KIEV (Reuters) - The head of a Ukrainian software firm tasked with building a landmark anti-corruption computer program is suspected of stealing Western funds from the project and funneling the cash overseas, General Prosecutor Yuriy Lutsenko said on Wednesday.

FILE PHOTO: Yuri Novikov, head of Miranda company, which designed the original software for the e-declaration system, speaks during an interview with Reuters in Kiev, Ukraine, August 26, 2016. REUTERS/Valentyn Ogirenko

The boss of the software company, Yuriy Novikov, strongly denied the accusation and a leading anti-graft non-governmental organization also expressed doubts about the case.

The database of lawmakers’ and officials’ asset declarations was meant to be a cornerstone of the government’s Western-backed reform drive. But the scheme has been mired in scandal, and activists say vested interests have tried to sabotage it.

Novikov’s company Miranda won the tender to create the database, but prosecutors say he subcontracted a university teacher and his students to build the software and stole the project’s funding that had been given by the Danish government.

“Novikov decided to embezzle the funds and evade taxation,” Lutsenko told lawmakers during a report to parliament.

“The funds that had been provided to Miranda were transferred to an account in Estonia through a fictitious company,” he said.

When contacted by Reuters, Novikov said the accusations from the general prosecutor’s office (GPU) were “groundless.”

“Such a performance by the general prosecutor shows the prejudice and bias of the investigation and creates the means to pressure the court with the aim of obtaining beneficial judgments for the GPU,” he said in emailed comments.

DELAY

Transparency International Ukraine also expressed doubts.

“We are pretty skeptical of such statements because if they had grounds for such an investigation they would have stated it almost a year ago,” TI Ukraine senior policy analyst Oleksandr Kalitenko told Reuters, referring to the period when the database first went online.

The fraught launch in October, after months of delay, underscored the patchiness of Ukrainian efforts to deliver reforms promised to allies and the International Monetary Fund as part of a $40 billion bailout.

Government ministries and state anti-corruption bodies have traded blame for the project’s delays and software glitches.

At its launch, Novikov rejected criticism of the website, saying a “fairly large” group of officials did not want the system to succeed.

The scheme attracted fresh controversy when lawmakers approved legislation requiring NGOs to declare their wealth and income. Ukraine’s Western backers and human rights groups said the new law could hamper the work of anti-corruption activists.

On Wednesday, the Council of Europe Commissioner for Human Rights, Nils Muiznieks, published a letter addressed to the Deputy Head of the Administration of the President of Ukraine, criticizing the amendments.

“I am concerned that the amendments enacted in March 2017 may single out anti-corruption NGOs, their staff and others working against corruption – including investigative journalists - by making them subject to additional and unnecessary filing requirements,” Muiznieks wrote on May 2.