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Piotr Luty, Nataliia Versal, Pavel Semerád
Publishing House of Wroclaw University of Economics and Business
Knowledge
and Digitalisation
Against Corruption and Fraud
The project is co-financed by the Governments of Czechia, Hungary, Poland and Slovakia through
Visegrad Grants from Interna�onal Visegrad Fund. The mission of the fund is to advance ideas for
sustainable regional coopera�on in Central Europe
edited by
Piotr Luty, Nataliia Versal, Pavel Semerád
Knowledge
and Digitalisation
Against Corruption and Fraud
The project is co-financed by the Governments of Czechia, Hungary, Poland and Slovakia through
Visegrad Grants from Interna�onal Visegrad Fund. The mission of the fund is to advance ideas for
sustainable regional coopera�on in Central Europe
Publishing House of Wroclaw University of Economics and Business
Wroclaw 2024
Reviewer
Marek Masztalerz
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Elżbieta Macauley, Tim Macauley, Agnieszka Flasińska
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ISBN 978-83-67899-96-3
DOI: 10.15611/2024.96.3
Quote as: Luty, P., Versal, N., & Semerád, P. (Eds.). (2024). Knowledge and Digitalisaon Against Cor-
rupon and Fraud. Publishing House of Wroclaw University of Economics and Business.
Contents
Foreword ............................................................................................................................ 5
1. Fight Against Corruption in the Czech Republic and Ukraine (Veronika
Solilova, Nataliia Versal) .................................................................................... 7
1.1. Introducon ............................................................................................................ 7
1.2. Corrupon: Meaning, Types, Measures .................................................................. 8
1.3. Policy Response ....................................................................................................... 13
1.3.1. Ukraine .................................................................................................................... 13
1.3.2. The Czech Republic ................................................................................................. 15
1.4. Conclusions ............................................................................................................. 20
2. The Use of Digital Technology in the Fight Against Welfare Fraud:
Comparative Analysis of Selected National Experiences (Łukasz Jurek) 23
2.1. Introducon ............................................................................................................ 23
2.2. Digital Welfare State: Theorecal Approach ........................................................... 24
2.3. Welfare Fraud and Welfare Surveillance ................................................................. 26
2.4. Digital Welfare Surveillance in Selected Countries.................................................. 29
2.5. Conclusions ............................................................................................................. 31
3. Exchange of Experience in the Use of Digital Procurement Tools to Prevent
Corruption in the Public and Business Sectors in Ukraine and V4 (Oleksiy
Poburko, Nataliya Synyutka, Pavlo Horyslavets, Andriana Mazur, Oksana
Kurylo) ................................................................................................................... 36
3.1. Introducon ............................................................................................................ 36
3.2. Exchange of Experience in the Use of Digital Procurement Tools ........................... 38
3.3. Conclusions ............................................................................................................. 43
4. New Forms of Non-Standard Employment and Fighting Shadow
Economy (Antonina Sholoiko, Vasyl Erastov) ................................................ 45
4.1. Introducon ............................................................................................................ 45
4.2. Forms of Non-Standard Employment...................................................................... 46
4.3. Conclusions ............................................................................................................. 55
5. The Transformation of Payment Systems in Eastern Europe: Past Trends
and Future Innovation (Bogdan Adamyk, Anetta Zielińska, Oksana
Adamyk) ................................................................................................................ 57
5.1. Introducon ............................................................................................................ 57
5.2. The Opportunies for and Impact of Payments Innovaons .................................. 59
5.2.1. The Drivers of Payment Innovaon ......................................................................... 60
5.2.2. The Economic Impact of Payment Innovaon ......................................................... 61
5.3. The Rise of Non-Cash Payments in Eastern Europe................................................. 63
5.3.1. Non-Cash Payments ................................................................................................ 63
Knowledge and Digitalisaon Against Corrupon and Fraud 4
5.3.2. Financial Parcipaon ............................................................................................. 68
5.3.3. E-commerce ............................................................................................................ 69
5.3.4. POS-terminals ......................................................................................................... 71
5.3.5. Shadow Economy .................................................................................................... 72
5.4. Future Prospects: Bank or Non-Bank? .................................................................... 72
5.4.1. FinTech Payment Startups ....................................................................................... 72
5.4.2. Mobile Payments .................................................................................................... 73
5.4.3. Cryptocurrencies, Blockchain and CBDC ................................................................. 73
5.5. Conclusions ............................................................................................................. 75
6. Electronic Records of Sales in the Czech Republic (Pavel Semerád,
Lucie Semerádová, Marian Dobranschi) ........................................................ 78
6.1. Introducon ............................................................................................................ 78
6.2. Electronic Records of Sales ..................................................................................... 80
6.3. Results of the Electronic Records of Sales System .................................................. 82
6.4. Consequences of the Abolion of the Electronic Records of the Sales System ...... 83
6.5. Conclusions ............................................................................................................. 85
7. Fighting the VAT Gap – The Polish Experience (Alicja Brodzka, Krzysztof
Biernacki) ............................................................................................................. 88
7.1. Introducon ............................................................................................................ 88
7.2. VAT Gap ................................................................................................................... 89
7.3. VAT Gap in Poland ................................................................................................... 90
7.4. VAT Compliance Measures Implemented in Poland ............................................... 93
7.5. Procedures of Vericaon Tax Liabilies and the VAT Gap ..................................... 95
7.6. Conclusions ............................................................................................................. 98
Aerword .......................................................................................................................... 101
List of Figures...................................................................................................................... 102
List of Tables ....................................................................................................................... 103
Foreword
It is with great pleasure that we present the rst of three monographs describing the research
results on combang corrupon and fraud. Combang corrupon begins with awareness of the
problem. Sharing the knowledge of the Visegrad Group countries and Ukraine in counteracng
corrupt behaviour has a signicant cognive and educaonal aspect. Addionally, the inclusion
of technological tools allows for reducing the negave consequences of such behaviour.
In the rst chapter, the study focuses on trends in corrupon indices in Ukraine and the Czech
Republic and assesses policy responses to corrupon. The results indicate posive trends
in both naons. Over the last decade (2012-2022), the Corrupon Percepon Index (CPI)
improved from 26 to 33 in Ukraine and 49 to 56 in the Czech Republic. However, Ukraine’s
CPI score remains considerably lower, with the gap unchanged at 23 points compared to the
Czech Republic, suggesng that the Czech Republic is generally more eecve in ghng
corrupon. Nonetheless, according to the Corrupon Forecast, Ukraine has made substanal
progress in reducing corrupon opportunies, mainly through implemenng digital plaorms
like Diia and Prozorro, which have digised a vast array of public services and enhanced budget
transparency. In conclusion, both countries demonstrate notable improvements through
instuonal and legislave changes aimed at ghtening measures against corrupon.
The chapter describes digital transformaon in combang welfare fraud, however, the
author’s experience with digital surveillance has not been so far encouraging. The most
advanced countries in this regard, the Netherlands and Austria, have suered spectacular
failures in recent years. The author presents the cases of these countries, providing the basis
for a discussion of the main problems with the use of modern technology in the ght against
irregularies.
The third chapter covers an important issue related to compliance with the principles of
transparency in the public procurement process. The authors analysed the state of legal
regulaons in European countries, emphasising recommendaons for Ukraine.
The fourth chapter deals with ghng the shadow economy by introducing new forms of
employment. Global labour market changes, globalisaon, and consequences of the pandemic
created space for the evoluon of forms of employment. New employment approaches are
becoming a widespread phenomenon. Thus, the primary purpose of this invesgaon was to
highlight the main non-standard forms of employment and to create recommendaons for
ghng the shadow economy in Ukraine, which needs to full a set of tasks. First, the pros
and cons of each non-standard employment form were generalised. Some can be considered
applicable for all forms, but some were form-specic. Next, recommendaons on how to ght
the shadow economy in Ukraine were suggested. The advantages and disadvantages can be
both general and form-specic. For Ukraine, the best soluon for now, will be smulang the
creaon of sole proprietors and, if applicable, transforming them into gig specialists (only for
the IT sphere and Diia residents).
The h chapter examines the development of payment systems in Eastern Europe over the last
decade and the opportunity for further improvement through adopng new digital payment
technologies, including potenally introducing central bank digital currency. It compares the
experience of six Eastern European countries that have joined the European Union (including
Knowledge and Digitalisaon Against Corrupon and Fraud 6
all countries of the V4 Group) with three post-soviet countries (including Ukraine) that remain
outside the European Union. It documents the development of non-cash payments, and
idenes barriers to developing non-cash payments in Eastern Europe, seeking to explain
the dierences between these countries. Finally, it assesses the inuence of ntech startups,
cryptocurrencies and blockchain technologies on the recent and future development of non-
-cash payments in Eastern Europe, where the opportunies for the development of e-money
are limited. The insignicant development of e-money and the fact that there is no growth
in the volume of payments with the help of e-money is associated with the comprehensive
development and deep penetraon of card payment systems, mobile banks, and ntech
startups based on payment cards in all areas.
The sixth chapter deals with electronic evidence of sales in the Czech Republic. Combang
tax fraud is a long-standing and essenal objecve of the nancial administraon. If this were
not the case, and the authority abandoned meeng this requirement, it could destabilise and
irreversibly damage the enre entrepreneurial environment. Furthermore, the electronic
records of the sales system could have been used to re-distribute shared taxes more fairly,
allowing residents to request a proper tax receipt, as it would automacally mean that a poron
of the entrepreneur’s nal tax would be re-distributed to their municipality as per rao. This
bonding within communies could help movate proper sales reporng. Instead, the electronic
records of the sales system became a polical issue that helped the current government win the
elecons, even though digital informaon exchange between entrepreneurs and government
is a natural part of business life in most EU countries. What the Czech government did was an
unfortunate step against this trend.
The last, seventh chapter analyses the instruments implemented in Poland to minimise the
VAT gap. The hypothesis proposed in this chapter concerns the synergy eects of acons in the
legislave issue and the actual approach of the naonal tax authories iniang tax validaon
procedures. The chapter uses materials published by the Polish Ministry of Finance, Polish
Supreme Audit Oce (NIK), Internaonal Monetary Fund and European Commission together
with CASE, as well as data obtained as a result of a request on 16 December 2023 to the
Minister of Finance under the provisions of the Access to Public Informaon Act.
Chapter 1
Fight Against Corruption in the Czech Republic
and Ukraine
Veronika Solilova
Associate Professor, Prague University of Economics and Business
ORCID: 0000-0002-9122-539X
Nataliia Versal
Associate Professor, Taras Shevchenko Naonal University of Kyiv
ORCID: 0000-0002-8801-6351
© 2024 Veronika Solilova, Nataliia Versal
This work is licensed under the Creave Commons Aribuon-ShareAlike 4.0 Internaonal License.
To view a copy of this license, visit hp://creavecommons.org/licenses/by-sa/4.0/
Quote as: Solilova, V., & Versal, N. (2024). Fight Against Corruption in the Czech Republic and
Ukraine. In P. Luty, N. Versal, & P. Semerád (Eds.), Knowledge and Digitalisation Against Corruption
and Fraud (pp. 7-22). Publishing House of Wroclaw University of Economics and Business.
DOI: 10.15611/2024.96.3.01
1.1. Introduction
Ukraine and the Czech Republic share a parcular common past: the Ukrainian Soviet Socialist
Republic and the Czechoslovak Socialist Republic, respecvely. Ukraine gained independence
in 1991, while Czechoslovakia did so in 1990, spling into the Czech Republic and Slovakia in
1993. This shared ‘socialist’ past has signicantly inuenced Ukraine and the Czech Republic.
However, unlike Ukraine, the Czech Republic has successfully overcome this legacy.
While the Czech Republic became increasingly economically developed, established a rule-of-
-law state free from oligarchic dominance, and achieved the status of a developed economy,
Ukraine remained a developing country plagued by powerful oligarchic clans and weak
legislave, judicial, and execuve bodies. According to World Bank data, in terms of GDP per
capita PPP, for Ukraine this value in 1993 was 5784.657 USD, reaching 12675.44 USD in 2022,
whilst for the Czech Republic it was 12124.34 USD and 49194.96 USD, respecvely. Over
30 years, Ukraine reached the economic level the Czech Republic had at the start of its
independence. Ukraine’s limited economic growth is partly aributed to corrupon
(Internaonal Monetary Fund, 2017), which has inltrated almost all spheres of society.
As a result, Ukraine embarked on a challenging journey to combat corrupon. Since 2017,
there have been four waves of surveys on corrupon percepon among individuals and
businesses. The latest wave (2022) indicated a slight posive trend. As perceived by the
respondents, the corrupon prevalence index was 4.49 points (out of a maximum of 5) in 2017
and 4.25 in 2022; for businesses, it was 4.52 and 3.98, respecvely. Delving deeper, experience
of corrupon was reported in areas such as law enforcement acvies (32.7% in 2022 versus
Knowledge and Digitalisaon Against Corrupon and Fraud 8
50.1% in 2021), services related to electricity, gas, water supply, and sewage (28.7% and
28.8%), higher educaon instuons (25.7% and 38.4%), public and municipal healthcare
(24.8% and 39.4%), relaons in construcon and use of land (23.9% and 45.3%), educaon
services (kindergartens) (15.5% and 33.3%), and primary and secondary educaon services
(13.0% and 33.5%). From these data, two things are evident: corrupon remains high, but
there is progress in the ght against it (InfoSapiens, 2022).
As regards the Czech Republic, based on the latest research (Bašna et al., 2023), the general
percepon of corrupon was around 11% and has a posive trend (improved during the last
decade). A similar result was presented by the Global Corrupon Barometer (Kukutschka, 2021),
however the percepon of the corrupon in individual sectors was dierent, and was mainly
aected by the corrupon scandals. For example, in the health sector the corrupon prevalence
index is 10% based on the Global Corrupon Barometer (hereinaer GCB) and 6% based on the
Eurobarometer (European Commission, 2023), although the percepon of corrupon in this
sector was, according to Bašna et al. (2023), more widespread than a decade ago, when
respondents very oen met with the oer of the trip to luxury hotels in exoc desnaons.
