Social Enterprise in Ukraine

Dec 19th, 2012 | By | Category: News

“Business! Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence, were all my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business!”

In Dickens’ classic – A Christmas Carol, these words are uttered by the ghost of Jacob Marley, the former business partner of Ebeneezer Scrooge.

In this production,  the  leading role has already been cast  while the Ignorance and Want allegory has a 21st century dimension:

“We see a staggering array of social problems arising directly from poverty, including but not limited to tens of thousands of children in orphanages or other state care; crime; disrespect for civil government because government cannot be felt or seen as civil for anyone left to suffer in poverty; young people prostituting themselves on the street; drug abuse to alleviate the aches and pains of the suffering that arises from poverty and misery; HIV/AIDS spreading like a plague amidst prostitution, unprotected sex, and drug abuse; more children being born into this mix and ending up in state care at further cost to the state; criminals coming from poverty backgrounds, ending up as bandits, returning to communities after prison, with few options except further criminal activity. These are all part and parcel of the vicious negative cycle of poverty, and this threatens to destroy Ukraine, if Ukraine is defined in terms of people rather than mere geographic boundaries”

In the light of current events in Ukraine, with Yulia Tymoshenko still in prison,  here’s a look back at how Western government are assisting with Ukraine’s democratic evolution. I begin with correspondence from the UK Foreign and Commonwealth Office, responding to my enquiries about support for our social enterprise activities.  By this time the ‘Death Camps, For Children’ article had been widely read, as had our proposal for childcare reform and a social enterprise centre.

Ukraine’s goverment by then had announced plans to adopt one of the major recommendations, the creation of 400+ rehab centres for disabled children.

I’d brought up the subject of  the Holodomor because of the work that had gone into creating the awareness raising website , calling on support from UK politicians.

Thursday, 18 December 2008, 12:57
Dear Mr Mowatt

Thank you for your e-mail of 9 December. I am sorry that you have experienced difficulties in your previous contacts with the FCO. I can at least assure you that the Ukraine desk at the FCO, and our Embassy in Kyiv, are now aware about the activities of your organisation.

Perhaps I could take this opportunity to clarify a few of the issues you raised in your e-mail about project funding.

As you mentioned in your e-mail, DfID’s programme in Ukraine has now closed down. However, the UK contributes to the EU’s Assistance programmes (the EU is the largest donor in Ukraine). Most of the EU’s funding comes from the European Neighbourhood and Partnership Instrument which allocates over €124 million (around £98 million) annually to Ukraine.

As far as the UK’s bilateral assistance is concerned, this is now mainly provided from the FCO’s Strategic Programme Fund, which has an annual budget of £650,000 for Ukraine. The management of this budget is devolved to the British Embassy, Kyiv. Further details of the Strategic Programme Fund, including the type of projects covered and how to apply for funding, can be found on the Embassy’s website (link below)

The Westminster Foundation for Democracy are currently implementing a project entitled Strengthening Human Resources Development at the Verkhovna Rada in Ukraine. We are providing funding worth £150,000 in 2008/09 and £150,000 in 2009/10 from the Strategic Programme Fund for this project. Again you can find further details of this project on the Embassy website.

With regard to the exhibition on the Holdomor in Parliament, I understood this was in fact funded by the British Ukrainian Society (an NGO). I was not aware that WFD had had any involvement in it.

Yours sincerely


That same year, Terry Hallman called on  USAID and the Senate Committee on Foreign Relations for support. He drew their attention to  organised crime operations including trafficking in body parts.  Later he would raise awareness of the plight of Yuri Lutsenko with the US Embassy.   Several months later, in his final days of life, the US Embassy would inform me that Terry Hallman’s budget did not allow for any medial assistance other than the most primitive Ukrainian hospital.  Likewise in 2008, USAID had no budget for ‘retarded children

“Welcome to our brave new world. Except it’s not so new: learn to love and respect each other first, especially the weakest, most defenseless, most voiceless among us, then figure out the rest. There aren’t other more important things to do first. This message has been around for at least two thousand years. How difficult is it for us to understand?”

The letter to USAID was sent 3 months after applying to a program of grant funding from the East Europe Foundation. We wanted to create a model for the 400+ rehab centres Ukraine’s government had agreed to.   5 years on, I note that they’re offering grants again, in conjunction with Erste Bank.

In 2009 UK Business Secretary Lord Mandelson hosted the Social Enterprise Summit declaring that his department were ‘helping firms to help others’ . His interest in Ukraine however, was far more focussed on Ukraine’s access to the European market.

