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Regional Development Funding – Ukraine

March 29, 2013

This entry was inspired by a UK MEP named Arlene McCarthy who represents the north-west of England in the European Parliament – although what she said has nothing to do with Ukraine – directly.

Indirectly, her words undoubtedly fit Ukraine – as well as many other EU nations and nations that receive EU regional funds.

One can hardly draw any other inference from her words other than that she believes that central government (in this case Whitehall and the UK government) siphon off large quantities of EU funding meant for regional development.

I do wonder why the funds  are going through Whitehall and not directly to the regions?  Should they not be on a project by project basis as submitted for EU financing directly from local government to EU, without the need to involve central government at all?  At most a cursory informing of Whitehall?

Perhaps the MEP should also concern herself with the funds that do reach the regions and are then siphoned off by the regional and local government in the UK too – either for nefarious purposes or to support otherwise unsustainable pet projects?

Anyway, Liverpool, Arlene McCarthy, Whitehall and the EU can bicker amongst themselves as generally I write about Ukraine (and occasionally the neighbourhood).

Nevertheless, never one to look a gift horse in the mouth when it comes to an easy topic introduction – Ms McCarthy’s words come at the same time that the EU announced Euro 31 million to boost Ukraine’s regional development.

Here it seems the EU is prepared to directly finance the local government and regions rather than send funds via central government.  Insuring it seems, that the projects it supports do run parallel to the national action plan for Ukraine wherever possible.  Very good.

One level of corruption and/or funding miss-allocation removed in the case of Ukraine when going direct to regional/local government.  Naturally not the elimination of corruption and/or miss-allocation of funding.  That is simply not possible no matter how rigorous any process is.  Just as any security expert worthy of the name will state there can never be 100% security, there can never be a system that is absolutely corruption-proof.

After all, the lowest tender in any procurement model is not necessarily the best value for money when other issues from a bidding  entity are considered.  Cost alone simply does not and should not decide the winner of any tender.  Contractor ability, contractor experience, contractor cash flow etc., are all considerations alongside any tender bid.  In short the contractor awarded a contract should have the ability to provide a quality outcome and the cash flow to avoid folding mid-contract.

Having now discounted the lowest tender as always being the best tender – even in the most transparent of circumstances – there are obvious methods now presenting themselves even to the most naive of readers for corruption, cronyism and kick-backs to occur.  And they do.  Daily.  In Ukraine and everywhere else on the planet.

The fact the finance comes from the EU, an entity riddled with accounting “issues” for so long I can’t even remember the last time auditors signed off the EU accounts in their entirety – (15+ years I suspect) – really doesn’t help.

I am reminded of a very caustic letter from a gentleman who managed to account very well in far more trying times than those faced by the EU accountants:

Gentlemen,

Whilst marching from Portugal to a position which commands the approach to Madrid and the French forces, my officers have been diligently complying with your requests which have been sent by H.M. ship from London to Lisbon and thence by dispatch to our headquarters.

We have enumerated our saddles, bridles, tents and tent poles, and all manner of sundry items for which His Majesty’s Government holds me accountable. I have dispatched reports on the character, wit, and spleen of every officer. Each item and every farthing has been accounted for, with two regrettable exceptions for which I beg your indulgence.

Unfortunately the sum of one shilling and ninepence remains unaccounted for in one infantry battalion’s petty cash and there has been a hideous confusion as the the number of jars of raspberry jam issued to one cavalry regiment during a sandstorm in western Spain. This reprehensible carelessness may be related to the pressure of circumstance, since we are war with France, a fact which may come as a bit of a surprise to you gentlemen in Whitehall.

This brings me to my present purpose, which is to request elucidation of my instructions from His Majesty’s Government so that I may better understand why I am dragging an army over these barren plains. I construe that perforce it must be one of two alternative duties, as given below. I shall pursue either one with the best of my ability, but I cannot do both:

1. To train an army of uniformed British clerks in Spain for the benefit of the accountants and copy-boys in London or perchance.

2. To see to it that the forces of Napoleon are driven out of Spain.

Your most obedient servant,

Wellington

So much for progress in our electronic data capable world eh?

However, knowing there to be no perfect model or model that cannot be manipulated, and knowing there are so very few in Ukrainian politics – be they local or national – that are entirely upright and solid citizens of Ukraine, with such integrity that they would never take anything more than the pitiful public servant salary for their time and effort in office, one has to suppose that even when cutting out the Ukrainian central government, the regional fiefdoms will carry out the same nefarious funding function – one way or another – even with projects with a maximum value of Euro 2 million.

Nevertheless, a need for regional development there certainly is.  A regional interface there needs to be – and local/regional government is the most appropriate, no matter how nefarious.  A rigorous auditing model would minimize the opportunities for corruption although it could never eradicate them, but together with the EU producing the invoices they are asked to pay/given as audit evidence for public scrutiny would keep “very generous profit margins” to a more reasonable level.

Most importantly of course is that development of the region occurs – and for those citizens who actually benefit from the development of the region and feel the effects in their daily lives – well do they really care how many Euros it costs or get nefariously appropriated along the way to get what they need?  Of course not!

Perhaps they have a point too.   Accepting there is no perfect method – why do we expect a perfect outcome?

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