Photographs courtesy of Danielle Philomena Photography (c) 2016
Andy Hunder gave a BUS lecture on tackling corruption and doing business in Ukraine
8 February 2016
The President of the American Chamber of Commerce in Ukraine, Andy Hunder, delivered the third British Ukrainian Society lecture in the UK Parliament on 8 February.
Andy was appointed President of the American Chamber of Commerce in Ukraine in April 2015, and relocated to Kyiv after heading the Ukrainian Institute in London for a number of years. He oversees a team of 45 permanent staff, who look to develop the three main areas at the core of the Chamber’s mission and vision: B2G (business to government), B2B (business to business) and B2U (business to Ukraine). Through these focus areas, the Chamber promotes the voice of business on behalf of the most important investors in Ukraine.
An annual perception survey, taken by the American Chamber of Commerce’s 600 members, revealed that endemic corruption is the biggest hurdle to doing business in Ukraine, and it was this topic that the audience gathered to hear Andy speak about. Around 125 people attended the talk in the Attlee Suite including representatives from the EBRD, the procurement and energy sectors, educational institutions and not-for-profits, as well as politicians and journalists.
Setting the scene for the discussion, Andy quoted some statistics on how corruption keeps potential investors at bay – startlingly, even more so than the fighting in the east of the country. “Ninety eight percent of our members believe that corruption practices are widespread. Eighty eight percent have faced corruption when doing business in Ukraine, and 82% consider fighting corruption the number one priority to improve the business climate”, he said. More must be done, he concluded.
Andy discussed what has been done recently, in 2015, to tackle corruption. He cited the police force and their new “brand”, consisting of flashing blue lights and white Toyotas, as perhaps the most visible example of reform that has completely changed people’s perception of the police as being one of the most corrupt public agencies, to one of the least. He also touched on the recently created National Anti-Corruption Bureau of Ukraine, saying “Our members met with the head, Artem Sytnyk, last week and he’s really keen. He’s got the authority, he’s got the power, and now with the appointment of a new anti-corruption prosecutor, Nazar Kholodnytskyi, they are gathering information, they have surveillance equipment, and their objective is to go after the big guys. So this is one to watch.”
Other advancements include the introduction of “ProZorro”, a system set up by the Minister of Economy to bring transparency to the procurement sector, an area that is notorious for kickbacks in relation to government tenders. Also relating to government tenders has been the creation of an e-data portal launched to monitor spending by the government, which allows anyone from the public to see who is buying what from whom. Regarding the energy sector, he remarked that corrupt intermediaries have been removed from the gas market and that since 1 October, Ukraine has been buying gas from Europe, not Russia. Furthermore, Naftogaz has a new team of professional managers – former McKinsey employees – who he believes are doing their work in a non-corrupt manner.
The introduction of 3G to Ukraine is another tangible change that has transformed things for the better in Ukraine. Andy said, “Until a year ago, one company had a monopoly on the license and didn’t want to let anyone else in. The government introduced a tender on mobile communication frequencies, and that’s when three operators successfully bid. Now you can walk around Kyiv and check your Facebook or emails on a 3G network. The State has won because billions of Hryvna have gone into the state budget in terms of fees. It shows that transparency can be a boost for the economy.”
According to Andy, the fight against corruption should be pursued by both business and the state. He feels the government should be guided by “three Ps”: prevent, publicise and punish. Steps towards preventing corruption could include replacing older managers if they are unwilling to change their mindset and behaviour, increasing salaries for civil servants, cutting red tape, introducing smart technology wherever possible, introducing a more level playing field with tax regulation and holding fair and transparent privatisation tenders, which can bring in billions of dollars in new investment.
Andy praised the role of independent media outlets and civil society activists, which have played a great role in naming and shaming corrupt individuals into coming clean. However, punishment may be the most powerful tool. “When we were in Washington in July, Vice President Joe Biden said to PM Yatseniuk, ‘Put these guys in jail.’ Unless there is a fear that you will be punished for the corruption, then there’s no reason to stop.” Corporates also have a responsibility. The American Chamber of Commerce in Ukraine recommends that, at a minimum, companies have an anti-corruption programme in place, along with a compliance officer on staff and a procedure for reporting and investigating corruption.
