Theft from the budget like stolen art

2014/02/05 • News

“They would be arrested, you’ll see: get ar-res-ted!  After I was chased away from there, those guys would start stealing, as only they can. And after a year, someone would come to get them.”

I heard this emotional speech a few years ago. The speaker was one of the scheme-makers from a big government ministry, who was cast aside by the new administration. For two hours, I was listening to how an official could withdraw state property, what knowledge to use to submit the right tender, and how many speeches he had made using NLP methods.

“The main thing is that all of the above was performed ‘in accordance with the corresponding legislation.’ Everything is just perfect: it leaves nothing to be desired. There are only a few dozen people in positions like mine, and all of them are extremely busy. They will not be able to find anyone. No, they are done,” summed up the speaker.

There have been quite a few similar conversations with those from the opposite side over the past ten years. Facts and events were changing, but the main point remained: organizing the theft of state money is like creating a masterpiece for those seeking fortune. The financial reward for such theft is an appropriate payment to such clever individuals, resulting in the appropriate axiom amongst peers: “Why are you so poor when you are so clever?”

That is why I was puzzled when one clever girl recently asked me what would happen with economics if state authorities stopped requiring ‘extra fees.’ There is no single answer here, due to an incorrect assumption. Officials in state institutions do not require ‘extra fees,’ bribes, or even gratitude. They are not thieves according to their own convictions. State officials only ‘create conditions,’ ‘use legislation,’ or ‘notice possibilities.’ For most, it is simply part of their job and for some, it is a valuable, if bizarre, form of art. Can the painter stop painting or singer stop singing if they both reject the flowers thrown at their feet?

Here is one example to give proof about the notorious ‘Boikov’s Tower.’ It seems easy, if illogical, at first sight to pay $400 million for something that costs $250 million. In reality, it requires a monumental amount of work: to form the tender conditions in such a way that only one tower can get through; the registration of companies in Belize, Great Britain, and New Zealand; forcing a Norwegian dealer withhold information reagarding the buyer’s personal information; and paying the economic press for their loyalty. The result can be a masterful piece of work.  Ocean’s Twelve pales in comparison.

Take the story with Mezhyhirya. If an individual who is not informed would attempt to research the President’s home on the Internet, he would certainly go crazy within a few hours. The transfer of two buildings on Park Alley from Kyiv City Council to Naftogaz and then to Nadr Ukraine and back again. Later, there was an unexpected exchange of those buildings to Mezhyhirya, dozens of court hearings, and a paper trail that runs through Austria, Great Britain, and Lichtenstein. It is all an invention. There is no doubt that the creators of this fiction are experiencing some kind of physiological joy and intellectual satisfaction. Who can blame them?

All that is said, of course, has little to do with another group of thieves. I mean specifically those who keep the following phrases in their vocabulary: “a lemon monthly from you” or “you will introduce our guy into your business.” Lately, this is becoming even more popular. They are despised by the ‘intellectuals.’  Firstly, this stage is in the past and there is thus no art in it any longer. Secondly, income for the ‘guys’ look insignificant in comparison with greater financial achievement. No gun can earn as much as a kind word can, and no private business can allow to benefit from itself as much as it can from siphoning off the state budget.

However, it is in this sad position where one can find a place for optimism. Since the main thieves of the state budget are these so-called artists, their attempts for creating beauty can be calmed down by intelligent action. ‘Scheme-makers’ consider state budget as one portion of the free market, thus allowing a place to earn money while not committing a crime. Changing the law will cause a change in behaviour.

For example:

In the slang of a few journalists who are working with state tenders, there is this idea of pani Galya effect (Miss Galya Effect). This theory was born out of radio reporters who called the head of the tender committee of one of the Donetsk Oblast mines asking only one question: Why has the mine paid a few times more for mine torches than they actually cost? Pani Galya was explained, in full detail, live over the telephone: “We have announced a tender. Only two parties have responded. One offered an expensive price, and another one? Very expensive.  We took the cheaper option.”

Word of similar tenders are coming to light weekly in Ukraine. Everyone understands why there are only two participants for the mine in Donetsk: one was informed that Vasylyi Petrovych would be victorious, a second proposal was rejected due to a supposedly missing documents, and the third recalled how he was physically beaten in the entrance corridor after the last tender.  But, as they say, no transcendent knowledge can be attached to the case. From a legal perspective, both Pani Galya and all of her co-workers are clean, as a solitary man’s teardrop during the companionable court.

The law, obviously, permits officials to decline the tender under these questionable conditions. Permission is not binding, however.

What if a rejection is made? The head of the tender committee, as an example, could announce a rejection if the price offered is 50% higher as compared to the market price and would be fined for a certain amount of hryvnas. Would any official attempt to repeat such a scheme? Current experience suggests yes, they would alter their artwork and make a second attempt.

It has been like this in many places, including outside of Ukraine. I once read a book that presented around 500 stories from Germany, where entrepreneurs falsified budgets while getting around appropriate German legislation. Each story closed with a note on the changes in legislation, meaning that the loophole that was once opened had now been, in theory, closed. Such measures have been effective.

To return to the fundamental point, it is evident that people are moved by personal gain just as much as they are moved by fear. The current government has done everything possible for citizens of all ranks to be afraid to stand up for integrity, especially the governmental clerks in middle management pressured to conduct the unethical actions themselves. Dozens of stories can be told about civil servants who have resigned, have taken six months of sick leave, or imitated broken legs to avoid signing corruption documents that they were forced to sign by the representatives of a new elite. Mixed signals are appearing daily, as all members of the Tender Committee are being detained while the Minister himself has yet to be called in for questioning.

Many papers are still being signed, as there are countless loopholes in Ukrainian legislation. It is quite enough to take one’s fees directly from the budget.

Such holes are not difficult to find. There are controlling institutions that, in spite of their limited capacity, have some experience in such matters. Moreover, there is a market full of offended parties. If someone has wrongly won a tender, there is someone else who lost it, someone that is telling the story not just to their friends and family in frustration, but also to journalists and activists. In a different country, those receiving such information would have passed it on to those that should know, both in the government and in the public.

It is possible here as well. But there is a difference. One of the top officials has recently mentioned in an informal conversation, “I am not afraid of the government changing. I will always be on time for my helicopter.”

The changes in Ukrainian corruption will definitely come, but seemingly only when the hum of the helicopters begin to fade.

 

Source: krytyka.com.ua
Oleksiy Shalaiskyi

Translated by Marika Shved

Edited by Adam Nowek

 

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