Interview Lessons for business

Virtue is the Most Precious Capital

The book of Vira Vallee, Ukrainian writer and human rights defender, “Corruption. The Fall of Social Capital” was published this year. In this book, the phenomenon of corruption is considered as a symptom of a chronic disease and  spiritual, political and economic lack of freedom of the Ukrainian nation. The book clearly shows the defects of the domestic facade democracy, which becomes a threat to the country’s future.

 In a long interview for , the author talks about the reasons that motivated her to write, explains the main theses of her work and convinces of the importance of cooperation between civil society, government and business for social progress and building a successful Ukraine.

: Vira, please, tell us about yourself.

V. Vallee: I am a legal practitioner with a degree in economics (PhD in economics) with an active citil positionreflected in my literary works and law educational

I have been practicing law for 15 years. I started my law practice in consulting, then I have been working in the public sector (at the International Finance Corporation, World Bank Group). For some time I was engaged in legislative activity in the field of entrepreneurship development. For over 10 years I have been working in a large international business. I am currently the head of legal and compliance support for 25 countries in one international corporation.

: How did you come with an idea of ​​writing a book?

V. Vallee: It is not my first book. The idea to write the first one came a long time ago when I was still working on my master’s degree. I collected the materials for my book at the Library of Congress while studying in the United States. The master’s work on intellectual property turned out to be convincing and later became my thesis and then a book publication, which, in my opinion, was useful for the Ukrainian reader, because at that time there was no similar research in the field of intellectual property in Ukraine. After that, I wrote two more books on this topic, which are actively used by intellectual property experts and are included in the curriculum of higher education institutions.

Soon the writing of books became my passion: when I have finished my work on intellectual property, new interests and ideas appeared. In particular, the topic of corruption, which suddenly seized my attention. It happened at the time of the Revolution of Dignity when its first victims were killed. Then it became clear that the main problem of Ukraine is corruption. So I was fascinated by the study of this negative phenomenon, and already in 2016 I published the book “Corruption: Reflections after Maidan”.

The following year another book was published “The Thirst of Freedom” – the essay on freedom as the core, in my opinion, theme of human existence. Today, I am thinking a lot about the phenomenon of corruption, and this year I published another book devoted to this issue “Corruption. The Fall of Social Capital”. This book answers the question: what happened in Ukraine after the Revolution of Dignity, what is the reform status, why changes happen so slow in our country, what problems we have in our outlook.

: In addition to the above, which theses are highlighted in your books?

V. Vallee: The main thesis of my works, perhaps, can be formulated as follows: “Virtue is the most precious capital”. That’s exactly what I thought about on the way to an interview with you. I think, this idea would be worth putting into the title of the material.

I absolutely do not share the opinion that success and power are the prerogatives of bad guys, whose “virtues” are lies, selfishness and impudence. In fact, it also happens, but such a success is fragile and short-term. In the long run, if we analyze the indicators of economic development of countries, the history of success and fall of corporations or even the fate of individuals, it becomes obvious that unfair rules of the game sooner or later lead to collapse. On the other hand, virtue is the key to long-term success. Especially today, at the time of expanding of personal, political and economic freedom when morality acquires a new meaning.

Virtue is something I have written about in the book “Corruption. The Fall of Social Capital”. What is social capital? This is a set of norms and values ​​that are shared by members of a particular community. This community may be small – you and I, or even more – the staff of a certain organization, society, and people in general. If members of any community share the same positive values ​​and pursue one goal together, such communities are successful. In other words, not only the goal matters, but also the methods of achieving it.

For example, Ukrainians say they are trying to get rid of corruption. According to various sociological studies, people have very high demands on the government (including the fight against corruption). What do Ukrainians do in practice? Are we going to the declared goal, if we accept corruption in our everyday life? Methods often smooth out the goal, make it impossible to achieve.

I want to show the following example. Some of the ATO volunteers who defended Ukraine at the risk of mortal danger returned to the capital and eagerly jumped into the power, where they successfully feeding the soil of corruption now (the one that led to the war) instead of forming a powerful opposition to the “old” authorities. Their ambitions were stronger than their principles at the fire line. Some of the warriors already have already managed to start their business, which would certainly have caused my high admiration and deep respect, if their methods of business functioning were not based on corruption institutions: new businessmen do not pay taxes and do not officially hire employees. Their personal interests turned out to be more important than the future of Ukraine, which they fought for.

