The EBA position on the law on the Bureau of Economic Security

30/ 01/ 2021

On January 28, the Verkhovna Rada voted for the establishment of the Bureau of Economic Security in the 2nd reading. So far, the business community was not allowed to see the final document. However, the previous version, analyzed by EBA experts between 1 and 2 readings, is strongly not supported by the business. Although we welcome attempts to reduce the number of authorities that exert pressure on the business - we still do not share the unbridled optimism shown, for example, on social networks. Moreover, we have well-founded fears that the creation of an additional body of pressure on business or a body that, unfortunately, will not have the functionality to analyze and prevent economic crimes to replace the Tax Police as it was intended. Currently, the business has several comments and warnings on the issue: · As mentioned earlier, the final version of the document is not yet available. Therefore, it is necessary to wait for the final publication and hope that the amendments proposed by the business between 1 and 2 readings were made there. · As the law on BES is the framework one, it may be too early to assess its effect (both positive and negative) before the adoption of closely related legislation, such as amendments to the Criminal Code and the Code of Criminal Procedure. · Also, there is a draft law №4090 which returns the tax police with the previous functions and methods of work. Therefore, we may assume that the BES will be established as an additional body of pressure on the business. · Besides, the European Business Association prepared some comments on the draft law for the 2nd reading. The key moments are discussed below. Although the document proposes to establish the Bureau of Economic Security as a body aiming at detecting and investigating criminal offenses of an economic nature. According to the EBA experts, this goal has nothing to do with the provisions of this document. Instead, the proposed format of the body may increase business and investor distrust of law enforcement. First of all, it is not clearly defined which categories of economic crimes the BES should investigate. Regarding this issue, quite broad formulations are used which can be interpreted differently. Secondly, the maximum number of BES employees, which is currently estimated at 4,000 people, is quite high and unreasonable. Third, there is a risk that the BES will be perceived as a renewed tax police, rather than a qualitatively new analytical body. Fourth, the document contains inconsistent provisions regarding the procedure for appointing the head of the BES, which creates the risk of choosing an insufficiently professional or indecent candidate for this position, and so on. The business believes that the work of the new body should be based on such principles as political and operational independence, focus on analytical functions, demilitarization, transparent selection of management and staff, public and supervisory oversight, increased liability for violations. Thus, the adopted law is unlikely to initiate the creation of such a body. However, the community will look forward to the publication of the text of the document to understand what exactly was adopted and then give a real and balanced assessment. At the same time, the European Business Association will continue to stand guard over the interests of legitimate business. We hope the country will be able to avoid creating another problem for business! Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

Although we welcome attempts to reduce the number of authorities that exert pressure on the business – we still do not share the unbridled optimism shown, for example, on social networks.

Moreover, we have well-founded fears that the creation of an additional body of pressure on business or a body that, unfortunately, will not have the functionality to analyze and prevent economic crimes to replace the Tax Police as it was intended. Currently, the business has several comments and warnings on the issue:

· As mentioned earlier, the final version of the document is not yet available. Therefore, it is necessary to wait for the final publication and hope that the amendments proposed by the business between 1 and 2 readings were made there.

· As the law on BES is the framework one, it may be too early to assess its effect (both positive and negative) before the adoption of closely related legislation, such as amendments to the Criminal Code and the Code of Criminal Procedure.

· Also, there is a draft law №4090 which returns the tax police with the previous functions and methods of work. Therefore, we may assume that the BES will be established as an additional body of pressure on the business.

· Besides, the European Business Association prepared some comments on the draft law for the 2nd reading. The key moments are discussed below.

Although the document proposes to establish the Bureau of Economic Security as a body aiming at detecting and investigating criminal offenses of an economic nature. According to the EBA experts, this goal has nothing to do with the provisions of this document. Instead, the proposed format of the body may increase business and investor distrust of law enforcement. First of all, it is not clearly defined which categories of economic crimes the BES should investigate. Regarding this issue, quite broad formulations are used which can be interpreted differently. Secondly, the maximum number of BES employees, which is currently estimated at 4,000 people, is quite high and unreasonable. Third, there is a risk that the BES will be perceived as a renewed tax police, rather than a qualitatively new analytical body. Fourth, the document contains inconsistent provisions regarding the procedure for appointing the head of the BES, which creates the risk of choosing an insufficiently professional or indecent candidate for this position, and so on.

The business believes that the work of the new body should be based on such principles as political and operational independence, focus on analytical functions, demilitarization, transparent selection of management and staff, public and supervisory oversight, increased liability for violations. Thus, the adopted law is unlikely to initiate the creation of such a body.

However, the community will look forward to the publication of the text of the document to understand what exactly was adopted and then give a real and balanced assessment. At the same time, the European Business Association will continue to stand guard over the interests of legitimate business. We hope the country will be able to avoid creating another problem for business!

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.