Open Standard for e-System (UA0071)

Introducing open standards of operation of the E-system of selling arrested assets
Lack of competition in selling the arrested assets through online auction creates space for corruption risks and makes civic control impossible.
The Ministry of Justice (MoJ), Ministry of Economy, State-run Enterprise “SETAM” (E-System of Selling Arrested Assets), and Government-Civic Initiative “Together
Against Corruption” signed a Memorandum/roadmap on cooperation in the field of selling arrested assets that aims to ensure transparent, competitive-based and
favourable environment for selling assets that was arrested by courts.
On 18 June 2018, the MoJ adopted the Order # 1859/5 on amending the Procedure of Selling Arrested Assets that enabled and regulated the procedure of letting
economic entities irrespective of the form of ownership and individual entrepreneurs to use an electronic resource which is a part of the online auction system through
5
agent and partner agreements. Moreover, the amendments formalized the procedure of interaction between e-platforms by opening the API that proves that the
environment for e-selling of arrested assets within the framework of executive proceedings is indeed competitive.
Engaging independent platforms will enable economic entities irrespective of the form of ownership and individual entrepreneurs to conduct online auctions to sell
arrested assets. In its turn, SETAM got the status of ProZorro.Sales operator letting SETAM to sell small privatization targets and assets of banks that are liquidated.
Actions Responsible Timeframe Partners Indicator
1. Monitoring and evaluation
of the operation of “partner
agreements” and an updated
Procedure of Selling Arrested
Assets
MoJ
MoE
Antimonopoly Committee
of Ukraine
December 2018 – March
2019
SETAM,
Prozorro.Sales,
Government-Civic Initiative “Together against
Corruption,”
Transparency International Ukraine,
other CSOs and international organizations
(upon their consent)
Findings on the operation of
“partner agreements” are
summarized, and amendments to
the Procedure of Selling Arrested
Assets made
2. Update of the Procedure of
Selling Arrested Assets based
on the findings of monitoring
and evaluation
MoJ
MoE
Antimonopoly Committee
of Ukraine
June 2019 SETAM,
Prozorro.Sales,
Government-Civic Initiative “Together against
Corruption,”
Transparency International Ukraine,
other CSOs and international organizations
(upon their consent)
Procedure of Selling Arrested
Assets amended based on the
evaluation of efficiency of
“partner agreements”
3. Producing the Terms of
reference on improving the esystem of selling arrested
assets, conducting the
respective tender
-//- 1
st quarter of 2019 -//- The respective ToR drafted,
tender for improving the esystem of selling arrested assets
conducted
4. Improving the e-system of
selling arrested assets
MoJ
MoE
Antimonopoly Committee
of Ukraine
February 2019 SETAM,
Prozorro.Sales,
Government-Civic Initiative “Together against
Corruption,”
E-system of selling arrested assets
improved and tested
6
Transparency International Ukraine,
other CSOs and international organizations
(upon their consent)
5. Distribution of functions of
administrator of central
database of online auction
system and auction organizer,
transferring the system to the
respective administrator
May 2019 Administrator of central database
of online auction system and
auction organizer identified,
system transferred to the
administrator
Expected results of this activity are creating transparent, competitive-based and favourable environment for organization and e-selling of assets that was arrested by
during the enforcement of court decisions and decisions of other authorities/officials that will reduce time for selling these assets and improve efficiency of enforcement
of court decisions and decisions of other authorities/officials.

2. Introduce the E-system of selling arrested assets

Language of the commitment as it appears in the action plan: [11] Introducing open standards of operation of the E-system of selling arrested assets

Lack of competition in selling the arrested assets through online auction creates space for corruption risks and makes civic control impossible.

The Ministry of Justice (MoJ), Ministry of Economy, State-run Enterprise “SETAM” (E-System of Selling Arrested Assets), and Government-Civic Initiative “Together Against Corruption” signed a Memorandum/roadmap on cooperation in the field of selling arrested assets that aims to ensure transparent, competitive-based and favourable environment for selling assets that was arrested by courts.

On 18 June 2018, the MoJ adopted the Order # 1859/5 on amending the Procedure of Selling Arrested Assets that enabled and regulated the procedure of letting economic entities irrespective of the form of ownership and individual entrepreneurs to use an electronic resource which is a part of the online auction system through agent and partner agreements. Moreover, the amendments formalized the procedure of interaction between e-platforms by opening the API that proves that the environment for e-selling of arrested assets within the framework of executive proceedings is indeed competitive.

Engaging independent platforms will enable economic entities irrespective of the form of ownership and individual entrepreneurs to conduct online auctions to sell arrested assets. In its turn, SETAM got the status of ProZorro.Sales operator letting SETAM to sell small privatization targets and assets of banks that are liquidated.

Milestones:

1. Monitoring and evaluation of the operation of “partner agreements” and an updated Procedure of Selling Arrested Assets
2. Update of the Procedure of Selling Arrested Assets based on the findings of monitoring and evaluation
3. Producing the Terms of reference on improving the e-system of selling arrested assets, conducting the respective tender
4. Improving the e-system of selling arrested assets
5. Distribution of functions of administrator of central database of online auction system and auction organizer, transferring the system to the respective administrator

Start Date: December 2018

End Date: May 2019

Context and objectives

This commitment aims to ensure a transparent and competitive system for selling assets seized by courts due to alleged criminal activity. [12] Civil society has criticized the existing E-System of Selling Arrested Assets (SETAM) as being a monopolistic platform. [13] In September 2016, the Anti-Monopoly Committee (AMC) recommended the government fix the decrees that created the monopoly on selling seized assets [14] and allow other platforms to also sell these assets. [15]

This commitment calls for updating the procedures and improving SETAM with additional administrative functions. Each activity has an indicator and overall, they are verifiable. However, it is unclear how SETAM will relate to the newly established ProZorro.Sale, which is an electronic system designed to sell state property. This commitment is clearly relevant to the OGP value of access to information, while its digital realization is relevant to technology and innovation.

According to the SETAM representative, there was room for improvement, even though their online platform already performed all necessary functions for selling arrested assets through online auctions, [16] used blockchain technology, provided equal opportunities and information to all bidders, and ensured 24-hour access to information about auctions. Allowing independent platforms to conduct online auctions could improve competition, [17] as could the separation of the various functions of the process like storage, transportation, and sale. [18] However, it is unclear how this commitment intends to change the sales of seized assets and how it would be different from what is already done by ProZorro.Sale. Therefore, it is difficult to assess the potential impact of this commitment beyond minor.

Next steps

The IRM researcher recommends that commitments in the next action plan clearly articulate the intended change and expected results that the activities seek to enact.

2. Introduce the e-system of selling arrested assets

Completion: Substantial

The government monitored and evaluated the previous procedure for selling seized assets. ^[79] Using those findings, decree #413/5 amended the procedure by splitting the roles of database administrator and auction organizer. ^[80] Despite a formally competitive tender process, in practice, the government used very specific selection criteria. ^[81] This resulted in the E-System of Selling Arrested Assets state enterprise (SETAM) being chosen as the auction organizer. ^[82] Continued problems with the procedure that maintained conflict of interest and corruption risks led to decree #2933/5. That decree mandated that Prozorro.Sale administer the database, ^[83] thereby fully separating the functions of database administrator (Prozorro.Sale) and auction organizer (SETAM). The technical integration of the SETAM and ProZorro.Sale systems for the sale of arrested assets was not yet completed by the end of the implementation period. In November 2020, the government set up the working group in charge - consisting of representatives of the Ministry for Development of Economy, Trade and Agriculture; SETAM; and the Ministry of Justice. ^[84]