Investment climate and governance

Business Ombudsman Initiatives

A Business Ombudsman Institution is a dedicated body established to defend businesses and entrepreneurs with legitimate claims against state or sub-state entities that infringe on their rights.

In an effort to provide incentives for the development of entrepreneurship and create a level playing field for business, the EBRD under its Investment Climate and Governance Initiative has begun to assist countries with the establishment of Business Ombudsman Institutions where certain conditions are met.

These include independence, accountability, professionalism, investigative scope and ability to influence.

The EBRD was instrumental in setting up the Business Ombudsman Institution in Ukraine soon after the Maidan uprising of 2014 and the formation of a reform-minded government looking to improve the investment climate. In partnership with the Ukrainian government, the OECD and five Ukrainian business associations, the EBRD signed an MoU launching an Anti-Corruption Initiative, which led to the creation of the Ukraine Business Ombudsman Council as a governing body.  

The Council recommended and the Cabinet of Ministers approved former European Commissioner Algirdas Šemeta to the position of Ukraine Business Ombudsman.  The Business Ombudsman has a staff of 15, including nine experts with experience in law, strategic management, economics, auditing, and risk management.

The Ukraine Business Ombudsman is empowered to investigate alleged wrongdoing by state entities. If abuse is determined to have taken place, the Business Ombudsman refers these cases to the relevant authorities, including, for criminal cases, to the newly established Anti-Corruption Bureau, the state prosecution service or the police for further investigation.

Failure to investigate or to implement the Business Ombudsman’s recommendations, or to provide proper feedback on action taken, is reported publicly through quarterly and annual reports published on the Business Ombudsman’s website, or through the media.

The institution also publishes systemic reports, which address some of the most pressing systemic issues that negatively affect the investment climate and proposes practical ways to address these. These reports are being extensively used by the authorities in order to improve the existing legislation and procedures that negatively affect the business environment. This demonstrates that the systemic role of the Business Ombudsman Institution has a further impact on the advancement of the reform in the country and that a well-structured and equipped Business Ombudsman Institution could serve as an effective tool of policy dialogue in a country.

Recommendations made by the Business Ombudsman are not binding, but the publicity generated by the reports and more generally through the mass media create pressure on public entities and on the enforcement agencies investigating criminal cases to take action to tackle corruption and rectify other breaches of the legitimate rights of businesses.

The direct financial impact of the work of the Business Ombudsman Council for Ukraine is equivalent to roughly 2.3 billion hryvnia (around US$ 100 million), explained Algirdas Šemeta, the Business Ombudsman, on a visit to the EBRD.

 

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The ICGI team has been advising governments on establishing Business Ombudsman Institutions in Kazakhstan, Armenia and Albania, and it aims to apply the lessons learned in Ukraine in other countries where the presence of such institution might be needed or warranted.