CONTENTS

I. Facts and Figures. The Key Events in 2014

II. OSF Key Competences:

1. POLICY ANALYSIS AND ADVOCACY

• Analysis of the Verkhovna Rada of Ukraine (parliamentary activities as the implementation of political programs and reforms advocacy)

• EU budgetary support policy for the Government of Ukraine

• State support policy for public enterprises and public organizations of persons with disabilities

2. PUBLIC FINANCE

• National budget of Ukraine in terms of anti-corruption policy

• Budget procurement

• The budget of Kyiv

• Kyiv budget and other local budgets in terms of budget, tax and anti-corruption policy

3. ANTI-CORRUPTION

• Development of the new anti-corruption legislation and the anti-corruption policy

• Anti-corruption policy at the local level (Kyiv region and cities of eastern and southern Ukraine)

• Public anti-corruption campaign "Return the Billions to Local Budgets"

• New anti-corruption policy for Kyiv

• Advocacy campaign against the new Kyiv 2025 General Plan

  III. Financial Report

Facts and Figures. Key Events in 2014

Open Society Foundation (OSF) is Ukrainian independent think tank established and registered in March 2001.

OSF analyzes policies in the areas of key competences (political parties’ responsibility for pre-election promises in Parliament, national and local budgets and budget policy, anti-corruption policy).

The Foundation’s mission is to promote the principles and values of an open society in Ukraine by influencing the agenda for public policy and public finance.

Within 14 years of activity we became experts in public policy and public finance analysis. 2014 was an important year for our think tank.

In 2014, we achieved the following markers:

- Enhanced the quality of our analysis

- Conducted advocacy campaigns for adopting legislation necessary to implement reforms

- In cooperation with the leading Ukrainian media:

newspapers and online resources – ‘Dzerkalo Tyzhnya’, ‘Ukrainska Pravda’, ‘The Insider’, ‘Tyzhden’, ‘Liga’, ‘Gazeta po-Ukrainsky’, radio stations (ERA-FM, ‘Golos Kyeva’, ‘Svoboda’) and TV channels

influenced the agenda and adoption of national and local policy, in collaboration with the authorities (the Government of Ukraine, Verkhovna Rada of Ukraine, Kyiv City State Administration and Kyiv City Council, Kyiv Oblast Council) had developed the relevant policy proposals.

For us 2014 was:

12th year of the analysis of Verkhovna Rada of Ukraine and the year of increased influence over public agenda due to cooperation with the ‘Reanimation package of reforms’ initiative.

1st year of decentralization policies’ impact and risks analysis regarding national and local budgets and the implementation of pre-election promises of decentralization by political parties.

1st year of analysis of impact, risks and consequences of national policy of support for enterprises and public organizations of disabled persons.

1st year of European Union budget support policy analysis for the Ukrainian government.

5th year of Kyiv budget analysis and year of visualizing the city budget on the capital’s budget website with estimated corruption practices worth billions of hryvnias, the year of complex proposals for legalization  of the city budget and successful advocacy campaigns.

3rd year of analysis of national target programs in Kyiv, and year of a thorough analysis of municipal programs in land relations, architecture and urban planning.

2nd year of analysis of corruption risks in national budget and fiscal policy compliance with program-based budgeting approach.

3rd year of analysis of integrity in public procurement and the year of amending the procurement policy and drawing attention the exceptions to the rules in relevant laws.

3rd year of analysis of the national anti-corruption strategy and development of the new anti-corruption strategy and national program. Open Society Foundation became the coordinator of the new state anti-corruption program of the ‘Reanimation package of reforms’ initiative.

2nd year of analysis of local level anti-corruption policies. We issued policy proposals for local anti-corruption programs of Kyiv City Council and Oblast State Administration.

In 2014 we took part in the ‘Reanimation package of reforms’ initiative groups on anti-corruption policy, Kyiv local policy and public finance. OSF further participated in the Ukrainian Club of Policy Analysts. 

II. OSF Key Competencies:

1.      POLICY ANALYSIS

Formation and implementation of the more accountable, efficient and effective policy by Parliament and the Government of Ukraine remains one of our priorities. The voters and the general public have the right to control the implementation of the promises made by the political parties in Parliament. Lawmaking analysis empowers voters with a tool for combating manipulative populist politicians and provides for making a conscious choice.

2.      PUBLIC FINANCE

The analysis and formation of public finance are the important parts of the responsible policy. Increased transparency, public participation in the budget process and information availability are the necessary conditions to influence the efficiency and effectiveness of the budget policy at all levels. Every year, billions of hryvnias are spent inefficiently, given the growing budget deficit and underfunding of social, educational and health care programs.

