Misappropriation, abuse, corruption and incompetence
Main Control and Revision Office (MCRO) of Ukraine reports on July 14, 2010, that its bodies over the period of January-June 2010 completed a scheduled revision of some aspects of financial and economic activities of the State Committee of Ukraine on Land Resources as well as its subordinates. Among other things, revision investigated the use of resources of the Stabilization Fund for free-of-charge issue of land titles to citizens of Ukraine in 2009 and the first quarter of 2010 (MyLand: the said free-of-charge issue of land titles was initiated by the Government of Yulia Tymoshenko and meant to issue over 6 million land titles within 6 months. Issue was free-of-charge for citizens, but the cost was to be covered by the state. Obvious impossibility to issue so many titles within so short a period made many experts believe that it was nothing but promotional action of Yulia Tymoshenko. Those titles should have confirmed ownership to plots for housing, gardening, dacha and garage construction – i.e. these measure had nothing to do with Rural Land Titling Project funded by the World Bank).
MCRO reports that revision revealed large-scale violation of financial discipline at appropriation of resources of the Stabilization Fund. It says that the state suffered the total losses amounting to UAH 190 million (USD 24 million) or 63% of the total sum allocated for free-of-charge issue of land titles.
In particular, the resolution of the Cabinet of Ministers of Ukraine providing for the said free-of-charge issue - #844 of May 8, 2009 – was drafted and implemented by the management of the State Committee of Ukraine of Land resources (SCLR) in a very unprofessional manner.
For example, in violation of the Rules of Procedure of the Cabinet of Ministers, SCLR (headed by Oleg Kulinich) as a main designer of the Resolution # 844 failed to get the Resolution approved by the Ministry of Finance and omitted to submit it to the legal expertise of the Ministry of Justice. Moreover, redistribution of resources of the Stabilization Fund initiated by the Resolution # 844 was not agreed upon with respective committees of the Parliament of Ukraine (on issues of budget and on issues of finance and banking).
It is remarkable, notes MCRO, that initial allocation of resources for the implementation of Resolution # 844 was set up at the level of UAH 6 billion (USD 770 million) but in a month it was cut to the level of UAH 508 million (USD 77 million), i.e. by more than 10 times.
MCRO says that unrealistic of targets set up by Resolution # 844 was easily detected when looking at target indicators as well as comparing them with actual results of implementation.
In particular, it was planned to issue in 2009 over 6.4 million land titles, i.e. 1 land titles should have been issued every 2-3 seconds.
Government actually allocated and transferred for implementation of Resolution # 844 UAH 298 million (58.6% of the total allocation). As of January 1, 2010 there were issued about 620 thousand titles, or approx. 10% of the planned number. As of march 1, 2010 there were issued almost 1 million titles or 16% of the target level.
MCRO also points out that initiative of SCLR on reorganization of the State Inspection for Control Over Land Use and Protection was not in line with the effective legislation. Law of Ukraine on State Control over Land Use and Protection says that the said control shall be performed by the State Inspection and its territorial offices acting within the system of SCLR. In 2009 SCLR initiated Resolution of the Cabinet of Ministers # 901 which terminated the State Inspection as an independent body and converted it into one of SCLR departments.
MCRO estimates that this action led to substantial deterioration of the state control over use and protection of land; MCRO estimates this deterioration at the level of 75%.
MCRO also points out that funding of works under Resolution # 844 was done with brutal violation of all financial rules, with disregard to the critical situation in Ukraine. At the same time issue of land titles in any sense was not a protected item of the state budget or priority spending.
In particular, in the end of 2009 SCLR, without necessary grounds and papers, organized advance payment to its subordinates (Centre of State Land Cadastre, regional institutes for land surveying and state map-making enterprises) to the tune of UAH 171 million (USD 21.9 million).
MCRO also says that despite significance of allocated funds, the cost of issue of a single title was calculated in a very inaccurate manner and set up at the level of UAH 113.16 while actual cost varied from UAH 200 to UAH 800, depending on complexity and scale of works. Thus calculated figure did not cover actual cost of issuing titles incurred by SCLR subordinates.