Another area was sports sector, considered very corrupt (Transparency Internaonal, 2016).
However, the current research highlights the fact that the percepon of corrupon was lower
in the Czech Republic, even though there were more forms of corrupon than in the last decade.
For example, bribing coaches by parents, inuencing match results, and the abuse of subsidies
are more widespread, and according to the respondents, range between 6 and 8% (Bašna et al.,
2023). In educaon, according to the Eurobarometer, the corrupon index was 15% (European
Commission, 2023), 6% based on the GCB (Kukutschka, 2021), and according to Bašna et al.
(2023), this sector was considered not to be so corrupt and the corrupon was generally less
widespread. However, corrupon was rife in public procurement and building/planning
procedures sectors. Based on the CEEC Research (2009) and Lidovky.cz (2017), more than 40%
of the respondents were asked to give bribes as a condion for receiving the tender (public
procurement) in the Czech Republic. Moreover, based on the Eurobarometer data, this kind of
corrupon is now more widespread, and its index is at the 21% level. According to Bašna et al.
(2023), more than 10% of the respondents considered such corrupon as generally widespread
and common, and more than 50% thought that the condions of the tender procurement were
set with the parcular applicant/bidder in mind. According to Transparency Internaonal
(2023), the Czech Republic was ranked for the purpose of corrupon as 41st out of 180 countries,
with a score of 57 points out of 100 (i.e., 16th in the European Union); the worst posion was
noted for Italy, Slovenia, Slovakia, Poland, Croaa, and other Balkan countries. Thus, similarly,
as in the case of Ukraine, corrupon is sll signicant in the Czech Republic.
Therefore, this study aimed to explore the specic features of corrupon in Ukraine and the
Czech Republic, as well as the an-corrupon measures being implemented to combat it.
1.2. Corruption: Meaning, Types, Measures
Before delving into the specics of combang corrupon, it is essenal to understand what
exactly is meant by it. Here, one immediately encounters a problem: corrupon has many
faces, and importantly, it has not always been viewed as evil in the past. Even today, it is not
always seen as such, and can be tolerated by society. In certain cultures what might be deemed
corrupt pracces, such as the necessity of giving gis, are considered normal due to cultural
nuances. One book on corrupon begins with this premise:
V. Solilova, N. Versal: Fight Against Corrupon in the Czech Republic and Ukraine 9
the darker aspect of polical trade, that is, the realm of corrupon, whose history is as long and
twisted as that of mankind’s aempt to live by the rule of law. Variously tolerated or fought,
depending on me and place, the very denion of corrupon has shied frequently, as
praconers of corrupon have encountered the ideas, laws, and customs of dierent peoples
(Brioschi, 2017, p. 1).
Perhaps one of the shortest denions of corrupon is found in Dante’s Commedia Divina:
“Describing the city of Lucca, Dante provides the single most succinct denion of a bribe:
Lucca is where No becomes Yes for money” (Noonan, 1987, p. 746). Such a scenario is possible
in any sphere. This can be applied to any associaon of people, whether at state level or within
corporaons. This is why the OECD, in its document (Corrupon: A Glossary of Internaonal
Standards in Criminal Law), does not provide a denion of corrupon but rather “establishes
the oences for a range of corrupt behavior” (OECD, 2008, p. 19). However, for the purposes
of “an-corrupon strategies, acon plans, and corrupon prevenon measures,” it is proposed
to consider corrupon as “abuse of public or private oce for personal gain” (OECD, 2008,
p. 19). According to the European Commission (2023), corrupon is the abuse of power for
private gain, which can take many forms, such as bribes, inuence peddling, and abuse of
oce, but it can also be hidden behind neposm, conicts of interest, ‘revolving doors’
between the public and private sectors. Given the study’s objecve – comparing an-corrupon
measures in Ukraine and the Czech Republic, and considering the signicant dierences
between these countries, it is within this context that the authors examined corrupon.
Corrupon is manifested in numerous forms, and it is challenging to compile an exhausve list
of all of them. This analysis relied on the typology proposed by Andersen, which includes
bribery, embezzlement, neposm, extoron, ‘kickbacks’, money laundering, fraud, and
conicts of interest (Andersen, 2023). Table 1.1 provides case studies of corrupon in Ukraine
and the Czech Republic, encompassing one or mulple types of corrupon.
Thus, corrupon is a mulfaceted phenomenon, complicang the evaluaon of its level. This
is why various methodologies exist to measure corrupon.
Table 1.1. Case studies of corruption in Ukraine and the Czech Republic
Type
of corruption Ukraine The Czech Republic
Bribery
A deputy of the Kyiv City Council, who also
headed the city improvement commission,
was involved in organizing a corrupt
scheme designed to obtain illicit benefits
from entrepreneurs seeking permission to
place seasonal mobile kiosks. Specifically,
negotiations covered seven locations in
different districts of Kyiv in 2021, with
an agreement to illicitly obtain a total
of UAH 1.39 million (approximately USD
50 thousand), payable in two separate
instalments. The investigation into this case
was officially completed on 17 June 2022.
NCOZ officers charged 7 individuals and 2 legal entities
with the offences of arranging advantage in commissioning
public contract, public contest and public auction,
machinations in the commission of public contract
and public contest and fraud. The case concerned the
manipulation of tenders for the provision of the substitute
bus transportation in the course of scheduled rail closures
announced by the Czech Railways.
On 14 June 2022, NCOZ police officers conducted an action
day in the STOKA II case. From at least January 2014 to
March 2019, the accused persons influenced small-scale
contracts on repairs and maintenance of the real estate
premises of one state institution located in the South
Moravian Region and the Vysočina Region and one legal
entity with a seat in Brno. A certain percentage of the
prices of the contracts was meant for bribes. NCOZ police
officers came to the conclusion that dozens of contracts
were influenced in this way.
Kickbacks
Knowledge and Digitalisaon Against Corrupon and Fraud 10
Embezzlement
In October 2014, VAB Bank, identified as
‘troubled’, asked for a stabilisation loan
from the National Bank of Ukraine, using
real estate as collateral. The National Bank
of Ukraine approved a two-year stabilisation
loan of UAH 1.2 billion (approximately
USD 92 million) to VAB Bank. Subsequent
investigations revealed that the provided
valuation reports contained misleading
information, wherein the value of the real
estate was exaggerated almost 25 times.
VAB Bank, however, failed to repay this loan
at the end of the stipulated period.
On 16 and 17 May 2022 NCOZ carried out a police
operation related to the manipulation of tenders awarded
by the Radioactive Waste Repository Authority as the
contracting authority. At present, 6 individuals and 3 legal
entities are being prosecuted for the offence of arranging
advantage in commission of public contract, public
contest and public auction. The individuals are reasonably
suspected of organised crime comprising the manipulation
of two tenders of this particular contracting authority
between 2021 and 2022.
On 8 June 2022 NCOZ officers filed a motion for indictment
to the State Prosecutor of the High Public Prosecutor’s
Office in Prague against 21 natural persons and 1 legal
entity for the offence of influencing football matches
results in the Czech Football League and Fortuna: National
League and further for unauthorised withdrawal of funds
from Pilsen’s Regional Football Association.
Conflicts of interest
In the autumn of 2016, the head of the
National Police Department, leveraging
his official position, initiated a deal to
purchase equipment and specialist uniforms
from an acquaintance who was a private
entrepreneur. The specifications of these
items were set in such a way as to avoid
competition. As a result, the National
Police paid UAH 3 million, out of which the
private entrepreneur transferred UAH 980
thousand (approximately USD 38 thousand)
as payment for legal services to a company,
the beneficiary of which was that head of
the department.
The 2013 Czech political corruption scandal involved an
anti-corruption raid, launched by the organised crime
unit. It resulted in the arrest of the prime minister’s Chief
of Staff, Jana Nagyová, and seven others. Jana Nečasová
(Nagyová) was being investigated on suspicion
of corruption. In exchange for luxury gifts, she was
supposed to give the donors access to Prime Minister
Nečas or provide them with other benefits. Due to lack of
evidence, she was only charged with tax evasion. Another
part of the case concerns the misuse of the Military
Intelligence Service to monitor the former wife of Prime
Minister Nečas in 2012.
Money laundering
The State Investment Company, managed
by Derzhinvestproekt, received funding
in 2012-2014 for the implementation of
national projects “Quality Water” and
“Olympic Hope-2022”. Later investigations
revealed that over UAH 250 million
(approximately USD 31 million) had
been transferred to the accounts of
foreign companies based in Cyprus. It
was discovered that the brother of the
former head of “Derzhinvestproekt”
used this money to acquire shares in
Ukrainian companies that, between 2013
and 2015, purchased over 700 land plots
(approximately 1000 hectares) from
Ukrainian citizens.
NCOZ officers finalised their investigation of a case of tax
evasion and money laundering totalling approximately CZK
700 million. Within the OCTAVIAN case, 11 persons were
prosecuted. The defendants committed the crimes from
September 2009 until April 2012 by submitting excessive
VAT deductions within the companies they controlled.
NCOZ officers managed to seize assets corresponding to
the full amount of losses suffered by the Czech Republic
as a replacement. The case was pursued by the Tax Cobra
team in close cooperation with Czech FIU (FAÚ).
Fraud
In the Panama Papers case, many Czech citizens were
involved, particularly regarding foreign investments in the
Czech real-estate sector for the purpose of obscuring the
real ultimate beneficiaries of wealth (for further detail see
Holcova, 2016).
The motion to indict 66 persons of ČKD Praha DIZ for VAT
evasion dated 7 Jan2022: NCOZ officers filed an indictment
motion against 32 persons for the offence of tax evasion
committed for the benefit of an organised criminal group
or participation in the form of aiding this crime. The
suspects are believed to have included fake invoices related
to fictitious taxable transactions into the ČKD Praha DIZ
accounts, or have intended to do so. The VAT loss caused
by their concerted action to the state budget totalled
approximately CZK 438 million.
Source: (Dufková & Kotouček-Mikolášková, 2018; Holcova, 2016; NABU, 2021, 2022, 2023; NCOZ, 2022).
V. Solilova, N. Versal: Fight Against Corrupon in the Czech Republic and Ukraine 11
Firstly, the study considered the Corrupon Percepon Index (CPI) proposed by Transparency
Internaonal. This index is represented by the CPI Score (from zero to a maximum of 100 points:
the higher the rate, the beer the situaon) and the CPI Rank, where a higher rank correlates
with a greater level of corrupon. The СPI Score is calculated as the average value of data from
12 dierent sources, reecng experts’ percepon of the level of corrupon in the public
sector (Transparency Internaonal, 2023).
The CPI trends for Ukraine and the Czech Republic over the past decade, as illustrated in
Figure 1.1, reveal a signicantly higher corrupon level in Ukraine compared to the Czech
Republic. Despite the observed improvements in both countries, their disparity remains
substanal (on average 25 points in CPI Score). This is the case even with Ukraine’s considerable
eorts to combat corrupon.
0
20
40
60
80
100
120
140
160
0
10
20
30
40
50
60
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
CPI Rank
CPI Score
Ukraine CPI Rank The Czech Republic CPI Rank
Ukraine CPI Score The Czech Republic CPI Score
Fig. 1.1. CPI Score and Rank of Ukraine and the Czech Republic in 2012-2022
Source: (Transparency International, 2023).
The second one is the Index of Control of Corrupon proposed by the World Bank, and it
captures percepons of the extent to which public power is exercised for private gain, including
both pey and grand forms of corrupon, as well as ‘capture’ of the state by elites and private
interests. The esmate gives the country’s score on the aggregate indicator, in units of a standard
normal distribuon, i.e. ranging from approximately –2.5 to 2.5 (World Bank, 2023).
The lower the index, the higher the corrupon. According to Figure 1.2, an upward trend of this
index was observed in both countries, which is posive, however the average rate of change in
Ukraine is higher than in the Czech Republic. The authors emphasise once again that the eorts
made by Ukraine in the ght against corrupon are extraordinary, nevertheless, the pervasive
nature of corrupon and its level there hinders rapid progress in overcoming this issue.
One limitaon of the previously menoned indices is their reliance on expert subjecve
evaluaons. To address this, a novel methodology for index construcon has been developed by
Mungiu-Pippidi & Dadašov (2016) at the European Research Center for An-Corrupon and
State-Building. This new approach incorporates the evaluaon of causes of corrupon, thereby
enabling forecasts of its future levels, hence the third methodology considers the evaluaon of
Knowledge and Digitalisaon Against Corrupon and Fraud 12
two indices. The rst is the Index of Public Integrity with a maximum score of 10, comprising two
components: Opportunies for Corrupon and Constraints on Corrupon. The second is the
Transparency Index, which has a maximum score of 20. A more in-depth analysis of corrupon
allows to idenfy areas where each country is making signicant progress in combang it.
y = 0.0317x + 0.3105
y = 0.0453x – 1.1833
–1.2
–1
–0.8
–0.6
–0.4
–0.2
0
0.2
0.4
0.6
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
The Czech RepublicUkraine
Linear (The Czech Republic) Linear (Ukraine)
Fig. 1.2. Index of control of corrupon of Ukraine and the Czech Republic in 2012-2022
Source: own elaboration based on (World Bank, 2023).
For instance, Ukraine has shown a notable posive trend in the dynamics of Online Services
and E-Cizenship, advancing by +3.51 points, in contrast to the Czech Republic’s improvement
in Online Services (+1.14) and E-Cizenship (+0.96) (Table 1.2). However, Ukraine signicantly
lags behind in crucial areas like Judicial Independence, despite eorts to reform this sector.
Overall, consistent with previous indices, the Czech Republic demonstrates beer outcomes in
the ght against corrupon.
Table 1.2. Ukraine’s and the Czech Republic’s corruption forecast
Indicators Max
2013 2023 Change
Ukraine The Czech
Republic Ukraine The Czech
Republic Ukraine The Czech
Republic
Opportunities for corruption
Budget Transparency 10 7.42 8.08 8.4 8.6 0.98 0.52
Online Services 10 4.82 5.88 8.33 7.02 3.51 1.14
Constraints on corruption
Judicial Independence 10 3.27 5.02 4.08 6.59 0.81 1.57
Press Freedom 10 6.69 9.08 6.51 8.52 –0.18 –0.56
E–Citizenship 10 4.82 5.56 8.33 6.52 3.51 0.96
Index of Public Integrity 10 – – 6.37 8.14 – –
Transparency Index 20 – – 14.0 15.5 – –
Source: (Corruptionrisk.org, 2023).