3.      ANTI-CORRUPTION

Systemic corruption had caused the crisis of confidence in the government, enormous budget losses and inefficient use of state and municipal property, land and other assets. Proper development, implementation and monitoring of the anti-corruption policy at all levels in Ukraine was hindered by corruption and inadequate responses from the authorities, poor civil society capacity to carry out the public monitoring, and mostly superficial readiness of the authorities to take into account public recommendations. Conflict of interests elimination and open access to the income declarations of public officials had not yet become the rule.

1.  POLICY ANALYSIS

Parliamentary Monitoring

Transparent and accountable Parliament and political parties form the basis for responsible policy-making and integrity of politicians. We empower the voters with a tool to monitor the political parties they elected. Being aware of the responsibility for the unfulfilled promises is an important step towards better Ukrainian politics.

OSF experts have monitored and analyzed the work of the Verkhovna Rada of Ukraine for more than 12 years. We controlled the implementation of election promises by the political parties represented in Parliament.

In 2014 we analyzed the implementation of pre-election programs of political parties in Parliament in budget, taxation, anti-corruption, decentralization, educational policy, budget procurement, state aid, lustration, electoral legislation, regional and local level policies, language policy and policies related to the participation of citizens in decision-making process.

Open Society Foundation produced more than 30 research-based publications, including 4 publications in ‘Ukrainska Pravda’, 14 publications in ‘Dzerkalo Tyzhnya’, 7 publications in the ‘Insider’ and 5 in ‘Gazeta po-Ukrainsky’.

Summary Publications:

6 months report "How Does Your Party Work” #2, 2014

Research: “Perspectives of Public Control in Ukraine”

EU budgetary support policy for the Government of Ukraine

We have prepared a comprehensive overview of all types of EU budgetary support provided to date to the governments of Georgia, Moldova and Ukraine. OSF has developed the following methodological framework for Ukrainian, Georgian and Moldovan experts.

1. Actual fulfillment of three major conditions for provision of the EU budget support.

• availability of sectoral development or reform policy and strategy;
• stability-oriented macroeconomic framework;
• a programme to improve public financial management.

1. Evaluation of factors/shortcomings in legal regulation or political climate which can undermine efficient use of the EU budgetary support.
2. Reflection of the sectoral budget support in country’s national budget.
3. Availability and quality of information (reports) on implementation of particular strategies or use of support funds for other purposes.
4. Proper use of the EU budget support (e.g. for policy/strategy implementation).
5. Policy impact achieved so far.
6. Civil society involvement into formulation and implementation of strategies and policies that receive/will receive the EU budget support.

Government support policy for enterprises and NGOs for disabled persons

Our attempts for integrated and comprehensive policy analysis of government support for public organizations of disabled people and its impact on ensuring the rights of persons with disabilities to participate in public life and the right to work in accordance with the international standards are unique in Ukraine.

We have analyzed the goals and needs of beneficiaries, the instruments of public support for enterprises and public organizations of disabled persons, evaluated their effectiveness and equal distribution, analyzed the Polish experience of promoting employment of disabled people and prepared recommendations for programs to support and create jobs for persons with disabilities.

2. PUBLIC FINANCE

The analysis and formation of public finance are the important parts of the responsible policy. Increased transparency, public participation in the budget process and information availability are the necessary conditions to influence the efficiency and effectiveness of the fiscal policy at all levels. Every year, billions of hryvnias are spent inefficiently, given the growing budget deficit and underfunding of social, educational and health care programs.

National budget of Ukraine in terms of anti-corruption policy

OSF has evaluated systemic corruption risks in the draft national budget for 2014. The research results were presented on the eve of the adoption of the national budget for 2014. The results referred to the continued practice of inefficient financing for companies and entire industries. We stressed continuous ineffective budget funds spending and unjustified increase of social expectations of employees in the companies receiving state aid.

Overall budget losses from excessive and inefficient state aid, non-transparent and non-competitive procurement, flaws in the VAT administration of and other corruption schemes will exceed UAH 188 billion or almost 24 billion of US dollars. This amounts to nearly half of the expenditures in the draft budget for 2014. Improper administration of the personal income tax and land tax (these form the basis of revenues of local budgets), and insufficient inventory of smaller ‘washout’ schemes, suggest the loss of the national budget in the amount exceeding UAH 200 billion (equivalent of USD 25 billion). OSF evaluation of the cost of corruption to the national budget was further confirmed by government officials.

