Article 8.4. and 13.2.
Reporting Mechanisms and Whistleblower Protection

Article provisions:
8.4. Each State Party shall also consider, in accordance with the fundamental principles of its domestic law, establishing measures and systems to facilitate the reporting by public officials of acts of corruption to appropriate authorities, when such acts come to their notice in the performance of their functions.

13.2. Each State Party shall take appropriate measures to ensure that the relevant anti-corruption bodies referred to in this Convention are known to the public and shall provide access to such bodies, where appropriate, for the reporting, including anonymously, of any incidents that may be considered to constitute an offence established in accordance with this Convention.
State evaluation
Public evaluation
Ukraine has generally implemented the UNCAC requirements on reporting corruption and whistleblower protection mechanisms in national legislation. There is a certain lack of law regulation regarding specifications for reporting channels, the ways of reporting specific information, and certain guarantees for the protection of whistleblowers.
The legislation is not always successfully enforced. Despite the fact that in practice there are a sufficient number of channels for reporting corruption, insufficient guarantees of anonymity, confidentiality and the possibility to report specific information do not facilitate their active use. Despite the tangible lack of human resources, the work of the body designed to protect whistleblowers (NAPC) can be assessed positively. However, the tools available in the NAPC to protect whistleblowers are not fully effective, in particular, due to numerous opportunities to avoid liability, the prescriptions of the body are not executed. This practice, together with numerous violations of protection guarantees and occasional legal problems, are significant challenges to the effective protection of whistleblowers of corruption.

In short:

State of implementation

Legal framework
The issue of protection of whistleblowers, reports of acts of corruption, payment of a reward to whistleblowers, etc. is regulated by the Corruption Prevention Law of Ukraine. In 2019, the law was supplemented with the section on whistleblowers, so there is no widespread practice of its application yet.

According to the law, a reporter of acts of corruption (a whistleblower) can only be an individual who:

  1. Has information about the commission of an act of corruption or corruption-related offense or other violation of the Corruption Prevention Law, and is convinced of such commission;
  2. Has received such information while exercising his or her employment, professional, economic, social, scientific activity, service or training or participation in the procedures provided by law, which are mandatory for the beginning of such activity, service or training;
  3. And has reported such information.

A whistleblower can report corruption through three channels available for reporting: internal channels (to send an allegation to the body where a whistleblower works); external channels (allegations made through other persons); regular channels (allegations to the authorized bodies, namely, the Prosecutor’s Office, National Police, National Anti-Corruption Bureau of Ukraine (NACBU), State Investigation Bureau (SIB), and National Agency of Corruption Prevention (NACP)). All state bodies, local self-government bodies, and legal entities under public law are obliged to maintain and ensure the functioning of internal channels. In turn, the prosecutor’s offices, the police, the NACBU, SIB, and the NACP, in addition to internal channels, are obliged to ensure the functioning of regular channels.

Regardless of how an allegation is sent, it is to be registered in the Unified Whistleblower Allegation Portal, i.e., a special system that accumulates information about all allegations made by whistleblowers. The portal is held by the NACP, and access to the portal is limited.

A whistleblower’s allegation is considered within 10 days, and in case of confirmation of the facts an internal investigation begins, or the materials of the case are handed over to the pre-court investigation body. If a whistleblower’s allegation is based on conjecture or unconfirmed information, it is returned to the whistleblower and is considered as an inquiry made by a citizen.

Despite that the general rule sets forth reporting as a voluntary act, certain individuals are obliged to report. In particular, civil servants are obliged to report about every fact he or she discovers or every allegation he or she receives about an act of corruption offense committed by a public official.

To protect whistleblowers and their the closest, the Corruption Prevention Law provides appropriate guarantees, in particular:

  1. Protection against unlawful encroachments on life, health, property, etc. (with security, means of protection, possible change of documents and/or appearance to be provided);
  2. Protection of labor rights (impossibility of dismissal, refusal to employment, or bringing to disciplinary responsibility);
  3. The right to confidentiality and anonymity;
  4. The right to receive free legal and psychological assistance;
  5. The right to be released from legal liability (in definite cases);
  6. The right to receive an award (in the case of an allegation about an act of a corruption offense that has caused the state damage in the sum of approximately EUR 372000. The amount of an award is 10% of the damage but may not exceed approximately EUR 562000).
Implementation in practice
As mentioned above, the institute of whistleblower protection is quite new for Ukraine, which is why there is no widespread practice of using this institute yet. Therefore, the effectiveness of the new legislation and its implementation is assessed through specific cases and recently obtained statistical data.

2.1. Allegation About Act of Corruption

The current Corruption Prevention Law provides for the functioning of the Unified Whistleblower Allegation Portal. However, its creation was provided only by recently made amendments to the legislation, and as of November 2021, the Portal has not yet been created. The NACP plans to launch its full-fledged work in early 2022. Therefore, the mechanism for reporting corruption is assessed based on previous practice and available reporting channels.

