Three years ago, an innovative technology—the "Electronic Ticket" system—was successfully implemented at the Main Information and Computing Center of Ukrzaliznytsia (hereinafter, MICC). This service, which had operated without a single glitch until then, became incredibly popular with passengers: the number of e-ticket users increased year after year. However, in February 2015, Maksym Blank, acting CEO of UZ, unjustifiably decided to transfer the "Electronic Ticket" system from the MICC (which employs 350 highly qualified specialists and has the necessary technical infrastructure to manage all IT processes at UZ) to the small (approximately 10 full-time employees) and technically underequipped State Enterprise "Settlement Center of the Ministry of Infrastructure of Ukraine" (hereinafter, RC). Incidentally, the management of the latter has long been facing criminal charges for embezzling tens of millions of hryvnias.
Why Ukrainians love e-tickets
The "Electronic Ticket" was introduced the year Ukraine hosted the Euro 2012 football championship. Ukrainians quickly realized the benefits and fell in love with this convenient service.
Train tickets purchased via computer, mobile phone, or payment terminal can now be printed or simply saved as an image on a mobile phone without going to the ticket office. Each ticket contains a special code that the conductor can scan using a mobile control terminal.
Statistics also speak volumes about the popularity of e-tickets. According to UZ, online train ticket sales accounted for 3,4% of all tickets in 2012, 8,9% in 2013, 13% in 2014, and 21,6% since the beginning of 2015, with growth continuing.
A successful, unique and anti-corruption system!
The introduction of the electronic ticket system brought UZ colossal multi-million dollar revenues, as:
Firstly, the state-owned company's costs for online ticket purchases using bank payment cards were minimized by connecting all leading banks to the "electronic ticket" system;
secondly, the railway workers managed to abandon the services of a single intermediary agent (E-ticket), which previously accumulated the money of passengers who bought tickets in their accounts, and only then transferred it to UZ;
Thirdly, the "Procedure for Connecting Agents" was approved and put into effect, providing absolutely equal access to the resource to all companies wishing to sell e-tickets. Funds from ticket sales agents are now deposited directly into UZ accounts without any intermediaries, allowing it to maintain a working capital reserve.
Moreover, the e-ticket system cost UZ tens of times less than the potential cost of existing market options. As a result, in just a few months of operation, UZ fully recouped the costs of acquiring and implementing the e-ticket system.
The "Electronic Ticket" system can rightfully be considered a true reform at UZ, as in addition to providing a convenient service, it has eradicated the well-known corruption in the ticket sales system.
All the signs of a scam
As a reminder, the electronic ticket system was put into commercial operation at the Main Information Center on August 21, 2014, by decision of a commission established pursuant to an order issued by then-Deputy General Director of UZ, Maksym Blank. On February 23, 2015, the same Maksym Blank, now acting as Acting General Director of UZ, issued another order, "On Certain Issues of Organizing the Centralized Sale of Travel/Transportation Documents through Electronic Service Channels." This order essentially refers to the unfounded and illegal allocation of millions of hryvnias for the development of a new, completely identical electronic ticket system and the transfer of technology from the Main Information Center to the Distribution Center.
The RC was established in July 2008 and, until June 2014, was directly subordinate to the Ministry of Transport and Communications, employing fewer than ten people. However, for unknown reasons, the RC was then included in the List of Enterprises and Institutions planned to become PJSC Ukrainian Railways. Currently, the RC, as an agent, sells only 9,000 tickets per month. Considering that, on average, 5 million train tickets are sold monthly in Ukraine, the RC's market share is only 0,1%. Furthermore, as has been repeatedly reported in domestic media, the RC has been implicated in several corruption scandals over the six years of its existence. And criminal cases are still open against its leaders, as law enforcement authorities investigate embezzlement totaling tens of millions of hryvnias.
At the same time, the Main Data Processing Center employs 350 highly qualified and experienced specialists. By using the "electronic ticket" system, the Main Data Processing Center has not only become completely break-even but has also begun to generate significant profits for UZ.
That's precisely why, in connection with the transfer of the electronic ticket system from the Main Information and Communication Center to the Regional Center, alarm bells have been raised among experts. The gist of these statements is that Maksym Blank's initiative bears all the hallmarks of a scam designed to siphon off large financial flows from UZ's control—at least 7-8 billion hryvnias per year.
