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Explainer | Ukraine’s Anti-Oligarch Law

The Georgian Dream said it drafted the law aimed at reducing the undue influence on politics and clarified that it essentially copies the law adopted in Ukraine on September 23, 2021.

We have looked at Ukraine’s law and summarized its key provisions.

What is the aim of the Law?

The official title of the law is “On Preventing Threats to National Security Associated With Excessive Influence by Persons Who Wield Significant Economic and Political Weight in Public Life (Oligarchs)”.

Its purpose is defined as: “to overcome the conflict of interest caused by the merger of politicians, media, and big business, preventing the use of political power to increase one’s own capital.”

How is an “oligarch” defined?

“Oligarch” is someone who wields significant economic and political weight in public life, by simultaneously:

  1. being involved in political life;
  2. exerting significant influence on mass media;
  3. being the ultimate beneficial owner of a business entity that is a natural monopoly entity or occupies a monopoly (dominant) position in the market for at least one year.
  4. having personal and business assets exceeding 1 million subsistence minimums. If this provision was applied currently in Georgia, the required threshold would stand at 247 million GEL (about 88 million USD).

What does being “involved in political life” mean?

According to the law, this means (a) holding any senior position in executive or legislative government, as well as in the judiciary, and crucial government agencies, (b) being the close family of individuals in those positions, (c) sitting in the governing body of any political party, or (d) financing the political parties/campaigns or events with political demands.

This latter provision includes donations in person or through one’s legal entities in cash, in kind, or in services, providing premises or campaign material, technical facilities, funding advertising, or campaign materials, both directly to political actors or their families.

How is “significant influence on mass media” defined?

This means founding, owning, or controlling the mass-media outlets, and/or being the beneficiary of the founder/owner. Interestingly, the law also covers such persons that got rid of the media assets before the enactment of the law, but transferred them to an “affiliated person” or “a person without an impeccable business reputation.”

Who are people with “impeccable business reputation”?

  • Never been convicted;
  • Have not been on any sanctions list for at least the past three years;
  • Were not associated with terrorist activities and sanctioned for it for at least the past ten years;
  • Are not under court prohibition to occupy certain positions or engage in certain activities;
  • Have adequately discharged tax, fee, and other obligations equal to or exceeding 100 minimum salaries.
  • Have never acquired media at a lower than market price, and/or with intransparent funds;
  • Never committed substantial and/or systematic violations of the regulations on media, banking, taxes, finances, currency, securities, etc.

Who designates an “oligarch”?

The responsibility falls onto the National Security and Defense Council (NSDC), based on submission by:

  • Cabinet of Ministers
  • Member of the NSDC
  • National Bank of Ukraine
  • Security Service of Ukraine
  • Antimonopoly Committee of Ukraine.

President has to promulgate the NSDC decision which enters into force on the same day. The designated person may challenge the decision and submit objections and clarifying documents.

What happens after one is designated?

Firstly, information about that person, her/his assets, contracts and beneficiaries, donations to election funds or parties made within the past three years, is entered into a special Register.

Secondly, the person is prohibited (a) from making donations directly or indirectly to the political parties, or a candidate’s election funds, (b) from buying privatized properties; (c) from financing political campaigns, rallies, and the like.

Thirdly, any contacts – in person, by phone, or online – with the designated person, her/his beneficiary, or representative with public officials shall be officially declared, including the date and content of the communication.

How is one taken off the Register?

The designated person is taken off the Register by the decision of NSDC, once it is established that the person does not simultaneously meet at least two of the criteria for designation.

Does the law work in Ukraine?

The Law has entered into legal force, and President Volodimir Zelensky signed the regulation on the Registry of oligarchs in June 2022. Secretary of the NSDC Aleksey Danilov noted in July 2022, that 86 persons would fall under the definition of only the first criteria of the law, and their compliance with other criteria was a subject of further investigation. Secretary of the National Anticorruption Agency was saying in June 2022, that in the context of war, the registry is no longer a pressing matter.

Following the adoption of the law, several potential candidates to be designated, acted to dissociate from the relevant legal criteria: notably, including Vadim Novikov gave up the parliamentary seat; Rinat Akhmetov (owner of AzovStal) transferred his assets to the state; while Ihor Kolomoyskii sought to dissolve his media holdings, before being stripped of the Ukrainian citizenship for treason. Only Petro Poroshenko, the former president, who obviously satisfied several criteria, refused to comply. He was being investigated.

This post is also available in: ქართული (Georgian) Русский (Russian)

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