I. Introduction

Policy background and objectives of the Report

Corruption seriously harms the economy and society as a whole. Many countries around the world suffer from deep-rooted corruption that hampers economic development, undermines democracy, and damages social justice and the rule of law. The Member States of the EU are not immune to this reality. Corruption varies in nature and extent from one country to another, but it affects all Member States. It impinges on good governance, sound management of public money, and competitive markets. In extreme cases, it undermines the trust of citizens in democratic institutions and processes.

This Report provides an analysis of corruption within the EU’s Member States and of the steps taken to prevent and fight it. It aims to launch a debate involving the Commission, Member States, the European Parliament and other stakeholders, to assist the anti-corruption work and to identify ways in which the European dimension can help.

EU Member States have in place most of the necessary legal instruments and institutions to prevent and fight corruption. However, the results they deliver are not satisfactory across the EU. Anti-corruption rules are not always vigorously enforced, systemic problems are not tackled effectively enough, and the relevant institutions do not always have sufficient capacity to enforce the rules. Declared intentions are still too distant from concrete results, and genuine political will to eradicate corruption often appears to be missing.

To ensure an EU contribution, the Commission adopted the Communication on Fighting Corruption in the EU in June 2011,[1] establishing the EU Anti-Corruption Report to monitor and assess Member States’ efforts in this area with a view to stronger political engagement to address corruption effectively. The report is hereby published now for the first time; further reports will be issued every two years.

In line with international legal instruments,[2] this report defines corruption in a broad sense as any ‘abuse of power for private gain’. It therefore covers specific acts of corruption and those measures that Member States take specifically to prevent or punish corrupt acts as defined by the law, and also mentions a range of areas and measures which impact on the risk of corruption occurring and on the capacity to control it.

The report focuses on selected key issues of particular relevance to each Member State. It describes good practices as well as weaknesses, and identifies steps which will allow Member States to address corruption more effectively. The Commission recognises that some of these issues are solely national competence. It is, however, in the Union’s common interest to ensure that all Member States have efficient anti-corruption policies and that the EU supports the Member States in pursuing this work. The report therefore seeks to promote high anti-corruption standards across the EU.  By highlighting problems – as well as good practices – found inside the EU, the report also lends credibility to the EU’s efforts to promote anti-corruption standards elsewhere.

Corruption is a complex phenomenon with economic, social, political and cultural dimensions, which cannot be easily eliminated. An effective policy response cannot be reduced to a standard set of measures; there is no ‘one size fits all’ solution. The report therefore examines corruption within the national context of each Member State, and suggests how the most relevant issues for each Member State can be addressed in the national context.

Further explanation about the methodology of the report is provided in the Annex.

The wider policy context

The financial crisis has put additional pressure on Europeans and their governments. In the face of the current economic challenges both in Europe and elsewhere, stronger guarantees of integrity and transparency of public expenditure are required. Citizens expect the EU to play an important role in helping Member States to protect the licit economy against organised crime, financial and tax fraud, money laundering and corruption, not least in times of economic crisis and budgetary austerity. Corruption alone is estimated to cost the EU economy EUR 120 billion per year, just a little less than the annual budget of the European Union.[3]

Europe 2020 is the EU’s growth strategy over the present decade to foster a smart, sustainable and inclusive economy, thus helping the EU and its Member States to deliver high levels of employment, productivity and social cohesion. Research suggests that the success of the Europe 2020 strategy also depends on institutional factors such as good governance, rule of law, and control of corruption.[4] Fighting corruption contributes to the EU’s competitiveness in the global economy. In that context, anti-corruption measures have been highlighted with respect to a number of Member States as part of the European Semester – a yearly cycle of economic policy coordination involving a detailed analysis of Member States’ programmes for economic and structural reform as well as country-specific recommendations. More generally, improving the efficiency of public administration, especially if combined with greater transparency, can help mitigate corruption-related risks. The Commission Communication for a European Industrial Renaissance of January 2014 therefore places emphasis on quality public administration as an important aspect of the EU’s growth strategy.[5]

Structure of the report

The EU Anti-Corruption Report covers all 28 EU Member States. It has the following structure:

Introduction, presenting the policy background and objectives. Results of Eurobarometer surveys of 2013 on perceptions of corruption and experience of corruption. Horizontal chapter, describing corruption-related trends across the EU. It summarises the main findings. The conclusions and suggestions for future steps for each Member State are set out (only) in the respective country chapters. Thematic chapter, focusing on a cross-cutting issue of particular relevance at EU level. The issue in focus in this first report is public procurement, which is of crucial importance for the internal market; it is covered by extensive EU legislation, and subject to significant corruption risks. The chapter covers corruption and anti-corruption measures within national systems of public procurement. Annex on methodology, describing how the report was prepared as well as methodological choices and limitations. Country chapters, covering each of the 28 Member States. These chapters do not provide an exhaustive description of corruption-related issues and anti-corruption measures. Instead, they highlight selected key issues identified through the individual assessment of each country on its own merits and with due regard to the national context. 

a) Introduction, providing a snapshot of the general situation regarding corruption. It presents selected indicators including perceptions, along with facts, trends, challenges and developments relevant to corruption and anti-corruption measures.

b) Issues in focus. Several issues are identified and analysed for each country. While the emphasis is on vulnerabilities and areas for improvement, the analysis is forward-looking and points to plans and measures going in the right direction, and identifies issues that require further attention. Good practices which might be an inspiration for others are highlighted. The range of issues in focus is not limited to the matters covered by the thematic chapter (public procurement). Some country chapters do, however, include a specific analysis of public procurement; this is the case for countries where substantial problems with public procurement have been identified.

The selection of key issues in each country chapter is based on the following considerations:

· severity and impact of the problem in relation to other corruption-related challenges in the country;

· scale of potential spill-over effect for a wider range of policies (for example, major loopholes in public procurement controls creating significant risk of diversion of public funds) and

· ability to point to constructive and concrete future steps.

Future steps and follow-up

The points for further attention set out in each country chapter reflect the Commission’s attempt to identify measures likely to give added value in addressing key outstanding issues in regard to preventing and fighting corruption. They are tailored to the context and needs of each country. They are concrete and targeted, without going into excessive detail, and aimed at tangible changes on the ground. The report, where relevant, draws on and supports recommendations already formulated by other corruption reporting mechanisms (notably Council of Europe’s Group of States against Corruption – GRECO – and OECD), some of which have not yet been followed by Member States.

As follow-up to the report, the Commission wishes to engage in a constructive, forward-looking debate on the best ways to address corruption, notably on the points that it has identified for further attention. The Commission hopes to see a wide debate about anti-corruption measures with active participation of the Member States, the European Parliament, national parliaments, the private sector and civil society, and looks forward to itself actively participating in discussions both at EU level and in Member States.

Additionally, the Commission intends to put in place a mutual experience-sharing programme for Member States, local NGOs and other stakeholders to identify best practices and overcome shortcomings in anti-corruption policies, raise awareness or provide training. These efforts should be linked to the issues for attention contained in the report, and facilitate the follow-up action. The mutual experience-sharing programme will be launched after the adoption of the report, building on feedback received and discussion with stakeholders on the specific needs that it could address.

The Commission intends to carefully analyse feedback in relation to this first report, reflect on possible gaps and errors, and draw lessons for the second report. The methodology will be reviewed, and additional consideration will be given to the possibility of developing new corruption indicators.

Future work will look into issues like how the measures suggested in this first report were implemented, and take the stock of the experience-sharing programme.

II. Results of Eurobarometer survey on perceptions of corruption and experience of corruption

Two Eurobarometer surveys were carried out in preparation for the EU Anti-corruption Report in early 2013: the 1) Special Eurobarometer[6] and a 2) a business-focused ‘Flash survey’[7]. For most countries, the ranking of the CPI index[8] published by Transparency International tends to correspond to answers given by the Eurobarometer respondents.

Taking together the Special Eurobarometer data, firstly on general perceptions of the prevalence of corruption and secondly on actually being expected to pay a bribe (personal experience in bribery), it is clear that Member States can be characterised in different ways.

Answers confirm a positive perception and low experience of bribery in the case of Denmark, Finland, Luxembourg and Sweden. Respondents in these countries rarely indicated that they had been expected to pay a bribe (less than 1 % of cases) and the number of people who think that corruption is widespread (20 %, 29 %, 42 % and 44 % respectively) is significantly below the EU average. In the case of the UK, only 5 persons out of 1115 were expected to pay a bribe (less than 1 %), showing the best result in all Europe; nevertheless, the perception data show that 64 % of UK respondents think corruption is widespread in the country (the EU average is 74 %).

In countries like Germany, the Netherlands, Belgium, Estonia and France, while more than half of the respondents think corruption is a widespread phenomenon, the actual number of people having had to pay a bribe is low (around 2 %). These countries also appear among the good performers on the Transparency International Index. Austria shares similar features with this group with the exception of a somewhat high number of respondents (5 %) who reported to have been expected to pay a bribe.

In some countries a relatively high number of people indicated that they had personal experience with bribery, but with a clear concentration on a limited number of sectors, including Hungary (13 %), Slovakia (14 %) and Poland (15 %). In these countries, one sector, namely healthcare, provides the bulk of instances of bribery. There is evidence that structural problems in healthcare provide incentives to pay a bribe for medical staff. Indeed, in all the countries mentioned, the detailed answer show that healthcare is referred to by the highest number of individuals, while all other institutions or sectors (e.g. police, customs, politicians, public prosecutors’ services, etc) were named by less than 1 % of respondents. Corruption in a broader sense is perceived as widespread in these countries (82 % in Poland, 89 % in Hungary and 90 % in Slovakia).

In certain countries, including Portugal, Slovenia, Spain and Italy, bribery seems rare but corruption in a broader sense is a serious concern: a relatively low number of respondents claimed that they were asked or expected to pay a bribe in the last 12 months. While personal experience of bribery is apparently rare (1-3 %), the perception is so heavily influenced by recent political scandals and the financial and economic crisis that this is reflected in the respondents’ negative impression about the corruption situation overall (90, 91, 95 and 97 % respectively).

As for countries lagging behind in the scores concerning both perceptions and actual experience of corruption, these include Croatia, the Czech Republic, Lithuania, Bulgaria, Romania and Greece. In these countries, between 6 % and 29 % of respondents indicated that they were asked or expected to pay a bribe in the past 12 months, while 84 % up to 99 % think that corruption is widespread in their country. Croatia and the Czech Republic appear to make a somewhat more positive impression with slightly better scores than the rest of the countries from the same group.

