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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Inspection Mania

20 July, 1999 - 00:00

"Well, my friends, I see that you have suspended ceilings
in your offices. Obviously this is money you didn't pay taxes on. We just
need another 500,000 hryvnias to fulfill our plan..."

This little tax service saga told by Oleksandra Kuzhel, Chairperson
of the State Committee for Business Development, is extremely popular these
days among Ukrainian businessmen who have long realized that doing business
in this country is possible only when one has official connections. Ukrainian
business experience shows that "connections" means not only having an influential
bureaucrat (everyone seems to have to put up with this). It also means
an ability to come to terms with lower level bureaucrats, those in command
of tax, fire, and other state oversight bodies, so that in case of any
"reticence" or "lack of agreement" these bureaucrats have every opportunity
to bring fiscal pressure to bear, using a multitude of laws and bylaws
(often controversial). Those succeeding in building the "right" kind of
relationships with such bureaucrats (and "right" does not mean playing
fair with the national budget), which in most cases boils down to making
a deal with the right man in the right place, can do "legal" business.
Those failing to make such deals, for one reason or another either go bankrupt
or move into the shadow. Such are today's realities and standard practice.
The main thing is that today complete arbitrariness is the rule. No one
can deny it.

I know of a Kyiv businessperson who asked not to be identified (additional
evidence of how much confidence domestic business circles have in the government
machine) and told The Day that there was only one entry in his state
inspection log.

"It means that you have undergone only one inspection?"

"No, I've had about a dozen since January, but when I wanted to enter
another such unscheduled inspection visit they told me loud and clear that
if I do I will have to specify the purpose, in which case, no matter how
fantastic it sounds, the controlling authority will do their utmost to
meet this purpose, and they will, have no fear! And then I was offered
a deal so we could part without hurt feelings."

On the eve of the presidential elections the state machine, having honed
its methods of suppressing and bullying business dissenters to perfection,
is now concentrating on the media. Here the techniques applied are basically
the same, the difference being that the controlling authority acts as a
tool in the competition covering the financial as well as political range.
In other words, if it is impossible to censor (which is actually impossible
with regard to the opposition media), then economic levers are pulled.

Of course, state control authorities may believe that they are "foresters"
and by hunting down such dissenters are benefiting society. But the fact
remains that they are being used as a tool to eliminate all those unwelcome
"fellow travelers" of the number one presidential candidate.

Remarkably, these methods of doing away with political adversaries have
become apparent even to foreign experts - those who, hard as they tried,
could see no changes for the better in a country now supposedly living
under a more or less democratic Constitution. Mildly speaking, the civilized
world was amazed to learn that these democratic laws are being used to
enact bylaws in Ukraine that are not adequate to its legislation and can
perhaps match only the oral directives uttered on Bankova and Hrushevsky
Streets. We all remember that early this May, precisely on Freedom of the
Press Day, the US Committee to Protect Journalists placed Leonid Kuchma
sixth on its list of the world's top ten enemies of the press. Its statement
reads that, by using tax and libel laws as an instrument of his hostility
toward journalists, Leonid Kuchma is suppressing the slightest expression
of opposition. His tax policy forces print and electronic media without
foreign support to seek financial aid from businessmen and politicians
who then demand that publications carry material they need. A month later,
in June, Ukraine was chastised in public at the Council of Europe's Assembly.
For some reason, there is an opinion (being actively cultivated by the
government-affiliated media) that Ukraine is only accused of failing to
resolve the capital punishment issue. The reality is different. The Council
of Europe actually pressed charges on three counts: local self-government,
freedom of expression, and capital punishment. Ukraine was once again given
six months to take specific measures to "enhance its civilized nature."

In other words, Ukraine's European neighbors have strong doubts not
so much about its being civilized or democratic as about its desire to
become civilized and democratic. Ukraine's current domestic policy is caught
in a kind of Brownian motion, slipping ever farther from civilization.
Ukraine is still to become a true democracy, yet it has turned into a Planet
No. 6. For how can one otherwise identify a polity, which seems to have
adopted a market model but has (according to the Chairperson of the State
Committee for Business Development) a million (!) bureaucrats representing
state controlling authorities per ten million working people. Needless
to say, these bureaucrats live on taxpayer's money.

"The bylaws of about 100 structures currently entitle them to control
business. 1,300 laws regulate these activities. 28 oversight structures
have fiscal functions (i.e., the power to come and take or write off money).
Regional structures as bodies of the state representing ministries and
agencies are actually self-accounting entities; as the result of such an
unofficial merger of power and business, they are just making money. In
addition, the fact that 30% of the penalties exacted by the State Tax Administration
remains in its budget deserves close attention. Tax people abide by their
plan, not transgressions as such, and there is a special penalty item in
the state budget. Why not consider this a stimulus for inquisition-like,
provocations by them?" The Day's Yana MOISEYENKOVA was told
at the State Committee for Business Development.

Consider the fact that according to Ms. Kuzhel out of the 2,500 cooperatives
officially registered in Kherson oblast since 1989 only two (!) have survived.
Those who find this surprising should reread the preceding paragraph. One
is left with the clear impression that the huge control machine created
by the Ukrainian state has only one aim: suppressing everything which is
still alive and capable of any growth.