Looking ahead, 51% of Chamber members are optimistic about the fight against corruption in 2016. According to Andy, the recent resignation of the Minister of Economy, Aivaras Abromavičius, who complained of ingrained corruption, presents both a challenge and an opportunity for Ukraine. Coupled with the fact that the economy has hit rock bottom, he feels now is a good time to invest. Many household names are exploring investment in Ukraine including Virgin, the investor George Soros and Uber, which will announce its start of operations in Ukraine. Andy sees investors come through his door on a weekly basis, and feels that the only way is up, with signs of macroeconomic stabilisation visible.
In his concluding remarks, Andy cited 2016 as potentially a make or break year for Ukraine. He quoted from the FT editorial dated 7 February, saying, “Ultimately, the entire pro-European elite needs to set aside the greed, feuding and rent-seeking that have characterised post-Soviet Ukraine and work together on building a system allowing all citizens to prosper in freedom. Failure to pull together plays into the hands of the Russian leadership that is bent on wrenching Ukraine back into its sphere of influence. As US vice-president Joe Biden argued powerfully on a visit to Kyiv in December, Ukraine may be facing its last chance to secure a prosperous, independent future.”
Lord Risby thanked Andy for his openness and honesty, for not shying away from the difficulties while expressing hope that reform is taking place, and noted that there did seem to be cause for optimism in 2016. Lord Risby proceeded to open up the Q&A session by asking about measures to remove corruption from the political class. Citing the UK as a model, he wondered whether individuals in the Ukrainian government have been asked to declare their interests in terms of company shares or remittances, and for them to be isolated in order to prevent a conflict of interest, as is done in Britain. This opened the floor to a lively question and answer session that continued with informal discussions after Lord Risby formally closed proceedings.
This two-year British Ukrainian Society series of lectures in the spheres of politics and culture is run in partnership with the All-Party Parliamentary Group on Ukraine. It aims to give anyone interested in Ukrainian affairs an opportunity to hear from British and Ukrainian politicians, diplomats, authors, artists and experts from various professions who are in some way involved in noteworthy work relating to Ukraine.
The next British Ukrainian Society lecture at the UK Parliament will take place on 19 April 2016. Spaces are limited. To attend, and for other enquiries, please RSVP to the London Secretariat of the British Ukrainian Society at email@example.com.
Andy Hunder is a native Londoner, who over the past two decades has become a recognised leading specialist in public affairs, communications and government relations in Ukraine. On 15 April 2015, he was appointed President of the American Chamber of Commerce in Ukraine.
In 1997, Mr Hunder was a TV presenter on a leading Ukrainian television channel. Then for seven years he headed the Public Relations department at Ukrainian Mobile Communications (now Vodafone Ukraine), and in 2004 was appointed External Affairs and Communications Manager at GlaxoSmithKline with responsibility for Ukraine, Central Asia and the Caucasus.
Mr Hunder later launched the London office of Ukrainian law firm Magisters, and later Sayenko Kharenko, where he also headed the Government Relations practice. The Ukrainian law firms in London served as conduits to service multinational clients investing in Ukraine.
In 2010, Mr Hunder was appointed Director of the Ukrainian Institute in London, and was a regular commentator on Ukrainian current affairs in the global media. During 2014, he was interviewed live more than 100 times on top international TV and radio stations including BBC, CNN, Sky News, Bloomberg TV, ITV, Al Jazeera and others. He has spoken on Ukrainian current affairs at the House of Commons, House of Lords, Oxford University, London School of Economics and University College London.
Andy Hunder studied Philosophy and Theology in Rome, Italy. He speaks fluent English, Ukrainian, Russian and Italian. Andy is married with two sons.