International round table«Reforming the corruption

prevention system in Ukraine»

Dr. Slagjana TasevaChair TI Macedonia

Points for presentation

International standards for the asset declaration of the officials

• Recommendation Nr. R (2000) 10 of the Committee of Ministers to Member states on codes of conduct for public officials (adopted on 11 May 2000),

• United Nations Convention against Corruption (adopted in 2003). Article 8 (Paragraph 5) etc..

• Technical Guide to the UN Convention (UN, 2009, pp. 25-26)

Section VII of the Law of Ukraine “On Prevention of Corruption”

• Articles 45- 52

• Reference and comments to all articles based on the experience in implementation of similar provisions in different countries.

Comparative analysis

• Validation of Ukrainian system against experiences of other countries: the lessons learned or “to-dos” and “not-to-dos”

References

Progress Reports 2014http://ec.europa.eu/enlargement/countries/strategy-and-progress-report/index_en.htm

Recommendation Nr. R (2000) 10 of the Committee of Ministers to Member states on codes of conduct for public officialshttps://www.coe.int/t/dghl/monitoring/greco/documents/Rec%282000%2910_EN.pdf

United Nations Convention against Corruption https://www.unodc.org/unodc/en/treaties/CAC/

Technical Guide to the UN Conventionhttp://www.unodc.org/documents/corruption/Technical_Guide_UNCAC.pdf

Asset Declarations for Public Officials A Tool to Prevent Corruption © OECD 2011 http://www.oecd.org/corruption/anti-bribery/47489446.pdf

ReSPA Comparative Study Income and Asset Declarations in PracticeReSPA is a joint Initiative of European Union and the Western Balkan countries working towards fostering and strengthening the regional cooperation in the field of public administration among its Member States

Historical background

• The 1990s saw not only the spread of declarations in transition countries but also the emergence of mainly soft/recommending international standards to this end.

• One of the earlier international documents that foresaw public officials’ declarations was the Inter-American Convention Against Corruption (adopted in 1996).

Anti-corruption aquisList of standards• STANDARD # 1 Convention of 26 May 1997 on the fight against corruption involving officials of the

European Communities or officials of the Member States• STANDARD #2 Convention of 26 July 1995 on the protection of the European Communities’

Financial Interests• STANDARD #3 Protocol drawn up on the basis of Article K.3 of the Treaty on European Union to the

Convention on the protection of the European Communities' financial interests• STANDARD #4 Second Protocol, drawn up on the basis of Article K.3 of the treaty on European

Union, to the Convention on the protection of the European Communities' financial interests• STANDARD #5 Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption

in the private sector OJ L 192, 31.7.2003, p.54• STANDARD #10 UN Convention against Corruption, Merida 2003• STANDARD #11 OECD Convention on Combating Bribery of foreign public officials in International

Business Transactions, 1997• STANDARD #12 Council of Europe Criminal Law convention on Corruption 1999 • STANDARD #13 Council of Europe Civil Law Convention on Corruption 1999 • STANDARD #14 UN Convention against Transnational Organized Crime, Palermo December 2000• STANDARD #15 Council of Europe Resolution (97) 24 on the Twenty Guiding Principles For The Fight

Against Corruption • STANDARD #16 Council of Europe Recommendation on Codes of Conducts for public officials

(recommendation no. R(2000)10)• STANDARD #17 Council of Europe Recommendation on Common Rules against corruption in the

funding of political parties and Electoral Campaigns (rec(2003)4)

International standards for the asset declaration of officials

• Recommendation Nr. R (2000) 10 of the Committee of Ministers to Member states on codes of conduct for public officials (adopted on 11 May 2000),

• United Nations Convention against Corruption (adopted in 2003). Article 8 (Paragraph 5) etc.

• Technical Guide to the UN Convention (UN, 2009, pp. 25-26)

Recommendation Nr. R (2000) 10

• The earliest European standard is found in the Recommendation Nr. R (2000) 10 of the Committee of Ministers to Member states on codes of conduct for public officials (adopted on 11 May 2000),

• Article 14 refers to declarations, i.e.,“The public official who occupies a position in which his or her personal or private interests are likely to be affected by his or her official duties should, as lawfully required, declare upon appointment, at regular intervals thereafter and whenever any changes occur the nature and extent of those interests.”

