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Subscribe to this list via RSS Blog posts tagged in Bureaucracy

Hiring someone in Moldova is so hilariously convoluted and difficult that we have actually had to hire a professional HR manager as an employee of our company simply in order to file the paperwork to employee the company's founders (technically we also have an accountant and 1 employee but this would literally be just as hard hiring only ourselves). This woman has been working on site now for 2+ weeks and we are still not through the daily stacks of paperwork. Keep in mind we are 6 people (including the HR manager who is now also tasked with figuring out how to hire herself). This is all the subject of a future post I'll be writing but as a primer, I wanted to introduce you all to the world of Moldovan employment bureaucracy in the context of getting a job in the food service industry. 

While our team's collective western food service expertise is encompassed in Matt's 2 weeks at Taco Bell in high school, I have enough friends who have waited tables to know a few things. Namely, it's a hard job, but it's not necessarily a hard job to get. You walk into a restaurant, ask about openings, apply, and get in dependent on whether or not they see you as a fit. 

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no experience? that's fine! no, no we don't want to hear about any "record" - just sign on the line!


I'm not trying to oversimplify things but basically if you get the job you show up to work, they train you and you start. Hopefully by the end of the cycle payroll has you entered in and you get your check. Done and done. This is not the process in Moldova. If you want a job in food service (waiter, bartender, cook, whatever) in Moldova you need to know that...

#1 It's not the restaurant's job to train you, but the government's (but also the restaurant's?)

In order to be hired in food service in Moldova you need a health department issued little blue passport from the health department (no not THAT blue passport). This certifies a number of things from your personal hygiene to your basic knowledge on health topics. If some percentage of you are saying "that sounds reasonable" read on.

The point here is that the government has a declared responsibility for these things which they make you re-up on ever 2 years. As owners of our restaurant who plan to stand behind our own bar and serve customers legally we went through this process with the masses of teenage waiters and elderly babushka cooks. All the way through Vlad kept asking "so if my employee is found to have [name the disease of the day] and gets someone sick you're going to be legally responsible?" to which he received the reply of "no." This is also true if they cross contaminate food or outright poison someone. This basically means that there is a huge bureaucracy (spanning at least 3 offices in Chisinau) that certifies and trains people in a way that legally must be duplicated by their employers as a means to ensure that their staff are in compliance and because, at the end of the day, it's on the company's head. Needless to say there is a lot of needlessness here. If you are an employee entering the process expect a LOT of redundancy. 

#2 The government certification process was hilariously long and difficult

Go to this office and get a stamp certifying that you are you. They will print you a document with your picture and name and you will take that to another office who will stamp it. Then go to your doctor who will certify your health and stamp it. Then go to a radiologist who will give you a full torso x-ray (needed every year - sounds safe) who will also stamp it. Then go back to the first office and get them to stamp that you were at the 2nd office. 

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Getting the point? (source)

If you're lucky your company will have someone doing some of the legwork or at least telling you where to go (in our case we had Vlad who put a LOT of time in). In most cases that isn't the case though because cafes don't want to even consider people without the stamps. That means this is on you - 16 year old Moldovan teenager getting your first job. Good luck!! Consider it an "introduction to bureaucracy 101" class or a practical lesson in "how little Moldova cares about your time or theirs." In another practical lesson as to their views on privacy brace yourself because...

 

#3 There will be numerous indignities along the way

"bend over and spread your cheeks" - always fun words to hear in a government office. If you want to wait tables here you will hear them because Moldova wants to swab your ass. Twice 

 

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provided without comment

 

Dependent on how "lucky" you are that isn't the end of it either. At one office we were split into 2 groups, Vlad and Matt in one and myself and our employee in the other. They were assigned to room 7 and we were assigned to room 6 (supposed to be identical). They got their blood taken. We got our blood taken AND an STD test. For anyone who has never experienced this google it at your peril. Women get a pap smear. 

What does any of this have to do with serving tables or pouring beer at a bar? who knows. Certainly the people performing the test don't. Short of their fear that I will do unmentionable things to the food I can't imagine the need for tests of this type. Furthermore, the whole thing is endlessly silly because if I get certified an immediately contract something terrible and wind up getting someone sick the Moldovan government isn't going to so much as respond to comment. It seems like the most likely case is that they just wanna see your junk. 

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Moldova is like that one weird kid in every school who swears he isn't looking but everyone knows totally is...

#4 There will be a 7 hour health class with no point whatsoever

This past thursday I got to attend my state mandated health certification class. It was 7 hours long and I didn't quite know what to expect except that Vlad and Matt had attended the day before and said it was the most boring, senseless, soulless waste of time in the history of the world. In a sense I guess I did know what I was expecting. 

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well said... but presupposes that time wasting is a problem. We need to start a little more basic that that here (source)

Anyhow, it was that and more. Let's start by noting that this is done in the Soviet education style. There are no books, materials, visual aids, discussions or interruptions. A teacher will regurgitate from memory, at an incredible speed, the lesson that they have given 1000x before, verbatim, and you must hastily write notes. In our case the first hour and a half was a listing of all the possible fines you, your employer, your company or your suppliers might incur during the course of your work along with the sums which vary according to many factors. Basically it was a list that was read for an hour and a half. This was completely without context and was, essentially, a list of the punishments that will be visited on you for messing up various parts of that later lesson if you fail to learn them then they are taught to you.

The second part was a knowledgeable, if irrelevant, run down on "health." Basically it was a 2 year high school health curriculum crammed into 3.5 hours. I could comment on how silly it was that we all had to sit there and listen to the fact that smoking causes cancer, etc as a prelude to being allowed to work in a restaurant but honestly I haven't the heart. Most of these people had literally never heard this before and had LOTS of questions. As my class was Russian and therefore much older this was quite amazing to see (explaining this is a talk about demographics here but people who only speak Russian generally belong to the older generation). This would be a good time to say "great work" or "I appreciate your service" to any of the Peace Corps Volunteers or their Partner Teachers who work tirelessly, and in the case of the partners without official appreciation (or often pay) to teach Health in Moldovan schools. A subject that is neither taught nor appreciated at any official level. From me - big thanks to you all. I hope there was at least one person in the Romanian language room who could tell the others how and why to wash their hands because they had been exposed to that information before by a PCV (because it's unlikely otherwise literally ever in rural MD).

 

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shameless plug well deserved

Ok, enough of that. The final part of the class was a 1.5 hour session on actual kitchen and restaurant rules. Sadly these were less "helpful" and more "crazy." How many cutting boards must you have? Multiples of 9. yup, you heard that right. 9 is the minimum and they all have a specific purpose. If you want more of one you need another set so it must always be divisible by 9. Sinks? lots (post coming soon on kitchens). Want to clean with chlorine? we can tell you how to dilute it properly. Actually, we'll do better! we will read you a dilution table for 20 min so you can copy it down. 

In case you didn't gather as much this entire class could have been accomplished by 15 cents worth of handout paper. 

#5 At last half of you fail the test the first time

The test for this 7 hour class is conducted the following day. It is a verbal quiz on topics covered during the terrible lecture. If you fail you can come back the next day up to 3 times in a row. Sadly, you will not be admitted to the test unless you can prove you attended the whole class. 

Ok, so ~1/2 of everyone fails the test - must be hard right? Not really. I'm not saying it's easy, especially if you weren't exposed to health topics much in school, but it isn't hard. Honestly, the failure rate staggered us until we started looking at things from a slightly different context. Education is different here. As a product of American high school I know that when the teacher says "this is important but won't be on the test" it's a cue to sleep.

 

 

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don't even pretend that I'm alone here

 

Furthermore, while dozing if I hear the words "make sure to copy this down" or "pay attention to this point" or "THIS WILL ABSOLUTELY BE ON THE TEST," I subconsciously jolt awake and start writing (strangely this mental training carried over to Russian perfectly). Criticize me as you will but this got me through college and does for most Americans. Call it tactics

This is not well understood in Moldova. As I said before that classroom was full of people hastily scribbling notes for 7 hours. That means when the teacher said "this will not be on the test" people kept writing with just the ferocity of the key points section. This yielded a MASSIVE pack of notes for most of the students to hastily crunch in the hallway vs a few short bulleted lists my colleague and I put together on the drive over to the test. Just as the teacher said, the key points section was quizzed - the multi page chlorine dilution table that was dutifully read to us was not. 

