Thousands of Ukrainians could be freed from prisons and the cash-starved budget could receive badly needed cash when a new law comes into force early next year.
The legislation softens the punishment for those who have committed economic crimes.
President Viktor Yanukovych on Dec. 13 signed the decriminalization law and narrowed the range of crimes for which a person can be detained and kept in prison, changing the punishment from imprisonment to a fine.
The move was long advocated for by both international institutions and Ukrainian lawyers and human rights activists to replace articles in a law that widely uses detention as the main punishment for most crimes, including economic.
According to World Prison Population, Ukraine has a large prison population of around 150,000 inmates. Around 40,000 of them are kept in pretrial jail cells, some up to 12 years as there is no limit.
The decriminalization drive got international attention due to extensive speculation that article 365, under which opposition leader Yulia Tymoshenko was sentenced to seven years in prison, would be repealed.
Her alleged offense was abuse of power as prime minister in signing gas deals with Russia in 2009. But the pro-presidential majority in parliament did not support decriminalization of this article.
According to the new law, suspects with no criminal past cannot be jailed before trial if accused of a crime that calls for five or less years imprisonment.
Most economic crimes will now be punished by heftier fines – up to Hr 850,000 (about $100,000) – compared to the previous maximum fine of Hr 17,000. Fines will have to be paid over a period of up to six months. The person can be imprisoned only if he or she is unable to pay the fine on time.
Committing contraband trade will not be a criminal offense under the new law and will be punishable by fines of 100-200 percent of the value of confiscated goods.
Decriminalization does not apply to the smuggling of weapons, toxic materials or trafficking of people and other serious crimes.
Implementation of contraband fines will next year alone bring about Hr 600 million ($75 million) to the state budget, according to S.T. Partners, a Kyiv-based law firm.
No money went to the state budget in 2011 as a result of criminal cases related to contraband trade, totaling Hr 298 million.
Falsely claiming bankruptcy, fictitious entrepreneurship and opening bank accounts abroad without permission from the National Bank of Ukraine no longer qualify for a jail term.
Decriminalization also affected corruption in private sector and tax evasion which will be punished by fines instead of imprisonment.
“The person found guilty of tax evasion will have to reimburse the damage it caused to the state as well as pay a fine of up to Hr 850,000. Same goes for the private sector corruption when the person will have to reimburse the damage plus pay a fine,” says Olexandr Panchuk, expert from the Centre for Political and Legal Reforms, a Kyiv-based think tank.
The law also softens the punishment for those committing unlawful privatization, such as Ukraine’s oligarchs. Experts say they in prior years built up their billion-dollar fortunes through non-competitive and rigged privatization sales and heavily influence lawmakers that supported the decriminalization legislation.
Illegal actions with privatization documents, violation of the rules of privatization of state and municipal property will now be punishable with reimbursement to the state and a fine.
“While the law softens punishment for crimes, often committed by oligarchs, like tax evasion and unlawful privatization, it would be fair to say that even previous punishments for these crimes were never implemented. Not a single person was ever prosecuted under that article of unlawful privatization anyway,” says Panchuk.
Some experts welcome the move as good both financially and morally. “People who committed economic crimes are not dangerous for society and do not need to be isolated. Also it is important to mention that while detained, the person is not reimbursing the economic damage caused, but, quite the opposite, requires money from the state for the upkeep in prison,” said Svitlana Trofymchuk, a lawyer at S.T. Partners.
The law is expected to come into force in January, but it will take around one month for the government to adjust other legislation.
Andriy Portnov, head of the legislative department in the Presidential Administration, said “thousands will be freed from prisons if they can reimburse the damage their crime caused.”
Ihor Andrushko, a spokesman for the State Penitentiary Service, said: “If the person can compensate only partially, the prison term will be cut shorter.” Andrushko said the service did not estimate how many people could fall under the new law and no statistics are kept of how many prisoners are serving a term for economic crimes.
Experts say the new law will also decrease corruption and eliminate many loopholes for selective justice, which lawyers and human rights activists say are often the case.
Zoryana Toporetska from Jurimex law firm said the new law will deprive investigative officers of the right to decide on the detention of a suspect and establish the amount of bail.
Human rights activists say common loopholes in legislation are now often used to detain suspects before trial in order to extort money or shut down their businesses.
“Because the business climate in Ukraine is harsh and corruption flourishes, most businesses cheat with their income and documents.
So theoretically almost every businessman can be detained pretrial, but the legislation is of course used selectively to deal with those who do not play by the corrupt rules,” said Yevhen Zakharov, head of the Kharkiv Human Rights Group in Ukraine.
Despite positive signs, experts say a lot more needs to be done to bring Ukrainian criminal law in order with that of developed nations.
“For example, Ukrainian law does not distinguish felonies from criminal misdemeanors.
In developed countries, people who committed misdemeanors, like small scale robberies and thefts, are obliged to reimburse the damage they caused, while Ukrainian law places them in prison,” said Andriy Didenko, coordinator of the Kharkiv Human Rights Group.
Around 30 percent of Ukrainian prison population consists of those convicted for misdemeanors.
Kyiv Post staff writer Svitlana Tuchynska can be reached at [email protected].