V. Solilova, N. Versal: Fight Against Corrupon in the Czech Republic and Ukraine 13
1.3. Policy Response
1.3.1. Ukraine
Legislation and anti-corruption bodies
The ght against corrupon in Ukraine is accompanied by the adopon of relevant legal acts,
notably: the Law of Ukraine on Prevenon of Corrupon dated 2014, the Law of Ukraine on
Naonal An-Corrupon Policy of Ukraine for 2021-2025 dated 2022, and the 2023 Cabinet of
Ministers of Ukraine resoluon on the approval of the Naonal An-Corrupon Programme
for 2023-2025.
The law on Prevenon of Corrupon established the Naonal Agency on Corrupon Prevenon
(NACP), which is “a central execuve body with a special status responsible for the development
of an-corrupon policy and prevenon of corrupon” (NACP, 2023). It develops An-
-Corrupon Strategy and State Programme, and administers: the Unied State Register of
Declaraons of Persons Authorized to Perform the Funcons of the State or Local Government;
the Unied State Register of Persons that Commied Corrupon or Corrupon-Related
Oences; the Unied State Register of Financial Reports of Polical Pares.
One more important instuon is the Naonal An-Corrupon Bureau of Ukraine (NABU), with
the main task “to combat corrupon and other criminal oences commied by top ocials,
which pose a threat to the naonal security of Ukraine, as well as to take other ancorrupon
measures under the Law” with the slogan “Eradicate and Prevent!” (NABU, 2023).
Also created were the High An-Corrupon Court (HACC) and Asset Recovery and Management
Agency (ARMA), each of which has its own area of responsibility.
Despite the creaon of specialised an-corrupon instuons, all levels of Ukrainian
government are engaged in an-corrupon eorts. Table 1.3 illustrates how the public and
business sectors perceive the eecveness of these eorts. Noted that businesses tend to be
more informed about the acvies of these an-corrupon bodies than the general populaon.
Table 1.3. Assessment by the individuals and business of the effectiveness of anti-corruption efforts
by government agencies 2021-2022
Institution Individuals Business
2021 2022 2021 2022
President of Ukraine / Office of the President of Ukraine 1.92 2.9 2.28 2.98
Security Service of Ukraine (SSU) 1.91 2.58 2.44 2.82
Local authorities 1.8 2.39 2.34 2.45
National Police of Ukraine 1.8 2.37 2.45 2.67
State Financial Monitoring Service of Ukraine 1.87 2.36 2.51 2.7
Regional authorities 1.79 2.35 2.3 2.39
Asset Recovery and Management Agency (ARMA) 1.8 2.34 2.2 2.62
National Anti-Corruption Bureau of Ukraine (NABU) 1.82 2.32 2.38 2.82
State Bureau of Investigation (SBI) 1.79 2.29 2.32 2.78
Knowledge and Digitalisaon Against Corrupon and Fraud 14
Specialised Anti-Corruption Prosecutor’s Office (SAPO) 1.85 2.25 2.38 2.79
National Agency on Corruption Prevention (NAPC) 1.77 2.23 2.27 2.66
High Anti-Corruption Court (HACC) 1.89 2.19 2.32 2.64
Prosecutorial authorities (other than the Specialised Anti-Corruption
Prosecutor’s Office) 1.85 2.16 2.22 2.41
Courts (other than the High Anti-Corruption Court) 1.69 2.12 2.23 2.36
Cabinet of Ministers of Ukraine, ministries, and other central executive
authorities 1.74 2.1 2.15 2.51
Parliament of Ukraine 1.67 2.09 2.02 2.34
Average score on a 5-point scale, where 1 means that anti-corruption efforts are completely ineffective, and 5
means that they are highly effective.
Source: (InfoSapiens, 2022).
The ght against corruption
Combang corrupon is a complex task. Unfortunately, the enactment of good and proper
laws, the imposion of stricter penales for corrupt acons, and the establishment of an-
-corrupon bodies do not always adequately respond to this challenge. Much depends on
society’s readiness to change its atude towards corrupon. Moving forward, the authors
demonstrated several examples from dierent sectors where the ght against corrupon can
be considered successful.
The sectors where corrupon is possible can be generalised as educaon, healthcare, and
administrave services. Currently, signicant progress is evident in all these sectors.
Numerous reforms have been implemented in educaon to prevent corrupon, such as the
centralised preparaon of examinaon tasks for both Bachelor’s and Master’s degree
admissions and eliminang corrupon at the level of higher educaonal instuons. There are
special electronic queues for kindergarten admissions, etc. In 2022, a survey of Ukrainians
indicated experiences of corrupon in higher educaon instuons at 11.9%, elementary and
secondary educaon at 21.4%, and kindergartens at 8.3% (InfoSapiens, 2022).
In healthcare, electronic sick leaves have been introduced, and basic services provided to the
populaon are clearly listed in each medical facility, including available medicaons and free
services. However, this sector remains corrupt, with 51% of Ukrainians having direct corrupon
experience in 2022 (InfoSapiens, 2022).
At the level of state authories, corrupon has signicantly decreased due to the
implementaon of Diia – a “state in a smartphone” iniave. Many documents, previously
requiring signicant me to obtain, are now accessible with one click. However, issues remain
in areas involving direct contact with public ocials. For example, in the acvies of
administrave service centres, 20.4% of Ukrainians experienced corrupon in 2021, which
increased to 22.8% in 2022 (InfoSapiens, 2022).
Thus, it is clear that progress is being made and remains stable where direct contact between
interested pares is removed, because consumers of services can also be iniators of pey
corrupon, creang a vicious circle.
V. Solilova, N. Versal: Fight Against Corrupon in the Czech Republic and Ukraine 15
In the business sector, the ght against corrupon connues. In 2022, corrupon experiences
were reported as follows: 11.3% in customs, 8.5% in construcon and land use, 9.0% in services
related to power, gas, water supply, and sewer systems, 8.0% in the judicial system (including
enforcement of court decisions), 9.4% in monitoring and oversight of business acvies, 14.0%
in the acvies of law enforcement authories, and 23.2% in the acvies of tax authories
(InfoSapiens, 2022).
At the same me, one of the most signicant achievements in Ukraine is the implementaon
of the Prozorro system in the sphere of public procurement. Prior to 2016, the public
procurement sector in Ukraine was plagued by non-transparency and systemic corrupon.
Informaon pertaining to tender processes was disseminated exclusively through the Bullen
of State Procurements, a publicaon with limited circulaon. The submission of procurement
proposals was conned to paper format, resulng in their occasional loss. Through
a collaborave eort involving the civil organizaon Transparency Internaonal Ukraine,
private electronic plaorms, the IT company Quintagroup, and the Ministry of Economy, the
electronic plaorm Prozorro, recognised for its transparency, was developed. Currently, this
system is state-owned and subject to oversight by the Cabinet of Ministers (Khutor et al., 2024;
Prozorro, 2024).
From 1 April 2016, the Prozorro system became mandatory for central government enes and
monopolies, expanding its reach to encompass other public procurement enes from 1 August
2016 onwards. As a result, any individual in Ukraine can now track procurements and assess the
adequacy of prices, as well as idenfy the parcipants in tenders. Thanks to this system, numerous
instances of corrupt acvies have been exposed and addressed (Prozorro, 2024).
Currently, Prozorro and the NACP have intensied their collaboraon, including integrang
their electronic procurement system with the Unied State Register of Persons who have
commied corrupt or corrupon-related oenses (Prozorro, 2024).
1.3.2. The Czech Republic
Legislation and anti-corruption bodies
Based on internaonal comparisons in recent years, it has emerged that the Czech Republic
has been stagnang in its ght against corrupon and, accordingly, in the evaluaon metrics.
For this reason, the current government is striving to implement a number of correcve
measures. One of the signicant documents is the Government Concept for Combang
Corrupon for the period 2023 to 2026 (hereinaer the Government Concept), which was
approved by Resoluon No. 228 of the Government of the Czech Republic on 5 April 2023, that
idenes priority areas for combang corrupon (Figure 1.3).
Another equally signicant document is the Acon Plan to Combat Corrupon (for the years
2023 and 2024), which is regularly compiled for specic periods and was approved by
Government Resoluon No. 508 on 12 July 2023. The aim of the Acon Plan was to specify the
tasks of individual legislave and non-legislave measures for the priority areas of the
government’s an-corrupon policy, and to determine the responsible authority for their
implementaon. Emphasis is placed parcularly on the eecve implementaon of an-
-corrupon standards rather than their quanty.
Knowledge and Digitalisaon Against Corrupon and Fraud 16
Efficient
and independent
public power
Transparency
and open access
to informaon
Economical
management
of state property
Development
of civil society
Fig. 1.3. Priority areas for combang corrupon in the Czech Republic
Source: compiled based on the Government Concept for Combating Corruption for the period 2023 to 2026.
The measures of the Acon Plan will complement other signicant strategic documents, such
as the Strategic Framework Czech Republic 2030, the Concept of Client-oriented Public
Administraon 2030, and the Digital Czech Republic strategy, as well as reforms, including
component 4.3 An-Corrupon reforms of the Naonal Recovery Plan of the Czech Republic,
which is funded by the EU.
As already menoned, the Czech Republic has been engaged in the ght against corrupon for
over a decade. A signicant milestone was the establishment of the Open Government
Partnership (OGP), a voluntary iniave of the United States administraon aimed at promong
openness, transparency, combang corrupon, and increasing civic engagement. Since its
founding in 2011, OGP has grown to include 75 countries and 104 local jurisdicons. The Czech
Republic joined this internaonal iniave by Government resoluon No. 691 on September
14, 2011, with the aim of transforming state instuons to be more open, ecient, and
accountable. The country is also part of internaonal assessments in the ght against
corrupon. Currently, anyone encountering any form of corrupon can report such situaons.1
Furthermore, among other measures, in 2014, Government resoluon No. 629 approved the
Government Council for the Coordinaon and Evaluaon of the Fight against Corrupon,
which replaced the former Government Commiee for the Coordinaon of the Fight against
Corrupon established in 2012. Currently, it includes a total of 20 members from among
ministers, the Naonal Centre against Organised Crime (NCOZ), heads of the Associaon of
Regions and the Union of Towns and Municipalies, as well as non-governmental organisaons,
the academic community, and professional chambers.2
1 The website for the announcement of the corrupon is: hps://nahlasitkorupci.transparency.cz/#/
2 The list of members is available at: hps://korupce.cz/wp-content/uploads/2023/09/Seznam-clenu-Rady-
vlady-pro-koordinaci-boje-s-korupci_zari_2023.pdf
V. Solilova, N. Versal: Fight Against Corrupon in the Czech Republic and Ukraine 17
A signicant achievement of the Government Commiee was the introducon of the
mandatory assessment of corrupon risks, i.e. Corrupon Impact Assessment (CIA), alongside
the exisng Regulatory Impact Assessment (RIA) within the government’s legislave rules.
The core of the methodology is a straighorward evaluaon of corrupon risks associated
with proposed legislaon, allowing for the consideraon of criteria for reducing corrupt
opportunies when draing legal proposals. Since the incepon of the Government Commiee
and the respecve Acon Plans, the goal has been to more rigorously monitor the
implementaon of RIA and CIA within the legislave process. The successor Government
Council recommended connuing to use this methodology for RIA and CIA in the preparaon
of legislave proposals.
In addion to the aforemenoned methodologies, the Czech Republic has implemented the
Framework Resort Internal An-Corrupon Programme (RRIPP), which sets out the framework
for these internal programs (RIPP), thus standardising the structural and content-related form
of RIPP. Furthermore, a RIPP report is regularly prepared every two years, for which
methodological guidelines – recommendaons for RIPP evaluaon are also created.
The Czech Republic has also established the Interdepartmental Coordinaon Group for An-
-Corrupon based on the Government’s An-Corrupon Strategy, currently overseen by the
Ministry of Jusce – An-Corrupon Department. The aim of this working group is to dene
key priories of government an-corrupon policy, acvely idenfy areas of public
administraon performance that are most at risk of corrupon, propose measures to eliminate
these risks, and monitor and evaluate an-corrupon measures, including monitoring the
legislave process in this area.
The An-Corrupon Department, under the Ministry of Jusce, is currently a strategic division
that gathers all news, legislave and non-legislave measures related to the ght against
corrupon, an-corrupon documents, departmental/interdepartmental groups, and other
collaboraons on its website.3 The An-Corrupon Department is part of the Conict of
Interest and An-Corrupon Division within the Secon for Coordinang Legislaon and
Corrupon Prevenon at the Ministry of Jusce. Its main agenda involves coordinang various
departments (resorts) in the ght against corrupon, including providing methodological
support and ensuring compliance with commitments in this area arising from internaonal
convenons, memberships, and other internaonal organizaons.
The direcons of the an-corrupon agenda, which is a summary of legislave and non-
-legislave measures and procedures applied in the ght against corrupon, are as follows:
Establishment of an independent, ecient, professional, integrated, and corrupon-
-resistant public administraon.
Independence of the public prosecutor’s oce from polical inuences.
Transparency and eciency of decision-making and legislave processes.
Streamlining the system of free access to informaon.
Expansion and rigorous applicaon of Regulatory Impact Assessments (RIA) and Corrupon
Impact Assessments (CIA) in legislaon.
More eecve prevenon of conicts of interest.
Clear rules for nancing polical pares, as well as electoral campaigns.
Creaon of binding standards for the nominaon of state representaves to corporaons
and state-owned enterprises.
3 hps://korupce.cz
Knowledge and Digitalisaon Against Corrupon and Fraud 18
Adopon of prevenve measures to limit corrupon risks in the management of public
funds.
Strengthening of managerial and control mechanisms in public administraon.
Protecon of corrupon whistleblowers.
