Over the coming five years, the European Bank of Reconstruction and Development (EBRD) plans to invest between EUR 7.5 billion and EUR 15 billion in Ukraine. The private sector is also showing signs of increasing commitment. Major companies including Germany’s Bayer AG and Rheinmetall, the UK’s BAE Systems, and Turkey’s Baykar have already either announced major investments or begun construction of plants in Ukraine. This is potentially just the tip of the investment iceberg. In total, thousands of other companies around the world are currently believed to be monitoring the situation and preparing to participate in the recovery of Ukraine.
While interest in clearly strong, the decision to invest in Ukraine does not only depend on the future course of hostilities and the outcome of the war. Much also hinges on perceptions of corruption and regulatory risks within the country. To ensure that dialogue between the international business community and the Ukrainian government is both transparent and practical, the Group of States Against Corruption (GRECO) and the European Commission recommended Ukraine regulate relations between business and political institutions and legalize the lobbying market.
Ukraine’s Lobbying Legislation
ADER HABER law firm, which has been providing government relations services for almost 20 years, participated in the working group preparing the draft law on the regulation of lobbying activities at the Ukrainian Parliamentary Committee on Legal Policy. This legislation represents an important step in the development of the Ukrainian business climate. The legalization of lobbying makes it possible to create a market for legal influence complete with transparent mechanisms and regulatory tools, while eliminating the culture of behind-the-scenes agreements with senior officials.
A legalized and regulated lobbying industry can open doors for everyone, not just a few select clients. When lobbyists from one business see the work of others, it has a qualitative impact on the broader business environment; different market players engage in intellectual competition through debates, ideas, and inventive approaches. The arrival of foreign companies in Ukraine will also raise the standards for lobbying practices.
The lobbying law has already been passed by the Ukrainian Parliament. Next steps include the creation of a Transparency Register. This will allow those with official lobbyist status to begin working under a new regulatory framework that will be transparent and clear, both for domestic consumers of lobbying services and international investors.
Transparency Register
Ukraine’s law legalizing the lobbying industry is by nature a framework. It defines the status of “lobbyist” and introduces this category to the legal environment. However, at the same time, it does not provide many opportunities or instruments for activity. The law restricts lobbying to individuals who have obtained lobbyist status. Lobbyists can be both private individuals and companies, including foreign companies with representative offices in Ukraine. This status is obtained by entering the relevant information about the lobbyist to the Transparency Register, which will be maintained by Ukraine’s National Agency on Corruption Prevention. This register will feature information about lobbyists and details of their activities. The data contained in the Ukrainian Transparency Register will be free and publicly available (excluding personal data) in both Ukrainian and English. Access to the register on the official NACP website will be available 24/7.
Similar registers have been established in a wide range of countries. In many cases, this makes it possible to track who is lobbying for what and how much they are being paid. The EU Transparency Register was launched by the European Parliament and the European Commission in June 2021. This is an open database of groups and organizations that influence the formation or implementation of EU policies and laws. As of February 2024, it includes nearly 12,500 registered businesses, non-governmental organizations, law firms, lobbying companies, private individuals, research institutions, associations, and personal advisors.
Restrictions on Lobbying
Ukraine’s lobbying legislation will restrict who can be a lobbyist and what can be lobbied. Lobbying without registration on the NACP Transparency Register will be considered illegal. Political parties, media and religious organizations, and candidates standing for election to public office will not be allowed to act as lobbyists or to promote their interests through the use of lobbyists. Public officials will be prohibited from lobbying, with this restriction extending for one year following the termination of an official’s time in office. Individuals with criminal records and those subject to sanctions, along with citizens and companies from the aggressor state (i.e. Russia) will be subject to similar prohibitions. Lobbying for the announcement of mobilization, imposition of martial law, deployment of the military, declaration of war, conclusion of peace, or changes to Ukraine’s territorial status will likewise be prohibited.
Meanwhile, the activities of non-governmental associations and various categories of non-profit organizations will not be considered lobbying if they do not pursue commercial interests. The law will also not apply to activities carried out in connection with obtaining, using, monitoring, providing, and utilizing international technical assistance, or the implementation of international technical assistance projects and programs.
Lobbyist Rights
Statutory recognition of lobbyist rights in Ukraine is a significant signal to the international business community that also creates opportunities for employers. Lobbyists are granted the right not only to enter administrative buildings, but also to participate in discussions related to lobbying. This goes beyond merely being able to show up in person for a meeting; it also involves having the capacity to express ideas clearly, provide arguments, and defend a position. Of equal importance are regulations that open up the possibility for international investors to not only discuss their wishes in a broad sense, but to directly specify their proposals.
Significantly, lobbyists have the right to initiate the preparation of draft regulations. Moreover, we interpret this regulation not only as the unilateral right of the lobbyist, but as a mutual obligation for officials to react to lobbying initiatives and enter into a dialogue. This opens up new opportunities for international companies, both at the stage of entering the Ukrainian market and in the process of operating in Ukraine. The internal regulations of international companies often require alignment with Ukraine’s regulatory legal framework.
Sharing Information
Lobbyists have also been granted the right to freely disseminate information about lobbying in the media and online. This creates a range of new opportunities to shape public opinion on the regulation of specific issues, especially if they relate to entire economic sectors or socially sensitive matters. Sharing information publicly can be seen as a tool to help overcome misunderstandings between business and consumers, leading to mutually beneficial compromises. This is extremely important for responsible businesses and global brands, which must safeguard their social capital.
The law allows for lobbying of private commercial interests, including the interests of the lobbyist. Any business or business association can enter into a contract with a lobbyist, except for businesses and individuals associated with the aggressor state, sanctioned individuals, or those engaged in terrorist activities. Naturally, lobbyists will have the opportunity to receive remuneration for their work. However, the law prohibits determining remuneration based on lobbying outcomes.
Funding and Fines
Controlling the sources of funding for lobbying activities is another major consideration. It is important that lobbying activities are not financed from state and local budgets or from from funds received by senior officials and civil servants. Likewise, regulations prevent the funding of lobbying by officials from the aggressor state or companies and organizations associated with it.
Like any other business, the lobbying industry requires proper regulation and ongoing control by the state. The National Agency on Corruption Prevention will monitor the activities of lobbyists, while the Ukrainian Parliament plans to introduce a system of fines for infringements. The relevant law has already been approved by the Ukrainian Parliament. If signed by the President, it will become effective simultaneously with the main lobbying law, but no later than 1 January 2025. Overall, the adopted lobbying law and its implementation represent a positive signal to potential investors and partner countries regarding Ukraine’s ability to implement reforms and readiness to work according to accepted international standards.