Ukraine

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4:47 AM Tuesday, June 27, 2017
Government
Ombudsman Proves to be Ally of Small Business in Fight Against Corruption
Most business complaints are against tax authorities - and most are resolved in favor of businesses
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KYIV – To fight back against corruption in Ukraine, small and medium businesses are finding they have a surprisingly effective ally in the Business Ombudsman Council.

After two years in business, the Ombudsman’s office is winning favorable resolutions to two thirds of complaints. It also is winning high praise -- 95 percent approval -- from business users.

It is no surprise to business executives that half of complaints to the Ombudsman -- 49 percent -- concern actions of tax officials. But in a surprise to many business users, the State Fiscal Service complied with 91 percent of the Ombudsman’s findings last year.

For complaints, law enforcement agencies come in second, at 19 percent. Three categories -- complaints about draft legislation, actions of state regulators, and actions of local governments -- accounted eight percent of complaints each.

Ukraine's Business Ombudsman, Algirdas Semeta, a former finance minister in Lithuania, believes Ukraine's investment climate is getting better. (supplied)

“The state understands that we’ll only lobby on behalf of businesses if they’ve passed our review process”, Business Ombudsman Algirdas Semeta said in his office in Kyiv’s Podil district. “That is why we have such a success rate.”

Government employees seem to be gaining knowledge -- and respect -- for the new institution. Last year’s 66 percent closure rate was four times the rate for 2015, the Ombudsman’s first full year. In real terms, the Ombudsman received 868 complaints, clearing 570.

National Impact

“Little by little, we see improvements in the business climate in the country”, Semetas, a former Lithuanian finance minister, said in an interview.

He estimated the financial impact of his office’s work last year at $220.35 million.

Almost half of all complaints came from Kyiv (371). In descending order, complaints came from: Kharkiv (51), Odesa (41), Dnipro (40) and Lviv (34) regions.

Semetas travels frequently around Ukraine, meeting with business groups to publicise his office.

User Friendly

The bilingual Ukrainian-English website (https://boi.org.ua/en/) is user friendly and encourages visitors to act. The site features a rectangular green “Make a Complaint” tab on every page. This leads straight to an online complaint form.

“I think we have the full confidence of the business community”, Semetas said. “Now they have a channel to defend their interests.”

Working on Bureaucrats

Semetas says it is a constant battle to change ingrained attitudes by government employees.

“The old system is not changing fast enough,” he said. “Sometimes we still see old habits.”

To gain bureaucratic allies, the Ombudman’s office last year signed five memoranda of understanding with key government agencies – the National Police, the Kyiv City State Administration, the National Anti-Corruption Bureau, the National Agency on Corruption Prevention, and the Ministry of Ecology and Natural Resources.

Impunity: No one Goes to Jail

Impunity for corrupt officials is a big obstacle.

The American Chamber of Commerce, in its Ukraine Country Profile 2017, said 90 percent of companies surveyed could not identify a successful prosecution of a corrupt official.

“I’m not surprised”, said Semeta, “The key to fighting corruption is judicial reform.”

Anna Derevyanko, executive director of the European Business Association, agrees: “While the ombudsman’s office has led to the improvement of the business environment in Ukraine, the decisive role in fighting corruption is in the hands of the government.”

She praised the office’s efficiency, adding that, while corruption remains a problem, “more visible improvements” are on the way.

Law To Open Classified Info?

Semeta expects further improvements after the Rada passes a draft law on the ombudsman council.

The legislation will empower his office to win access classified information and will make official responses to queries mandatory. The current status is “motivated.” It also will impose penalties on officials and provide office staff with immunity from some government agencies, such as the national police and the SBU security service.

"The most important part is the right to access classified information," Semeta said.

The law was introduced to parliament last May and is undergoing second reading. The International Monetary Fund considers passage of the bill a requirement for releasing a new tranche of its $17.5 billion aid program for Ukraine.

Sustainable After Foreign Aid?

A new two-year, 1.5-million euro project is bringing Lithuanian and Austrian ombudsman officials to Ukraine to share the experiences and techniques.

The Ombudsman Council is funded by the European Bank for Reconstruction and Development, specifically with donations from the United States, Britain, Japan and eight European nations.

For the future, the challenge will be to establish the Council as a core Ukrainian institution, accepted and funded by government and business alike.

For comments or news tips, please contact UBJ Reporter Lee Reaney at lee.reaney@theubj.com.

Posted Feb. 17, 2017

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