Implementaon of the Framework Resort Internal An-Corrupon Programme (RRIPP)
and Resort Internal An-Corrupon Programmes (RIPP).
Table 1.4 lists the most signicant legislave and non-legislave regulaons in the ght against
corrupon that have been proposed or are currently under consideraon.
Table 1.4. Anti-corruption regulations in the Czech Republic
Legislative and non-legislative anticorruption regulations Responsible authority
Update of the Framework Resort Internal Anti-Corruption Programme Ministry of Justice
Amendment to Act No. 283/1993 Coll., on Public Prosecution Ministry of Justice
Amendment to Act No. 7/2002 Coll., on Proceedings Concerning Judges, State
Prosecutors, and Judicial Executors, as amended, and other related laws
Ministry of Justice
Implementation of the project “Intensifying the Fight Against Corruption by
Increasing Awareness in the Public Sector with a Focus on Judges, Authorities
Involved in Criminal Proceedings, and Public Administration” – Professional and
Ethical Codes of Judges and State Prosecutors
Ministry of Justice
Proposal of the Law on Lobbying and Related Amendment Act Ministry of Justice
Processing an analysis aimed at identifying potential issues with Act No.
159/2006 Coll., on Conflict of Interest, as amended
Working Commission
of the Chairman of the
Government Council for
Coordination of the Fight
against Corruption on
Conflict of Interest / Ministry
of Justice
Creation of the Action Plan of the Czech Republic for the Open Government
Partnership for the years 2025 to 2026.
Ministry of Justice
Implementation of the commitment of the Sixth Action Plan: Transparency of
state-provided subsidies.
Ministry of Finance /
Ministry for Regional
Development
Implementation of the commitment of the Sixth Action Plan: Strengthening the
quality of data in the register of beneficial owners – analysis and proposal of
measures.
Ministry of Justice
Proposal of the law amending Act No. 134/2016 Coll., on Public Procurement,
as amended.
Ministry for Regional
Development
Implementation of the commitment of the Sixth Action Plan: Involving the
public in monitoring public procurement.
Ministry for Regional
Development
/ Ministry of Labour and
Social Affairs
Implementation of the commitment of the Sixth Action Plan: Increasing
transparency and methodological support for the procurement of small-scale
public contracts.
Ministry for Regional
Development
Continuation of methodological support for Act No. 253/2008 Coll., on
certain measures against the legalisation of proceeds from crime and
terrorist financing, as amended, its development, updating, and expansion of
methodological support including issues related to politically exposed persons.
Financial Analytical Office
/ Ministry of Finance The
substantive intent of the law
on the management and
control of public finances
Ministry of Finance
V. Solilova, N. Versal: Fight Against Corrupon in the Czech Republic and Ukraine 19
Implementation of measures from the Strategy for Combating Fraud and
Corruption within EU Funds incorporated into the Single National Framework.
Ministry for Regional
Development
Completion of the legislative process of proposals of laws transposing Directive
2019/1937 of the European Parliament and of the Council on the protection of
persons reporting breaches of Union law.
Ministry of Justice
Implementation of the commitment of the Sixth Action Plan: Improving
the position of whistleblowers, including increasing awareness of reporting
wrongdoing.
Ministry of Justice
Continue supporting anti-corruption activities of non-governmental non-
-profit organizations through the grant program for the Prevention of Corrupt
Practices.
Ministry of Justice
Proposal for the implementation of recommendations from the project: The
Corruption in Selected Sectors in the Czech Republic and possibilities for its
reduction.
Ministry of Justice
Source: (Ministry of Justice, 2023).
Another signicant legislave measure is the compleon of the legislave process and
subsequent implementaon of the Whistleblower Protecon Act (Whistleblowing Regulaon4),
adopon of lobbying regulaon5, or adopon of an amendment to the Public Prosecuon Act,
stemming from the regular evaluaon report of GRECO (Group of States against Corrupon,
the Council of Europe). From the latest h round6 of GRECO evaluaons, it also emerged that
the Czech Republic should take measures regarding the integrity of individuals in top execuve
posions (i.e. introducon of a code of conduct, including integrity tests for advisors, ministers,
and deputy ministers before appointment) including expanding the regulaon of conicts of
interest aer terminaon of employment. In the case of conicts of interest, GRECO
recommends strengthening the obligaon to report a given conict ad hoc. The Ministry of
Jusce is conducng the necessary analysis to idenfy changes to the Conicts of Interest Law
to propose necessary amendments. The Ministry of Jusce also, upon GRECO’s recommendaon,
allows for the publicaon of asset declaraons of public ocials upon request. In response to
GRECO’s recommendaons, the Czech Republic will inform GRECO about the measures taken
by 31 December 2024.
The ght against corruption
The An-Corrupon Department, under the Ministry of Jusce, also oversees a range of
programmes and projects. One of these acvies was the project “Intensifying the Fight
Against Corrupon by Increasing Awareness in the Public Sector with a Focus on Judges,
4 The comprehensive legal regulaon of whistleblowing came into eect on August 2023, through Act
No. 171/2023 Coll., on the protecon of whistleblowers, including the accompanying amending Act No.
172/2023 Coll., transposing into Czech law Direcve 2019/1937 of the European Parliament and of the
Council of the European Union of 23rd October 2019 on the protecon of persons who report breaches of EU
law. Available at: hps://eur-lex.europa.eu/legal-content/CS/TXT/PDF/?uri=CELEX:32019L1937&from=CS
5 Proposal of the Law on Lobbying and Related Amendment Act was submied to the Government of the
Czech Republic by the Ministry of Jusce on 9th May 2023. Currently, they are being discussed in the Chamber
of Depues. The eecveness is expected by 1st July 2025. Its introducon is advocated by non-governmental
organizaons, the OECD, and the Council of Europe. According to the proposal, a lobbyist for the most serious
type of oenses may be ned up to 1 million CZK or be subject to a ban on acvies.
6 Informaon about the acvies of the GRECO group and their assessment reports is available on the website:
www.coe.int/greco. Report for Czechia is available at: hps://rm.coe.int/grecoeval5rep-2022-7-nal-eng-
evaluaon-report-czech-republic-public/1680aeb6aa
Knowledge and Digitalisaon Against Corrupon and Fraud 20
Authories Acve in Criminal Proceedings, and Public Administraon” supported by the EEA
Funds 2014-2021. The project lasted for almost three years (ending in October 2023) and was
performed by the Ministry of Jusce in partnership with the Supreme Public Prosecutor’s
Oce and the Judicial Academy. As part of the project, brochures on Whistleblower Protecon,
Conict of Interest among Public Ocials, and Ethical Codes for Judges and Prosecutors were
produced. Comparave studies addressing these issues were also conducted.
Another signicant project supported by the Ministry of Jusce as the implemenng guarantor
and by the Grant agency – Technology Agency of the Czech Republic (TAČR) is the project
“Corrupon in Selected Sectors in the Czech Republic and Opons for Its Reducon” carried
out by the Sociological Instute of the Czech Academy of Sciences for three years (concluded
on 31 December 2023). The project presented tools for replicable, eecve, and valid
measurement of direct and indirect experiences with corrupon in dierent sectors. The
project’s results were reected in two strategic documents: the Government Concept for the
years 2023 to 2026 and the Acon Plan for 2023 and 2024. Based on the project, percepons
of corrupon and its actual occurrence among the respondents in various sectors were
measured (Bašná et al., 2023).
1.4. Conclusions
This study has comprehensively explored the corrupon in Ukraine and the Czech Republic,
providing a comparave insight into how each country has addressed this pervasive issue
through various legislave and an-corrupon strategies.
Despite signicant eorts and reforms in Ukraine, corrupon connues to impede economic
and social development. Introducing systems like Prozorro for public procurement transparency
shows promise in reducing corrupon levels, but the overall eecveness remains constrained
by persistent systemic issues. The legislave frameworks and an-corrupon bodies such as
the NACP and NABU underscore a robust commitment to combang corrupon. However, the
public percepon and business experiences suggest that these measures must be more deeply
embedded in the societal and polical fabric to eect substanal change.
Conversely, with a stronger instuonal framework and higher economic development, the
Czech Republic has demonstrated more substanal progress in its an-corrupon eorts.
Adopng the Government Concept for Combang Corrupon and subsequent acon plans
illustrates a proacve approach to rening the governance landscape. However, the study
idenes that despite these advancements, the country sll faces challenges in fully eradicang
corrupon, parcularly in sectors prone to corrupon scandals. The ongoing eorts need to
focus on enhancing transparency, reducing opportunies for corrupon, and fostering a culture
of integrity within all levels of government and society.
The connuous improvement in the corrupon percepon indexes over the years for both
countries indicates a posive trend, but it also highlights the need for sustained and intensied
eorts.
Moving forward, Ukraine and the Czech Republic must connue to innovate and adapt their
an-corrupon strategies based on naonal needs and evolving global standards. Strengthening
the legal and instuonal frameworks, ensuring the independence of judicial systems, and
promong a societal shi towards transparency and accountability will be crucial in making
signicant headway against corrupon.
V. Solilova, N. Versal: Fight Against Corrupon in the Czech Republic and Ukraine 21
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Chapter 2
The Use of Digital Technology in the Fight Against
Welfare Fraud: Comparative Analysis
of Selected National Experiences
Łukasz Jurek
Assistant Professor, Wroclaw University of Economics and Business
ORCID: 0000-0002-0078-471X
© 2024 Łukasz Jurek
This work is licensed under the Creave Commons Aribuon-ShareAlike 4.0 Internaonal License.
To view a copy of this license, visit hp://creavecommons.org/licenses/by-sa/4.0/
Quote as: Jurek, Ł. (2024). The Use of Digital Technology in the Fight Against Welfare Fraud: Compara-
ve Analysis of Selected Naonal Experiences. In P. Luty, N. Versal, & P. Semerád (Eds.), Knowledge and
Digitalisaon Against Corrupon and Fraud (pp. 23-35). Publishing House of Wroclaw University of
Economics and Business.
DOI: 10.15611/2024.96.3.02
2.1. Introduction
The term ‘welfare state’ is ambiguous. It was coined in England during the Second World War
in contrast to another term that was common at that me, ‘warfare state’. The replacement of
‘warfare’ by ‘welfare’ was intended to be a symbolic shi from an economy focused on pro-
arms producon, which provided cizens with military security, to pro-social producon
supposed to provide cizens with social security.
The welfare state was developed for both equity and eciency reasons. Thus, according to
Barr (2020), it can be thought of as (1) a set of instuons that provide poverty relief,
redistribute income and wealth, and seek to reduce social exclusion (the ‘Robin Hood’ funcon),
and (2) a set of instuons that provide insurance and a mechanism for redistribuon over the
life cycle (the ‘piggy bank’ funcon).
The design of the welfare state varies from country to country (Esping-Andersen, 1990).
Despite some dierences, the overall size (tasks, funds, administrators) of the welfare state is
systemacally increasing in Western countries (Quadagno, 1987), due to the growth of
tradional issues caused by demographic change and shis in industrial relaons. There is also
the emergence of new risks related to, for example, epidemiological issues. All this increases
the pressure on public authories to extend a safety net for cizens.
The development of the welfare state has enabled to overcome crucial social problems,
however it also raised a number of concerns about operang costs and administrave
eciency. Excessive bureaucracy hampers social policy programmes, especially at the stage of
benet distribuon. The mulplicity of procedures and ineecve control make the welfare
system open to various types of abuse and fraud. Public funds that were to serve good causes
Knowledge and Digitalisaon Against Corrupon and Fraud 24
are being extorted by unauthorised persons. This problem, although for a long me overlooked
and/or neglected, is now becoming a major challenge for theorists and policy-makers. The use
of modern technology seems to be the only reasonable soluon in this situaon. Mass data
collecon, automaon, and arcial intelligence can essenally increase eciency in detecng
and combang welfare fraud. It is crucial therefore, as stated by Henman (2022, p. 536), “to
bring the ‘digital’ into ‘social policy’”.
So far, only a few countries have digised their welfare infrastructure. Sociees where local
governments have developed AI-driven technologies to eliminate non-compliance have been
involved in a massive experiment. Their experience has shown that while technology reduces
old problems such as low operaonal eciency and high bureaucrac costs, it also creates
a new set of problems and concerns, with the emerging crical issues of data protecon,
privacy and e-exclusion. In retrospect, the overall outcome is mixed and to some extent
controversial. For this reason, the general narraves in the literature range from the techno-
-opmisc to the techno-pessimisc (Fugletveit & Sørhaug, 2023).
This chapter describes the experiences of two countries (the Netherlands and Australia) in
using digital technologies to detect and combat welfare fraud, and also aempts to assess the
strengths and weaknesses of such a digital transformaon. It is both analycal and descripve,
and based on analysis of literature and ocial documents.
2.2. Digital Welfare State: Theoretical Approach
The world is changing fast, and the technological revoluon we are witnessing today touches
all areas of society. Every aspect of human existence is more or less aected by modernity,
with technologies penetrang every aspect of life. However, the pace of this diusion varies in
dierent areas. Public administraon has tradionally been very conservave and resistant to
change, hence innovaons do not aect it as quickly as, for example, the corporate world.
Somemes it is necessary to smulate this development, in order to encourage the adaptaon
of new tools based on technology.
In general, digital transformaon may be described as the transion from ‘analogue’ to ‘digital’.
This shi has also aected the welfare state. In order to emphasise the scale and quality of
change, various load-bearing labels are used in the literature, such as: digital social policy,
social policy 4.0, and digital welfare state (Szatur-Jaworska, 2023).
In 2014, on the iniave of the OECD Council, member countries adopted Recommendaon of
the Council on Digital Government Strategies (OECD, 2014). The document called on
governments to develop and implement digital strategies in order to achieve digital
transformaon. Technologies were to be a strategic driver to create an open, parcipatory,
and trustworthy public sector, to improve social inclusiveness and government accountability,
and to bring together government and non-government actors and develop innovave
approaches to contribute to naonal development and long-term sustainable growth.
Digital transformaon in the public sector responds to the need to modernise public services.