Recently, civil society representatives published the monitoring report on the implementation of the Corruption Prevention Law in terms of the protection of whistleblowers by certain executive bodies. This report, in particular, examines the functioning of internal reporting channels. According to its results, the researchers concluded that as of the end of 2020, most of the analyzed bodies are fragmentally compliant with the requirements of the Corruption Prevention Law in terms of allegations of whistleblower and their protection. Experts argue that:

  • The statistical information received from state bodies shows that there is no linkage between the number of allegations and the methodological/informational work with whistleblowers. The body can receive hundreds of allegations, but provide methodological assistance in respect of a small number of them. It indicates both the poor quality of allegations and the poor level of qualification, skills of the employees of the analyzed bodies, and their non-ability to work with whistleblowers.
  • In general, the main pages of official websites of the analyzed bodies contain links to the “To report corruption” website section. These sections provide basic information for making an allegation. However, there are doubts about the anonymity and confidentiality of the reporting channels.
  • Most of the analyzed bodies have internal rules of procedures for receiving, reviewing, and verifying allegations. Moreover, most of the analyzed bodies have implemented mechanisms to encourage and cultivate a culture of reporting.

Having analyzed the regular channels of reporting that operate in the NACBU, NACP, SIB, the Ministry of Internal Affairs, and the Prosecutor’s Offices, it can be argued that, in general, they provide appropriate conditions for reporting. The NACBU, NACP, SIB, the Ministry of Internal Affairs have maintained a capacity to report through a fairly convenient and user-friendly online form on their websites, via e-mail, or by phone. The Office of the Prosecutor General and the National Police provide the capacity to report only corruption or other violations committed by specific employees of these bodies, and it is not possible to report corruption committed in other structures. All these websites retain the ability to submit allegations anonymously. Relevant sections with the facility to submit an allegation can be easily found on the official websites of all these bodies.

Despite the capacities available for reporting corruption to law enforcement authorities, there is one sufficient problem that is pointed out by whistleblowers. In particular, if a corruption allegation is submitted via e-mail, or online form on the website, or by telephone, the person will not be able to receive prompt official confirmation that his or her allegation is made. As a result, it is difficult to promptly appeal to the court the refusal of the law enforcement agency to register (or delay in registration) his or her allegation, as there is no document confirming its submission. This concern was also confirmed by representatives of some law enforcement agencies when we had a telephone conversation with them. They indicated that an official letter should be sent to the body to obtain such a confirming document.

The whistleblowers we interviewed believe that there are currently no significant obstacles to reporting.

In their views, every citizen is free to report corruption, as there are enough tools and information support for this. Nevertheless, the experts are concerned about some problems in this context:

1) Lack of mechanisms for reporting corruption related to the state secrets. Factually, the law does not regulate the specifics of reporting corruption that is related to the state secrets. That is why whistleblowers, due to fear of responsibility for the disclosure of a state secret, are reluctant to report it. Moreover, whistleblowers of such corruption are limited in their use of external channels of reporting, as the persons to whom they can report (journalists, MPs, etc.), due to law restrictions, will not be able to process such information. This problem is currently extremely pressing for Ukraine, as during the war in the east of Ukraine there are many corruption schemes related to defense procurement.
An example to emphasize this problem is the “Case of the Lviv Tank Factory”. A person anonymously reported a corruption scheme related to public procurement of engines for tanks, which caused the state losses in sum of EUR 442000. The procurement of the engines, in this case, was secret and that is why it can be assumed that the whistleblower wished to remain anonymous because he understood that he could be prosecuted for disclosure of the state secret.

2) Lack of guarantees of anonymity and confidentiality in practice. The civil society experts argue that the authorities approach the creation of reporting channels formally. As a result, e-mail boxes and allegation record books can be accessed by a wide range of people. Besides, state bodies hardly have proper software able to protect the confidentiality and anonymity of electronic messages. Subsequently, allegations are received by the authorities without proper protection. This problem, according to experts, arises due to the lack of law regulation of these issues. Neither the law nor the by-laws specify requirements for software to protect reporting channels. This situation can be explained by the lack of financing for state bodies to create adequate protection of reporting channels. That is why the NACP head believes that the creation of the Unified Whistleblower Allegation Portal will not only ensure confidentiality and anonymity but will also save significant funds of state bodies, compared to the option if each of them separately ensured the protection of channels.

For certain categories of people, there are other specific problems when they report corruption. For example, Larysa Holnyk, a judge-whistleblower, explains that a judge who is being tried for bribery (or who has faced corruption) is obliged, under the Law on the Judiciary and the Status of Judges, to report it to the High Council of Justice, as such kind of situation is understood to be the interference in the independence of a judge. In practice, consequently, the person a judge-whistleblower reports can get aware of the allegation made against him or her (for example, the chairman of the court, representatives of the judiciary). Thus, almost immediately after reporting, such a judge is more likely to be subjected to negative measures against him or her.

2.2. Protection of Whistleblowers

2.2.1. Instruments for Protection of Whistleblowers

The guarantees for whistleblowers set forth by the Corruption Law are violated quite often. Even during the short period of validity of the Ukrainian legislation on the protection of whistleblowers, several examples of such violations have already happened. Given this, it is crucially critical to ensure the effective functioning of the protection tools.

The NACP is the authorized body for the protection of whistleblowers. To exercise these powers, the NACP applies two main tools, namely, prescriptions and representation in court hearings.

