#Ukraine - Where Social Enterprise isn't

In the Great Business Debate, on business and the community I have shared my article on the purpose of business. I focus today on our work in Ukraine.  :  

“Social Enterprise Development” project is being implemented by the joint efforts of the British Council in Ukraine, East Europe Foundation, PricewaterhouseCoopers, International Renaissance Foundation and Erste Bank with support from Erste Stiftung and American Chamber of Commerce and USAID. Project partners believe that the project will create partnerships across the public, private and third sectors in the UK and Ukraine, and provide a platform for collaboration, exchange and learning from each other, as well as create conditions to test this innovative model in Ukraine.

The statement above may be found on the website of the East Europe Foundation which was created by USAID in October 2007. In 2010 they launched the project described above.

The 2013 update is more interesting in that it refers to one of Ukraine's major corporations:

In February EEF and DTEK started a new joint social project. The main aim of the project, in which DTEK has invested UAH 1 mln, is to increase the competitiveness of the regions in which the company conducts its operations by strengthening their economic potential and spurring the growth of social entrepreneurship. As part of the project, partners will support creating of the agencies for local economic development and provide funds for the creation and development of social entrepreneurship. These activities are expected to promote the development of small-sized enterprises and increase the number of workplaces for people in Burshtyn (Ivano-Frankivsk region), Dobrotvir (Lviv region), Rovenki, Sverdlovsk (Luhansk region), Dobropillya and Zuhres (Donetsk region). More information on this project can be found here.

EEF and DTEK have also organized special training sessions for social entrepreneurs in Kyiv over 24–27 April 2013. During the four-day training course participants learnt about business-planning for social enterprises, focusing on marketing, business plan development, legal and regulatory aspects of running such an enterprise like registration, taxation, fundraising and more. Afterwards 16 training participants will be able to conduct training for those who want to create similar social enterprises.

As a social enterprise we'd been operation in Ukraine since 2002, Our first project had been aimed at helping the Crimean Tatar community and when we incorporated in London in 2004, our founder was interviewed by a diaspora leader about this and his work in Russia

The following interview with Terry Hallman, Director of the London-based People-Centered Economic Development Ltd., examines the various factors involved in improving small-business environment in post-Soviet Crimea. Focusing on the case of Crimean Tatars, he discusses the availability of micro finance, assistance from international organizations, direct foreign investment and aid from the diaspora. He explains why his proposed People-Centered Economic Development program, also referred to as social enterprise, would work better for repatriates who lack the necessary material collateral to start their own business.

In 2006, with his "breakthrough report:" on 'Death Camps, For Children, Terry had raised awareness of industrial scale neglect of disabled children in institutions. Industrial is the appropriate term for what was essentially a mafia operation.

Opening up the reality of that situation resulted in threats against me and anyone else interfering with that system.  I came under direct assault by tax police, government’s primary enforcement arm if anyone steps out of line.  This is not a research activity where many, if any, other people dared to participate.  UNICEF was willfully blind to the matter because it was just too dangerous to bother to intercede  Powerful interests remained entrenched with enforcers to make it dangerous.  Jurists were correct, in my view.  It was more a mafia operation than anything else, aimed at misappropriation and laundering of large money.  That was perfectly congruent with how Ukraine operated before the revolution.  USAID wanted nothing to do with it, nor would they fund any organizations or activists who might try.  Some things could be done and some things could not be done.  Helping these children was something that could not be done.  So, I exposed it and made it the central focus and metric of Ukraine’s microeconomic development blueprint.  In that context, it was far more difficult to ignore, dismiss, or argue about.  For about six months, I really did not expect to survive.  Nevertheless, Ukraine’s government finally conceded the point and announced the opening of more than four hundred new treatment centers for children who were theretofore invisible under tight and deadly enforcement.”

In October 2006 our proposal for Microeconomic Development and Social Enterprise in Ukraine was posted through government channels. In August 2007 it was published on a leading news portal. The section on social enterprise began:

It is almost impossible to overstate the need for social enterprise in Ukraine. The nation is plagued by widespread socioeconomic problems and deficiencies, with a host of disparate, haphazard, uncoordinated efforts aimed at solving them.

Though the story was removed from the Mail Online, What's on in Kyiv published this interesting observation

Britain’s most shady political figure, Peter Mandelson, is at the centre of another scandal in the British press, and this time it’s around his all-expenses paid trip to Ukraine to give a speech at an event organised by Donbass oligarch Rinat Akhmetov’s Foundation for Effective Governance (let’s say that once again in case you missed the irony, Akhmetov’s Foundation for Effective Governance).

