At the end of 2019, the Specialized Anti-Corruption Prosecutor's Office (hereinafter referred to as the "SAP") received the right to apply to the High Anti-Corruption Court with lawsuits to declare assets unfounded. In 2023, the number of such lawsuits increased significantly, including the number of requests for client protection to our bar association.
📌 For example, the subject of the declaration has an annual income of UAH 500,000 and he purchased and declared the purchase of real estate for UAH 5 million. For SAP, this may mean that the asset clearly does not correspond to the amount of income, and therefore the difference between the income and the value of the real estate must be charged to the state income. Therefore, the category of cases is extremely serious, as it affects the ownership of the person and the asset in case of filing a lawsuit under the risk of confiscation.
How to defend and prove that the assets were acquired legally? Let's figure it out in a question-and-answer format.
To whom can the SAP contact with a claim to declare assets unsubstantiated?
With a claim to declare assets unsubstantiated, the SAP may apply to a person authorized to perform the functions of the state or local self-government. This is a wide range of subjects, including both top officials and civil servants and officials of local self-government bodies; military officials; judges and law enforcement officers, etc. The complete list of such persons contains Clause 1 Part 1 Article 3 of the Law of Ukraine "On Prevention of Corruption".
👉 Такі особи будуть відповідачами у справі за позовом САП до Вищого антикорупційного суду. Це не кримінальна справа, а цивільна і розглядається за правилами розгляду цивільних справ.
What are assets?
Assets should be understood as cash (including cash, funds held in bank accounts or in custody in banks or other financial institutions), other property, property rights, intangible assets, including cryptocurrencies, the amount of reduction of financial obligations, as well as works or services provided to a person authorized to perform the functions of the state or local self-government.
Under what conditions can assets be recognized as unsubstantiated and charged to state income?
Assets, if the difference between their value and the legal income of a person authorized to perform the functions of the state or local self-government, 500 times or more exceeds the subsistence minimum for able-bodied persons established by law on the date of entry into force of the said Law, but does not exceed the limit established by Article 368-5 of the Criminal Code of Ukraine (Illegal enrichment).
500 times or more - it's more UAH 1,003,500
The limit established by Article 368-5 of the Criminal Code of Ukraine – UAH 7,455,500.
👉 Example. The subject of the declaration purchased real estate for UAH 4 million and declared an income of UAH 500,000 for the last year. This means that the subject of the declaration does not have to explain the origin of funds up to the threshold of 500 minimum salaries (up to UAH 1,003,500), but must prove to the court the legality of income, with the exception of UAH 1,503,500, i.e. UAH 2,996,500.
In the case of failure to prove the legality of the origin of the income for the acquisition of the asset, UAH 2,996,500 may be recognized by the court as unfounded and charged to state income, or the corresponding share in real estate may be charged, if possible.
As to defend oneself in cases of recognition of assets as unfounded?
The main defense strategy in such cases is to determine the amount, the legitimacy of which must be proven and to provide evidence confirming the legitimacy of obtaining funds for the acquisition of assets.
This can be proven by various evidence and facts - receipt of funds for the sale of property in past reporting periods, loans from other individuals or legal entities, receipt of inheritance, receipt of income from business activities of close persons, etc.
When can I find out about a lawsuit or preparing to file a lawsuit?
If you receive a request from the National Agency for the Prevention of Corruption (further - NAZK) on providing explanations regarding the legality of the origin of the funds for the purchase of the asset, which means that the verification of this body is ongoing.
If you do not provide sufficient explanations or do not provide them at all, NAZK will send the materials to SAP for additional verification. The SAP, in turn, collects information provided by the National Anti-Corruption Bureau of Ukraine as part of an additional check and may also send a request for explanations with relevant documentary evidence of receipt of income.
If the SAP considers the explanation unfounded, the prosecutor has the right to send a lawsuit to declare the assets unfounded to the High Anti-Corruption Court.
The Supreme Anti-Corruption Court of Ukraine opens proceedings in the case and sends a copy of the lawsuit with attachments to the defendant with a proposal to send to the address of the court his position on the lawsuit.
So, you can find out about the open proceedings in which the question of the existence of grounds for filing a lawsuit is decided from the requests of the NAKC and SAP, and about the filed lawsuit - in the case of the prosecutor's appeal to the High Anti-Corruption Court, when the court will send a copy of the lawsuit and the attached materials.
Does NAKC carry out inspections?
During the martial law, the NAKC does not check declarations, but it monitors the way of life of the subject of the declaration. It is within the framework of monitoring that NAKC can conduct checks on the validity of the acquisition of assets.
Is it mandatory for the prosecutor to file a lawsuit with the VACS?
This is the right of the prosecutor, however, to avoid the risk of filing a lawsuit, it is necessary to provide detailed explanations to the NAKC and SAP together with evidence that will eliminate doubts about the legality of the origin of the funds for the acquisition of assets.
Does the prosecutor and the court take into account unofficial income received by family members, if they are not the subjects of the declaration?
It is not legally stipulated, only legal income should be taken into account. However, given that many people have unofficial inherited funds, as well as unofficial business activities, if evidence is provided, such income can also be taken into account by the prosecutor and the court.
What are the consequences of a decision to recover assets for the subject of the declaration?
In addition to the actual recovery of the asset, various laws establish the consequences of such a court decision in the form of dismissal from office. It depends on the specific category of persons and the rules established by law for this category.
If it is impossible to recover the property due to its absence or other reasons, how will the court decision be enforced?
In this case, the value of the unsubstantiated assets must be paid or the enforcement agency will levy other assets that correspond to the value of the unsubstantiated assets. Keep in mind that, most likely, the SAP will file a motion to seize the asset before filing a lawsuit, so you won't be able to dispose of it until the case is over.
Conclusions. While case law in cases of recognition of assets as unjustified is just being formed, the general approaches to defense in this category of cases are obvious. Avoiding a lawsuit or obtaining a positive court decision is possible only in the case of proving the legality of the origin of the funds for which the assets were purchased.