Budget Procurement

The integrity of public procurement in general improved in 2014, despite the fact that within three months after the new law was adopted Parliament received dozens of bills for exceptions for certain goods and services, which we have stressed. Significantly, such exceptions were initiated by the representatives of various political parties.

Kyiv budget and other local budgets in terms of budget, tax and anti-corruption policy

The budget of Kyiv

The budget of Kyiv, the largest local budget in Ukraine, remaines unfulfilled each year. The corruption risks are estimated at billions of hryvnias and remain illegal, bypassing the official budget. The budget funds are spent inefficiently.

Open Society Foundation consistently defends the interests of Kyivites. In 2014 we have invited the city authorities to cooperate and drew attention on the most outraging corruption practices in land management, urban planning and operation of utility providers. Throughout the year we issued numerous Open Addresses, some of them supported by the Reanimation Package of Reforms initiative. We insisted on the effective measures for legalization of budget. Referring to our initiative in November 2014 Kyiv City Council held the first ever public discussion of the Kyiv budget for the next year. OSF presented (on budget debates and in ‘Ukrainska Pravda’ publication) the expert proposals for legalizing the illegal billions of the city budget.

OSF experts analyzed Kyiv city budget for 2013 and the draft budget for 2014 using functional method (program oriented budgeting), which includes an assessment of the effectiveness and efficiency of spending and policy impact of local authorities.

The citizens of Ukraine and Kyivites were informed about the potential corruption risks in 2014 Kyiv budget on numerous public events, in publications by leading newspapers and Internet resources.

Kyiv city budget was visualized on our website, providing the comprehensive tool to monitor it. The developed tool has enabled ordinary citizens and all interested parties to better understand the sources of income and the spending trends, as well as estimate the cost of corruption risks and contribute to control of the budget by providing the information online and collaborating with the non-governmental experts. Based on the developed web-site OSF managed to form a partnership with number non-governmental organizations and promote local initiatives against illegal construction and land acquisition, acting against the new Kyiv 2025 General Plan.

Open Society Foundation has initiated public and expert discussion on the budget of Kyiv. Advocacy activities started mid-summer 2014, when we developed and presented to the new Kyiv authorities the Roadmap for Reforms of Budget and Anti-Corruption Policies at the Local Level. Advocacy campaign continued through the fall, as city authorities ignored the corruption risks in the KCSA and in drafting the municipal budget for 2015.

June 2014 - Roadmap for reforms to Kyiv authorities

The roadmap for the local government included proposals on budget and anti-corruption policy, tax administration and implementation of city target programs, land management, municipal property and operation of utility providers.

September 2014 - Round table discussion “100 days of Mayor Vitaliy Klytschko: The Missed Opportunities to Remove Billions from the Shadows” with City Council Secretary Reznikov, the Chairman of the Budget Committee of the City Council, the heads of KCSA departments, experts and civil society activists.

October 2014 – THE OPEN ADDRESS to Mayor V. Klytschko to initiate the discussion of the Kyiv budget for 2015.

November 2014 - city government supported the initiative of the Open Society Foundation and held public discussion on the budget of Kyiv. The debate, however, did not cover the major sources of corruption in the total budget revenues, in particular the land tax and personal income tax. Unfortunately, the hearings in the city council affected only 10% of the budget revenues. The OSF suggestions were not taken into account due to lack of real political will to combat corruption in land, property and the public sector.

OSF analysis related to Kyiv budget:

‘Ukrainska Pravda’:

The business groups influencing the government can get up to 188 billion from the budget – the expert (January 14, 2014)

“The Budget Song" by Klytschko. Text and music by the ‘predecessors’ (November 4, 2014)

Kyiv General Plan -2025 as the loyalty test for the new government (November 5, 2014)

‘Liga. Biznes’:

‘The same old song on Kyiv budget’ by Klytschko.

The attack on corruption in Kyiv?

‘Dzerkalo Tyzhnya’:

The attack on corruption in Kyiv: the promises and the reality (December 12, 2014)

Why does Klytschko need a coach? (10.17.2014)

3. Anti-Corruption (Anti-corruption policy)

Public monitoring of anti-corruption policies at the national and local levels is an important tool of public control. Corruption risks are often included in the draft laws providing the formation, implementation, monitoring and reporting on implementation of the state programs and the action plans. Superficial response to corruption risks under the anti-corruption programs and the action plans remains a common practice.

Open Society Foundation constantly improves the quality of own analytical products. At the same time, we also focus on the increased capacity of civil society in public monitoring, evaluations and investigations.