1) Prescriptions. The prescription of the NACP is a law requirement addressed to the heads of state bodies, enterprises, institutions to eliminate violations of the law, conduct an internal investigation, bring law-breakers to justice, etc.. In the context of the protection of whistleblowers, a prescription is an operational measure taken by the NACP to respond to violations of whistleblowers’ rights, as its application requires only the will of the NACP. Nevertheless, the practice of prescriptions is not widely applied. According to statistical data, in 2020, the NACP made only 5 prescriptions aiming at the protection of whistleblowers.
The most famous case of application of the NACP’s prescription is the case of Oleg Polishchuk, a whistleblower. Mr. Polishchuk worked as an anti-corruption commissioner at the “Energoatom”, a big state-owned enterprise. In 2020, he reported facts of possible corruption offenses committed by the management of the SOE. After that, he was brought to disciplinary sanctions and dismissed, despite significant progress made in creating an effective compliance system in the enterprise. In March 2021, the NAPC issued two prescriptions, particularly, one prescription was made in respect of the Cabinet of Ministers requiring to conduct an internal investigation of the dismissal; and another one was directed to the head of “Energoatom” with a demand to reinstate the whistleblower. According to the results of the prescription, the Cabinet of Ministers commenced an internal investigation, which is still ongoing. Instead, the acting head of the enterprise (against whom the allegation was made) did not execute the prescription to reinstate Mr. Polishchuk. Consequently, the NACP drew up an administrative protocol against the head for non-compliance with the prescription, nevertheless he was not brought to justice. Later, the court revoked that prescription.

Another example of the application of a prescription by the NACP is the case of Larysa Holnyk, a judge-whistleblower. Ms. Larysa is a judge who reported corruption committed by the mayor of Poltava and the court administration. After that, the head of the court and colleagues started exerting pressure on her. In particular, she was illegally deprived of part of her court remuneration and pressured by various measures. In 2020, the NACP made a prescription in respect to the new head of the court requiring to pay the unpaid sum of a judge’s remuneration to Ms. Golnyk and to conduct an internal investigation against the former head of the court and other judges who exerted pressure on the whistleblower. Consequently, Ms. Golnyk was paid her money, but, according to her, the internal investigation was not actually conducted and the NACP did not respond properly.

Given examples lead to a conclusion that the prescriptions made by the NAPC are exercised partially, but, according to the whistleblowers, they nevertheless remain the operative tool for the restoration of their rights. In general, it can be argued that compliance with the prescription depends only on the will of the person to whom it was sent. This practice is primarily due to the lack of real responsibility for non-compliance with prescriptions. The reasons for this are:

  • Low extent of liability for non-compliance with prescriptions. The maximum sanction provided by the Code of Administrative Offenses is EUR 160. At the same time, the average fine applied by the courts in 2020 is only EUR 58.
  • Poor prosecution in courts for non-compliance with a prescription. In 2020, only 10 people were brought to justice in 50 cases (40 cases were closed by the court). In Section __ you can find more about the problems with bringing to administrative responsibility.
  • Cancellation of prescriptions by courts. Experts also believe that the reasons for non-compliance with prescriptions may be procedural errors made by the NACP during the issuance of prescriptions and lack among NAPC employees of experience in the application of the concept of prescriptions.

2) NAPC as a party to the litigation. To protect whistleblowers, the NACP often acts in litigation as a third party on the whistleblower’s side. Litigation involving the NACP mainly concerns the restoration of the violated rights of a whistleblower or appeals against prescriptions. The activity of the NACP in the use of this tool deserves a positive assessment. According to statistical data, in 2020, the NACP participated on the side of the whistleblower in 70 cases heard in courts. The effectiveness of this tool can be concerned, as it significantly increases the chances of whistleblowers to succeed in the case. In 2020, out of 23 court cases, the NACP succeeded in 15 cases.

A well-known example of the NACP involvement in the case of whistleblower protection is the case of Oleh Polishchuk. The court challenged the disciplinary sanction against Mr. Polishchuk and the closure of the dismissal proceedings by the National Police. In this case, the court sided with the whistleblower and, as Mr. Polishchuk points out, the NACP helped to represent his interests in court quite actively and efficiently.
Although it should be noted that the whistleblowers’ views on the activity of the NACP in court proceedings on their side differ. Thus, the judge-whistleblower Ms. Holnyk argues that the NACP did not take an active part in her cases, and some activity could be observed in cases that were of interest to the NACP.

Given that whistleblowing court practice is just beginning to take shape, the NACP's involvement in court cases is important. However, the NACP representatives have recently stated that they wish to hand judicial representation over free legal aid centers (LACs). Such statements have been sharply criticized by the civil society experts and whistleblowers, because, firstly, at the stage of formation of judicial practice it is necessary to involve as many resources of the profile body as possible, and secondly, the LACs are not much trusted by whistleblowers.

2.2.2. Methodological support of whistleblowers and NAPC capacity

Given the novelty of whistleblowing in Ukraine, it is essential to disseminate information about it to the public and provide methodological support. This function is performed by the NACP and, it should be noted that it copes with it quite well. Yes, the official NACP website provides clarifications on key issues related to whistleblowers and their protection. In 2020, an educational series about whistleblowers was released and a short-term training program on “Organization of work with whistleblowers in a state body” was developed . The NACP has also recently issued a practical guide for anti-corruption commissioners on working with whistleblowers. In addition, the NACP together with the public and international partners held an international conference on the protection of whistleblowers.