This all gets to a much more interesting talk about education and educational systems that we don't have time for today. Suffice to say I'll end on the advice, to a fictional audience member who read this post and thinks "oh yeah - I'll go sign myself up for a little blue medical passport tomorrow!" and comes to the test - study smart, not hard. 

 

 

Tagged in: Bureaucracy Cafe
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Posted by on in Stories From The Field
You have two cows...

We've all heard the classic economics analogy jokes about cows my favorites are these:

Communism: You have two cows. You give them to the government, and the government then gives you some milk.

Fascism: You have two cows. You give them to the government, and the government then sells you some milk.

Capitalism: You have two cows. You sell one and buy a bull.

Nazism: You have two cows. The government takes both and shoots you.

 

To add to this list though is one I heard for Moldova when I first got here over 2 years ago. It goes something like...

Moldova: You have two cows. The government steals one and you give the other to your illiterate cousin to neglect. You buy a sport-coat and call yourself a "businessman."

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in case that wasn't bleak enough enjoy this picture (source)

 

The reason we're talking about cows, as some people with experience in Moldova might have guessed, is because today we're going to talk a bit about management and employees in Moldova. Keep in mind that as an entrepreneur starting out in my first venture my personal experience with managing a team is very limited. This article is more about observations from living and working in Moldova that my mind tied together based on reactions people have to how we are running our company here. That will get clearer in time so bear with me. 

 

I have a few anecdotes to describe how this works here.

At an NGO

Firstly, there was an NGO I worked with where the director go sick and was out for a few months. She would come in once at the end of each month and, in a frenzy, try and keep the ship from sinking. We had a full time accountant, a full time lawyer and a full time social worker but without the director the bills didn't get paid, legal complaints against beneficiaries didn't move forward and the social worker's case files didn't get forwarded to the appropriate state bodies. Mostly everyone watched wedding videos that winter. Don't get me wrong here, this isn't just about employees being lazy or needing constant oversight. The other problem is that without the Director wielding their all powerful stamp none of those functions could be accomplished. Either way you can see what it does to staff initiative. 

 

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"Initiative is Punished" but sending pictures of cats to my boss
during the work day makes her like me more
(picture source is a hilarious article btw)

 

What About Businesses? 

From our cow analogy though you can see that the main perception of Moldovan businessmen is that they are simply absent. There is a business a block away from the location of my future restaurant in Chisinau. It's a pretzel and donut bakery that, like every other one in the city, somehow manages to make something that looks relatively like a pretzel but tastes like a sweet role (not in a positive way). Anyhow, a few weeks ago I walked in their for the first time. Outside there was a fold out street sign identifying the place but the door, down a flight of stairs from the street, gave me pause as it's sign said "pawnshop." I decided to go in anyhow and discovered that while there was a small pawnshop there the little bakery was open and much larger than I had thought. It had a number of tables and lots and lots of goods on display (no customers however). I ordered 3 pretzels. The woman working there told me "no we don't have any." I looked around in confusion since they not only had a display area with 3 baskets of pretzels behind glass but they had 2 more baskets on the counter top in the "right out of the oven" fresh baked goods area. I asked, "what do you mean you don't have any?! look at all these pretzels!" She responded "they are all very old and cannot be eaten, we have a few donuts if you want some." I bought 2 jelly donuts of which 1 had any jelly in it.

Another similar story was at a kebab stand by the university in Balti that I would sometimes go to. At 2pm I went in and asked for a kebab. They told me no because they have no lavash (like tortilla bread) and they will have more tomorrow. This was required for every dish they sold. I was confused because they had the option of walking 3 blocks to the supermarket, restocking and continuing work. Instead, they cooked all the fillings for the kebabs that they couldn't sell and sat there turning down every single customer until the place closed at 6pm.

Anyone living in Moldova knows countless versions of these. Bars that close at 10 pm friday night and throw out paying customers against their marked hours since no management was present. Loan officers playing around on facebook instead of trying to figure out how to help a customer. Kitchen suppliers refusing to quote a price for an oven and instead insisting on giving a package quote with lots of stuff we'll never need or buy (update on suppliers and buying kitchen goods coming soon) etc etc etc. 

 

What's the point of these stories? well basically these employees had zero interest in selling me anything. So what is the interest? Why even come to work?!

 

Basically the goal structure is messed up. Management cares much more about appearances and authority than money so employees care much more about staying out from underfoot than sales. From the loan officers who could be giving loans if they wanted but instead surf facebook to the restaurant employees who make sure they have a clean "prepared looking" workspace even if it can't make any sales, no one is working to make their companies money. Admittedly there are a whole lot of cultural leftovers from the Soviet Union here (more than possible to address in this post) but one key attitude to understanding all of this is the following:

In America a good team leader is someone who brings together a diverse set of skill-sets to solve problems more efficiently than the sum of it's parts. In Moldova a good team leader is one that retains absolute control over their teams doings and is necessarily smarter at their specialty than any member of the team in order to maintain that control. In America an outstanding employee reflects well on their manager. In Moldova an outstanding employee is a threat to the manager. In America employees are expected to go above and beyond to get "the job" done. In Moldova all worries about "the job" or goals is reserved for the manager and initiative on behalf of employees is punished. 

 

So how do people see us? Batshit crazy Americans

What inspired me to write this post is the insane looks I get constantly as I go to work, pick up a hammer and remodel my restaurant. One contractor coming in asked if I was the electrician and how I came to have such a job in Moldova as an American. I told him I was the owner of the business and he laughed and said, seriously, how did an American Electrician come to be here. I reiterated my ownership of the business and he went back to work thinking that Americans have a very odd sense of humor (absolutely not believing me). This came up before when we were appealing our visa denial and the bureaucrats we dealt with could not fathom why we wanted to work in our own business. They kept saying "give the money to your partner who will hire people and you will go back to America." There is a strong attitude here that businesspeople do not involve themselves in business (except perhaps to stamp things and yell at people). For sure this isn't true of all business here (I promise a hopeful upcoming post about good businesses here). It is a fact that this is how MANY people here understand the notion of business. You have a cow and it (magically) makes you money. It's also an excuse to employ an underserving relative or friend.

That's how business "works" in Moldova. 

 

 

For anyone who enjoys this blog AND remembers this post about how hard it is to get a loan in Moldova AND thought at that time, "wow I really wish I could give these guys like a few bucks and get a t-shirt or something cool back" then I have a solution for you!! We are running an Indiegogo to help cover the startup costs of our business! You can click here to take a look at our page. Watch our pathetic attempt at a promotional video and support us in return for some cool perks!

If none of that applies to you just click on the following picture. There's candy there: 

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Accounting Part 1

This last week I started to write my first serious post dedicated to corruption in Moldova. While I've touched on the subject a bit in my short post about The DMV or the epic saga that was our visa approval process but nothing dedicated to corruption. As you might have noticed from the title of this post this is not such a post. I realized that even starting that conversation was so daunting without certain background elements explained that it was totally unmanageable in scope. I'll try again soon but in the meantime I decided it was time to share a glimpse into accounting in Moldova - by far the most batshit insane and corrupt part of doing business here bar none.

Let me preface this article by saying that it is just a first effort to scratch the surface of this madness. By no means do I have even a rudimentary grasp on the workings of the accounting and fiscal systems in Moldova and attempts I've made to understand them have come up very short. As a team we've decided that someone needs to start taking night classes on accounting here just to get some idea of what's going on (and we have a full time accountant hired now). So with that said here's a bit about what I do know right now. Pardon me if I made bad assumptions as to intentions or root causes behind these things. After dealing with this for a day it is easy to assume that the system was entirely crafted by unhinged lunatics on a bender and to forget that there are real people trying to address real problems in the government here. That said, as you will see, they are failing spectacularly. 

 

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like this but with more stamps

 

Without further ado let's start with... 

Facturas for Everything

What is a"factura" ask? Great question. If you melded a standard store receipt with the gravitas of a birth certificate you have a factura. Basically it's a REALLY REALLY important receipt that you need to get for literally everything you buy as a company. They look like this...

