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Ukraine: No One Actually Fighting Corruption

Washington, 24 February 1999 (RFE/RL) -- The detention in the U.S. of former Ukrainian Prime Minister Pavlo Lazarenko, wanted on corruption and money-laundering charges in Ukraine and Switzerland, has put the global spotlight on Ukraine, again highlighting the country's problems with corruption.

The editor of the publication ERT from the private Ukrainian Center for Independent Research, Inna Pidluska, told an OECD (Organization for Economic Cooperation and Development) conference in Washington Tuesday that corruption is what she calls "a painful" subject in Ukraine.

It's painful, she says, because it has been so broadly discussed since 1992 and more than 20 laws enacted on fighting corruption.

The problem, she says, is that despite all these declarations -- and seven government ministries and departments assigned the task of fighting corruption -- no one is actually doing it -- fighting corruption.

Pidluska says Ukraine is lagging behind many other post-communist states, both in economic performance and in dealing with corruption.

One of the reasons, she says, is the totalitarian attitude of the state toward business -- the taxation system has not been reformed, nor has the criminal code. She noted that there is still a law on the books making "speculation" illegal. Speculation is defined as reselling something to gain profit, which is business activity, and in Ukraine that still is de facto outlawed. So businesses are pushed into bribing officials.

Part of the problem in Ukraine, says Pidluska, is that the average business owner spends 55 days registering his or her business and it is not unusual for it to take 90 days. At the same time, there are 26 state bodies which are authorized to perform inspections in any business and fine entrepreneurs for any infraction of the agency's rules.

But the rules are not published and frequently the inspectors won't even tell the business owner what violations are being cited. Of course, says Pidluska, there is a simple and fast way to get a license or pass an inspection -- bribery.

Without question, says Pidluska, President Leonid Kuchma was right last year when he admitted that abuse of power, bribery and extortion by bureaucrats were the main obstacles to economic development in Ukraine.

Ukraine, of course, is not alone in having to battle corruption.

The Deputy Administrator of the U.S. Agency for International Development (AID), Harriet Babbitt, told the conference that in its role of promoting democracy around the world, the American aid agency helps fight corruption as well.

She noted that in Armenia, for example, USAID supported 200 community development programs which stressed the importance of transparency and accountability in managing any funds, public or private.

She said the agency backed judicial reform with ethics classes in schools and the creation of professional associations in law, business and the media to endorse anti-corruption codes of ethics.

The agency also encouraged an independent media in Armenia and, she said, in the last elections provided the most balanced coverage in Armenia's history.

Additionally, she said, by helping Armenia privatize its energy sector, the U.S. aid agency helped the government reduce electric meter tampering and bribery by starting a computerized system that separates the metering, billing and collection functions. The Vice President of the private group Transparency International, Frank Vogl, wrapped up the OECD conference saying that corruption is seen as a "massive problem" in more than half the countries of the world.

Petty corruption serves as a vicious tax on the poor, he said, grand corruption hurt the economies of Central and Eastern Europe and looting, which he described as the most outrageous form of corruption, has been perpetrated by leaders in Russia, Indonesia, Nigeria and Kenya among others.

While fighting corruption has become a major global topic, Vogl said efforts so far have "only made a dent." He said the armor of protection surrounding the corrupt -- in government and business -- remains largely in tact.

Business should be pro-active, said Vogl, by reforming and acting as good corporate citizens everywhere.

The problem of government corruption will be addressed at a second conference opening today in Washington under the sponsorship of U.S. Vice President Al Gore. This conference, with at least 75 nations sending representatives, will focus on fighting corruption among justice, security and financial management officials of government.