Countries not mentioned above (i.e. Latvia, Malta, Ireland, Cyprus) do not show results that diverge considerably from the EU average on any of these aspects.

At European level, three quarters of respondents (76 %) think that corruption is widespread in their own country. The countries where respondents are most likely to think corruption is widespread are Greece (99 %), Italy (97 %), Lithuania, Spain and the Czech Republic (95 % in each). A quarter of Europeans (26 %), compared with 29 % showed by the 2011 Eurobarometer, consider that they are personally affected by corruption in their daily lives. People are most likely to say they are personally affected by corruption in Spain and Greece (63 % in each), Cyprus and Romania (57 % in each) and Croatia (55 %); and least likely to do so in Denmark (3 %), France and Germany (6 % in each). Around one in twelve Europeans (8 %) say they have experienced or witnessed a case of corruption in the past 12 months. Respondents are most likely to say they have experienced or witnessed corruption in Lithuania (25 %), Slovakia (21 %) and Poland (16 %) and least likely to do so in Finland and Denmark (3 % in each), Malta and the UK (4 % in each).

Around three quarters of Europeans (73 %) say that bribery and the use of connections is often the easiest way of obtaining certain public services in their country. This belief is most widespread in Greece (93 %), Cyprus (92 %), Slovakia and Croatia (89 % in each). Similarly to 2011, around two in three Europeans (67 %) think the financing of political parties is not sufficiently transparent and supervised. Most likely to hold that view are respondents from Spain (87 %), Greece (86 %), and the Czech Republic (81 %), while those least likely to hold this view are respondents from Denmark (47 %), the UK (54 %), Sweden (55 %) and Finland (56 %). Just under a quarter of Europeans (23 %) agree that their Government’s efforts are effective in tackling corruption; around a quarter (26 %) think that there are enough successful prosecutions in their country to deter people from corrupt practices.

For the business-focused Flash survey the country results show striking variations: a difference of 89 percentage points between the highest (Greece: 99 %) and lowest (Denmark: 10 %) levels of perceived corruption. (The same result is reflected in the ‘Special Eurobarometer’ presented above: 20 % vs 99 %.) Indeed, all but one of the respondents from Greece are of the belief that corruption is widespread in Greece.

At European level, more than 4 out of 10 companies consider corruption to be a problem for doing business, and this is true for patronage and nepotism too. When asked specifically whether corruption is a problem for doing business, 50 % of the construction sector and 33 % of the telecoms/IT companies felt it was a problem to a serious extent. The smaller the company, the more often corruption and nepotism appears as a problem for doing business. Corruption is most likely to be considered a problem when doing business by companies in the Czech Republic (71 %), Portugal (68 %), Greece and Slovakia (both 66 %).

III. Main Findings of this Report

The individual country analyses revealed a wide variety of corruption-related problems, as well as of corruption control mechanisms, some of which have proved effective and others have failed to produce results. Nevertheless, some common features can be noted either across the EU or within clusters of Member States. The country analyses show that public procurement is particularly prone to corruption in the Member States, owing to deficient control mechanisms and risk management. An assessment of corruption risks, including both good and negative practices in public procurement appears in the following section.

This summary reviews the main issues that are assessed in more detail in the country chapters. They are condensed into four subject areas (A. Political dimension, B. Control mechanisms and prevention, C. Repression, D. Risk areas), though there may be some overlap, given the complex nature of the issues under examination. More detailed background and analyses can be found in the country chapters.

A. Political dimension

Prioritising anti-corruption policies

Anti-corruption policies have become more visible on the political agenda in most Member States. The financial crisis drew attention to integrity issues and accountability of decision-makers. Most of the Member States confronted with serious economic difficulties have acknowledged the seriousness of corruption-related problems and developed (or are developing) anti-corruption programmes to address the attendant risks and the risks of diversion of public funds. For some Member States, economic adjustment programmes include explicit requirements related to anti-corruption policies. Even if not formally linked with an adjustment programme, anti-corruption policies complement adjustment measures, especially in countries where corruption poses a serious problem. Recommendations on effectively fighting corruption were also made in the context of the European Semester of economic policy coordination.

This report is not premised on the assumption that over-arching anti-corruption strategies are indispensable to prevent or fight corruption. However, the long-standing absence of comprehensive anti-corruption strategies in some Member States which are facing systemic corruption problems turned out to be an issue of concern, since the type of problems that need to be addressed require a comprehensive coordinated approach at central level. In some of these Member States a national anti-corruption strategy was recently adopted, while in others no such strategy is yet in place. Anti-corruption strategies adopted in some Member States based on impact assessments of previous strategic programmes following public consultations and actively involving civil society and a range of public and autonomous institutions in the fields of enforcement and monitoring, are mentioned as positive steps, with the caveat that results remain to be seen at the implementation phase.

Most Member States that face serious challenges in dealing with corruption have set up complex and sophisticated legal and institutional frameworks, as well as numerous targeted strategies or programmes. However, these alone do not necessarily lead to tangible results. By contrast, in other Member States where relevant regulation or strategic programmes are lacking, corruption has been visibly reduced by preventive systems, practices, traditions involving the suppliers and recipients of public services or, in some cases, high standards of transparency.

Political accountability

Provoked by the crisis, social protests have targeted not only economic and social policies, but also the integrity and accountability of political elites. High-profile scandals associated with corruption, misuse of public funds or unethical behaviour by politicians have contributed to public discontent and mistrust of the political system.

Integrity in politics is a serious issue for many Member States. Codes of conduct within political parties or elected assemblies at central or local level are the exception more than the rule. When such codes are in place, they often lack an effective monitoring mechanism or clear sanctioning regulations, rarely leading to the application of dissuasive penalties. In some cases, insufficient accountability has generated a perception of quasi-impunity of political elites.

Concerns in some Member States relate not only to growing public mistrust, but also to a reputational risk in the international context. As a consequence, Member States are now giving far greater priority to fighting corruption, with substantial steps being taken or radical reforms announced.

In some Member States, politicisation of recruitment for mid-management and lower positions in public administration at central or regional/local level have been highlighted as serious problems. Such practices increase the susceptibility to corruption, raise the risk of conflicts of interests, weaken control mechanisms and affect the credibility of the public administration as a whole.

Liability of elected officials for corruption

A fundamental challenge regarding anti-corruption policies is the lack of a harmonised definition of ‘public official’ at EU level which would include elected officials. The Commission has put forward a proposal in 2012 for a directive on criminal law protection from fraud and related offences to the EU financial interests[9] which contains a definition of public official including persons holding a legislative office. The negotiations in the Council[10] and in the European Parliament[11] on the proposed Directive show a lack of support for the proposed definition aiming at a criminalisation of corruption committed by the elected officials. However, in the Commission’s view, in order to come to a common approach in the EU, there is a need for a clear harmonisation of criminal liability of elected officials for corruption offences.

Financing of political parties

One of the broader background issues which experience shows to have an impact on corruption is the financing of political parties. Recent large-scale corruption cases involving illegal party funding affected politicians in some Member States. Vote-buying and other forms of undue influence of the electorate were also noted in a number of Member States.

GRECO evaluations on party funding have had a visible impact on the reform of the legal and, to some extent, institutional framework in this area. With some exceptions, most Member States have recently amended their legislation on party funding and increased transparency standards, including on donations. In two Member States there is no restriction on anonymous donations. The publication of accounts of political parties is not mandatory in one of these Member States. However, the main political parties concluded a voluntary agreement to ensure financial transparency. Moreover, amendments to the party financing legislation aiming at compliance with GRECO recommendations are forthcoming. The other Member State in question has not announced plans to further amend its legislation following GRECO recommendations. Another Member State has recently revised its party funding legislation but loopholes remain as regards caps for donations, regime of sponsorships from state-owned companies, supervisory mechanisms and sanctioning powers.

Well-regulated and transparent party funding system – Finland

Finland amended the Act on Political Parties in 2010 taking into account all the recommendations made by GRECO. Finland previously had only limited regulations on political party financing. The new legal framework aims at transparency of financing of election candidates, political parties, as well as other entities affiliated to political parties. If applied as intended, the Act will substantially increase the transparency of political funding. According to GRECO, Finland may serve as an inspiration to other countries.

In some cases, political parties have raised their integrity standards and sanctioned or dismissed members involved in corruption scandals. In one Member State, significant achievements were noted in improving the transparency and accountability of the parliamentary system. Nevertheless, even in countries with such examples of political accountability, integrity responses are not part of generalised practice.

Considerable shortcomings remain in the supervision of party funding. The impact of recent legislative reforms remains to be seen. It is often the case that once a legislative loophole has been closed (such as transparency of and caps on donations), others seem to emerge (e.g. light loans regime, multiple donations schemes, insufficient supervision of foundations or other entities linked to political parties, etc). Proactive supervision and dissuasive sanctioning of illegal party funding are still not regular practices across the EU and more efforts are needed to ensure consistent implementation.

B. Control mechanisms and prevention

Use of preventive policies

Preventive policies cover a wide variety of aspects including clear-cut ethical rules, awareness-raising measures, building a culture of integrity within various organisations, setting a firm tone from the top in relation to integrity issues, to effective internal control mechanisms, transparency, easy access to public interest information, effective systems for evaluation of performance of public institutions, etc. There is a considerable divide among Member States concerning prevention of corruption. For some, the implementation of preventive policies has been fragmented so far, failing to show convincing results. For others, effective prevention has contributed to a long-standing reputation of ‘clean countries’. Although corruption is not considered a major issue in these latter countries, active and dynamic integrity and prevention programmes are in place and considered a priority by most central and local authorities. For other Member States, corruption has been seen as a lesser problem for a long time, hence no active stance on promoting comprehensive preventive actions is taken.

Active promotion of public sector integrity – The Netherlands

Integrity, transparency and accountability are actively promoted in the Dutch public administration. Established by the Ministry of Interior and Kingdom Relations, the Office for the Promotion of Public Sector Integrity (BIOS) is an independent institute that encourages and supports the public sector in the design and implementation of integrity policies.

In addition, many Dutch cities and communities are implementing a local integrity policy which has improved the detection of integrity cases (increased from 135 in 2003 to 301 in 2010). Local integrity policies have evolved over the past 20 years, becoming an integral part of local governance.

External and internal control mechanisms (other than law enforcement)

Control mechanisms play an important role both for the prevention and the detection of corruption, within public bodies. Some Member States place a high burden on law enforcement and prosecution bodies or on anti-corruption agencies that are seen as solely responsible for addressing corruption in the country. While the activity of these institutions is of utmost importance, deep-rooted corruption cannot be tackled without a comprehensive approach aiming to enhance prevention and control mechanisms throughout the public administration, at central and local levels.