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To properly explain this system let me walk you through a trip I made to the hardware store for materials for our cafe's remodel. The hardware store in town is called "Supraten" and is basically a Moldovan version of Home Depot (a comparison that carries with it high praise from me as a former Home Depot employee and lifelong fan). After picking out the things I need I go to the checkout lane and buy them with the company debit card receiving in return a receipt. I must then present this receipt to the door checker man who stamps it after which I proceed to my car to dump the stuff in the trunk. This is where the fun begins. I then grab my Smokehouse SRL company stamp from the car and return to the store. In a side room marked "Accounting" I enter to find myself face to face with no fewer than 10 accountants and a handful of hapless schmoes about to go through the same process as me. I then wait to see an accountant and present them with my receipt. The accountant then pulls up my company's information on the computer (or asks for a financial information form from me if it's my first time) and begins making facturas. They pull out three sheets of impeccable security paper and individually barcode scan them and load them into the printer. The factura is then printed on them and she signs and stamps sheets 1-3. I take sheet #1 for my company and sheet #3 for my accountant to file with the government's fiscal office so they have a record of this transaction. Sheet #2 stays with the store so I need to sign and stamp it for the company and return it to them. When I get back to my company I give sheets #1 and #3 to our accountant who needs to enter them into the state mandated accounting system called 1C line by line. She then files sheet #3 with the appropriate financial office. Sheet #1 has my actual store receipt (the register printout) stapled to it. If this is lost the entire process is deemed invalid and you will be fined. Let me also say that this run through is far and away an "ideal" version of this situation. Supraten has 10+ accountants on staff from 9-5 weekdays. If you buy on a weekend or outside of those hours you need to come back another time for the factura. Worse still, if you are buying from a smaller company they often only have an accountant that comes in one day a week so you need to run back on that day and get your factura. Worse still not any employee at my company can do this - only an Administrator or someone with other legal empowerment can. That means the person in charge of the company has to spend a hell of a lot of time running around to collect all this stuff. Oh and by the way here's a picture of that factura from before up close...

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you will note that the amount is stated as 39 MDL which, at time of writing, is $2

 

If you think all of that is confusing wait until you find out that there's...

 

Lots and Lots of Stuff You Aren't Allowed to Buy

 

Have you ever worked at an office and only made it through the afternoon because of that sweet injection of caffeine received from a nice cup of coffee in the employee break room? Yeah, in Moldova that's illegal. At least as a business expense - companies can't buy refreshments for people without some kind of higher justification. Why not? Who knows - you just can't. We wanted to serve BBQ to friends who were volunteering to paint our location as a nice "thank you" but our accountant said that this is impossible. We thought - there must be some mistake and dug a bit deeper only to find that there IS a way but it needs to be dubbed an official taste testing which needs to be justified by sign-in sheets and various paperwork. This is all because that program I mentioned before - 1C, the state mandated software that creates financial reporting - needs everything to be placed in a "bucket" or category to be justified and the available ones differ by the industry you're approved to work in (I do not have confirmation for differing by industry - please chime-in in the comments if you can shed some light). Coffee for employees has no such bucket and so is categorically prohibited. 

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it's amazing what simple acts can make you a criminal in Moldova (source)

 

As you can start to imagine this all leads to...

The Result is Widespread Corruption by Necessity

Most people reading this from in Moldova are probably thinking "wait a minute - my office has coffee in it! what gives?!" The answer as I understand it falls into one of two categories. The first is simple working around the rules. In the office I worked in as a Peace Corps Volunteer the staff basically all chipped in to buy some necessities. Occasionally I would bring in a box of tea as my contribution. Combined with the fact that parties in Moldova are catered by the person being celebrated (aka on your birthday you bring food for everyone) this worked out to address all of the problems of our small office. A friend of mine from the states with an IT startup here solves the problem by buying coffee and tea out of his own pocket. This is pretty much the normal approach for evading facturas and all the silliness that goes with the accounting system here - use cash. What about big companies though? How does this work if you have hundreds or even thousands of employees?

Obviously I can't speak for these companies with certainty but I know that often the answer is "creative accounting."

 

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sadly there are fewer musical interludes than similar
past efforts at bringing creativity to accounting...

 

Many companies are structured, legally or illegally, to never make profits which yields a lump sum of side cash which can be used without all of the maddening restrictions mentioned above. I can't speak to the methods used for this but I know that at least one of the larger chain restaurants here has been around for many years and never turned any profit. I also know that a large beverage distributor here is able to provide cash kickbacks to places that exclusively sell their products. These examples at least involve some level of honest business with dishonest components. Not so for the coffee suppliers we talked to - 2 out of 3 refused to even speak to us when they found out we wanted to buy their product as a company instead of with under the table cash. Their response to all those facturas is basically...

 

e65

 

None of that even scratches the surface though. Landlords want money in cash, consultants refuse to work for company cash (more on that in an upcoming post about how messed up HR is here), and if the business is small enough it literally will not sell to another business because of the trouble. All in all the best way to finance a business here is with a suitcase full of cash. In theory this would get you into lots of trouble because buying a microwave out of your pocket and putting it in you company's break room is illegal but that's all solvable thanks to...

 

Indescribable Ambiguity 

The appropriate answer to any question about accounting here is "no one knows" fullstop. We have asked the same question (about transferring money from the states) to 2 accountants, a lawyer, our bank and finally an employee of the national bank only to get as many answers as people. Literally no one has any idea what is going on. I can't buy coffee for the break room? This realization leads to asking your accountant endless stupid questions because, since there is no apparent framework for the answers you receive, normal people can't possibly know what to do. It's utterly paralyzing. The fines associated with messing up are catastrophic and unsurvivable and literally no one has any idea how to avoid them. The answer of course harkens back to a saying I've mentioned before that "nothing is allowed but everything is possible." You can figure it out somehow if you look hard enough and waste enough time. When we're talking about buying coffee though it's much easier to say "screw it" and buy it out of pocket. When we're talking about being fined because you bought an out of pocket microwave it's easier to pass them a bill and watch it go away. Such is Moldova. 

We have had so much trouble with this that Matt and I started bombarding a friend stateside who agreed to help guide us through our LLC's accounting with stupid questions about what we are and aren't allowed to do. Her response was always a well thought out description of our tax liabilities in different circumstances. This led us to the realization that we were being morons. The US government literally doesn't care at all what we do with OUR money as long as we pay taxes and don't do anything criminal. Fullstop. 

 

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This leads to the realization that in Moldova...

 

The Root of the Problem is Focus

Remember what I said at the front about my ability to really come up with a root analysis because I don't have enough info? Well, remember later on when talked about ambiguity? Basically we may never have full answers as to what is going on with this messed up system. That said, with the info available to me here it goes.

The Moldovan Government has legislated as if it's prime directive is preventing people from stealing from themselves.

What does this mean? Well basically all of the above complications are meant to document, end to end, the cashflow process for any and all company activities. To me it seems like the government is really concerned that I will buy eggs and bread with the company and make myself breakfast. This leads to the system of super official receipts, 1C data entry, filing expenditure reports constantly to the fiscal office, etc. In essence all companies in Moldova are being audited with great scrutiny every single day in the hopes of finding that they are using company money for personal expenses. Predictably, at least to anyone not writing the laws here, this has forced an economic reaction that forces business owners to take the exact actions the laws are designed to prevent at a level that makes it so widespread that any attempts to clamp down on the criminality would require jailing the entire country. Anything that widespread is a cheap bribe so forcing compliance is a nonstarter. Anyone can see that this regulation is not only failing but was focused in the wrong direction to begin with. The government setting out to regulate companies in order to prevent owners from stealing from themselves or their shareholders essentially injects the government into a conversation to which it was not invited. If I'm an investor and suspect wrongdoing I will take action. If I am an owner and an employee steals from me I will take action. What exactly does the government have to do with this? Why do they care?

The answers should be "nothing at all" and "they shouldn't." In a view that is slightly simplistic but nonetheless informative the US government works in the opposite way to this. They are only involved in business regulation when a) they are brought in by a 3rd party (business dispute going to the courts) or b) they have a vital interest there. In the US most financial regulations that effect small business day to day involve encouraging a payment of taxes and discouraging tax evasion. At the end of the day the US government wants to make it's money and knows it needs to get out of your way so you can make yours. Because of their failure to understand this the Moldovan Government is creating a system that not only encourages but necessitates criminality while retarding their own tax collection potential and the economy as a whole. 

 

Think I'm crazy or off base? Many Moldovan friends do. Add your thoughts to theirs in the comments below :)

 

 

 

 

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Posted by on in Stories From The Field
On Menus...

