While the country was shocked by the adoption of the language law on July 4, pro-presidential lawmakers passed another law that could end up costing the nation much more. The controversial bill on state procurement further reduces competition and oversight of state purchases, which are already bleeding the budget.
According to
z.texty.org.ua, which calculates money spent through state
procurements, the share of such expenditures compared to gross
domestic product is much higher in Ukraine than in Europe.
According to official
statistics, last year the state made Hr 325 billion ($40.6 billion)
worth of purchases. This year the figure could go up significantly;
in the first six months of the year, state procurement already
swallowed Hr 307 billion.
Much money in Ukraine is
being spent via tenders that lacked competitive bids. Prices in such
tenders are often far above market value.
Even the head of
state admits something is wrong. At a June 8,
2011 meeting of the National
Anti-Corruption Committee, President Viktor
Yanukovych said that corrupt public procurement deals amount to 10 to
15 percent of the state budget, which ends up in the pockets of
officials.
“That is, $7.4
billion,” Yanukovych said. “That’s why in the last 15 months we
have worked hard on eradicating corruption.”
Examples abound.
Last June, the State
Affairs Department bought imported raspberries worth $84 per
kilogram.
Another state company,
subordinated to the Energy Ministry, recently purchased three housing booths
for construction workers worth Hr 934,000 ($116,750) each. This
implies a price per square meter of $5,600, a figure close to the
average price for a square meter in an apartment in Moscow, one of
the world’s most expensive capitals.
If the law takes effect,
the legislation will allow state-owned companies to bypass tender
procedures in purchasing goods and services. Critics say this will
further fuel corruption, making it possible to spend public money
without proper scrutiny and with even less competition.
“I do not expect
much more money to be ‘siphoned’ as a result of this law,” said
Vasyl Yurchyshyn, economic analyst at the Kyiv-based Razumkov Center.
“The tenders will be open only to a chosen few.”
He added that the public
will lose the most from the lack of competition, because consumers
will end up with products that have low quality and high prices.
The law was adopted on
July 4, the same day parliament adopted a controversial language law
elevating the status of the Russian language. The ensuing protests
and international attention over the language law meant the
procurement law’s passage went almost unnoticed, fueling criticism
that the language law was a smokescreen to divert public attention.
In fact, the procurement
bill was passed so quietly that journalists did not notice it became
law until early this week.
Even after going on
vacation and asking parliament to accept his resignation to avoid
the adoption of
the controversial language bill,
parliamentary
speaker
Volodymyr
Lytvyn managed to sign the
procurement law on July 17 and pass it on to President Viktor
Yanukovych for consideration.
Lawmakers in the
Party of Regions faction, Lytvyn’s
People’s Party faction and the Communist Party voted in favor. The
Communists, ironically, are campaigning on the slogans of “returning
the country to the people” and punishing those who steal.
Nashi Hroshi (Our Money),
a news website that monitors state purchases, showed that last year
companies owned by Rinat Akhmetov, Ukraine’s richest billionaire and
a Party of Regions lawmaker, received 11 percent of all state
procurement finances.
Other politicians and
businesses that make money on providing goods and services to public
entities include: Yuriy Ivaniushchenko, a Party of Regions lawmaker;
companies affiliated with family of President Yanukovych; Oleksandr
Yefremov, head of the Regions’ party faction in the parliament;
Dmytro Firtash, the billionaire co-owner of RosUkrEnergo; Viktor
Pinchuk, son-in-law of Ex-President Leonid Kuchma; Petro Poroshenko,
economy minister, and Serhiy Tigipko, deputy prime minister and
minister for social affairs.
Razumkov’s Yurchyshyn
expects Yanukovych to sign the law. The president’s press secretary
did not immediately respond whether he will sign the bill. Yanukovych
has another week to consider the measure.
Kyv Post staff
writer Yuriy Onyshkiv can be reached at [email protected]
