A State in a Smartphone without a State in Law: The Dictatorship of Algorithms
An Analysis of Draft Law No. 14005 on the Legalization of Fictitious Debt Collection for the Benefit of Monopolies
In Ukraine, over 106.6 billion UAH in household debt for utility services has been registered. This astronomical sum, exceeding the annual budgets of key social sectors like education or healthcare, is not merely a statistical anomaly. It is an alarming and indisputable indicator of the complete disconnect between the “billing” system and the volume of services actually received. It is financial proof of a systemic collapse in contractual relations within the utility sector, where the consumer is de facto stripped of any real tools to influence the quality or even the fact of service provision, yet remains absolutely legally vulnerable to any “charges” generated by the monopolist’s billing system. This figure demonstrates a fundamental gap between the financial demands of suppliers and the real economic situation of citizens, as well as the state’s systemic inability or unwillingness to moderate these relations in favor of justice and a balance of interests.
Against this backdrop, a draft law (No. 14005) is introduced, presented to the public under the guise of necessary “digitalization” of enforcement proceedings and improvement of the collection procedure for socially sensitive debts, particularly alimony. However, an in-depth analysis of the document indicates that its true, unarticulated goal is the creation of an unprecedentedly powerful and sophisticated digital “apparatus of coercion.” This is a mechanism that operates on the principle of a “digital guillotine”: it does not investigate the substance of the “guilt” but merely automates the “punishment.” It offers no tool to verify the legality and validity of the creditor’s claims, transforming the state enforcement service into an automated tool for serving the interests of monopolies.
The draft law proposes a perfect, automated mechanism for forced collection, yet it completely ignores and, evidently, deliberately avoids addressing the key problem: the fundamental severing of the link between the “billing” and the “service actually received.” The law’s authors, like the beneficiaries of this system, are not interested in whether the services were available in the consumer’s apartment, their quality, or the implementation of transparent and accessible mechanisms for pre-trial appeals of these “billings,” as no one checks either the existence or the quality of the services. Their sole purpose is the unquestioning legalization and total automation of collecting any amount billed by the monopolist, regardless of its origin. This is the legitimization of financial coercion without establishing the fact of a legal violation.
It must be acknowledged that the draft law contains technical improvements that are positive. The key one is the proposal of Article 39-1 (“Consequences of debt repayment”).
This norm stipulates that after the full payment of a debt, the automated system of enforcement proceedings (ASEP) automatically generates a notification of repayment and, on the same day, sends it to banks and other institutions for the immediate lifting of the arrest on funds/accounts.
This genuinely solves a real, painful problem. In the existing system, a citizen, even after paying a debt, falls into “bureaucratic hell”: they are forced to spend weeks, sometimes months, personally collecting certificates, visiting enforcement services and banks to manually lift the block. For a person (not a “natural person,” as it is dehumanizingly stated in such documents), this means the inability to receive a salary or social assistance. For a small business, such a “manual” arrest, lasting for weeks after payment, paralyzes all activity and leads to bankruptcy. This bureaucratic red tape is a form of continued punishment even after the obligation has been fulfilled, which is absolutely unacceptable in a state governed by the rule of law.
However, this unconditional, yet purely technical, positive aspect looks like cynical “bait” for society and the expert community. It is a small technological concession designed to hide the far more dangerous, systemic, and anti-constitutional aspects of the draft law. It is intended to create the illusion of “fair digitalization,” which in reality changes the very philosophy of relations between the citizen, the state, and the monopolies in favor of the latter. This is a classic tactic where a minor procedural improvement is used to mask a fundamental deterioration of the legal status of millions of citizens.
The current situation is a direct consequence of a deliberate state policy, pursued for decades, aimed at creating a legal mechanism for enrichment from vital, natural monopoly resources. This policy was based on the conscious disregard for constitutional norms and the distortion of basic economic principles.
The very idea of “privatizing” life-support systems is a direct violation of the fundamental norms of the Constitution of Ukraine, which define the foundations of the social order.
Life-support systems (heating plants, water utilities, power grids) are, by their nature, an integral part of communal and state property. They are natural monopolies that ensure the realization of the inalienable rights of the people (Art. 13) to life and a safe environment. Thus, the transfer of these strategic, vital assets from the ownership of the people and the management of communities into private hands (oligarchic groups) is not “privatization” in the economic sense. It is an act that bears the hallmarks of a violation of the constitutional order: it deprived the Ukrainian people of their inalienable right of ownership (Art. 13) and castrated the constitutional right of local self-government (Art. 140) to manage this property, turning local councils from representatives of the people into mere administrators acting in the interests of private monopolies.
