New blog by WEFEC BCEF 2018 speaker:
Tatiana Korotka, Deputy Business Ombudsman, Ukraine
Right after the Revolution of Dignity in 2013 business rounds of Ukraine addressed to the international organizations and newly established Government of Ukraine regarding the control body’s pressure and widespread violences of its rights. As a result, Memorandum of Understanding for the Ukrainian Anti-Corruption Initiative was signed in May 2014, concluded among the Government of Ukraine, EBRD, OECD, and five largest Ukrainian business associations. Among these business associations are the Ukrainian Chamber of Commerce, the American Chamber of Commerce, the Federation of Employers of Ukraine, the European Business Association, and the Ukrainian League of Industrialists and Entrepreneurs. Altogether, they cover most of the business community working in Ukraine, both international and local business entities.
The Council began its work in May 2015 and in three years created a high level of trust, which is supported by the BOC’s statistics. During 2014-2017, not only the Council itself was established with the Business Ombudsman and his two deputies, but also a highly professional team of inspectors was formed.
Main objectives of BOC include:
- To investigate complaints regarding alleged business malpractice
- To request updates from the state and municipal authorities regarding the regarding implementation of Council’s recommendations To provide proposals to the government of Ukraine concerning amendments to legislative acts
For three years the BOC has received more than 3800 complaints, of which 2488 were successfully closed.
2017 was the third year of the BOC’s operations in Ukraine, which has become special for the Council. Our organization has entered a new level of efficiency and reached the planned height of activity. The following facts prove this:
The State bodies implemented 91% of Council’s recommendations, while the vast majority of complainants, 97%, expressed satisfaction in dealing with us. So far, the cumulative financial effect since launch of operations exceeds UAH 11.3 billion (368.3 million Euros). In 2017, the BOC expanded its team by one third, to 32 employees, which helped us to significantly reduce the average time for conducting investigations from 98 days to 60 days.
In 2017, the principal part (90%) of complaints concerned four following blocks of subjects:
- Tax and customs issues, 64% of total complaints. Despite being the source of the most appeals, the State Fiscal Service performs a high level of implementing our recommendations, which constitutes 93%.
- Actions of law enforcement agencies, 12% of total complaints. While the number of received appeals has grown since the previous year, we are proud to have established a constructive dialogue with law enforcement agencies, who performed a growing ratio in implementing our recommendations. Currently, it is rather high and ranges from 78% for the Prosecutor’s office to 91% for the State Security Service, with a Memorandum on Partnership signed this year. National Police significantly improved the ratio of implemented recommendations from 57% in 2016 to 88% in 2017.
- Actions of State regulators, 9% of total complaints. This subject performed a double growth in the number of appeals since the previous year.
Actions of Local Councils, 5% of total complaints. These state bodies implemented 87% of BOC’s recommendations, which is +25pp as compared to 2016
BOC Systemic recommendations
In 2016, OECD provided the Investment Policy Review for Ukraine. It was a significant step for cooperation with Ukraine as it was conducted for the first time. Policy recommendations resulted the review consist statement that Ukraine Government will be regularly monitored by OECD whether it follows the BOC systemic recommendations.
During 2015-2018, the BOC provided ten packages of systemic recommendations in different areas. Those covered main important business issues as taxation, control bodies activities, law enforcement measures, foreign trade, natural monopolists etc. The implementation of most of them requires legislative changes. 32% of the BOC’s systemic recommendations are implemented at present.
New Business Integrity Initiative
In 2017, the Business Ombudsman Council with the support of the European Bank for Reconstruction and Development and the Organization for Economic Cooperation and Development presented the Ukrainian Network of Integrity and Compliance (UNIC), a new initiative for businesses that want to work transparently.
The purpose of this network is to promote the idea of doing business ethically and responsibly. Companies that joined the network commit themselves to support a good business reputation and improve the standards of integrity. By instituting responsibility in the foundations of a company’s operations, businesses will be able to counter corruption, lighten regulatory pressures, ease access to credits, and foster their entry onto international markets.
Network members work together to assess corruption risks as part of instituting compliance programs in their companies, to draw the business community into discussions of the principles of integrity, and to raise interest in doing business transparently among market players. Members will also audit their own levels of compliance on a regular basis.
At this time, 55 Ukrainian and international companies have signed the pledge of integrity. These companies jointly determine the basis and rules for the network’s activities. All companies go through a self-assessment questionnaire mainly based on ISO 37001:2016 standard. The companies commit themselves to take steps towards implementation of business integrity and compliance and/or improve its level. The UNIC Members must proceed from a self-declaration of specific compliance and business integrity level to the independent assessment of high compliance and business integrity level. After the certification, the UNIC Member becomes entitled to use the UNIC logo and name for labelling purpose. The use of the UNIC logo and name is a competitive advantage for the UNIC Members and it symbolizes that its bearer has a high maturity in managing compliance and business integrity risks.
The Ukrainian experience serves as a good example of finding new ways to help companies resist corrupt demands, develop domestic competitive climate and business culture through consolidated efforts.