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?
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.