http://thehill.com/opinion/international/380952-us-ukraine-must-ensure-k-street-contracts-arent-funded-by-ill-gottenAlthough it is welcome that the Justice Department is tightening up FARA enforcement, problems and loopholes remain.
One of these has been highlighted by this month’s FARA filing by Avenue Strategies on behalf of Ukrainian Member of Parliament Yulia Tymoshenko, leader of the center-left populist Fatherland Party. Avenue Strategies will receive $65,000 per month for its services, under the six-month contract. Where will the money come from? The National Agency for Preventing Corruption (NAPC) is checking Tymoshenko’s 2016 income declaration — which disclosed her income as the equivalent of $33,975. Her disclosure form for 2017, submitted this week, shows an even lower total income of around $21,000.
Tymoshenko has not said how she will pay Avenue Strategies; the Fatherland Party has not declared that it will pay the consultants. If the $390,000 is to be paid by an unknown sponsor, this would violate four laws on corruption adopted in November 2014.
The U.S. government, European Union and International Monetary Fund pressured Ukraine to establish institutions to fight its scourge of corruption; one of these institutions is the NAPC, which checks asset and income declarations of state officials. In October 2016, in a landmark development in the fight against corruption, President Petro Poroshenko, Prime Minister Volodymyr Groysman, cabinet members, 423 members of Parliament, and state officials — a total of 50,000 people — publicly declared their assets and incomes for the first time.
Many Ukrainians, however, question Tymoshenko’s financial disclosure claims.
Even with public officials disclosing their assets and incomes, it is doubtful that the questions of how Tymoshenko will pay a U.S. consultancy constitute the only example of opaque payments to K Street consultants. Perhaps the Justice Department and the Mueller investigation will close this and other loopholes in FARA.
The Treasury and Justice departments should work closely together to ensure that funding sources in all FARA registrations pass Know Your Customer (KYC) and color of money stress testing. Both agencies should enforce anti-money laundering requirements to ensure that foreign lobbying contracts are not funded by ill-gotten gains.
The United States has a much better track record for this than European countries that complain about corruption in Russia, Ukraine and elsewhere in Eurasia but undertake little due diligence on capital with opaque origins. The Washington-based Global Financial Integrity has calculated that $12 billion is sent abroad from Ukraine each year. After Privat Bank, Ukraine’s largest, was nationalized in 2016, it was found to have laundered $5.5 billion over the previous decade.
Acceptance of large opaque payments from Ukrainian politicians who cannot, or refuse to, explain the origins of funds goes against Western demands for transparency in Ukraine’s finances. Moreover, it nullifies the work of NAPC and perpetuates a culture of impunity among Ukrainian elites. This will undermine the work of the Anti-Corruption Court that is to be set up this year.
The U.S. government always has been a strong supporter of Ukraine sovereignty and its right to choose European integration. For this support to Ukraine to be consistent, all branches of the U.S. government must be on the same page.
