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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.

 

E-declaration: Start or Finish?

26.10.2016

Galyna Melnyk, lawyer at Ilyashev & Partners Law Firm

Source: Dzerkalo Tyzhnia

Controversies regarding e-declaration have settled down, the system allegedly began to operate, there even appeared the first declarations of officials filled in according to the new rules. However, it is early to say that everything goes smoothly. Anyway lances broke at the very beginning not in vain.

The new declarations are filled in as a questionnaire on the website of the National Agency for the Prevention of Corruption (NAPC) and signed by electronic signature. An important innovation is that now dates of acquisition of the property and its value are specified in the declaration, and the range of objects of declaration and information about them have been extended significantly.

In particular, not only completed objects, but also objects under construction are referred to the new objects of declaration. The legal entities in which the declarant or his family members are the ultimate beneficiaries are also specified. And yet – intangible assets, including intellectual property items (trademarks, patents, copyright, etc.). If in the previous version only repayment of loans was declared, now it is necessary to specify all granted and received loans exceeding UAH 68.9 thousand and specify how such obligations are secured.

If the official is included in the executive, auditing or supervisory public or professional associations, charitable organizations, it is also reflected in his declaration.

In addition to specifying the objects of declaration, the system is good in the sense that all information is accumulated on one resource (website of the NAPC), publicly available, it is possible to make keyword search, monitoring of official’s lifestyle and its comparison with the declared items has been simplified. In addition, the primary automatic control is made at the stage of submission of declaration – in some cases if there is defect in filling any line, the declaration can not be submitted at all.

“The fundamental difference between the new and the old systems is a dynamic control of changes of property status and the possibility of monitoring of the lifestyle and the declared data, explains Galyna Melnyk, lawyer at Ilyashev & Partners Law Firm. – Certainly, many officials would want to hide their property, grant or transfer it to distant relatives, aunts, and grandmothers. The old form of declaration did not envisage declaration of property transfer transactions, while the new one requires specifying not only the objects owned by the declarant directly, but also those he has the right to dispose of indirectly as such objects were transferred to the distant relatives. Failure to submit such data or transfer of the property owned to the third parties may be the reason for conducting the investigation by the anti-corruption agencies. Obviously, the effective use of such possibilities will depend on the activity of corruption fighters”.

However, the benefits of the new system end at that. Some new requirements are difficult to implement in practice (e.g. the requirement to declare valuable movable property, including the property acquired before launch of the electronic declaration system). Some requirements are unreasonably burdensome. For example, the requirement to submit within a year the notification on receipt of income/purchase of property in excess of 50 minimum wages (UAH 68.9 thousand). Such transactions will be recorded in the declaration for the current year in any case, and submission of separate notifications increases the administrative burden for their handling that is not always justified.

Thereto it is possible to file the adjusted return only within seven days from the date of filing the initial version, and further submission of adjustments is only possible at request of the NAPC. You can not submit adjustment to the notification of significant change of property status during the reporting year.

In some cases, the scope of the information declared – according to the form of the declaration posted on the NAPC’s website and the NAPC’s explanations on how to fill in the declaration – is inconsistent with the Law “On prevention of corruption” (hereinafter, the Law).

The information specified in e-declaration according to the form approved by the NAPC, but not envisaged by the Law:

– date of birth of the declarant and his family members;

– cash assets, income, financial obligations of the declarant’s family members;

– change of full name in the reporting period;

– area and registration number of the facility under construction;

– cost of corporate rights;

– ID number;

– e-mail, telephone, fax, postal address of the legal entity, which the beneficiary is the declarant/his family members;

– location of the financial institution, which holds cash assets;

– country in which the declarant incurred costs.

The information required by the Law, but absent in e-declaration:

– location of the facility under construction on the land plot of the declarant/his family members;

– par value of corporate rights (share in the authorized capital in cash);

– value of property transferred as collateral for financial obligations of the declarant.

“These legal inconsistencies are likely to be used by government officials in legal disputes and give the declarants the chance to avoid liability for submitting false information because the new declaration has legal contradictions”, says Galyna Melnyk.

However, methodological omissions in the structure of the declaration at the level of the Law “On prevention of corruption” and at the level of clarifications of the NAPC to the procedure for filling in the declaration are obvious. For example, some indices appear simultaneously in several sections of the declaration, and due to the lack of detailed individualization of objects it can result in confusion and incorrect conclusions that there are two different objects of declaration, while in fact it is the same object.

One of the key points, in the opinion of the lawyer, is the question as at what date property, assets and other items are declared. It is not specified clearly whether you should declare the indices relevant at the end of the reporting period, or all objects of declaration that emerged during the reporting period regardless of their presence at the end of the reporting period. The law does not envisage it that gives the NAPC a wide field for maneuver, although such an important aspect should be stipulated in the law.

Remarkably that various acts of the NAPC interpret this issue in different ways. For example, the NAPC decision of June 10, 2016, No. 3 (approves the form of e-declaration) states that the information is specified in the declaration taking into account its relevance as at the last date of the reporting period. However, the clarifications to the procedure for filling in e-declaration (NAPC decision of August 11, 2016) have the requirement to specify in the declaration the facts that occurred during the reporting period, but are already outdated on its last day (e.g. part-time work).

Lawyers agree that, for the system to really work, it is necessary to make a huge amount of adjustments and changes. Taking into account the large number of government officials in the country, 47 thousand of declarants must submit declarations even at the first stage. If not amended, if the process is not made simple and transparent, it will be impossible to effectively monitor compliance of the officials’ lifestyle and their income, because it will require considerable time and human resources. However, the NAPC’s staff and limitation periods of liability for submitting false data are limited.

 

 
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