03 April 2014 Federation of Employers of Ukraine 

Ukraine Does Not Receive Benefits From Business Checks

In 2013, Ukraine's state budget received only 7% of penalty amounts that were applied by the regulatory authorities during inspections of business.

93% of fines in the amount of UAH 4 billion which last year were applied by regulatory authorities during inspections of business, did not get to the budget due to corruption of the state structures. This was studied by the Federation of Employers of Ukraine.

According to the FEU, in 2013 the number of inspections of enterprises decreased by a third, and the amount of fines increased from UAH 3 billion 167 million 867 thousand to 3 billion 963 million 801 thousand.

Thus, the state budget did not receive UAH 3.7 bln. The expenses of the state budget and other sources for the maintenance of regulatory bodies totaled 24.7 bln.
 
“The current control system over enterprises’ activities is a problem for business and for the state. We do not need so many supervisors. Problem is not only in the number of inspections, but in the paid services that business must compulsorily buy from state companies only because someone is needed this. Checks and services are enormous challenges that bind business on hand and foot. We have to change this situation - reduce the powers of supervisory authorities and make their work understandable and transparent. This will be a real contribution to improving the investment climate in Ukraine”, – said the President of the Federation of Employers of Ukraine Dmitry Firtash.

According to the studies conducted by the FEU, the largest number of inspections were made by ​​the State Emergencies Service of Ukraine (282.5 thousand inspections), the State Sanitary and Epidemiological Service of Ukraine (160.8 thousand), State Veterinary and Phytosanitary Service of Ukraine (158.6 thousand), the

Pension Fund of Ukraine (139.7 million), the State Service of Mining Supervision and Industrial Safety of Ukraine (133.4 thousand).

“In 2013, we saw a rapid increase in the proportion of unscheduled business inspections. A number of government agencies exceeded plan for unscheduled inspections in five or six times”, – said the Vice-President of the FEU Oleksiy Miroshnychenko.
 
Most intensively unscheduled inspections were conducted by the State Architectural and Construction Inspectorate of Ukraine (exceeded the number of planned inspections by 6.2 times), the Pension Fund of Ukraine (6 times), the State Inspectorate of Labour (2.9 times), the State Energy Inspectorate (2.7 times), the State Sanitary and Epidemiological Service of Ukraine (2 times).

The Federation of Employers of Ukraine is also concerned about the negative trend of growth in the number of unscheduled business inspections carried out without warning and without following certain procedures based solely on letters from individuals or entities.

“These checks often had paid-for nature and contained signs of raiding”, – said the Vice-President of the FEU Oleksiy Miroshnychenko.

The specialists in the Federation of Employers of Ukraine believe in necessity to eliminate additional services of the enterprises established by the central executive authorities which precede obtaining administrative services. These services include so-called scientific support, monitoring, surveillance, verification, confirmation of compliance etc. To do this, you need to make changes in more than 70 legal acts.

In addition, the FEU offers to eliminate unscheduled inspections based on letters from individuals or legal entities, as well as to establish personal financial responsibility for each inspection decision to stop or limit activities of enterprise, the validity of which is not confirmed by the Administrative Court, as well as for violation of inspection procedure.
 

NOTE

In 2013, the Federation of Employers of Ukraine was the first to systematize information on all regulatory bodies, which have the right to conduct inspections of enterprises. At the end of 2013, 70 government control bodies transferred to the FEU data on the number of scheduled and unscheduled inspections, amounts of fines, number of prosecutions of entrepreneurs and enterprises that were suspended or stopped.

Thus, the FEU became the only non-governmental organization, which all regulatory authorities are obliged to report every six months on the implementation of their enforcement powers.