Graham Stack in Kyiv -

“Ukraine is now probably the world's leader in openness of state registers,” claims Serhiy Benedysiuk, director of the Ministry of Justice’s Department of State Registration.

Benedysiuk, a graduate of Kings College London and formerly a lawyer at PwC, epitomises Ukraine's new brooms that have swept into office following the revolution of February 2014 to clean up Ukraine notoriously corrupt officialdom. Benedysiuk says that what makes Ukraine special is that the search functions for both the online state registers of company ownership and real estate ownership enable the public to conduct a full search for owners. “This means you can simply enter a name and see what that person owns in Ukraine,” he explains.

The next step, believes Benedysiuk, is to create some interface linking the databases, making it even easier to monitor. “This way anyone can be an investigative journalist,” he claims.

Together with the state register of court decisions also being highly accessible online – and approaching a mind-boggling 50mn documents – this gives civil society powerful tools for monitoring the activity of officials, with an eye to signs of unlawful enrichment. “This is the best way to check for corruption,” believes Benedysiuk. “If someone has been an official all their life, then how to explain if they or their family own whole estates or business empires, especially if they don't declare them?” 

Trailblazer

International experts agree that Ukraine is a pioneer in openness of data. “As of today, Ukraine ranks third worldwide in terms of corporate and litigation data,” says Ed Long, head of research at Arachnys Compass, the leading provider of instant access to worldwide national databases. In the latest Arachnys Compass ranking of openness, Ukraine “received our maximum score in the corporate category,” Long says, and was only squeezed out of the overall No.1 spot by USA and UK.

Benedysiuk says he understands there may be privacy concerns, but currently in Ukraine “the public mood tends towards demanding as much transparency as possible”.

Benedysiuk's department is now moving ahead with compiling a register of final beneficiaries of companies. Apart from introducing more transparency when family and friends are used as proxy shareholders, it should help tackle Ukraine's problem with widespread use of so-called fictive firms in VAT fraud and other financial schemes, as well as being good for the business and investment climate. According to the latest economy ministry estimates, the shadow economy comprises 47% of Ukraine's economy, creating uncertainty for investors about whom they are actually dealing with. “This means that an open database of beneficiaries is also good for doing business,” says Benedysiuk.

The trick in compiling a register of beneficiaries is reconciling the need for more transparency with demands to reduce bureaucracy and make it as easy as possible to register companies, say Benedysiuk. The approach is to make the company director criminally liable for providing the correct information, which should also discourage people from acting as nominee directors, he hopes.

Citizen investigators

Investigative journalists have already scored notable successes purely by using open registers. Tracking scores of pro-forma court cases brought by PrivatBank corporate borrowers against their British counterparties who had defaulted on delivery after receiving a total of $1bn in advance payments, suggested to investigators that PrivatBank had in this way effectively moved International Monetary Fund (IMF) stabilisation funds out of the country. As a result, police opened a criminal investigation into the bank, as bne IntelliNews reported. PrivatBank claims there was no wrongdoing involved and says it is cooperating fully with the investigation.

Investigative journalist Denys Bigus tells bne IntelliNews that opening the state registers means that Ukraine is now “close to the gates of paradise” for investigators. Bigus launched the crowd-sourcing project Garna Khata, or 'Nice Place,' solely on the back of access to the state property register.

The site lists the names of owners of Kyiv's most expensive luxury apartments as taken from the state real estate register, and asks the public to identify what connections the lucky owners might have to top officials. One recent eye opener was to show that pro-Russian politicians from East Ukraine's Luhansk region who backed a separatist referendum in May 2014 have acquired luxury apartments in Kyiv this year.

Other successful media projects have been based on the open state registers, such as the project Nashi Groshi, or 'Our Money', which monitors state tenders, or First Instance, which chronicles the latest litigation in the enormous database. “This is great, because it means that readers can verify the stories themselves with reference to the databases,” says Benedysiuk.

Even the more conservative interior ministry has been getting in on the act, linking directly from its homepage to a number of freely accessible state registers, up to and including the state register of unidentified corpses – albeit with a disclaimer that it is not suitable for “children or individuals with weak nerves”.

Activists are now also calling for Ukraine's register of car ownership to be opened to the public. “ I think this would be good,” says Andriy Marusov, head of the board of Transparency International Ukraine, though adds that “The key problem remains the unwillingness of the government to investigate and punish corrupt officials.”