The age of electronic trade

OLEKSANDR ROZHEN

Living in a computer-controlled society. This subject has been popular with the media over the past years and it is increasingly in the limelight in Ukraine. Despite the overall economic decline, this country operates industries where output is steadily on the upward trend.
Last year, 150,000 domestically assembled computers were sold, although even the most optimistic forecasts pointed to a number three times smaller. Experts believe that if Ukrainian enterprise could manufacture 500,000 computers a year Ukraine would have every right to regard itself as a "computerised" country. However, this will take time, and most importantly money. Even so the rate of growth is quite impressive, 40% per annum, which means that betore long Ukraine will have an output of note.
Although the leading Internet-providers cannot yet boast a sizeable number of users, the increasing computerisation ratio promises good results here, too.

INTERNET TRADE SEMINAR IN PUSHCHA-OZERNA
Half a year ago this author learned that one could buy goods via the Internet. This happened at the International Centre for Information Technologies (called INT). Its director, Serhiy Pysarev, demonstrated how one could purchase a book at a most prestigious store in New York without stepping outside one's office in Kyiv.
On March 2-5, Pushcha-Ozerna, a scenic Kyiv resort suburb, hosted the seminar "Internet in Banking and Trade", demonstrating SIK, a Ukrainian acronym tor "Internet Commerce System", an INT child. The effect was somewhat dampened by the telephone line failure which prevented the organisers from completing a purchase cycle (the line connected the "electronic shop" with a bank in Kyiv and its breakdown cut short the processor-aided payment procedure.) If was no fault of INT, but the prospective users realised that they would enjoy the privileges of the new technology only if they can be secured against such contingencies. As tor domestic communication lines, their "reliability" is generally known.
Kyiv's Internet Shop is expected to show a much more diversified assortment this year. Using SIK, trade outlets will be able to offer goods and services practically round the clock, enabling individuals and companies to buy precisely what they need at short notice.

A SURE WAY TO DETECT A "NEW UKRAINIAN" OVERSEAS
It transpired at the seminar that Ukraine had to sharply reduce its reliance on cash transactions in order to step into the electronic trade wonderland.
Today, a Ukrainian travelling abroad is no longer likely to be surprised by the range of goods available. However, a local shop assistant will be surprised to see a tourist, reach into his pocket and produce a wallet stuffed with crisp new hundred dollar bills to  pay. In Western countries, people have long discarded the practice of carrying large sums of money, preferring credit cards, especially when buying expensive items. Besides, if you need cash there is a cash dispencer around practically every corner.
So what are the biggest problems we have in this respect?
"The main requirement is to provide favourable conditions for switching over to clearing (non-cash) transactions for all types of consumer payments," explains Anatoliy Savchenko, director of the NBU's information department. "This idea must be supported by the inland revenue service, because unlike cash transactions each such operation is easily monitored. In general, there are big changes to be expected in the banking sphere."
Anatoliy Savchenko, Oleksiy Savchenko & Serhiy Pysarev in the Internet Trade Seminar in Pushcha-Ozerna

THE SIMPLE CHARMS OF MODERN CIVILISATION
"I'm afraid I'll have to put a 'fly in the ointment' of such attractive prospects," says another seminar participant, Oleksiy Savchenko, Deputy Head of the Chief State Administration, Corresponding Member of the National Academy of Sciences (no relation to Anatoliy Savchenko.) "The negative aspect is that we must simultaneously introduce fiscal elements in all the mushrooming entities. They must all be given reliable information protection. Which is easier said than done.
"Previously, accountants practised fraud on paper. Today it has reached the computer level. It suffices to remind oneself of recent scandals, one involving electronic registers made by an enterprise in Kyiv. The designers and manufactures seemed to have foreseen all contingencies and made their products foolproof. Then it transpired that a certain keyboard combination refreshed the device's fiscal memory. In other words, transactions were simply not registered. It is understandable: the more sophisticated a system, the more subtle the fraudulent techniques applied to trick it.
"Also, take the so-called Chechen aviso (letter of advice or note used as a payment document) epidemic. When an electronic transfer system was introduced in 1993 documents were faked. Despite the coding system, as this was somehow very quickly cracked. In some cities, telexes were installed at home, in conspiracy with telecommunications officials, and counterfeit notes were transmitted. That same year, the Interior Ministry reported, such documents were faked to the value of a trillion karbovantsi (Ukraine's temporary currency at the time), although the actual losses must have been even worse."

COMPUTER WONDER-BOYS: QUITE INVENTIVE
We are not the only country experiencing such problems. Staggering sums are spent in the United States to combat computer piracy.
"I have a feeling that we are trying to get ahead of the story," Serhiy Pysarev responds to the tax official's concern. "We must analyse the reasons for our shortcomings and make sure we do not repeat the same mistakes. World experience shows that most codes are cracked not by outstanding mathematicians or other top-notch experts, but by criminals using inside informants."
"But what about hackers? Not so long ago we heard about a boy from Sakhalin, a real computer genius who cracked the local administration's files and even penetrated a counter-intelligence database."
"Indeed, there are real computer virtuosi, but the existing records of electronic safe-breakers show that more often than not each such superthief was assisted by somebody inside the bank who would give him the key to the code. Real penetration from the outside usually did not happen the way it is described by journalists.
"Western statistics point to hundreds of millions of dollars worth of transactions carried out over the Internet, with a mere 0.2% unauthorised entries. It's so little it doesn't rate separate attention. We're talking about an almost perfect reliability, leaving any hacker practically no chance of success. To solve our problems, we must take a reasonable approach to electronic trade. New technology calls for preparation, a new mentality and a better organised society."

YOU ARE NOT A THIEF UNTIL YOU'RE CAUGHT
"I'd like to emphasise what I call positive experience," continues Anatoliy Savchenko. "Since January 1994, when we activated the electronic fund transfer system all over Ukraine, we haven't come across a single counterfeit file. Unbelievable but true. Of course, we know that attempts have been made, and that experts have been hired. However, every inquiry came up with 'Attempted theft. Abort.' On one such occasion we discovered a certain bank official who had tried to steal a million hryvnias. As he did not succeed, we could not arrest him. Not under the existing law.
"Our investigations also proved that processoraided clearing transactions are very convenient and transparent. When investigating a case of fraud, using computer files reveals the entire background and allows one to trace literally every move of the malefactor. Today, investigating agencies and law enforcement authorities can check their computerised books and records dating back three years. Personally, I save files dating from 1994, so I have a clear picture of pay-ments and all the other transactions. This is very helpful in a criminal case."
"I suppose things would be much easier if they legalised electronic signatures, what do you think?"
"Regrettably, we have no such legislation. In the West one can be brought to court for counterfeiting an electronic signature. This is very important. We have signed a contract with Kyiv Polytechnic Institute. One of the clauses reads that a legal framework is to be developed, incorporating an electronic signature covenant. An appropriate normative document will be prepared and submitted for the government's approval, which should bring the country in line with other nations in this respect."