Failure to launch E-system for asset declaration fully – what threats are there for Ukraine?

Failure to launch E-system for asset declaration fully – what threats are there for Ukraine?
August 15, 2016.

On August 15 at 00:00 electronic system for declaration of assets of high-level officials was launched following a long-lasting period of development and testing. The tool that was supposed to help disclose information about officials’ assets and cast light on the assets that do not correlate with their income. However, there are attempts to twist the instrument to allow corrupt manipulations.

Kyiv, August 1, 2016. Ahead of the launch of the electronic asset declaration system Derzhspetszvyazok (State Service for Special Communication and Information Protection) reported unpreparedness of the system to collect and save declarations, and thus refused to certify it. Apart from serving the purpose of fighting corruption, electronic declaration system was Ukraine’s last requirement on the way to getting the visa-free regime with the EU as well as financial assistance by the European Union (EUR 1,2 billion) and the IMF (USD 3 billion). The way the events unfolded suggested two options: to postpone the launch of the system (violating commitments and launching it later in a full-fledged way) or launch it in the test mode. The second option will have serious consequences as the test mode has no legal force. In case an official is caught “red-handed” with undeclared assets, the system’s test mode will become an obstacle for proving the guilt and bringing him/her liable.

Earlier Derzhspetszvyazok (the Service has close connection to the Head of the National Security and Defense Council Oleksandr Turchynov, main role in blocking e-declarations is attributed to him) released a series of controversial statements. The Service said the system is not fully ready (the first stage required for the full-fledged launch was completed), it was not possible to conduct certification over a short period of time (earlier the Service agreed the schedule with no amendments), independent testing was missing (two companies have tested it) and there were problems in the system’s software protection (the Service has not even tested it). Taking all the above factors into account, one may ask: did the Ukrainian authorities really intend to launch the system in the format requested by the Ukrainian society and western partners?

“Killing the declaration system means killing the visa-free regime and financial assistance from the west. Without this money hryvnia (Ukraine’s currency – edit.) will collapse in autumn,” said Vitaliy Shabunin, head of board of the Anticorruption Action Center at a press briefing at Ukraine Crisis Media Center. He also emphasized the risks that this move has for combatting corruption in Ukraine. “An opportunity to legalize all sorts of illegal assets was created including of those gained by corrupt means, from drug trafficking, smuggling etc. Uncertified data cannot serve as proof therefore it will be impossible even theoretically to conduct a criminal investigation. Huge amount of money used by the civil servants will be legalized. Next summer we will find ourselves in the FATF (Financial Action Task Force) black list. It would be insane to expect that investors would come after that,” Shabunin explained.

Yaroslav Yurchyshyn, Executive Director of Transparency International Ukraine, emphasized that following the call of his organization President Poroshenko committed to the international community that on August 15 the electronic asset declaration system will be 100 percent operational on August 15. “I don’t know whether the President feels ashamed but I do. I also have to tell Transparency International today that our President does not keep his promises. European partners linked it to the visa-free regime, the e-declaration system is also clearly mentioned in the IMF memorandum. Ukrainian people are being systematically fooled, but it will not work out this way with the international community,” Yurchyshyn said. He emphasized that the reform was not financed from the state budget – the required funds were provided by the UNDP and the World Bank that are now being accused of exercising pressure. Another scapegoat became a private firm (Miranda company), the only one that agreed to work 24/7 to produce the software. They are now being asked to correct the “omission” but are refused explanation on what the omission is.

“Electronic declaration is a litmus test that showed that the authorities never intended to combat corruption. By violating the law and commitments towards the EU and the IMF Ukrainian authorities demonstrate that they are not going to abide to the law. The civil society may well act accordingly,” said Oleksandra Drik, head of board at NGO “Civic lustration committee” and coordinator of coalition “Declarations under control”.

MP Serhiy Leshchenko stated that President Poroshenko bears direct responsibility over derailing the e-declaration system. MP Mustafa Nayyem shares the opinion. “President Poroshenko could have gathered Prime Minister Groysman, Head of Derzhspetszvyazok, Head of National Security and Defense Council Turchynov and all responsible around the table recalling that it is their responsibility and encouraging them to do it, already now. Instead he keeps diverting attention with his speeches on TV. If the President speaks on TV and calls to introduce e-declaration, and a small civil servant says ‘no’, we all realize it is nonsense,” the MP says.

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