– Note that the recommendation emphasises only the declaration’s purpose of controlling conflict of interest – not that of wealth monitoring, which is also viewed as important in a number of countries.

Declaration system - Not an explicit EU requirement

• The conditions that applied to the countries wishing to accede to the European Union generally did not contain an explicit requirement to establish a declaration system for public officials (there is no EU law – or acquis communautaire – on declarations).

• The EU position, stated in broad terms, included the requirement “that the candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights

De facto standard for the candidates

• Thus, even though there is no binding legal basis and no conclusive proof of effectiveness, declarations for public officials have become a de facto standard of the European Union vis-à-vis candidate members.

• As already noted, all ten Central and Eastern European countries that joined the EU in the 21st century introduced such systems of greater of lesser efficiency well before the actual accession.

– The functioning of declaration systems continues to be under the scrutiny of the European Commission in current candidate countries.

EU Accession and asset declarations

All countries of the region that joined the European Union in 2004 and 2007 had adopted their declaration systems by 2000.

This can be explained by conditions for EU accession but the trend continues into the 21st century, when both new aspirants for EU membership and former Soviet Republics with no such ambition developed their disclosure rules.

The year of introduction of declarationsfor public officials in transition and selected other countries

Year of introduction Country

1974 1978 1982 1992 1993 1994 1995 1996 19982000 20012002 2003 20042005 2006

United KingdomUnited StatesSpain, ItalySloveniaBelarus, UkraineLatviaAlbania, EstoniaKazakhstan, RomaniaGeorgia, LithuaniaBulgariaBosnia and HerzegovinaMacedoniaCroatiaKyrgyzstan, MontenegroAzerbaijan, KosovoTajikistan

UNCAC Convention

• Nowadays public officials’ declarations have become a part of the global standard that is embodied in the United Nations Convention against Corruption (adopted in 2003).

• The United Nations Convention against Corruption (UNCAC) is a multilateral convention negotiated by members of the United Nations. It is the first global legally binding international anti-corruption instrument.

• In its 71 Articles divided into 8 Chapters, UNCAC requires that States Parties implement several anti-corruption measures which may affect their laws, institutions and practices. These measures aim at preventing corruption, criminalizing certain conducts, strengthening international law enforcement and judicial cooperation, providing effective legal mechanisms for asset recovery, technical assistance and information exchange, and mechanisms for implementation of the Convention, including the Conference of the States Parties to the United Nations Convention against Corruption (CoSP).

UNCAC as a global standard

• Article 8 (Paragraph 5) contains a soft standard, which requires state parties to “endeavour, where appropriate and in accordance with the fundamental principles of its domestic law, to establish measures and systems requiring public officials to make declarations to appropriate authorities regarding, inter alia, their outside activities, employment, investments, assets and substantial gifts or benefits from which a conflict of interest may result with respect to their functions as public officials.”

States urged to consider adopting such declaration systems

• The requirements of the UN Convention do not amount to more than the obligation to consider.

• Still, borrowing language from the Legislative Guide for the Implementation of the UN Convention Against Corruption (UN, 2006, Paragraph 12, p. 4), it is clear that states are urged to consider adopting such declaration systems and to make a genuine effort to determine whether they would becompatible with their legal system.

Asset recovery

Article 51. General provision• The return of assets pursuant to this chapter is a fundamental

principle of this Convention, and States Parties shall afford one another the widest measure of cooperation and assistance in this regard.

• The return of assets is a fundamental principle of the Convention. Not only does the Convention devote a separate chapter to asset recovery, but it addresses comprehensively the impediments to effective preventive, investigative and remedial action on a global level

Asset declarations related to asset recovery

• The Convention returns to the issue of disclosure in the context of asset recovery by requiring that “each State Party shall consider establishing, in accordance with its domestic law, effective financial disclosure systems for appropriate public officials and shall provide for appropriate sanctions for non-compliance. Each State Party shall also consider taking such measures as may be necessary to permit its competent authorities to share that information with the competent authorities in other States Parties when necessary to investigate, claim and recover proceeds of offences established in accordance with this Convention” (Article 52, Paragraph 5)

Technical Guide to the UN Convention

Further recommendations are provided in the Technical Guide to the UN Convention (UN, 2009, pp. 25-26), and include the following:

• disclosure covers all substantial types of incomes and assets of officials (all or from a certain level of appointment or sector and/or their relatives);

• disclosure forms allow for year-on-year comparisons of officials’ financial position;• disclosure procedures preclude possibilities to conceal officials’ assets through

other means or, to the extent possible, assets held by those against whom a state party may have no access (e.g. held overseas or by a nonresident);

• a reliable system for income and asset control exists for all physical and legal persons – such as within tax administration – to access in relation to persons or legal entities associated with public officials;

• officials have a strong duty to substantiate/prove the sources of their income;• to the extent possible, officials are precluded from declaring nonexistent assets,

which can later be used as justification for otherwise unexplained wealth;• oversight agencies have sufficient manpower, expertise, technical capacity and

legal authority for meaningful controls;• appropriate deterrent penalties exist for violations of these requirements.

Illicit enrichment

• UNCAC Article 20. Illicit enrichment

• Subject to its constitution and the fundamental principles of its legal system, each State Party shall consider adopting such legislative and other measures as may be necessary to establish as a criminal offence, when committed intentionally, illicit enrichment, that is, a significant increase in the assets of a public official that he or she cannot reasonably explain in relation to his or her lawful income.

Article 3682. Illicit EnrichmentArticle 3682. Illicit Enrichment

1. Acquisition by a person authorized to perform functions of the state or local self-government, in the ownership (use) of property of value significantly exceeding his/her income receipt of which is confirmed through legitimate sources, or transfer of such property to his/her close relatives -

shall be punishable by imprisonment for up to two years with deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years and with special confiscation and confiscation of property.

2. Acts specified in paragraph 1 of this Article, committed by a person who holds a responsible position -

shall be punishable by imprisonment for a term of two to five years with deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years and with special confiscation and confiscation of property.

3. Acts specified in paragraph 1 of this Article, committed by a person who holds an especially responsible position -

shall be punishable by imprisonment for a term of five to ten years, concurrently with deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years and with special confiscation and confiscation of property.

Note. 1. “Significantly exceeding” shall mean the difference between the value of the property and legitimate sources of income of the person in the amount equal to or greater than the official annual income of this person from primary employment.

2. Persons authorized to perform functions of the state or local self-government are the persons referred to in paragraph 1 of Article 4 of the Law of Ukraine "On Principles of Prevention and Countering Corruption".

Section VII of the Law of Ukraine“On Prevention of Corruption”

• Article 45. Submission of declarations of persons authorized to perform the functions of the state or local self-government

– № of civil servants 433 269

• Time for submission 1st April except for p.3 (prior to appointment or election)

• In electronic form

• Is there a clear roster of the civil servants?

• Capacity of the NA to deal with submissions

Article 46 - Information to be included in the declaration

• 46.2.b) Real estate information refer to the third persons rights? (If the real estate property is rented or the other right of use is applicable, the information specified in clause 1 of part one of this article shall be provided about the owner of such property)

• Wide range of assets presumably dispersed through the territory of the state. How will it be addressed pursuant to Article 8 p. 3. (Regional offices of the National Agency, the territory of which not necessarily coincides with the administrative and territorial division, may be established by decision of the Cabinet of Ministers of Ukraine upon the proposal of the National Agency.)

Article 47 - Accounting and disclosure of declarations

• Unified State Register of Declarations• Submitted declarations are included to the Unified State Register of

Declarations of Persons Authorized to Perform the Functions of the State or Local Self-government that is formed and maintained by the National Agency.

• Is there a clear list of declarants at national level?– Open round-the-clock access to the Unified State Register of Declarations of

Persons Authorized to Perform the Functions of the State or Local Self-government at the official web-site of the National Agency.

• The option of seeing previous declarations• “shall be stored all the time during which individual performs

functions of the state or local self-government and for five years after the termination of performing such functions, except for the last declaration filed by a person which is stored for a lifetime.

