New law said to go against core principles of non-profit sector.
Since the end of the war in Kosovo, civil society has consistently been held up as an essential pillar in the building of a healthy democracy. The nature of that civil society has been much debated, but one central component in Kosovo for the past two decades — established both in law and in practise — has been non-governmental organizations (NGOs).
As part of the constitutional right to freedom of association, each individual has the right to form a collective with other individuals and to establish an organization with a mission to serve the community and benefit society in general.
The right to establish NGOs is currently protected and regulated by the 2011 Law on Freedom of Association in Non-Governmental Organizations. However the law is currently being amended — and it is causing significant controversy.
Many NGOs claim that a number of amendments to the draft law, which they say have been slipped in under the radar, are unconstitutional and have the potential to undermine the whole sector.
The controversy has reached the point where President of Kosovo Hashim Thaçi has used his presidential prerogative not to sign the draft law, and has instead sent it back to the Assembly for further review.
In light of developments, K2.0 looks at what the new draft law is all about, why it’s proving so controversial and what’s being done to try to prevent it passing into law.
Why is a new law being drawn up in the first place?
The process of creating a new law to regulate this field started around three years ago, with the objective of better addressing certain aspects such as national security and prevention of terrorism funding, which were considered to not be properly regulated by the existing law.
Members of different organizations who were part of the working groups involved in drafting the new law say that the new draft law as originally put forward to the Assembly by the government was one of the best in the region, was completely in accordance with the guidelines and practices of international institutions, and ensured the proper functioning of one of the most important sectors for a democratic society.
That doesn’t sound too controversial so far…
The draft law was approved by the Kosovo Government in January 2018, before passing the first reading in the Assembly in March. After being considered by the relevant committees for amendments, it went back to the Assembly for its second reading on November 7, 2018, and passed once again. It was therefore sent to the president for signing.
However, after being lobbied by dozens of NGOs, including those involved in drafting the new law, the president considered the draft law to be unconstitutional and used his presidential right to send it back to the Assembly on November 23, 2018. The president included a detailed explanation of all the articles considered to be problematic and proposals for rewriting them.
(For an explanation of the process by which laws are passed in Kosovo, scroll down to the yellow box at the bottom of this article.)
Why did the NGOs lobby the president not to sign the law, if many of them had been involved in drafting it in the first place?
The issue was that the bill that was approved at the second reading in November contained 36 additional amendments to the original bill, which were added by the Committee on Public Administration, Local Governance and Media. Many civil society organizations say that these amendments were included without notice or consultation.
Experts from the NGO sector in Kosovo had actively partaken in the process of drafting the new law, so naturally they were baffled when they saw that the law that they had drafted together with local and international experts, was “supplemented” with many amendments, which they say make the law much more useless and unimplementable — and in some parts, even dangerous.
"They sort of smuggled in amendments that completely changed the version of the law that came from the government.”
Kosovo Civil Society Foundation (KCSF), with the support of 77 other organizations, sent a letter raising their concerns to the Office of the President on November 15, a few days after the bill was approved for the second time in the Assembly.
KCSF’s Dren Puka says that the deputies that voted in favor of the law and approved it at the second reading in early November might not have been correctly informed about the issues that were brought by the additional amendments, which were included last minute.
“We can say that they sort of smuggled in amendments that completely changed the version of the law that came from the government,” Puka says.
That all sounds a bit underhand. So what was in the amendments that the NGOs are so concerned about?
The complaint sent by NGOs to the president included a legal analysis of the “substantive” amendments. This states that while some of the amendments are merely linguistic or technical, others are deeply problematic.
While they have a number of concerns with multiple amendments, they particularly warn of “the decimation of the non-profit principle” and “the opportunity that is given to institutions to arbitrarily close any NGO.”
These sound pretty serious! Let’s take the first one first…
Amendment 31 relates to Article 41.2, which deals with who is liable to inherit an NGO’s assets when it closes; it adds the words “or other institutions” to “another NGO registered in the Republic of Kosovo.”
