Ukraine's Lobbying Law: Bright and Dark Sides

On January 1, 2025, Ukraine's new lobbying law will come into full effect, following its passage in February 2024.

Designed to bring transparency to government interactions and align Ukraine with EU standards, this law mandates that all individuals or organizations seeking to influence legislation for commercial purposes register in a Transparency Register managed by the National Agency on Corruption Prevention (NACP).

Earlier in my LinkedIn article “Three Misconceptions Western Companies Have About Ukraine” I questioned why Ukraine is exclusively considered “corrupt” by the West. In contrast, I emphasized Ukraine’s significant progress towards transparency.

An excellent example of that statement is the National Agency on Corruption Prevention (NACP). It took the next step forward in combating corruption. This time, with a controversial idea of controling the lobbyists for the sake of transparency.

The ACC Complience Club Meeting

On October 29, 2024 the American Chamber of Commerce's compliance club meeting took place, with the goal to discuss the Law on Lobbying and see what it specifically means for companies in terms of complience.

Anastasia Yezerska (in the picture), Deputy Head of the National Agency on Corruption Prevention Department of Stakeholder Engagement and Ensuring Adoption of Anti-Corruption Policy Acts, answered the questions asked by the representatives of businesses, consultancies, law firms, and compliance specialists.

Ms. Yazerska emphasized that the law's initial purpose was good and noble — to reduce corruption in Ukraine.

However, some issues left a cloud of uncertainty. Objectively, the law has its pros and cons, and I want to highlight both.

The bright side: Transparency, EU standards, accountability

First, let us admit the bright side of the Law of Ukraine on Fair Lobbying:

1. Enhanced transparency

One of the law’s core features is the Transparency Register, managed by NACP.

This register requires all lobbyists aiming to influence government policy for commercial purposes to disclose their interactions with officials.

The process includes providing regular reports detailing lobbyists’ meetings with high-ranking officials, establishing a transparent framework (“similar” to those in the EU and the U.S.).

2. Alignment with EU standards

Ukraine’s lobbying law fulfills the European Commission’s recommendation to improve governance and transparency in Ukraine.

The law aims to limit the influence of oligarchs by defining the boundaries of permissible lobbying activities and imposing registration requirements for lobbyists.

3. Accountability

By implementing the new rules, Ukraine’s lobbying law seeks to limit unregulated influence over policymaking. This effort includes restrictions that prevent political parties, media organizations, and religious groups from hiring or acting as lobbyists.

Of course, there are more benefits of the initiative aimed to ensure transparency in the relations between the state and the lobbyists, and I will share more of them later. Meanwhile, let us take an honest look at the critical side of it.

The dark side of the lobbying law

One of the main problems with this law is the additional burden it imposes on diligent and transparent companies.

Some experts see the state’s attempt to control the lobbyists as a restriction on constitutional rights. They point out that every Ukrainian citizen has the right to influence the state. They insist, no “special registry” is needed to exercise this right, and any attempt to limit it is unconstitutional.

Such a radical opinion surprised Ruben Mirzoyan, a NACP expert. In my conversation with Ruben, he clearly assured me that the law has nothing to do with any unconstitutional actions whatsoever.

Still, some issues seemed to remain in the shadows.

Uncomfortable questions

For example, the responsibility for corruption seemed to be shifting from government officials to businesses. But if the government officials are “transparent” and not corrupt, why would you need to create additional bureaucratic obstacles for businesses?

On the other hand, if state officials are corrupt, why not impose increased responsibility on them? Eliminating corruption within the government would perfectly align with the goals of the proposed law.

So, let us take a look at the law’s three problems: vague definition, ambiguous application, and administrative pressure on businesses.

1. Broad definition of lobbying

The law’s broad definition of lobbying, focused primarily on “commercial interest,” creates significant ambiguity. The state casts a wide net, thus any form of influence that results in financial or non-financial gain could potentially be seen as lobbying, regardless of intent.

