The Cabinet of Ministers insists on creating a Financial Investigation Service

Photo: Ukrainian photo

The government has decided on the final version of the bill, which will regulate the activities of the Financial Investigation Service (FIS). It assumes that the service will be headed by current First Deputy Head of the State Fiscal Service (SFS) Volodymyr Khomenko. In fact, the latter addressed the Prime Minister asking him to instruct the Ministry of Justice to prepare appropriate regulations for review of the bill at a Cabinet meeting. Capital has a copy of the letter at its disposal.

Based on the results of discussion

The bill on the Financial Investigation Service was drafted in May, yet was strongly criticized by the business community. On May 23, at a meeting of the government Committee for Social and Economic Development and International Cooperation, a decision was made to discuss the draft law with representatives of business circles.

Since then, according to the letter, 12 meetings were held with the business associations, representatives of the Public Council of the SFS, international experts and experts from OLAF (the European Anti-Fraud Office).

As a result, the draft law on the FIS drafted by the government was amended. Now there is a new provision in the law pursuant to which the parliament will have the power to recommend to the Cabinet that it dismisses the head of the service following examination of the annual report on the activities of the FIS in the parliament.

The revised version of the bill also proposes forming a unit in the structure of the FIS, whose officers, including police officers, will be able to use firearms, martial arts techniques and special tools and equipment. The latter, according to the Law On Police, includes batons, water cannons, armored vehicles, tear gas, light and sound devices for distraction, sniffer dogs and other special means and resources. It was initially supposed to confer such powers to all FIS employees. The government also agreed to supplement the bill with a clause on creation of a public council in the structure of the Financial Investigation Service, whose main task will lie in public control over activities of the new body. Still, the list of the main powers of the FIS – combating economic crimes, financial control, certain duties of tax and customs control, operational and investigative activities and elimination of money laundering schemes remained unchanged.

Lack of mutual understanding

Executive Director of the European Business Association Anna Derevyanko says the management of the SFS discussed the creation of the FIS with business circles as an idea with the hope that businesses would benefit from a downsizing of the number of regulatory bodies and that their duties and functions would be merged into a single structure. “We support this idea. However, nobody discussed certain provisions of the bill with us and we did not give any consent to creation of the service in such a format,” said Derevyanko.

Head of the Secretariat of the Council of Entrepreneurs for the Cabinet of Ministers Andriy Zablovskiy says during the meetings it was clear that the problem of credibility was never solved. “Business has no trust even in those constructive proposals of the government, which were suggested in the process of debates. Businesses are still convinced that the government plans to revive the notion of financial police with all its consequences,” said the expert.

“After every meeting the government for some reason commented that business supports the idea of creation of the FIS, but this is simply not true!” said Head of the Commission for Economic Affairs of the Ukrainian Union of Industrialists and Entrepreneurs Yulia Drohovoz. She says over the last two months the UUIE, as well as other NGOs, have been trying to explain to the government that now was not the time to create such a service as it will not resolve the problems of business entities regarding relations between taxpayers and the tax police. “After revision of the bill there have been no essential changes and we are concerned that officials do not hear us,” said Drohovoz, adding that the UUIE and several other organizations planned to appeal to the Ministry of Justice and the Cabinet of Ministers regarding this issue.

In his turn, Vice President for Strategic Development at the American Chamber of Commerce in Ukraine Taras Kachka said the SFS did not form a working group to finalize the document, while communication with the service was as follows: first they received the bill and then they expressed their wishes verbally, which were later finalized in writing. “At that time our position was that the document needed to be improved in all aspects. The current version of the bill requires a detailed examination,” he concluded.