Parliament approved the first readings of two key bills to rein in the oligarchs on June 1.
One piece of legislation legally defines what an oligarch is and places restrictions on their political activities. The other raises taxes and rents on businesses, which would have the biggest impact on Rinat Akhmetov, the richest person in Ukraine.
Both are part of President Volodymyr Zelensky’s promise to go after the wealthiest Ukrainians, who have a massive influence on politics and public opinion and are seen as virtually untouchable by Ukraine’s troubled legal system.
Neither bill will see a second reading before September.
De-oligarchization bill
Zelensky’s Servant of The People faction pushed this bill through the parliament with 231 votes — a minimum of 226 votes are needed for approval. Altogether, it attracted 275 votes.
For the first time ever, the draft law introduces a legal definition of what an oligarch is and imposes limits on what they’re allowed to do.
Oligarchs would be banned from donating directly or indirectly to political parties and participating in the privatization of state assets.
To be recognized as an oligarch, a person must meet at least three out of four criteria: be involved in political activities, have considerable influence on mass media, be a beneficiary of monopolies recognized by antitrust authorities and own assets exceeding Hr 2.2 billion ($81 million), excluding media assets.
Influence on the media could be direct or indirect meaning that even a person without formal ownership of media outlets could be still defined as an oligarch, according to the authors of the law.
Involvement in political activities has a more precise definition. A person must either hold a high-level office or be affiliated with one. All top government officials will be required to declare any non-public contacts or meetings with oligarchs.
Moreover, a person who has financed political parties, ads or protests can also be defined as an oligarch, according to the legislation.
The National Defense and Security Council will be in charge of deciding who’s an oligarch and maintaining a public registry of them.
Many lawmakers were unimpressed by the president’s legislation and spoke out against it.
“They want to ban them from participation in privatization. But the oligarchs have already privatized everything,” said Yulia Tymoshenko, the leader of Batkivshchyna party and a former prime minister. Batkivshchyna did not support the bill.
“They will be appointing people as oligarchs and adding them to the registry without clear criteria. The oligarchs with gladly support this bill to put on a show for the electorate,” said Viktoria Siumar, a member of the European Solidarity faction, which also voted against the bill.
If signed into law, the bill will formally come into effect on the following day and will be implemented within six months. The legislation will be in force for 10 years.
Anti-Akhmetov bill
The second draft law, unofficially known as the anti-Akhmetov bill, passed the first reading with 264 votes, including 223 from the ruling Servant of the People faction.
It introduces amendments to the tax code, increasing environmental, real estate, industry and energy taxes for big businesses.
Akhmetov’s business empire enjoys many benefits, which the bill seeks to undo. For example, current rents for iron ore mining companies are based on the cost of production. The bill would change rents to be based on iron ore market prices instead.
Originally, the government sought to set the maximum fee at 16% of the price that the iron ore is sold for. But the final version of the bill has the maximum fee set at 10%, while in most cases it will be even lower — depending on the iron ore price at the global market.
Still, this would force Akhmetov’s companies and other iron ore producers to pay an extra Hr 3 billion ($111 million) to the state budget each year. Akhmetov controls over half of iron ore production in Ukraine.
The government also wants to introduce an excise tax on the sale of renewable electricity — rates would range from 3.2% to 40%. This would hit Akhmetov’s energy conglomerate DTEK, which produces close to a fifth of renewable energy in Ukraine. This is expected to add an annual Hr 60 billion ($2.2 billion) to the state budget.
Kyiv Post staff writer Alexander Query contributed reporting.