With EU support in mind, I’d put forward the ‘Marshall Plan’ to the 2008 European Citizens Consultation only days before the response from the FCO.  Lord Mandelson as our EU Trade Secretary was bein questioned in the media about his relationship with oligarch Oleg Deripaska. There would later be media criticism of his relationship with Rinat Akhmetov.

I had several exchanges of email with the British Ukrainian Society who didn’t see fit to publicise our efforts to the expatriate community.   According to Ukraine’s constitution, we and other residents had an obligation to act in the knowledge of harm being done to the vulnerable.  The best defence would be not knowing.

This Society is a rather unusual kind of Non Goverment Organisation, with two Lords as directors and an Ukrainian airline as official partners.

The point about not knowing is made 5 years later in the Sunday Times when the story of Torez, the unnamed location of the ‘Death Camps’ article finally hits mainstream media.

The Ukrainian maxim: “I saw nothing, my home is on the other side of the village” has no place in the modern world. If by our deliberate blindness, children are allowed to suffer such depravities then, by our inaction, we are all guilty.’

In 2010  there is suddenly a change of heart with regard to funding, with the annoucement of a joint initiative for social enterprise by USAID and the British Council, an organisation in receipt of large scale funding from the FCO. We apply to solitication for partners and are disregarded.

A social enterprise centre was created in Donetsk with USAID funding assistance

For the like of us,  a self sustaining business paying taxes, we were effectively contributing to our own destruction.

With this in mind, I wrote recently to Immigration Minister Mark Harper, pointing out to him that if government themselves behave with the kind of dishonesty associated with organised crime, there could be little hope of tackling the problems thar organised crime causes.

Trafficking in Persons


A response today from the British Council says that part of the selection criteria for partners was their making a financial contribution.  They considered there to be no reason to respond to our application. They also say that their work did not derive from ours but a project in Indonesia in 2006/7.

They also say that the approach they use is based on concepts of social entrepreneurship developed internationally over 40 years.   This would be the foundation grant approach which differs from the self sustaining business approach conceived by P-CED in 1996. In essence a cause marketing opportunity for corporates.

On the other hand, the British Council website for the Ukraine project offers a definition which is a lot closer to the P-CED model descibed in all our papers since 1996. More importantly, our operational model in the UK since 2004.

“Social enterprise is a business with primarily social objectives whose profits are directed mainly at self-development, public affairs or resolving social problems. Such companies operate as business organisations do and generate profit, therefore they are non-charity. Social entrepreneurship is dynamically growing in European countries now, addressing unemployment, social protection and social inclusion. In particular, there are over 50,000 social enterprises only in the UK   “

There are very few social enterprises in the UK that are not dependent on grant funding. As recent research indicates.  funding exceeds profit by a factor of 8 to 1.

To further  illustrate dishonesty, a definition written by a UK expert is offered,  in Ukrainian.

No wonder Erste Bank went silent on us.  I’ve learned recently that they now plan to exit Ukraine.

In comparison, our work in Ukraine began with a project for social enterprise in Crimea in 2002/3 and our investment since 2004 amounts to around £500,000 in project support and sweat equity.

This has made one thing very clear.  Social enterprise in international development will be a matter of corporations buying in and most likely avoiding the difficult social problems which might present a commerical conflict.

“Admit it for your factious purposes, and make it worse! And abide the end!”

The donor and partner list for USAID’s  East Europe Foundation is rather revealing. Does this mean Business in the Community and The John Smith Trust are contributing money to this avoidance of human rights?

It would seem that Terry Hallman was right in the assertions made in his notes about the reluctance to tackle childcare reform.

“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.”

It was former British Prime minister Tony Blair who made social enterprise government policy. Several years ago, I’d been with  my father on a Normandy veterans event when Tony Blair emerged from Downing Street. He shouted, referring to the war in Iraq “How many more will die in this one!”‘

When I told Terry Hallman of the Tony Blair Faith Foundation in Ukraine , he quoted me James 2

14 What does it profit, my brethren, if someone says he has faith but does not have works? Can faith save him? 15 If a brother or sister is naked and destitute of daily food, 16 and one of you says to them, “Depart in peace, be warmed and filled,” but you do not give them the things which are needed for the body, what does it profit? 17 Thus also faith by itself, if it does not have works, is dead.”

I was reminded of the motto of my old school in South London – “Rather Deathe than False of Faythe”

Better dead perhaps than live where moral cowardice has become de facto

2 Comments to “Social Enterprise in Ukraine”

  1. […] Full details of this murky affair may be found on the Maidan civic action website. […]

  2. […] with a DTI representative on a social networking forum. I referred her to my report on ‘Social Enterprise in Ukraine‘ which revealed our interaction with both US and UK government agencies on our work.  It […]

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