Some Courts of Audit have played a prominent role in pushing anti-corruption reforms forward. In a few Member States, the Court of Audit is active in notifying other relevant authorities of suspected corruption. In some cases, it is also the institution responsible for verification of party and electoral campaign financing. However, its pro-activeness is not matched by effective internal and external controls at regional and local levels.

In many Member States internal controls across the country (particularly at local level) are weak and uncoordinated. There is a need to reinforce such controls and match them with strong prevention policies in order to deliver tangible and sustainable results against corruption.

Asset disclosure

Asset disclosure for officials in sensitive posts is a practice which contributes to consolidating the accountability of public officials, ensures enhanced transparency and facilitates detection of potential cases of illicit enrichment, conflicts of interests, incompatibilities, as well as the detection and investigation of potential corrupt practices.

Approaches towards asset disclosure for elected officials range from requiring a considerable amount of information to be disclosed,[12] to more limited disclosure or non-disclosure policies. For professional public officials in certain sectors asset disclosure could be a way forward to avoid issues of conflict of interests.  In spite of these different approaches, a general trend can be noted towards stricter asset disclosure requirements for public officials. A few Member States that traditionally did not have asset disclosure regimes have recently introduced or announced the introduction of such systems.

An important aspect concerns their verification. In some Member States, bodies in charge of monitoring asset disclosure have limited powers and tools. In others there is little evidence of active implementation or enforcement of those rules. In a few countries, the verification system is complex and cumbersome, affecting its effectiveness. There are few examples of thorough verification among Member States: in these, substantial checks are carried out by specialised independent anti-corruption/integrity agencies that have the necessary powers and tools to check the origin of assets of concerned public officials against a wide range of databases (tax administration, trade register, etc.) to identify potential incorrect declarations.

Rules on conflict of interest

Conflicts of interest reflect a situation where public officials act or intend to act or create the appearance of acting to the benefit of a private interest.[13] The issue of conflicts of interest have therefore been included in the scope of a wide range of anti-corruption instruments and review mechanisms, including those related to the UN Convention against Corruption (UNCAC), GRECO and OECD.

Regulations and sanctions applicable to conflicts of interest vary across the EU. Some Member States have dedicated legislation that covers a wide range of elected and appointed public officials, as well as specialised agencies tasked to carry out checks. The level of scrutiny varies from one Member State to another: some have independent agencies that monitor conflicts of interest, but the capacity to cover these situations countrywide is limited and follow-up of their decisions is insufficient; others have an ethics commission in charge of such verifications that reports to Parliament; checks on MPs are in some cases carried out by a Parliamentary commission, or, in some other cases, by a commission tasked to carry out checks on conflicts of interest and asset declarations, albeit often with limited capacity and sanctioning powers. Verifications on substance are often formalistic and mostly limited to administrative checks. The monitoring capacity and tools necessary to carry out substantial checks are often insufficient.

Particular difficulties that arise across the board stem from the scarce and weak sanctions applicable to elected officials. Where they cover conflicts of interest, the codes of conduct of various elected assemblies are usually not accompanied by dissuasive sanctions. Party discipline and self-control may not be sufficiently effective in this regard. Also, cancellation of contracts and procedures concluded or carried out in conflict of interest situations or the recovery of estimated damages are often left to general civil regulations and are not effectively implemented in practice.

Conflicts of interest in decision-making, allocation of public funds and public procurement, particularly at local level, form a recurrent pattern in many Member States. This report analyses the particular challenges in this regard at regional and local level in those Member States where such problems appear more severe. There is a (sometimes wide) difference between regions and local administrations and a coherent approach towards imposing minimum standards and raising awareness in this regard is lacking. Conflicts of interest are as a rule not incriminated in the EU Member States. In one Member State, conflicts of interest are criminalised, although there is not yet an established track record of successful prosecutions. Some forms of conflicts of interest are also incriminated in another Member State (i.e. illegal interest in an activity that public officials manage or supervise).

Mobility of labour between the public and private sectors are essential for the functioning of a modern society and can bring major benefits to both the public and the private sector. It implies however a potential risk that former public officials disclose information from their previous functions that should not be disclosed and that former private sector staff take up public functions that result in conflicts of interest with regard to their former employer. This situation is expressly addressed in some Member States only, and implementation is often weak.

C. Repression

Criminal law

Criminal law against corruption is largely in place, meeting the standards of the Council of Europe, UN and EU legislation. One Member State has not ratified UNCAC. The main obstacle to ratification of this Member State lies in the lack of criminal liability for elected public officials for bribery.

Some Member States have introduced or are planning substantive criminal and criminal procedure reforms. A common objective is to make procedures more efficient and speedier, and to reinforce anti-corruption tools (including better definition of offences, in some cases higher sanctions, and fast-track provisions). In drawing the fine line between legitimate and illegitimate behaviour, some Member States still have a narrow scope of incrimination.

The quality of transposition of Framework Decision 2003/568/JHA on combating corruption in the private sector is uneven.[14] There are particular shortcomings in the transposition of the provisions on criminalisation of all elements of active and passive bribery, as well as liability of legal persons. Even for Member States that have transposed the Framework Decision, information on enforcement is scarce.

Effectiveness of anti-corruption agencies

It is for the Member State alone to decide which institutional structures for tackling corruption their national context may require, depending on the extent and nature of corruption in the country, constitutional and legal framework, traditions, link with other policies in the country, overall institutional setting, etc.

Several Member States have central anti-corruption agencies that combine prevention and repression tasks, while others have dedicated anti-corruption agencies for prevention, some of which are also empowered to deal with verification of wealth, conflicts of interest, incompatibilities, and in some cases party funding. Some other countries have dedicated law enforcement or prosecution services for combating corruption.

It is now widely acknowledged that the setting up of specialised anti-corruption agencies, whether they focus on prevention or repression or both, is not a panacea. The results achieved vary. However, the country analyses in this report show that some of these agencies have been effective drivers of anti-corruption reforms in their country.

The achievements of some anti-corruption agencies have been more sustainable than others.  Factors affecting their (temporary or long-term) success include: guarantees of independence and absence of political interference, merit-based selection and promotion of staff, multidisciplinary collaboration among operational teams and with other institutions, swift access to databases and intelligence, and provision of necessary resources and skills. These elements are not consistently brought together in all Member States.

Good practices concerning anti-corruption agencies

The Slovenian Commission for Prevention of Corruption (CPC) has consolidated its role in seeking to ‘uphold the rule of law through anti-corruption efforts’, as recognised also by the Slovenian Constitutional Court. In spite of limited resources, CPC has a solid track record of implementation, with over 1 000 reviews and investigations per year. It has verified the assets and interests of leaders from all main political parties, recently revealing breaches of asset disclosure legislation and allegedly unexplained wealth of important political figures.

The Romanian National Anti-Corruption Directorate (DNA). A specialised prosecution office for combating medium and high-level corruption, DNA has built a notable track record of non-partisan investigations and prosecutions into allegations of corruption at the highest levels of politics, the judiciary and other sectors such as tax administration, customs, energy, transport, construction, healthcare, etc. In the past seven years, DNA has indicted over 4 700 defendants. 90.25 % of its indictments were confirmed through final court decisions. Nearly  1 500 defendants were convicted through final court decisions, almost half of them holding very high level positions. Key to these results has been DNA’s structure which incorporates, apart from prosecutors who lead and supervise investigations, judicial police and economic, financial and IT experts.

The Latvian Bureau for Prevention and Combating of Corruption (KNAB) has established a solid reputation in Latvia and beyond. It combines tasks related to prevention, investigation and education, including the control of party financing. KNAB also acts as a pre-trial investigatory body endowed with traditional police powers and access to bank and tax databases. More recently the Bureau underwent a period of internal turmoil.

The Croatian Bureau for Combating Corruption and Organized Crime attached to the State Attorney General’s Office (USKOK) has established a track record of proactive investigations and successful prosecutions including in notable cases concerning high level elected and appointed officials.

The central Spanish specialised anti-corruption prosecution office achieved a solid track-record of investigations and prosecutions, including in high-level cases involving allegations of complex schemes of illegal party funding. Catalonia Anti-Fraud Office, a regional anti-corruption agency specialised in prevention and investigation of corruption and fraud is the only one of its kind in Spain. Aiming to prevent and investigate misuse of public funds, it is also entrusted with guiding other entities.

In some Member States, anti-corruption agencies that investigate politicians subsequently face direct or indirect pressure. Such pressure includes public statements or other challenges to the legitimacy of the agencies’ leadership or institutional powers and competences. It is important to secure the guarantees necessary for these anti-corruption agencies to continue carrying out their tasks without undue pressure.

Capacity of law enforcement, prosecution and judiciary

The efficiency of law enforcement and prosecution in investigating corruption varies widely across the EU. Factors considered when evaluating their efficiency include the estimated extent and nature of corruption they must address, the balance with preventive measures, the political will to support their independence, the capacity and resources at their disposal, the potential obstacles to investigations, the effectiveness of the judiciary, in particular its independence, etc. The assessment is difficult as corruption crime statistics lack coherence in most Member States. There are hardly any up-to-date accurate consolidated statistics following all procedural stages of corruption cases.

Repressive measures alone are not sufficient to tackle corruption in an effective manner. Nevertheless, the ability of a judicial system to impose dissuasive criminal sanctions plays a major deterrent role and is a clear sign that corruption is not tolerated.

Some Member States place particular emphasis on the repressive side and law enforcement becomes the most visible aspect of anti-corruption efforts. Outstanding results can be seen also in Member States where prosecution as a whole (beyond services specialised in corruption) is effective. In some other Member States, successful prosecution is scant or investigations are lengthy.

Independence of the judiciary is a key element of anti-corruption policies from the point of view of the capacity of the justice system to effectively handle corruption cases, including at high levels, as well as from the viewpoint of integrity standards within the justice system itself. Effective independence safeguards and high ethical standards within the judiciary are essential to securing the necessary framework for an effective judiciary which renders justice in corruption cases in an objective and impartial manner without any undue influence. Independence of law enforcement and prosecution is noted as a problem in some Member States. Without judging the overall institutional structure that reflects the constitutional, legal and cultural setting of each Member State, and is subject to separate mechanisms and procedures at EU level – notably the annual EU Justice Scoreboard and the rule of law framework announced and outlined by President Barroso in his State of the Union speech in 2012 and 2013 – particular concerns have been raised on some occasions regarding the exposure of prosecution services and courts to political interference in corruption cases. Examples include non-transparent or discretionary application of procedures to appoint, promote or dismiss leading prosecutors working on corruption cases as well as dismissals or attempts to discredit anti-corruption institutions or their leaders without an apparent objective reason. In other cases anti-corruption law enforcement agencies have seen political actors interfere in their management and functioning. The wide-ranging powers enjoyed by some anti-corruption institutions are not always matched with accountability, leading to perceptions that they might be shying away from high-profile cases or resorting to controversial investigative methods.

