On August 9, the Verkhovna Rada adopted Draft Law (DL) 9419-1 which aims to restore the regular financial reporting of political parties.  The adoption of DL 9419-1 in the first reading is a welcome and long overdue step towards the restoration of party reporting. The lack of reporting by political parties since early 2020 has dealt a major blow to the transparency of political finance and accountability of political parties. Read more background this in IFES’ previous communications here.

In its current form, DL 9419-1 addresses these issues by introducing the following provisions:

• Parliamentary political parties should submit their overdue financial reports to NACP not later than 90 days after DL 9419-1 enters into force, which should happen on the 60^th day after the DL is adopted in the final reading;
• All other parties will have 120 days after DL 9419-1 enters into force to submit their overdue reports to NACP;
• Parties will not be held liable if they are unable to disclose some information in their reports due to objective war-related or other force majeure circumstances, if these circumstances are properly documented;
• NACP should verify all received reports within 60 days after receiving them.

Overall, the adoption of DL 9419-1 in the first reading is a significant step towards ensuring transparency in political finance in Ukraine. Its provisions on restoring party reporting and the mandate of NACP to verify these reports are crucial for Ukraine’s continued democratic progress. The lowered eligibility threshold for receiving public funding is also conducive to increased political competition and a more equal playing field.

Meanwhile, DL 9419-1 could be further improved before the second reading, including by:

• Elaborating clearly that any funds received by parties as interest from their deposit accounts where public funds are accumulated should be also considered public funds and used only within the legal limitations set for public funds;
• Re-considering the right of parties not to include financial liabilities their reports if these liabilities appeared and were repaid during the same reporting period, as this provision might lead to manipulation with loans and increased dependence of parties on big private donors;
• Clarifying how a party should respond to a written request from NACP about the circumstances of a potential violation found in its report and what are the consequences of its non-response;
• Considering the prolongation of statute of limitations for administrative and criminal offences of political finance rules, to allow the investigation and prosecution of offences committed by political parties in the non-reporting period of 2020-2022.

IFES welcomes the decision of parliament to adopt DL 9419-1 in the first reading and urges the parliament to ensure its adoption in the final reading as soon as possible. Verkhovna Rada voted for reducing the term for submission of amendments to the draft law before the 2nd reading from 14 to 7 days. IFES will continue monitoring the finalization of DL 9491-1 and stands ready to help with improving its provisions.