All whistleblowers we interviewed are generally positive about the work of the NACP. They talk about trust in this body and the good enough qualifications of employees. The whistleblowers claim that despite certain problems in the work of the NACP, the activities of the body are very important to ensure their guarantees. However, despite the many positive reviews, it is also necessary to point out certain problems in this context, namely:

1) Lack of resources. According to the experts, the NACP has limited resources to protect whistleblowers. In particular, the profile department employs only 9 people who have 70 cases. In addition, there is a problem with the protection of whistleblowers in the regions, as the NACP is located in Kyiv and has no regional offices. Thus, whistleblowers in the regions are actually in a worse position compared to whistleblowers in the capital.

2) Discrediting whistleblowers by the NACP. Despite the NACP’s being quite active in protecting whistleblowers, there are cases when the body has discredited whistleblowers it supported.

The first example is the case of Roman Marzhan, a whistleblower-prosecutor, who reported corruption schemes in the regional prosecutor’s office. After Mr. Marzhan reported and obtained the status of a whistleblower, the NACP drew up an administrative protocol against him for violation of the requirements for the prevention and settlement of conflicts of interest. As a result, the whistleblower appealed these protocols in court and won the case, but disciplinary proceedings were initiated against him in the prosecutor’s office. However, the most important thing in this situation is not so much the prosecution of the whistleblower as the public communication runs the NACP. The NACP posted information about the administrative protocol on its Facebook page with the full name and position of the whistleblower, which could have negatively affected Mr. Marjan’s reputation, like those his allegation was made against could use the post to discredit him.

The case of Oleh Polishchuk, we described above, is similar. Following the reporting corruption, the NACP included Mr. Polishchuk in the register of corrupt officials. The formal reason for his inclusion in the register was the violation of the Corruption Prevention Law in terms of his failure, being an anti-corruption commissioner, to create protected channels for reporting corruption. The ground for such entry to the register was the Order by the Director of “Energoatom” (against whom the allegation was made) “To exercise disciplinary measures” according to which Oleh Polishchuk was dismissed, and which he together with the NACP appealed to court.

By such actions performed by the NACP, whistleblowers are subjected to additional pressure. The information that the NACP applies similar measures against whistleblowers is used by the people, against whom whistleblowers report, to discredit the whistleblowers in the eyes of the public. Such practice of the NACP is not widespread, but even in some cases, it brings enough trouble to whistleblowers. Even in cases where there are grounds for bringing whistleblowers to justice, the NACP should avoid public disclosure of this information, as the harm to the whistleblower may outweigh the public interest in the disclosure of such information.

2.2.3. Pressing Issues of Whistleblower Protection

The introduction of law novels is almost always accompanied by problems with their implementation in practice. This has also happened in the context of whistleblower protection. We have singled out the most pressing and important problems of this institute among those pointed out by experts and whistleblowers themselves:

1) No exemption from court fees. The Corruption Prevention Law enshrines the whistleblower’s right to reimbursement of court fees. That is, the return of funds paid to the state in cases involving the protection of the rights of whistleblowers. However, such a legal construction does not look successful given the practice of application.

For example, Ms. Larysa Holnyk filed a lawsuit to defend herself as a whistleblower with a claim for recognition of the actions of her former leadership as a negative measure of influence, demanding compensation for non-pecuniary damage and unpaid judge’s remuneration. The court, in turn, demanded Ms. Golnyk to pay a court fee of EUR 650 (while the minimum wage in Ukraine was about EUR 200).
Even though in Ms. Golnik’s case, the court artificially increased the fee by separating the claims, this situation can still clearly demonstrate the problem. It is the very requirement for whistleblowers to pay court fees, with whistleblowers usually going to court to protect their violated rights (such as labor), and not always having the necessary funds to pay the fee. In such cases, the fee reimbursement mechanism does not work, as the whistleblower can count on it only after the court decision.

2) Lack of medical and psychological care. Free medical care for whistleblowers is not provided by law at all. At the same time, free psychological assistance, although provided, is not provided in practice due to the lack of a body to provide it and the lack of state budget funding.

3) Lack of protection for whistleblowers who reported an act that is not a crime. Despite the Corruption Prevention Law envisaging the right of all whistleblowers (both those who reported crimes and those who reported administrative, disciplinary offenses, etc.) to be provided with individual bodyguard protection it is provided only to persons who report corruption criminal offenses. The problem lies in the contradiction of the legislation, as the procedure for granting such kind of protection is established by another, special Law on Ensuring the Safety of Persons Participating in Criminal Proceedings. In the sense of this law, a whistleblower is a person who reported corruption criminal crime but not another corruption offense. Thus, persons who report, for example, inaccurate information submitted in declarations, conflicts of interest, or other violations of the Corruption Prevention Law, cannot receive adequate individual protection. Moreover, the NACBU experts and staff argue that the Law on Ensuring the Safety of Persons Participating in Criminal Proceedings is outdated and needs to be significantly improved, as it does not provide adequate protection for participants in criminal proceedings.