There is no uniform standard that can be considered a model for appointment and dismissal procedures for heads of law enforcement or prosecution services. Such decisions are in the hands of governments in most Member States as an expression of political accountability and reflecting the location of law enforcement and prosecution within the executive branch. Regardless of the procedure followed, the process needs to be credible and merit-based to avoid any impression of political bias and to allow police and prosecutors to investigate corruption wherever they discover it.

Lack of effective coordination among law enforcement and anti-corruption agencies was also highlighted as a weakness in some Member States.

Individual country analyses highlights concerns with regard to the integrity of the judiciary when working on corruption cases and concerns regarding its independence or integrity, as illustrated by the range and nature of corruption cases involving judges or prosecutors. A specialised anti-corruption court set up in one Member State has faced considerable challenges (and even temporary dissolution), affecting its stability and capacity to build a convincing track record.

In several Member States there appears to be a lack of judicial determination and capacity to tackle complex or sensitive corruption cases. In some Member States corruption cases risk becoming time-barred where judicial procedures turn out to be excessively long and cumbersome. There are situations in which the way procedural rules are applied in practice lead to considerable delays, in some cases aimed at avoiding finalisation of court proceedings.

The limited dissuasiveness of court sentencing was also highlighted in several Member States where the frequency of suspended or weak sanctions for corruption was noted as a pattern. There are however other cases in the courts have recently handed down dissuasive prison sentences for corruption.

In one Member State, the role of tribunals of inquiry has been assessed as decisive for driving forward legislative and institutional reforms with regard to corruption cases, but the analysis also raised questions regarding the length of their proceedings and actual impact on prosecutions.

It should be noted that procedural shortcomings can often obstruct the investigation of corruption cases in certain Member States. Examples include excessive or unclear provisions on lifting immunities, or flawed application thereof and statutes of limitations which impede the finalisation of complex cases, notably in combination with lengthy proceedings or inflexible rules on access to banking information that hamper financial investigations and cross-border cooperation.

D. Specific risk areas

Petty corruption

Petty corruption remains a widespread problem only in a few Member States. Numerous anti-corruption initiatives have failed to tackle petty corruption in these countries. Several Member States where petty corruption was seen as a recurrent problem decades ago have managed to achieve progress in this area, as shown by surveys on direct experiences with corruption that reveal positive trends and sometimes even rank them above the EU average in this regard. Despite the promising progress towards reducing petty corruption in general, a number of Member States still struggle with risk-prone conditions in the healthcare sector, where incentives to give unofficial payments against differentiated treatment persist.

Corruption risks at regional and local level

Corruption risks are found to be higher at regional and local levels where checks and balances and internal controls tend to be weaker than at central level. There are considerable variations within some Member States when it comes to good governance and effectiveness of anti-corruption policies.[15]

In many Member States, wide discretionary powers of regional governments or local administrations (which also manage considerable resources) are not matched by a corresponding level of accountability and control mechanisms. Conflicts of interest raise particular problems at local level. More efforts are needed to disseminate good practices applied by some regions or local administrations and create a level playing field, for both elected and appointed officials at local level, particularly as regards transparency standards, asset disclosure, prevention and sanctioning of conflicts of interests, as well as control of public spending.

On the positive side, effective preventive practices have been noted at local or regional level. In one Member State, a network of over 200 regional, municipal and provincial administrations was set up, working together to prevent corruption and mafia infiltration in public structures.

Selected vulnerable sectors

In several Member States, the analysis highlighted some sectors which seem particularly vulnerable to corruption, calling for targeted responses.

Urban development and construction are sectors where corruption vulnerabilities are usually high across the EU. They are identified in the report as being particularly susceptible to corruption in some Member States where many corruption cases have been investigated and prosecuted in recent years. In response to risks in this area, one Member State established a specialised prosecution service for combating environment and urban planning crime, covering a wide range of offences including corruption. Environmental planning was pinpointed as an area vulnerable to corruption in one Member State where granting of planning permits, particularly for large-scale projects, has been affected by allegations of corruption and illegal party funding.

Healthcare, another sector where corruption vulnerabilities can be seen across the board, in particular regarding procurement and the pharmaceutical industry, has been assessed in more detail in a number of Member States. These countries are currently developing strategies and reforms to tackle healthcare corruption. However, tangible results are scarce so far. Informal payments, and corruption in public procurement and in the pharmaceutical sector remain matters of concern.

Corruption in tax administration, which was highlighted as a serious problem in one Member State, requires a targeted strategic response.

Overall, most of the above-mentioned Member States lack coherent risk assessment mechanisms or sector-specific strategies to tackle corruption in vulnerable sectors.

Integrity and transparency of the financial sector

The need for enhanced integrity and transparency standards within the financial sector has often been raised in the aftermath of the financial crisis. This report raises such issues with regard to a number of Member States.

A report by the Parliamentary Assembly of the Council of Europe links ‘grand corruption cases’ with tax evasion through offshore companies and tax havens.[16] The report refers to the Stolen Asset Recovery Initiative of the World Bank[17] and the UNODC which analysed 150 grand corruption cases and found a direct link between large-scale corruption by high-level public officials and the concealment of stolen assets through opaque shell companies, foundations and trusts. Furthermore, it indicated obstacles to investigating and tracing stolen assets due to lack of access to information on beneficial ownership and the use of sophisticated multi-jurisdictional corporate structures.

The same report by the Parliamentary Assembly listed one Member State among other Council of Europe members ‘harbouring or tolerating more or less questionable financial and legal arrangements of the offshore system’. More recently, the Member State in question announced plans to revise its legal framework on access to banking information.

In another Member State, recent controversies involving the financial sector, including major banks, over issues such as fixing interest rates, irresponsible and speculative lending, and failing to exercise due diligence, raised concern about regulation and enforcement of existing rules. The role of banks in facilitating or allowing money laundering was also widely debated. Plans for a publicly accessible register of the owners of registered companies stand to improve transparency.

Another Member State has committed itself to strengthen its banking supervision and regulatory framework, as well as safeguards against money laundering.

Foreign bribery

Member States that effectively address corruption within their own borders often face challenges regarding the behaviour of their companies abroad, especially in countries where corrupt practices are widespread. The OECD conducts strict monitoring in this field, highlighting in its regular evaluations both good and less satisfactory results of enforcement. There are good practices in a number of Member States, either in relation to a significant number of successful prosecutions and a high level of sanctions, in prioritising foreign bribery cases or in the recent adoption of a comprehensive bribery act strengthening the legal and procedural tools for preventing and prosecuting corruption, especially foreign bribery.

A sound legislative framework to tackle domestic and foreign bribery – UK Bribery Act

The Bribery Act 2010, which came into force on 1 July 2011 places the UK among the countries with the strongest anti-bribery rules in the world. It not only criminalises the payment and receipt of bribes and the bribing of a foreign official but also extends criminal liability to commercial organisations that fail to prevent bribery committed on their behalf. Provisions on extra-territorial jurisdiction allow the Serious Fraud Office (SFO) to prosecute any company, or associated person, with a UK presence, even if the company is based overseas. Commercial organisations are exonerated from criminal liability if they had adequate procedures to prevent bribery.

The accompanying Guidance to Commercial Organisations (GCO) by the SFO promotes awareness of the new legislative framework and guides businesses in a practical manner (including case studies) regarding their obligations under the Act to prevent or detect bribery. In line with a previous OECD recommendation, the GCO makes it clear that facilitation payments are considered illegal bribes and provides businesses with criteria to differentiate hospitality from disguised forms of bribery.

The SFO has wide powers to investigate and prosecute serious and complex fraud, including corruption. In certain circumstances, the SFO can consider civil recovery orders and settlements in accordance with previous guidelines.

The OECD has criticised other Member States for insufficient or non-existent prosecution of foreign bribery, considering the corruption risks their companies face abroad.

State-owned companies

In some Member States, shortcomings exist regarding the supervision of state-owned companies where legislation is unclear and politicisation impedes merit-based appointments and the pursuit of the public interest. Moreover, there are insufficient anti-corruption safeguards or mechanisms to prevent and sanction conflicts of interest. There is little transparency regarding the allocation of funds and, in some cases, purchase of services by these companies. Recent investigations into alleged misuse of funds, corrupt practices and money laundering linked to state-owned companies indicate the high level of corruption-related risks in this area, as well as the weakness of control and prevention.

For a few Member States, the report highlights the need for more transparency and efficient checks on accelerated privatisation processes that may raise the risks of corruption.

Links between corruption and organised crime

In the Member States where organised crime poses considerable problems, corruption is often used as a facilitator. In one Member State, numerous cases of alleged illegal party funding at central or regional level were also linked to organised crime groups. Links between organised crime groups, businesses and politicians remain a concern for those Member States, particularly at regional and local levels, and in public procurement, construction, maintenance services, waste management and other sectors. Research has showed that in another Member State organised crime exercises influence at all levels, including in politics. Political corruption there is often seen as a tool for gaining direct or indirect access to power; that country was considered to have the highest level of shadow economy among EU Member States. Overall corruption remains a serious threat as a means for organised crime groups to infiltrate public and private sectors, as stated by the EU Serious and Organised Crime Threat Assessment carried out in 2013 by Europol.

E. Background issues

There are a number of background issues which – although not in themselves necessarily linked to corruption – can have an impact on the extent to which an environment opens the door to corruption. Effective policies in these areas can have the effect of reducing the opportunities for corruption.

Transparency policies and freedom of information

Openness and transparency can act as a disincentive to corruption, and can help to reveal transgressions when they occur. While most Member States have adequate legislation in this field, and some are on the way to adopting laws, implementation of transparency standards is uneven. One Member State has developed an online application that offers an overview of all public sector expenditure on goods and services (see also the public procurement section). It also provides details on management and supervisory boards of all state-owned and state-controlled companies and their annual reports.

Effective anti-corruption policies in some Member States stem partly from a tradition of openness, transparency and disclosure of documents.

