Page 68 - BNE_magazine_12_2019 dec19

68 Opinion
corruption is a form of three-dimensional checkers. Here’s
how it works, using the three plastic boards.
The Top Board – In this analogy, top board is made up of individuals like Kolomoisky or Firtash, collectively referred to as oligarchs. Together, they control large segments of Ukraine’s capital stock, gas production, metals production, utilities, banks, etc. They have no interest in Ukraine as
a functioning political entity, even though 73% of Ukraine’s voters in the last Presidential election wanted sweeping political change, including ending corruption. Instead the occupants of the Top Board see Ukraine almost exclusively as a source of massive graft. In addition to stealing from others on the two lower boards, they steal from each other.
The Middle Board – Government Institutions. Since the Revolution of Dignity, Ukraine has made substantial progress in curtailing graft and corruption within government institutions, including what I have called the plumbing
of corruption. Examples include:
• The National Bank of Ukraine (NBU) – In the 5 1⁄2 years since the Revolution of Dignity the NBU has gone from not much more than an ATM for Viktor Yanukovich and his associates, to an internationally well-respected, and effective central bank. During this time, the NBU has shut down close to 100 banks, and has nationalised others, such as PrivatBank. Without the intervention of the NBU, there would’ve been far more than $15bn stolen from Ukrainian depositors. By closing the banks, in effect the NBU is clogging the plumbing of corruption.
• ProZorro – An automated system of government procurement, developed by Ukrainians, that has saved Ukraine close to $2bn annually.
• Civil Service Reform – Applicants for government jobs must now take a civil service exam and, from there, applicants are moved to positions for, which they originally applied. The objective is to eliminate cronyism.
• E-Government – The Zelenskiy Administration is beginning to initiate ‘E-Government,” similar to what currently exists in Estonia and Kenya, among other countries, where citizens can complete many interactions
“The occupants of the Top Board see Ukraine almost exclusively as a source of massive graft”
with the government on-line, such as forming a business, obtaining a passport, obtaining a driver’s license, etc. This will substantially reduce personal interactions with government, and thus reduce opportunities for graft.
bne December 2019
• Governance of State-Owned Enterprises (SOE’s). Many
of the largest SOE’s now have professional management, with supervisory boards that includes Western experts. Prior to its re-organization, Naftogaz was draining around $9bn/year from the State budget. Today, Naftogaz is Ukraine’s largest taxpayer. The Zelenskiy is beginning the process of either auctioning off SOE’s, or simply shutting them down and liquidating the assets.
• Ministry of Health, under former Acting Minister Ulana Suprun. Suprun enacted policies, including the “Money Follows the Patient,” that serves the purpose of reducing the flow of graft going to hospitals and drug distributors. Suprun also placed international organizations, Crown Agents and UNDP, in charge of drug distribution.
All of these developments began during the administration of former President Poroshenko. President Zelenskiy and his team have promised to continue and strengthen them.
Two significant areas in the Middle Board that still need to be addressed include corruption in the judiciary and improved property rights. Lack of a transparent and fully functioning judiciary allows substantial graft to continue. Lack of property rights continues as a major source of theft.
The Lower Board – Graft and corruption that directly affects ordinary Ukrainians. Examples include:
• Theft of funds that were meant to replace the elevators in our building.
• Harassment of small business owners by government officials looking for payment of bribes, in return for building permits, tax disputes and other reasons.
• Schemes such as graft surrounding the required recycling of used motor oil, in Lv’iv.
If there is one reason why 73% of Ukraine’s voters wanted change, this is it. Unfortunately, because they usually focus on corruption and graft taking place on the top board, where the numbers are far larger, often there is very little appreciation among Western donors and experts for how lower-level corruption affects Ukrainian citizens, those in the lower board, and how lower-level corruption fuels the higher two boards.
The Vertical Game – three-dimensional checkers is played vertically as well as horizontally. To apply this analogy to corruption in Ukraine it is necessary to understand how the money flows between boards. Two examples:
• PrivatBank – Money is taken from depositors, on the lower level, and was used to extend credits to companies owned or controlled by PrivatBank’s owners, at the top level, or simply moved outside Ukraine.
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