20 August 2012

Doing Business in Ukraine - The 'obsession' with minutiae

Look for mistakes....look and find. Try to find a problem. We MUST find a problem.

I'm almost convinced that from an early age Ukrainians have been taught how to concentrate on finding something WRONG with something. Particularly when it comes to documents.

Its a well know fact across the foreign community here in Ukraine that doing business here is driven by the obsession with documents, lots of them and making sure they are 100% correct in every small detail.
If a small mistake is found........OH NO........(Or maybe OH YES) we have a BIG PROBLEM now.

Please don't misunderstand me, I know that its important to get documents correct first time to help protect an individual or business from a legal standpoint. But there is clearly a major problem in Ukraine which I can only describe as an OBSESSION WITH MINUTIAE.

A well known obsession is the 'wrongly transliterated' name problem. Usually arises where a Ukrainian company or Ukrainian business owned by a foreign shareholder and/or when doing business with a foreign company and agreements are prepared in dual languages, usually English and Ukrainian.
Names of Directors can be translated in many different ways leading to the major problem of.............
''OH NO.......one letter is wrong in the name''

I recently witnessed a case where a foreign owned Ukrainian company had entered into an agreement with an overseas foreign company. The foreign company ( a very large multinational) had prepared the agreement and sent it to Ukraine for signatures. The Ukrainian company, eager to win the business signed and returned the agreement and prepared a translation of the agreement into Ukrainian language.  Weeks later when the Ukrainian company received payment from the overseas client, the suppliers bank requested to see the agreement to justify why payment had been received.

Shock horror, when some eagle eye bank employee discovered a major error with the agreement.The name of one of the Directors of the Ukrainian supplying company was spelled incorrectly on the original agreement in English and had also been translated the wrong way in Ukrainian. What was this major error?

The name 'Poroshenko' had been written as 'Porsohenko' ( this is an example, not the real name from the company). The bank claimed this was a major problem and the money would have to be sent back to the paying company overseas.

The main shareholder and director of the company explained to the bank that both his company and the client company were already doing business and had no problems. The company had supplied the goods/services and here was the client paying the invoice. Why was the bank trying to cause a problem.
The bank employees replied that they were just doing their job according to rules applied by the National Bank of Ukraine. The fact that the name was spelled correctly on every other document the company produced to the bank was completely ignored.

A clear example of 'obsession with minutiae'.  Maybe the bank employee(s) were looking for a financial reward to take away the problem.

Plus the bank added that old excuse, the foreign client had 'FAILED' to apply the company STAMP to the agreement.
How many times do foreigners have to explain to people in Ukraine that the majority of foreign companies NEVER use any kind of stamp to prove who they are. Just a simple signature, name written in block capitals and a date are enough.

The rest of the world should not be obliged to meet so called Ukraine standards.
Banks in Ukraine should not be expected to continue as unpaid agents for the Tax authorities.
Common sense should become the order of the day instead of poor excuses for holding back everyday business.

Until change is introduced, Ukraine will continue to be known as one of the most difficult places in the world to do business.

1 comment:

Igor Gavrylov said...

The problem lies mostly not in the rules of NBU but in the low qualifications of bank personnel and Ukrainian lawyers. They are always trying to back themselves up with a ton of documents in order to prove they are not to blame for something bad that might happen. And they always do this in a manner that puts foreigners in shock (just as you described "OH NO - BIG, BIG PROBLEM!") - just to make sure that their demands are treated as serious.