This change seems inevitable in the face of new and growing expectaons of the welfare state
and the necessity of state administraon to deal with increasingly complex issues. As such, it has
become a polical imperave to improve the eciency, eecveness and governance of public
services by designing and implemenng innovave technological soluons (OECD, 2016).
Ł. Jurek: The Use of Digital Technology in the Fight Against Welfare Fraud... 25
At normave level, a major contribuon to the digital transformaon of the welfare state has
been made by the United Naons. The notable report on extreme poverty and human rights
(Alston, 2019) highlighted the strategic importance of the digital transformaon of the welfare
state as a transformaon of the relaon between the state and cizens, from analogue to
digital, to improve governance through eciency, integrity, and transparency. The document
established the term ‘digital welfare state’, in which “systems of social protecon and assistance
are increasingly driven by digital data and technologies that are used to automate, predict,
idenfy, survey, detect, target and punish” (Alston, 2019, p. 4). Moreover, it was stressed that
new forms of governance are emerging which rely signicantly on the processing of vast
quanes of digital data from all available sources, use predicve analycs to foresee risk,
automate decision-making and remove discreon from human decision makers […]. In such
a world, cizens become ever more visible to their Governments, but not the other way around.
(Alston, 2019, p. 4)
The concept of the digital welfare state has been subject to much development and modicaon
since then. In their extensive study on datacaon in the context of welfare state, Dencik and
Kaun (2020, p. 2) explored a “shi toward a new regime in public services and welfare provision
intricately linked to digital infrastructures that results in new forms of control and support”.
The importance of this technical-driven transformaon of the welfare state was also emphasised
by van Gerven (2022):
The welfare state and its management of social risks is clearly aected by the technological
transformaons of the late tweneth and early twenty-rst centuries. It creates a need to
reorganize and recalibrate welfare state structures and systems to extend social risk protecon
towards a diverse set of risks, including exisng (e.g. changing family structures and labour
market parcipaon paerns) and ‘new’ digitally driven risks (e.g. labour market insecuries
induced by plaorm work and automaon). (p. 254)
According to Henman (2022), the juscaons for the digitalisaon of the welfare state can be
divided into two groups: ‘tradional’ and ‘new’. The ‘tradional’ juscaons have been
behind the transformaon from the beginning and have not changed over me. These are:
eciency, cost reducon, sta savings, consistency of decisions and reducon of errors. The
‘new’ juscaons, on the other hand, have emerged more recently. These are: policy
responsiveness and agility, customer service and service innovaon, personalisaon,
overpayment and fraud detecon, improved governance and enhanced accountability and
democracy.
Technology oers a wide range of soluons to improve the structure and funconing of the
welfare state. The above-menoned United Naons report (Alston, 2019) idened six areas
as being parcularly open to the use of modern technology.
1. Identy vericaon: a veriable identy is essenal for claiming benets, establishing
entlements, receiving benets and appealing against benet denials. Modern
idencaon systems contain both demographic and biometric informaon on all
residents, including an iris scan, photograph and ngerprints.
2. Eligibility assessment: IT systems support decision-making processes and increase the
eciency of analysing large databases. They relieve caseworkers of clerical tasks, and
make decisions independent of subjecve opinion, ensuring transparency and objecvity.
They also allow for connuous monitoring of the situaon of beneciaries in terms of
compliance with entlements.
Knowledge and Digitalisaon Against Corrupon and Fraud 26
3. Welfare benet calculaon and payments: using spreadsheets and algorithms to automate
the calculaon of benets, and paying them out using digised nancial services such as
bank transfers and electronic payment cards.
4. Fraud prevenon and detecon: informac systems allowing to match data from dierent
sources in order to expose decepon and irregularies on the part of welfare applicants.
5. Risk scoring and need classicaon: algorithm-based techniques to determine whether
intervenon is required and, if so, at what level.
6. Communicaon between welfare authories and beneciaries: tradional forms of
communicaon (face-to-face, telephone, leer) are being replaced by online applicaons
and interacons (e.g. chatbots).
Generally, these areas of digitalisaon can be divided into two basic domains: rule-based
systems and predicve systems. A rule-based system helps to verify eligibility for benets and,
if applicable, to calculate the amount of benets. Predicve systems, on the other hand, are
risk-proling tools that sort welfare claimants into dierent levels of intervenon. The risk
assessment is based on indicators that are idened by research and/or mandated by policy.
On this basis a stascal model is formed that gives a probabilisc score for each individual. As
noted by Well et al. (2023, p. 45), “companies, professionals and somemes academics develop
these assessment tools in relaon to a historic comparave populaon and past experiences
of service provision, oen using stakeholder consultaon, trials, validity and usability tesng
and factor analysis”.
Today, the issue of the digitalisaon of the welfare state is becoming a priority for both social
policy theorists and praconers. Many research and implementaon projects in this area are
being undertaken in many countries. Such iniaves are now also taking place at transnaonal
level. One example is AUTO-WELF, the rst project to provide an analysis of automated welfare
provision across dierent European welfare regimes, which examines the implementaon of
automated decision-making (ADM) in the welfare sector across Europe.1
2.3. Welfare Fraud and Welfare Surveillance
Welfare fraud is a complex and muldimensional issue (Jurek, 2024). This term is oen used as
synonymous with ‘welfare abuse’ or ‘welfare crime’, although these are not enrely clear-cut.
Their common feature is non-compliance with the welfare rules, resulng in incorrect
payments, i.e. payments made for the wrong reason or for the wrong amount. However, not
every incorrect payment is a case of welfare fraud. Firstly, the non-compliance may involve
both an over- and understatement of the welfare benet. Second, the overconsumpon may
be the result of unintenonal error or intenonal behaviour. Third, intenonal overconsumpon
may be irraonal but legal (moral hazard) or illegal (fraud). Fourthly, fraud can be of dierent
‘degrees of seriousness’, it can be a minor oence (the so-called crimes of everyday life) or
a serious crime commied on a large scale by organised criminal groups.
The issue of welfare non-compliance has become an important issue in European Union policy.
This is linked to a number of irregularies that have arisen with the increasing coordinaon of
naonal social security systems. In response to these problems, it was decided (Decision No
H5 of 18 March 2010…) to call on the Member States to take appropriate remedial acon in
1 Project website: hps://blogg.sh.se/digitalwelfare
Ł. Jurek: The Use of Digital Technology in the Fight Against Welfare Fraud... 27
this area. EU documents disnguish two types of irregularies: fraud and error (Jorens et al.,
2019). A fraud is dened as any act or omission contrary to naonal legislaon, either in order
to obtain benets from the social security system or to evade the obligaon to pay public
contribuons to maintain this system. An error, on the other hand, is considered to be an
unintenonal mistake or oversight on the part of ocials or cizens.
European countries are developing their own denions of welfare abuse as well as methods
for the prevenon, detecon and deterrence. These measures are parcularly advanced in
Sweden, where in 2021 the country’s government adopted a special ordinance that regulates
iniaves to ensure proper payments from the welfare system (Sveriges Riksdag, 2021). The
coordinaon of these acvies has been entrusted to the Naonal Instuon for Financial
Management (ESV). According to its guidelines (Modin & Lindblom, 2021), a payment from the
social security system is incorrect if it is made even though the condions for receiving the
benet have not been met. The benet may be too high, too low, or completely undue based
on the applicable regulaons. Incorrect payments range from unintenonal errors to large-
-scale, systemac and organised welfare crime. To illustrate this diversity, the welfare
compliance pyramid was used (Fig. 1), which contains four types of incorrect payments that
dier greatly in terms of move, severity, and structure.
Unintended errors
Welfare
abuse
Welfare
fraud
Welfare
crime
Fig. 2.1. Welfare compliance pyramid
Source: (Modin & Lindblom, 2021, p. 11).
Unintended errors are the result of mistakes that are unconscious and unintenonal. Welfare
abuse is the conscious provision of misinformaon in order to misuse welfare entlements.
Welfare fraud is the pracce of extoron and decepon (e.g. bribery, forgery, cheang and
lying) to obtain undue benets, whereas welfare crime is an organised acvity carried out on
a large scale against welfare instuons.
Similar legislaon exists in the Netherlands (Eerste Kamer, 2012). The Dutch legislaon
disnguishes between ‘improper use of benets’ and ‘benet fraud’. Improper use is dened
as “using the entlements in a way that is allowed by law but not in the spirit of the law”.
Fraud, on the other hand, is dened as “the use in a manner not permied by law”.
Knowledge and Digitalisaon Against Corrupon and Fraud 28
Kukuła (2016) dened welfare fraud as
acons of natural persons aimed at persuading a social instuon to dispose of its property
in a certain way and obtain material benets not due to them, which full the characteriscs
of a crime, consisng in deliberately misleading or exploing the error of an instuon
dealing with the distribuon of budget funds, aimed exclusively at providing assistance or
material support to people, both those who have a source of income and those who are
temporarily or permanently deprived of it. (p. 28)
It is, therefore, a manifestaon of conscious and deliberate pathologies commied by private
individuals in the use of welfare benets.
By its very nature, welfare abuse is dicult to detect. The main reason is the blurred line between
jused and unjused benet use. As described by McKeever (2012, p. 472), this boundary lies
between need and greed. Usually, it is very dicult to assess whether the use of benets is really
necessary because of a dicult life situaon or whether it is rather a maer of cheang. In the
case of welfare fraud, however, the situaon is clear, as it is a clear violaon of the law.
The extent of welfare fraud is dicult to measure. It is obviously inappropriate to draw conclusions
from the results of inspecons carried out by control bodies, because of the potenally very
large underesmaon bias. This type of data does not show the actual number of frauds
commied, but only the number of cases detected. The relaon between these two gures, i.e.
the number of frauds commied and the number of frauds detected, is unknown and depends
on many factors, the most important of which is the frequency and quality of controls.
The basic problem is that the general structure of the social system was not designed for
monitoring. Administrators generally see the essence of their job as providing benets, not
exercising control. The eecveness of their work is measured by the number of payments
made, not by the number of wrongly withheld payments. In some cases, the rules leave
administrators a lot of room for subjecve judgement, which makes it dicult to idenfy
incorrect payments. In addion, controls tend to be carried out in those areas that are easy to
perform and “produce results” (Korsell et al., 2008).
It can be assumed that the extent of welfare fraud varies from country to country. This is partly
due to instuonal and legal dierences (control measures and severity of sancons), but
above all to socio-cultural condions. This concerns the level of so-called ‘benet morality’, i.e.
the individual reluctance to exploit the welfare state through fraud (Halla et al., 2010;
Heinemann, 2008).
The genesis and development of the ght against welfare fraud, although taking place in
dierent countries and at dierent mes, are to some extent similar. The general trajectory of
events is largely convergent, forming an evoluonary process consisng of four main stages.
The rst stage may be called ‘welfare euphoria’. This is a period of dynamic development of
the welfare state that goes hand in hand with rapid economic growth. Implementaon of
welfare programmes is based on trust and high moral standards in society. The control system
is praccally non-existent.
The second stage may be called a ‘grace’. This period usually coincides with an economic crisis
and scal restricons. The problem of welfare abuse is then noced. The policy-makers implement
a pioneer control system. First inspecons show that the problem of abuse concerns the most
vulnerable. The dominant rhetoric is that fraud is forced by a dicult life situaon and is an act
Ł. Jurek: The Use of Digital Technology in the Fight Against Welfare Fraud... 29
of higher necessity in order to sasfy basic existenal needs. Control measures have a negave
social recepon, being idened with cricism of the welfare state and the punishment of
poverty. In addion, the low cost-eecveness of control acvies is emphasised, i.e. the
potenal gains from the detecon of abuse are usually lower than the costs of the administrave
measures taken. Moreover, the eecveness of the control system is limited by poor instuonal
coordinaon and lack of access to informaon.
The third stage may be called ‘consternaon’. This is when reports appear from public instuons
and/or the media about various cases of benet abuse. These are oen examples of arrogant
and perdious exploitaon of the welfare system. The issue is publicised in the mass media and
becomes a popular polical and journalisc topic. Aenon is drawn to organised criminal
acvity against the system. Fraud is equated with the, and priority is given to prevenng and
combang this problem. Policians make honest aempts to esmate the extent of abuse and
its costs (social and nancial). The infrastructure for monitoring and combang social security
fraud is being put in place: sta are being recruited and given powers, special monitoring and
control instuons are being set up, legislaon is being adapted, and sancons are being made
more severe. However, many of these are ‘shotgun’ measures, as they are taken blindly and
intuively, without a proper understanding of the nature of the problem.
The fourth (last) stage can be described as the ‘surveillance welfare state’. In this case,
monitoring and control acvies are established as a natural public task. A systemac and
organised diagnosis of the problem is carried out (a reliable diagnosis using scienc
methods and techniques). Supervision and control acvies are digised, automated and
computerised. Modern technologies increase the cost-eecveness of control acvies.
The integraon and coordinaon of acvies within dierent instuons takes place in
order to eecvely combat fraud.
2.4. Digital Welfare Surveillance in Selected Countries
The idea of digital surveillance is based on the logic of risk in detecng non-compliances. The
point is that in welfare systems (especially social assistance) it is necessary to monitor the
situaon of beneciaries on an ongoing basis. At the very beginning, when people apply for
a benet, their identy, social situaon and ‘means’ (income, assets) need to be veried. Then,
aer the benet has been granted, connuous monitoring must be maintained in order to
detect changes that may aect the eligibility status of beneciaries. Naturally, there is no
juscaon for checking everyone who uses welfare benets as it would require a huge
administrave eort. Besides, a signicant proporon of beneciaries do not commit fraud.
Controlling them would be a simple waste, and instead it is advisable to select the cases that
require special aenon. To achieve this goal, policy makers are developing tools that calculate
the risk of fraud. Such measures are based on complex stascal models that make it possible
to idenfy (ag) those with an above-average risk and refer them for inspecon. The computer
programmes employ large databases containing informaon on various aspects of life. This
data is analysed using algorithms and (to some extent) machine learning (arcial intelligence).
On this basis, surveillance targets people with certain characteriscs that are predicted to
become involved in incorrect payments (Henman & Marston, 2008).
