UkraineBusiness.com – After a marathon session, the Ukrainian parliament passed a presidential bill that in theory would improve the state’s ability to fight corruption. Arseniy Yatsenyuk said the opposition scored the only improvements in the bill.

News and commentary from Ukraine Business Online:

KYIV, April 8, 2011 (UBO) – In a marathon sitting that went three hours beyond the normal parliamentary schedule, the Verkhovna Rada last night adopted a presidential bill on the principles of preventing and combating corruption in Ukraine, UkrInform reported.

In voting on amendments, the parliament voted to change articles on the definition of terms, a special audit of individuals in posts related to the fulfillment of the functions of the state or local government, the provisions of an article about financial controls and the Final Provisions section.

In addition, the parliament ordered the committee on combating organized crime and corruption and the main legal department to introduce legislative changes to the text of the bill based on the amendments adopted. In addition, there were instructions to divide the bill, while preparing it for signature, into two laws – a law on the principles of preventing and combating corruption and a law on amendments to certain legislative acts of Ukraine regarding liability for corruption offenses.

Yatsenyuk claims opposition amendments helped the bill

Speaking the reporters the day after the vote, Arseniy Yatsenyuk said, “Consolidation in the anti-corruption law binding declaration of expenses of officials and their families was a victory for the opposition.” The leader of the Front for Change political party added, “It was my suggestion, I insisted on it. This is the only opposition victory, but very important.”

However, Yatsenyuk expressed regret that the introduction of this rule was delayed until January 1, 2012. “That is a year officials will be able to enjoy impunity for their corrupt incomes,” he added.

Based on recent experience, many political observers believe Ukrainian citizens will be most interested to see whether the new laws will be applied fairly, or used by the government to attack the ruling party’s political opponents.

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!

The installation of this space flight was held in Mystetsky Arsenal Museum within the “Space Odyssey 2011″ festival. The action treated respect to the first Soviet cosmonaut Yuri Gagarin.

A group of six German scientists has created a reconstruction of the flight. They named the performance “Gagarin Lounge 10.8″. Because the first cosmonaut spent 108 minutes in space.

Visual concert coincided with the moment when Gagarin’s spacecraft “Vostok-1″ had been flying around the Earth’s orbit.

During the installation the guests have an opportunity to feel themselves in the astronaut’s body. Only 128 people have been able to become aware of spacemen for a few minutes.

Celebrations were also placed at the central square of Kiev. Youth organizations held marathon “Our Space”. They posted a huge puzzle with a picture of the first cosmonaut Yuri Gagarin on Maidan square. The picture’s size was nearly 25 square meters. Fifteen people worked on the puzzle during 20 minutes.

The puzzle consisted of 265 pieces made of plastic, coated with UV varnish and full color printing.

The lessons on the space theme were held in all educational institutions of Kiev.

Large-scale festivals were conducted as well in other Ukrainian cities. Sporting and educational games as well as competitions for the space theme were among them.

Meanwhile, the 50th anniversary of Yuri Gagarin’s spaceflight is widely celebrated around the world.

The UN General Assembly recently proclaimed April 12 as the International Day of Human Space Flight.

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!

We want you to have your say on the issues we cover in Democracy Watch. Bookmark our “Democracy Watch –Your Opinion” page on Facebook and comment every week on our new, fully monitored, public discussion board. www.facebook.com/YourOpinionEng

Each week we will post the current issue of Democracy Watch and invite your constructive criticism, ideas and comments. We hope that you will use the opportunity to exercise your democratic right to speak your mind.

Each month we will collate the best and most constructive comments into a summary which will be posted on Facebook and also printed in a report for the Deputies at Verkhovna Rada. This is your opportunity to speak directly to the decision makers.

Will the weight of debt crush economy?

Prime Minister Mykola Azarov announced the repayment of Hr 10.5 billion ($1.3 billion) of external debts in March – more than the total healthcare budget for the year or the annual development funds for the Euro 2012 soccer tournament. The government is expected to repay a further Hr 19 billion ($2.38 billion) to foreign creditors in July, which is more than annual education expenditures.

The debt interest for January and February alone is set to cost the state Hr 7.32 billion ($0.92 billion). The total debt repayments scheduled up between 2011- 2014 amount to $29.9 billion. Azarov largely attributes the mammoth debt to loans taken out by the previous government with interest rates as high as 30 percent.

