The law on seizure of unjustified assets within civil proceedings will help return the assets stolen by Yanukovych to state ownership – authors of the bill


International partners praise the draft that is meant to act both as a  preventive tool and to punish the wrongdoings of former officials, although it doesn’t apply to the officials currently serving the state.

Kyiv, September 15, 2016. The Ministry of Justice of Ukraine in cooperation with a group of MPs and experts of the EU project “Support to Justice Sector Reforms” completed work on a new draft law on recovery of unjustified assets to the state revenue under civil proceedings. “We worked out a new version, which removed all speculation about the introduction of the new institute of special confiscation in civil proceedings. This draft law meets all the EU standards and requirements. The draft law is to become law during the next session week,” stated Pavlo Petrenko, Minister of Justice of Ukraine, at a press briefing held at Ukraine Crisis Media Center. According to him, the law will create a real opportunity for returning the assets stolen by the Yanukovych regime to state ownership from the arrested accounts both in Ukrainian banks and in other countries.

Pecularities of the new preventive measure

The guidelines of the StAR initiative of the World Bank for developing legislation on the recovery of unjustified assets outside of criminal proceedings served as a basis for the draft law. “This tool is a preventive measure aimed not to punish the wrongdoing but to reduce a desire to do it – to eliminate the immediate motive, the cause of the wrongdoing,” said Dovydas Vitkauskas, Coordinator of the EU project “Support to Justice Sector Reforms in Ukraine”. The draft law provides the possibility for the state to pursue legal action against a person, e.g. an offshore company, through the Prosecutor General’s Office with a request to explain the origin of the assets. “If they took a loan at a western bank against real assets – the court will make a decision in their favor, but if we do not get a reasonable explanation – the court will remove the funds to the state,” noted Anton Gerashchenko, MP, Narodnyi Front faction. He added that a similar mechanism has been operating in almost 30 countries. It is used not only to fight corruption, but also drug trafficking and money laundering.

“This tool differs fundamentally from all previous tools. It entails less risk to the state. The entire process is included in civil action proceedings and not in criminal proceedings. It is based on the permissive rule, – explained Anton Yanchuk, Deputy Minister of Justice of Ukraine, – Instead of prosecutor – charger- defendant relationship, plaintiff – respondent relationship is used that simplifies considerably the process of proving. “An action may be started by the Prosecutor General, the Acting Prosecutor General, and by prosecutors of Specialized Anti-Corruption Prosecutor’s Office. This tool is applied to a limited range of assets – money and securities which can be easily converted and transferred abroad. The draft law specifies what explanations for assets the defendant has to give. “This is one of the most advanced and effective ways to provide greater clarity and stability of this process,” noted Dovydas Vitkauskas. It also provides a right of appeal.

Pros and cons of the new legislation

Pavlo Petrenko noted that yesterday the draft law was approved in the Cabinet. It also received favourable reviews from the Prosecutor General’s Office and the EU project experts. “We were against the previous initiatives because they did not keep a fair balance between the interest to prevent an offense, on the one hand, and the interest to protect property rights and the right to a fair trial – on the other. In our opinion, the current draft law provides a much better balance of interests,” commented Dovydas Vitkauskas.

Pavlo Petrenko reminded that during Yanukovych’s time, according to various estimates, from USD 20 to 30 billion dollars were stolen from the Ukrainian budget. “Assets, securities and funds of nearly USD 1.5 billion have been frozen on the accounts of state banks of Ukraine over more than two years. These assets are owned by some offshore companies that in times of Yanukovych strongly expressed their desire to invest in government bonds. According to law enforcement agencies, these assets are part of those huge assets stolen from the state budget,” noted Anton Geraschenko. It is almost impossible to prove under litigation that a director of some Panamanian company is a criminal, but the proposed mechanism of reverse presumption can give real results.

A significant drawback of the draft law, according to activist Karl Volokh, is that the statutory principle of reverse presumption can be applied only to representatives of the Yanukovych regime. “I wish that this tool could be applied to today’s corrupt officials,” he noted.