I call it double standards and believe that they are the cause of the decline of social capital I wrote about.

When Ukrainians understand that consistency in daily actions takes matter, double games lead us to a dead end, that, finally, virtue is a capital… Then we will stop the arbitrariness of the power and see the light at the end of the tunnel. From the impasse which Ukrainians have driven themselves, it is possible to get out only through the confession of virtue.

Still, virtue requires courage. Only a brave person can be honest with others and to himself. Having principles and living with them every day is a complicated work that requires the power of the spirit to act with dignity, without being subjected to influence and temptation. It is very hard to say “no” to the system, it is much easier to become its component and melt in the soil that feeds it.

: Do you reveal any corruption groups or is it just a generalized description?

V. Vallee: The disclosure of certain groups or personalities is investigative journalism work, which is important for fighting corruption, but have a short life remaining relevant within a short period of time.

My book is written in the non-fiction style which is popular science literature. I do not aim to expose specific clans or personalities, but focus on the study of institutions in general: what is corruption; what causes it; what needs to be done to uproot this phenomenon.

I think I will write a trilogy, there will be a third book on corruption. The first book was romantic: I wrote it under the impression of the Ukrainian social explosion in the days of the Revolution of Dignity. This (the second) one is written by a pragmatic witness of current processes. There must be a third one. Hope it will complete my study of corruption with conclusions on how Ukraine managed to overcome corruption.

: Does it just getting worse?

V. Vallee: I would not say that there is a worsening trend, there are some positive changes. However, the tendency of the reform “rollback” is not The good news is that new specialized anti-corruption institutions are formed. The bad thing is that they do not work.

If we talk about legislation, then it has become considerably better from a formal point of view. The practice of applying laws not worsened, but it did not become better  either. In general, this is an alarming symptom: the judicial and law enforcement systems do not work, there are many cases of abuse in these areas.

As for the level of corruption, it remains stable, the same as it was at the time of the Revolution of Dignity. At least numerous sociological studies evidenced this.

: Have you revealed in your book the mechanisms, which businessmen use to generate corruption?

V. Vallee: I see corruption in a comprehensive way in terms of three forces of society: civil society, state and business. Today, corruption in Ukraine is generated by all three forces, and this is where our misfortune lies.

Corruption is a two-way process: if there is no offer there will be no demand. The first thing you need to do to kill corruption (both by business and ordinary citizens) is to refuse to tolerate it. It cannot be encouraged and fed, because it is a road to nowhere.

Of course, paying bribes is easier than working honestly. Many are sceptical about my belief that doing business and not paying bribes in Ukraine is quite possible. But as a legal practitioner, I assure you that this is true. It all depends on the weapons from your arsenal: the best is professionalism, courage and virtue.

Everyone knows the economic theory where corruption considered as an economically rational phenomenon. In fact, from an economic point of view, it is cheaper for an entrepreneur to pay a bribe than to fulfil all the law requirements. But the effect of such “rationality” is short-term. In the long run, no one could win from corruption. Here is an example. A company with an impeccable reputation in the legal field has better chances in resisting arbitrariness: it is more difficult to blame it unlawfully in illegal activity and it is not easy to “compromise” it on a bribe, because it has nothing to hide, and therefore it is less vulnerable than the company that pays a “salary” to the inspector of the district tax or environmental inspection.

If you feed corruption, it will continue to exist: tariffs will increase with your legal and commercial risks. If you are confidently and consistently working in the legal field every day (no matter how complicated and ambiguous it is), you will not be afraid of anyone and provide yourself with a reputation of total intolerance to corruption – you will not be bribed, because they will be afraid of you. The relations of corruption are subject to the fear factor, and this important psychological factor should be kept in mind by everyone.

The problem of our society is that Ukrainians hate corruption at higher levels of power, but tolerate it towards themselves: in solving personal issues, in business, anywhere.

: Does it make any sense for a business to go to court?