Anti-corruption policy at the national level

Development of a new anti-corruption legislation and the new anti-corruption policy

Open Society Foundation was working in the anti-corruption group of the Reanimation Package of Reforms initiative to develop the new anti-corruption legislation adopted in October 2014.

OSF, as part of the Reanimation Package, is involved in developing and coordinating the new national anti-corruption program with the government and UNDP (direction "Support of the Cabinet of Ministers of Ukraine in the development of national anti-corruption policy in Ukraine for 2014-2017”).

In 2014 OSF began the development of performance indicators for tasks and activities of national anti-corruption program. Our proposals include assessment of the importance and significance of corruption risks and practices, and requirements for the development of state programs. Within four performance indicators (costs, product performance and quality) we have developed determinants of achievement of goals and objectives.

Integrity and Conflict of Interest in the Public Service

In 2014 we launched an NGO coalition "For the Integrity in Public Service".  The coalition "For the Integrity in Public Service" was created to unite the efforts of civil society in Ukraine to ensure public control over the integrity and conflict of interest in the public sector. Members of the coalition share social network approach methodology as a basis for monitoring conflicts of interest. The Coalition aims to unite the efforts of civil society in Ukraine to ensure public control over the integrity and prevention of conflicts of interests in the public sector.

The developed materials have enabled civic activists and journalists to understand better the nature of the conflict of interests and perform further evaluation of public figures in governmental institutions, regional administrations and executive management of local councils.

We held the investigative journalism competition, which was focused on the conflict of interests, and rewarded the best authors.

The educational movie "The Carthage of the conflict of interests" has shown step by step actions for effective investigations of conflict of interests in public institutions. We held a number of trainings in Kyiv, Lviv and Odesa, and increased the public's ability to investigate the phenomenon of conflict of interests.

The anti-corruption policy at the local level (Kyiv city and Kyiv, the cities in eastern and southern Ukraine)

Open Society Foundation has significant experience in the area of performance monitoring and impact assessment of the previous national anti-corruption program, as well as the programs adopted in the regions and cities of Ukraine (including the examples of Kyiv, Chernihiv and Chernihiv region). On the basis of this experience we submitted the proposals to develop the anti-corruption programs for Kyiv and Kyiv region.

Anti-corruption public initiative "Return the Billions to Local Budgets."

In November 2014, the Open Society Foundation initiated the anti-corruption public initiative "Return the Billions to Local Budgets." The initiative aims to legalize the resources of local budgets. We use the example of Kyiv budget, where billions of hryvnias continue to remain illegal despite the promises of city authorities to “attack the corruption." Our methodological developments and the joint efforts will help increasing the efficiency of public activists, journalists and bloggers in the fight against outrageous abuses related to land, property and budget.

The new anti-corruption policy for Kyiv

The new joint advocacy campaign of OSF and Reanimation Package of Reforms-Kyiv began in 2014. We hope to create the new municipal program to combat corruption in order to respond effectively to significant corruption risks. “The attack on corruption in Kyiv: the promises and the reality" in ‘Dzerkalo Tyzhnya. Ukraina’, issue 47. OSF chairs an expert working group on anti-corruption program focused on cooperation with local authorities.

The city officials will receive the draft anti-corruption program that will help creating an effective anti-corruption policy.

Earlier the proposals for anti-corruption program for Kyiv region were provided in response to the query of the Standing Commission of Kyiv Oblast Council. Yet, the program was not adopted because of the Maidan events and adoption of the new anti-corruption legislation.

Advocacy campaign against the new Kyiv General Plan 2025

In 2014 OSF performed a successful advocacy campaign against the Kyiv General Plan for 2025, which attempts to legalize the land fraud (the illegal land acquisitions and construction projects not yet included in the General Plan for 2020). The cost of land fraud in Kyiv budget was estimated at more than UAH 50 billion.

The Open Society Foundation has informed the Kyiv community at press conferences and at public events on the impact of the 2025 General Plan on the budget of Kyiv. We prepared the public address and published a number of articles in the leading media.

Articles: ‘2025 General Plan for Kyiv: the Capital City or the Mega-Village’ in ‘Dzerkalo Tyzhnya. Ukraina’, issue 45. (November 28, 2014), ‘Kyiv General Plan -2025 as the loyalty test for the new government’ in ‘Ukrainska Pravda’ (November 5, 2014)

OSF has actively collaborated with the Reanimation Package for Reforms initiative and issued the Open Address to the President and the Prime Minister on the violation of the applicable laws and lobbying of Kyiv General Plan for 2025.

III. Financial Report 

INCOME 2014, UAH

EXPENSES 2014, UAH