The National Bank of Ukraine has observed a debt increase of 13.5 percent ($13.947 billion) in 2010 bringing the total up to $117.343 billion – 85.7 percent of GDP. Yet in 2010, Azarov’s government took out eurobonds for $2.5 billion, borrowed $2 billion from the International Monetary Fund and $2 billion in a short-term loan from the Russian bank VTB, the supervisory committee of which is headed by Putin. Despite two years of heavy borrowing, a new president and a new government, Ukraine continues to take loans. If the situation worsens further, the issue of survival may supersede the issue of democratic freedom.

People First Comment: Using investment capital to service debt is a classic recipe for disaster. Remember the MMM pyramid scandal? This is exact what they did. They took in cash by offering to pay high interest rates and then used the cash to pay the interest on previous debts. Bernard Madoff tried the same thing in the United States. His Ponzi or ‘pyramid’ scheme, as they are termed, collapsed owing billions and now he will spend the next 150 years in jail. What this and successive governments have done looks worryingly similar. As any self-respecting housewife will tell you, borrowing money is easy, paying it back is not and yet the government continues to borrow.

Lack of national economic performance ensures that the cake gets smaller every year. The Ukrainian model is further complicated by government tolerance of rampant corruption and highly questionable financial management systems.

The results are all too obvious. Ukrainian gross domestic product in real terms is today around 20 percent lower than it was 20 years ago. In fact, Ukraine has not grown at all, while Slovakia, which started from a similar level but uses the Western approach now has a per-capita gross domestic product of almost $19,000 and from a lot fewer resources. Perhaps somebody ought to remind the government that the Soviet system went bankrupt before they do the same to Ukraine.

Ukraine, a European high-risk zone

Ukraine’s position in two recent global rankings should ring alarm bells for the governing authorities that drastic reform is required in many different spheres. Ukraine is 22nd out of 85 countries in the protesting disposition rating of The Wall Street Journal. This rating pits Ukraine as less volatile than Libya, Uzbekistan, Egypt, Bolivia, Georgia, Turkmenistan, Dominican Republic and Tunis but more unstable than Bosnia and Herzegovina, Iran and Belarus. The risk of revolution is high in Ukraine, making the improvement of dialogue between the people and authorities all the more important.

According to another American publication, Business Insider, Ukraine is among 18 countries under serious threat of default. Experts attribute Ukraine’s 6th place to the amount of national debt, financial and political stability. The first five countries are Venezuela, Greece, Argentina, Ireland and Portugal. The list shows Ukraine as in a worse situation than Libya, Egypt, Bahrain, Spain, Bulgaria. The powder keg of revolutionary attitude and the serious economic pressures requires the authorities to tread carefully when it comes to respect for human rights and democratic principles.

People First Comment: There is a misguided belief that the Ukrainian people, when faced with adversity, will simply go to their dachas and pickle more vegetables. While this may have been true up to the turn of the century, the world has changed to such a degree that no self-respecting politician should take this position for granted. The reason for the change is simple. We now live in the communications age where information flows around the planet in seconds. There are now two mobile telephones for every man, woman and child and some 14 million now have the ability to go online.

Newspaper and magazine sales are falling not as many claim because of the economic situation, although this has had an effect, but because people will no longer spend hard earned money on manipulated news and other peoples disguised advertising. Through the Internet, they now have a point of comparison and are no longer restricted to the party or government line. Ukrainians are today more aware of alternative realities than at any time in history. Couple this with rising poverty and regional disquiet and it is little wonder that Ukraine is so high on the international “worry” lists.

The authorities would do well to note that it only takes one small spark to cause a repressed society to explode… and Ukraine is repressed. In Tunisia, for example, it was one man’s protest suicide that bought hundreds of thousands onto the streets who then bought down a government and ended a 20 year old system. What is even more interesting is that the new government, in conjunction with the international community, is now seizing plundered assets hidden in Western banks. In such a crisis money buys you no protection at all.

