OPINION: Financial Reporting for Political Parties: It’s Time to Restore the Impossible

Political parties in Ukraine have a right not to submit financial reports. This measure was taken back in 2020 for the first time against the backdrop of the Covid-19 pandemic. It was decided at the state level that political parties were not obliged to report during the entire quarantine (which is being constantly extended – this time until April 30, 2023).

But the coronavirus was not the only big problem Ukraine had to face. The Russian Federation’s full-scale invasion has caused some legislative changes. On March 7, the law “on protection of the interests of subjects of submission of reports and other documents during the period of martial law or state of war” came into force. According to law, political parties must submit their financial reports within three months after the end or lifting of martial law, which is currently in force until May 20, 2023.

The possibility of not reporting on the parties’ revenues and expenses seemed logical during the first months after Feb. 24, 2022. After all, at that time, the safety of the politicians – who could have been in the enemy’s crosshairs – and, in general, the financial revenues and expenses of Ukrainian political parties were considered a priority.

Most of the political groups represented in the parliament have been using this opportunity since 2020 and did not submit their reports because of the pandemic and the war.

How much money did the parties receive during this “grace period”?

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At the same time, the parties represented in the parliament continued to receive significant funding. During the period 2020-22, five parliamentary parties received from the state budget around Hr.1.5 billion ($41 million) in the financing of statutory activities and another almost Hr.500 million ($13 million) in compensation for election campaign expenses.

In 2020, all the parties in parliament submitted their financial reports for the first fiscal quarter. Only the Servant of the People and Holos parties submitted theirs for the second quarter, and only Servant of the People reported for the third and fourth quarters. In 2021-2022, the National Agency on Corruption Prevention (NACP) didn’t receive any reports from the political parties.

It is important to understand that society and the designated authorities simply can’t see how much money was received by the parties and who was the intended recipient. Besides, the public would like to know what these funds are spent on. As of now, there is simply no way to track it.

Of particular concern is the financing of the banned parties. After the full-scale invasion, several political parties were sanctioned for conniving with the enemy (OPZZh, The Party of Shariy, The Volodymyr Saldo Bloc, Derzhava, The Opposition Bloc, The Socialist Party of Ukraine, etc.). It would be fascinating to find out who was financing their activities during the last years before the full-scale war. However, we are not going to see their reports for the past three years. And we will never find out who their donors were and who helped to spread Russian propaganda in Ukraine.

Attempts to restore the duty of financial reporting

Despite everything, there have been attempts to oblige the political parties to start reporting once again. In 2021 the MPs registered legislative drafts with the idea of bringing back quarterly reporting.

However, one bill (#4611) was never introduced. Another bill (#5253-1) was quite contradictory: on the one hand, it provided for the restoration of financial reporting, and on the other, the norm that allowed parties to not submit reports was not excluded from the current version of the law “on political parties in Ukraine.” Later, President Volodymyr Zelensky vetoed the bill because it needed to be amended. As a result, it has never been reviewed due to the beginning of the full-scale war.

There was also an initiative that I co-authored and registered in January 2022 (bill #6519). My colleagues and I raised the issue of financial reporting once again, but the bill was included in the agenda on the eve of Feb. 24, 2022. As a result, we did not have time to consider it.

Ultimately, transparency in financial reporting for political parties has not yet been restored. But taking into account the requirements of the EU, I regularly raise this issue in the public sphere. After all, the eradication of corruption and the proper functioning of anti-corruption bodies are virtually impossible without having full transparency when it comes to tracking the revenues and expenses of political parties.

Furthermore, the resumption of financial reporting will make it impossible for the Russian Federation to finance Ukrainian political parties, as any of its attempts to influence Ukrainian politics will be scrutinized by the NACP and by Ukrainian society.

 The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.