Den's editorial office, which has sustained over 30 inspections by various
control authorities over the 2.5 years of the newspaper's existence, now
has almost daily the pleasure of the company of tax people from the Minsk
city district in yet another "unscheduled check." In fact, they make no
secret of their intention to spend another month and a half on the premises.
Analyzing everything stated above and the Minsk district tax people's conduct,
the Editors pose the question: How can a non-affiliated periodical oppose
this control machine being obviously determined to undermine that periodical's
economic foundation to the point of shutting it down? And how does Ukrainian
law provide for liquidating a mass media outlet? Especially considering
that the tax authorities have precisely this task assigned from above?

"Closing down media bodies in Ukraine is very simple; this can be done
practically overnight," The Day's Tetiana SHULHACH was told
by People's Deputy Oleksandr Lavrynovych, secretary of Parliament's legal
reform committee, adding that "The requisite laws exist, but there is no
power of the people in today's Ukraine; the people has no way to influence
political decision-making. This is all the result of cultivating legal
nihilism in Ukraine. There is a demonstrative, brazen, and cynical ignoring
of the laws in force, all the way from the head of state to the Cabinet
to Parliament. Administrative, disciplinary, civil, or criminal legal responsibility
will be effective only when there is true political responsibility. Here
is my advice on how to combat the tax authorities. Combine efforts with
those bodies of the media that still have the courage to oppose the regime,
contributing as best you can to forming Ukrainian public opinion of the
need to change this regime and build an open civil society. There is another
option: place the President's photo on the front page and use the second
page to describe how much the laws currently in effect are at variance
with realities and the Ukrainian Parliament's devastating effect, concentrating
on the manner in which Verkhovna Rada prevents Ukraine's pressing problems
from being constructively solved. And you could place photos of beautiful
women and anecdotes on the back page. If you do, everything will be OK."

What about civilized Europe and its experience, something the Presidential
Administration and Cabinet refer to so often? How about Europe's opposition
media?

The Day's Viktor ZAMYATIN contacted Judith Gardiner, Second
Secretary (for press and public relations) of the British Embassy, and
she said, "There are no particular laws on the press in Great Britain.
Nor do we have a vehicle, using which state bodies can order some newspaper
or another closed. Yet the government can apply the Official Secrets Act
or misinformation acts to prevent certain articles from appearing in print.
Also, the press is not allowed to disclose information pertaining to court
proceedings if such disclosure could affect the legal process. The government
can turn to a court of law to have certain information barred from public
knowledge. Most such court hearings have been libel and slander cases initiated
by private citizens. The press can defend itself in court. Great Britain
signed international and multilateral conventions, including the UN Universal
Declaration of Human Rights and the European Convention on Human Rights.
We cannot recall a single case when a government agency has closed a British
newspaper."

Well, we can in Ukraine and there is ample evidence of the government
machine being used to combat the media - how can one otherwise consider
what has happened to such newspapers as Kievskie Vedomosti, Pravda Ukrainy,
Polityka, and Dnepropetrovskaya Pravda?

MYKOLA AZAROV

PS: The Day intends to raise the matter of state control
authorities on the broadest scale. After polling Ukrainian businessmen,
the Editors first resolved to start by a series of detailed reports on
the methods being used by the Tax Administration. Later, following the
logic of an unbiased approach - in this case toward these controlling authorities
- and being aware that these authorities are often used as an implement
of unfair play, The Day, rather than relating stories about the
tax people's arbitrary rule (and the Editors do have an ample supply of
such first-hand information!) decided to give the floor to the State Tax
Administration. At the end of last week, The Day invited Mykola
Azarov, head of the State Tax Administration to take part in our round
table. Needless to say, his views will be of interest to the Editors and
readers, particularly with regard to the Ukrainian fiscal system's trends
and prospects, and business survival opportunities in view of hardening
tax authorities' pressure. In addition, The Day will want to hear
comment on acts perpetrated by Mr. Azarov's subordinates, specifically
about the current "unscheduled verifications" underway on The Day's
premises (especially considering the tax people's promise that it will
last for a month and a half). Is this part of a certain political contract?
And what does Mr. Azarov think of the threat of his STA being used as a
weapon in political and financial power plays, now that the election date
is getting closer? On July 12 STA Press Secretary Larysa Demydova confirmed
The Day's round table invitation but informed us that Mr. Azarov
is out of town on vacation. The Editors wish Mr. Azarov a good time and
hope that he will join our round table after getting back to work.

PPS: On July 12, Oksana Oksanych, deputy head of the Minsk district
tax department, confirmed to The Day's reporter the fact that there
is an "unscheduled" inspection at the Editorial Office. She further assured
us that any claims and grievances we might put forward as a result would
be dealt with promptly, subject to the condition that each and every such
instrument is submitted in writing, executed in keeping with legally established
procedures, and duly signed by the newspaper's management.

The Editors will, of course, exercise this right.

 

 

Den (The Day) has gone through over 30 inspections by state authorities in its 2.5 years of existence
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