It is well-known that the Law of Ukraine \u201cOn the Bureau of Economic Security of Ukraine\u201d (the Law on BESU) came into force on March 25, 2021. This Law provides in Paragraph 9 of Section IV “Final and Transitional Provisions” (as at the date of publication of this material) that:<\/p>\n
“9. The Bureau of Economic Security of Ukraine shall start its activity no later than six months<\/mark> from the date of entry into force of this Law”.<\/span><\/p>\n In addition, Paragraph 10 of the Final and Transitional Provisions of the Law on BESU explicitly provides for the obligation of the Cabinet of Ministers of Ukraine to liquidate the State Fiscal Service of Ukraine (where the tax police still functions as a part of it):<\/p>\n \u201c10. The Cabinet of Ministers of Ukraine shall:<\/span><\/p>\n 2) ensure the liquidation of the State Fiscal Service of Ukraine<\/strong> not later than six months from the date of entry into force<\/strong> of this Law”.<\/span><\/p>\n Six months from the date of entry into force of the Law on BESU falls on September 25. Therefore, we propose to find out whether the Bureau of Economic Security of Ukraine (the BESU) has been launched, and will the tax police stop its activity? What to expect next?<\/p>\n <\/p>\n 1.<\/p>\n In accordance with Part 1 of Article 1 of the Law on BESU, the Bureau of Economic Security of Ukraine “is a central body of executive power, which is entrusted with the task of counteracting offenses that encroach on the functioning of the state economy”<\/span>.<\/p>\n Given the status of the BESU as a central executive body, its establishment is subject to the provisions of Article 5 of the Law of Ukraine “On Central Executive Bodies”, which provides that the relevant bodies are established by the Cabinet of Ministers of Ukraine. In accordance with Part 9 of Article 5 of this Law: “The procedure for implementing measures related to the formation, reorganization or liquidation of ministries and other central executive bodies shall be determined by the Cabinet of Ministers of Ukraine”<\/span>.<\/p>\n Therefore, Paragraph 13 of the relevant Procedure, approved by the Resolution of the Cabinet of Ministers of Ukraine of October 20, 2011, No. 1074, provides that the Act of the Cabinet of Ministers of Ukraine is required for the start of activity, and such an Act: “is issued after the implementation of measures related to registration of the formed body of executive power as a legal entity of public law, by approval of the regulations on it, structure and staff list, budget and filling of 30 percent of vacancies”.<\/span><\/p>\n According to the public statements of the Director of the BESU (for example, “Failure to launch the Bureau of Economic Security in time<\/a>“, “\u2019We need more time\u2019: The Bureau of Economic Security may not start on September 25 \u2013 The Head of the BESU”<\/a>, “Melnyk says that the launch of the Bureau of Economic Security is delayed\u201d<\/a>), the BESU has been established, but 30 percent of vacancies have not been filled yet. Accordingly, the Act of the Cabinet of Ministers of Ukraine, which is binding for the start of the BESU as a central executive body, was not adopted by September 25.<\/p>\n 2.<\/p>\n That is, in fact, the BESU did not start its activity on September 25, as it is required by the Law on BESU, since not all internal procedures for the establishment of the relevant body as a central executive body were completed and the relevant Act was not issued by the Cabinet of Ministers of Ukraine.<\/p>\n Certainly, the Law of Ukraine “On Central Executive Bodies” provides that in such a case, according to Part 7 of Article 5 of this Law, a body that is being terminated shall exercise powers and functions :<\/p>\n “7. Ministries, other central executive bodies, in respect of which the act of the Cabinet of Ministers of Ukraine on their termination has entered into force shall continue to exercise powers and functions in respective areas of competence until the completion of measures to establish the Ministry, other central executive body, to which the powers and functions of the ministry, other central executive body, that is being terminated, are transferred, and the possibility of ensuring the exercise of these functions and powers, as issued by the relevant act of the Cabinet of Ministers of Ukraine”.<\/span><\/p>\n However, firstly, by law there is no such central executive body that would have powers and functions in the relevant area of \u200b\u200bcompetence. This has been repeatedly discussed in our reviews (for example, in the information letter “What is to be done with \u201cghosts\u201d (or if the financial investigations department as a part of the tax authority is addressing you now)<\/a>).<\/p>\n Secondly, in this connection, the apt position of the binding case law of the European Court of Human Rights (ECtHR) comes to mind. In particular, the Decision on the case of Rysovskyy v. Ukraine (Application no. 29979\/04)which, inter alia, sets out the following:<\/p>\n “71. In other words, State authorities which fail to put in place or adhere to their own procedures should not be allowed to profit from their wrongdoing\u00a0or\u00a0to\u00a0escape their obligations<\/strong> (see\u00a0Lelas<\/em>, cited above, \u00a7\u00a074). The risk of any\u00a0mistake\u00a0made by the State authority must be borne by the State\u00a0itself<\/strong>\u00a0and the errors must not be remedied at the expense of the individuals\u00a0concerned (see,\u00a0among other authorities,\u00a0mutatis\u00a0mutandis,\u00a0Pincov\u00e1 and Pinc,\u00a0<\/em>cited above,\u00a0<\/em>\u00a7\u00a058;\u00a0Gashi v. Croatia<\/em>, no.\u00a032457\/05<\/a>, \u00a7\u00a040, 13 December 2007\u00a0and\u00a0Trgo v. Croatia<\/em>, no.\u00a035298\/04<\/a>,\u00a0\u00a7\u00a067, 11 June 2009)\u201d.<\/span><\/p>\n In terms of the issue under discussion, this can be interpreted as evidence that the delay in the establishment of the BESU cannot have negative consequences for business, as well as for the respective reasons the ongoing questionable activity of the State Fiscal Service (where the tax police, which is deprived of powers, still functions) on the investigation of criminal offenses.<\/p>\n 3.<\/p>\n Therefore, the possibility of continuing the activity of the bodies of the State Fiscal Service (which includes the tax police) as bodies of pre-trial investigation should not be considered by law.<\/p>\n This raises the question of the materials of criminal proceedings in such bodies. According to Paragraph 2 of Section IV “Final and Transitional Provisions” of the Law on BESU:<\/p>\n \u201c2. Materials of criminal proceedings, which on the day of the beginning of activity of the Bureau of Economic Security of Ukraine stay in other body of pre-judicial investigation at a stage of pre-judicial investigation, but in accordance with the law, are the subjects of the Bureau of Economic Security of Ukraine, within two months from the date of the decision to start the Bureau of Economic Security of Ukraine shall be transferred by the pre-trial investigation body to the respective prosecutor in criminal proceedings for further decision to be made in accordance with the Criminal Procedure Code of Ukraine.<\/span><\/p>\n Materials of criminal proceedings, which stay in the pre-trial investigation bodies monitoring compliance with tax legislation, at the stage of pre-trial investigation, shall be transferred to the relevant prosecutor in criminal proceedings for further transfer to the Bureau of Economic Security of Ukraine in accordance with the Criminal Procedure Code of Ukraine\u201d.<\/span><\/p>\n Given that the day of commencement of activity should be considered in the light of legitimate expectations and the inadmissibility of transferring the negative consequences of the internal delay of such a day, the deadline for transfer of proceedings should be considered\/counted from the date specified by the Law on BESU. Based on the current wording of the Law on BESU, the materials of the criminal proceedings should be submitted to the prosecutor within two months from September 25.<\/p>\n