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E-customs from 1st August – Ukraine

May 18, 2016

It seems like a long time ago that an entry appeared regarding the corruption and/or smuggling issues at Odessa’s ports.  Indeed it is almost a year ago.

The entry highlighted a few notable issues and was by no means in depth with regard to the existing corruption scams or potential corruption opportunities.  In fact it stuck to the blindingly obvious problems rather than detailing the “very clever” scams – “So to a less than erudite, nor exhaustive, list of areas to cast a discerning eye over would seem appropriate – “broad brush” as they are.

Bribes at the ports are easily achievable.  It is not hard for a customs official to turn a blind eye to the fact that a manifest does not cover all the imported/exported goods in the cargo.  It is not difficult to ignore transit goods making their way into domestic supply chains.  To reclassify/wrongly classify goods is not more than a slip of the pen.  Naturally speeding up clearance can be achieved given the right incentives.

Manipulating the country of origin and any special arrangements with those nations is not difficult.   A cargo missing inspection or having a “relaxed inspection”, the under-invoicing of cargo, release bonds with insufficient (or non-existent) supporting documentation, influencing audit outcomes,  and perhaps the most prevalent of “rent-seeking” options – pre-declaration and the use of “fashionable brokers”.

“Fashionable brokers” are the agents that insure no delays, inspections etc for a fee and can be found in Odessa.

There is then the issue of the private companies that control the weight bridges, container ports, and transport infrastructure in and out of the port sides.  The corruption issues are not all related to the State customs and borders agencies.

No differently from the new “Police” whom receive better than average pay compared to their counterparts of commensurate service, there is a need to recognise that in restructuring the customs and borders services at the ports of Odessa, it is highly unlikely that officials will wholeheartedly support any major reforms that remove opportunities for ‘rent-seeking’ and improve transparency – unless they are combined with meaningful improvements in their conditions of employment.”

Since then Yulia Marushevska (and team behind her) have been appointed in Odessa to fight the good fight and tackle the vested interests that have historically grown wealthy from the illicit goings-on.  Among those vested interests are local public figures and businessmen, those within the State Fiscal Service, the SBU and a cash flow to Kyiv to “keep everybody sweet”.

Her efforts have seen the introduction of e-customs at Odessa Port, a swifter and fairer customs service for the users of the port – or at least the State owned and run part of the port.

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Her efforts have also seen her receive 3 written reprimands from the Head of the State Fiscal Service Roman Nasirov who has tried to obstruct the efforts to reduce the corruption and prevent open and transparent staffing solutions.

Indeed Mr Nasirov is not upon the Christmas Card list of two regional governors – Messrs Moskal and Saakashvili for his less than helpful disposition in tackling corruption and less than ethical personnel appointments into positions within the customs and SFS institutions.

It is no secret that the dismissal of Ms Marushevska was a priority second only to that of former-Regional Prosecutor Davit Sakvarelidze for the local elite with dubious/nefarious vested interests, as well as those within certain State institutions (and their unseen masters).  Ms Marushevska (and team) have been fighting what until recently appeared to be a losing the war with those in Kyiv, even if beginning to win their small battle.

However, Prime Minsiter Groisman visited Odessa on 17th May and spoke with Ms Marushevska and Governor Saakashvili, and visited the ports – among other things.

Purely by coincidence (cynicism), the following day an announcement was made that the entirety of the Ukrainian customs system would move across to the Odessa trialed e-customs system with effect from 1st August.  A significant step in the right direction (on the presumption this announcement is actually implemented nationally on 1st August).

Further, for Ms Marushevska, it appears that all 3 reprimands issued by the obstructive Mr Nasirov will be cancelled – As a result of the visit of Prime Minister Volodymyr Groysman to Odessa, the Control Agency cancelled the freeze on construction of the new Open Customs Area terminal. Also, by the end of the week agreement must be reached regarding all personnel issues that have been blocked by SFS leadership: dismissal unscrupulous officials, agreement on new people and announcement of a competition for key leadership positions.

The Prime Minister also expressed support for the introduction of the new ASYCUDA software.

Positively assessing our reforms at Odessa Customs, the head of government has promised to cancel the reprimands given to me by SFS chief Roman Nasirov. It turns out that you can move quickly to reform, if you choose to.” – Facebook Yulia Marushevska 17th May 2016

Thus, should those reprimand cancellations materialise, those vested interests attempting to remove her from post would appear to have suffered something of a setback.

A reader may deduce that whatever dubious money flows Prime Minister Groisman may or may not receive, they seemingly do not come from corrupt customs scams – certainly as far as Odessa is concerned.  A reader may also ponder therefore, and possibly draw conclusions, as to why his predecessor failed to take such simple actions and also failed to support Ms Marushevska (and team).

As stated in several recent entries, Prime Minister Groisman may well be stuck with Mr Nasirov as head of the SFS (at least for the next few months) as part of a grubby political deal to insure parliamentary support from unexpected places during some very important recent votes (including his own appointment), but it is also becoming clear that he has also found “pressure points” upon those same unexpectedly supportive parliamentary places sufficient to stay the manufactured departing of Ms Marushevska (and team) and undo their efforts via Mr Nasirov – all of which (hopefully) does not bode particularly well for Mr Nasirov in the long term.

We shall see whether e-customs goes live nationally on 1st August – or not.  If it does, it is a significant step in tacking the opportunities that are currently present for corruption within customs and the SFS.

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