Business Ombudsman Council: An Integral Part of Good Governance and EU integration
Tetiana KOROTKA
Deputy Business Ombudsman in Ukraine | Policy & Governance | Economic Resilience & Development | Program Management & Operations
Business Ombudsman Council : An Integral Part of Good Governance and EU Integration
I've decided to commemorate this date with this article, as it is a significant milestone not only in my professional journey but also in the context of Ukraine, other countries, and the evolution of the ombudsman institution.
It has been exactly 10 years since the signing of the Memorandum of Understanding for the Ukrainian Anti-Corruption Initiative dated 12 May 2014 concluded among the Cabinet of Ministers of Ukraine, the European Bank for Reconstruction and Development, the Organization for Economic Co-Operation and Development, and five most influential business associations of Ukraine. The main idea of this agreement was a creation in Ukraine of an independent institution that would be equidistant from politicians, authorities and business, but would also be able to resolve situations of pressure on business and help formulate and implement significant governance reforms. It became the starting point in the creation of the Business Ombudsman Council in Ukraine.
In today's world, where businesses operate in a rapidly changing environment, having a system in place to ensure that their rights are protected is crucial. Moreover, the ombudsman institution stands as a cornerstone for good governance and policy reforms. This is where the concept of the Business Ombudsman comes into play. The ombudsman’s mission is to serve as a fair, trusted, and effective recourse mechanism. Although there are different procedures for resolving disputes in relations between the private sector and the state, and courts have the power to hear different types of cases, not all cases of malpractice may be suitable for legal action. An ombudsman institution can partly solve this problem by providing a remedy.
The concept of the Ombudsman
The concept of the Ombudsman has been around for centuries. It was first introduced in Sweden in 1809 as a representative of the people to ensure that the government acted in the citizens’ best interests. Since then, the Ombudsman institution has evolved and is now used in many countries around the world.
Until the beginning of the 60s of the last century, it existed only in the Scandinavian countries. However, since the 1980s, this institution has become very widespread. According to the International Ombudsman Institute, more than 200 countries have various ombudsmen covering national, regional and municipal ombudsmen, as well as specialized ombudsmen such as ombudsman on children's rights, SMEs, education, etc.[1][2], that only highlight the high interest and effectiveness of such an institution.
The development of the Ombudsman institution is closely connected with the development of public policy as such, with the spread of the ideology of good governance. Let me remind you that The World Bank introduced the concept in its 1992 report entitled "Governance and Development"[3]. According to the paper, good governance is an essential complement to sound economic policies and is central to creating and sustaining an environment fostering strong and equitable development.
The European Ombudsman
At the same time, the principle of good governance was enshrined at the level of EU principles along with the introduction of the institution of the European Ombudsman. The European Ombudsman was established by the Maastricht Treaty[4]. The European Ombudsman plays an important role in ensuring the effectiveness and legitimacy of European Union policy and the overall process of EU integration and aims at the interaction of various stakeholders.
The European Ombudsman helps people, businesses, and organisations facing problems with the EU’s administration by investigating complaints about maladministration by EU institutions and bodies, as well as by proactively looking into broader systemic issues[5] It draws attention to the major policy issues facing the EU - such as dealing with climate change, the migration crisis and rule of law problems within the EU - noting the importance of maintaining high ethical standards within the EU institutions, so citizens trust the decisions and laws that emerge in the coming years.
The role of the European Ombudsman in ensuring good governance is remarkable in the absence of legally binding decisions, he nevertheless contributes to creating, implementing and developing principles of good governance at the supranational level
Business Ombudsman Institution
The introduction and further development of the business ombudsman institution concept have become a new modern chapter in history.
A Business Ombudsman (BO) - like other ombudsmen[6]– primary aim is to protect the rights of a defined group, that is businesses and entrepreneurs, in this case. BOs provide protect through investigating claims of abuse of businesses’ rights, dispute resolution, advocacy and/or advisory services. BOs for various businesses exist in many countries around the world: Ombudsman for SMEs and family businesses in Australia,[7] foreign investment ombudsman in Korea,[8] SME ombudsman in Korea and Poland,[9] Canadian ombudsman for responsible entrepreneurship[10] and financial ombudsman in the UK[11] to name a few. The Business Ombudsman Council was established in Ukraine in 2015. The Council has been successful in its mission and has become a model for other countries to follow.