Moves towards transparency of decision-making in public administration - Greece

A law adopted in 2010[18] obliges all public institutions to publish online their decisions, including in relation to public procurement. As from 1 October 2010, all public institutions, regulatory authorities and local governments are obliged to upload their decisions on the internet through the ‘Clarity’ programme (diavgeia – διαύγεια).[19] The decisions of public entities cannot be implemented if they are not uploaded on the Clarity websites. Only decisions that contain sensitive personal data and/or information on national security are exempted from this obligation. Each document is digitally signed and automatically assigned a unique number. If there is a discrepancy between the text published in the Government Gazette and that on Clarity websites, the latter prevails. Concluded public contracts are also published.

Whistleblowers’ protection

Adequate whistleblowing mechanisms that codify processes within public administrations to allow official channels for reporting what they may perceive as irregularities or even illegal acts can help overcome detection problems inherent to corruption (and indeed in other areas). However, whistleblowing faces difficulties given the general reluctance to report such acts within one’s own organisation, and fear of retaliation. In this regard, building an integrity culture within each organisation, raising awareness, and creating effective protection mechanisms that would give confidence to potential whistleblowers are key.[20]

Transparency of lobbying

In the complex world of public policy-making, it is desirable for public administrations to engage in a continuous dialogue with outside stakeholders. All interested parties should be able to have their say, but this should be done in a transparent way. As lobbying activities can raise risks of corruption and regulatory capture, it is desirable to have mechanisms in place to frame such activities, be it through legislation or a voluntary registration of lobbyists.

Such mechanisms can help to create both clarity and transparency in the relationship between public authorities and outside stakeholders. As such, they can help to reduce the risk of corruption. So far, this area has been developed in relatively few Member States, though some other Member States have legislation or rules in the pipeline or are debating the possibility of introducing new mechanisms.

IV. Public Procurement

A. General overview of the EU framework

Size of public procurement market in the EU

Public procurement is a significant element of the national economies in the EU. Approximately one fifth of the EU’s GDP is spent every year by public authorities and by entities governed by public law in procuring goods, works and services.[21] Approximately 20 % of this total concerns public procurement exceeding the thresholds above which EU procurement rules apply. The Commission estimated the total value of calls for tenders above those EU thresholds to be approximately EUR 425 billion in 2011.[22]

Relevance of anti-corruption policies within public procurement

Given the level of financial flows generated, and a number of other factors, public procurement is an area prone to corrupt practices. According to 2008 research on public procurement and corruption, the costs added to a contract as a result of corrupt practices may amount to between 20 % to 25 %, and in some cases even 50 % of the total cost of the contract.[23] As pointed out by the OECD in its Principles for Integrity in Public Procurement, ‘weak governance in public procurement hinders market competition and raises the price paid by the administration for goods and services, direct impacting public expenditures and therefore taxpayers’ resources. The financial interests at stake, and the close interaction between the public and private sectors, make public procurement a major risk area. […]’[24]

A 2013 study on identifying and reducing corruption in public procurement in the EU concluded that in 2010 the overall direct costs of corruption in public procurement for only five sectors (i.e. road and rail; water and waste; urban/utility construction; training; research and development) in eight Member States[25] ranged from EUR 1.4 billion up to EUR 2.2 billion.[26]

The individual country assessments of this report point to public procurement as one of the areas most vulnerable to corruption, as also illustrated by a number of high-level corruption cases involving one or more countries. Given that the corruption risk level in the public procurement process is rather high, anti-corruption and anti-fraud safeguards in public procurement are a matter of priority for both EU Member States and EU institutions.[27]

Weaknesses in the prevention and repression of corruption in public procurement adversely affect management of national and EU funds.

Current EU legal framework

The main objective of EU legislation on public procurement (i.e. the ‘Public Procurement’ Directive, the ‘Utilities ‘ Directive, the Directive covering public procurement in defence and security sectors and the ‘Remedies’ Directives)[28] is to ensure respect for the principles of the Treaty on the Functioning of the European Union, and in particular the principles of freedom of movement of goods, freedom of establishment and freedom to provide services, as well as other principles deriving therefrom. The public procurement legislation aims to ensure that procurement markets are kept open Union-wide so as to contribute to the most efficient use of public funds, thus promoting a fair, uniform and transparent platform for public spending. This can also positively influence the overall EU anti-corruption policies where transparency and fair competition play an important role in preventing corrupt practices.

The public procurement legislation also includes provisions which are more directly relevant to anti-corruption policies such as exclusion from the tendering process of an entity against which a final court decision on corruption charges has been handed down, detailed provisions on publicity and transparency of various stages of the procurement cycle, minimum standards for remedies, specific provisions on abnormally low tenders, as well as provisions setting certain requirements for modification of contracts. The award of works concessions is presently subject to a limited number of secondary law provisions[29] while service concessions are currently only covered by the general principles of the Treaty on the Functioning of the European Union.

Some Member States have specific legal provisions dealing with corruption in the area of public procurement or apply specific measures aimed at reducing the risk of corruption as detailed below. Most Member States however deal with corruption in public procurement through their general legislation on corruption.

A Tenders Electronic Daily (TED) database, the online version of the ‘Supplement to the Official Journal of the European Union’, is updated regularly with tenders from across Europe. Contract notices and contract award notices above the thresholds of the Public Procurement Directives are published in OJ/TED. The 2012 Annual Public Procurement Implementation Review noted that the number of contract notices and contract award notices advertised has continued to grow steadily over the past years.[30] This shows that the Directives and TED have contributed to increasing publicity of tenders and awards of public contracts.

Monitoring of correct application of EU public procurement rules

In fulfilling its role as guardian of the Treaties, in cases of potential violation of European public procurement rules, the Commission acts upon complaints or on its own initiative. In this regard, the Commission strives to ensure compliance with the public procurement rules whatever the reasons for their violation, regardless of whether a violation has been committed knowingly or is the result of insufficient knowledge or errors.

As a general rule, the Commission does not investigate whether a violation of EU public procurement rules might be due to corruption. This falls within the competence of the Member States. Nevertheless, infringement procedures[31] often refer to irregularities pointing to certain vulnerabilities in the application of public procurement rules that are also highly relevant when assessing the effectiveness of corruption prevention and control mechanisms.

The Commission’s 2012 Annual Public Procurement Implementation Review pointed to 97 pending infringement cases for incorrect application of the public procurement rules, over half of them concerning only three Member States. Most of these cases related to allegations of: unjustified use of the negotiated procedure without prior publication, discrimination, direct awards, lack of transparency, unjustified amendment of the contract, incorrect application of the internal rules or infringement of general principles of the Treaty.[32]

Judging by the type of cases where the Commission opens infringement procedures for an alleged breach of the EU rules on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts the negotiated procedure without publication is the type of procedure most affected by irregularities. Most cases of wrong application concern the infrastructure sector, followed by sewage/waste, procurement of IT services, railways, the health sector and energy.

Ongoing EU legislative reforms

A comprehensive evaluation has shown that the Public Procurement Directives have achieved their objectives to a considerable extent.[33] They have resulted in greater transparency, higher levels of competition, and measurable savings through lower prices. Nevertheless, further improvement is considered necessary for the simplification of procedures, and to strengthen anti-fraud and anti-corruption guarantees. The Commission therefore proposed in December 2011 a revision of the Public Procurement Directives. The proposed new legislation covers procurement in the water, energy, transport and postal services sectors,[34] public works, supply and service contracts,[35] as well as concessions, regulated at EU level. The Commission has proposed provisions regarding conflicts of interest (for the first time defined in EU legislation), centralised data on corruption, fraud and conflicts of interest, stricter rules governing modification of contracts, broader exclusion criteria, and monitoring of concluded contracts. The Commission’s proposal is currently under discussion in the European Parliament and the Council. The proposal also included the setting up of oversight monitoring of the implementation of public procurement rules, red flagging and alert systems to detect fraud and corruption. However, Member States raised fundamental objections to such measures which were considered too cumbersome for their administrations.

The proposal on award of concession contracts[36] aims at reducing the uncertainty surrounding the award of such contracts and seeks to foster public and private investment in infrastructure and strategic services giving best value for money. The proposed directive on concessions also contains provisions requiring Member States to adopt rules combating favouritism or corruption and preventing conflicts of interest, aimed at ensuring transparency of the award procedure and equal treatment of all tenderers.

The new public procurement package is expected to be adopted in early 2014.

Results of Eurobarometer surveys on corruption

According to the 2013 flash Eurobarometer survey on corruption relevant to businesses[37], more than three out of ten (32 %) companies in the Member States that participated in public procurement say corruption prevented them from winning a contract. This view is most widely held amongst companies in the construction (35 %) and engineering (33 %) sectors. More than half of company representatives from Bulgaria (58 %), Slovakia (57 %), Cyprus (55 %) and the Czech Republic (51 %) say this has been the case.

According to the same survey, red tape (21 %) and criteria that seem to be tailor-made for certain participants (16 %) are the main reasons why companies have not taken part in a public tender/procurement process in the last three years. More than four out of ten companies say that a range of illegal practices in public procurement procedures are widespread, particularly specifications tailor-made for specific companies (57 %), conflict of interest in bid evaluation (54 %), collusive bidding (52 %), unclear selection or evaluation criteria (51 %), involvement of bidders in the design of specifications (48 %), abuse of negotiated procedures (47 %), abuse of emergency grounds to justify the use of non-competitive or fast-track procedure (46 %), amendments to the contract terms after conclusion of the contract (44 %). Engineering and construction companies are generally the most likely to say that all of these practices are widespread.

More than half of all companies say that corruption in public procurement managed by national (56 %) or regional/local authorities (60 %) is widespread.

According to the 2013 Special Eurobarometer survey on corruption, (45 %) of the Europeans interviewed believe that bribery and the abuse of positions of power for personal gain are widespread among officials awarding public tenders. The countries where respondents are most likely to think that there is widespread corruption among officials awarding public tenders include the Czech Republic (69 %), the Netherlands (64 %), Greece (55 %), Slovenia (60 %), Croatia (58 %) and Italy (55 %). Countries with the most consistent positive perceptions of officials in this area include Denmark (22 %), along with Finland (31 %), Ireland (32 %), Luxembourg (32 %) and the UK (33 %).