What does it mean practically? Consider, for example, Coca-Cola. Will this legendary producer of beverages have to become a “lobbyist company” from now on, because of the new requirements of the lobbying law?

This lack of clarity may lead to speculations. Thus, it is not difficult to predict that some business activities will unintentionally fall into the lobbying category, entailing bad consequences and injustice.

2. Ambiguity in application

Questions remain about how to determine when an activity qualifies as lobbying versus general consultation or advocacy.

For instance, individuals contributing to working groups may find themselves in “gray areas” if their contributions have potential commercial benefits for their sector.

Another question: should each employee of a Government Relations agency register as a “lobbyist” in the “Transparency Register” or is registering such an entity sufficient enough?

One more question: if a business association encounters 500 member-companies, and it advocates for an industry represented by 100 diligent companies, must it report them all being “beneficiaries”? Will they be “punished” for not being registered as “lobbyists” in such a case?

3. Administrative pressure on businesses

The lobbying law introduces additional administrative load on businesses (not to mention additional expenses of the government on creating the “army” of new clerks, software development, and tons of new procedures.)

Diligent companies that prioritize transparency may find themselves burdened by the extensive reporting, registration, and additional controlling process.

These, and many other issues will most likely be raised as soon as the law takes effect in 2025. If so, the tension between the state and businesses may increase.

I assume, the National Agency on Corruption Prevention will have a lot of work in 2025, in terms of specifying the law’s application.

Besides, I recommend the agency to pay closer attention to its communications strategy to prove the law’s relevance and explain its benefits for the Ukrainian people.

What about the EU and U.S.?

Initially, the idea to develop the “lobbying law” was the “requirement of the European Commission”, as Ukrayinska Pravda and other sources report, for Ukraine to move forward with the EU entry process.

In such a context, such a requirement makes sense because the European Union already has the Transparency Register designed to monitor those seeking to influence European Parliament decisions.

Being a part of the European Union means to comply with its standards. And its policies regarding lobbying cannot be an exception.

Furthermore, in the United States, lobbying is highly regulated under the Lobbying Disclosure Act (LDA), which mandates registration for any person or entity spending over 20% of their time on lobbying activities.

Conclusions

Ukraine's new Lobbying Law, effective from January 1, 2025, brings forth ambitious measures to increase transparency in government relations and align with European Union standards.

This legislation mandates that anyone seeking to influence legislation for commercial purposes must register with the Transparency Register, managed by the National Agency on Corruption Prevention (NACP).

The primary strengths of the law include enhanced transparency, alignment with EU governance recommendations, and efforts to curtail unregulated influence by requiring lobbyists to disclose interactions with officials.

The law aims to ensure greater accountability by establishing specific boundaries and rules for permissible lobbying activities, drawing inspiration from similar frameworks in the EU and U.S.

At the same time, the law’s broad and somewhat ambiguous definitions present challenges. Defining lobbying through “commercial interest” may lead to uncertainties and overreach, potentially misclassifying ordinary business or advisory activities as lobbying.

Additionally, the law could impose an administrative burden on transparent businesses. There are concerns that these rules might infringe on constitutional rights, potentially shifting some responsibility for corruption away from officials and toward businesses.

Final points

As Ukraine implements the Lobbying Law, the nation takes a step closer to EU integration by demonstrating its commitment to transparency and accountability.

To maximize its positive impact, Ukrainian authorities may need to address areas of ambiguity within the context of the lobbying law, clarify procedural requirements, and ensure that administrative burdens do not hinder transparent businesses.

Learning from the EU and U.S. experiences with lobbying regulation, NACP should maintain consistent and good communication with the business sector, emphasizing how these changes benefit business and society.

Clearer guidelines and streamlined processes could help maintain the balance between transparency and accessibility, enabling the law to fulfill its intended role without unintentionally penalizing the very sectors it aims to regulate.

? Oles Dmytrenko, 2024

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