The reform strategy ignored the basic principles of public economics, the goal of which is not to make a profit, but to provide basic public goods, human life, and the sustainable functioning of society. In Ukraine, the opposite approach was implemented:
The economists and reformers who promoted these ideas knew this theory perfectly and consciously committed this crime, creating a system of controlled resource extraction.
The thesis of “phantom” tariffs and the criminal nature of their formation is not an assumption, but a fact, repeatedly confirmed at the highest state level.
In recent years, Temporary Commissions of Inquiry (TCIs) have been established in the Verkhovna Rada of Ukraine (in particular, by Resolution No. 4044-IX of 30.10.2024) to investigate the validity of tariffs and procurement of energy resources, including by NJSC “Naftogaz of Ukraine.”
The Transformation of NJSC “Naftogaz”: A key part of the problem was the “reform” of Naftogaz. From a state enterprise whose goal was to ensure the national interests and energy security of the people of Ukraine, it was transformed into a subject operating on the principles of private law. Its sole goal became profit maximization. Using its absolute monopoly position (control over production, transit, and storage) and its “state” company status, Naftogaz began to act like a private business, extracting money from the population through inflated tariffs, which led to the impoverishment of millions of Ukrainians.
The Mechanism of Siphoning Money through “Naftogaz”: This transformation allowed the company’s management, which acted in the interests of mafia groups that had occupied the enterprise, to legally siphon funds received from the population. This siphoning occurred in two ways:
This model is not limited to “Naftogaz”; it is systemic for all strategic state monopolies. A striking proof of this is the situation around SE “Energoatom.” On the very day this analysis was prepared (November 10, 2025), it became known about raids conducted by NABU at the enterprise in connection with an investigation into multi-billion corruption schemes in equipment procurement. This once again proves that the colossal funds siphoned from the enterprise through corrupt deals are not spent on modernizing nuclear units or improving safety levels. Instead, these losses, as in the case of “Naftogaz,” are passed on to end consumers—the population and industry—through the mechanisms of the “market” and tariff formation, creating the very “debt” for the collection of which the repressive apparatus is being created.
The reports and public conclusions of the TCIs, despite attempts to conceal them, proved key facts:
The TCI’s conclusion is simple: the 106.6 billion in debts currently hanging over the population are, for the most part, not for services actually consumed. This is a sum that includes corruption, inefficiency, and the super-profits of monopolies.
Thus, the adoption of draft law No. 14005 is a conscious act by the state aimed at legalizing and forcibly collecting the consequences of economic crimes that were officially documented by its own highest legislative body.
The draft law introduces a mechanism of total and automated control, turning the state into an instrument acting in favor of monopolists.
The key implication of the law is the legal enshrinement of the “presumption of guilt” of the consumer.
The foundation of the system is the Unified Register of Debtors, which is transformed into an instrument of “social shutdown.” Being included in it—even due to an error or a fake court order—leads to immediate and devastating consequences:
This is not just an “inconvenience.” It is a cascading effect: the inability to sell a car may mean the inability to conduct business or obtain funds for medical treatment; the arrest of accounts blocks all economic activity. It is an effective tool for excluding a person from social life. Blocking the salary card of a serviceman at the front line due to a fictitious utility debt, leaves his family without means of subsistence—this is a direct threat to national security.
This is the real goal of the “state in a smartphone” concept in its current implementation—not a service for the citizen, but a system of total control and automatic punishment. It is a dictatorship of the algorithm, where there is no place for the presumption of innocence, human dignity, or the right to defense. It is a system that allows any person to be excluded from social and economic life at the push of a button, turning basic rights into privileges dependent on loyalty to the “billing” system. It is an instrument of digital totalitarianism, disguised as a convenient service.
Although the main beneficiaries are the financial-industrial groups controlling the monopolies, the law (No. 14005) is being promoted under the cynical cover of protecting children.
The collection of alimony is a socially approved, absolutely necessary goal. This noble objective is deliberately brought to the forefront to gain public approval. However, it is used as a “Trojan horse” to “sell” society a repressive mechanism that will be used for a completely different purpose—to collect utility debts, the share of which in the overall structure is incomparably larger.