So far, several countries have implemented such risk-based system to detect welfare fraud,
with others already working at an advanced stage on such soluons. One of these countries is
Slovenia, where the SURVEILWEL project is being implemented with EU funding, which
Knowledge and Digitalisaon Against Corrupon and Fraud 30
will employ qualitave, mul-sited ethnographic eldwork to scrunise the realm of digital
welfare surveillance within Slovenian instuons […]. The project explores how digital welfare
surveillance tools impact welfare eligibility assessments and the invesgaon of suspected
fraudulent acvies. Moreover, its objecve encompasses the development of ecient
intervenons for social and material welfare. (Horizon Europe, 2033)
Similar acvies are also taking place in Sweden. In 2024, the country’s government set up
a special commission to study the possibilies of increasing digitalisaon in the area of social
security, primarily to prevent fraud, but also to ensure a more personalised service and
streamline the processing of benet claims (Sveriges Riksdag, 2024).
To date, the Netherlands had the broadest experience in using digital technology to combat
welfare fraud. Since the 2000s, data from a variety of sources have been used to idenfy
potenal abuses. One example was the ADM system, which used informaon from households
on registered water consumpon to compare it with the number of declared residents. In the
following years, fraud invesgaon became a major applicaon of ‘public sector data analycs’
(Zajko, 2023). As a result, three algorithmic fraud risk detecon systems were successively
implemented, rst ‘Waterproof’ (2004-2007), then ‘Black Box’ (2008-2014) and most recently
‘SyRI’ (since 2015).
SyRI (for ‘System Risk Indicaon’) was described by Van Bekkum and Zuiderveen Borgesius
(2021, p. 325) as ‘a socio-technical infrastructure’. It was designed to idenfy potenal welfare
fraud by generang risk nocaons and sending alerts to administrave bodies. Individuals
are shortlisted and agged as those ‘at high risk of fraudulent behaviour’ by idenfying
discrepancies in their personal data. The system cross-referenced almost all the informaon
the government has on its cizens, relang to: employment, penales and convicons, taxes,
assets, denial of benets, residence, identy, integraon, compliance with the law, educaon,
pension, reintegraon, debts, welfare benets, permits and exempons, and health insurance
(Wieringa, 2023).
SyRI operates on the basis of the ‘black box method’. The system downloads some informaon
about welfare beneciaries and then analysis it using a certain algorithm. However, neither
the sort of data used, nor the risk assessment model remained unknown for a general public
(Van Bekkum & Borgesius, 2021).
From the outset, SyRI has been the subject of much controversy. In parcular, it has been
accused of a lack of transparency in the ow of informaon used. Claimants were not informed
what kind of data, even sensive data, was being used. The system of risk reporng was also
unknown. Decisions were made automacally on the basis of a blind vericaon mechanism
(using pseudonymised data). However, claimants were not warned that they had been agged
as a fraud risk and were not told why they had been agged. There was also cricism that SyRI
was only being used in selected communies, known as ‘problem neighbourhoods’, i.e. those
with high rates of poverty, crime and unemployment. It was perceived by the general public as
an element of vicmisaon and discriminaon that should not be sanconed by the law. Based
on these arguments, in 2018 several civil rights organisaons led a lawsuit against the Dutch
state to stop the use of SyRI. In 2020, the court ruled that neither the legislaon on SyRI nor its
use met the requirements of Arcle 8 of the European Convenon on Human Rights. A fair
balance had not been struck between the public interest in detecng fraud on the one hand
and the human right to privacy on the other. As a result, SyRI was found to be unlawful
(Rachovitsa & Johann, 2022).
Ł. Jurek: The Use of Digital Technology in the Fight Against Welfare Fraud... 31
Another country with a relavely rich experience of digital surveillance is Australia, where
welfare governance has been transformed into a paternalisc concept of welfare for several
decades; the 2007 reform introduced a pioneering income management system called BasicCard.
It allows welfare recipients to buy only ‘essenal’ items (food, fuel, clothing, rent payments,
etc.), and avoid purchasing prohibited products (alcohol, tobacco, pornography, etc.) (Dee,
2013). Moreover, the Australian government has a ‘zero tolerance’ policy towards welfare non-
-compliance. Prevenve measures were targeted in parcular at ‘welfare overpayments’. The
point is that in Australia, as in many other countries, eligibility for welfare support is linked to
nancial situaon. An increase in income may reduce eligibility for benet. However, informaon
about earnings does not ow to the welfare agency in real me and it is the responsibility of the
individual to report any changes in this regard. If they fail to do so (for whatever reason), they
may receive more support than they are entled to and become debtors.
To eliminate this problem, in July 2016 the Department of Human Services (currently known
as Services Australia) implemented an Online Compliance Intervenon (OCI) programme,
commonly known as Robodebt (welfare debt recovery system). It was intended to verify
eligibility to welfare benets without an excessive human-resources burden. The system drew
data from two dierent sources: social welfare data on benet payments (from Centrelink),
and tax data on earnings reports (from the Australian Taxaon Oce). Informaon on earnings
was matched with informaon on received welfare benets. The system automacally detected
discrepancies between the two. On this basis, an algorithm idened ‘suspected’ welfare
recipients and issued them with debt noces (Rinta-Kahila et al., 2022).
Robodebt has been cricised for inaccurate assessments, illegality, shiing the burden of proof
of debt onto welfare recipients, poor support and communicaon, and coercive debt collecon
(Braithwaite, 2020). Thus, in 2017, within a year of its implementaon, it came under scruny
by public bodies, while at the same me, acvists from non-governmental organisaons began
to raise awareness of the system’s shortcomings. The entrenched problems with the scheme
connued unl a legal challenge led the government to suspend the system in 2019 (Rinta-
-Kahila et al., 2024).
2.5. Conclusions
The digital transformaon of the welfare state is a dynamic process taking place in various areas
of infrastructure, management, contact with cizens, service delivery, and control and
monitoring. However, the experience gained so far in implemenng digital surveillance does
not inspire opmism. The examples of the Netherlands and Australia, where the process is
most advanced, revealed a number of crical problems. This is not to say that the projects have
not worked at all and should be enrely abandoned. At this stage, the problems must be treated
as challenges. In order to overcome these problems and advance the digitalisaon process, the
systems need to be adapted to the surrounding condions (legislaon, infrastructure, social
atudes) and, conversely, the surrounding condions (legislaon, infrastructure, social
atudes) also need to be changed and (to some extent) adapted to the system.
The rst crucial problem is transparency. Digital surveillance is accused of lacking clear
informaon about the construcon of the algorithm, i.e. the method of data analysis. The
system operates as a ‘black box’. The general public does not know what data is collected, how
it is analysed and what factors are crucial for idenfying non-compliance.
Knowledge and Digitalisaon Against Corrupon and Fraud 32
This problem should be addressed as a queson of dominant values in the public sphere –
what is more important, transparency or eecveness? Clear criteria for decision-making
appear to be at the heart of government accountability and administrave jusce, however
the clarity of assessment rules raises concerns about feedback reacons on behalf of those
subject to control. The situaon can be compared to the ght against trac oences. Eecve
surveillance requires a conspiratorial approach so that drivers do not know when or where
they will be checked, otherwise they will temporarily change their behaviour and drive
according to the rules for a while, only to commit oences at a later stage. One can be sure
that the same is true for welfare fraud. Making the control criteria known to the public triggers
a behavioural reacon, i.e. adjustment to these criteria. Potenal oenders may mimic certain
features just to cheat the algorithm and reduce the risk of being ‘agged’ as a fraudster.
Freedom of informaon is at odds with the eecveness of the surveillance system. It is
therefore necessary to reach a consensus on how and to what extent control is to be carried
out. Auding should ensure clear principles of risk calculaon on the one hand and eciency
of control on the other.
The second crucial problem is operaonal performance. To date, the predicve validity of risk
assessment tools has been very low. Failure to detect welfare fraud has led to various negave
consequences, such as human tragedies (deprivaon, aggression, divorce), as well as a decline
in public trust in the instuons of the state. However, it should be clearly stated that the fault
for these errors is allegedly not with the system but with the human who developed it. The
algorithms were merely ‘decision trees’ that esmated the risk based on the data provided
and the criteria adopted. A sarical scene from the Polish comedy Miś [Bear] comes to mind
here, where one of the characters (a collecon agent) comments on the use of a computer: “it
will always make a mistake when adding, sir. Not a month goes by without it making an error”.
This is, of course, a humorous approach to the subject of digitalisaon. In reality, the problem
is not the technology per se, but the ‘input’, i.e. the quality of the stascal model and the
assumpons on which the algorithm is based. The human factor sll plays a dominant role
here.
Risk assessment tools are already used in various areas of the welfare state. Abuse detecon
is no excepon. Algorithms and arcial intelligence will play an increasingly important role,
whether we are in favour of it or not, therefore an appropriate atude should be adopted.
The failures made so far should not be seen as a ‘warning’ about the use of digital technology
in government, but as an important lesson to be learnt. Systems, by denion, require
connuous progress by eliminang errors and adapng to changing external realies. Inial
failures cannot invalidate the whole soluon, but rather highlight the need for modicaon
and improvement.
According to Zajko (2023), digital transformaon only replaces human bureaucrats by
autonomous machinery. Digital technologies are designed to replicate the decisions made by
people in the analogue world. They automate the decision-making process based on parameters
and constraints set by humans. Wrong decisions are therefore the result of wrong assumpons.
In addion, the role of the algorithm is to calculate an individual’s risk score based on an
assessment of a dataset of people claiming benets, in order to idenfy those who are most
likely to be fraudsters. The problem is that this is a very complex issue. The propensity to
commit welfare fraud is condioned by personal and contextual factors. Many of these are not
obvious and are sll poorly recognised. For this reason, it is extremely dicult to create an
algorithm that eecvely predicts human behaviour.
Ł. Jurek: The Use of Digital Technology in the Fight Against Welfare Fraud... 33
Therefore, at the current stage of development, digital technology should only be treated as
a tool to support the decision-making process. Algorithmic governance should take a hybrid
form, with humans making the nal decision on cases that have been algorithmically agged
for scruny.
The third crucial problem is the issue of personal data protecon. To be eecve, digital
surveillance systems need to access various databases, including sensive ones, without the
knowledge or consent of welfare recipients. It is claimed that such scruny violates the right
to privacy. However, as noted by Henman and Martson (2008), such arguments are based on
ideas of personhood and social governance inherited from the early days of western modernity.
They presented three assumpons for data-based surveillance. Firstly, concerns about privacy
are predicated on a liberal ideal of personal property and personhood – an independent,
raonal, self-updang human being. Yet in a world of growing interdependence and collecve
desny, the right to be le alone is outdated. Secondly, the noon of privacy is based on
a dichotomy of public and private responsibility, which is problemac from the perspecve of
a welfare state where the boundary between the two is unclear. Thirdly, the image of
surveillance is changing, from an omnipresent panopcon-style vision to the tracking of
a person’s data (‘dataveillance’).
Following the rhetoric of today’s researchers and praconers, one gets the impression that
too much aenon is being paid to the problems and limitaons of digital transformaon and
not enough to its potenal benets. Technology not only facilitates exisng acvies, it opens
up new possibilies. The digitalisaon of the welfare state allows for more individualised and
dierenated decisions, thus opening up a wider path for condionality in social policy (Szatur-
-Jaworska, 2023). This process rests (at least in principle) on three fundamental values:
eciency, integrity and transparency (Alston, 2019).
It may seem that digitalisaon is an inevitable path. Welfare states must undergo this
transformaon, otherwise they will not exist. The queson, then, is why does the development
of digital surveillance meet with such resistance in society? It is associated with ‘disciplining’,
‘punishing’ or ‘criminalising’ (Fenger & Simonse, 2024), however welfare surveillance is in fact
nothing new as controls have been carried out for a long me. Henman and Martson (2008)
argued that digitalisaon re-congures the nature of surveillance. It concentrates the power
and capacity of authories to assert norms, monitor behaviour and enforce compliance.
It means that the form of the relaon between the cizen and the welfare state is changing,
but not its content.
There are many other serious concerns about digital transformaon, such as high costs,
underdeveloped infrastructure and e-exclusion. From a historical perspecve, however, these
problems are only technical details. First of all, digital transformaon should not be seen as
a cost but as an investment that will bring tangible benets in the future. As for e-exclusion,
this is a general problem that needs to be solved, not just in the welfare sector. In addion,
techno-pessimists oen stress the problem of the ‘dehumanisaon’ of social policy. Such an
argument of ‘digital rigidity’ concerns the lack of empathy between the state and the cizen
(Ranchordás, 2022). Paradoxically, this feature is seen by techno-opmists as the main
advantage of digital surveillance. Computer algorithms and big data are culturally constructed
as accurate, objecve and true, and there is no room for subjecve discreon. Simple
compliance with the law, and no excepons to the rules. If someone does not meet the
eligibility criteria, the computer always says “No” (Henman, 2022).
Knowledge and Digitalisaon Against Corrupon and Fraud 34
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Chapter 3
Exchange of Experience in the Use of Digital
Procurement Tools to Prevent Corruption in the
Public and Business Sectors in Ukraine and V4
Oleksiy Poburko
Associate Professor of the Department of Finance, Lviv Polytechnic Naonal University
ORCID: 0000-0002-9140-4099
Nataliya Synyutka
Associate Professor of the Department of Finance, Lviv Polytechnic Naonal University
ORCID: 0000-0002-4294-2149
Pavlo Horyslavets
Associate Professor of the Department of Finance, Lviv Polytechnic Naonal University
ORCID: 0000-0002-1882-2104
Andriana Mazur
Associate Professor of the Department of Finance, Lviv Polytechnic Naonal University
ORCID: 0000-0002-5985-5674
Oksana Kurylo
Associate Professor of the Department of Finance, Lviv Polytechnic Naonal University
ORCID: 0000-0003-0366-0648
© 2024 Oleksiy Poburko, Nataliya Synyutka, Pavlo Horyslavets, Andriana Mazur, Oksana Kurylo
This work is licensed under the Creave Commons Aribuon-ShareAlike 4.0 Internaonal License.
