Hetmantsev, under the guise of the IMF, is trying to violate the Constitution of Ukraine and gain full influence over the Deposit Guarantee Fund 17 February 2025
Kyiv • UNN
Draft law No. 13007 may give the DGF unlimited powers and limit the rights of depositors. The document contradicts the Constitution and creates corruption risks in the management of assets of liquidated banks.
Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, has submitted to the Parliament the draft law 13007 "On Amendments to Certain Legislative Acts of Ukraine on the Settlement of Certain Issues of the Deposit Guarantee Fund, the National Bank of Ukraine and Collective Investment Institutions". Hiding behind the requirements of the International Monetary Fund (IMF), it tries to lobby for a significant expansion of the powers of the Deposit Guarantee Fund (DGF) and makes it completely "manual". At the same time, this draft law contains provisions that contradict the Constitution of Ukraine, which not only restrict the rights of depositors, but also create potential corruption schemes for managing the assets of liquidated banks, UNN writes.
The Ukrainian side signed a Memorandum of Economic and Financial Policies with the International Monetary Fund, in which Kyiv committed itself to implementing a number of important reforms. One of them was to improve the operations of the Deposit Guarantee Fund. Among other things, the IMF, for example, demanded that Ukrainian legislation be amended to allow the DGF's managing director to be elected in an open competition.
Apparently, after Danylo Hetmantsev, the head of the Rada's tax committee, lost control of the tax service due to the change of its entire leadership, he began to look for new spheres of influence. To do this, he probably decided to take advantage of the situation and start "improving" the work of the Deposit Guarantee Fund under the guise of fulfilling IMF requirements. In particular, Hetmantsev registered a bill in the parliament, the adoption of which, according to the MP, will "strengthen the protection of depositors.
Thus, in view of the current challenges and pursuant to paragraph 58 of the Memorandum on Economic and Financial Policies dated 04.10.2024 signed between the Government of Ukraine and the International Monetary Fund, the analysis of the existing mechanisms for removing banks from the market by the Fund and the National Bank of Ukraine identified a number of key legal and operational gaps that require urgent legislative regulation,
However, a detailed analysis of the draft law shows that, in fact, if adopted, it will undermine confidence in Ukraine's financial system. At the same time, the document itself contains provisions that violate human rights, in particular, the right to property enshrined in the Constitution, and generally contradicts certain provisions of the law. Let's look at the key violations of the law that make Hetmantsev's draft law legally null and void.
Depriving depositors of judicial protection and property rights
Article 41 of the Constitution of Ukraine provides: "Everyone has the right to own, use and dispose of his or her property. No one shall be unlawfully deprived of the right to property."
The bill submitted by Hetmantsev, on the contrary, proposes to actually deprive depositors of the right to timely reimbursement and eliminates transparent compensation mechanisms.
For example, MP proposes to unlawfully deprive the clients of a bank in liquidation who used the services of a custodian of their property rights if they do not apply within 60 days of the start of liquidation. A similar procedure for misappropriation of other people's funds is provided for in the draft law in relation to shareholders and creditors who have not filed a timely claim.
Article 55 of the Constitution of Ukraine states: "Human and civil rights and freedoms shall be protected by the courts. Everyone shall have the right to appeal in court against decisions, actions or inaction of state authorities."
However, it is clear that in this case, too, the Basic Law is not a decree for Hetmantsev. After all, according to his proposals, the Deposit Guarantee Fund may be granted the right to solely manage the assets of banks without the possibility of judicial review of its decisions.
Mr. Hetmantsev proposes to limit the timeframe for participants in the bank liquidation process to 1 month to appeal against DGF decisions in courts. This contradicts the general principles of civil law and creates preconditions for abuse by responsible officials. Lawyers point out that it takes much more time than 1 month to prepare a quality lawsuit.
Thus, the proposed amendments actually legalize the mechanism of forced alienation of property, which cannot be challenged in court. This is a direct violation of the Constitution and human rights.
In addition to restricting depositors' rights, the draft law provides for a significant expansion of the powers of the Deposit Guarantee Fund and the National Bank of Ukraine. For example, they will be able to withdraw banks from the market at will, based on "their" criteria, which can be changed at any time.
The DGF will be able to act without control, making decisions without the need for legal justification. Thus, the courts are effectively removed from the process of controlling its decisions. The elimination of judicial oversight of the fund's activities is a serious departure from the rule of law. This may lead to the assets of liquidated banks being distributed in a non-transparent manner, which creates significant corruption risks.
Violation of the Law of Ukraine "On Prevention of Corruption"
The draft law, authored by Hetmantsev, proposes to significantly expand the powers of the DGF, while the document does not provide for effective mechanisms to control its activities in terms of corruption risks.
In addition, the MP wants to allow the DGF to transfer bank assets without open tenders and market value assessment, creating obvious prerequisites for corruption. In this way, the DGF will be able to sell the property of banks in liquidation at reduced prices to companies affiliated with the former owners .
Thus, the draft law violates:
- Article 3 of the Law of Ukraine “On Prevention of Corruption”: “State bodies shall ensure transparency of their activities and prevent corruption risks.”
- Article 5 of the Law of Ukraine “On Prevention of Corruption”: “State decisions shall be made taking into account anti-corruption mechanisms and transparency of procedures.”
- Article 11 of the Law of Ukraine “On Prevention of Corruption”: “Officials are obliged to avoid conflicts of interest and may not make decisions that facilitate illicit enrichment.”
As already mentioned, Hetmantsev suggests that MPs vote for the lack of real control over the DGF's actions. After all, there will be no effective audit of the Fund's activities due to restrictions on the ability of government agencies to interfere with its activities, including for the purpose of inspections.
In addition, if the Rada adopts Hetmantsev's draft law, the risk of "manual control" of the banking sector as a whole will increase significantly. Therefore, this initiative creates ideal conditions for corruption schemes, as the DGF receives almost unlimited powers in the process of bank liquidation without proper control by the state, society and judicial authorities.
Obviously, the IMF did not intend such a categorical narrowing of the rights of depositors, shareholders and creditors of banks in liquidation, and at the same time an unlimited expansion of the Deposit Guarantee Fund's capabilities. Therefore, Hetmantsev's initiative is completely at odds with the IMF's requirements. Moreover, such changes may have a negative impact on European integration processes, as it is known that the European Union values human rights and freedoms and compliance with laws by state institutions and officials.
Therefore, if this law is adopted, Ukraine risks finding itself in a situation where creditors and depositors will be deprived of effective mechanisms to protect their rights. This, in turn, could lead to massive lawsuits in the European Court of Human Rights and additional costs for the Ukrainian budget.
The adoption of this law will also pose serious risks to the stability of Ukraine's banking system. A loss of confidence in the deposit guarantee institution could lead to a massive outflow of deposits, which would have a negative impact on the economy as a whole. In addition, such changes in the banking sector will scare away investors, which will significantly worsen the investment climate in the country.
In times of war and economic instability, it is necessary not to usurp powers, but rather to strengthen mechanisms for protecting citizens' rights and create a predictable financial system.