NGOing wild. Advocacy Center “Life” – Ukrainian NGO, financed through the Western financial assistance – is accused of tax fraud and conflict of interests
Quite often the authorities of both EU and US stipulate, that some of the government officials in Ukraine can be potentially corrupted. And sometimes it is a case.
On the other hand Ukrainian NGOs, which often receive grants and other financing from Western foundations, are usually regarded and trusted as real watchdogs in Ukraine – free of conflicts of interests and potential corruption risks.But in reality it is not always a case.
And the recent scandals around the Advocacy Center “LIFE” in Ukraine – just prove, that Ukrainian proverb “doviryaj, ale pereviryaj” (“trust, but check”) should be applied to Ukrainian NGOs as well.
Noise vs. Smoke
“Since 2009, Advocacy Center “LIFE” has been working to improve health and well-being and reduce mortality and morbidity from non-communicable diseases caused by tobacco, alcohol, unhealthy nutrition and passive lifestyle”.
That’s the beginning of the introduction to the described activities of Ukrainian Advocacy Center “LIFE” at the official Internet-site of the organization.
Though the mentioned list includes “alcohol, unhealthy nutrition and passive lifestyle”, the organization almost fully concentrates its activities only on smoking prevention. One of the possible reasons is that Western funds (including Bloomberg foundation) much better finance anti-smoking campaigns, rather than fighting alcohol or fast food.
But despite 15 years of the prolific campaigns of LIFE, every 4th Ukrainian continues to smoke. The country is decades behind European leaders – such as Sweden, Iceland or Norway – which really managed to overcome tobacco epidemic.
The task of reducing “mortality and morbidity from non-communicable diseases” – was also not achieved so far. Unlike in EU countries, the main mortality cause in Ukraine is blood circulatory diseases – including heart attacks and strokes. About 64% of Ukrainians die of that reason (in EU that share is 3-4 times less). And smoking together with alcohol plays crucial role in it.
Definitely nobody is going to blame just one NGO for the unsatisfactory results in health policyof Ukraine. Here much more responsibilitylies with the appropriate ministry and parliamentary committee.
At the same time this particular NGO – Advocacy Center “LIFE” – which every year obtained up to half a million US dollars of grants from the prominent American, European and international foundations, is gradually sliding into a deep quagmire of various scandals. And their specific odor can create problems for the image of prominent Western foundations, supporting anti-tobacco movement all over the world.
Tax fraud
In March 2024 the CEO of Dialogue Expert Center Andriy Myseluk suspected Advocacy Center “Life” in tax fraud. The mentioned information was published on a popular Internet-Site Censor and the prominent news agency UNIAN.
“For 2022, even according to the official Internet-site of the Center, of the obtained 320 000 USD LIFE paid only about 6,3% intaxes- several times less than the actual tax rates in Ukraine are” – mentioned Myseluk.
The reason for such a gap –was that 8 out of 12 employees of LIFE, including its CEO Dmytro Kupyra, were registered also as private entrepreneurs.
Ukrainian legislation doesn’t prohibit directly such actions. But it is a “grey zone”. And besides, paying 5% of SME tax instead of 18% of income tax and alsoavoiding military tax (1,5%) are considered to be rather immoral during the war and under a state budget deficit in Ukraine over 35 bln. USD.
According to the calculations of Andriy Myseliuk, just in 2022 LIFE saved on taxes about 47 thousand USD – or more than twice the sum it really paid in taxes.Under the war circumstances, Myseliuk called such an approach “tax looting”.
There was also a piquant moment – for several years LIFE tried to establish strong ties with the Taxation Committee of the Parliament of Ukraine – in order to influence tobacco excise policy. And at the same time it has used tax fraud SME-scheme which is really hated by this Committee and which it has been trying to abolish for the last 2-3 years.
Conflict of interests
Another scandalwas closely associated with a former Ukrainian journalist Natalia Sokolenko. She cooperated with LIFE – publicly criticizing politicians, experts, government officials, whom she accused of lobbying interests of tobacco industry.
As a former member of Public Council of Integrity, she presumably had to know what the meaning of conflict of interests is. And as the investigation of her fellow journalists showed, Ms. Sokolenko could have financial interests in public fight with tobacco evil. As the PR-agency “KrasniKomunikacii” of her (now, presumably, former) husband Artem Sokolenkowas having PR-contracts with LIFE for the last several years.
And by the way, Ms. Sokolenko also used the SME taxation scheme in order to minimize her own tax burden. That schemeseemsto be popular amongnumerous NGOs and activists in Ukraine.
Lack of transparency – in finance and partnerships
Mr. Dmytro Kupyra, the CEO of LIFE, this year was several times asked by Ukrainian journalists to publicly provide the NGO’s financial report for 2023. At last the reporton the NGO’s activities was published. But unlike the previous years, this time the organization avoidedto provide even very basic financial information. And though previously – in February 2024 LIFE’s CEO admitted, that the Center received over 400 000 USD of grants in 2023, the NGO in its annual report provided no info on the obtained costs and howit spentthem. Just only the list of the sponsors was provided. Usually those, who have nothing to hide, act in more transparent manner.
Also LIFE both at its official Internet-site and in its report mentions World Health Organization as its partner and sponsor. At the same time, the head of WHO Bureau in Ukraine Dr. Jarno Habicht in his official letter denied any active cooperation between WHO and Advocacy Center “LIFE”.
LIFE vs. Ukrainian business
Definitely, the full-scale war seriously hitUkrainian business. About 7,7 thousand companies in Ukraine were closed in 2022-2023. The issue of well-being of Ukrainian business is still crucial not only for Ukrainian budget, but also for millions of employees, scared to lose their jobs during the war.
But at the same time the Advocacy Center “LIFE” together with State Consumer Protection Service last year started the campaign against Ukrainian business, trying to fine it for demonstrating tobacco products at sales points. And both participants of this action boasted to collect in 2023 about 270 thousand USD such fines – almost twice as much, comparing to 2022.
But Ukrainian business decided not to tolerate such an action and massively sued State Consumer Protection Service. And as RBC-Ukraine mentioned, later almost all of those cases were won by Ukrainian business. As the result, the state institution had not only to compensate the unlawful fines, but also additionally to cover legal costs.