Practices

positive

negative

The creation of the Unified Whistleblower Allegation Portal will ensure proper confidentiality and anonymity of allegations, as well as save the budget funds.
Capacities for reporting corruption are provided at a sufficient level. Everyone can choose the method and channels for reporting.
The NACP actively uses available tools to protect whistleblowers. The work of the body in this direction can be assessed quite high. Methodological support for whistleblowers and dissemination of information on the importance of reporting corruption is provided by the NACP at a good level.
State bodies have only partially complied with the requirements to create appropriate conditions for reporting corruption. Some law enforcement agencies do not comply with the requirements for the establishment of regular reporting channels.
There are obstacles to reporting corruption when it comes to the state secrets. Guarantees of anonymity and confidentiality of such allegations are not fulfilled in practice. Due to the novelty of the institution of whistleblowers, certain specific problems arise when reporting corruption.
Protection tools do not always apply effectively. Due to the lack of liability, compliance with the NACP’s prescription depends solely on the will of the person against whom it was made.
Lack of resources undermines the NACP’s effectiveness in protecting whistleblowers. Discrediting whistleblowers by the NACP itself negatively affect the reputation of whistleblowers and exert pressure on them.
Due to the novelty of the institution of whistleblowers, in practice, certain problems prevent whistleblowers from exercising their rights to receive adequate protection.
Actual research and materials
1. "Document name"
2. "Document name"
3. "Document name"
4. "Document name"
5. "Document name"
National legislation of Ukraine is consistent with the political funding standards enshrined by part 3 of Article 7 of the UN Convention against corruption. Well-grounded limitations on financing political parties and election campaigns, as well as state funding of political parties and their reporting, are set by the laws. At the same time, law requirements are not always fulfilled in a compliant manner. On the one hand, the transparency, openness, and accessibility of party reports can be highly appreciated, which allows the public to exercise effective control over party finances. However, on the other hand, due to unjustified legislative changes related to the COVID-19 pandemic, political parties have been able not to submit their reports for over a year. This has deprived the public and the state of control over the financing of political parties and the use of state budget funds. Funding requirements for political parties and election campaigns can be easily circumvented through a number of schemes. Their widespread use is due to the ineffective institution of prosecution for violations of the law.

2In short:

2State of implementation

Legal framework

The Law on Political Parties of 2001 is the main law governing the financing of political parties. In particular, it defines the main ways of financing political parties, restrictions of funding, and sets requirements for reporting and control. In turn, the detailed regulation of election campaigns is stipulated by the Electoral Code of 2019.

1.1. Requirements for Funding of Political Parties

In the sense of the law, a political party is a non-profit organization, i.e., it can spend money only on the exercise of its statutory activities. Two possible sources of income for political parties are voluntary contributions to support the party and state funding.

The Law on Political Parties clearly defines the term “contribution towards a political party” and sets out an exhaustive list of restrictions on its receipt. In particular, the contributions are prohibited to be paid by the following entities:

  • state authority, and state-owned enterprise;
  • legal entity, the ultimate beneficiary of which is a high-ranking official (with certain exceptions);
  • foreign country citizen, legal entity, or state;
  • citizen of Ukraine younger than 18 years;
  • legal entity providing state authorities with services/goods/works in the sum of more than EUR 3700.

It is forbidden to make anonymous contributions, to donate more than EUR 75000 by an individual, and EUR 150000 by a legal entity during the year, etc. Contributions paid by several legal entities owned by one beneficiary owner are considered to be as one contribution. Contributions in the form of works/goods/services are allowed.

Regular reporting and annual audits (internal ones for all; external ones for those receiving state funding) are provided to ensure compliance with these restrictions as well as party transparency.

A party report is submitted to the NACP each quarter, and it contains information on:

  • money available on all accounts, securities, real estate, vehicles, etc.;
  • contributions made in any form, as well as other money received by a party;
  • payments and expenses;
  • financial liabilities.

Reports of political parties are publicly accessible and, since recently, are published in a special register, i.e., POLITDATA. The reports are audited by the NACP. Administrative and criminal liability is provided for violation of the established rules.

1.2. Election campaign funding

The Electoral Code establishes 3 types of elections, namely, presidential elections, parliamentary elections, and local elections. For each type of election, there are separate rules for campaign financing. More detailed information on the peculiarities of such financing is given in the table below.


During the election of the President of Ukraine, the election fund of a presidential candidate is used, which is formed from the candidate's own funds, party funds and voluntary contributions. The size of the fund may not exceed 16.8 million euros. Unused funds are returned to the political party or the state budget. Interim and final reports for the period before and after the elections are submitted, and reports are published on the websites of the CEC, NAPC and political party.

During the election of people's deputies, the election fund of a candidate or party is used, which is formed from party funds, candidates' funds (not more than 7,500 euros) and voluntary contributions (only in cash). The size of the party's fund may not exceed 16.8 million euros, the candidate - 750 thousand euros. Unused funds are returned to the political party or the state budget. Interim and final reports for the period before and after the elections are submitted, and reports are published on the websites of the CEC, NAPC and political party.

During local elections, the election fund of a candidate or organization is used, which is formed from the funds of the party organization, candidates (not more than 1,800 euros) and voluntary contributions (only in cash). The size of the fund is virtually unlimited. Unused funds are returned to the political party or the state budget. Interim and final reports for the period before and after the elections are submitted, and reports are published on the websites of TECs, local councils, CEC offices or otherwise.

The law allows the use of election funds exclusively to finance election campaigning. All payments outwent from the election fund are made exclusively in non-cash form. In addition, there are time limits on the use of funds, particularly, for the election of the President and MPs it is the last Friday before an election day, and for local elections, it is the next Wednesday coming after an election day.
Voluntary contributions to election funds are subject to the same restrictions as contributions towards a political party. These restrictions are different only for local elections, specifically, the maximum sum of a contribution cannot exceed EUR 1,800; it is forbidden for legal entities, anonymous people, and foreigners to pay contributions.