V. Vallee: Definitely. This sense has a dual nature. Besides the legal resolution method of a particular dispute, litigation is important in terms of the creating a precedent of disobedience to arbitrariness and declaring war against illegal actions. To stop violating your rights, you must resist violators.

In addition, in certain cases, the effect of publicity – PR plays an important role. Since one of the enemies of corruption is publicity, it happens, for example, that in order to solve the problem of undue pressure on business, it is enough to publicize the case.

According to my practice, the belief in your own right (provided the impeccable reputation of your business as a law-abiding company), together with a strong PR, creates miracles in Ukrainian realities.

: Can you give advice to business on how to fight corruption?

V. Vallee: The first and most important thing is not to encourage it.

The second is to build a dialogue with the state according to the rule of law, and not in accordance with the soviet corruption standards.

The third is to live and work with the attitude that the core business capital is a virtue that needs to be encouraged and promoted. Since everything starts with a head, business leaders should give to their employees a feeling of respect to the law culture, build the philosophy of the rule of law, explain to them that reputational risks determine the fate of a business.

Large international corporations not only do not exclude reputational risks (as it is usually done bythe Ukrainian business), on the contrary, they invest enormous resources in efforts to grow and maintain an impeccable reputation. They introduce risk control systems (including reputational ones),  createlarge departments of professionals, whose responsibility is toprevent image related risks for the company, train not only their own employees but also their business partners. After all, staff feels responsibility and the company applies sanctions to their partners for violating their business integrity standards.

After all, today’s reputation is money. Corruption (or other harmful  to the business reputation) scandals can decrease the value of shares on international stock exchanges in minutes.

: How do you estimate the investment climate in Ukraine?

V. Vallee: Very bad. There is no investment climate in our country. Business investments are difficult to calculate as well as it is not easy to estimate the profitability of a future business. The economic, political and regulatory envisonment is highly unpredictable and not attractive to investors at all.

: Are there any tendencies for improvement?

V. Vallee: I believe so. It is the new anti-corruption legislation adopted in 2014, which marked a breakthrough year in the development of the system of anti-corruption institutions. The creation of NABU, SAPO, NAPC, Anti-Corruption Court, all these is undoubtedly positive change

It’s a pity, but during this time we could have done much more. The problem was the internal unwillingness of Ukrainians to go away from the “soviet union”. Although everybody always blames the authorities for everything, we should take responsibility ourselves, because our power is our reflection, however, in a condensed, hyperbolized, creepy way. The authorities do only what we allow them to do – no less and no more.

However, such a state of public opinion imbalance will not last forever. The last drop before the next explosion of social energy is probably not far off. Murders and attacks on public activists, in particular, are an alarming marker of a new explosion. We will not even notice how another unexpected event will lead to a new resistance like a “black swan”.

But Ukraine cannot live only by maidans! So, we finally have to learn: get rid of double standards, learn hard work and honest responsibility.

: What else Ukrainians should learn?

V. Vallee: Recently I had a dialogue with my younger eight-year-old son. He said: “It is cool to be the president: you have everything you want.” I answered him: “You know, in fact, a lot of people think so, but everything is not so as it seems.” “Why?” – surprised Alan. “The higher position the person holds, the more responsibility he has. The president works for people.” My son was even more surprised: “I did not understand how he works for us!?” I said: “Not only you who do not understand, but people in Ukraine also do not understand. They do not understand that we pay the salary to the president, but he has to return us the credit of trust and money with good deeds. We select government representatives and delegate them the right to manage the state affairs. We pay them money for their They are our service staff. ” Son: “Oh no, mom, I will not be president!”

Ukrainians need to learn that we are the power, and those who occupy positions in the state apparatus are our employees.

Ukrainians should understand that personal short-term mercenary interests should go to the background when it comes to the perspective of the state where our children will live.

Ukrainians should understand that practicing the corruption culture is no longer trendy. It is trendy be honest – do not steal, do not hide bribes in glass jars and do not bury them in the garden. So much stress, it’s so bad for health!

: Where can a reader buy your book?

V. Vallee: You can buy the book on the Yakaboo, at Petrivka in Kyiv, also read it on my academic page https://independent.academia.edu/ViraVallee.

 

Please read: To be successful in Ukraine, you need to forget everything you’ve ever known before entering its market

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