The organizations have warned that “other institutions” leaves a lot of space for different interpretations, and would consequently enable NGOs to transfer wealth to virtually any subject considered to be a public or private institution.
This means that an NGO that had somehow accrued money or other assets, could easily transfer that wealth to any institution — including potential private entities — simply through a decision from its members or board of directors.
The worry is that this provision is against the basic principle that NGOs do not work for profit, but for the realization of objectives or missions that benefit the general public.
What would this look like in practice? Who would it affect?
Civil society organizations have warned that the main issue lies in the fact that a number of microfinance institutions operating in Kosovo are officially registered as NGOs.
Microfinance institutions are “small banks,” which proliferated after the war in Kosovo, and which used foreign donations in an attempt to provide people with easier access to funds in the form of small loans with low interest rates. However in practise, the opposite has often happened.
This change in the law would allow these microfinance institutions to legally transfer funds from their accounts to other "institutions," including into private hands.
Puka says that loans by microfinance institutions in Kosovo reached interest rate values of up to 40 percent, and that through the years, these institutions have been able to collect huge sums of money through the loans that were paid back by citizens. KCSF estimates that the total sum of capital possessed by microfinance institutions that are registered officially as NGOs is around 160 million euros.
Until now, since this money is within organizations registered as NGOs, it has not been able to be used for personal or any other kind of profit. However, this change in the law would allow these microfinance institutions to legally transfer funds from their accounts to other “institutions,” including into private hands.
“If these amendments are passed, any NGO can experience an outstanding debacle regarding its property, and it would all be legal,” Puka says. “The [new draft] law gives many legal opportunities for misuse, and not only to microfinance institutions; it also directly damages the sector by enabling NGOs to misuse wealth.”
Puka explains that the Constitutional Court of Kosovo has issued a ruling for this issue based on the same principles. In 2013, the Constitutional Court declared that it is illegal to transfer assets of microfinance NGOs to joint-stock companies.
This all sounds like a recipe for corruption! But what about their second main concern — the government being able to close down NGOs doesn’t sound very democratic…
This relates to amendment 30 and affects Article 41.1.2. In this amendment, the term “insolvent” is substituted with the word “inactive,” when referring to the basis for extinguishing an NGO.
Insolvency is an organization’s inability to make required payments — so, it has a completely financial character. In Kosovo’s judicial system, insolvency is clearly defined in the Law on Bankruptcy, which defines “insolvency” and/or “inability to pay” as “the financial state in which an entity is generally unable to pay its claims as they mature or when its probable liabilities exceed the likely value of its assets.”
On the other hand, the word “inactive” has a completely different meaning and can be interpreted in many different ways, leaving space for public institutions to close down organizations in an arbitrary manner, without even requiring a court order.
The civil society analysis argues that this gives room for “arbitrary decisions” and is “contrary to the constitutional right to freedom of association,” while also pointing out that it is “unworkable as a legal norm” as there is no basis for measuring activity.
Wow, that sounds like a bit too much power in the hands of the state, particularly given that many of these NGOs are involved in trying to hold the authorities to account. What amendments to the law are being demanded by NGOs?
In essence, the civil society organizations are demanding the approval of the version of the law that was originally approved by the government, namely the bill before the 36 amendments were added by the Committee on Administration. They say that bill would provide Kosovo with a very progressive law that is in accordance with European standards.
The organizations are urging deputies to support the suggested amendments forwarded by the president, which oppose the 36 amendments that they see as being highly damaging.
Should we expect a change in the Assembly vote, considering that the same deputies voted in favor of the problematic amendments at the bill’s second reading in November?
Since the law passed the Assembly at the second reading, NGO representatives have been holding a series of meetings with all deputies and parliamentary groups, attempting to provide more information to deputies on the bill that they voted through in early November.
