Ethics in Ukraine

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The Ukrainian Way of Doing Business: “Pogylayko” Story

Alexander was unemployed for several months, when a call came from his mother-in-law Oksana, who offered him a place in her company – “Pogylayko.” Alexander knew all about the company: how it got started and was operated. Now, it was up to him to make a tough decision, resolving the dilemma that came from his knowledge.

The history of “Pogylayko” began 5 years ago. Alexander’s parents-in-law used their connections with government and privatized nice building not far from city center for a fraction of its real cost. It was owned by Lviv Railroad, but through bribing all the necessary people agreement was achieved. Than, city authorities were bribed and provided all the necessary legal documents and permissions for new business. The money for all transactions were provided by Alexander’s parents-in-law, who are owners of the company, and three other investors, who still share 30% of company’s incomes.

The newly created company was dealing with distribution of beauty and cleaning products. It had reached several legal agreements with large producers and bought inventory at above market prices, thus generating higher profits.

The owners decided to list the facilities (building and equipment) as their private property. It was also decided that company had to pay rent for the use of the property and equipment. Oksana and her husband, being forward-thinking persons, realized the potential profit of “Pogylayko” and set the level of the rent at above market rates.

At the very beginning, company had some problems with finding trustworthy staff to work for it, so the owners decided to only hire people they knew to be honest, friends and relatives, regardless of their qualifications or the qualifications of other potential employees. The owners maintain the right to raise or lower the salaries and bonuses of all employees, themselves included, depending upon the profitability of the company. As usual,...
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