On July 12, the Verkhovna Rada’s deputy speaker Oleksandr Korniienko (Servant of the People), and further 35 MPs representing all parliamentary factions registered Draft Law No 9419-1, “On Amendments to Certain Legislative Acts of Ukraine on Minimizing Potential Oligarchic Influence on Political Parties, Improving Mechanisms of State Financing and State Control over Political Parties.” The bill will restore political parties’ regular financial reporting of income and expenditures and the National Agency on Corruption Prevention (NACP) oversight mandate. It is an alternative to Draft Law No 9419, developed by the National Agency on Corruption Prevention (NACP) and registered by the Cabinet of Ministers in June.

Between March 2020 and July 2023, political parties were exempted from their legal obligation to submit quarterly financial reports to the NACP due to COVID-19 quarantine restrictions. After the full-scale invasion, regular party reporting was postponed again, this time for the duration of martial law. The deferral of political parties’ financial reporting obligation and suspending the NACP’s powers to verify reports impedes political finance transparency. Its restoration is essential to anti-corruption efforts and can be seen through the lens of national security and combatting illicit foreign influence in future elections. Draft Law No. 9419-1 will remedy this and proposes reasonable financial reporting and oversight time frames than earlier draft laws.

The new bill envisages that political parties with parliamentary representation must submit overdue financial reports within 90 days after promulgating the law. Other political parties must do so within 120 days. The NACP will have 60 days to verify the submitted reports. Parties can submit overdue reports in quarterly or annual formats at their convenience. The bill exempts political parties from liability for filing incomplete reports if data has gone missing due to ongoing hostilities or other forces majeures.

The NACP will need to resume the operation of the Unified State Register of Reporting of Political Parties on Property, Income, Expenses, and Financial Obligations (POLITDATA) from the day the law enters into force. While all delayed reports must be submitted within the 90-to-120-day period after the law’s passing, the resumption of regular reporting will begin in January of the calendar year after it is passed. This implies that the law must be adopted this year for regular reporting to resume on January 1, 2024.

The Draft Law goes beyond the sole resumption of party reporting and clarifies that a transfer of resources between the party office and regional party branches is not considered a donation in favor of the party and does not need to be reported. It also suggests that public funding will be extended to political parties without representation in Parliament. Parties that obtain at least three percent of voter support in future elections will be entitled to public funding. This is a welcome development as public funding should also benefit emerging parties that enjoy significant voter support but enough to overcome the five percent threshold for Parliament.

The restoration of regular political party finance reporting and the mandate of the NACP to verify reports are crucial steps for advancing political finance reform in Ukraine. It is an essential anti-corruption measure to ensure transparency with money in politics and generate public trust in political parties and oversight institutions. It was one of the main conditions for visa liberalization between Ukraine and the European Union (EU) under the EU Association Agreement. Recently, G7 Ambassadors stressed that Ukraine should prioritize efforts to reinstate political party financing, among other areas.

IFES and civil society partners welcome the legislative initiative and believe its adoption will be an important step forward for Ukraine. It responds to our previous calls for restoring political party financial reporting and oversight (see here, here, and here).