Valentyn SYMONENKO:"In Ukraine the laws are not fulfilled, but interpreted according to how it suits somebody"

In addition to the official list of posts held by Mr. Symonenko in the past (including First Deputy Premier, Presidential Advisor, and People's Deputy), the residents of Odesa probably remember him also as their mayor. Obviously, the tempering acquired in Odesa, as well as the experience of a pioneering mountain-climber have been very useful in his new and sometimes dangerous work. Thus, the round table discussion involving The Day journalists and Valentyn Symonenko, head of the supreme state watchdog of financial and economic operations addressed issues like what is the Accounting Chamber, what are its tools to oversee spending taxpayers' money in Ukraine, and, finally, why exactly the state budget is viewed by independent experts as the main source of corruption in this country.

Q.: In late 1997, the Constitutional Court approved a decision according to which the Accounting Chamber (AC) became independent, primarily of Verkhovna Rada. However, this same decision essentially reduced its powers. In preparation for this meeting our journalists conducted informal interviews with AC representatives to find out if the decision by the Constitutional Court was followed by any changes in the AC's work. Our understanding based on these interviews is that when the AC was under Verkhovna Rada, it had more influence and independence in approving decisions than it has now. Also, we were given the example of the Russian Accounting Chamber which, having stayed under the Duma, has more political weight than the Ukrainian. Any comment?

A.: As they tell us, the decision by the Constitutional Court is not logical, but seems to be constitutional. The budget is a single whole - revenues, expenditures, and deficit. They took away control of revenues from us, leaving only analysis, which reduced the effectiveness of the whole oversight system. However, power, as they say, should not be given but taken, and summarizing the results of the two-year work I can say that we have had more tangible results than our colleagues, because practically all decisions by the AC Board and all our verifications receive one kind of response or another. And the response is not only from the mass media, but also from the entities where audits are conducted. Also, you should take into consideration that the creation of the Accounting Chamber cannot be taken out of the context of the events taking place in this country. In general, our fiscal bodies employ around 160,000 people (excluding enforcement personnel), but these bodies are not unified into a single system, and thus do not provide either an instrument for systematic and public control, to say nothing of a clear instrument of repayment for improper use of budget resources.

The Treasury employs around 10,000 people whose main task is to organize the fulfillment of the state budget and to oversee its fulfillment. So where is the oversight? I think, there will be none at all. Actually, this is oversight by sectors, that is, by the Ministry of Finance, which has already more than once permitted and will permit violations of budget legislation; it controls itself, and punish itself, too. There is no such ideal ministry anywhere else in the world.

And we exercise non-sector, public, and independent oversight. But we have only 180 specialists against the army of thousands of sector officials.

Q.: How do you explain such a fierce resistance to the Accounting Chamber?

A.: Tell me: does anybody like overseers? I worked many years in the production sector and I know what verification is about. In fact, any check is a restriction of power. And executive authorities will always have insufficient power. This is an axiom. On the other hand, we practically lack any real economy. Now they have started to call our economy a virtual reality one. Take these same budgetary funds. A normal person cannot understand why it happens that way unless he/she transfers to the virtual world of mutual offsets. Say, a budget-supported organization, this same Accounting Chamber has some funds and would like to pay for consumed electrical power and heat. But they tell even us, "No, you can't. There is a Cabinet decision on mutual offsets." As a result, they have twice almost cut off our power supply because we failed to effect a mutual offset. And how can a mutual offset can be made between entities which do not have mutual debts?

Q.: Obviously, such hybrids benefit someone.

A.: Of course, because two, three, or more subjects participate in each such mutual offset, making 5 or 6% profit and evading taxes. I can give dozens of examples of how our leading institutes - orthopedic or oncological ones, as well as educational institutions, and even social protection agencies had mutual offsets of budget indebtedness with distilleries, champagne plants, etc. For instance, the Kyiv Oncology and Radiology Research Institute effected a mutual offset with Kharkiv Champagne Plant for supplying medical equipment amounting to Hr 738,000.

In such cases, by the time when the mutual offset protocol was signed, there had been no accounts receivable, no services had been rendered, and fictitious acts on mutual payment comparisons were used as a principle document for effecting mutual offsets. This year, the Accounting Chamber experts detected more than 400 cases of illegal mutual offsets. Just think of the numbers: in 1997, mutual offsets accounted for 22.9% of budget revenues and 16.3% of budget expenses.

Q.: Now much is spoken of budgetary voluntarism, does it begin as early as at the stage of planning the revenues which cannot be obtained?

A.: Yes, this is also the case, but I have a different approach here. One should not think of the budget's creators and executors as non-professionals. One should understand their interest. Just look: according to an analysis, last year's budget was quite realistic on the date of its adoption. But there is a system of budget execution that makes it unrealistic. What is the budget process? It is a system of legal acts which regulate the collecting and spending budget funds. Now, after a series of administrative decisions and adoption of a whole system of bylaws, a budget gradually turns into an unrealistic one. The budget is no longer executed, it is interpreted, and at the same time its execution is controlled by hand. Now I can assert that most wealthy people in Ukraine have made their wealth on the so-called unreality of the budget. The sources of their wealth are: 1) the monetary resources of the budget itself; 2) utilization of legal privileges; and 3) illegal use of state property.

For instance, last year the budget failed to receive about Hr 20 billion because of budget privileges. This is more than the revenues for all of 1997. And in 1998 the situation has not changed. The amount of privileges granted in the first quarter totaled Hr 6 billion. Incidentally, the highest privileges were given to taxpayers in Kyiv - around Hr 2 billion, which is 2.5 times more than the revenues collected there; Dnipropetrovsk oblast - Hr 1.1 billion, which is 3.5 times higher than revenue; Donetsk oblast - Hr 811 million, which is 1.7 times higher than total revenue. The same situation can be observed in sectors.

Q.: Could you tell us, what is the purpose of approving a budget if it will never be executed or simply plundered?

A.: These are extremes, the state cannot live without a budget; it is a document of the highest state importance, which provides for your and my safety along with the socioeconomic development of the country. In addition, believe me, we would be forced to adopt a budget. We have too many debts to live without one.

Q.: And what budget do you think could satisfy our creditors?

A.: Practically any, if it is a budget making it possible to repay and service debts.

Q.: It is impossible to talk about the budget and leave aside the issue of off-budget funds. What is the situation now?

A.: We proceed from the fact that currently it is unacceptable to have a system of off-budget and special designation funds operating in parallel to the state budget. Last year, over Hr 4 billion were attracted by these funds, over one billion of which was purely budgetary money. About four months ago (when this country was nearing catastrophe) I spoke at a National Security and Defense Council meeting that it was not acceptable to pursue the current policy, when each minister had two or three extra-budget funds. In Ukraine, there were more than 600 extra-budgetary funds in the early 1997, and now there are around 2,000, while the UK has three and France four. In this country, such funds are produced continuously, and we have to repeat this continuously to both the Cabinet and the Verkhovna Rada.

Q.: Did anything changed after you spoke to the council?

A.: Around five such funds were eliminated, but the main thing, the system for their establishment and formation, the very idea of this process was not changed. You should understand that passing good legislation is not enough. We need a system of measures to enforce it, a system for managing social processes in the state, and personal responsibility. Also, we should take into account the great resistance put up by the forces which turned the budget into a feeding trough and render the most realistic budget unrealistic on the very day of its adoption.