B. Positive and negative practices in addressing corruption risks in public procurement

General comments

This chapter reviews the corruption risks associated with public procurement based on the findings of the country-specific assessments of this EU Anti-Corruption Report, as well as on other Commission studies and data. All stages of the public procurement cycle are considered for the purpose of the current analysis: i.e. pre-bidding (including needs assessment and specifications), bidding (including the contracting process: selection, evaluation and contract award) and post-award. The phase of contract implementation is also taken into account. This is in accordance with the analysis of the OECD dating from 2009 that highlighted the need to take further measures to prevent corruption risks that occur during the entire public procurement cycle, starting with the phase of needs assessment up to contract management and payment, including also the use of national security and emergency procurement.[38]

While this section looks generally at positive and negative practices across the EU, public procurement aspects have also been analysed more in depth in some of the country-specific chapters. The choice of Member States for which such in-depth country-specific analysis of corruption risks in public procurement was carried out was based on an assessment of the extent of the problem and/or the seriousness of the challenges it raised in those particular countries. This does not mean that issues of public procurement do not require further attention in the remaining Member States, but that the Commission decided to give more prominence to other corruption-related issues that seemed to be more salient than public procurement.

Suspected cases of corruption and conflict of interest in the management of EU funds, under the applicable EU regulations in force, can lead to interruption and/or suspension of payments until appropriate corrective measures have been taken by the Member State, including the strengthening of the management and control systems.

Neither the general nor the country-specific analyses aim at establishing universal benchmarks in this area, but rather seek to present vulnerabilities and corresponding solutions (on both prevention and repression sides) which have either succeeded or failed in practice.

Specific findings

Risk areas and patterns of corruption

Judging from the prosecuted cases of corruption in public procurement in the Member States, the most frequently occurring problems concern: drafting of tailor-made specifications to favour certain bidders, splitting of public tenders in smaller bids to avoid competitive procedures, conflicts of interest affecting various stages of procedures and concerning not only procurement officials, but also higher level of contracting authorities, disproportionate and unjustified selection criteria, unjustified exclusion of bidders, unjustified use of emergency procedures, inadequate analysis of situations where the bid prices were too low, excessive reliance on the lowest price as the most important criterion to the detriment of criteria regarding quality of deliverables and capacity to deliver, unjustified exceptions from publication of bids. Apart from the public procurement procedure, audits have in many cases identified risks related to the post-award phase, when kickbacks may also occur, and for instance the quality of deliverables is intentionally compromised. Other post-award patterns identified in corruption cases include: insufficient justification for amendments to public contracts, subsequent amendment of contracts modifying the specification terms and increasing the budget.

A 2013 study on identifying and reducing corruption in public procurement in the EU[39] identified four main types irregular practices concerning 96 cases in which corruption allegations have already been confirmed through final court decisions, or where there are strong indications of corrupt practices. These practices concern: (1) bid rigging (in the form of bid suppression, complementary offers, bid rotation and sub-contracting) when the contract is ‘promised’ to one contractor with or without the consent of public officials; (2) kickbacks, when the public official requests or accepts a bribe which will be accounted for in the tendering process, including administrative processes; (3) conflict of interest; (4) other irregularities including deliberate mismanagement/ignorance when public officials do not carry out proper checks or follow the required procedures and/or tolerate or ignore overt deliberate mismanagement by contractors.

While the use of negotiated and direct award procedures is justified in certain circumstances, there are cases in which it is done with the purpose of avoiding competitive procedure obligations. In some Member States, the use of non-competitive procedures is considerably above the EU average. The unjustified use of negotiated procedures also increases the risk of corrupt practices. With a view to countering the risk of abusive use of negotiated procedures or direct award, some Member States provide for the legal obligation of ex-ante notification of negotiated procedure without publication of notice to the public procurement oversight or review bodies.

Construction, energy, transport, defence and healthcare sectors appear to be most vulnerable to corruption in public procurement.

In several Member States where allegations of illegal party funding emerged, there were situations in which such funding was allegedly granted in exchange for beneficial decisions regarding the award of public contracts. In some other cases, the allegations concerned too close links between businesses and politicians at central or local level that encouraged alleged corrupt practices linked to the award of public contracts.

Risks regarding public procurement at regional and local levels

Public procurement at regional and local levels raise particular issues where local authorities have wide discretionary powers that are not matched with sufficient checks and balances, significant percentages of public funds are allocated at this level, and at the same time internal and external control mechanisms are weak. In convergence countries where a very substantial part of public investment is co-financed by Structural Funds, these risks are mitigated by the management and control requirements of the funds. However, their effective implementation poses a real challenge. In a few Member States, control mechanisms have revealed cases in which officials used local government assets to conclude transactions with companies related to them. In some municipalities and regions, a strong consolidation of ‘clientele’ networks around small interest groups was developed. Most of the cases have concerned charges or allegations of illegal party funding, personal illicit enrichment, diversion of national or EU funds, favouritism and conflicts of interest. In a few Member States, there were cases in which some organised crime leaders at municipality level established their own political parties or infiltrated municipal councils to exert influence over local law enforcement or judiciary, and to rig public tenders. In order to address this risk, some municipalities have implemented anti-corruption measures such as establishing systems for internal financial management and control.

Construction linked to urban development, as well as waste management are among the sectors most prone to corruption at local level. High-level corruption cases involving regional and local officials in some Member States have revealed that re-zoning decisions[40] were at times taken under pressure from local developers in relation to future property construction contracts.

In some Member States local administrations have developed or are asked to develop their own integrity or anti-corruption action plans. While some of them are formalistic or unevenly enforced, and the actual impact is difficult to measure, others have pioneered the building models that work in practice. In some Member States, contracting authorities are obliged to develop their own integrity plans and assess corruption risks.

In a few cases, civil society initiatives have had a beneficial effect on the accountability of local administrations with regard to transparency of public spending.

Open Local Government Initiative – Slovakia

In the framework of external monitoring of public spending, the Open Local Government initiative of Slovakia ranks 100 Slovak towns according to a set of criteria based on transparency in public procurement, access to information, availability of data of public interest, public participation, professional ethics and conflicts of interests. The project is run by Transparency International. More details can be found in the country chapter on Slovakia.

Guidelines for prevention of corruption in public procurement at local level – Germany

A Brochure on the Prevention of Corruption in Public Tendering agreed by the German Association of Towns and Municipalities jointly with the Federal Association of Small and Medium-Sized Building Contractors provides an overview of preventive measures against corruption in public procurement at the level of towns and municipalities.[41] These include: awareness raising and codes of conduct; rotation of staff; strict observance of the ‘four eyes’ rules; clear regulations on sponsoring and the prohibition on accepting gifts; establishing centralised authorities for tender/awarding; precise description of the tender and control of estimates; organisation of tender procedures, including secrecy of bids and prevention of belated manipulation of the bids; increased use of e-procurement; documentation of adjudication and careful control by supervisory bodies; exclusion of enterprises found guilty of corruption offences and establishing black lists/corruption registers.

Conflicts of interest and asset disclosure

Conflicts of interest in the Member States are covered by general legislation on prevention of corruption or by specific provisions on public procurement. The effectiveness of the prevention and detection of conflicts of interest in public procurement depends therefore on the effectiveness of the overall control mechanisms in this area. Particular vulnerabilities can be noted with regard to conflicts of interest affecting public procurement procedures at local level. Some Member States, through their anti-corruption or integrity agencies, carried out targeted checks on conflicts of interest in certain areas considered particularly vulnerable. This led to an increased number of detected cases involving conflicts of interest and identified public contracts concluded for private gain to the detriment of the public interest.

Where there are rules on asset disclosure applicable to public officials, they almost always apply to public procurement officers as well.

See for more details the section on ‘Main Findings’, as well as sub-sections on conflicts of interest and asset disclosure.

Corruption risk management policies[42]

Several Member States have recently undergone or are going through public procurement reforms aiming at increasing transparency and further supporting fair competition. In some Member States national anti-corruption strategies are in place, covering prevention and repression of corruption in public procurement. Nevertheless, frequent legislative changes have led in some Member States to legal uncertainty and weaknesses in the implementation process and corresponding control mechanisms. Complexity of legislation is also perceived in some Member States as an obstacle to smooth implementation.

The contracting authorities are asked to adopt integrity plans and assess corruption risks only in few Member States. In most cases such risk assessments are carried out with the support of either law enforcement or anti-corruption agencies. There are a few Member States that have been implementing red-flagging systems[43] for some time, raising awareness at both central and local level. A few Member States have also developed specific risk management tools tailor-made for particular challenges faced at their respective national or regional levels.

Risk management tools and public procurement platforms in Italy

Several networks and associations of regional and local administrations are actively implementing actions for prevention of mafia infiltration in public structures and promoting transparency of public procurement at regional level (e.g. Avviso Pubblico, ITACA[44]). Various other measures have been taken at the level of public authorities to prevent criminal infiltration in public contracts (e.g. CAPACI – Creation of Automated Procedures Against Criminal Infiltration in public contracts – project and guidelines issued by the Committee for Coordination of High Surveillance of Large Public Works for anti-mafia checks on large infrastructure projects). More details can be found in the country chapter on Italy.

Data on corruption cases or conflicts of interests detected in public procurement procedures at national and/or regional/local level are rarely centralised or kept in a national register. Such centralised data gathering is largely seen by the Member States as an unnecessary administrative burden. However, such data could be used in the development of sound risk assessments and could also significantly contribute to the uniform implementation of anti-corruption policies at national and regional/local levels.

Regular and structured market studies are not common practice before the public procurement, with the exception of complex and high-value procurements. Unit costs databases are being developed only in very few Member States at either central or local level or are sector-specific. Such databases may help carry out comparative analysis between similar types of projects (e.g. supplies or works) and their deliverables. They can help identify risks or suspicions of corrupt behaviour if a serious mismatch is identified, despite limitations of such approach given the complexity of the products and the variety of inputs that feed into a final deliverable.[45]

Transparency

Partly as a result of the transposition and implementation process surrounding the Public Procurement Directives, notable improvements have been made in the level of transparency of public procurement procedures in the majority of the Member States. Some have taken extensive measures to ensure real-time publication of annual accounts and balance sheets of public authorities in user-friendly formats, including details on costs of public works and services.

Tracing public money – online application of the Slovenian Commission for Prevention of Corruption

The online application ‘Supervizor’ provides information on business transactions of the legislative, judicial and executive branch, autonomous state bodies, local communities and their branches with legal personality, etc. The application indicates contracting parties, the largest recipients, related legal entities, dates, amounts and purpose of transactions. It offers an overview of the average EUR 4.7 billion a year spent by the public sector on goods and services. It also provides details on management and supervisory boards of all state-owned and state-controlled companies and their annual reports. This transparency system facilitates detection of irregularities in public contracts and expenditure.