Ukrainians speak no evil

Infringement of the right to privacy and property by the Ukrainian security services is on the rise. The mass media have reported a considerable increase in the number of cases of state ordered espionage inspiring the public disapproval of the Prosecutor General’s Office of Ukraine. Last year the number of audio interceptions (phone tapping), trespassing in citizens’ homes and secret retrieval of information increased substantially. This is shown quite clearly in the amount of criminal cases involving evidence collected through covert means, amounting to 12 percent of cases involving the Interior Ministry and 15 percent of cases involving the security services, while a year before it was 10 percent and 13 percent respectively.

These facts contradict the legislation of Ukraine, which demands that secret information retrieval may become evidence in court only in exceptional cases of serious crime investigation. Otherwise covert evidence may be only be used in court if it was obtained under officially approved conditions – both parties must be aware that their conversation is being recorded and court authorisation is required.

Asked to comment by on the issue, Valeriy Khoroshkovsky, head of the Security Service of Ukraine, stated his belief that indiscriminate phone tapping was not a problem. However, according to the opinion of the Prosecutor General’s Office, the secret obtaining of information is inappropriate for common legal cases and violates civil rights. The cdhairman of the Parliamentary Committee for Legislative Support for Law Enforcement Activity and Deputy Viktor Shvets highlighted that the information gathered through covert means is often used for private rather than official purposes.

People First Comment: We all understand that the Security Services in the course of their work sometimes have to sail very close to the absolute limits of the law but what defines a civilised society is that once the line is reached it is never crossed without there being a very strong and legally defensible reason of national security. To cross the line in support of some third parties commercial interests is legally and morally indefensible and a total violation of all human rights and dignities.

While some in the service may think that getting the prosecution is the ultimate objective in reality breaking law to achieve it may well enable the offenders to walk free. Breaches of the law are a national issue whilst breaches of human rights are an international issue under the auspices of the United Nations through the International Court of Human Rights in the Hague. Breaking the law to effect a prosecution in most cases will invalidate the prosecution letting the perpetrators walk free, in fact even a hint that the Security services have misused the law in the past will draw into question the validity of their evidence in the future.

This is a very slippery slope and one the security services would do well not to take as whilst at present they may be selling their services to the highest bidder they place themselves in a position of total vulnerability for the future after all if they cannot be trusted to uphold the law and use the law for personal enrichment then how can they be trusted by other security services in the future.

Criminalized Ukraine

Ukrainian society is turning away from democratic norms of living, resulting in a dramatic rise in crime. A recent mass media report released figures from the Prosecutor General’s Office of Ukraine that show the number of reported crimes last year increasing by 15.2 percent from 435,000 in 2009 to 501,000 in 2010. Much to public concern, the figures also demonstrate an increase in the amount of serious crimes by 14.8 percent to 167,000. But Interior Minister Anatoliy Mogyliov, remains in nonchalant denial of the crime wave saying that the increase is being observed only due to a growing number of thefts.

Ukrainian deputies from the opposition, including Gennadiy Moskal, reaffirm the argument of the Prosecutor’s General Office accusing the interior minister of spreading untruthful and misleading information.

According to them, the statistics prove that this January saw an increase, especially serious crimes by 26 percent, robberies – by 17.1 percent, thefts – by 33.2 percent and human trafficking – by 46.2 percent compared to January 2010. Children are suffering the worst from this rise in criminality, with the number of under-aged crime victims growing by 44 percent. Is this dramatic rise of criminal activity in Ukrainian society factored into the reforms and modernization of Ukraine planned by the president and government?

People First Comment: Desperate people do desperate thing in desperate times and with 35 million people in Ukraine living below the poverty line and a further 12 million living on less than $3 per day, times are very definitely desperate for the majority. These figures are a national disgrace, in any other country senior police officers and prosecutors would be hauled over hot coals until they could explain how and why this is being allowed to happen. In reality, it is just the next step in the moral and psychological decline of the nation that this government’s policies have stimulated.

The comments by the interior minister defy belief. In any normal democratic country, a minister presiding over a 15 percent increase in serious crime in one year would do the honorable thing and resign, sadly not in Ukraine, he just plays semantics with the figures. Increases in crime of this scale are alarming to say the least as soon this situation could easily run out of control as the thugs and bandits realize that they can act with impunity. Europe and in particular UEFA should be equally concerned. Euro 2012 is projected to bring 650,000 tourists to Ukraine. If the militia and the authorities cannot protect ordinary Ukrainians why will they bother to protect tourists who are in reality much easier pickings?

