Time to declare: Ukrainian anti-corruption reform faces threats

By Pavel Polityuk and Margaryta Chornokondratenko

KIEV (Reuters) - The prime minister urged his cabinet colleagues to be brave enough to do it, saying it was like shutting one's eyes before parachuting out of a plane.

But as the deadline for its completion nears, an IMF-backed reform forcing Ukrainian politicians and officials to declare their assets online is facing what some lawmakers and anti-corruption activists say are persistent attempts to sabotage it.

"There is an attempt to discredit the system in order to destroy it technically, physically," said Viktor Chumak, an independent lawmaker and the deputy head of the parliament's committee on fighting corruption.

The reform comes at a critical time for Ukraine. More than two years after street protests ousted a Kremlin-backed president, political leaders in Kiev must be seen to make good on promises to transform the country and tackle corruption.

The reform has faced hostility from the start, and the original August launch date was delayed because the software wasn't given security clearance. Several lawmakers introduced bills to try to water the reform down and others want it delayed.

The system finally went live in September but MPs say it is full of problems that make it difficult to complete the form properly. Its designer says those problems were introduced after he handed control of the software to the authorities.

The consequences of Ukraine missing the Oct. 30 deadline for some 50,000 people to declare their wealth may be far-reaching, and the prospect of that happening prompted the EU to send an urgent letter to the speaker of parliament.

The International Monetary Fund sees the deadline as a "structural benchmark", and failing to meet it would weaken the case for the IMF to disburse more aid as part of a $17.5 billion bailout by the end of this year.

UNPRECEDENTED DISCLOSURE

Artem Shevalev, Ukraine's representative to the European Bank for Reconstruction and Development, said it didn't look feasible for Ukraine to implement difficult reforms such as the asset declaration system by then.

"When I read some of the feedback from some of my colleagues in Kiev it is clear it is very difficult technically, but also the level of disclosure is unprecedented," Shevalev said.

"It's anything, literally anything, even down to every piece of jewelry you have."

The EU has linked the reform to granting a visa-free regime to Ukraine. If the reform fails, it would add to the impression that Kiev's Western-backed leaders do not have the will to tackle corruption. Other measures, such as privatizing state companies or cleaning up the customs service, also face threats.

"It is absolutely obvious for me that the president's declarations to the international community, that the system would operate fully, are artificial in order to create an image that Ukraine is fulfilling its obligations," said Oleksandra Drik, head of the Civic Lustration Committee, an anti-corruption body.

Politicians have had to fill in asset declaration forms before, but the new one is more comprehensive and carries prison sentences for false statements.

President Petro Poroshenko told local television on Sunday that the form was not perfect and he didn't much like it.

"But it cannot be a reason not to fill it in," he said, and he would submit his on time.

TESTED TO DESTRUCTION

Based on the principle that sunlight is the best disinfectant, the measure was designed to expose the wealth of politicians, officials, prosecutors and judges in a country that thrives on kickbacks and tax evasion.

Some politicians, officials and businessmen have amassed fantastic wealth. To many, this was encapsulated by the luxurious residence of Viktor Yanukovich, the Russian-backed president who fled into exile two years ago.

Similarly, police found 42 kilograms of gold and $4.8 million in cash during a search of the apartments of former Energy Minister Eduard Stavytsky two years ago. And last year, large quantities of diamonds and cash were found at the homes of two high-ranking prosecutors.

As of Monday, just over half the 50,000 declarations had been submitted. Prime Minister Volodymyr Groysman said his was almost done.

"I think it's something like a parachute jump," Groysman said at a televised government meeting. "Close your eyes and jump. It needs to be done once and everything will fall into place. If you're afraid, don't be."

The man whose company MIRANDA designed the software said he handed over control in August to a state anti-corruption body, which asked the State Service of Special Communication to make changes to the program.

After that, "all sorts of errors and problems" were introduced, said Yuri Novikov, the designer. "The video tutorials are still ours, but the system is different. We look at the system and understand that all this is very sad."

For example, one addition asks for the passport numbers of dead relatives who have passed on inheritances, even though Ukrainians often hand passports in to the authorities when a person dies, Novikov said.

Another addition is that the system now asks how much physical cash a person holds and then asks for the name of the bank where they've stored it: a contradiction in terms that several MPs identified as a problem to completing the form.

The State Service of Special Communication and Information Protection did not respond to a request for comment.

"The form that we fill was revised by the State Service of Special Communication. In the end, they broke it," Serhiy Leshchenko, a lawmaker and activist, wrote on Facebook.

(Additional reporting by Marc Jones in LONDON; Writing by Matthias Williams; Editing by Giles Elgood)

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