National web portal to centralise information on public contracts – BASE – Portugal

Since 2008, after the entry into force of the Public Contracts Code, Portugal has put in place a national web portal, BASE (www.base.gov.pt) that centralises information on public contracts. The Institute of Construction and Real Estate (InCI) is responsible for the management of this portal. BASE receives data from the electronic edition of the Portuguese Official Journal and from the certified electronic platforms concerning open and restricted pre-award procedures. All public contracting authorities use the reserved area of the portal to record contract data, upload the contracts themselves and record information on their performance. From 2008 to 2011, the BASE only publicised contracts relating to direct awards. Since January 2012, the BASE must publicise all contracts resulting from all types of procedures subject to the Public Contracts Code. It also publishes information on contract performance. The publication of contracts in both BASE and the Official Gazette is now mandatory for direct adjustments, increases of 15 % in the price of already concluded contracts and potential penalties.

Public procurement electronic database – Croatia

In March 2013, a web portal and public procurement electronic database were launched by a local NGO as a result of an EU-funded project. The database consolidates information related to the implementation of public procurement procedures and companies involved in public procurement procedures, and is available free of charge to the public. The electronic database also contains information concerning assets and interests of public officials, in line with asset disclosure rules. Such aggregated data allow cross-checks to be carried out.

In a few Member States access to documents and information regarding public procurement is limited by overly broad exceptions and a wide definition of confidentiality concerning public procurement documentation.

In some other Member States, procurement organised by state-owned enterprises does not follow the same transparency, competitive or supervision standards as the regular public procurement procedures. There were cases in some Member States where state-owned enterprises concluded non-competitive purchase contracts above market prices with favoured partners.

Publication of concluded contracts is not yet a widespread practice in the EU. There are some Member States where contracts are published in their entirety and in one Member State publication is even a precondition for the validity of the contract (i.e. the contract should be published within three months of being signed; or else it is null and void).

Integrity pacts and role of civil society

Integrity pacts are agreements between the contracting authority for a particular project and the bidders, all committing themselves to abstain from any corrupt practices. Certain monitoring, transparency and sanctioning provisions are also included in such agreements. With a view to ensuring that they are effectively implemented, integrity pacts are often monitored by civil society groups. In some Member States which apply a far-reaching transparency policy, civil society has become very active in complex monitoring of procurement processes and public contracts. In some Member States, often at the initiative of NGOs, integrity pacts are implemented with regard to certain public procurements, particularly where large public contracts are concerned (e.g. large-scale infrastructure projects).

Use of E-procurement

E-procurement, apart from improving the efficiency of public procurement procedures, offers additional safeguards in terms of preventing and detecting corrupt practices because it helps increase transparency and allows for better implementation of standardised procedures, as well as facilitating control mechanisms. The current Public Procurement Directives contain provisions requiring all Member States to introduce e-procurement, including through the electronic publication of procurement notices, electronic communication (including the submission of bids), and new, fully electronic procurement such as dynamic purchasing systems and e-auctions. At the time of the adoption, in 2004, the Directives were accompanied by an Action Plan.[46]

As shown by the 2012 Public Procurement Implementation Review, there has been some progress in the use of e-procurement, but overall it is still used in only 5 % to 10 % of procurement procedures carried out across the EU. However, a few Member States have made significant progress towards full implementation of e-procurement in the pre-award phases. This is particularly true of Member States in which e-procurement has become mandatory by national law and is expected to be gradually implemented.

The Commission’s public procurement legislative package provides for a gradual transition towards full e-communication.

Good practices in the implementation of e-procurement

Lithuania has made significant progress in providing online access to combined data on public procurement. The range of information published exceeds the requirements of EU law, including draft technical specifications, concluded and performed public contracts. Also, suppliers are required to indicate subcontractors in their bids. Since 2009, at least 50 % of the total value of their public bids must be done electronically. As a result, the share of e-procurement rose from 7.7 % to 63 % in 2010, approaching the target of 70 % by 2013.

Estonia has set up an e-procurement portal and related e-services (e.g. company registration and management portal and centralisation of public sector bookkeeping). The State Public Procurement Register is an e-Tenders portal where all public procurement notices have been published electronically since 2003. The Public Procurement Act provides for further developments such as e-Auctions, e-Purchasing system, and an e-Catalogue and requires electronic tenders for 50 % of overall public procurement from 2013. In 2012, about 15 % of public tenders were conducted via e-procurement, three times more than in 2011.

The Portuguese e-Procurement Programme was launched in June 2003 as a centralised and high-quality platform that promotes efficiency and competition through increased transparency and savings in the public procurement process. The portal – http://www.ancp.gov.pt/EN/Pages/Home.aspx – offers the possibility to download the entire bid documentation and specifications free of charge. It also disseminates calls for tender, receives suppliers’ queries and manages all aspects of information exchange online. A Contract Management Tool ensures uploading of public contracts, allows monitoring of contracts concluded and enables e-invoicing. The Information Management System also helps collect, store and systemise statistics on the procurement process.

More details on these practices can be found in the respective country chapters.

Control mechanisms

According to the EU legislation in force, the establishment of a central procurement body is optional. Most Member States have nevertheless implemented this option in their national legislation. As noted in the 2012 Public Procurement Implementation Review, most Member States designate specific authorities which handle many or all of the tasks related to procurement, with some exceptions where the institutions in charge are not designated specifically to handle procurement but it is only one of their tasks (e.g. competition authorities). However, in some of the Member States where a central body exists, its capacity is limited by insufficient staff and training for dealing with ever increasing tasks.

The Remedies Directives leave it to the Member States to decide whether reviews are handled by administrative or judicial bodies. The choice between the two possibilities is split fifty-fifty among Member States. In a few Member States, there are insufficient guarantees for the independence of such review bodies from political interference, including as regards the appointment of their leadership and staff.

Over the last few years, a trend towards increased professionalisation of public procurement has been noticed, in the form of aggregation of demand and centralisation by means of framework contracts (accounting for 17 % of the total value of above thresholds contracts awarded in the period 2006-2010[47]) and joint purchasing (12 % of the total value respectively). Government administrations, at both central and local levels, are increasingly using specialised bodies, such as central procurement bodies, while greater use of framework contracts is changing the nature of the procurement function. Currently, practice varies widely across Member States.

In relation to awareness and training on anti-corruption policies, while this has improved over recent years in the majority of Member States, public procurement officials see a rather limited role for themselves in detecting corrupt practices. Moreover, the effectiveness of cooperation between public procurement authorities, law enforcement and anti-corruption agencies varies widely across the Member States. In many cases, the cooperation is formalistic and statistics show a low number of notifications about suspicions of corruption or conflicts of interests submitted by public procurement authorities to law enforcement or integrity agencies.

In some Member States, where control mechanisms, particularly at local level, are rather weak or fragmented, cases of favouritism in allocation of public funds within national, local and regional authorities involved in public procurement appear to be widespread.

While the efficiency of control mechanisms concerning pre-bidding, bidding and award phases has improved in the Member States, the implementation (post-award) phase is less closely monitored. Some national Courts of Audit or national audit offices have often pointed out that irregularities occur in the execution phase. In many Member States the courts of audit have become key players in identifying gaps and shortcomings related to public procurement procedures. Their recommendations in this field are often not sufficiently followed up.

Ownership of bidders and sub-contractors is very rarely checked in public procurement procedures. In at least one Member State legislation allows public contracts to be concluded with companies that have anonymous shareholders, while at the same time not offering sufficiently strong safeguards against conflict of interests.

Coordination of oversight, partial overlap, division of tasks or fragmented control mechanisms at central and local levels, including in the implementation phase, still pose problems in a number of Member States.

Control mechanisms for public procurement below the thresholds of the EU legislation are particularly weak in the majority of Member States. This raises concerns in particular in relation to the reported practices, whereby contracts are split into smaller ones to circumvent EU procurement requirements and checks.

Debarment

In line with the EU legislation, there are mandatory debarment/exclusion rules in place in all Member States according to which bidders against whom final court convictions for corruption have been handed down are excluded from the tender. Many national laws contain self-cleaning provisions.[48] Member States are not required to publish debarment lists,[49] and they generally do not publish such lists. In many Member States contracting authorities have cross-access to their internal debarment databases. International debarment lists are, as a rule, not considered as a basis for exclusion in EU Member States.

Sanctions

In most Member States corruption in public procurement is covered by criminal offences such as bribery and trading in influence. There are Member States where specific corruption-related offences affecting the course of public procurement are incriminated distinctively. As a rule, procurement procedures are suspended, interrupted or cancelled when a corrupt behaviour or a conflict of interest is detected. However, the situation is different in the case of concluded contracts in relation to which corrupt behaviour or a conflict of interest is detected or occurs after the award of the contract. In many cases, apart from the sanctioning of corrupt behaviour or conflicts of interest as such, separate civil action for the annulment of the public contract is required. This often entails lengthy procedures and risks producing effects at a too late stage when it is difficult or even impossible to fully recover the losses. In some other Member States, public contracts include an anti-corruption clause that guarantees more effective follow-up in the event of corrupt practices being proven within the lifetime of the contract (e.g. clear-cut procedures for declaring a contract null and void or for applying other contractual penalties).

In some Member States where corruption in public procurement raises particular concerns, the track record of prosecutions and final court decisions is weak, and few cases of public procurement corruption are finalised with dissuasive sanctions. These cases usually take a long time and, frequently, contracts or projects are already executed at the time when corrupt practices are discovered. Cases of corruption in public procurement are often complex and at times they may involve high-ranking officials. Specific technical knowledge is therefore required in order to ensure effective and fair judicial proceedings. In some Member States, shortcomings remain as to the training of prosecutors and/or judges on public procurement matters.

C. Conclusions and recommendations on public procurement

The above-mentioned findings show progress as to the implementation of anti-corruption policies in public procurement within the Member States, but it remains an area of risk. Further efforts aimed at strengthening integrity standards are called for. The reform of the Public Procurement and Utilities Directives, as well as the proposed Directive on award of concessions, include anti-corruption and good governance standards as an important part of the overall modernisation drive. The minimum standards on conflicts of interests proposed in these Directives, preliminary market consultations, mandatory and voluntary exclusion criteria, self-cleaning rules, stricter provisions on modification and termination of contracts, centralisation of data on corruption and conflict of interest cases, as well as the monitoring and reporting obligations, respond to a large extent to the remaining concerns expressed above.

As regards possible further action to be taken by the Member States, the 17 country chapters where public procurement issues are highlighted, as well as the analysis in this section, point to the following general recommendations:

1. Need for systematic use of corruption risk assessments within public procurement

· Risk assessments should be developed at the level of public procurement oversight, irrespective of their institutional setting, with the support of law enforcement or anti-corruption/integrity agencies.