However, in conditions of war, mobilization, and economic crisis, many men are objectively unable to fulfill their obligations (loss of job, injury, being in captivity). The system does not check each case but only automatically punishes, destroying social ties and driving people into a corner. Such an attitude towards people, especially those defending the country, has already led to a catastrophic population decline in Ukraine. Instead of helping families, the state offers a punitive mechanism.
The law strengthens the role of commercially motivated private enforcers. Their remuneration is a percentage of the amount collected. They are financially interested not in establishing justice, but in collecting the largest and easiest debts, which are the “billings” of monopolists confirmed by court orders. They are transformed into a de facto private army of the monopolies, using the state’s “apparatus of coercion” for their own enrichment. This system creates a dangerous market for “debt trading,” where private structures receive the legal right to financially terrorize the population with the support of state instruments.
The mechanisms that the draft law legalizes are already being used by monopolists, but for now, in a criminal way. The examples provided demonstrate the complete fusion of monopolies and security forces, which creates an atmosphere of total impunity.
“Kyivteploenergo” billed a Kyiv resident 50,000 UAH for hot water. The absurdity of the situation is that the building has not had this service for 20 years, following DTEK’s intervention in the boiler room. Complaints have been ignored for years. This case is not an error, but a systemic feature of automated billing systems that generate profit “out of thin air” and have no feedback loop with the consumer. Under the new law, this fictitious debt, backed by a court order, will turn into an automatic arrest of property and accounts. This illustrates how digitalization without justice becomes an instrument of terror.
This case demonstrates the full hierarchy of the criminal system: from the field enforcers of the monopolies to collectors and police cover.
Employees of DTEK (the grid operator), instead of going to court and providing evidence of the debt in an adversarial process, began to openly engage in criminal activity. Acting without any permission from the victim or a court order, company employees repeatedly entered the private property of a Kyiv resident and cut the wires.
They justified their criminal actions by citing an alleged old, disputed debt that arose before 2019, when the contract was still with DTEK, even though at the time of entry, the contractual relationship for supply was with a different legal entity—YASNO. This is a direct violation of Art. 162 of the Criminal Code of Ukraine (Violation of the inviolability of habitation) and classic arbitrary action (Art. 356 CC). This is a demonstration that the monopolist, feeling its impunity, places itself above the court and the law.
Subsequently, DTEK/YASNO transferred the family’s personal data (which is a violation of the Law “On Personal Data Protection”) to the collection company “Delta M Ukraine,” which began psychological terror and extortion (Art. 189, 355 CC). This indicates the use of the entire arsenal of illegal pressure methods, where collectors act as the strong arm of the monopolist.
The victim appealed to the Holosiivskyi Police Department (Head: A. H. Kochkadamian). However, the police, ignoring Art. 214 of the Criminal Procedure Code (CPC) of Ukraine (the obligation to immediately, within 24 hours, enter information into the Unified Register of Pre-trial Investigations) and even direct court orders that obliged the police to start a pre-trial investigation, refused to stop the criminal activities of DTEK and the collectors.
Draft law No. 14005 is the final element of a system whose goal is the forced conversion of “phantom” debts into real assets.
This law is an instrument for the emergency conversion of fictitious assets (doubtful debts) into real money. In the context of economic crisis and war, the cash flows of monopolists are drying up. They need this law right now to legalize their “billings” of 106 billion. This will allow them to “clean up” their balance sheets, either to collect from the people or (more likely) to force the state to cover these “debts” from the budget. They also seek to present themselves to international partners and investors (in the context of recovery programs) as “effective businesses” suffering from “non-payers,” thereby demanding financing to cover the very debts they themselves created.
Conditions are being created where it is cheaper and easier for a person listed in the Register (regardless of whether they are a real debtor) to pay a fake debt than to enter into a long, expensive, and predetermined-to-fail fight against a system where the monopolist, collector, enforcer, and law enforcement act as a single entity.
This launches “the great racket,” where the end result is one: the oligarchs get real money. There are two paths:
The proposed draft law is the antithesis of Article 3 of the Constitution of Ukraine, where “The human being, his or her life and health, honour and dignity, inviolability and security are recognised in Ukraine as the highest social value.” This law turns the human being from the highest value into a “wallet” for mafia groups, and the state into an apparatus of coercion for their benefit.
