received by or given to political parties, their registered local organisations, to an associated person of a party or its local organisation, or to a candidate nominated by a party or its local election organisation (by transferring or remitting it to an election fund during the relevant election).

A political party has the right to receive state financing for its campaign activity if, during the parliamentary election, its list of candidates in the national multi-mandate constituency received at least 2 per cent of the votes.

The state budget may fund:

• parties’ statutory activities, not related to their participation in elections, including the payment of employees of the statutory bodies of the political party and its local organisations; and
• reimbursement of expenses of political parties related to financing of their election campaign during the regular and extraordinary elections of MPs.

In reality, the majority of parties cover their expenses using alternative means to those provided by the law, which are subject to investigation by the National Agency for Prevention of Corruption (NAPC).

Registration of interests: The Law on Prevention of Corruption defines the terms ‘private interest’, ‘real conflict of interests’ and ‘potential conflict of interests’. The Law extends, in particular, to persons authorised to perform functions of the state or local self-government and candidates for deputies.

Persons subject to the Law have the following obligations:

• take measures to prevent the emergence of a potential conflict of interest;
• notify his or her immediate supervisor, the NAPC or the relevant authorities if he or she has learned or should have known of the existence of a real or potential conflict of interest;
• not to take action and not to make decisions when a real conflict of interest arises; and
• take measures to resolve a real or potential conflict of interest.

Persons authorised to perform state or local government functions may not, directly or indirectly or in any way, encourage their subordinates to undertake decisions, acts or omissions in contravention of the Law in favour of their private interests or the private interests of third parties.

Contributions to political parties and officials: According to the Law, the following persons and entities are prohibited from making contributions in support of political parties:

• state authorities and local self-government bodies;
• state and communal enterprises, institutions and organisations, as well as legal entities, in which not less than 10 per cent of the authorised capital or voting rights belong to the state;
• foreign states and legal entities, foreigners and stateless persons, as well as legal entities, whose final beneficiaries are foreigners or stateless persons;
• unregistered public, charitable and religious associations;
• anonymous persons or those under a pseudonym; and
• other political parties.

The total amount of the contributions in support of a political party from a citizen of Ukraine, within one year, may not exceed 400 minimum wages (US$55,100 as of 2018) established on 1 January of the year in which contributions were made. For legal entities, this is 800 minimum wages (US$110,300 as of 2018) during one year.

Sources of funding for political campaigns: Financing of election campaigns for candidates for elective positions shall be carried out only through election funds, which shall be created within 10 days after the nomination of a candidate in a single-mandate constituency or of the list of party candidates in the nationwide constituency.

The size of the party’s election fund cannot exceed 90,000 minimum wages (US$12.4 million as of 2018), and the size of the electoral fund of an MP candidate in a single-mandate constituency is 4,000 minimum wages (US$551,000 as of 2018).

The party’s election fund is formed at the expense of the party’s own funds, as well as voluntary contributions from persons who are entitled to do so in accordance with the Law on Political Parties. The electoral fund of an MP candidate in a single-member constituency is formed at the expense of the candidate’s own funds and voluntary contributions of persons who are entitled to do so in accordance with the Law on Political Parties.

To form the election fund, accumulate money and use it for election campaigning, the party should open two types of bank account: an accumulation account and a current account. Thus, the opportunity is provided to accumulate funds for the organisation of an election campaign in one account, and to finance the costs of the campaign in another.

The voluntary contributions of a person to the election fund of a party, an MP candidate in a single-member constituency, nominated by the party or by way of self-nomination, is limited by the size of the maximum contribution in support of the party during the year established by the Law on Political Parties.

The political party that was the subject of the election process or receives public funding is required to undergo an external independent financial audit. The parties submit a property, income, expense and financial report to the NAPC on a quarterly basis and make it public on their official websites.

During the election, parties and individual candidates must submit interim and final reports to the Central Election Commission and the NAPC on the receipt and use of the funds for the election.

Lobbyist participation in fundraising and electioneering: Not applicable.

Independent expenditure and coordination: There is no law that prohibits public associations or individuals that are not related to candidates or political parties from conducting political campaigns for or against a candidate.

However, the financing of election campaign activities or materials from sources not provided for by the law, regardless of whether there is an agreement with the parties taking part in the election process or with MP candidates, is prohibited.

Agitation through social media is not regulated by law.

Gifts, travel and hospitality: Persons authorised to perform functions of the state or local government and MP candidates may accept gifts that correspond to generally accepted notions of hospitality, if the value of the gifts does not exceed one living wage (US$63 as of 2018), and the aggregate value of gifts received from one person or group of persons during the year does not exceed two living wages (US$126).

Anti-bribery laws: Relevant provisions of the Criminal Code and the Law on Prevention of Corruption provide extensive regulation that restricts payment or provision of other types of material or non-material benefits to officials, public employees and other public decision makers.

Revolving door: Persons who were formerly authorised to perform state or local government functions, who have ceased such activities, are prohibited:

• from entering into employment contracts or business transactions with legal entities or individual entrepreneurs within one year of the day they ceased to exercise their functions, if in their former position they had exercised control, supervision or preparation, or adoption of decisions regarding the activities of these legal entities or individual entrepreneurs; and
• from representing, within one year of the date of termination of the relevant activity, the interests of any person in cases (including those considered in the courts) in which the other party is the body, enterprise, institution or organisation for which they worked as a public official.

Prohibitions on lobbying: Not applicable.

Recent cases: Since the events of 2013-14, activities aimed at combating corruption have intensified in Ukraine. Despite the modest results of these activities, there have been several high-profile cases, in which top- and medium-level officials were accused of corruption and lobbying of private interests.

After the introduction of mandatory open-to-public e-declaration of property, the incomes and expenses of civil servants and candidates for civil service positions in 2016, a vast number of cases became known to the public, when the property and expenses of public officials did not correspond to their incomes and the origin of which could not be legitimately confirmed. A number of such instances became the subject of criminal cases and a matter of attention of society and anti-corruption activists and NGOs. As a response to the activities of the latter, a number of political forces ‘pushed’ through the Rada an amendment to the anti-corruption legislation obliging members of anti-corruption NGOs to provide e-declarations of their incomes and property as well. This amendment was heavily criticised by the West, which regarded this as retaliation by corrupt officials for attempts to uncover their proceeds of corruption.

In addition, in 2017 the NAPC opened 16 criminal cases against five political parties for inaccuracies in their financial statements.

Remedies and sanctions: Not applicable