After the president sent the bill back to the Assembly, the Committee on Administration held a meeting on December 12, in which it reviewed the draft law once again. However, despite the recommendations forwarded by the president on the basis of the concerns expressed by civil society, the Committee once again voted in favor of the law containing the articles that the president and NGOs have claimed are unconstitutional.
KCSF issued an announcement after the meeting, stating that during the meeting some deputies, in particular the head of the Committee, Nait Hasani, used offensive words, incomplete arguments and manipulation tactics toward members who represented civil society in the meeting.
There are concerns that as soon as the law enters into force, millions of euros will immediately be siphoned out of organizations registered as NGOs and into private hands overnight.
Despite claims by some deputies in the Committee that the law goes against the Constitution and that the arguments expressed by civil society are just, the demands issued by civil society were brought down with five votes against, four in favor and one abstention.
The votes against came from Nait Hasani (PDK), Milaim Zeka (NISMA), Adem Mikullovci (LVV), Imet Rrahmani (LDK) and Albert Kinolli (6+). In favor of the civil society recommendations taken on by the president were Xhevahire Izmaku (PDK), Rasim Selmanaj (AAK), Arban Abrashi (LDK) and Shqipe Pantina (PSD). Valon Ramadani (LVV) abstained, while Jasmine Živković (Lista Srpska) was absent.
The lobbying work by NGOs and the informative meetings have continued since then, but civil society organization representatives are still concerned that the contentious amendments may still be approved when the vote takes place in the Assembly plenary session.
When are deputies voting again on this?
The third and final reading of the law is taking place this week. A debate was held in the Assembly plenary session on Wednesday (January 30), however there was no quorum to hold the vote and so the session was suspended. The Assembly has not officially confirmed when the session will be completed (and therefore when the vote will take place). However it is thought that it could be as early as Saturday (February 2) if a new session that has been scheduled to be held that day is completed on time.
What happens if the bill containing these controversial amendments is ultimately approved by deputies?
If approved by deputies during the third reading in the Assembly plenary session, the bill would not be sent back to the president, but would be due to enter into force 14 days later.
KCSF and other organizations who support this initiative have announced that before the law were to enter into force, they would attempt to present sufficient legal arguments through the Ombudsperson to take the matter to the Constitutional Court. They say they will ask the Court to issue temporary restrictions to allow them time to use all other legal means to prevent the transfer of wealth from microfinance institutions registered as NGOs.
If they are not able to do this, they are concerned that as soon as the law enters into force, millions of euros will immediately be siphoned out of organizations registered as NGOs and into private hands overnight.K
Passing a new law
Anyone who can propose a new law must initially draft a bill. Entities who are entitled to do this are the Office of the President, the government, Assembly committees, parliamentary groups of deputies, a group of at least six deputies from any political party, or a group of at least 10,000 citizens.
After the proposer sends the bill — written in Albanian, Serbian and English — to the Assembly, a responsible parliamentary committee is appointed by the Assembly Presidency to initially review it. The bill is then sent for a first reading in an Assembly plenary session and, if passed in a vote, is sent to the different Assembly committees, which scrutinize each article of the bill.
The main review of a law in the Assembly is done at the second reading, after the committees have reviewed all of its articles. If it does not gain sufficient votes, usually by a simple majority of deputies, the bill is sent for third review by relevant committees — a rare occurrence. If it passes this phase, the bill is sent to be signed by the president.
After receiving the approved bill from the Assembly, the Office of the President is tasked with ensuring that the bill is in accordance with the Constitution. If so, he signs it and 14 days later it is published in the Official Gazette, thereby becoming law.
If the president estimates that the law or some of its articles are against the principles or articles of the Constitution, they may send the law back to the Assembly. In this instance the relevant committees consider the draft law again, before a third reading and vote is held in a plenary session.
If the draft law is voted for in this final plenary session, it does not go back to the president, but is published in the Official Gazette 14 days later and becomes law.
Feature image: Creative Commons License.