June, 25

How bureaucrats stole the EU aid from forced migrants

01/13/2016 03:39:01 pm
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More and more people are leaving occupied Donbass and going to Ukraine in search of peace and better life. Most of them rely on help from the state, because they are forced to leave everything and begin a life from a new chapter in a new place. However, in the current economic situation Ukraine is distancing itself from the problems of internally displaced persons. The state allocates 442 UAH per month to employable persons and 884 UAH to disabled. Of course, it’s impossible to live on this money when you have to rent a flat. Therefore, the international donors help the displaced people, initiating different projects. But such projects are implemented in the main state institutions, where corruption and the desire to make money are on the first place.

The project, which will be discussed in this article, aims to help forced migrants start a business, thereby creating jobs and tax revenues to local budgets. But here bureaucracy puts a spoke in the wheel, the project froze, and the European Union, which had allocated money, began investigation. But first things first.

In 2014 in Vinnytsia region it was decided to launch a project to help internally displaced persons and the transfer of their business from the ATO area. The project started on March 26th, 2015, and provided allocation of 323 million euros by the EU to establish in Vinnytsia "Center for Adaptation of employers and forced migrants from the ATO area and Crimea". The beneficiaries of the project, according to the grant contract, are the Department of Regional Economic Development of the Vinnytsia Regional State Administration, Vinnitsa Chamber of Commerce and the Association of Private investors in Ukraine. However, the project has not started to work so far...

It should be noted that as a result of the project it was planned to create 720 new jobs in the region. The project provided 170 thousand euros only for compensation of interest on loans of immigrants taken for starting a business. It was planned to support about 20 companies.

In particular, the project was intended to:

- create information and consulting center and a website concerning the transfer of business and support for entrepreneurs from the ATO area;

- provide compensation for the use of loans from commercial banks for the cost of relocation of business assets and the establishment of businesses, as well as reimbursement for expenses for the preparation of investment projects;

- carry out a series of educational activities aimed at promoting entrepreneurship and employment of forced migrants;

- conduct an information campaign aimed at creating a positive image of forced migrants (TV spots, social media, internet, and so on).

As explained, this project is considered as the most progressive experience in the application of effective interaction of government, business, civil society organizations and European donors in solving employment issues of internally displaced persons.

"For me it was a very significant project, because it was something that I had asked for 9 months before, had requested the local authorities, the Cabinet of Ministers, all the structures that need to act to inform, to combine at one point the efforts of local authorities to bring together entrepreneurs who left the ATO area, combine public organizations. We stop the gaps all the time, but for me it is important that the development is systemic and looks forward, development priorities of the region have been identified at the regional level and in each of them the entrepreneurs are involved. And the project in Vinnytsia was a perfect  project, which connected local authorities, business community, and in which they determined which branches of industry interested them ... This project was very important for me, because it involved local authorities. This is very important because you can not do anything apart from them"- said "the head of the All-Ukrainian Organization for IDPs NGO Oksana Ermishina to OstroV.

In May 2015 the Department of Regional Economic Development of the Vinnytsia Regional State Administration received the first tranche of 245,300 euros from the European Union on the implementation of the project, but the forced migrants haven’t received real payments yet, according to the president of Vinnitsa Chamber of Commerce Alexander Didyk.

"In May 2015 the European Union transferred means, but not a penny had business persons and other partners received on the implementation of the project. With limited funding and a working program of payment compensation which was provided by the Department, the project is being implemented by its own resources of other partners. As a result, we have contributed to the restoration of work of one enterprise from the ATO area in Vinnytsia in the field of foundry production", - commented Alexander Didyk.

The joint statement of Vinnytsia Chamber of Commerce and the Association Private investors in Ukraine says that after the Department of Regional Economic Development of the Vinnytsia Regional State Administration received the  grant funds, there were systematic violations of the grant contract and partnership agreements, including ignoring by officials meetings of the Supervisory Board of the project, violation of the terms of transfer of the grant funds to other beneficiaries, breach of documentation and information terms about the project, abuse of power and so on.

In particular, according to the contract, the Department of Regional Economic Development of the Vinnytsia Regional State Administration after admission of the first transmission to the treasury account was to transfer a part of the funds toeach of the parties to the agreement, i.e. the Vinnytsia Chamber of Commerce and the Association of Private Investors in Ukraine. However, when on May 27th, 2015 the Department received 245 300 euros, it, referring to the need to obtain the necessary clarifications from the State Treasury Service and the National Bank, in fact, froze the funds.

"According to the current legislation and practices of the implementation of grant projects, there are no requirements to treasury services of the EU funds and restrictions on the allocation of funds to other beneficiaries," – says the Association of Private investors in Ukraine. Letters from the State Treasury and the National Bank, which OstroV has, also confirms this position.

The Department remained uncompromising and refused to transfer the money, even though the Vinnytsia Regional State Administration received official letters from the State Treasury and the National Bank of Ukraine, which states that there are no restrictions on the transfer of funds to the parties to the contract.

Thus, the grant money was simply credited to the regional budget of Vinnytsia region (according to the decision of the Vinnytsia Regional Council as of April 30th, 2015 No 889 "On Amendments to the decision of the 31st session of the Regional Council of the 6 convocation as of January 16th, 2015 N 805 "On the regional budget for 2015").