To view a copy of this license, visit hp://creavecommons.org/licenses/by-sa/4.0/
Quote as: Poburko, O., Synyutka, N., Horyslavets, P., Mazur, A., & Kurylo, O. (2024). Exchange of Experi-
ence in the Use of Digital Procurement Tools to Prevent Corrupon in the Public and Business Sectors
in Ukraine and V4. In P. Luty, N. Versal, & P. Semerád (Eds.), Knowledge and Digitalisaon Against Cor-
rupon and Fraud (pp. 36-44). Publishing House of Wroclaw University of Economics and Business.
DOI: 10.15611/2024.96.3.03
3.1. Introduction
The problem of corrupon is, without exaggeraon, relevant for all countries of the world.
Some economists even compare it to an addional tax for businesses and cizens. This arcle
discusses the problems of corrupon risks in public procurement in Ukraine, the measures
taken by Ukraine to adapt its legislaon to the EU legislaon, and a comparison of key public
procurement indicators in Ukraine and the Visegrad countries.
O. Poburko et al.: Exchange of Experience in the Use of Digital Procurement Tools... 37
Corrupon as a phenomenon exists in the vast majority of countries around the world. As the
founder of reforms, not only economic, in Georgia and Ukraine, Kakha Bendukidze, claimed,
corrupon does not arise on equal grounds. It requires the coincidence of three factors: lack
of control over ocials, moral juscaon of corrupon, craving for quick and easy money.
Ukrainian representaves of the internaonal non-governmental organisaon, Transparency
Internaonal, added another factor – the total concealment of informaon (Khmara, 2014).
According to the World Bank, public procurement accounts for an average of 13 to 20% of GDP.
Global procurement spending is esmated at almost USD 9.5 trillion, and according to the
United Naons Oce on Drugs and Crime, between 10 and 25% of the total value of
a government contract can be lost to corrupon. Governments have a strong incenve to
maximise every penny of their budgets, which should be spent transparently and eciently
(World Bank, n.d.).
Digitalisaon, opening of registers, and simplicaon of access are among the key aspects of
public procurement reform in Ukraine and other European countries.
Thanks to the obligaon to publish procurement plans in the public domain, hundreds of
tenders that contained both signs of corrupon and mismanagement have been cancelled in
Ukraine, which has prevented billions of hryvnias from being wasted and most of them stolen
before the procurement announcement.
The Naonal Agency for Corrupon Prevenon of Ukraine idened the following corrupon
risks in public procurement, under maral law (NACP, n.d.):
1) conducng an open tender with only one tender oer;
2) possibility to submit tender oers at a price higher than the expected value;
3) increase in the purchase price as a material term of the contract;
4) abuse of procurement through an electronic catalogue;
5) corrupt pracces through direct contracts;
6) inconsistency of decisions of the appeal body (lack of established/generalised pracce);
7) impossibility to appeal against decisions, acons or omissions of procuring enes during
procurement procedures, including simplied ones;
8) problems with enforcement of decisions of the appeal body and courts;
9) restricons on the rights of parcipants in the course of consideraon of complaints by
the Anmonopoly Commiee of Ukraine;
10) other (non-price) criteria for evaluang proposals;
11) the use of ‘arcial obstacles’ in procurement to favour a parcular parcipant.
In the authors’ opinion, similar risks are inherent in procurement in other countries, including
the European Union and the Visegrad Four. This is conrmed by data from the stascal oces
of the respecve countries.
For example, in Slovakia, the e-procurement system has been in place since 2015, and in 2021,
32.3% of public procurement procedures were completed through the modernised electronic
public procurement system, resulng in contracts that accounted for 46.9% of the monetary
value of procurement (UVO, 2022).
The digitalisaon of public administraon, and not only in the area of public procurement, is
a priority area of development in most countries. The transion to the use of services and data
in electronic format can signicantly simplify me-consuming processes and services, reduce
administrave costs of the authories, eliminate corrupon and increase the compeveness
Knowledge and Digitalisaon Against Corrupon and Fraud 38
of procedures in order to save money. The digitalisaon of public administraon includes the
area of electronic public procurement, which actually opens up procurement data of indivi-
dual business enes to the public and signicantly simplies tender processes for bidders
through the use of automated calculaons and the electronic submission of the necessary
documentaon.
In the process of reforming its public procurement legislaon, the government of Ukraine has
been paying aenon to the standards set by EU direcves in order to meet the requirements
of the Associaon Agreement with the EU and increase the eciency of the public sector.
It is important to note that Ukrainian and EU public procurement legislaon have a common
ulmate goal – to ensure the economic eciency of public procurement and transparent
tenders.
According to the OECD Public Governance Brieng Papers Public Procurement Performance:
A Framework for Measuring Eciency, Compliance and Strategic Objecves (OECD, 2023),
public procurement accounts for 13% of GDP in OECD countries. The pressure on public
spending, as well as the need for greater accountability, beer monitoring of public policies
and more eecve risk management, make it increasingly important to measure public
procurement performance. However, many countries have not yet established a formal
performance management system with key performance indicators.
Moreover, the relevant EU legislaon is designed to regulate much more complex relaons
than Ukrainian legislaon currently regulates, primarily due to the deeper standardisaon
of procurement procedures in the EU. In this regard, the authors claried the priority areas
of development of legal support for the funconing of the naonal public procurement
management system. In parcular, they substanated the expediency, taking into account the
provisions of Direcve 2014/24/EU, of changing the concept of ‘customer’ in the current
legislaon of Ukraine on public procurement, introducing new rules for lling in tender
documents and tender procedures and announcements, updang the procedures for
compeve dialogue and negoaons with several parcipants, expanding the pracce of
maintaining electronic catalogues, and regulang the rules of sub-threshold procurement.
The authors also argued for the expediency of enshrining a new principle of proporonality of
procurement for budgetary funds at the legislave level, regarding Arcle 36 of Direcve
2014/25/EU.
3.2. Exchange of Experience in the Use
of Digital Procurement Tools
The study then compared some procurement indicators of Ukraine and the Visegrad countries
obtained from open sources, for example taking in consideraon the gures for 2021, given
that in 2022, Russia’s aack on Ukraine dramacally changed both the volume and nature and
transparency of public procurement. The number and volume of procurements of goods and
services for naonal defence has increased dramacally in Ukraine, and due to the
circumstances, the vast majority of them are classied.
In 2021, the share of public procurement in Ukraine’s GDP was 17%. The ocial website of the
Polish Central Stascal Oce stated that in 2021, the value of public procurement contracts
concluded with the applicaon of the provisions of the Public Procurement Act was PLN 184.6
O. Poburko et al.: Exchange of Experience in the Use of Digital Procurement Tools... 39
billion in 2021 (PLN 183.5 billion in 2020), approximately 7.04% of gross domesc product
(GDP) in 2021.
In Hungary, the share of public procurement was 16.4%, in Slovakia – 12.4%, and in the
Czech Republic – 14.1% (European Court of Auditors, 2023). Hence, this concerns large
amounts of money that belong to fellow cizens, who, in turn, have the right to understand
how they are used.
A report by the EU Court of Auditors (European Court of Auditors, 2023) stated that in 2021,
‘no call for tenders’ accounted for about 15.8% of all procurement procedures in the EU
single market reported by Member States on Tenders Electronic Daily. The Chamber’s
analysis also showed that the share of direct contracts varied across EU member states. In
2021, the average rate of direct contracts ranged from 3.1% (Greece) to 42.3% (Cyprus),
indicang signicant dierences in public procurement pracces among EU Member States.
Some of them reduced the use of direct contracts during the reporng period (e.g. Germany),
while others remained stable (e.g. Ireland), or signicantly increased the use of direct
contracts (e.g. Cyprus). An absence rate of more than 10% is considered a red ag, and in
2021 most Member States (23 out of 27) fell into this category, including three Visegrad
countries – Hungary, Poland and the Czech Republic. In case of Ukraine, this gure was
higher.
It should be noted that the problem of public procurement has been studied in economic
science for a long me.
From the historical point of view, the discourse on the funconing of the public procurement
instuon in the global economy began in the works of well-known internaonal economists,
such as Keynes, Buchanan, Sgler, Owen, Pey, Pigou, and others, yet their studies did not
take into account the innovave impact of digital technologies on public nance.
Public expenditures are posioned in the works of Heller as an objecve component of the
scal space (Kravets et al., 2021), and the need for their implementaon follows from the
postulates of the theory of public welfare.
Fischer postulated the interdependence of public expenditure with the development of society.
In his opinion, public spending in certain areas, such as telecommunicaons and road
infrastructure, contributes to economic growth and accelerate social development (Fisher, 1997).
Besley & Persson emphasised that budgetary resources spent on public projects means
expenditure on public goods and corrupon rent-seeking, which are already included in the
price of public goods by interested individuals or groups. Scholars stressed the value of
digitalisaon for intervenons in procurement processes in order to reduce corrupon and
increase the ecient ow of budget expenditure to end users (Besley & Persson, 2013).
Joined iniave of OECD and EU (SIGMA – Support for Improvement in Governance and
Management) has focused research on facilitang access to public procurement markets for
small and microbusinesses (SMEs) in the European Union through the approval and
implementaon of the relevant EU Direcves in 2014. In SIGMA view, electronic procurement
systems are a crucial tool for engaging SMEs in public consumpon. EU legislaon removes the
barriers that oen hinder SMEs and requires that tools and devices are also used for electronic
communicaon. Their technical specicaons must be non-discriminatory and easily accessible
(Sigma, 2016).
Knowledge and Digitalisaon Against Corrupon and Fraud 40
The work of German sciensts Eßig & Glas explored the impact of dividing public contracts into
smaller batches as a tool for aracng small businesses to public procurement. The main
message of the study was that increased compeon has a posive impact on the success of
SMEs in public procurement, and that the involvement of SMEs increases the innovaon and
exibility of the proposed soluons (Eßig & Glas, 2015).
Some scholars studied the methodology of successful bidding, for example, Plećić et al. (2018)
proposed a mul-criteria methodology for selecng the opmal soluon from the submied
bids within the tender.
Kolosok, Panchenko and Iordanov analysed the state of achievement of long-term goals set
during the reform of the ProZorro procurement system in Ukraine. They studied the level of
corrupon, transparency and accessibility, as well as reliability, eciency and elascity of the
public procurement system aer the introducon of the ProZorro system, and idened
systemic problems in the procurement process and outlined areas for improvement in Ukraine.
In parcular, the decentralised procurement system in Ukraine causes dierences in the
ltering and delivery of announcements to tenderers registered on dierent trading plaorms.
Legislave inconsistency in customer support and the variety of trading plaorm requirements
may lead to unequal opportunies for business parcipants, which worsens compeon in
the procurement market. According to the authors, the number of non-compeve tenders
has increased since the introducon of ProZorro. This situaon may be caused mainly not by
defects or problems of ProZorro, but by improper performance of the funcon of controlling
bodies (Kolosok et al., 2017).
Ukrainian researchers pay considerable aenon to the problems of organising and managing
the public procurement system through the prism of European experience. Miniailo and
Kostenko (2016) systemised the relevant public procurement procedures. The above
publicaons analysed in detail the EU direcves, in parcular, on public procurement of goods,
public procurement of works, and public procurement of services. Ukrainian experts
emphasised that at one me, these documents created the necessary legal basis for the
development of eecve systems of procurement acvies for budgetary funds, but now their
provisions are already outdated to some extent, and some provisions are unclear and rather
contradictory. As a result, there is sll no coherent vision of the prospects for implemenng
and harmonising Ukrainian legislaon with EU direcves on public procurement management.
This signicantly complicates the process of reforming this management system in our country.
In view of this, the purpose of the arcle is to analyse the provisions of EU legislaon on public
procurement management and to clarify the priories for the development of legal support
for their implementaon in Ukraine.
There is diversity of public procurement procedures in certain EU countries.
The level of development of electronic public procurement in EU countries is determined by
the use of electronic data processing methods at dierent stages of the bidding process, these
include:
e-Sourcing – collecng informaon about potenal suppliers and contacng them;
e-Nocaons – publicaon of nocaons and informaon about the start of trading in
electronic format;
e-Tendering – divided into e-Access (providing all necessary informaon on tender
documents and standards with the possibility of feedback) and e-Submission (subming
a proposal in electronic format);
O. Poburko et al.: Exchange of Experience in the Use of Digital Procurement Tools... 41
e-Evaluaon – evaluaon of tenders for compliance with the criteria set by the government;
e-Contract – the conclusion of a contract between tenderers;
e-Order – placing an order in electronic format;
e-Invoicing – issuance of an invoice (waybill) in electronic format in accordance with the
standards of the Direcves;
e-Payment – payment by the customer for goods, works and services received (Prałat,
2019).
The introducon of full digitalisaon of the public procurement cycle in the EU was planned by
2018: electronic publicaon of procurement noces was to become mandatory by 2016;
electronic submission of proposals through the central procurement authority by 2017;
submission of electronic proposals by 2018 and mandatory e-invoicing by 2019 (Tkachenko,
2016).
Table 3.1 shows the level of digitalisaon (modernisaon) of the public procurement process
in some EU countries in 2019.
Table 3.1. Modernisation of the public procurement process in selected EU countries in 2019
EU country
The state of digitalisation of the e-procurement process
E-Alerts E-Access E-Submission E-Assessment &
E-Contract E-Order E-Invoicing
Austria + + + + + +
Belgium + + + + + +
Greece – – – – – –
Italy + + + + + +
Germany + + + + + –
Poland + + + – + –
Slovakia + + + + – –
Hungary + + + + + –
Finland + + – – + –
France + + + + + –
The Czech Republic + + – – – –
Sweden + + + + + +
Source: (Tkachenko, 2016).
Therefore, the level of digitalisaon of the procurement process in each EU country is dierent.
For example, in Austria and Belgium in 2019, the enre procurement process was conducted
electronically; in some G7 member states (Italy, Germany and France), e-tendering was almost
fully modernised, except for the e-invoicing stage in Germany and France. In Greece, as of
2019, there was no digitalisaon of public procurement as such, which may be partly explained
by its economic situaon, whilst in the Visegrad countries (Poland, Slovakia, the Czech Republic
and Hungary), the digitalisaon process is unevenly developed.