MCRO concludes that SCLR in pursuance of Resolution # 844 partly used financial resources of state enterprises; the said negatively affected financial situation of the enterprises.
Preliminary estimations show that those enterprises incurred additional expenses to the tune of UAH 60 million (USD 7.7 million).
One of the measures within the course of realization of Resolution # 844 was mailing of special notifications to citizens of Ukraine entitled to benefit from free-of-charge issue of land titles. SCLR engaged several intermediaries into such mailing and used UAH 10.2 million to cover the cost of their services. As a result, the said intermediaries had profit of UAH 4.7 million while state postal service enterprise UKRPOSHTA (Ukrainian Post) which was actually doing the mailing incurred losses to the tune of UAH 6 million.
It is remarkable that lists of those entitled to free-of-charge issue of land titles was drafted by SCLR in the same inaccurate manner. Thus over 180 thousand notifications (production cost of which was UAH 280 thousand) returned to UKRPOSHTA because absence of addressees (they passed away or moved).
MCRO also blames on SCLR failure to organize proper technical control over the quality of land surveying documents related to Resolution # 844 implementation. This failure cost to the Stabilization Fund over UAH 12 million.
MCRO also revealed that despite the fact that Resolution # 844 explicitly prohibited engaging of non-state enterprises into free-of-charge issue of titles such engagement has actually taken place. Thus state enterprises entrusted with implementation of Resolution # 844 paid to such non-state enterprises UAH 1.4 million.
MCRO also managed to detect a corruption scheme developed within the process of free-of-charge issue of land titles.
It found that Sevastopol Branch of the Centre of State land Cadastre leased out part of its premises to a commercial land surveying company headed by the daughter of the director of the said Branch. That company advised citizens on aspects of free-of-charge issue of titles and charged for its consultations UAH 1250 a peace, i.e. for every title. This lucrative business allowed the company to collect in 2009 UAH 3.3 million. It is remarkable that the said consultations provided with by the Branch cost only UAH 18; the Branch scraped UAH 47.6 thousand in 2009 advising citizens (MyLand: it looks only "just", from a certain point of view, because father and daughter shared clients evenly, 50/50 (branch advised 47.6/18=2644 clients and daughter advised 3300/1250=2640), they only charged different prices).
MCRO also revealed and proved what was many times announced by the media and NGOs: state resources allocated for implementation of Resolution # 844 in some instances were used for paying for works and services which had already been paid for by citizens, before Resolution was adopted. Thus the state lost about UAH 1 million.
In total, MCRO detected 900 instances of the said double funding. Lion share of such detection falls on Ivano-Frankivsk Oblast where 521 instances detected.
Khmelnitsk Branch of the Centre of State Land Cadastre reported in 2010 works and services which it done and got paid for in 2009; that led to losses for the state to the tune of UAH 632 thousand. The same “tricks” were disclosed in Crimea, Vinnytsya Oblast, Volyn Oblast, Dniepropetrovsk Obalst, Zhytomyr Obalst, Ivano-Frankivsk Oblast, Kyiv Oblast, Cherkasy Oblast and Chernigiv Oblast.
In Volyn, Dniepropetrovsk, Zhytomir, Kyiv and Chernivtsi Oblasts MCRO detected deficiency of blanks of land titles, in total 1.4 thousand titles were missing. It is interesting that out of 500 blanks which gone missing in Volyn Oblast, 204 blanks were used in Kyiv Oblast, alsmot all of them - in Kyiv-Svyatoshyno Rayon. It is said that the price of a land title blank on a black market amounts to USD 500.
Unsatisfactory personnel policy of SCLR led to deterioration of professional level in the system. In many cases positions are held by persons whose educational background and professional experience do not meet qualification requirements. In particular, in Kyiv and Sumy Oblasts positions of engineers, land surveyors and geodetic surveyors are held by zoo-technicians, nurses, locksmiths, teachers etc.
MCRO informs that results of this revision were submitted to law enforcement agencies of Ukraine which have already started 7 criminal cases.
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