Picture above from Listen 2 Uncle Jay and apparently taken in Tatarstan Russia. Good to know that "business launch" is not just a Moldova phenomenon :)

 

If you live in Moldova or have ever traveled here one question sticks out above the rest in terms of how constantly it is encountered and how frustrated it is bound to make any westerner.

 

Why does every restaurant have a 50 page menu with hundreds and hundreds

of items listed that they do not have. Furthermore why won't anyone, anywhere, just tell me what they have instead of making me guess half a dozen times before I hit something they will serve?!

 

Sadly part 2 of that question will forever remain a mystery. Matt and I once guessed every single beer on a menu (7) before realizing that a.) they only had non-alcoholic Chisinau and b.) the waitress had absolutely no intention of telling me that, preferring instead to say "no" to each one in succession.

 

Image available under Creative Commons (https://creativecommons.org/licenses/by-nc-nd/2.0/) and accessed at https://www.flickr.com/photos/justard/11892679423 The Cheerful Waitress

I smile because you're allowing me to fill my whole "saying NO to people"

quota today! soon I get to move on to "I don't know"

 

The good news is that today we are going to answer the first part of the question. Why are menus so big and why don't they ever have anything? To do that we need to descend back into the world of Moldovan bureaucracy. But first...

 

What is a menu anyhow and how are they made?

In theory this question has a simple answer. The menu is the list of things I want to serve to my customer and I make it however I damn please. At Ann's Snack Bar in Atlanta for example you pretty much eat the Ghetto Burger (Wall St. Journals' #1 burger in America 2007) she puts in front of you or she throws your ass out (something I have witnessed). That is their menu. Most places however have their basic menu + (maybe) a specials menu + (maybe) a chalkboard showing a "soup of the day" or something. Anyone who has ever lived in Moldova knows that none of that is the case here. The menu is very formulaic with Appetizer, First Dish, Second Dish, Meats, Fish, etc etc and is very very long. Only very modern places have pictures on the menu and everything is presented by weight (like the picture of the menu above with the o-so-delicious sounding "Salad Green Madness"). The reasons for these major differences between Moldova and countries outside of the post-Soviet world begin with...

The Health Department and their "Food Lab"

In Moldova the Health Department not only...

  1. dictates how your kitchen must be laid out specifying exactly what food is prepped where, how many employee showers you need (no joke) etc, (post on kitchen plan upcoming),

  2. selects a category of establishment for you (post here - additional post upcoming about insane profit limitations that accompany this classification)

  3. inspect and certify your establishment's cleanliness

  4. require testing for all your employees on food safety

they also...

  1. "control" your recipes to make sure you're doing them right (or something)

  2. certify your menu to make sure it conforms to the recipes you claim to be serving

note: this is only the national Health Department. The city Health Department has a different process entirely.

 

They do all of this via a giant Recipe Book of literally every recipe recognized as valid by the Moldovan Government.

b2ap3_thumbnail_69686_stefan_cel_mare1.jpg

I, Stefan Cel Mare, King of Moldavia, Saint, Scourge of the Ottoman Empire,

cousin of Vlad "Dracula" Tepesh, and bequether of many road names

do hereby declare this scroll to be the final word on mashed potatoes.

 

In order to serve something in your restaurant it must be in the book. If it isn't in the book you must submit your recipe to a "food lab" so that they may recreate it (to make sure you weren't lying?) and then they put it in the book. You can imagine that this involves fees, time, lots of people who say "I have no idea" as a career, and more time. I can. We'll see because I'll update this post after we go through this whole process.

In the mean time I can explain a bit more of how this works. After the recipes are selected or submitted and returned you are given official "recipe cards" which are (naturally) officially stamped to indicate their relative importance when compared with your grandmother's recipe for mashed potatoes. These recipes are then placed in your kitchen and used by your staff. They must be followed exactly or there are consequences but more on that later. Let's see how this relates to menus...

Changing the Menu

So you have your recipes. They are awesome food is awesome AND the card is stamped. Time to make a menu. Print out a sheet of paper and write all the stuff you want to serve on it. Be sure to include the weights of the items as that is required by law. I'd like to think this is a kind of (misguided) attempt at consumer protection but seriously who knows. Also stamp every page of your menu with your company stamp because otherwise it could totally be a fake menu that that lunatic down the street keeps putting on your tables (evidently a problem here before the advent of the stamp system?). Finally you get the Health Department to check and approve your menu. You now have your menu. Congrats. We're done here right?

[do we ever end on a happy note?]

 

Coulda seen that coming. You see the problem occurs when you want to do anything not on the menu or the recipe cards. For example...

  1. offer a "soup of the day"

  2. have a special based on combining various ingredients you have on hand

  3. innovate and try new recipes

  4. allow the customer to "have it their way" and customize their order

  5. cater a party with special orders

  6. have a holiday special

  7. remove an unpopular item

etc etc etc

Why are all these things problems? because every time you change the menu you need to register the change with the Health Department. This triggers a new health inspection for your restaurant. Unless you want that kind of hassle, fees, under the table fees (if you pay those) and random scrutiny every time you offer a soup of the day then you're shit outta luck. Those are the rules. Want fries with that steak instead of mashed potatoes? Is that variant on the menu? if not, no. Hosting your kid's birthday at my restaurant and he loves bananas so you want me to make a banana cake? shit. outta. luck.

Anyone see where this is going? If you've been to Moldova you do.

 

This is why the menus are so long. They need to list everything they ever would conceivably want to cook for weddings, events, parties, seasonal dishes, etc. This is why they never have those things.

 

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this is the point that I realized much of what I attribute to "Moldovan Culture"

is really a case of "insanely horrific laws that make no sense whatsoever"

 

Escaping the Madness

Restaurateurs in Moldova aren't stupid. The majority I've talked to have been the clearest eyed business people I've talked to here and they are generally super helpful and open. They understand that this system is stupid and outdated. Some of these laws date from the 1970s before they were legally called capitalists or even business people. People know this needs to be changed or "gotten around" the question is how.

Firstly, I'll give a rare shout out to the Moldovan Government. Most people I've talked to say this is in effect a "Dead Law" meaning it's still on the books but the recipes and menu oversight isn't enforced. In this way the government realized "this silliness isn't worth our time" and moved on to better things (presumably finding ever more interesting ways to make foreign investment difficult). This doesn't mean that you don't have to do everything I mentioned above (submitting the recipes, getting the menu approved, etc). It just means that if you make changes later no one cares (maybe?, we hope). The problems with this are twofold. One, any unenforced law is an invitation for someone "in the know" to come and jack you up for "on the spot fines." This is especially true of something like this where compliance is so tedious compared to what you want to do (soup of the day - seriously why do they hate my seasonal curry pumpkin soup so much?). This fear alone keeps people in line. The second problem is accounting which I will explain in a moment.

Firstly, I want to mention a few interesting ways around this mess. The main one, that Andy's and the big chains seem to use is having multiple menu inserts based on season ("menu de post," etc). Another is the "Business Launch [sic]" as shown at the top of the page where they rotate "specials" based on the day. Obviously this isn't that fun because you KNOW that every monday is that cool thing you like but you're busy and ever friday they have the white rice and pork-broth special. Even if they were good though there's no variation or surprises. These are at best partial solutions.

The most creative solution I've seen is Gastrobar's "Test Menu." Now I haven't talked to the owner about this (if any readers know him/her please introduce me) but this seems pretty clear to me. If anyone asks tell them it's not permanent. Fullstop. Pretty creative if you ask me.

 

The Problem With Anything but Legal Reform - Accounting

Finally I will explain where the "recipe cards" get truly devious. Even if the Health Department never comes by and checks that you are using exactly as much cumin as you said you would per kilo of pork shoulder the Moldovan IRS does. That's because these recipe cards get entered into your official accounting tallies. So does the menu. For example, if I say that we use 1 cup of sugar and 1 cup of salt per x liters water to brine x kilos of meat and I decide to put less meat in the brine one night I'm responsible for spending according to the recipe. Meaning that if the recipe says that I should have used 1 kilo of sugar and I used 2 the company cannot legally buy the second kilo. Conversely if I was supposed to use 2 and I used 1 then I am subject to a government fine.  

 

Consider this a little teaser to upcoming posts about the accounting system here. We're quite new so we have a whole lot to learn on this front. That said, I am pretty ready to say that the accounting rules in Moldova are the single largest compliance problem for business here AND are structured in a way that yields far fewer taxes than owed. Anyhow, all that is to come.