"Currency values ​​of the grant contract were improperly included in a special fund of the regional budget in the full amount of the contract because they aren’t included into the budget within the Budget Code of Ukraine", - concluded the Navigator consulting association, which was involved to study the situation, according to the decision of the Supervisory Board of the project in May 2015.

Not transferring grant funds of the project to other partners, the Department of Regional and Economic Development of the Vinnytsia Regional State Administration unilaterally tore up the grant contract with the Vinnytsia Chamber of Commerce and the Association of Private Investors in Ukraine on September 14th, 2015.

"The Department of Regional Economic Development of the Vinnytsia Regional State Administration as the Coordinator does not fulfill its obligations to transfer funds provided by the grantor to other beneficiaries of the project and informs by unilaterally letter dated as of 09.14.2015, the number 2410 / 3-1 on absolving obligations over others partners as partners of the project did not take its proposed changes, which review the previously agreed procedure of the project implementation. Such actions do not comply with the general principles of civil law, creating a controversial situation that probably needs to be resolved in the court. The position of the Coordinator is unjustified concerning actions on the provision of funds allocated by grantor, the regime of extra-budgetary revenues of local budgets according to the Budget Code", - said Vladimir Ustymenko, Honoured Lawyer of Ukraine, corresponding member of National Academy of Legal Sciences of Ukraine, the chairman of the Association of internally displaced scientists.

After that the Vinnytsia Chamber of Commerce and the Association of Private Investors in Ukraine had to resort to the EU Delegation in Ukraine with a complaint against illegal actions of the Department of Regional Economic Development of the Vinnytsia Regional State Administration. According to the official response from the EU Delegation in Ukraine, which OstroV has, the EU side started the investigation on the issue since the end of November 2015.

In his commentary to OstroV the President of the Association of Private Investors in Ukraine Sergey Desyak said that did not rule out the inclusion of administrative resources, which may affect the objectivity of the results of the investigation and hopes to resolve the issue in the pretrial order.

"For an objective assessment of the situation on the Vinnytsia project, we have provided the EU Delegation to Ukraine with a detailed report on the implementation of project activities and offered to establish a commission for investigation, which includes representatives of public organizations, who patronized the rights of forced migrants, as they directly were to receive aid and are a victim party due to freezing of the project. In addition, we held preliminary talks with the Institute of Economic and Legal Research of the National Academy of Sciences of Ukraine for due diligence of all parties of the project and solving the dispute in the pre-court order.",- he said.

At the same the volunteer Oksana Ermishina noted in the commentary to OstroV that this issue was raised in the summer but the local authorities involved administrative resources to drop the subject.

"There (in Vinnytsia region - OstroV) the administrative resource was involved. These were the local authorities that froze the process, which first were actively involved, and then got out, it is a fact", - she said.

This is not surprising, given that Valeriy Nikitiuk, who previously held the position of adviser to the head of the Vinnytsia Regional State Administration, became the new project manager. With such a patronage it wasn’t difficult to involve the administrative resource.

According to Yuriy Zykov, the head of the Obshcheye Delo public organization, which represents forced migrants in Vinnytsia region, due to the fact that the project had not been implemented, the forced migrants suffered as well as all the residents of the region.

"Now there are over 16,500 forced migrants in Vinnytsia region and the issue of job creation is extremely important. The aid of the European Union could provide a means for the lives of more than 700 families to reduce the payments of state aid to forced migrants, to replenish local budgets by taxes of new companies. The situation concerning the project must be objectively investigated and the perpetrators must be brought to justice,"- he said.

Thus, the problems of corruption and bureaucracy do not allow to implement international projects in Ukraine and to raise the country's economy and consequently the standard of living. Indeed, in this case no one asks for money from the state, the question is only about the possibility of its implementation. The EU and other donors can pour hundreds of millions into Ukraine, but if they do not reach the people and solve their problems but will settle in the pockets of officials, there will be day when Ukraine will be left alone with its problems.

The President of the Association of Private Investors in Ukraine Sergey Desyak believes that the public should monitor the use of international financial aid, and the tool, according to him, should be establishment of commissions (community councils) to monitor projects.

"Ukraine can rely on significant amounts of financial aid from international organizations and as a result of fiscal decentralization the regional budgets will increase. It is necessary to avoid corruption for the money to work for economic development and positive effects. Unfortunately, international donors often can not directly influence the corrupt officials and they have to close their eyes to grant siphon off",- he said.

The project co-ordinator of Donetsk Alliance public organization Anna Shchetinina believes that it is necessary to solve the systemic problems in the management and control of international financial aid.

"Vinnytsia region was the first to be systematically involved in the issue of adaptation of business migrants. We took part in the round table, which created the basis for the future Center for Help to Forced Migrants at the invitation of the Association of Private Investors in Ukraine in November 2014. Despite the good preparatory work and fast involvement of substantial grant funds, forced migrants have not received the real aid", - she says and notes that the situation should be a definite signal to donors and authorities, pointing out serious problems in the management and use of international financial aid.

Unequivocally, the case should be investigated as such incidents undermine the image of Ukraine in the eyes of European partners and donors willing to invest in our country and to help those forced to leave their homes because of the war. By and large, forced migrants do not need charity from the state, they need to be able to start a full life. All they need from the state is not to interfere and not to put a spoke in the wheel.

Vladislav Bulatchik, OstroV