Rinat Akmetov's company is DTEK

In 2009, Mandelson as UK Business Secretary  hosted the Social Enterprise Summit, saying that they were "here to help firms helping society"  

As EU Trade Minister however, he seem more focussed on support ollgarchs with an access agreement   The vide below come from Yalta European Strategy. an organisation run by oligarch Viktor Pinchuk to which disgraced MP Stephen Byers and Tony Blair have been of service.   

As most of the world knows by now, social unrest boiled over at the end of last year after Ukraine's fugitive PM failed to sign a trade agreement with the EU and took up the offer of $15 million from Russia. 

The military action which followed has cost many lives including the passengers of Malaysian airliner.MH17

How different things might have been had there been a real attempt to tackle Ukraine's many social problems

SEEKING SUPPORT

Looking back, I reflect on efforts to gain the support of government and the social enterprise community

First call , aside from the forum discussions on Skoll and Omidyar networks was with the Social Enterprise Coalition. When we became members in 2006, I described our Ukraine operations. It was they said, beyond their current focus.

In February 2008, contact was made wiith USAID and the Senate Committee on Foreign Relations, in a letter describing conditions in institutitions and the R.I.C.O activity associated with it  Together with Maidan, KHPG and others we wanted support for an anti-corruption network 

In response, USAID told us that their limited funds did not permit any support for "handicapped and retarded children"

In December Contact was also made with the UK Foreign and Commonwealth Office, who informed me that theirr Ukraine desk and the British Embassy were now aware of our activities. 

The proposal was also submitted to the EU Citizens Consultation in December 2008.

So we can say with some confidence that government of the UK, US and EU were aware of this project. That didn't make any difference, 

In 2010, The Social Business Tour of Budapest had solicited project ideas and it was to Erste Bank and Grameen Creative Labs that I'd introduced our work in Ukraine.

Later that year, I learned of the British Council initiative. The British Council are supported by FCO funds and were also a customer for our resource scheduling software. I had made contact several times suggesting we could collaborate in Ukraine.  .  

The British Council were soliciting partnerships in their social enterprise intiatives and with our considerable experience, in both social enterprise and Ukraine, it seemed appropriate to make an application, so we did, introducing our proposal. Like Erste Bank, they went silent on us     

Price WaterHouse Coopers were last to be contacted, drawing their attention to violation if intellectual property.  

I'm not sure it would be appropriate to call the project to a halt on grounds of Intellectual Property Rights violations because the project is so badly needed for Ukraine. I am sure that the Ukrainian side will not think twice about IPR violations. Ukraine remains among the worst locations in the world for such violations. Without IPR protections, it is extremely unlikely that social enterprise can take root in Ukraine. Reason: any social enterprise project, anywhere in the world, which is capable of turning a profit can have the 'social' part stripped out in favor of increased financial profit. If you understand Ukraine, you surely understand that is instinctive. There is no cognitive loop involved. Ukrainians see no point and assign no importance for IPR. IPR theft is an Ukrainian sport.

By contrast, UK and the US do understand IPR protections. There is no way forward without establishing IPR protections from the start of this project in Ukraine. It is incumbent upon UK and US partners to set the course and hold fast to it.

Therefore, on principle, by law as understood in UK and the US, and to foster the viability of the entire SE project, it is appropriate and necessary to square IPR issues before the project proceeds further. It can be shut down entirely, but that does no good for anyone except to reinforce the importance of IPR.

A CALL FOR INTEGRITY

PricewaterhouseCoopers recently launched a global call to action for business integrity. Its framework for integrity involves: establishing integrity as a C-suite and boardroom priority; putting integrity at the core of a company's mission and making it a business, not a moral issue.

Long before becoming aware of the British Council initiative, Terry Hallman spoke out on Social Edge questioning the ethics of doing "business for good" through dishonesty, like IP theft.

Finally, is it acceptable to build projects with stolen property? What sort of results would that lead to? Can be build an ethical system based upon unethical behavior (such as violations of Intellectual Property Rights)?

If we invent such a system, is it anything new? Or is it just a twist on the old system?

One thing that can be collaborated openly is this: a Code of Ethics. But, whose ethics? What org(s) will enforce them, and how? Who decides who gets in, how, and why?

IRONY OF IRONIES

When MH17 was shot down over Eastern Ukraine, bodies were transported to the nearby town of Torez. A place largely unknow to the rest of the world, yet well known to us , being the location of the Death Camps for Children articles.

As Martin Luther King Jr had said - "Our lives begin to end the day we become silent about things that matter"  We and these children were clearly in the way of building relationships with Ukraine's oligarchs.