International and local business owners grumble loudest about tax collectors and prosecutors, Ukraine’s newly created business ombudsman said in his first quarterly report released on July 28.
Altogether, Ukraine’s business referee, Algirdas Semeta, who is supposed to track how enterprises are treated by government bodies in a bid to tackle corruption, has received 230 complaints since his office started recording business gripes on May 20.
His 15-person team reported that other state agencies or bodies are hurting the economy as well, including national and local governments, as well as the State Security Service and Interior Ministry.
The agency expects the numbers to grow as more businesses discover its services.
“Unfortunately, Ukraine needs a lot of reforms; the country for many years has not been implementing reforms which were going through in other countries,” Semeta said while giving a presentation of the agency’s first quarterly report in Kyiv.
Although the ombudsman’s office is open to all kinds of complaints, more than 30 percent were directed at the State Fiscal Service, which includes the state tax inspection and customs service. Twelve percent of complaints were filed against the prosecutor’s office.
Specifically, companies griped about the electronic filing system, difficulty connecting with the electronic grid, drafted employees not receiving state-compensation, as well as import-export problems, especially at the borders of the occupied eastern regions.
Complaints came from across the whole range of the economy. No specific industry sector stood out in filing complaints, the ombudsman said.
According to deputy business ombudsman Tetyana Korotka, companies face problems getting the government to pay for those of their employees who were called up by the army. The compensation program hasn’t been regulated, while Ukrainian businesses have failed to receive a total of Hr 1.6 billion over the past nine months in compensation for the lost labor of drafted soldiers, she said citing the finance and social policy ministries.
Another complaint is that businesses are too often being taken to court by the government. “Suing businesses seems like some kind of national sport here in Ukraine,” Semeta said.
Geographically, complaints clustered around the capital. Fifty-five percent of the complaints came from Kyiv Oblast, 6 from Dnipropetrovsk Oblast and 5 percent from Kharkiv Oblast. The remaining were evenly distributed throughout the remaining regions, excluding Zakarpatya, Ivano-Frankivsk, Chernihiv and Rivne oblasts.
“I don’t know if it’s because there are no problems over there, or if it’s because business are not as active over there,” Semeta said.
The Lithuania native’s office is funded through the European Bank for Reconstruction and Development’s multi-donor account with an annual budget of €1.5 million. The donors are Denmark, Finland, Germany, Japan, Netherlands, Sweden, Switzerland, the United Kingdom, and the United States.
Apart from processing complaints, the agency is supposed to analyze and help resolve them. This often involves working with government agencies.
Semeta is his seventh month as the nation’s chief business referee. The trained economist is fluent in Russian and was twice Lithuania’s finance minister: in 1997-1999 and 2008-2009. He then was a European Union commissioner on financial planning, taxes, audit and anti-fraud.
Business complaints can be filed at boi.org.ua.
It takes up to 10 days for a company to receive a reply from the office. If the complaint is accepted, then the Business Ombudsman Council investigates the case for up to three months, unless the case requires additional time.
Complaints so far have been equally distributed among small, middle and large businesses. Twenty-five complaints are still under review, 82 have been rejected, 103 are in the preliminary screening state and 21 cases have been resolved.
Some visual progress has been made. “We’ve achieved changes in the regulatory sphere,” Semeta said.
One example is in the scrap-metal industry, where the agency encouraged the ecology ministry to bring down the number of days to receive a license from 30 to 10, Semeta said.
The agency has also been reviewing beer regulations by working with the economy ministry so that licensing will correspond to international norms, preventing discrimination against small- and medium-sized businesses.
Right now the ombudsman’s office is working on signing memorandums with various government regulatory institutions in order to hold them more accountable. One has already been signed with the state regulatory administration.
There’s a big gap in reforms between the top, medium and lowest echelons in Ukraine’s government, where the latter two were almost untouched. “Government reforms need to go through the whole governmental power vertical,” Semeta said. “This will serve for the success of other reforms.”
Also important is following through on reforms.
“You can have good strategies, good laws but when it comes to finishing it to the end this is a huge problem,” he said.
The government’s attitude toward business and society must change as well, the ombudsman said. “We often notice that the government officially considers itself the boss, and society and business are its subordinates,” he said. “But in the whole democratic world it is the opposite.”
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].
