Ukraine is moving toward the corporate governance in GTSO and reload of the Economic Security Bureau
On September 25, IMF mission started work on the second review of $15,6 bn EFF Program for Ukraine. Currently the representatives of the mission are in Ukraine for the first time in the last three years.
As we all know, up to this point Ukraine has missed deadlines of three benchmarks. However, in last several weeks we have a progress in realization of one of them regarding the corporate governance reform of the GTSO.
Moreover, Parliament also passed the DL on restoring asset declarations for public officials to the Presidential Office for signing.
In addition, according to the latest discussions, the restart of the Economic Security Bureau of Ukraine (ESBU) is one of the priorities of our international partners. As a result, the DL #10088 to restart the ESBU was submitted to the Parliament.
This digest covers more detailed updates on IMF agenda, priorities of other international partners, especially regarding cases of high-level corruption for the 25 September – 1 October 2023.
The Ministry of Energy announced a competitive selection of a supervisory board for the GTSO. Candidates will submit their applications till October 5, 2023.
According to the Structural Benchmark #18 Ukraine has to select and appoint a supervisory board for the GTSO by end-October.
On September 22 the CMU transferred the GTSO shareholding directly to the Ministry of Energy, as it stated in Structural Benchmark #8.
As for the second part of the benchmark on adoption of a new GTSO charter, the final text hasn’t been agreed with the Energy Community yet.
The Parliament sent to the Presidential Office the draft law on restoring asset declarations for public officials after veto. Ruslan Stefanchuk, Chair of the Verkhovna Rada, signed the DL #9534 on September 26. Currently the DL is waiting for the President to sign it.
It’s the second DL on this issue which is waiting for signing in the Presidential Office. Still it isn’t clear whether the President will veto the second DL on this issue #9587d which was criticized for allowing public officials to avoid punishment for hiding assets worth up to UAH 1.3 mln.
As we reported earlier, the Verkhovna Rada adopted the draft law #9534 after the presidential veto. The amendments allow to open the register of public officials’ asset declarations immediately after the law comes into force which is Ukraine’s commitments to the IMF (Structural Benchmark #14).
MPs submitted the updated draft law to restart the Economic Security Bureau (ESBU).
On 25 September Iaroslav Zhelezniak, First Deputy Head of the parliamentary Tax Committee, and the group of MPs including Heads of Budget, Tax and Anti-Corruption Policy Committees submitted the revised DL #10088 on the ESBU reform.
The text was prepared after numerous discussions with international organisations and updates the previous version in the DL #9080 according to the received suggestions and amendments from our partners.
Among key Innovations of the DL are the following:
- new competition procedure for the appointment of the ESBU Director with a majority of international members in the Election Commission and their decisive vote (according to the best practices in SAP, NABU, and NACP);
- legislative provisions to ensure political independence of the state body which have proven itself in NABU and NACP;
- recertification of all ESBU employees both of the head office and local units, excluding service staff.
This approach has already received support in the letter from the United States to the Donor Coordination Platform.
We anticipate that similar requirements will be included into the updated memorandum with the International Monetary Fund (IMF) after the second review of the EFF program. We also expect that the key provisions of the DL #10088 will be integrated inti the terms of macro-financial assistance from the European Union (EU).
Group of MPs submitted the DL on strengthening institutional autonomy of SAPO which is alternative to governmental one. Anastasiia Radina, Head of the Committee on Anti-Corruption Policy, and Yaroslav Zhelezniak, First Deputy Head of the Committee on Finance, Tax and Customs Policy, are among authors of the aforementioned DL #10060-2.
As we reported earlier, it suggests more necessary provisions to enhance institutional independence of the SAPO. Its main goal is to ensure that crucial provisions (such as legal entity status for the SAPO) won’t be eliminated during the reviewing process.
The DL will be a part of the legislative package to strengthen Ukrainian anticorruption infrastructure. Other two DLs suggest to cancel the statute of limitations for corruption crimes and increase the total number of NABU employees.
The President signed the DL to restore financial reports of political parties. As we reported in the Issue 16, the DL #9419-1 restores the obligation of political parties to submit financial reports on their assets, incomes and spending as well as the obligation of the National Agency on Corruption Prevention to check these reports in 60 days.
This step is the G7 requirement for Ukraine.
Due to the delayed terms of the law coming into force, political parties could submit first financial reports not earlier than in five months.
Among other provisions, the new law suggests to provide state funding for all political parties which gained 3% and more votes during parliamentary elections instead of the current 5% threshold.
The Committee on Finance, Tax and Customs Policy approved for the first reading a revised DL on additional taxation for excess profits of Ukrainian banks. The text was updated as a result of discussions with the NBU and the MoF aiming not to create another one tax type.
According to the NBU's proposal, the DL suggest just to double income tax rate from 18% to 36%). The fiscal effect is expected to be the same adding approximately UAH 10 billion per year for the state budget.
The new approach was discussed with Ukrainian banking associations and was pre-approved by the IMF. Still further discussions will be held for the second reading.
The Parliament will consider the DL in the first reading later this week.
MPs submitted the DL to eliminate legislation pitfalls made by so-called "amendments of Lozovyi, MP" which prevent punishment for corruption. The DL #10100 abolishes the statute of limitations for prosecuting serious and especially serious corruption crimes committed during the full-scale war started by russia in Ukraine.
It also suggests to abolish the time limits for the investigation of criminal proceedings until the moment when the person is notified of the suspicion.
NABU opened criminal proceeding regarding payments for electricity from solar power plants affiliated with the deputy head of the Presidential Office Rostyslav Shurma which still operates in the occupied territories. According to the sources of Economichna Pravda, the criminal proceeding was registered on August 21.
However, the Security Service of Ukraine sees no signs of collaborationism in the "green" tariff reimbursements to the occupied solar power plants associated with Rostyslav Shurma. In response to my parliamentary appeal, the SSU reported that there are no legal grounds to initiate a pre-trial investigation.
As we reported earlier, according to the Bihus.Info journalist investigation, several power stations in the occupied territories received UAH 320 mln under the 'green tariff' in 2022. Some of these stations had stopped synchronizing with Ukraine's power grid last year, yet continued to receive payments for an additional year. Among these beneficiaries are power stations associated with Rostyslav Shurma, the deputy head of the Presidential Office, who oversees the energy sector.
Iaroslav Zhelezniak
