On June, 17, 2021, the Verkhovna Rada of Ukraine supported with 319 votes a draft law on introducing amendments to the Law of Ukraine “On Political Parties in Ukraine” (No 5253-1). It aims to improve legal regulation of party finance. The document supported by the Parliament is an alternative to the draft law of Ukraine “On Introducing Changes to the Law of Ukraine “On Political Parties in Ukraine” to improve the procedures for termination of government funding for statutory activities of political parties” (Registration No 5253). It received much criticism from experts because of the reduced functions and capacity of the National Agency for Prevention of Corruption in part of control over political party finances. Although some critical provisions of the draft law No 5253 have not been included into the text of the draft law No 5253-1, a series of important remarks remained. 

The main and the alternative draft laws were registered in spring, parallel to the operations of working groups to improve electoral law and the law on political parties. Civil Network OPORA hereby reiterates the need to include the respective provisions to comprehensive special draft laws rather than do patchwork or adopt additions, sometimes detached from a comprehensive vision of reforms. 

In any case, the changes suggested by the draft law No 5253-1 require fine-tuning, following the additional discussion at the relevant platforms to improve electoral law and the law on political parties.

Specifically, Civil Network OPORA hereby highlights the shortcomings in the draft law No 5253-1:

1. The option to place the government finance on deposit accounts may contradict the purpose of their allocation, which is to support capacity building of an association of citizens. 

At the same time, the current account cannot offer passive revenues, such as interest rates. Furthermore, passive income is not a fixed legal term. Besides, as the Chief Office for Research and Evaluation stated, the draft law does not clarify the legal status of funds in the form of interest rates accrued under the deposit agreement (such as, it is questionable whether this kind of government funds shall be refunded to the government budget). In this regard, there is another debatable provision about the funds received by a political party as passive income in the form of interest rates to the current or deposit (safekeeping) bank account shall not qualify as monetary contribution to support the party.

On the other hand, the issue of placing the political party money on deposit accounts is highly  debatable and may affect the development of party institutes in Ukraine because of restricted funds for their growth (also for the development of regional and local centers). Even if the parliament supports the proposal, its implementation should entail significant improvements of other legal provisions on political parties. In particular, it is about defining the status of the funds, and the need to include information on deposit accounts and the received interest rates to reports of political parties, ensuring the precautions to open deposit accounts in national currency only, and other legislative restrictions.

2. It is highly risky to have a proposal not to qualify as a party supporting contribution a case when a people’s deputy of Ukraine, a local council deputy, a head of village, township, or city, a member of the party, on a free-of-charge basis or on preferential terms offers goods, works, and services needed for COVID-19 containment measures, in line with the list set by the Cabinet. The list, under the Law of Ukraine “On Public Procurement,” has been stipulated by the Government Resolution of March, 20 2021 No 225  “Certain Aspects of Procuring Goods, Works, and Services Needed to Implement Measures to Prevent the Contraction, Localization, and Liquidation of Outbreaks, Epidemics, and Pandemics of the Acute Respiratory Disease COVID-19 Caused by the Coronavirus SARS-CoV-2 Over the Territory of Ukraine.” The valid list includes many different goods. We need to take into account that the extraordinary elections of Kharkiv city mayor are scheduled for autumn, as well as other local elections or by-elections of people’s deputies of Ukraine. Thus, the relaxation will facilitate voter bribery during the early campaigning.

3. The proposals included in the draft law on suspending and terminating government funding do not pose high risks but certain legislative proposals lack proper justification:

  • the amount of divergences permissible in a report to keep the government funding is 100 subsistence minimums of able-bodied persons in Ukraine, which in 2021 will amount to over UAH 454,000. The Office for Research and Evaluation also mentioned the excessiveness of this amount in their conclusions.
  • a possibility to terminate government funding for statutory activities of a political party in case there are no expenses (costs) incurred by a political party at the cost of funds received to finance their statutory activities, during one calendar year from the day of accrual of the first declared funds to the political party’s account in a banking institution is a rather controversial initiative. On the one hand, the party is thus pushed to a more active political activity, on the other hand, it is the inefficient use of money.