The organisaon of electronic public procurement in EU countries also diers. For example, in
the Czech Republic a bidder must be registered either in the state-owned Tender Portal (NEN)
or in one of the private plaorms FEN (which oers addional services for a fee). In Hungary
Knowledge and Digitalisaon Against Corrupon and Fraud 42
there is a single plaorm, EKR, which is managed by the Oce of the Prime Minister of Hungary.
Up to now, Slovakia used ISEVO (Modernised Informaon System for Electronic Procurement),
while other paid resources exist (Karlin, 2021). Dierences are also manifested in the models
of payment for services by e-plaorms: in Portugal, the service fee is charged from tenderers,
while in other countries it is the tenderers who pay for registraon in the plaorm and further
parcipaon in the tender (Tkachenko, 2016).
Each EU country can independently determine the lower limit of procurement at the naonal
level. For example, the Czech Republic and Poland have only one threshold, while Hungary has
several above-threshold levels for naonal procurement (Karlin, 2021).
In most EU member states, centralised procurement organisaons operate, which reduce the
costs of bidding for procurement parcipants and save me on the enre procurement process.
In Hungary, procurement through them is mandatory for central-level public instuons, while
in Poland there is no such organisaon at the state level (Karlin, 2021).
One of the parcular characteriscs of Slovakia in the eld of public procurement is that it is
one of the rst countries to develop legislaon for the introducon of ‘green procurement’, i.e.
clear criteria for the availability of environmental cercates and the use of environmentally
friendly producon processes have been established (Karlin, 2021).
In order to determine the specics of public procurement legislaon at naonal level, it is
worth considering the state of public procurement in Poland due to economic and polical
similaries with Ukraine. The legislave regulaon of public procurement in Poland was
reformed by the adopon of the Public Procurement Act of 11 September 2019, which came
into force on 1 January 2021. The purpose of this reform was to increase the role of strategic
procurement (generally related to the already menoned environmental, social and innovaon
goals), the aracveness of the public procurement market for the private sector and the
creaon of eecve communicaon between sectors of the economy (Kania, 2023).
In Poland, several government agencies are responsible for controlling public procurement.
The Polish Supreme Chamber of Control usually conducts post-contract procurement control.
A separate central execuve body is the Public Procurement Agency, which conducts both
scheduled and unscheduled document inspecons of tenders and analyses the procurement
bullen data. If a contracng authority disagrees with the Agency’s conclusions, the Appeals
Chamber makes the nal decision. Public procurement is also monitored by the Oce for the
Protecon of Compeon and Consumer Rights in terms of collusion (Kania, 2023).
According to the Criminal Code of the Republic of Poland, the submission of false documents
or false statements in order to obtain a public procurement order is punishable by imprisonment
for a term of 3 months to 5 years. There is also a penalty for collusion with other bidders
(Ustawa z dnia 6 czerwca 1997…).
In 2020, around 94% of contracts in Slovakia were awarded on the basis of the lowest price
alone. This is signicantly higher than the EU average of 64% and limits compeon based on
quality. It also reduces the possibility of using public procurement strategically to support
other policies, such as green, social and innovaon. In addion, the professional services
sector remains highly regulated.
To sum up, the supranaonal standards set out in the EU Public Procurement Direcves dene
the key requirements that each Member State must comply with when applying above-
-threshold procurement, while below-threshold procurement is carried out in accordance with
O. Poburko et al.: Exchange of Experience in the Use of Digital Procurement Tools... 43
the laws of a parcular country using its own mechanisms and models of organising the tender
process, provided that they are harmonised with the Direcves.
3.3. Conclusions
The chapter conrms the thesis that corrupon is a major problem in most countries of the
world, as evidenced by the stascs of internaonal organisaons. Taking into account the
volume of public procurement and its share in GDP, the state, its cizens and instuons
should comprehensively monitor the eciency of spending taxpayers’ money. In fact, electronic
public procurement is an important element of protecng the interests of taxpayers and
transparency of public procurement. The chapter shows that Ukraine and the Visegrad
countries have many similaries in their approaches to public procurement, although each
country is at dierent stages of implemenng digital public procurement systems.
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share-compare-improve
Chapter 4
New Forms of Non-Standard Employment
and Fighting Shadow Economy
Antonina Sholoiko
Taras Shevchenko Naonal University of Kyiv
ORCID: 0000-0003-1239-4281
Vasyl Erastov
Taras Shevchenko Naonal University of Kyiv
ORCID: 0000-0001-5230-0273
© 2024 Antonina Sholoiko, Vasyl Erastov
This work is licensed under the Creave Commons Aribuon-ShareAlike 4.0 Internaonal License.
To view a copy of this license, visit hp://creavecommons.org/licenses/by-sa/4.0/
Quote as: Sholoiko, A., & Erastov, V. (2024). New Forms of Non-Standard Employment and Fighng
Against Shadow Economy. In P. Luty, N. Versal, & P. Semerád (Eds.), Knowledge and Digitalisaon Against
Corrupon and Fraud (pp. 45-56). Publishing House of Wroclaw University of Economics and Business.
DOI: 10.15611/2024.96.3.04
4.1. Introduction
The global economy is undergoing a massive transformaon, and with it, the tradional
boundaries of employment are being redrawn. New forms of work interacons are emerging,
and many businesses are shiing to alternave work arrangements, such as working from
home, temporary employment, part-me or on-call work, digital labour plaorms, mul-party
employment, disguised employment, etc. These changes are mainly caused by labour
globalisaon, shiing to digitalised communies, and technological changes worldwide.
Standard forms of employment are facing signicant compeon, especially in some specic
industries suering from the downsides of tradional employment models. Full-me
employment, as the basic tradional form, has a lot of drawbacks when it comes to creavely,
technologically, or intellectually rich spheres of human acvies. Employee potenal cannot
be eecvely ulised by seng addional work me and workplace boundaries. Moreover, it
should be menoned that intellectual capital is mostly transferred, and geng a specic
mindset and experse in a tradional way can be costly, in terms of relocaon, and dicult, in
terms of legislave aspects, or simply impossible, in terms of condions or other factors.
Shiing to non-standard forms of employment can be benecial for both employers and
employees, while some formal boundaries are neglected. Ease of geng necessary specialists,
higher salary rate, bigger employment pool, and signicant improvement in results are
considered as the main benets of non-standard forms of employment over those tradional,
while ignoring their considerable downsides such as hidden work relaons, taxaon
opmisaon, and avoidance, lack of social responsibilies, etc.
Knowledge and Digitalisaon Against Corrupon and Fraud 46
To prevent taxaon violaons by ulising new forms of non-standard employment, dierent
approaches can be used. The Ukrainian labour market provides many examples of how to shi
hidden employment relaons towards other forms, less destrucve and opaque for taxaon.
Some measures can be used as a rule of thumb, while some need to be ‘tweaked’ before
implementaon. A thorough study of the current Ukrainian situaon and the overall idea of
non-standard forms of employment can provide signicant insights for both controlling enes
and employers worldwide.
The research aim was to consider main non-standard forms of employment and create
recommendaons for ghng the shadow economy in Ukraine.
This purpose was achieved due to the realisaon of the following: generalising pros and cons
of the main non-standard forms of employment, and creang recommendaons for ghng
the shadow economy in Ukraine.
4.2. Forms of Non-Standard Employment
Many forms of non-standard employment can be now considered new because of the strong
inuence of the digitalisaon processes. Thus, the rst form is working from home. Due to the
Internet and the impact of Covid-19 pandemic, many types of jobs were transformed and
nowadays most of them are available to work from home remotely, which is especially
convenient for women, allowing to combine work with housekeeping.
The Internaonal Labour Organizaon (ILO) explains that working from home is
long associated with labour-intensive, repeve work in the industrial sector (“industrial
homework”), it also encompasses higher-skilled workers on digital labor plaorms, as well as
remote workers (teleworkers) in service industries. […] The ILO esmates that while not all
occupaons can be done at home, many could – approximately one in six at global level, and
just over one in four in advanced countries. (ILO, 2020)
Working from home oers signicant advantages, including me savings by eliminang
commutes, reduced transport expenses, and the exibility to adapt work schedules to personal
needs. However, the me saved oen gets redirected to addional work or household chores,
liming personal benets. It also encourages a sedentary lifestyle, increases health risks, and
can weaken communicaon skills and team-building abilies due to reduced in-person
interacon. Balancing these pros and cons is crucial for maximizing the benets of remote
work (ILO, 2020).
One of the posive sides is me saving. According to the study by Aksoy et al. (2023):
the average daily me saved when working from home was 72 minutes – in this sample. Work
from home saved about 2 hours per week per worker in 2021 and 2022. Workers allocated 40%
of their me saved to their jobs and about 11% to caregiving acvies. People living with
children allocate more of their saved me to caregiving.
As for Ukrainians, negave consequences of remote work include: a decrease in producvity,
dicules due to everyday factors, overme; among the advantages are: a less-busy schedule,
me saving and the ability to work from anywhere (Kochmar-Tymoshenko, 2021).
One can conclude that working from home is characterised by a high level of informality, and
as a result tax avoidance can take place. Thus, to ght the shadow economy in Ukraine, it is
A. Sholoiko, V. Erastov: New Forms of Non-Standard Employment and Fighng Shadow Economy 47
possible to work from home ocially and pay taxes if employers have a distance or hybrid
model of working. However, for independent professionals it is necessary to smulate them to
register as a sole proprietor (SP) (Table 4.1).
Table 4.1. Sole proprietor: groups of single taxpayers
Type
of SP
Hired
workers Annual income
Cooperation
with legal
entities
Rate of the single tax
Single social
contribution
(SSC)
Reports
I
–
less than
UAH 1 185 700
per year
–
10% of the subsistence
minimum = UAH
302.80 per month
22% of the
minimum
wage
monthly
declaration
II or less
than 10
workers
less than
UAH 5 921 400
per year
+
20% of the minimum
wage = UAH 1420 per
month
22% of the
minimum
wage
monthly
declaration
III or
unlimited
less than
UAH 8 285 700
per year
+
3% or 5% of income 22% of the
minimum
wage
quarterly
declaration
IV unlimited – + from 0.09% to 1.8% of the normative
assessment of the land
annually
Source: compiled by the authors based on (DtKt, 2023; Kosht, 2023).
Table 4.1 shows that dierent types of sole proprietors are based on dierent sizes of individual
business with the appropriate rate of the single tax. Moreover, it is also possible to parcipate
in social insurance and obtain a basic level of social protecon in cases if social risk occurs.
The next form of non-standard employment is temporary employment, divided into xed-
-term, project- or task-based contracts and casual work (Figure 4.1).
Temporary employment – whereby workers are
engaged only for a specific period, includes:
Casual work
Fixed-term, project
or task-based contracts
Fixed-term contracts (FTCs) have always
existed in labour markets and serve specific
purposes. They provide flexibility to enter-
prises to respond to changes in demand,
such as due to seasonal fluctuaons, to
replace temporarily absent workers, or to
evaluate newly hired employees before
offering them an open-ended contract. Yet,
beyond these tradional reasons, some
enterprises have come to rely heavily on
FTCs, hiring workers recurrently on these
contracts for permanent tasks of the
company.
Fixed-term contracts (FTCs) have always existed in labour
markets and serve specific purposes. They provide
flexibility to enterprises to respond to changes in demand,
such as due to seasonal fluctuaons, to replace tempo-
rarily absent workers, or to evaluate newly hired
employees before offering them an open-ended contract.
Yet, beyond these tradional reasons, some enterprises
have come to rely heavily on FTCs, hiring workers
recurrently on these contracts for permanent tasks of the
company.
It is also essenal to provide equal condions of work to
workers in temporary employment as compared to
workers in standard employment.
Fig. 4.1. The concept of temporary employment
Source: compiled by the authors based on (ILO, 2016a).
Knowledge and Digitalisaon Against Corrupon and Fraud 48
Temporary employment oers exibility, allowing individuals to combine it with a full-me job
and gain addional income. However, it comes with the risk of temporary unemployment and
uncertainty. Workers in temporary roles may face unequal condions compared to standard
employment, such as limited opportunies for skill development and lower social protecon.
Balancing these factors is crucial when considering temporary work arrangements (ILO, 2016a).
In Ukraine, temporary employment is oen considered by workers not as posive choice, but
as forced necessity. According to sociological studies, 8% of Ukrainians rate their chances of
nding a job in the region where they live as “good”, almost 15% – as “not bad”. Such indicators
show that Ukrainians are ready to leave their homes in search of earnings. However, they do
this not only by going abroad, but also by migrang within the country. Oen, labour migraon
in Ukraine has a temporary and seasonal nature (Legalaid, 2020) (see Table 4.2).
Table 4.2. The difference between seasonal and temporary work in Ukraine
Seasonal work Temporary work
Jobs, which, due to natural and climatic conditions,
can be performed only during a certain period
(season), but not more than six months (for
instance: agriculture).
After the end of the seasonal work, the employees
who were employed are dismissed on the basis
of the termination of the employment contract –
the end of the term. In this case, the last day of
seasonal work is considered the day of dismissal.
If the employee continues to work after the end
of the seasonal work or the duration of such work
exceeds six months, the employment contract with
this employee is considered to be concluded for an
indefinite period.
Such jobs can be accepted by an employee for a period
of up to two months, and to replace temporarily absent
employees, for whom their place of employment is kept,
for up to four months. The list of temporary jobs has not
been established, but the employee must be warned in
writing form that he will work temporarily. The employer
must confirm the circumstances that make it impossible
to conclude an employment contract with the employee
for an indefinite period.
The employment contract of temporary employees is
considered to be extended for an indefinite period if the
employment relationship continues after its termination
and none of the parties wants to terminate it.
Source: compiled by the authors based on (Legalaid, 2020).
Thus, seasonal and temporary works are also characterised by high level of informality. If these
forms of employment are based on xed-term contracts, then everything is legal, and taxes
are paid, whereas in the opposite case it is necessary to:
increase labour literacy as for the rights of workers (within school curriculum as
“Entrepreneurship and nancial literacy<