There is an entire market of up to 100 million hryvnias per year based on cumbersome DABI procedures

Source: Unian 

The Ukrainian construction market has been impacted by corruption and corrupt officials for many years. President Zelensky has set a task to reform the industry in two months. UNIAN was figuring out at what stages corruption risks arise and in what way the government plans to deal with them.

President of Ukraine Volodymyr Zelensky set another ambitious task: to eliminate total corruption in state architectural and construction control and urban planning by the end of 2019. The Head of State gave the appropriate instruction to the Minister of Development of Communities and Territories Olena Babak.

Zelensky emphasized the need to put the provision of administrative services in construction into electronic format and introduce automatic registration in the register of permits, as well as implement an exclusively judicial procedure to appeal against preparatory and construction works based on specified permits and cancel a declaration of facility readiness for operation.

The tasks assigned are related to activities of the State Architectural and Construction Inspectorate (DABI), which is responsible for architectural and construction control, permitting and registration functions and licensing.

Since its establishment, DABI has been recognized as one of the most corrupt government agencies.

According to Oleksiy Dorohan, CEO of the Better Regulation Delivery Office (BRDO), significant corruption risks arise at the stage of issuing documents that give the right to build.

“For example, as an entrepreneur, you need to get a permit to perform construction works. You submit your project that has already passed the examination to DABI. It is carried out only by experts who are certified by DABI itself. But this doesn’t prevent DABI from re-reading this project and looking for flaws. In many cases, it finds minor mistakes and refuses to issue permits,” he says.

According to Dorohan, the number of refusals to issue construction permits is almost half of all applications. For example, 46% of applications resulted in refusals in the first quarter of this year, and 34% – in the second quarter.

It is interesting is that, in the vast majority of cases, the justification for refusals contains formal grounds, and many of them are repeated in all refusals.

“For example, the composition of project documentation does not comply with some paragraph of the Order of the Ministry of Regional Development. Either the examination document submitted is not the original document, or the copy is not notarized in accordance with the established procedure. There are also many cases when even nationwide projects are rejected for these reasons. For example, construction of roads, reconstruction of hospitals,” Dorohan said.

Corruption tax

Of course, we can assume that there are mistakes in a certain number of applications. But, according to Dorohan, when the number of formal reasons is half of all refusals, it looks like creating conditions to extort bribes.

The BRDO CEO assures that developers are constantly complaining about corruption in DABI.

“It is impossible to provide the exact details of bribes. We have been collecting information for 2018, which we can’t verify, but on average, DABI corruption fees cost $4.5 per square meter,” he said.

Dorohan noted that a lack of public information on reasons for rejection fueled corruption. Thus, it is impossible to take into account other people’s mistakes when applying.

“This process is not transparent. A lot of permits are issued, but no one knows on what documents they are based. Thus, it is impossible to take into account even other people’s mistakes. That is, on the one hand, inspectors find mistakes in the documents, which have already passed the examination, in a non-transparent manner, and on the other hand, competitors can’t obtain information on successful documents,” the expert said.

As a result, developers need to re-submit documents. And they do it till their projects are perfect, or the mood of DABI employees is changed.

Read more at UNIAN