Quote of the week:

Any people anywhere, being inclined and having the power, have the right to rise up, and shake off the existing government, and form a new one that suits them better. This is a most valuable – a most sacred right – a right, which we hope and believe, is to liberate the world.

Abraham Lincoln, the 16th president of the United States (1861-1865)

Viktor Tkachuk is chief executive of the People First Foundation, a politically independent democracy foundation. He is a former deputy secretary of Ukraine’s National Security and Defense Council, a former senior adviser to three presidents and a former member of the Ukrainian parliament.

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!

According to a posting on the company’s Web site made on Monday, the first four poultry houses will start operating by the end of April, as the first breeders have been already supplied, and the remaining four will start operating in August 2011, when the second group of breeding stock is supplied.

The company said that each group of young breeding stock will include 36,528 birds, totalling 73,056 breeders supplied this year.

The poultry houses will produce hatching eggs, which will be used in Agroton’s incubator facilities to produce chickens for fattening, the company said.

Agroton estimates that it will produce 1.6 million eggs in the fourth quarter of 2011, with the current requirement being 1.86 million eggs. In 2012 the company plans to produce 8.5 million eggs, while its total annual requirement being 8.6 million eggs.

This will enable the company to close its chicken business cycle, support vertical integration, and reduce poultry production costs, the company said.

As reported, Agroton, founded in 1992, is one of the biggest agricultural producers in Eastern Ukraine. The company leases 134,000 hectares of farmland and controls elevators with a total capacity of 235,000 tonnes of grain. The holding specializes in grain and oilseed crops, the production and sale of livestock products, and the production of baked goods, pasta and cheeses.

In H1, 2010 the holding saw sales fall by 25.5%, to $19.67 million, although its net profit jumped by 2.1 times, to $28.42 million, thanks to the revaluation of livestock and food production figures. Its ЕВITDA in H1, 2010 came to $37.55 million, against $21 million year-over-year.

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!

KIEV

The main purpose of Azarov’s participation in the representative economic forum in Boao is to reveal opportunities and advantages of this cooperation. Azarov appealed to Chinese investors to primarily invest in those industries where Ukraine established significant tax incentives and has untapped potential: aerospace industry, shipbuilding industry, hotel business and light industry.

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!

The first conference hosted in 2010 was attended by more than 150 delegates from 8 countries of the world (Ukraine, Russia, Belarus, Poland, Israel, Germany, France, and Italy), 44% of whom were producers of berries. Thanks to business-meetings during the first conference, Ukraine managed to increase significantly exports of fresh sweet cherries, and participants, according to them, got a great number of new ideas and contacts, helpful for the further development of their business. This year we will try to make the event even more interesting and informative.

Business-program of the conference-exhibition is designed in the following way. The conference “Berries of Ukraine-2011: Freezing and Fresh Market” and exhibition “Berries of Ukraine-2011” will simultaneously take place on May 19 (the first working day). Then, in the end of the first day, there will be a festive buffet for the conference and exhibition participants. The second day, May 20, will be devoted to the business-tour to a berry company and Lvov sightseeing tour. Attention! Preferential registration for participation in the conference-exhibition is in effect till April 15 inclusive.

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!

Industrial Milk set the maximum price at 21 zloty each, the company said in a share sale prospectus on its website today. Bookbuilding for as many as 12.4 million shares starts today and ends April 20. ING Groep NV and Investment Capital Ukraine will advise on the sale.

Agroton Public Ltd., Kernel Holding SA and Astarta Holding NV are among Ukrainian food and farming companies that already trade in the Polish capital. The Warsaw Stock Exchange is the third-largest in emerging Europe after Russia and Turkey, with market capitalization of $217 billion, Bloomberg data show.

KSG Agro SA, a Ukrainian grain and sunflower seed producer, this week is selling $44 million of shares in IPO.

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!

However, the attention was locked on the Ukraine’s cooperation with the Customs Union of Belarus-Kazakhstan and Russia that triggered discrepant rumors in the Ukraine society. Ukraine’s diplomats confirmed Kyiv’s readiness to deal with the Union under the 3+1 format that was earlier voiced by Ukraine’s President. Foreign Affairs Minister of the Russian Federation has said this plan will not prevent Ukraine from entering the European Union.