1.3. State financing of political parties

State financing of political parties has been provided in Ukraine since 2016. According to the law on political parties, state financing is provided for two purposes:

  1. Statutory activities of a political party, but with the activities being not related to participation in elections (quarterly ingoings);
  2. Reimbursement of pre-election campaign expenses (one-time payment).The general fund from which the parties are financed is formed according to the following formula: EUR 1.8 multiplied by the total number of voters in previous elections. A political party is entitled to state financing if it receives more than 5% of the votes of all voters, therefore, if it is represented in the Parliament.

The amount of funding for each political party is determined by two criteria:

  • 10% of the total fund is divided equally between parties that adhere to the gender quota;
  • 100% of the total fund is distributed among the parties in proportion to the number of votes voted for them.

If a political party does not use public funds by the end of the year, money is returned to the state budget.
If a political party enters the Parliament, it is entitled to reimbursement of expenses related to the financing of its election campaign (but not more than the maximum size of the election fund of a political party).

The NACP exercises state control over the use of funds by political parties. In case of violations, the NACP has the right to stop state financing in perpetuity or to suspend it for a certain time.


Suspension of funding is possible in the case of:

  • Failure of a political party to submit a report by the deadline;
  • Submission of a report with a gross violation of the requirements or indicating inaccurate information (if it differs from reliable information in the amount of more than approximately 3700 euros).
  • If the shortcomings in the report are eliminated, the NAPC will resume state funding from the next quarter.

Suspension of public funding applies in the case of:

  • Application of criminal and legal measures to a political party;
  • Prohibitions on the activities of a political party, cancellation of its registration;
  • Repeated during the year: failure to report to the NAPC; submission of a report with a gross violation of the requirements or indicating inaccurate information; intentional receipt by a political party of a contribution received from a person who was not entitled to make such a contribution, or receipt of a contribution exceeding the maximum amount;
  • Establishment by the court of the fact that the funds of state funding for statutory activities were spent for other purposes or for participation in elections, etc.
Implementation in practice

2.1. Reporting of Political Parties

Quarterly reports by political parties are a key tool for checking political finances. Until recently, each political party submitted its reports to the NACP in two forms, namely, in electronic (PDF and XLS) form and paper. The NACP, in turn, published these reports on its website (in PDF and XLS formats). Despite their openness and accessibility, this reporting format had several shortcomings.

  1. The reports published on the site were enormously massive and often of poor quality. The experts reckon that their processing took a lot of resources and time because before the direct analysis the reports had to be unified, cleaned, and digitized.
  2. Paper reports, in turn, were very huge and required a significant amount of paper. For example, to print a report of one fairly large political party it was necessary to consume 70-80 packs of A4 sheets of paper. Transporting such a report to the NACP required several cars or one truck.

In May 2021, the situation radically changed when the NACP completely commenced the electronic system for reporting by political parties, i.e., POLITDATA. Its launch significantly increased transparency in political funding. From one side, civil society is able to check the report in a shorter time and more efficiently due to the fact that information is accessible and unified, and on another side, political parties save their resources and time when submitting their reports. Unlike the usual placement of copies of reports on the NACP website, POLITDATA provides for automatic processing of such information. In particular, in addition to displaying reports in XLS format, POLITDATA provides information in the form of statistical and practical data with a search engine to find the required report. All data in POLITDATA is placed in the open data format, particularly in API (machine-readable format), which greatly simplifies working political party reports out by the public. By 2021, political party reports are submitted exclusively in the electronic form to POLITDATA. For this purpose, political parties and their branches are registered in the system. As of September 2021, 112 political parties (out of more than 600) have been registered with POLITDATA, and 31 reports have been submitted.

Despite increasing transparency in political financing, political parties have the right (on days when this paper was being written) not to submit such reports. In April 2020, a law, that postponed the submission of reports by parties until the end of the quarantine imposed by the COVID-19 pandemic, entered into force. Taking such measures looks more like the “whim” of political parties than an urgent need since the quarantine hardly poses any obstacle to submitting such reports. As of September 2021, there was still a quarantine period, consequently, political parties did not submit their reports for more than a year. Because of this, the public has not known for a year what money was spent for the local elections held in October 2020, and how political parties spent state funds. Upon completion of the quarantine, political parties are obliged to submit all previously non-submitted reports almost simultaneously. Experts are of the opinion that it can also cause negative consequences. First, after the resumption of reporting, the NACP will obtain a large number of reports at one time, which will not allow them to be processed qualitatively due to the short deadlines for inspections. Second, those political parties that reported during the quarantine period can be in a worse position than others because their reports can attract more attention from the NACP and the public.

2.2. Election Campaigns Reports

The reports on election campaign funds are published on the websites of NACP, CEC, TEC, etc. in pdf and xls formats. Despite the commencement of the electronic system, the submitted reports will not be placed on POLITDATA. Such an approach raises the same shortcomings as those in terms of quarter reports happening before, specifically, their processing will take a long time and resources. It is unlikely to result in effective state and public scrutiny of election campaigns finance.