 

In other news, now you know why the menus are so long here and they never have anything. And here I just thought they were being silly...

 

 

 

 

 

 

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Posted by on in Stories From The Field
Visa Denial and Appeal

Read Me First: I wrote this originally while this process was ongoing so I imagine a fair amount of frustration and anger comes through. I've edited the post to reflect the fact that we did eventually get our visas but I have tried to keep the tone the same. This was an incredibly terrible process and I have no desire to sugar coat it just because we got through it. I've had to put a little distance between the events and my posting to even look it over because the whole thing is mostly a mess of bad memories for me. So, without further ado please enjoy...

 

Well folks you're in for a doozy with this one. I apologize in advance. If you're the kind of person who doesn't want to see things about Moldova that make you sad, depressed or enraged I recommend stopping now. 

That picture you see there is my whiteboard's countdown. It was a countdown from the moment my visa got rejected to the day I needed to get myself out of this fine country I've called home for over 2 years. It reflects the fact that for almost a month our living room became a war room dedicated not to our business but to fighting a corrupt and confused visa process just in order to stay in the country. At the end of this process our appeal was accepted and we managed to get visas. Before it did though that whiteboard counter hit zero and went negative. Read on to follow the tale... 

 

jump to... 

Chapter 1 

The Gatekeepers

Chapter 2 

Official Rejection

Chapter 3 

What is to be done

Chapter 4 

The Meeting

Chapter 5

The Appeal

Chapter 6 

Conclusions

 


 

CHAPTER 1


"The Gatekeepers"  

or...

"A Tale of 4 Bureaucrats"

Our tale starts where we left off in the first post about visa applications where I posted an update saying that we could get a 5yr visa instead of a 1yr (the first post is recommended preliminary reading as this sorrowful saga builds on many of the same themes of ambiguity, misdirection, misinformation, obscurity and downright rudeness). This information was conveyed to us by a person at the immigration office who, it turns out, is one of 4 gatekeeper bureaucrats who review your visa application before they go before a final commission. This information came as a surprise that slowly dawned on us as it was never explained who was going to review the application. We were told that two departments needed to look them over but it was implied that the kindly woman at the submission window constituted one of those departments. Either that was untrue or she confused "2 departments" with "lots of people."

Anyhow, our 4 bureaucrats. It is unclear what their purpose is. Our theories revolve around the idea that they a.) just redundantly check for document completion (along with the application room receptionist and the person at the application booth) or b.) that they review the applications and make a recommendation to the following commission. Honestly we have no idea but theory a.) is strengthened by the fact that their behavior mirrored the reception woman and the kindly woman at the booth in that they all had totally different ideas of what was required for the application. 

 

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it is my hope that cute pictures of dogs and bad puns shall make this post less trying to read

 

So... bureaucrats 1-3 turned out to be quite nice. One of them was super insistent on our internal document numbering scheme (something we didn't want, they required, and then they judged was inadequate). Another was excited to tell us that as Americans we were eligible for 5 year visas instead of 1 year. This would have been excellent since this process has already consumed over a month and would need to be done every year. Then came bureaucrat number 4. 

This man was less helpful. He first attacked our company's capitalization. To some extent his questioning is understandable because the documents in his possession showed only a 100 MDL (just under $7) investment in the company. We had felt no need to provide more updated documents because there is no law requiring a certain level of capitalization for your company for you to get a visa

 

...let me reiterate that...

 

nolaw

image-2

image-3

image-6

...for all you English major's out there that's what you call some foreshadowing. 

 

Ok, back to our guy. So he's really unhappy with our 100 lei. 100 lei is the legal minimum for an SRL and all we need to prove to be, in theory, visa eligible. He took this clear state of undercapitalization as proof that we were, at best, unserious, or worse trying to scam our way into Moldova (this suspicion was reoccurring - do people actually do that?! *see note at end of chapter). We explained to him that we have an American company that has all of our capital and is really excited to send it (We neglected to end that sentence with ...as soon as your colleagues in the State Registration Chamber stop insisting that they are experts on Virginia Law or, put more simply will allow us to send the money here)Vlad signed an Affidavit affirming that this money was inbound imminently. Additionally we explained that the capital in our Moldovan company isn't 100 lei but 18000 lei at this time. He told us to prove it and we did. A few documents and stamps later we were clear bureaucrat #4. This one had left a bad taste in our mouths though. He wasn't a very nice person and made it super clear he would not approve us for a 5 year visa and had reservations about us entirely. 

This may be the time to mention that at literally no stage in the process of trying to get a visa to start a company in Moldova, or the process or starting that company, or the process or trying to invest money into the economy, has one. single. solitary. person said the words: "happy to have you! Moldova really needs investment and jobs! welcome aboard." This in spite of the fact that the government preaches this goal literally. every. day

 

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I'm unsure that the pictures of dogs are enough to make this less sad. I think I need more puns... 

 

*Update: Evidently they do have problem with people trying to scam the visa process in order to immigrate from areas in the middle east - especially Syria. One theory that was explained to us is that this gives them an excuse to hassle everyone more in order to extract more bribes from them. I cannot speak to the legitimacy of this theory but I can say 100% that we were treated like criminals for a good portion of this process for no reason whatsoever. 


 

CHAPTER 2


"Official Rejection"  

or...

"Dear Moldova Why Don't You Want Our $$$"

 

The title pretty much gives away the gist of this chapter. October 9th rolled around and we took a stroll down to the Immigration Office in the hopes of good news. Instead, we got what even we knew was more likely - no news at all. Mostly confused looks and a vague suggestion to return tomorrow. We did and this time everyone in the office knew who we were. We were barely through the door before they blurted "your visa has been rejected."

 

b2ap3_thumbnail_84628.jpg

no matter how prepared you are to find that the letters from
Hogwarts were just leading you on and that it was just your parents you still cry. It felt something like that.

 

If you would like to see a scan of the actual decision issued by the government please David and Matt's identical rejection letters. 

For those of you who can't read Romanian here is basically what it said. 

Under Article 32 para. (5) letter a.) Law no. 200 of 16.07.2010 on foreigners stay in Moldova and there is no basis for concluding, after examination, 1 of 09.09.2014 the administration "SMOKE HOUSE" LLC. for right of stay in order to work immigration US citizen DAVID LEO SMITH.

Additionally it explains at the bottom that we may appeal as stipulated in law nr. 793-XIV din 10.02.2000.

 

If you google translate that law and look at the relevant sections you will see, rather clearly, that this provides absolutely no information. The law essentially outlines the things you need to comply with in order to get a visa - our rejection says that we violated them. One of them? all of them? who knows. The appeal law is equally cryptic essentially providing for our right to appeal the decision within 30 days. The problem is that this law covers almost all federal agencies and therefore has no process information - each agency is different. How do you appeal then? I asked this. Here was the conversation:

Me: Why were we rejected?

Woman at the Immigration office who just gave us the decision (for brevity we'll call her Linda): I don't know. 

Me: Well, how do we appeal?

Linda: I don't know. 

Me: Well who do we appeal to?

Linda: I don't know. 

Me: When we make this appeal, somehow, to... someone, how long will it take? Can I stay in the country when it processes? 

Linda: I don't know. 

Me: Will it take one day? two?

Linda: I don't know. 

Linda's Coworker: Much longer. 

Me: Who does know?! who can tell me more?!?

Linda: I don't know. 

Linda's Coworker: [indifferent stare. It said "i could literally not give fewer fucks"]

 

After this and all of our other ordeals Matt and I really wanted to tear our hair out and say the following to Moldova:

 

b2ap3_thumbnail_takeOurMoney.jpgliterally. Please. 

So, what's next? As that nice dialog demonstrated rather clearly I have no idea and literally no one else does. The one thing I know is that as of the moment I got that decision the clock was ticking. I (David) had 19 days left in Moldova on my tourist visa and Matt had just over a month and a half. We had work to do. 

It's about time to mention the elephant in the room here. This problem can very quickly go away. It was conveyed to us in no uncertain terms that for 300 euros each this process can be "smoothed." No one asked for this (it came via a trusted lawyer associate) and no one ever asks for or takes your money. Said differently, no one can be caught as this is carefully done. It also needs to be done before the decision is rendered. Based on our previously mentioned ideals this was never going to be something we did. Our current situation could be said to be the result of that attitude. 