What are Blank and his associates trying to achieve?
The mastermind behind the transition to the electronic ticket system at the Regional Center is Nikolai Sambozhuk, a notorious con man who was once closely associated with the Regional Center (the company was once headed by his protégé, Alexander Gudkov). One of Sambozhuk's partners is the financial genius Artem Laznya, former Deputy General Director for Finance at UZ. The media once wrote the following about him: "After his appointment, the EBRD and other international financial institutions refused to lend to UZ for the purchase of new carriages as part of the rolling stock renewal project." Furthermore, it was Artem Laznya, as one of UZ's executives, who was responsible for the implementation of the electronic ticketing system. As a result of his efforts, Express-2 LLC (the "e-Ticket" system), which he owns, became the sole agent for online ticket bookings. Having become a monopoly, Express-2 received 17 hryvnias from every ticket sold, which ended up entirely in the pockets of its owner, Artem Laznya. Furthermore, UZ unjustifiably sold tickets to Express-2 (for subsequent sale through the e-Ticket system) at significantly lower prices than through its own railway ticket offices. This resulted in millions of hryvnias in losses for UZ—until it implemented its own "Electronic Ticket" technology.
Another of Sambozhuk's partners is the former director of the Regional Center, Alexander Kashpersky, who now holds the position of first deputy director of the company. A recent audit by UZ auditors revealed that the Regional Center provided loans to Kashpersky's private company, Argest Group, which also sells tickets online. Several official reports have already been filed against Maxim Blank regarding this matter, but the acting head of UZ, to the detriment of the interests of the strategic state-owned enterprise, not only failed to respond, but also saw Kashpersky as a talented embezzler of public funds, and therefore a "needed man," and signed an order transferring the "e-ticket" system to the Regional Center.
Experts believe that Sambozhuk, Laznia, and Kashpersky, having lost their shadow control over train ticket sales in Ukraine, now intend to regain it and regain control of billions in financial flows.
To implement this scam called "reform," Maksym Blank initiated a reorganization, carrying out personnel changes and appointing the "right" people to the "right" leadership positions both at UZ and at the Main Information and Communications Center. Igor Pavlenko, whose competence is highly questionable, was appointed head of the Main Information and Communications Center. At Ukrzaliznytsia, in place of the liquidated Department of Information Technology, Maksym Blank created a new Department of Corporate Information Technology—essentially an exact replica of the liquidated one, headed by his protégé Bohdan Karban. Thus, the puppets are in place, and management of Ukrzaliznytsia's entire IT structure is becoming "tame." Do Pavlenko and Karban understand that they are participating in a financial scam aimed at embezzling budget funds on an especially large scale, and do they realize that they will bear criminal liability on par with their "boss" and the aforementioned instigators?
Stop the "interim government" at "UZ"!
What will be the losses resulting from the transfer of the system from the State Information Center to the Regional Center, which is only formally considered a state-owned enterprise?
First, Ukrzaliznytsia will lose control not only over ticket distribution but also over the entire passenger transportation system, both technologically and financially, which is absolutely unacceptable in what is essentially a wartime situation. And the cost of this issue is billions of hryvnias per year.
Secondly, this will lead to the financial collapse of the Main Information and Communication Center. The enterprise will again become unprofitable, and its financing will once again fall on the shoulders of UZ. This will thus become another burden on our state budget, the deficit of which reached a critical point this year.
Third, a return to the previous, "antediluvian" online ticket sales system, without the use of many of the existing additional services, will be inevitable. Also, given the low qualifications, lack of experience, and insufficient staff at distribution centers, significant disruptions in online ticket sales will occur (even to the point of a complete shutdown).
Fourth, ticket agents will be forced back into a cage under the new name "RC," which will impose its own rules on them in the market. A return to monopoly will also inevitably lead to higher ticket prices. Given the declining purchasing power of Ukrainians due to the crisis, this will likely lead to an even further decline in UZ passenger numbers.
A reasonable question arises: why, when the entire country has risen up against corrupt officials and swindlers on a national scale, are the authorities and law enforcement agencies ignoring how UZ is losing control over the passenger transportation system, both technologically and financially? Why are the "ticket swindlers," protected by M. Blank, calmly and confidently carrying out financial fraud to siphon billions of dollars from the strategic state-owned enterprise UZ?
Oleg Nesterov, specially for ORD
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