A YEAR AGO, an important document was signed. It was the Memorandum of Cooperation aimed to develop a transparent and effective system of assets disposal of insolvent banks and liquidated banks in Ukraine. Since then, due to the concerted effort of the Deposit Guarantee Fund, ProZorro.Sale team, the Ministry of Economic Development and Trade, and the NGO Transparency International Ukraine created and implemented an entirely new system for bank assets disposal. By the end of 2017, the Deposit Guarantee Fund will have displayed all the assets of liquidated banks for sale in ProZorro.Sale. On June 22, at the Ukrainian Crisis Media Center, ProZorro.Sale team gave us some insights on the year of cooperation with the Deposit Guarantee Fund, and the first billion of gain from auctions, and plans for future.

“For the Deposit Guarantee Fund, the development of a system that would assure fairness and transparency during the auctions and would, as much as it is possible, prevent third-party interference in the course of bidding, has been a priority for a long time now. Being well aware of all the shortcomings of the auctions, the first thing we did was to transfer bidding to electronic trading platforms. However, even this measure did not stop certain stock exchanges from rather quickly discovering how to misuse the platforms. We realized that what we needed a system that would not allow outbidding another bidder. The Guarantee Fund’s team articulated this idea and began searching for partners for its implementation. A year ago, having signed the Memorandum, together with ProZorro we started establishing the ProZorro.Sale system, which would operate on a principle “everyone sees everything”. And today the Fund is ready to take on new challenges, implementing next steps of improving the disposal process of liquidated banks’ assets,” – stated Konstantin Vorushylin, the Managing Director of the Deposit Guarantee Fund.

Currently, the Deposit Guarantee Fund is responsible for the liquidation of 87 banks. Disposal of their properties in the shortest possible terms at the maximum price is one of the priority tasks. All funds from asset sales are used to satisfy the creditors’ claims.

In order to avoid profiteering on the price of assets, particularly concerning ‘underestimation’ charges, the Fund has launched a ‘pilot project’, according to which the lots were put up for first bids at the book (maximum) value, with the possibility of gradual reduction of price down to 30% of its nominal value.

Thus, the price of assets is determined solely by demand and investors’ purchasing power. In order to speed up the process of assets disposal and finding the market value, in September the next stage of the evolution of the assets sale of liquidated banks will be started – the introduction of a new bidding model based on the principles of Dutch auctions.

This step, which is designed to speed up the process of assets disposal and thus – prevent them from further depreciation, would have been impossible without ProZorro.Sale.

Yaroslav Yurchyshyn, Executive Director of Transparency International Ukraine: “Last year, the ProZorro.Sale system existed only within the heads of several dozens of people. Following the successful experience of introducing ProZorro’s electronic procurement system, the reform of public auction seemed to be a logical extension for TI Ukraine and the Ministry of Economic Development and Trade.

And the only representative from the state, who agreed to pilot the creation of a new system, was the Deposit Guarantee Fund. Currently, this project is a success story of ProZorro family’s reform. About 1 bln of assets of the Deposit Guarantee Fund have already been sold.

We, TI Ukraine, believe that the main instrument of change in the state lies in the openness of a variety of data, including data on procurement and sales. Finally, I want to call on activists and journalists to join ProZorro.Sale monitoring system using free online analytics module http://bi.prozorro.sale/ Working with such data is a fundamental part of modern-day activism, so join the systemic changes”.

Oleksyi Sobolev, Project Manager of ProZorro.Sale: “The year of cooperation with the Deposit Guarantee Fund is the first positive experience in disposing of state property through the system of e-auctions ProZorro.The sale that brought the state a gain of billion of hryvnias and whose efforts the world has recognized. On April 13th, we won the CITI Bank competition at the World Anti-Corruption Startup, and a study by students at the Norwegian Business School suggests that ProZorro.Sale creates a precedent for the world. I am sure that ‘the Dutch auctions’ will speed up the disposal of problematic assets, save them from cancellation, and the money will soon return to its depositors”.