 

CHAPTER 3


"What is to be done"

or...

"Calling Everyone We Know"

 

When you don't know what to do find someone who does. These are words to live by no matter how hard they occasionally smart the prideful amongst us. Moldova has been pretty tough on my pride already so it was pretty much immediately time to set about finding help. We called and emailed lots of people. I'm going to keep this section brief because the next chapter is more informative and moves this strange tale along. The key here is that we consulted many good people from various orgs and agencies to try and get help and information. As mentioned at the beginning of this post I intended to post this as the process was ongoing but held off for a few weeks to put some distance between me and the problem and get some perspective. As such I originally I included chapter 3 here in case anyone reading had a good idea. Literally, any of them. No hair-brained idea sounded too silly at that point. I held off on posting this so this chapter is no longer a call for help. That said it accurately reflects the state of confusion that we were in. We were really looking for a plan...

 

b2ap3_thumbnail_rube.png

Once the rocket launches it deploys a flare that alerts the one person in Moldova
that cares that we want to invest in the economy and they ride a dragon to our rescue

 

Ok ok I know that sounds a bit sci-fi. We all know that that such person does not exist in the Moldovan government. 


 

CHAPTER 4

"The Meeting"

or...

"All the reasons we suck but none of the reason(s) we were rejected"

 

In our attempts to gain some insight into what happened to us Vlad called the Immigration Department and requested a meeting with the department Chief. To our surprise they agreed and scheduled it for Thursday the 16th. Talking to our contacts we found that her taking the meeting at all is very rare and unusual so we took this as a good omen. We prepared for the meeting via the aforementioned "calling everyone we know" and managed to get a friend to ask his brother, an immigration lawyer, to meet us before the meeting to talk things over. He basically said that we should go in and politely see what is the problem and how we can fix it. If they give us no recourse we'll got to court (other contacts have assured us that as they have essentially groundlessly rejected us we would almost certainly win in court... but they could drag it out for months). 

 

I have included a short summary of the meeting below. It was a very confrontational discussion in which they repeatedly accused us of either wrongdoing to ill intent in Moldova but never explained on what legal basis we were rejected. As you will see they had serious reservations about our company's capitalization but also admitted that this was not a legal basis for rejection. The outcome of the meeting is that we needed to submit all of our documents for re-review. They had promised to conduct the review in 10 days rather than 30. This was not necessarily encouraging given the process of the meeting (see below). 

All in all we were hoping for a friendly, frank, conversation with the director of the department (who studied in America and speaks English!) but instead we found her deputies who were like...

 

image-6

and you are nothing
wait... I've been here before...

Here's a rough transcript of the meeting: 

Smokehouse Team (David, Matt and Vlad): introduced ourselves, our company and our intended business in Moldova. Asked "what is wrong with our documents and how do we fix them"

Immigration People: They did not introduce themselves. Had no information about our case. Did not tell us their positions or titles. We gave them xeroxed copies of our packet and reiterated the question: "what is wrong with our documents and how do we fix them." After much shuffling of papers they said that the statutory capital of our company (100 lei - the legal minimum) was too low and angrily demanded how we were going to start a business with so little. 

Smokehouse Team: we explained that the statutory capital is only one part of a bigger picture with our capitalization. We directed them to documents in their possession showing personal loans of 18000 lei to the company and a sworn affidavit explaining that we would be transferring the bulk of the investment from the parent US company in the immediate future (greatly delayed because of disputes with another department that are finally reaching resolution).  

Immigration People: ignored the documents we referenced. Make a huge fuss about the 100 lei. Asked us if they would be allowed to go to America for 100 lei? I asked if there was a law determining minimum capital investment here (there is not - there is in many countries, not in the USA). They did not respond.  

Smokehouse Team: We showed them a bank statement clearly showing our American company's money ready to transfer.  

Immigration People: They made a big fuss about how we can (heavily implied "should") just give our Moldovan partner the money and go back to the states.  

Immigration People: As I (David) handed over the relevant financial documents (which they refused to look at or take form my hand) they loudly accused me of making a much larger fuss than most people who invest millions of dollars. When I placed the document on the table in front of them (after they refused to take them from my hand) they accused us of being dramatic and making a show. 

Immigration People: The woman present viciously verbally attacked Vlad, loudly yelling that this* was all his fault. That he failed to fix this* for the Americans. We asked, again, what is this*? what was wrong with the application? was it the 100 lei? is there a law for that? They agreed that there was not a law and 100 lei is all that is required. When pressed for what was wrong they simply pointed at the refusal document which references the immigration law. This was the best answer we got and is summed up as "we rejected you according to some point in the law." She remained adamant that it was Vlad's fault for failing to fix this* 

Immigration People: Agreed to review documents (according to our legal right - not exactly a concession on their part). Ended the meeting. Told us only what their first names were. We asked which documents we needed to resubmit (aka the whole application? just a clarifying document?). They did not respond or clarify - they simply said "all the documents you have." When asked if we can stay in the country while this process proceeds and the man personally guaranteed that we could and if the decision was negative we would have 3 days to leave. When asked if they could say if the decision would be positive they said no. 

 End of meeting. 

*It requires little imagination to understand what our Moldovan partner failed to do for us and why he was deemed to be solely at fault. American's aren't expected to understand the... out of office procedures here but Moldovans are. 


CHAPTER 5

"The Appeal" 

or... 

"all the documents" 

 

We're not done here yet. We have appeals to write. Documents to gather. Lawyers to hire. Phone calls to make. and emails to write. We're not giving up on the idea of opening a BBQ restaurant here. We're not going quietly.

 

I wrote that as the ending of the original post when this process was still ongoing. Combined with a major sting of rejection and fear of imminent defeat it summed up our attitude at the time. So here's what we did. 

 

Documents for the Appeal

In addition to a whole slew of documents they already had we submitted the following documents in the appeal. We managed to pull everything together in an afternoon which sounds a whole lot easier than it was and resulted in us literally running to the Immigration Department to submit them before close of work. 

  1. The appeal letter describing that we are appealing the decision in legalese and what documents we submitted. This document is critical because you get to keep a copy that they stamp proving that you actually submitted these documents on that day and that they were accepted. 
  2. Bank account statement Smoke House SRL - proving we had much more money than 100 lei
  3. Excerpt from personal bank account - this is required under different types of visas to prove you can support yourself and won't be seeking help from Moldova's nonexistent welfare state. 
  4. Bank account statement Moldova Company LLC - showing the money that was all set to transfer
  5. Decision of "The Moldova Company LLC"  to invest a stated sum in capital of Smoke House SRL
  6. Documents Apostilled in the U.S. showing proof of ownership in the Company Moldova Company LLC by us
  7. Copy of current loan contract between SRL Smoke House and Matt and I

 

As you can see from these documents we were basically working on their concern about the 100 lei in the statutory capital. As mentioned before this for sure wasn't their only problem but it was the only one we could take a whack at. 

Getting Permission to Stay Temporarily

After waiting, as requested, until the whiteboard counter almost hit zero I went to the office and got a meeting with the man from the previous meeting to request a document explaining that I can stay until the decision finishes. He was noticeably more polite (see strategy below) and was able to get me a document allowing me to stay until Nov. 24th (one month). 

Strategy

This is the key entry to this chapter. We were told via our back channel connections that we would be denied again no matter what went into the appeal. This isn't specific to us but a blanket pseudo-policy because to accept our appeal would be to admit to a mistake in the first place. Obviously this is flawed thinking but it pervades a lot of the thinking of Moldovan "Directors."Flawed or not though we clearly needed more than just "vague hope" to win this one.

As mentioned before we pay no bribes as a company policy. As such we decided that the best we could do is make it clear that we are more trouble than we are worth to them. We were able to ask people to call on our behalf and inquire about our process and to make it clear that if we didn't get a fair treatment we would not give up here (aka go to court). I know this is all rather vague but the key is that they needed to send the message that we would continue to fight via courts of media if we were rejected without just cause. 

The Waiting Game

Commence the waiting game. This sucked. 


 

CHAPTER 6

"Conclusions" 

or... 

"time to get back to work"

 

I won't go through all the back and forth and trips to their office that it took to get the answer eventually (it took 14 days) but the key is that they did eventually give it to us and it was positive. We will likely never know what exactly happened to create this outcome but we can say definitively that it was honest. All in all the fact that we made lots of calls to make it publicly clear that we would be shining a light on this process probably made the decide just not to bother with us. 