The Business Ombudsman Council in Ukraine
The establishment of the Business Ombudsman Council took place in 2015 after the Revolution of Dignity in Ukraine and became a crucial step towards ensuring good governance and protecting the rights of businesses in Ukraine.
Moreover, the creation of the BOC was considered by the government, international partners and the business community as a step towards Ukraine’s European integration to ensure the principle of the rule of law. Naturally, the first Business Ombudsman was the former European Commissioner Algirdas Semeta, whose professional reputation was trusted by all global stakeholders of Ukraine. Today, the Business Ombudsman of Ukraine is also an internationally recognized professional Roman Waschuk.
We faced some legal difficulties since the Business Ombudsman Institution is a new body that does not belong to any established branches of power. Unfortunately, several attempts to pass a comprehensive bill failed. However, it neither blocked the BOC operations or suspended the adoption of the law on investments in the economy of Ukraine, where a special place was also given to the Business Ombudsman Council.
The Business Ombudsman Council (BOC) in Ukraine has shown remarkable success in facilitating the resolution of business-government disputes. In its nine-year tenure, the BOC has reviewed over 12,000 business requests, achieving successful resolutions in more than 7,000 cases. Feedback from business surveys indicates an impressive 97% satisfaction rate with the BOC's services. Furthermore, the BOC actively addresses systemic challenges within the business environment, compiling comprehensive proposals outlined in 19 systemic reports covering diverse issues such as local government-business relations, foreign trade, taxation, economic crimes, anti-corruption measures in infrastructure development, etc.
Even the russian military invasion did not stop BOC’s activity. With the invasion of russia on February 24, the Business Ombudsman Council quickly adapted to the business community's wartime needs, established two temporary offices in Western Ukraine and Poland, and launched a special rapid Helpline for businesses. Now the BOC is also actively involved in the processes of early Ukraine recovery and EU integration.
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Role in the EU integration
All systemic recommendations of the BOC to improve the investment climate took into account Ukraine’s obligations to integrate into the EU. In particular, this concerns the regulation of foreign trade operations, customs and tax issues, decentralization and the work of individual industries.
Despite the beginning of the full-scale invasion of the russian federation, Ukraine ultimately and irreversibly accelerated its movement towards the European Union by preparing and implementing the necessary reforms. Thanks to its multiyear experience in improving business conditions, particularly as regards adapting Ukrainian legislation to the EU acquis, the Business Ombudsman Council joined the process of filling out the Questionnaire received by Ukraine in April 2022, to obtain the candidate status for EU membership, and continues to contribute to the EU integration process through the legal and capacity building work.
My experience and lessons learned
Nine years ago it was an honor and a professional challenge for me to become one of the leaders of the BOC’s team. I assumed that I would have to operate in a very turbulent political environment and was ready to communicate at a high international level. However, further challenges (political turbulence, inertia of the public administration system, the desire to maintain corrupt practices, COVID-19 pandemic, and military aggression) associated with the establishment of the business ombudsman institution forced us to react flexibly and adapt all the experience and skills accumulated so far:
Through this endeavour, several invaluable lessons have emerged, illuminating the path towards more effective policy dialogue, governance, advocacy and resolution mechanisms for businesses.
These lessons serve as guiding principles in navigating the complexities of modern business landscapes and advancing the interests of the private sector.
[1] Reif L. С. Introduction. In: The International Ombudsman Anthology. Selected Writting from the International Ombudsman Institute/ Ed. by Linda C.Reif - The Hague e.a.: Kluwcr Law International, 1999
[6] Wikipedia: The typical duties of an ombudsman are to investigate complaints and attempt to resolve them, usually through recommendations (binding or not) or mediation.