Ukraine relaunches anti-corruption e-declaration system

Ukraine relaunches anti-corruption e-declaration system
By bne IntelliNews September 1, 2016

Ukraine on September 1 re-launched an electronic system for income declaration by state officials in a step that was vigorously demanded by the country’s Western backers to prevent  illegal concealment of assets.

Originally launched in mid-August but shut down again due to numerous flaws, the amended and improved system went online at midnight, Natalia Korchak, head of the National Agency for Prevention of Corruption (NAPC), said on the 112 Ukraina television network.

However, in the early hours of September 1, users complained on social media that the system’s website was not accessible from all internet browsers, the Ukrainian online newspaper reported.

Aimed at eliminating corruption among bureaucrats who understate their earnings and assets, the system was first launched on August 15. However, EU embassies in Kyiv cited flaws in its design and application, while observers said this could be a reason for the continued delay of the International Monetary Fund (IMF) to resume the release of billions of dollars in frozen credits to Ukraine.

In the wake of the system’s false start, Ukrainian civil rights activists accused the government of an intentional “fake launch” that allowed civil servants to avoid liability for inaccurate earnings declarations.

On August 17, the EU delegation to Ukraine and the embassies of EU member states in Kyiv also issued a joint statement saying the system fell short of specifying legal consequences for submitting false information. “An e-declaration system in test-mode therefore makes little sense and might actually be counterproductive,” the statement said.

Only hours before the relaunch, Leonid Yevdochenko, head of the State Service of Special Communications and Information Protection, said on August 31 that his agency had certified an integrated information protection system as part of the e-declaration platform.

Some analysts linked the punctual relaunch with a recent increase in pressure on Ukraine’s state finances.

“This just comes as last month saw a pretty dismal fiscal performance, with a big increase in spending - so maybe they finally might actually need some IMF cash, plus also pressure seen over the past few days on the [hrynia] forcing the National Bank of Ukraine to intervene to stabilise the [currency],” Nomura International strategist Tim Ash said in an emailed note.

Meanwhile, other experts pointed to law enforcers' possible reaction to information obtained from the system as a major potential problem.

“The big question now is what will law enforcement authorities do with the information that’s posted there,” wrote Zenon Zawada, an analyst at the Concorde Capital brokerage in Kyiv.

“Authorities have to ensure that criminal cases and prosecutions are conducted across the political spectrum, without bias,” he added. “Otherwise, the system has the potential to open a Pandora’s box of exacerbated political conflict.”

According to Zawada, a resultant conflict could break out between the Prosecutor General’s Office, controlled by President Petro Poroshenko, and the National Anti-Corruption Bureau, which is believed to be independent.