The anticorruption experts of the Reanimation Package of Reforms conducted legal analysis of the drawbacks and possible effects of the draft law No. 4811 on seizure and confiscation of assets of corrupt officials and concluded that the version of the draft law approved by the defense committee poses a serious threat to the fundamental right for property for all the citizens of Ukraine and should be rejected.

Promoted as the only way to return the assets of Yanukovych’s allies to the budget of Ukraine and finance the defense order, the draft law No. 4811 – a clone of the draft law #4057 with an identical subject-matter –  not only fails to solve the declared issue, but makes it harder to recover the property seized in the course of the criminal proceedings against the ex- officials under the EU sanctions.

Once adopted, the draft law will give unlimited possibilities to the prosecutors and investigators to confiscate the property of any citizen of Ukraine without a valid reason.

Bitter criticism voiced by the international partners

• The draft law No. 4811 duplicates provisions of the draft law No. 4057 in other wording. The latter was heavily criticized by the Council of Europe as such that does not meet the European standards of fair trial and protection of property rights.
  • The draft law No. 4811 does not take into account key comments of the international experts and the public on the previous version of the draft law as to confiscation of assets without conviction.
  • Moreover, the provisions of the draft law No. 4057 have been criticized by the EU Delegation in Ukraine. We would like to stress that after the international experts and NGOs criticized the draft law No. 4057, it was withdrawn from consideration in April 2016 by the parliamentary committee on legislative support of law enforcement.

Neglect of the Parliamentary Rules of Procedure

• The draft law No. 4811 has been considered and approved by the Committee on National Security and Defense headed by Serhiy Pashynskyi, co-author of the controversial clone draft law No. 4057. This is a blatant manipulation, because by its contents the draft law should have been considered by the specialized Law Enforcement Committee which has criticized and rejected the idea of ​Pashynskyi and other co-authors.
• Unsubstantiated change of the specialized committee is another cynical attempt of MP Serhiy Pashynskyi to pull along his useless and dangerous from a legal point of view idea of “easy” recovery of assets of corrupt officials under the pretense of defense needs.
• The RPR stresses that effective legislation allows prosecutors to confiscate the property of Yanukovych and his allies without any additional legislative amendments, even if this property is registered by name of a third party.  

The draft law shifts the burden of proof onto the owner of the property, even though the developed countries do this only in exceptional cases.

• Similarly to the draft law No. 4057, the draft law No. 4811 introduces a procedure of recovering money, securities, precious metals and gem stones to the state budget without a verdict of guiltiness. Both the assets of persons suspected of committing corruption crimes and put on the wanted list, and those of any third party who acquired them from the suspects before or during the criminal proceedings can be seized. The assets shall be seized provided that it has been proven that the cost of the assets exceeds the official income of their owners or there is a lack of evidence of the legality of asset acquisition or it is impossible to identify the property owner.
• The prosecutor is not obliged to prove the connection of the property with criminal activity, while the burden of proving the legality of property acquisition is fully placed on the suspect and/or third parties.

Legalization of the plunder by the corrupt officials through court

• Despite its declared goal, the draft law No. 4811 will not help to recover the assets of former officials employed during the presidency of Yanukovych. On the contrary, it gives grounds for legalizing them through the European Court of Human Rights (ECHR). In this case, Ukraine will be obliged to return the confiscated assets along with huge compensations.
• The ECHR will treat the recovery of the assets through criminal procedure to the state budget as a punishment, the application of which without conviction and retrospectively contradicts the European standards of justice.
• Moreover, the draft law No. 4811, similarly to its clone No. 4057, will not help to recover the foreign assets seized. Rulings of Ukrainian courts on the confiscation of Yanukovych’s assets under such a procedure will not be recognized by any foreign court. For example, the draft law will not help to confiscate about 200 million dollars arrested in Switzerland and Monaco on the accounts of Yuriy Ivaniushchenko.

An instrument with an immediate effect for the newly elected prosecutor to avoid criminal responsibility for corruption crimes

• The mechanism enshrined in the draft law No. 4811 will allow the prosecutor’s office headed by Yuriy Lutsenko to show immediate yet temporary results of seizing Ukrainians assets of Yanukovych’s allies, as well as to justify the failure to institute criminal proceedings and get convictions and seizures of property through in absentia proceedings.
• At the same time, the need for confiscation without conviction disappeared after Yuriy Lutsenko was appointed the Prosecutor General, as the Code of Criminal Procedure of Ukraine was amended to allow to hold trial in absentia if the defendant was placed on the national wanted list, not only the international one. This allows to convict Yanukovych and his allies in absentia and confiscate their properties with the help of the instruments already enshrined in the effective Code of Criminal Procedure.
• Instead of conducting proper investigation and proving the guilt of the corrupt officials, the prosecution will merely seize the allegedly corrupt property without conviction. The officials will lose the property (or its small part) the legality of which could not be proved, avoiding criminal responsibility for illicit enrichment and other corruption-related crimes.
• If the prosecution uses this simplified mechanism of confiscation which does not require any proofs, the prosecutors will stop using legal and proven mechanisms of confiscation and special confiscation or instituting criminal proceedings in the cases of illicit enrichment and money laundering.

The draft law makes it possible to seize the assets of third parties, bona fide purchasers, and fails to create any safeguards for the rights of such persons.

• Any citizen of Ukraine or legal entity may become a victim of this draft law. It will be possible to confiscate anyone’s property, depriving this person or entity of the fundamental constitutional  guarantees for protection of property rights. The assets of anyone who acquired some assets from the suspect as a result of any transactions, including purchase and sales agreements, might be seized.
• The court is not obliged to establish that the assets of third parties acquired from the suspect are actually controlled or used by the suspect – it does not conform to the Italian experience in combating the mafia mentioned by the authors of the draft law and approved by the ECHR.
• At the same time, it is on the third person that the draft law imposes the burden of proving the legality of the property acquisition. In particular, the cost of the third party’s property shall not exceed its declared income. The persons not obliged to declare their income will not be able to defend their property rights. Those who did not keep the copies of agreements whereby their received the funds will not be able to defend them either. The third parties are not provided with adequate safeguards to protect their property rights: in particular, they will not be informed about the trial in advance and will not be able to prepare for the defense during the trial. Both citizens and businesses will actually learn about the confiscation of their assets post-factum after the court judgment is passed.

The draft law contradicts the commitments of Ukraine under the Action Plan on visa liberalization with the EU.

• Under this Action Plan, Ukraine has amended the legislation on confiscation and special confiscation of the illegally acquired property in line with the FATF standards and EU Directives.
• The draft law No. 4811 affects the quality of this legislation, which might become the grounds for reconsidering the decision on the implementation of the Action Plan on visa liberalization by Ukraine.

Given the above-mentioned risks, the RPR calls on MPs to reject the draft law No. 4811.