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Harry van Bommel: In Ukraine corruption is the system

14 February 2016

Harry van Bommel: In Ukraine corruption is the system

Foto: SP

The treaty with Ukraine will not benefit the fight against corruption. This struggle in desperately necessary in a country where corruption hasn’t just harmed the system: corruption is the system. That’s why Ukraine has a high score in the corruption index. One Dutch company, the shipbuilder Damen Shipyards, found that out the hard way.

‘This treaty is good for trade’ and ‘this treaty combats corruption’: so say supporters of the EU-Ukraine Association Accord in singing its praises. At Damen Shipyards they see things very differently. Their conclusion is that they won’t involve themselves in trade with Ukraine as long as corruption is the system. Trade is not a solution to corruption; on the contrary, corruption is damaging to fair trade. That’s why everything possible must be done to reduce corruption in Ukraine, and only after that can there be any question of free trade.

A mad venture

‘The whole project there was a tragedy. They had warned me in advance, but we went ahead anyway. Ukraine is the most corrupt country that I’ve ever had anything to do with.’ So says Kommer Damen, Chairman of the Board of Directors of Damen Shipyards. With thirty-two shipyards in the Netherlands and abroad, the company is a player to be reckoned with, supplying some 160 vessels annually, including large luxury yachts, ships used in oil- and gas drilling, tugboats and patrol boats for the coast guard and the police. There is nothing to indicate that the firm is anything but level-headed, and in 2014 it recorded a turnover of €2 billion.

Far from being level-headed, however, doing business in Ukraine appears a mad venture and something indeed to be avoided. According to Kommer Damen, he committed his biggest international blunder when in 2000 his firm took a 78% share in the Okean shipyard in Ukraine. Okean is one of the country’s biggest shipyards, and along with the low wages in Ukraine this made it appear an attractive opportunity. In 2001 Damen acquired still more shares, taking their proportion of ownership to 98.7%. The yards were renamed ‘Damen Shipyards Okean’. The warnings of corruption which Damen had received turned out be far from unjust, as Kommer Damen relates. ‘We didn’t, for example, get a refund of VAT and even got taken to court on false charges. Steel should have been delivered in the period just before the takeover, but there was no reference to this in the books and we’ve never seen the steel.’

Yushchenko

Former employees and experienced shipbuilders say that the only time they have ever been frightened was ‘there on the wharf’. When Damen Shipyards lost the false court case and despite promises was unable to get any help from then president Viktor Yushchenko, the firm drew its own conclusions and decamped, selling the shipyard on in 2006. Not much has been published about everything that took place. Damen has no obligation to do so, but that it was corruption that threw a spanner in the works is no secret. ‘But yes,’ says Kommer Damen, ‘if you know that an adventure of this sort almost drove you into bankruptcy, you don’t shout it from the rooftops.’

Ukraine remains Europe’s most corrupt country and according to Transparency International belongs amongst the most corrupt countries in the world. Its position of 130th out of 167 puts it in the illustrious company of countries such as Paraguay and Nepal. A new public prosecutor who, investigating a fraud involving diamonds, uncovered sixty-five of the gems, $400,000 in cash and a Kalashnikov, was promptly disciplined by chief public prosecutor Viktor Shokin.

This treaty raises the issue of the need to combat corruption, but as long as people like Viktor Shokin are pulling the strings nothing will be put to rights. In the meantime we’ll be opening our market to corrupt business people from the Ukraine and sending our own into the corrupt snake pit of Ukrainian commerce. Before Ukraine can ever be integrated into the EU’s common market, corruption must therefore first of all be addressed. No Association Accord is necessary for that to happen. On the contrary. With this treaty, far from banishing corruption from Ukraine, we’ll be bringing it into the EU.
 

This article first appeared,, in the original Dutch, on 14th February 2016 on the website Joop.nl

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