by Shaxrizoda Mamasoliyeva
Image source: www.biznesvakil.uz
November 21, 2021
In the international business ranking “Doing Business 2020” Uzbekistan improved its position from 76 th to seventh place and ranked 69 th among 190 economies measured in the ranking. The Republic is also among the top 20 countries that have made significant progress in enhancing the business environment. To improve the position of Uzbekistan in these international indices, a number of reforms are being implemented. One of them was the Law of the Republic of Uzbekistan No. 440 “On the Authorized Representative of the Republic of Uzbekistan for the Protection of the Rights and Legitimate Interests of the Business Entities under the President ” in 2017. As a result of this Law, a Business Ombudsman has been established in the country to protect the rights and legitimate interests of business entities. So, what results have been achieved in ensuring the rights and freedoms of entrepreneurs and protecting their legitimate interests since the establishment of Business Ombudsman or, conversely, was the Business Ombudsman established to improve the government’s position in international indexes and to deceive international experts? This blogpost is dedicated to the analysis of the successes and failures of the Business Ombudsman in the legal protection of the interests of entrepreneurs over the past 4 years.
The role of the Business Ombudsman in protecting the interests of entrepreneurs: analysis
Firstly, the Business Ombudsman reports only to the President of Uzbekistan. So, what does it mean that the Business Ombudsman is accountable only to the President? It is reasonable to assume that submission of the report only to the President may lead to bureaucracy by the President. Because if we pay attention to the institution of the business ombudsman of advanced foreign countries in protecting the rights of business entities, we can see that the Business Ombudsman is accountable to Parliament. I believe that the legislature, which represents the interests of the people, oversees the activities of the Business Ombudsman and coordinates the consideration of complaints and appeals in accordance with the law. At the same time, if the Business Ombudsman is accountable only to the President, there is no control over the President’s improper performance of his duties. Parliamentary control would work effectively in organizing the protection of the rights of entrepreneurs. If the Business Ombudsman is accountable to both the President and Oliy Majlis, the powers to protect the rights of entrepreneurs will not be concentrated in one person. This experience has paid off for the United States. In the United States, where the rights of entrepreneurs are sufficiently guaranteed, the Business Ombudsman is accountable to Congress. According to the Small Business Regulatory Enforcement Fairness Act of 1996, the National Ombudsman reads an annual report.
Secondly, the issue of accountability of the Business Ombudsman is not clearly and consistently defined in the legislation of Uzbekistan. It should be noted that in the United States, the National Ombudsman is accountable to Congress on the following issues:
- Timeliness in responding to small entity comments
- Quality of response to small entity
- Non-retaliation policies
- Compliance assistance
- SBREFA notification
What can the legislation of Uzbekistan say on this issue? It should be noted that the accountability of the Business Ombudsman remains unclear. If the Business Ombudsman ignores any complaint and prepares a report only on positively resolved complaints, would it not be a certain violation of the rights of entrepreneurs? Also, if the issue of accountability is not clear, it will undoubtedly lead to the bureaucracy of the Business Ombudsman.
Thirdly, the Commissioner for Protection of Rights and Legitimate Interests of Entrepreneurs and his deputy will be appointed and dismissed by the President. It is time to change this procedure, and the dismissal of the Business Ombudsman only by the President will lead to a certain deviation of the Business Ombudsman from the legislation. In particular, one of the guarantees of the Business Ombudsman’s activity is that he has legal immunity. However, the fact that the representative has immunity does not mean that they are absolutely inviolable. According to this rule, if the representative is corrupt or unfair, it is expedient to hold him accountable to those involved in the case and dismiss him from work by impeachment.
Achievements of the Business Ombudsman in the interests of entrepreneurs
To what extent does the business representative protect the rights of entrepreneurs in accordance with the law, or vice versa?
The Business Ombudsman plays an important role in monitoring the illegal actions of regulatory authorities during the inspection of business entities. It is worth noting the following real incident: During the monitoring of the results of short-term tax audits agreed with the Business Ombudsman at the filling station, violations of the established procedure of inspections by employees of the regulatory body were identified. The Business Ombudsman’s Office also filed a lawsuit against five tax officials alleging an administrative offense under Article 2412 of the current Code of Administrative Offenses.
The Tashkent city administration demolished the building belonging to UZAVTOTEXXIZMAT LLC without compensation, and the Business Ombudsman defended the entrepreneur’s interests. In particular, a lawsuit was filed with the Tashkent Inter-District Court against the Tashkent city administration for collecting 3,210,000,000 soums in compensation from UZAVTOTEXXIZMAT LLC and allocating 486 m2 of land that had been seized for public use. According to the lawsuit, the Tashkent city administration is obliged to collect compensation in favor of UZAVTOTEXXIZMAT LLC in the amount of 3,210,000,000 soums and allocate 486 m2 of land. Now the amount has been fully recovered from the entrepreneur.
