Operation Frics, episode #1 - Setting up

Latvian Television's Aizliegtais paņēmiens (Forbidden methods) show has unveiled the first episode about the reality of running a small business in Latvia. 

In the course of an investigative experiment journalists opened Frics, a french fries restaurant in the fashionable Jūrmala resort and chronicled how they fared by making numerous secret recordings.

They weren't trying to make some hard-earned cash, but rather wanted to understand, see and feel what's it like for a small business to face the bureaucracy and possible corruption behind the scenes in Latvia. 

In the episode

In the first episode, titled simply 'Bureaucracy' the journalists look into what a business has to do to actually start working - the various permits and documents required, and the money spent on starting a business. It's a telling fact that the company couldn't obtain a seller's permit during the four months for which the experiment run.

French fries with various toppings, as well as some soft drinks were served at the restaurant. An undercover journalist ran the company.

Many things on the state end ran smoothly - like registering the company - but the bistro Frics experienced a number of obstacles right off the bat.

For example, as the small restaurant wanted to sell food, it had to deal with the Food and Veterinary Service, which required the business to get the necessary safety documents for the company - workplace and fire safety guidelines along with a 'self control' folder that documents the measures taken by the business to ensure on-site hygiene and sources of their wares.

The company decided to outsource the documentation as it'd be difficult to write it up by oneself. Two folders of often redundant content ("to avoid burns from hot liquid, avoid hot liquid," reads one sentence) came to €920.

Though very interesting were two episodes that can be felt to be stereotypical for many small business owners across the world: the unreliability of bureaucratic procedures, the officials' unwillingness to explain anything, as well as the numerous "middlemen" that claim to have (or actually have) the ability to help a business strike a better deal with the authorities.

To start, among other documents, the company had to acquire a building permit, after which they'd be visited by a construction inspector. Then, if all is well, the company would be greenlighted to receive a seller's permit.

However, the owner of Frics encountered a nasty surprise when she inquired at the construction board about when an inspection would visit - the person responsible simply couldn't tell.

"We are planning our own jobs and we don't account for whether we'll follow up on the [construction] object today or tomorrow," the official there said.

"The project is reviewed within a month, and the inspection is carried out within a month," she continued.

After two weeks without any news about the inspection, the owner went to the construction board, equipped with a hidden camera. The very official with whom she had talked on the phone now told her that they had had to file an application for the company to be inspected. She hadn't said so when the owner first called, arguing that's not her problem despite that it can potentially cost the state a lot of tax money.

Even if you don't speak Latvian, the body language of the official is very clear:

What follows is even stranger. As it was now clear that it would take too long to obtain a seller's permit, the owners of the restaurant asked for advice from other business owners and were told that there was in fact a special someone who could help them in obtaining the coveted permit.

It turned out that the 'helping hand' was actually a policeman from the local municipality. The journalists met him - he arrived in a police car during work hours - in person. He seemed eager to help. 

When they said they have asked for a visit to the mayor Gatis Truksnis in connection with acquiring the permit the policeman told them that they shouldn't turn to the head of the city in these matters. Though the policeman was then quick to disappear, perhaps because his sleuthing skills sensed that this was not a normal situation.

In the studio

The Minister of Economics Dana Reizniece-Ozola and Gatis Truksnis, the mayor of Jūrmala where the restaurant was run, were at the studio to talk with the head of the show Guntis Bojārs after the episode aired.

"I am shocked to see how it really happens. It's hard to understand it when you are sitting and writing documents," said Reizniece-Ozola. 

However, she also said that by mid-2016 together with the Finance ministry they'll have worked out support measures for budding entrepreneurs.

"We have to have a single place where you can go and smart people would tell you what you have to know when starting a business," said Reizniece-Ozola. She also said that they are thinking about creating a handbook for business owners according to the industry.

While Gatis Truksnis wasn't quick to judge or defend anyone, he admitted that officials should have had provided information about the order in which things should have been done. 

"It seems we have done everything so there's no bureaucracy, but if we look at it, the bureaucracy is very big," said Truksnis.

He said that the explanations given for the situation about the policemen have been inadequate and that he'd look into it carefully.

The five stories are airing once a week every Monday, starting November 2 on Latvian Television 1. LSM offers recaps from the episodes that might appeal to an international audience.

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