In conclusion... Being rejected and given neither good reason nor a way to make things right is rough. We always knew things would be hard (though maybe not this soul crushing). Put simply, Matt and I are still here, after two years pushing oversized stones up muddy slopes in the Peace Corps, because we believe, despite all of the (rather obvious) problems, that Moldova is full of opportunity. Put even more simply, we believe in Moldova. We are proud to call Vlad our third partner because he believes in Moldova too and is willing to endure hardship to make it a better place. Moldova made it abundantly clear that it doesn't want us. But just like that stage 5 clinger who gives out those too-long awkward hugs in high school we're just gonna grip tighter. Hey there Moldova, bring it in for the real thing

 

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closer... closer... closer...

 

This post is far too long but I'll follow it up with a concise set of recommendations for if you are trying to apply under this type of visa yourself. We learned a lot and I feel pretty confident that if we were to do it again we could have headed off a number of the problems. More to come. 

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Posted by on in Stories From The Field
On Stamps

So here's a topic that will look very familiar to anyone who's lived in the post-Soviet space but seem totally nuts to everyone else. Stamps - what are they for? Well in Moldova the answer is "literally everything." I first came in contact with this when I went to Kazakhstan as an English teacher and my packing list included "stamps for grading papers." My first thought was "I thought I was going to be teaching high school - why do I need smiley face stamps?!" The reasoning is because no matter how silly looking the stamp they make things "look official."

To understand this you need a little background on how things become "official" here vs. in the states. In America your signature is your bond. Furthermore your word can be your bond in contract law if it is deemed a verbal contract. I am not a lawyer but the gist is that in the US agreements can range from silly-informal to super formal. In Moldova they are always super formal. In theory this is to "control" the process ("control" being a translation from Russian for something like "oversight on steroids") and to prevent fraud and forgery. In practice this is a system of red tape unrivaled by even the darkest fears of government fearing anarchists. It is literally like buying shotguns to kill flies. 

 

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not only is this a real product but you too can be killing flies
with a shotgun for the low price of $39.95. I fucking love America.

 

So we get to stamps here because every legal entity must have one. In order for something to be official it MUST be stamped and signed by the company administrator (post on administrators coming soon). This is not just true of contracts and such but literally EVERYTHING. For a restaurant menu to be official every single page must be stamped with the company stamp. Every one. For a receipt for goods your company buys, say for example onions, you not only need their company's stamp confirming the sale but you also need to stamp it confirming that you purchased it (this is called a "factura fiscal" and will get it's own post later). In order to open a bank account here they needed to print off some ungodly document that actually required 27 stamps (yes I counted). The crazy part? It was an internal document. It wasn't even for us. They stamped it 27 times and put it in a drawer. I imagine that you're beginning to see that this system is a little "troubled."

 

In the interest of keeping this blog constructive and semi-helpful here are a few practical changes in your thinking that need to occur in order to do business here. These are the primary ones as I see them but feel free to add thoughts in the comments.

1.) Never leave the house without the stamp

It is as important as wearing pants so in the interest of sense (and decency) forget neither. That example about buying onions? not made up. You really need the stamp for everything. The question of "who is actually empowered to wield this powerful tool" is something I will write on later. 

2.) Anything can become official with a big enough stamp

Anything. A careful read of my past posts will show that stamps trump almost anything else (top examples are the US Embassy Affidavit in place of a criminal background check for the visa and Appostilles that technically only certify the identity of the signer being taken in Moldova to certify the contents of documents). The problem is that without a stamp things cannot be official here. For a Moldovan SRL this is easy. Follow step 1 and always have the stamp. For an American company needing to do business here (my Virginia LLC) this is a problem. Most officials kinda understand that American company's don't have stamps but they don't really trust it. Partly this is conscious and partly it is subconscious. Either way it is a solvable problem. You just create a stamp for yourself. Here is a picture of the stamp created by our corporate embosser purchased by the nice people at Ideal.

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so beautiful I might cry...

In America this stamp has no legal significance whatsoever (you could empower it but it's all very old school). In Moldova however it turns heads. Not only does it actually emboss the paper instead of a simple ink stamp but take a look how it compares to the plastic Moldovan stamp:

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yes the other items on my desk are a knife, duct tape and a tape measure. I like projects

 

This big metal thing is intimidating here. Think in these terms, as a teacher in a school the grade I give doesn't derive as much authority from the fact that I'm the teacher as it does from the fact that I stamped it with a ---- stamp. Now realize that my company stamp is metal and imprints paper. This is psychological warfare and this stamp is a big big weapon. 

 

3.) Expect this process to cause countless delays and hidden costs 

That first image at the intro to this entry is how official document packets are bound here. There is this fine thread that they tie through and then stamp so that you know it's original. That particular example is our company's operating agreement but they do this for many many things. When we got documents translated they had to be bound by the notary like this. Even xeroxes aren't deemed original without a stamp. You literally need to go to a notary for an "original copy" xerox. I know this is done in the states too at times but here is it constant. Furthermore not everyone has stamping authority so if you need to buy those onions and there's no one there to stamp your receipt you aren't getting one. You'll need to come back on another day. Imagine the delays this causes - not to mention the fees. It's death by a thousand cuts because you need to pay everyone for this. The amounts are typically small but with how constant it is they build up. Oh, and you want to get an original copy of a company document? That's 10 lei for the copy + you need to come back tuesday for a stamped receipt certifying that you purchased the original stamped document. 

 

 

To conclude I'll leave you all with this lovely stamp:

 

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if only absolute athority could be wielded with such mundane items in America... 

 

 

 

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Of LLCs and SRLs Part #2 - Banking and Conclusions

This is Part 2 of the process of introduing a US based LLC as a parent company of a Moldovan SRL. Find Part 1 here.

 

Note: this post is mostly a wordy, if humorous, take on banking and wire transfers in Moldova. If you would like to jump to the recommendations section for Parts 1 & 2 of this post do so here

 

**Update Nov 15: we just finalized all of the papers so this process is over. Once we got through the lower level people to the department director things got much easier. This is in spite of the fact that they royally messed up our paperwork. The director fixed it all himself and was not only professional but extremely pleasant to work with. It's always a wonder when you find someone in the government who really wants to help and make your day easier. Today, at the end of this mess, I have a lot of respect for the State Registration Chamber. Also we discovered that we can in fact have multiple "Administrators" of the company. Post coming soon...

 

Section 4: Wire Transfers and a Note on Banking in Moldova

 

This section is about the process of the wire transfer from the American bank (we use Wells Fargo) to the Moldovan bank (Mobias Bank). I know this seems like a pretty trivial discussion and perhaps even a waste of time, after all wire transfers pretty standard procedures. This is true, however there are enough nuances that it's worth mentioning here. Additionally I'll mention a few notable differences in dealing with banks here vs. in the states. 

Ok, so off we go. 

The first step we did was to go to the bank and ask what we should do. The basic procedure that was presented to us is this:

  1. Initiate the wire transfer from the states. It was mentioned in passing that the money should be indicated for statutory capital in the wire transfer (more info below). 
  2. On reception of the funds in Moldova come to the bank and present it with documents proving the purpose of the money. In this case that purpose is "to increase the statutory capital of the Moldovan SRL" and these documents are decisions by the companies to invest in/be invested in.
  3. Receive from the bank a confirmation of the money transfers reception with a value for the money in MDL (in our case we have a USD account at Mobias Bank so this reflects the amount the money was worth on arrival and will determine any profits/losses the company will incur as a result of currency fluctuations).
  4. Request from the bank a document confirming that the money was received for the purpose of statuatory capital. This is basically a form letter and the silly process of getting it I will mention below. 
  5. Bring these documents to State Registration Chamber so they can enter it into the statutory capital. 

 

So this is what we did with one notable exception. #1 says that we need to indicate that the money is for statutory capital. What they mean by this is writing something in the comments box of the wire transfer form. I forgot to do this and assumed that this is fine because they have ample proof in the form of contracts / us being physically present telling them things. It seemed a little silly that the comments box, used for things like "happy birthday sweetie!" on your Western Union transfers could be such a big thing. You know where this is going...