The levels of openness and accessibility of the reports on local election campaign funds are low. There are no problems with this in the national elections (president and parliament), and the CEC and NACP publish election campaigns reports in a timely and complete manner; however, the situation is worse in local elections. As the Table shows, ____ election campaign fund reports are published on the official websites of TECs (not usually available), or local councils, or otherwise, during local elections. However, in practice, these provisions of the law are not followed. The public monitored the publication of reports by political parties and candidates in 15 major Ukrainian cities during the recent local elections. The results found that local branches of political parties did not publish 55% of their final financial reports. In turn, mayoral candidates published only 44% of all reports. The quality of inspections of reports is also poor. The results of the selective analysis carried out by the public revealed that a significant part of TECs did not check any report, although, in situations where the checks were conducted, they were of declarative nature. Experts are of the view that this problem arises because TECs are much busier counting votes and processing election results, consequently, not having enough capacity to properly audit financial statements.

2.3. Financing of Political Parties

Despite the openness of financial statements of political parties and the ability to control every incoming to the party’s budget, it cannot be said that, in Ukraine, political parties are fully transparent. It is almost impossible to understand who finances political parties and how big financing is.

Legislative requirements for party financing can be easily circumvented with the help of developed schemes, the most popular of which are described below.

1) Use of fictitious donors.
This scheme is as follows: a person who is interested in financing political party hands the cash over to another person (he or she is called “pidstavna osoba”). This person, in turn, transfers, identifying his or her name, the money to the party’s bank account and receives a reward for such a transaction. Given that the maximum sum of a voluntary contribution paid by an individual is EUR 75000, it is not necessary to involve many fictitious donors to transfer big money.
In 2020, one political party used such a scheme. In the 2nd quarter of 2020, it declared zero receipts, an office with an area of 14.8 m2, located in Kyiv, one laptop, a table, and two chairs. But in the 3rd quarter that year, the party received almost EUR 1 million as voluntary contributions. The public found out that that money was contributed towards that political party mainly by students and unemployed people.
According to experts, besides fictitious “poor” donors (whose insolvency can be easily proven), there are also schemes with fictitious “rich” donors. That means that political parties are looking for people who can easily explain the legality of their earnings and use them to fund political parties. For example, one party received funds directly from the top management of large Ukrainian companies owned by an oligarch.

2) Use of fictitious legal entities and civil society organizations.
This scheme is similar to the previous one, but legal entities are used instead of individuals. For example, in 2019, one of the largest political parties in Ukraine received approximately EUR 90,000 from two companies that were registered by one person a month before the transfer. Approximately the same scheme was used by the ruling party. Experts note that there are cases when the amount of donation paid by a legal entity is equal to (or even less) its total annual revenue.
Due to the financing of political parties by legal entities, it is possible to evade the restrictions imposed on financing made by foreign citizens. For example, a foreign citizen can invest in a legal entity registered in Ukraine, and the latter, in turn, can legally finance the party.

2.4. Financing of Election Campaigns

There are also many ways for political parties to hide their ingoings and outgoings during election campaigns. To give you some of the most spread of them:

1) Use of public organizations with the same name as a political party.
To implement this method, there must be a civil society organization registered with the same name as a political party. Then the civil society organization finances political advertising pays salaries to employees, advertisers, and headquarters members of a political party, and so on. The political party does not report on these expenses, as they were, de jure, carried out by a separate legal entity. For example, such a scheme was actively used during the local elections in 2020 and the parliamentary elections in 2019.

2) Concealment of expenses on advertising on social networks.
The popularity of political advertising on social networks is growing rapidly. According to civil society estimates, in the first half of 2020, politicians spent on advertising on Facebook about USD 850000, and USD 1.2 million for the same period in 2021. Despite such high expenses, political parties mostly did not report on it. As a result, a huge amount of money spent on election campaigns remains in the shadows.
Experts note that in practice there are several shortcomings in reporting the cost of advertising on social networks, and among them are:

  • Lack of a convenient way to pay for advertising from the election campaign fund account. It happens due to the inability of legal entities to pay for advertising on Facebook, and due to the lack of official representation of the company in Ukraine;
  • lack of a separate category of expenditures (columns) in the forms of final and interim reports approved by the CEC. Experts believe that the form of reports should be further detailed, as at the moment the “other expenses” column covers a significant number of possible transactions that need to be allocated separately.

Shadow cash used by political parties during election campaigns is widespread. A large amount of money is spent on the salaries of political party observers and members of polling stations, and is paid “in envelopes”. One of the interviewed experts estimates that about half a million people are needed to organize the election campaign. Accordingly, one can only imagine the scale of this practice.

2.5. Responsibility for violation of requirements of the law

Widespread use of the described schemes is possible for several reasons, but the main one, in our opinion, is the evasion of bringing to liability, and petty sanctions for violations of the law. In addition to the general problems being experienced in bringing to administrative liability that we described in Section ___, the cases regarding violations of the requirements for financing a political party and election campaigns have certain features.

Efficiency in bringing to administrative responsibility for violation of rules of financing political party (election campaigns) and reporting (hereinafter “cases”) is extremely poor. Courts close most of the cases, impeding bringing to justice. According to information provided by the NACP, in 2020, courts closed 299 cases, that is 88% of all the cases heard in courts. Among them, 198 cases (66%) were closed on the ground of with the expiry of procedural deadlines, 81 cases (27%) - the absence of the constituent elements of the offense, and 8 cases (2,7%) - due to minor insignificance. The tendency of closing cases goes up, particularly, in 2018, courts closed 77% of cases, but, in 2019, 82% of cases. Factually, administrative liability is enforced in 12% of cases, even it happens, the sanctions impede prevention because, in 2020, the average sum of fine imposed by court resolution was EUR 144.