• Option of cross-year comparison

Article 48 - Control and verification of the declarations

1. The NA conducts the following types of control regarding declarations

• Control with respect to timeliness of filing; – comment:

• not a big problem if there is a clear and accurate list of declarants

• Control with respect to the accuracy and completeness; – comments:

• It can be done any time and also on the basis of the citizen/CSO/media reports• It is necessary to have in place accurate property registers• It is necessary to have connected databases of the tax office and cadaster • It is necessary to have access to databases (vehicles, property, company, travel)

• Logical and arithmetic control. • Importance of the methodology for logical control

• Analytical type of work for what it is necessary to have access to different databases(including electricity, travel, property

2. The National Agency conducts a complete examination of declarations in accordance with this Law.

Comment:• Access of NA to other institution databases• Organization and staff• Cooperation with other institutions is crucial

3. Procedure for conducting controls provided for by this article, as well as complete examinations of declarations are determined by the National Agency

• Importance of swift adoption of the procedure

Article 48 - Control and verification of the declarations

Evaluation of B&H

Currently, the checking is only of a basic nature – whether the asset declaration is in accordance with the deadlines and whether it is complete. Bosnia and Herzegovina currently has no legally defined mechanism for checking the plausibility of asset declarations. Instead, the data is exposed to the public within the limits of data protection laws.

So there is no verification of the declared data and the only sanction available is judgment by the public at large and the consequences for candidates are in terms of a low number of votes. In this respect, the situation changed as of 2012. Initially, data was published on the CEC’s official website. But this practice was changed after the decision of the Appellate Court that the data can only be obtained on request.

Article 49 - Verification of timeliness of declaration filing

1 Control for timely filing is made within fifteen working days from the date on which such declaration must be submitted• The issue of a tight deadline

2. State authorities, authorities of the Autonomous Republic of Crimea, local self-government, as well as legal entities of public law shall within seven working days inform the National Agency about the termination by declaration subjects who work for them of activities related to the public function or local government. • Issues that may arise throughout implementation: • The issue of a tight deadline• Ability to file such information online • Taking care of the accuracy of reporting

3. If in the result of control it is found that the subject of declaring did not submit a declaration, the National Agency shall notify in written such subject of declaring of that fact, and the subject shall submit declaration within ten days upon receipt of such notification in the manner specified in the Part One of Article 45 of this Law.

At the same time the National Agency shall notify in written about the fact of failure to file the declaration to the head of state authorities, authorities of the Autonomous Republic of Crimea, local self-government, their staff, legal entities of public law, where the relevant subject of declaring is employed and specially authorized subjects in the area of countering corruption.

Article 49. Verification of timeliness of declaration filing

Refusal to declare

Article 5 of the Albanian Law No. 9049 “On the Declaration of Assets” provides the case when a subject of this law with duty to declare assets refuses to make such a declaration.

The later article stipulates that: “the refusal to make a declaration entails the loss of function and punishment in conformity with the Criminal Code.” Moreover, within 30 days’ time, the Inspector General sends to the responsible institution a reasoned notification with a request to remove the person who refuses to declare from public office and the institution should take all necessary measures in order to comply with this requirement.

Article 50 - Complete examination of declarations

• Complete examination of declarations shall be carried out within ninety days from the date of filing of declarations and is meant to ascertain the reliability of the declared data, accuracy of evaluation of the declared assets, examination for the presence of the conflict of interests and signs of illicit enrichment.

• Declarations of officials that have responsible and highly responsible status, of declarants who hold positions associated with high levels of corruption risks, the list of which is approved by the National Agency, are subject to mandatory complete examination.

• Declarations filed by other declarants in case of discrepancies discovered in result of arithmetical and logical control shall also be a subject to complete examination

• Comments: • Will other institution be involved? • How will the NA conduct these examinations? • It seems like a big burden. How many employees will conduct the examinations and

how will they be trained?

Article 51 - Monitoring lifestyle of declarants

1. The National Agency selectively monitors lifestyles of declarants in order to establish correspondence between their level of living and property and income received by them and their family members according to the declaration of a person authorized to perform the functions of the state or local self-government, that is filed in accordance with this Law. 2. Lifestyle monitoring of the declaring subject is performed by the National Agency on the basis of information received from individuals and legal entities, as well as from the media and other open sources of information, which contains information about the discrepancy between the standard of living of the declaring subjects and their declared property and income.3. Procedure for monitoring lifestyles of the declarants is determined by the National Agency. Lifestyle monitoring shall be carried out in compliance with the legislation on personal data protection and should not involve undue abuse of the right to privacy and family life of a person. 4. Established inconsistence of the level of living and property and income declared by the declarant serves as a ground for complete examination of declaration. In case the National Agency finds out discrepancies in living standards it shall give opportunity to the declaring subject within ten working days to provide a written explanation about this fact. In the case lifestyle monitoring reveals characteristics of a corruption or related to corruption offense, the National Agency shall inform the specially authorized subjects in the area of countering corruption about those.

