UKRAINE is officially Europe’s most unreliable business centre, after it emerged that nearly three quarters of the deals proposed in the country fall through at the last minute after personal checks on company management.

Some 72 per cent of mergers, acquisitions and private equity investments in Ukraine collapse or are drastically altered, as a result of detailed investigations into company managers and co-investors in the deal, according to The Risk Advisory Group, the investigation and security agency.

Richard Prior, deputy chief executive of the group, said: “The Ukraine is a poorly regulated environment with little appreciation for the role of the law.

“The economy is dominated by a relatively narrow group of very powerful vested interests who do not support the law of regulation.”

It also emerged yesterday that 25 per cent of deals fall through in the UK after so-called investigative due diligence, compared with 28.5 per cent in the US and 16.7 per cent in France.

The Risk Advisory Group said that 52 per cent of deals in Eastern Europe fell through or were drastically altered at the last minute, compared with 18 per cent of deals in Western Europe.

Mr Prior added: “In the Ukraine, the vast majority of the 72 per cent of deals that falter end up collapsing altogether. In the UK, most of the 25 per cent of deals that falter tend to be drastically altered rather than collapse altogether.”

“Drastic alterations” included changing a potential chief executive at the last minute after uncovering evidence of fraud, or changing a co-investment partner, Mr Prior said.