In fact, this is a very big deal in Moldova. After the received the money and we came in to stamp lots of documents and such they called us back in later in the day to resolve the comments issue. They told us that we need to amend the comments within 36 hours or they would send the money back. We were obviously startled by how serious this seemed to be and asked if something else was possible, maybe more papers from us (after all it IS OUR MONEY) or a call from the bank in the US or literally anything. Nope. It needed to be changed. We explained that wire transfers aren't like facebook wall posts that can be edited after you sober up. They remained adamant that it needed to be done. 

 

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admirable in so many circumstances... of which this is not one

 

So we called up Wells Fargo and (predictably) they said, "ummm the comments box? really?" to which we replied "yes. This is Moldova. If there is literally any tiny spec of a process that does not have bureaucracy in it they will find a way." We asked them if there was anything at all they could do. They responded "I don't know sir. Let me find someone who does and get back to you." Hearing those lines over the phone in Moldova is more refreshing that you can possibly imagine. Our bank here (Mobias), despite charging us an arm and a leg above Wells Fargo on constant fees responds to those questions with "I have no idea." full-stop. Wells Fargo called back and said that transfers can't be changed past 30 min after their departure. We explained to them that this was critical to us. Not only did our money hang in the balance but possibly our visas (the upcoming post on Visa Part II will explain this). They said, "ok sir let me call our wire department and see if we can't figure it out." After the process in Moldova this was literally music to my ears. 

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you get me kid

 

 

It turned out they could somehow. Basically they sent a followup message somehow. Wonderful customer service Wells Fargo.

 

...back to Mobias. A few days after the transfer went through, they called us and asked if we wanted a confirmation from them that the money was in the statutory capital (#5 above). We went into the bank thinking they needed more paperwork from us but she just asked if we want this document. We were like "why do we need it?" She replied "I don't know." Didn't see that coming did you?

 

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eventually rightious anger fades to mild indignation and then just 
bitterness with a faint notion that somewhere things aren't like this...

 

We asked why she called us in then. She said "lots of people get it." We asked "how much does it cost?" She said 200 lei (~$13). We were like "you want us to spend 200 lei on something we may not need for a reason you don't know." She said "well... it could be 60 lei." Not the answer I was looking for (at least it got less expensive I suppose...). 

We called our lawyer and he recommended we get it because more documents is always superior to fewer documents in Moldova (also not the answer I wanted but sadly very true here). As icing on the cake with this exchange the following happened. While she prepared the document she asked us "where did the money come from." We said "our American company." She said (while pointing irritatedly at the wire transfer confirmation form) "where does it say that here? I don't see your company's name at all!!" (a mix of irritation and triumph on her face for finding our "mistake"). I numbly pointed at the form where it has Wells Fargo and the relevant account numbers and such. She was looking unsatisfied so I decided to show her my best "I have no idea how to process this. I did not invent the wire transfer system. Furthermore, you have already exlained that you do this process many many times. What the #*$% are you #*$%ing talking about!!!" face. It looked like this...

 

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oh how you undertand me internet...

 

In a brief summary of other differences between Mobias Bank and Wells Fargo...

 Mobias Bank Wells Fargo 
Hard questions confuse them and get no answer.  Hard questions get the response "let me find someone who can help you with that" 
Mistakes they make are your fault*  Mistakes you make are going to get their full attention and never an accusation (see above wire transfer story 
Their "bank client" for managing your account online a.) does not work b.) can only be installed on Windows XP or earlier c.) looks like it was made in 1993 and d.) doesn't have an installer, opting instead for 2 convenient videos (read huge filesize, available on cd only and without explanation, captioning or sound) explaining hot to manually install the program dlls in the system32 folder. This was literally the first time in my life I was unhappy not to find the README file.  Has wonderful online banking 
Their policies are 100% uncompromising (even if they differ as you talk to different people) You are a customer and your needs are treated with respect. If they can help you, they will. 

 

*At one point this mislabeled a deposit we made to statutory capital - aka they forgot to mark what it was for. They then told us that we made a mistake and that they clearly "thought it was a loan." We said "we have done a loan and you needed a ton of contracts for that too so there's no way that's true." They said, fix it - not my problem.

Final note: In defense of Mobias Bank I can say that the following 2 things are true. 1.) The Moldovan Government has saddled them with a whole lot of silliness to deal with in terms of regulations so this isn't all their fault and 2.) all the other banks here are likely just as bad. That said, I am a customer. I have put a lot of money in your care. At least give me enough respect to realize that I did not either invent the banking system or study it in school. I'm not stupid for not knowing things, especially things that you don't know. So find me the person who does please. 

 

Section 5: Conclusions and Recommendations

 

1.) Just an SRL or SRL / LLC combo?

What do you need? If you need to manage anything more complicated than a company that you form in Moldova with your personal money (aka - no investors, no sale of shares nothing) then you should not deal with the SRL system. Found your company somewhere sane and manage it there with an SRL here to conduct the business. Let me stress here (because I think I forgot to earlier) this is not a tax strategy. You will likely pay more taxes this way because you pay US taxes on top of Moldovan taxes and even if you can fully write off the Moldova taxes (posts about this later when we manage our taxes) US tax rates may be higher than Moldovan taxes if you are talking about an LLC because profits are passed through to the indvidual who are subject to their personal tax rate. This is solely about your sanity. 

2.) Thinking about changing anything about the Moldovan SRL's statutory capital?

Hire a decent lawyer unless it's as easy as selling some shares to your cousin Ivan. Even then, hire a lawyer. 

3.) Apostiles and Documents

In Moldova there is a paradox. More documents is always better than fewer documents. However, whoever is reading your documents believes everything contained therein is their business. Our strategy was therefore find out what happy middle ground would pass muster. That said, because of the time delay involved and in spite of the cost we got Apostiles for MANY MANY more documents than we ultimately needed. $10 more up front is better than $10 + lost time + another $100+ DHL packet later.

4.) Time time time

Allot so much more time than you ever thought would be necessary for literally everything

5.) Wire transfer - check well in advance with both banks to see what is needed

Ideally have the Moldova bank write it down. They probably won't because it gives them deniability later (or they will but without a stamp they can deny it anyways). 

6.) Moldovan Banks - watch everything

Mistakes are your fault and it's your money so don't make them. 

7.) Next time you think about being short-tempered or rude to an American customer service representative don't.

Seriously. You have no idea what a wonderful job they are doing in spite of dealing with people like me (ask any one of my college roommates). Possible exceptions here for the robot (yell away) and anyone who works for Comcast or Verizon who, while possibly being nice people, are in the employ of satanically evil companies and thus forfeit some of their protections under this recommendation. 

8.) Keep your head up. 

Everything in Moldova is far harder than it should be but ultimately solvable. We're doing this because we believe the rewards outweigh the challenges and have some hope for change. You aren't alone being frustrated but just think of how funny this will all be in retrospect? right...?

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Of LLCs and SRLs Part #1

Note 1: This post is an update to our first post about organizing a company in Moldova. While that post was pretty general and explained our initial reasoning this one will attempt to explain the results of that reasoning over the last few months and a few preliminary recommendations for other entrepreneurs (ok, this got long. Conclusions Recommendations will be in Part 2 [COMING SOON]). We will be writing a further update on this topic later on with more solid recommendations. (small update below)

Note 2: This post is covering quite a lot of experience had over a long period of time. The topic is dense and often technical. Please comment if things are unclear and I will add more information. Also, as usual, please feel free to tell us how stupid we are. Everyone can learn from that. 

 

Jump to... (note to use these section links open up the full version of the post by clicking the title or on "Continue Reading" below)

Section 1
Basic Organization 

Section 2
Selling Shares vs Adding a Founder: 
Section 3
The Necessary Documents for Adding a Founder
Section 4
Notarizations, Apostilles, Translations and DHL 

 

 

So Begins a Tale of SRLs and LLCs...

 

 

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The path to success is almost self evident!

 

 

Section 1: Basic Organization


 

I'll begin where the last post ended which was with a discussion of the process that we decided to embark upon. That was to organize the companies basically as follows:

 

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I'll let you all guess which silhouette represents which manager...

  

So to describe what you're seeing there we founded a Moldovan SRL called "Smoke House SLR" (they refused to believe it was one word and we didn't fight it). Additionally we founded an American LLC called "The Moldova Company LLC" in Virginia. The purpose of the LLC, as described briefly in the previous post, is to escape from some of the more challenging bureaucratic differences between a Moldovan SRL and an American LLC. These all...

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