Economists say the year of 2011 is an opportune time for Ukraine to implement the economic reforms.

Both diplomats and experts agree that the Free trade zone agreement with the EU has to be signed ahead of the Customs Union treaty. European officials however predict Ukraine and the EU can round off negotiations no earlier than 2013.

See the TV interview

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!

By increasing amount of investments, Ukrainian officials expect to raise the country’s ratings in World Bank’s Doing Business to 100th position (Ukraine was rated as 145 in 2010) and in Global Competitiveness Report of the World Economic Forum – to 50th position (currently Ukraine ranks 82). The reform includes restructuring of Ukraine’s tax and customs authorities.

The Ukrainian President Viktor Yanukovych, who also attended the presentation, has reminded that Ukrainian businesses are unsatisfied with the performance of state tax and customs authorities. He voiced the main concerns of the business community: untimely VAT refund, issue with simplified tax system for SMEs, inefficient countering of smuggling, etc.

“In order to address the aforementioned issues I have ordered the government to elaborate a program to reform the State Tax Service and State Customs Service,” stated Viktor Yanukovych, according to his official Web site. Under the conditions of the reform, state supervising bodies’ amenability to their unlawful actions will be considerably increased. Moreover, issues within customs legislation (corruption within customs authorities, holdups of products at the border, etc.) would be eliminated with adoption of new customs code. As far as adaptation of Ukrainian businesses to the new tax legislation, the new tax code foresees a six months transition period, during which penalties for violations of tax legislation will be applied but at a symbolic amount of 1 hryvnia (approx. USD 0.13).

According to the program of economic reforms in Ukraine for 2010 – 2014 the government will form a transparent market of agricultural land before the end of 2012.

The Committee on Economic Reforms has developed a program, according to the President’s order to restore economic growth and modernization of economy in Ukraine. The reforms are aimed at building a modern, stable, open and globally competitive economy, professional and effective governance, and ultimately – to increase the welfare of Ukrainian citizens, according to the official Web site of the President.

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!

Just last year, Oleksiy Vadatursky was the agrarian king, flying high as one of Ukraine’s 10 richest people, worth more than $1 billion and looking to invest to help keep his company, Nibulon, as one of Ukraine’s top grain traders.

But the government’s decision to ignore Nibulon when handing out quotas to export grain this year has caused huge losses to the company. Meanwhile, authorities granted a huge export quota to a previously unknown company that is partly owned by the state and partly by unknown private investors.

Now Vadatursky, a 67-year-old former Soviet collective farm worker, is fighting back, taking the state to court for what he and others say are opaque decisions about who is allowed to make huge profits through grain exports.

hrough groups such as the American Chamber of Commerce and Ukrainian Grain Association, domestic and top international grain companies operating in Ukraine have threatened numerous times in the past months to sue the government for damages caused by protectionist and non-transparent policies.

But so far, Vadatursky’s company is the only one of Ukraine’s large grain market players to act on such a threat.

“We have sued in order to draw the attention of the country’s authorities to non-transparent allocation of quotas,” Vadatursky said in a telephone interview from the southern city of Mykolayiv, where Nibulon is based.

Nibulon woes are a cautionary tale about a company that had invested large sums in infrastructure, and planned to put up further capital, only to be cut out of the market by the government’s increasingly heavy-handed intervention.

The government decided to restrict grain exports last year, citing a worse-than-expected harvest and the need to keep domestic food prices in check.

But grain traders, agricultural experts and business groups say the export restrictions are unjustified and claim the process of handing out quotas was done unfairly and opaquely.

Vadatursky wouldn’t put a figure on Nibulon’s losses from not receiving export licenses in a second round of allocations (it received quotas the first time round), but said they were “very big.”
Volodymyr Lapa, an agribusiness expert at the Ukrainian Agribusiness Club, said it looked “at least strange” that the No. 1 exporter didn’t get quotas, as it was obvious the company had sufficient grain to export.

Vadatursky, whose company is regarded as a showcase of transparency, goes further, calling the government decisions illegal. To prove his case, he is taking the Economy Ministry and Agriculture Ministry to court.

Are you a cigar aficionado or looking for the ultimate cigar gift? Take a look at the world’s most expensive cigar!