Among the main shortcomings appearing in the consideration of this category of cases by courts (except for the general shortcomings that are inherent in all administrative cases), the experts point out:

  • Lack of a clearly defined subject of the commission of an administrative offense, who is responsible for submitting the report of the political party, and the place of commission of such an offense, which affects the jurisdiction of such cases;
  • Insufficient period (24 hours) fixed to draw up a report, starting from the moment when the person who committed an offense was identified;
  • Absence of a deadline during which the NACP representatives are obliged to send the report to the court after the report is drawn up;
  • Ambiguity of court practice regarding the return of case materials in case of violation of jurisdiction, etc.

The efficiency of bringing to criminal liability is even poorer. In particular, in 2020, the NACP sent 22 notifications to the police about the detection of the facts of a criminal offense, as a result of which 11 proceedings were opened, but those cases did not reach the court. And for the whole time of existence of the article of the Criminal Code (since 2006), there was only 1 court case ruled guilty sentence.

2.6. State Financing of Political Parties

State financing of political parties is one of the main sources of income for political forces. The amount of state financing is increasing each year, and it is rather huge. As of July 2021, only 5 parties were applying for the state funding. In 2021, the total state budget allocated for political parties financing was approximately EUR 21.9 million. For comparison, in 2020, this figure was approximately EUR 8.8 million. As of July 2021, since the beginning of the year, the NACP transferred approximately EUR 16.2 million to political parties.
These funds are distributed in proportion to the votes received by voters in the recent parliamentary elections. For example, since the beginning of the year, the ruling party of the President, which has had a significant majority in the Parliament, has already received about EUR 7.5 million. To compare, during the same period, the least represented political party in the Parliament received about EUR 1.5 million.

The oversight mechanism is efficient, but not perfect. On one side, the NACP rather properly and thoroughly scrutinize the reports of political parties, and on grounded reasons suspends state financing. But on the other side, the currently applicable mechanism of suspension of state funding does not fully guarantee political parties against whimmy decisions of the NAPC. The issue of suspending public funding in 2020 was quite acute. Then, the NAPC suspended state funding for three parliamentary parties, namely, the ruling political party and two opposition ones. Two political forces submitted clarifying reports to correct the shortcomings identified by the NACP. As a result of the verification of clarifying reports, state financing was resumed. The third political force appealed the NACP’s decision to court. The final decision has not yet been ruled, but the party no longer receives money from the state budget. The grounds to suspend financing of those political parties were numerous violations of the Law on Political Parties.

The NAPC claims that:

  • one of the parties paid more than EUR 15000 for media monitoring services. For these funds, the contractor provided a report, which is an exact copy of publicly available information previously posted on the official website of one of the public organizations;
  • the reports of another party indicated that it transferred more than EUR 62000 for the organization and provision of forums based on documents that did not exist at that time;
  • Another party transferred money to five companies for printing products under contracts worth more than EUR 437 000. According to state authorities, the heads of local organizations who, according to the documents, received these products were abroad at that time. At the same time, the bank accounts of these companies, to which the funds were to be transferred, were opened later than the date of the conclusion of contracts.

The arguments of the NAPC were quite convincing and indicated a good level of inspection. However, political parties believed that the NAPC had exceeded its authority in assessing the services provided to parties. As a result of these events, representatives of all political forces in Parliament submitted a bill, which in fact provided for the deprivation of the NAPC of the power to control political finances. Due to public pressure, consideration of the bill had to be suspended. Instead, another bill is being considered in the Parliament, that envisages additional guarantees against NAPC’s arbitrary decisions, but entitles the oversight body to exercise control of political financing.

2Practices

positive

negative

The introduction of the electronic system for submitting political party reports (POLITDATA) has significantly increased the transparency and accessibility of information on political party financing.
State funding of political parties is provided at a proper level.
NAPC’s control over party finances is efficient and of proper quality.
For more than 19 months, without justified reasons given, political parties have the right not to submit their reports.
Reports of local election campaigns funds are practically not published and are not checked by oversight bodies.
Legislative requirements and restrictions on the financing of political parties and election campaigns can be easily circumvented. There are a number of widely-used ways to do this.
Shortcomings of the mechanism for bringing to responsibility allow offenders to evade responsibility.
Administrative and criminal liability for violating reporting and funding requirements for political parties is extremely ineffective.
The mechanism of suspension of state funding does not fully guarantee political parties against whimmy decisions of the NAPC
Actual research and materials
1. "Document name"
2. "Document name"
3. "Document name"
4. "Document name"
5. "Document name"
Positive
Negative
Neutral
Your suggestions
If you have suggestions and additional information that will help make the information better, please use the following form
Conference
office@izi.institute
+38 (063) 763-85-09
Kyiv, street Shovkovychna 24, office 14
Public reports
08.11.2020
Public report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
08.11.2020
Public report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
08.11.2020
Public report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
08.11.2020
Public report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
08.11.2020
Public report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
State reports
08.11.2020
State report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
08.11.2020
State report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
08.11.2020
State report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
08.11.2020
State report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
08.11.2020
State report on the implementation of the UN Convention against Corruption in Ukraine
08.11.2020
Subscribe to updates
Receive platform update notifications