Interview in Kyiv With Marcin Święcicki, Business Ombudsman in Ukraine
Business ombudsman of Ukraine Marcin Święcicki speaks about business climate and reforms
In 2011 you were highly involved in the process of helping Ukraine enter the World Trade Organization, the WTO. Now, eight years later, on Oct. 12, 2019 you became the business ombudsman of Ukraine. This eight year period, from 2011 to 2019, how did the business climate in Ukraine change for the better or for worse?
Yes, first of all, a small correction, because the entry to the WTO took place in 2008 already. After 14 years of negotiations, so it was a long process, it was a precondition to open negotiations on the free trade agreement with the European Union. So it was very important to conclude this. And I just concluded my work in Ukraine at that time, in 2011. And I think that the business climate, of course, did improve quite a lot. You know, with many things I remember at that time, it was difficult to get the value added tax reform for example. Now there is a systemic approach to this, and VAT are becoming clear, somehow more automatically than it used to be, we have a ProZorro system. I mean public procurement. So there are many other improvements. Still I would say that the image of Ukraine is perceived through the war in the East, which is not so much affecting the economy in other parts of the country. The climate is much better, you know, than it used to be five years ago. One of the testimonies of this is the conference in Mariupol that took place just 15 kilometers from the front, and it was a normal conference with many participants. And cities have been developing quite nicely during five years. So I was also taken by surprise that it is possible while still having an open conflict in the East. So the perception of Ukraine should be better than it really is.
Now you are officially a business ombudsman of Ukraine. What aims have you set for Ukraine and yourself, holding this position, and which of them do you consider as urgent as possible?
The general aim of this function in this ombudsman council is to increase the confidence of businesses in Ukrainian institutions. So if a businessman is facing unlawful activity of government officials and cannot find a solution within the existing government institution, he or she can turn to us for assistance.
You, meaning the Business Ombudsman Council.
Business Ombudsman Council, which is an independent institution. We are taking cover our actions, no matter whether the government officials like it or not. But the top officials like it, they count on our help because not having many thousand tax officials, customs officials, inspectors, police people all over the country, you cannot guarantee that all of them behave according to the rules, according to the law. So that’s why our assistance, our work on the cases that we receive from businesses is so important to improve the work of the whole administration, to discover weaknesses, to protect business interest, legal interest I mean, because we are not dealing as a lobby, we are not dealing in conflicts between businesses. We are trying to ensure that Ukrainian law is applied to businesses, and businesses are not worried about unlawful activities of any public officials in Kyiv or anywhere in the country.
What are the most common complaints of the representatives of Ukrainian businesses?
The greatest number of complaints deal with tax issues. There are improvements in some areas, and there are new problems, so to speak. For example, we receive a lot of complaints regarding, on the other hand, very important and needed system of qualifying companies as risky and non-risky companies. Companies receive the risky company status, but they don’t know why, how to get out of this situation, what needs to be improved, who from among the clients is suspected by tax officials. So this needs to be checked if something is suspicious, uncertain, so that they know how they can improve this. So still, with some cases regarding the tax amounts, regarding the customs amounts, the classification of taxes. But regarding other issues, we also have complaints on the police, on licencing, on local administration, for example permits for construction. Also, one issue that is quite frequent is that even court rulings are not executed by state officials. They are ignoring the final court decisions. So this is worrying businesses very much.
Yes, this is a problem. Which international financial institutions does Ukrainian Business Ombudsman Council cooperate with? Are you planning to enlarge this list?
At this moment, we are cooperating very closely with two institutions – with the Organization of Economic Development and Cooperation in Paris, which is also present in Ukraine, but the organization that we cooperate with the most is the European Bank of Reconstruction and Development. They are sitting in our supervisory board, they are organizing financing of our activities from among the donor countries and the European Union, and also we cooperate with them on th substance, because reports on the economic challenges they produce about economic obstacles, about the economic climate are very helpful for us. On the other hand, we are also producing our systemic reports stemming from our observations, from the cases that we receive, with our recommendations. So I think that this mutual cooperation regarding the economic climate in Ukraine, how to improve it, what should be done.
Speaking of further cooperation and improving the climate, the Ukrainian Business Ombudsman Council signed a memorandum with the Prosecutor General’s Office of Ukraine. What is this memorandum all about and how will it be implemented, how will it work?
The memorandum is about cooperation regarding, first of all, the most difficult cases that we receive. So if a case is not solved at the lower level, we report this to director secretary to debate with him. Then we also propose several systemic corrections, for example, or improvements in the legislation, and you would like to discuss it with the Prosecutor General, with his office to get their support. Some of our recommendations have already been implemented. For example, the limit from which a fiscal offence is considered a criminal offence.
And which is it?
I don’t remember the exact number, but it was tripled recently. The number was very low. Many businesses that had problems with payments, disputes with payments were treated as criminals, and they don’t deserve such treatment, even if there is a dispute regarding the amount to be paid. So this limit was substantially increased.
As far as I know, similar memorandums have also been mentioned concerning the state tax service and the state customs service of Ukraine. Have those been signed, and are they going to be operating on the same level as the memorandum signed with the Prosecutor General’s Office of Ukraine?
Yes, the memorandums are important for us because first of all they guarantee that all the officials that are under Prosecutor General or the Tax Office or the Customs Office or any other, because we signed several such memorandums, they are obliged to answer our inquiries with motivation and on time. Because if you are reviewing cases, we cannot deal with them if we don’t know the position of the government officials. Secondly, there are some joint expert groups set up, with which we can discuss the most difficult cases, and also discuss some systemic improvements that we need. So in every case of the memorandum, including the recently signed, the state heads of those institutions were very understanding about why they need such an institution as the Ombudsman Council, why it can improve the trust of businesses in state institutions. However, we are presenting difficult cases, we are advocating the interests of businesses, legal interests, those that are based on the legal substance, legal laws of Ukraine. But nevertheless, they consider us an important part in improving the rule of law in Ukraine in general.