Archive 2014

  • Oksana Kuziakiv: "Only time will tell whether corruption has lessened, as businesses expect"


    Activists wearing masks of ousted President Viktor Yanukovych and other top former officials, including fugitive ex-Prime Minister Mykola Azarov and ex-Prosecutor General Viktor Pshonka, hold a Sept. 15 anti-corruption protest near the Verkhovna Rada, Ukraine’s parliament.
    © Volodymyr Petrov

    The nation’s business community says corruption has receded somewhat after the EuroMaidan Revolution ousted disgraced former President Viktor Yanukovych in February. 

    Survey findings published this month conducted in May by Kyiv-based Institute for Economic Research and Policy Consulting said that 52 percent of 450 polled enterprise managers believed that corruption was widespread in their sector, 10 percentage points less than a year ago. Moreover, fewer business managers saw personal connections with politicians as a key success factor. Last year, 48 percent felt this way, while the most recent survey shows only 32 percent do.

    Using another indicator, on whether businesses perceive that corruption produces a desired result, the survey found that 62.5 percent found that giving a bribe will have an “uncertain effect,” 5 percentage points more than last year.

    Oksana Kuzyakiv, head of the Center for Modern Society Research, said only time will tell whether corruption has lessened, as businesses expect.

    Ukraine is the European continent’s most crooked nation, according to the latest Transparency International corruption perceptions index, ranking 144th among 177 countries. Prime Minister Arseniy Yatsenyuk last week said the phenomenon was the nation’s biggest internal national security threat at a Cabinet of Ministers meeting.

    Tetyana Zaharchenko, a visiting scholar at Environmental Law Institute in Washington D.C., reiterated what seems to be the most popular political slogan of the last decade: Ukraine’s cancerous corruption needs to be fought.

    “Any small business owner in Ukraine who hasn’t lost their company outright to physical threats or shady financial maneuvers sanctioned by corrupt courts, knows the necessity of paying large bribes to government officials just to keep their doors open,” Zaharchenko wrote in a February blog post.

    Lennart Dahlgren, the retired senior executive of Ikea who led the company’s entry to Russia, said that since 2004 the Swedish furniture maker had been trying to open a store in Ukraine, he told Russkiy Reporter magazine in 2010.

    “But we weren’t able to make a deal because Ikea’s system didn’t have any money for bribes,” said Dahlgren.

    In August, the Bureau of Wines, an alcohol retailer with sales outlets in Kyiv and Donetsk, accused the Security Service of Ukraine of soliciting a bribe for quashing an investigation into tax evasion that the company said was fabricated. “We have around 140 deals every month. Getting individual licenses for each of them is simply impossible,” the company’s marketing director Maria Oliynyk told the Kyiv Post on Aug. 18.

    Small business complaints about the tax agency’s corrupt attitude are endless. “Working with the tax service is the least pleasant of all types of interaction with public offices,” commented Oleksandra Kharytonova, owner of Alexamar, a translation boutique in Kyiv. “Their newly appointed employees have a very vague understanding of what they’re expected to do.”

    Corporate managers say that personal connections with government officials are not as powerful factors in doing business as they used to be.

    The nefarious practice affects every walk of life, including education and health care.

    Vitaly Moskalenko was scandalously fired as president of Bogomolets Medical University earlier this year on accusations that he ran a bribery ring. His counterpart, Petro Melnyk, lost his job as president of the Tax Service’s university after being caught taking a $15,000 bribe to enroll two applicants into a state-funded undergraduate program.

    Global auditing company EY says corruption isn’t exclusive to Ukraine. Among 155 chief executive officers whom it polled from a sample of 59 countries for its Global Fraud Survey conducted in February, 21 percent said they were asked to pay a bribe in a business situation. Sometimes bribery, corruption’s most beloved daughter, comes with a request to make a donation to a charitable organization.

    The same survey found that more than half of the 2,719 senior decision makers of the largest companies think corruption is widespread in 40 percent of the countries where they work. In Egypt, Kenya and Nigeria, that proportion exceeds 80 percent.

    Shady business, the untaxed part of the nation’s $175 billion economy, is nothing else but the private sector’s reflection of corruption in public offices. Once a bribe is paid, taxes don’t have to be paid.

    Igor Bilous, head of the State Fiscal Service, estimated the country’s untaxed revenues at $34 billion in what looks like an optimistic vision after Friedrich Schneider, an Austrian economist and expert on corruption issues, reported that the figure could be close to $90 billion.

    Source:  KyivPost
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