In this regard, the Cabinet of Ministers has designated raidership as a strategic problem that must be eliminated as soon as possible.
Ukraine must become a country where investment hopes are realized, and one in which property rights are protected by the state.
Some experts have said this task will be difficult. In my opinion, dealing with this issue will not be as tough as they say.
The first step on the path to developing effective mechanisms to counter illicit acquisitions of business assets was the revival of the Interagency Commission for the Protection of Investors’ Rights, Combat Illegal Acquisitions and Seizure of Enterprises. A similar body existed earlier, but it wasn’t sufficiently effective.
I regret to say, however, that immediately after the commission’s renewal, we received a great number of allegations concerning violations of investor rights. Among the recent high-profile cases were companies owned by foreigners.
We are currently radically revising our approach to building the organizational and personnel structure of the anti-raider body. This means personal responsibility being laid upon relevant ministers, and not their deputies, and centralizing control and management mechanisms to combat company takeovers by the most senior Cabinet of Ministers officials.
Equally important for the commission’s effective work is the role of non-governmental organizations and representatives of business associations.
With a lack of clear government policies and legal mechanisms to oppose raider takeovers in recent years, the public and business communities have developed fairly effective non-traditional methods of fighting for their property rights. However, they often realize this is not possible due to corruption and the use of different kinds of assistance in the capture of enterprises.
In the short term, the situation has changed. The interdepartmental commission should foremost develop an action plan that will have full legislative backing.
No less fundamental is the goal to develop a clear legal procedure for returning seized enterprises and business assets to their original owners.
Practice shows the vast majority of hostile takeovers are done with the assistance of judicial and law enforcement authorities.
The Cabinet of Ministers intends to take the initiative in this area and to amend the Criminal Code, which will clearly define the concept of raiding and outline the punishment for participating in such crimes. Accountability will be as harsh as possible. This will make it possible to bring to justice the organizers of such unlawful seizures, not just the actual perpetrators.
The government’s educational awareness program for entrepreneurs will also play an important role. We must educate businessmen, especially beginners, on how to protect their assets, properly place and keep securities, intelligently allocate material assets and build relationships with minority shareholders. In addition, the government should maintain a near real-time communication channel with businesses that will operate virtually around the clock.
Plans are in place to launch an information portal dedicated to the work of the commission, where users can learn more about the committee, its composition, aims and objectives.
During our upcoming meetings with ambassadors of European states, we will discuss the issue of protecting investor rights and the related problems.
We furthermore intend to adopt and implement the best European practices. This process is already underway. As is commonly known, the European Bank for Reconstruction and Development actively advises the Cabinet of Ministers of Ukraine on how to effectively fight against corruption. This is just the beginning.
Raiding is not difficult to overcome. This simply requires political will – the will to protect the country’s interests while building the image of Ukraine as a reliable economic partner. The current government has the will do this.
Ukraine has to create the image of an investment-friendly country, to convince its citizens that it’s safe to invest their money in a start-up, and most importantly, that it’s a promising endeavor. I am convinced the business community will see the first results of public policies to counter illegal company takeovers in the near future.
Serhiy Arbuzov is the first deputy prime minister of Ukraine and head of the inter-governmental agency to protect investor rights, combat illegal acquisitions and company takeovers.