True reform must be based on the “presumption of consumer innocence” and a complete restructuring of the system, aiming not at extracting money, but at ensuring life. This model completely negates the need for a repressive law, as it eliminates the very cause of “fictitious debts.”
The full confiscation and return to communal (local communities) and state ownership of all strategic life-support infrastructure (electricity, gas, water, heat), which was illegally “privatized” in defiance of Art. 13 (“Property of the Ukrainian people”) and 140-143 (“Local Self-Government”) of the Constitution of Ukraine. This is not re-privatization, but the restoration of the constitutional order.
The creation at the level of each Territorial Community (TC) of a single economic entity of public law (e.g., SEPL-BE Territorial Community), controlled by the members of the community (in accordance with Art. 140-143 of the Constitution). This entity must manage the entire life-support system, where the goal is not profit, but the sustainable provision of services at an economically justified cost.
The introduction of a three-tier system for monitoring the quality and volume of services, which simultaneously provides social assistance to those in need.
The system of “Claim Acts” from CSAs becomes not only a control mechanism but also invaluable managerial information. Real-time analysis of these acts (e.g., “50 acts about cold radiators from the ‘Sonyachnyi’ neighborhood”) allows the TC Council to see exactly where systemic problems are occurring in the infrastructure (pipe breaks, network wear, power outages) and to make timely decisions about necessary repairs and investments in infrastructure modernization, without waiting for a collapse. This transforms the system from punitive to managerial, creating a living feedback loop between the consumer and the service producer.
Thus, a comprehensive system of controlled resource extraction has been formed and is being legally cemented in Ukraine, which has all the hallmarks of an organized criminal group that has seized state power. This conclusion is based on the analysis of consistent, systemic, and interconnected actions aimed at achieving a single goal—the redistribution of national wealth.
This system operates in stages, with each stage logically following from the previous one:
This model of state capture is not unique; it is, in fact, the second, more technological stage of the process that began in the 1990s. In the first stage, the instrument was an artificially created economic crisis (hyperinflation, industrial collapse), which allowed for the fraudulent seizure of material assets—the property of the Ukrainian people—and, consequently, political power, through non-transparent “voucher” privatization.
In the current, second stage, the toolkit has changed. Instead of the chaotic seizure of assets, there is now a systematized extraction of financial flows from the population through mechanisms of “billing” that are legalized (like draft law No. 14005) but criminal in substance.
However, there is a fundamental difference that makes the current situation incomparably more dangerous. Whereas in the 90s, having seized property (factories, infrastructure), the “old” oligarchs were forced to at least somehow maintain their viability for their own enrichment, the current model of “siphoning” finances is purely exploitative. It does not provide for reinvestment. This suggests that after the final withdrawal of capital and the inevitable collapse of the system, which the war will accelerate, the beneficiaries of this scheme (oligarchs, officials, deputies) will simply leave the country, leaving behind only ruins and countless debts.
To ensure the long-term viability of this scheme and to cover up its criminal nature, an ideological capture of the education system took place in parallel with the economic capture. The introduction into educational programs of false (and essentially criminal) neoliberal doctrines, which fetishized “private property” and the “free market” while simultaneously silencing the constitutional norms about the property of the Ukrainian people (Art. 13) and the essence of public economics, led to catastrophic consequences. A whole generation has grown up that does not understand the fatal consequences of these “reforms.” Despite the objective deterioration of the economy and quality of life, these young people often continue to assert the “effectiveness” of privatization and “markets,” because they simply know no other model of the world and have not been taught to critically evaluate reality outside the imposed doctrine.
Today’s NABU raids on “Energoatom,” just like the past cases against “Naftogaz” management, are merely fighting the consequences, not the cause. These are “fables about success in the fight against corruption,” a fight that no one ever really waged, because corruption does not need to be “overcome”—it needs to not be created.
The source of corruption is the very laws and regulations that allow public property (Art. 13 of the Constitution) to be managed for private interests and to control “cash flows” instead of the “cost of the good” for the people. Without changing this paradigm, new “overseers” and thieves will inevitably replace the old ones.
In aggregate, this is not a chaotic “failure of reforms,” but a purposeful, open robbery of Ukrainians, carried out through formally legalized, but criminally substantive, mechanisms.
The country faces an existential choice: either the Ukrainian people will reclaim their power and property in accordance with the Constitution, or soon nothing will be left of Ukraine.
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