Law granting EU representatives the authority to inspect any individual or legal entity involved in receiving EU funding adopted in Ukraine

Under the new law, investigations, including on-site inspections and audits, can be carried out at the premises of any individual residing in Ukraine or any legal entity established in Ukraine that receives EU funding.

EU representatives will have the power to conduct technical, scientific, financial, and other types of inspections and audits at the premises of any individual residing in Ukraine who manages, participates in the use of, or benefits from EU funds, or any legal entity established in Ukraine and receiving EU funding, as well as any third party involved in the use of EU funds residing or established in Ukraine. Such inspections and audits may be conducted by representatives of EU institutions and bodies, including the European Commission and the European Court of Auditors, or other individuals authorised by the European Commission.

These provisions are outlined in Law 3904-IX “On Ratification of the Agreement between Ukraine and the European Union on Ukraine’s participation in the EU Anti-Fraud Programme (EUAF)” (draft law 0281), which has been signed by the President.

Furthermore, pursuant to Article 1 of Annex II to the Agreement, representatives of EU institutions and bodies must have appropriate access to locations, works, and documents, both in electronic and written form, and to all information necessary for conducting such audits. Ukraine must not obstruct access to premises or entry into Ukraine for these representatives and other authorised persons.

Notably, this Agreement also stipulates that the European Commission and the European Anti-Fraud Office (OLAF) are authorised to conduct administrative investigations, including on-site inspections and audits, within the territory of Ukraine.

Investigations, including on-site inspections and audits, can be conducted at the premises of any individual residing in Ukraine or any legal entity established in Ukraine and receiving EU funding, as well as any third party involved in the use of EU funds residing or established in Ukraine.

On-site inspections and audits are prepared and conducted by the European Commission in close cooperation with the competent authority of Ukraine, which is authorised by the Government.

Irrespective of the application of Ukrainian criminal law, the European Commission may impose administrative measures and sanctions on legal entities or individuals of Ukraine participating in the implementation of the Programme or activities in accordance with EU legislation.

Decisions made by the European Commission to impose fines on legal entities or individuals who do not represent the state in connection with any requirements related to the EU Anti-Fraud Programme are subject to compulsory enforcement in Ukraine.

The European Commission has the right to directly notify individuals and legal entities residing or established in Ukraine about decisions that are subject to enforcement.

If an individual, legal entity, or third party resists the conduct of an inspection or audit, the state authorities of Ukraine must assist in their conduct, including by taking measures to preserve evidence.

Ukraine’s accession and participation in the Programme necessitates Ukraine to make a financial contribution to the specified EU programme and financially participate in covering the associated management, implementation, and operational costs (Article 3 of the Agreement).

The financial contribution comprises the operational contribution and the participation contribution. It will be in the form of an annual payment due no later than May. The operational contribution is calculated based on the base contribution, which is defined as the ratio of Ukraine’s GDP at market prices to the EU’s GDP at market prices. GDP is determined by the special services of the European Commission based on statistical data.

It is also established that any delay in the payment of the financial contribution is grounds for Ukraine to pay interest on the overdue debt from the due date of payment.

However, considering the ongoing armed aggression, the Agreement includes a Protocol on the suspension of Ukraine’s payment of the financial contribution to the EU budget.

As previously reported by the Judicial-Legal Newspaper (sud.ua), a special “auditor” will monitor how Ukraine uses EU funds for reforms. This is stipulated in another Framework Agreement between Ukraine and the European Union on special mechanisms for implementing Union financing for Ukraine under the Ukraine Facility (bill 0276), which was ratified by the Parliament on June 6.

sud.ua