– Will the NA start monitoring on random basis without prior notification?– How will the notifications be received?– Will the whistle-blowers/reporters be protected? – Will this include hospitality? – Good example is to control the electricity bills and expenditures for studies of the family members

Lifestyle checks / comparative

Serbia:The Anti-Corruption Agency has no authority to make an immediate scrutiny of the movable and immovable assets of officials (“lifestyle checks”). According to the Law on the Anti-Corruption Agency, it conducts background checks on the basis of documents and data obtained from state agencies and banks. However, from this information the lifestyle of some officials can be indirectly identified, for example by identifying lavish payments through debit and credit card recordsChallengesOne of the challenges in practice is the processing of the Report of Property and Income. Namely, when filling out Reports, officials often omit certain data or fill out the Report incorrectly. Employees of the Agency must then take steps to correct the formal mistakes in the Report (by calling the official, checking which revenue is public, comparing the data from the Report with the data from the Registry of officials, etc.). Furthermore, the greatest challenge in practice is the detection of hidden assets or property and incomes, as well as assets transferred to third parties. Any additional tools for practitioners would need regulation in the Law on the Anti-Corruption Agency. Such tools would allow direct access to the documents of other state agencies and the possibility of directly checking the lifestyle of officials.

Lifestyle checks / comparative

KosovoOften, a simple visit to a real estate unit might prove that the data as registered with state agencies does not deliver a true picture. In Kosovo, for example, the oversight body can perform a “lifestyle check” on the public official, by visiting (from outside) a unit of real estate declared or not declared by the official. There are also more complex cases where illegal income is hidden behind seemingly correct data from state agencies. For example, several officials might report large casino winnings as income. Data from state agencies (for example the FIU) might confirm the winnings at first glance. However, a certain casino might appear to provide a “winning streak” just for public officials, thus raising the suspicion of whether the casino is in fact colluding with the officials to launder their illegal income as “winnings”.

Limited function of oversight

In Montenegro the function of the oversight body is limited to verifying the accuracy of the reported data by comparing it with data from third sources.

Similarly, in Croatia, the function of financial declarations is limited to the purely preventive sphere and thus the function of the oversight body is limited to verifications but does not allow for investigations. Wherever verification is limited in such a way, close cooperation with law enforcement authorities for following up on any suspicion will be necessary.

Verification of submission

There is only one way of verifying compliance with submission requirements: establishing a roster with the names of all public officials obliged to submit declarations, and comparing this roster with the actual list of submissions.

To establish the roster, data from civil service commissions or all human resource departments can be used.

As for household members, there is no verification mechanism using sourcesother than the declarations themselves in the ReSPA member states.However, there are two mechanisms for checks: first, information at least onthe number of household members should be available on the internet. Thiswill substantially increase the risk of detecting public officials who cheat. Inaddition, the option of verifying declarations with data from the civil registryon registered household members is worth exploring.

Requesting data from private entities

Data from private entities (natural persons or legal entities) is essential in many verification cases: Did the public official really receive money as a wedding gift from a private entity? Is the claimed lottery win real or just a cover for illegal income? Whenever such income is not subject to taxation, it is important to cross-check the data with information from private entities.

The oversight body in Montenegro has no legal basis for asking private entities for voluntary information. This could be contrasted with the legal framework in Albania, where it is possible to request financial declarations even from third parties if they are connected to the declaration of a public official, for example as creditors of a loan.

Conclusion

Income and asset declarations do have a real impact in the fight against corruption and can lead to meaningful investigations and sanctions.

Cases are sometimes well investigated, but seem not to get past the stage of prosecutors or judges despite showing sufficient merits. This challenge could be addressed, for instance, by training prosecutors and judges.

THANK YOU

taseva.slagjana@eurisk.com.mk

staseva@transparency.mk