Procurement Law Amendments cause Euro aid suspension

February 24, 2011

Well dear readers, an unashamed copy/cut and paste from Reuters (with my own emphasis added):

The European Union will hold up about 100 million euros in aid allocated for Ukraine until the former Soviet republic amends its law governing purchases of goods and services by the state, an EU diplomat said on Wednesday, February 23.

The suspension concerns budget support programmes under which funds are managed by the Ukrainian side, Jose Manuel Pinto Teixeira, head of the EU delegation to Ukraine, told reporters.

“All the programmes of this type will be interrupted until we have guarantees that public procurement is done in a transparent and accountable way,” Teixeira said.

Only one disbursement of about 30 million euros has been suspended so far, he said. For the whole of 2011, Ukraine’s cash-strapped government was due to receive about 100 million euros in budget support.

Ukraine adopted a new law on public procurement — purchases by government bodies and state-run companies — last June in what the government said was a demonstration of its commitment to reforms.

Teixeira said the law was initially compliant with EU standards. But several amendments introduced in the second half of 2010 have limited its scope by introducing a number of exceptions to normal procurement procedures.

Public procurement is often used by corrupt officials across the former Soviet Union to extract personal gains by rigging tenders in favour of affiliated suppliers, making purchases at inflated prices and receiving kickbacks from businesses.

Ukraine is no exception and the country’s public procurement system, according to the latest periodical investment report by the U.S. State Department, has been plagued by corruption for years.

But Teixeira said he hoped the government and the parliament would soon improve the procurement law. The EU continues to support Ukraine through programmes where funds are managed by other entities such as the European Bank for Reconstruction and Development. “It is not an exceptional situation for us,” he said. “I am convinced we are going to resolve this issue.”

The EU are of course quite right to do what they are doing.

Without doubt the EU are well equipped to understand corruption and procurement issues considering that for the last 16 years not one auditor has agreed to sign of EU accounts due to fraud, poor accounting and lacking audit trails etc etc.

Last year was not any different with auditors citing 33% of EU monies not properly accounted for……thus EU accounts not signed off again by auditors.

Unfortunately the EU is a prime example of having the laws (that Ukraine initially, prior to later amendments, mirrored) that proves unless the laws are implemented and people are held accountable, makes the laws worthless……16 years on, nobody within the EU has yet been held accountable for 33% of unaudited money for this entire period!

The EU still has a lot of tricks to teach Ukraine when it comes to fiscal non-accountability…..but it seems Ukraine will, for now, have to fall within the 66% of accounted for funds.

All that said, Euro 100 million is not exactly a lot of money when you are talking about the EU or Ukraine…….it’s just a lot to the likes of you and me.

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