Entrepreneur N. Abdukholiqov from the Namangan region complained to the business ombudsman that the land was not allocated as compensation instead of the land confiscated for state and public needs. It was revealed that the area of the kitchen building owned by the entrepreneur was taken away in 2012 for state and public needs, but 165.0 sq.m. 30.0 sq.m. instead of the land area is allocated. According to the presentation submitted by the Business Ombudsman, the Hokim of Naryn district handed over 300.0 sq.m. land area is allocated.
Case 4
The Business Ombudsman is an institution that protects the interests of not only large entrepreneurs but also individual entrepreneurs. This can be seen in the following real situation: A. Gaymullin, an entrepreneur in Tashkent, appealed to the Business Ombudsman for practical assistance in starting his own business. According to the Presidential Decree, the investment project of A. Gaymullin was approved by the Tashkent city administration. Still, due to the lack of proper documentation for the implementation of the project, the project was delayed for a year. In this case, the Business Ombudsman was able to ensure that the Cabinet approved the entrepreneur’s project of Ministers, and the land was allocated to the entrepreneur to start his business.
Failure of the Business Ombudsman to protect the interests of entrepreneurs
In addition to a number of successes in protecting the rights of entrepreneurs, the Business Ombudsman also has failures, which can be seen in the following cases:
It should be noted that there are still cases of officials using discretionary powers for their benefit, and there are a number of problems in the operation of the farm, which is a type of entrepreneurship. Government agencies and officials have taken a different approach to help farmers “create the conditions” set by law for them to operate. In particular, excessive interference by officials in farming activities (especially in planting and harvesting and agro-technical activities) is a major obstacle for entrepreneurs.
Also, the Business Ombudsman is helpless in the face of assignments from authorities from a higher position. In particular, since April 8, 2021, there has been a mass demolition of hoardings. Entrepreneurs say the actions of government officials, who dismantled about 300 billboards, are illegal and are demanding a justification for the decision. So, what is the role of the Business Ombudsman in this case? Why is the Business Ombudsman not using his powers to protect the interests of entrepreneurs? Yes, of course, in this case, the Business Ombudsman is considering the legality of these actions with the participation of the relevant government agencies, given that these actions of local authorities are provoking strong protests among entrepreneurs. However, the results of this study have not yet been published in the media. It should be noted that, even though the advertising objects have a permit, it is unfortunate that these structures were demolished without warning and any compensation to entrepreneurs. In this case, the following legal provisions have been violated:
1. Disassembly can be done only by court decision.
2. Before dismantling, the title documents must be revoked.
3. Five constructions of Humo Media were demolished despite the presence of advertising passports and other documents.
Admittedly, entrepreneurs have lost so much property due to disregard of the law in the capital of Uzbekistan. In addition, entrepreneurs face the problem of bureaucratic barriers and illegal interference in their activities. Admittedly, the negative aspects of state and economic management, such as illegal interference in the activities of entrepreneurs, the creation of various bureaucratic barriers, have not been completely eliminated. In particular, the following violations should be highlighted:
1281 – unreasonable suspension of operations on bank accounts, 347 – an overpayment of taxes, 466 – non-compliance with the requirements for consideration of appeals, 465 – violation of the order of public service, 408 – violation of licensing and permitting legislation, 181 – violation of the order of inspection and inspection of activities, 838 – non-application of privileges and preferences, 58 – violation of private property rights.
Conclusion
As a result of the analysis, the following suggestions can be made:
1. The Business Ombudsman must be accountable to the President and Parliament.
2. The legislation must clearly and consistently define the issues on which it is accountable.
3. If the Ombudsman is corrupt or unfair, it is expedient to dismiss him from the office by impeachment.
The Business Ombudsman has also been successful in the following areas:
1. Assistance in the use of technology
2. Ensuring the legality of inspections
3. Restoration of business entities
4. Improving legislation on protection of the rights of entrepreneurs
On the other hand, even after the establishment of the Business Ombudsman, there have been a number of violations against entrepreneurs, which means that the result is not successful, in my opinion. However, if the judiciary is not independent and fair in the country, the mechanism of the Business Ombudsman will not work as expected by government officials in the future.
Cite as: Shaxrizoda Mamasoliyeva, “Looking at the four years of the Business Ombudsman activity: has the expected result been achieved?”, Uzbekistanlawblog, 22.11.2021
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