2018 Shield in the Cloud Winners – case study series
ProZorro.Sale – eradicating corruption
in Ukraine’s public asset sales and leases
ProZorro.Sale is a Ukrainian e-auction system designed to eradicate corruption in public asset sales and leases in Ukraine. In 2018 it was awarded the Shield in the Cloud Award for the World’s Best Anti-Corruption Project Award.
Before the ProZorro.Sale platform was created, whenever a government agency, such as the State Property Fund or the Kyiv City State administration, wanted to sell its assets, auctions would either be held offline, or through a website that they would create or hire to act as the auction provider. The auction provider would know the bidders and the bids before the auction, and had the power to limit competition by not registering all interested buyers. What’s more, these websites weren’t necessarily easy to find for interested parties. This lack of transparency and trackability meant the system was vulnerable to corruption.
What was needed
Clearly, there was an opportunity to design and introduce a new system that was open and transparent and that could be trusted by both buyers and sellers.
An award winning solution
In 2016 ProZorro.Sale created its transparent e-auction system which offered ease of access, fair competition and transparency. Through this technology, the state had control of a database which, for the first time, held all transactions in one central place. More than 40 independent commercial-auction platforms are connected to this, which provide services (including user interfaces) for sellers and buyers. All sellers and buyers have the same rights and access to the data and, after each auction, all the data, the bids and the contracts were published in a machine-readable format.
The ProZorro.Sale team first introduced its system on a trial basis. Working with Ukraine’s Deposit Guarantee Fund, it tested the system with the sales of nonperforming loans (NPLs). After the first four months of testing the Deposit Guarantee Fund had transferred all its NPLs into ProZorro.Sale and, impressed with the results, huge state-owned enterprises such as Ukranian Post (“Ukrposhta”) and the Ukranian Energy Company (“Ukrenergo”) proposed to sell their assets through the platform.
It was these impressive results that helped ProZorro.Sale win the 2018 Shied in the Cloud World’s Best Anti-Corruption Project Award.
Since winning the award, ProZorro.Sale has developed the range of assets it sells – as well as NPLs the platform is used to auction rights to lease state and municipal real estate. In August 2018 it launched small privatization auctions and now sells hundreds of assets (it estimates it has sold about $20m worth) all over the country. It has also looked at a number of other applications for its transparent e-auction system, such as land leasing and transportation services.
What did the award mean?
Oleksii Sobolev, CEO of ProZorro.sale, said “It was a real honour to be recognised in the 2018 Shield in the Cloud Awards. It gave our system global recognition and on a more general level helped raise awareness on the need for reform in state asset sales. We also appreciated the opportunity to showcase Ukraine’s success to the world.
“Shield in the Cloud has been an excellent platform for us to showcase the need for and the benefit of transparent state sales, not only in Ukraine but globally. In fact, as a result of this, one of our goals for 2019 is to launch a pilot project abroad.”
ProZorro.Sale’s advice to other anti-corruption projects and startups
Sobolev added, “I’d recommend any innovative startup or project team considers entering a global challenge such as Shield in the Cloud. When you work closely on a project it’s easy to lose your sense of objectivity, as well as forget just how far you’ve come – taking part in challenges gives you real feedback.
Secondly, it’s a great opportunity to shout about your ambitions and showcase your achievements to the right people – through Shield in the Cloud, we had the opportunity to speak to experts, developers, investors and activists. Also, there’s no doubt that having a global award to our name has helped open communication lines with potential partners both within Ukraine and abroad.
Lastly, after months or even years of hard work, being recognised with an award is hugely rewarding, and encourages you to keep moving forward, even when it is difficult.”
Shield in the Cloud is a global competition and open to organisations of all sizes that are using innovative technology to challenge corruption. Applications for this year’s Shield in the Cloud challenge close on 25th February – you can enter here.