· Ensure centralisation of data on detected corrupt practices and patterns, including conflicts of interests and revolving door practices. Base risk assessments on these centralised data.

· Develop, based on risk assessments, tailor-made measures for particularly vulnerable sectors and the most frequent types of irregularities encountered during or after the procurement cycle.

· Implement targeted anti-corruption policies for regional and local administrations. Risk assessments can also helpfully look into the particular vulnerabilities of this level of administration.

· Develop and disseminate common guidelines for use of red-flagging indicator systems. Help contracting authorities and oversight bodies detect corrupt behaviour, favouritism and conflicts of interest.

2. Implementation of high transparency standards for the entire procurement cycle as well as during contract implementation

· Ensure common minimum standards of transparency at the level of regional and local administrations in relation to public procurement procedures and the implementation phase of public contracts.

· Consider some form of publishing or ensuring access to concluded public contracts, including the provisions on rights, obligations and penalty clauses, with the exception of well-defined, limited and justified exceptions of confidentiality for certain contractual clauses.

· Enhance transparency in public procurement procedures, pre- and post-award through publication online by all administrative structures (central, regional and local level) of the annual accounts and balance sheets and the broken-down costs of public works, supplies and services. Ensure more transparency of procurement carried out by state-owned enterprises, as well as within the context of public-private partnerships.

3. Strengthening of internal and external control mechanisms for the entire procurement cycle as well as during contract implementation

· Ensure sufficient capacity of public procurement review bodies, consultative organs and oversight bodies, as well as courts of audit, as the case may be, to carry out their verification tasks.

· Strengthen internal control mechanisms for purposes of prevention and detection of corrupt practices and conflicts of interests. Ensure sound and uniform methodologies for anti-corruption and conflict of interest checks during the public procurement cycle. Such methodologies should consider prioritisation of the most vulnerable procurement processes or levels of administration and ad-hoc unannounced checks by independent oversight bodies.

· Enhance control mechanisms and tools for the post-award and implementation phase of public contracts.

· Ensure adequate follow-up of the recommendations of the courts of audit identifying irregularities in public procurement.

· Carry out checks on ownership of bidders and subcontractors.

· Ensure adequate control mechanisms for procurement carried out by state-owned companies, as well as in the context of public-private partnerships.

4. Ensuring coherent overview and raising awareness about the need and know-how for prevention and detection of corrupt practices at all levels of public procurement

· Ensure effective coordination between authorities tasked with public procurement oversight.

· Develop and raise awareness about detailed guidelines on prevention and detection of corrupt practices and conflict of interests in public procurement, particularly at regional and local level.

· Provide tailor-made training for prosecutors and the judiciary on technical and legal aspects of the public procurement process.

5. Strengthening sanctioning regimes

· Ensure the application of dissuasive sanctions in relation to corrupt practices, favouritism or conflicts of interests in public procurement.

· Ensure effective follow-up mechanisms for repealing decisions and/or annulling public contracts in due time when corrupt practices have affected the process.

ANNEX

Methodology

Scope of the Report

As mentioned in the introduction this report defines corruption, in line with international legal instruments as any ‘abuse of power for private gain’. Although the exact meaning and scope of the concept are the object of academic debate, this implies that the Report covers two aspects.  First, it covers specific acts of corruption and those measures that Member States take specifically to prevent or punish corrupt acts as defined by the law. Secondly, it covers certain types of conduct and measures which impact on the risk of corruption occurring and on the capacity of a State to control it. Consequently, the Report deals with a wide range of issues associated with corruption, including, in addition to bribery, trading in influence, abuse of office, aspects related to nepotism, favouritism, illegal lobbying, and conflict of interests. The aim of this first EU anti-corruption report is to keep the focus on a limited number of key corruption-related issues. Wider aspects are mentioned for contextual coherence.

Constitutional arrangements (degree of devolution of power, position of judiciary, prosecutors vs executive branch), the organisation and quality of the civil service, active role of the state in the economy, privatisation are relevant from a corruption point of view. The report does not make any general value judgement on constitutional arrangements, or on how the boundary is drawn between state and private ownership. Hence, it is neutral with respect to decentralisation, but does look into whether adequate control mechanisms to manage corruption risks are in place. The same applies to privatisation: the transfer of state assets in private hands carries certain corruption risks, but may reduce long-term risks related to corruption, nepotism and clientelism. The report looks only at whether transparent, competitive procedures are in place to reduce the risk of corruption. Finally, there are different legal and constitutional arrangements concerning the relation between prosecution services and the executive power. The report is neutral with respect to the different models, since it only examines whether the prosecutors are able to pursue corruption cases in an effective manner.

Sources of information

The Commission was determined to avoid duplicating existing reporting mechanisms and adding to the administrative burden on Member States which are subject to various resource-intensive peer review evaluations (GRECO, OECD, UNCAC, FATF, Moneyval). The report is therefore not based on detailed questionnaires or expert country visits. It is based on the abundance of information available from existing monitoring mechanisms, together with data from other sources including national public authorities, research carried out by academic institutions, independent experts, think-tanks, civil society organisations etc.

Furthermore, the report draws on corruption-related information concerning a wide range of policy areas (e.g. public procurement, regional policy,) coming from various Commission departments and the relevant EU agencies (Europol and Eurojust). Studies and surveys were specifically commissioned for the purpose of further extending the knowledge base in areas relevant to the report. An extensive study on corruption in public procurement involving EU funds, launched at the initiative of the European Parliament, was commissioned by OLAF. Its findings fed into both the thematic chapter and the national chapters. Another study concerned corruption in healthcare. Two Eurobarometer surveys were carried out in 2013: the first targeted the general public, the second was done on a representative sample of companies in each Member State. Data on corruption at regional level were drawn from the Study on Quality of Government carried out by Gothenburg Quality of Government Institute. Finally, the Commission has used information generated by research projects co-funded by the EU, such as the National Integrity System reports carried out by Transparency International.

The EU Anti-Corruption Report also builds on the Cooperation and Verification Mechanism (CVM), a post-accession follow-up mechanism for Romania and Bulgaria that is managed by the European Commission. While these two mechanisms serve different purposes, the current report draws on the extensive knowledge and lessons acquired in the CVM process and makes references in the two country chapters accordingly. After the conclusion of the CVM procedure, this report will continue to follow up on those issues which are relevant in the context of corruption.

In relation to Croatia, extensive information was collected as part of the pre-accession process and related monitoring. More broadly, the monitoring of anti-corruption efforts that has been part of the enlargement process has brought many useful lessons that could have been applied in the context notably factors affecting sustainability of an anti-corruption agenda.

Preparatory process and supporting tools

In September 2011, the Commission adopted a decision to set up a group of experts on corruption to support the work on the EU Anti-Corruption Report. The expert group advises on the overall methodology and the assessments contained in the report. Seventeen experts were selected following an open call to which nearly 100 candidates registered their interest. The selected experts come from a wide variety of backgrounds (public authorities, law enforcement, judiciary, prevention services, private sector, civil society, international organisations, research, etc). The experts act in their personal capacity and they do not represent the institutions they come from. The group started its work in January 2012 and has met on average every three months.[50]

The Commission also set up a network of local research correspondents, operational since August 2012. The network complements the work of the expert group, by collecting and processing relevant information from each Member State. It consists of experts on corruption coming from research institutions and civil society organisations. In order to ensure a fully unbiased approach, 28 external reviewers oversee the main deliverables of the correspondents and issue an opinion on the fairness of the correspondents’ input.

The Commission organised two workshops with participation of national authorities (anti-corruption agencies, prosecution services, coordinating ministries), researchers, NGOs, journalists and business representatives. The first workshop took place in Sofia, on 11 December 2012, covering stakeholders from 14 Member States (AT, BG, CY, CZ, EL, ES, FR, HR, HU, IT, PT, RO, SK, SI). The second workshop took place on 5 March, in Gothenburg, Sweden, covering stakeholders from the 14 remaining Member States (BE, DE, DK, EE, IE, LU, MT, NL, LT, LV, PL, SE, FI, UK). The workshops were intended to inform about the Commission’s work on the report and to obtain country-specific illustrative good and negative practices on anti-corruption related issues in the Member States.

The Commission has also received input from national anti-corruption authorities which are part of EPAC/EACN network (European Partners Against Corruption/European Contact-Point Network Against Corruption).

The Commission also gave an opportunity to authorities of Member States to see early drafts of the respective country chapters (without the issues recommended for follow-up by the Member States) and provide comments. These comments were carefully considered in the preparation of the report.

Assessment methodology and use of indicators

The report is based primarily on qualitative rather than quantitative assessment. Qualitative assessment as indicated above is driven by the assessment of each country on its own merits. The focus is on what works and what does not work in terms of dealing with corruption in a particular country. Quantitative approaches play a lesser role, mostly because it is difficult to put a figure on how much of a problem corruption is, and even more difficult to rank the countries by results. The obstacle to using a quantitative approach is related to the fact that well-known surveys tend to compose their indexes using others’ data. This creates a cascade effect: composite indexes building on this approach may reflect data gathered one or two years before their publication. Surveys tend to use for instance the Eurobarometer results; however, by the time the composite index is published, another more recent Eurobarometer survey may be available.

Perception surveys, given the hidden nature of corruption, provide over time for an important indicator of pervasiveness of the problem. Surveys are by definition confined to the limited scope of the questions answered and depend heavily on the openness of respondents. The results of surveys are also undoubtedly influenced by immediate events occurring at the time of the interviews. At the same time, when a country takes more robust measures against corruption leading to more cases being revealed, more coverage by the media and more public awareness, perception surveys might lead to a negative dynamic – more people than previously will report high levels of perceived corruption. Also, responses may be politically biased, associating the popularity of a certain government with ineffectiveness in implementation of policies. Still, the mere perception of widespread corruption can be considered in itself an indicator of inefficient policies.

Moving beyond perception surveys, there is interesting research on correlation between some economic and social indicators and corruption. For instance, corruption was examined in the light of potential correlation with the rate of economic growth, allocation of public funds, internet penetration, budget for prosecution, and enforcement of competition rules. However, in practice, difficulties were encountered as regards capacity to collect credible, comparable data of high quality across Member States as well as to demonstrate convincingly the link between those factors and corruption. Finally, there is a difficulty in drawing clear policy-oriented conclusions from these correlations.

Despite these limitations, the Commission resolved to take stock of the already existing indicators. An inventory of these indicators was compiled, as comprehensively as possible, without a substantive judgement on the reliability/relevance of available data. The list was obtained by compiling data from already existing surveys (run by the OECD, the World Bank, the World Economic Forum, Transparency International, academia, etc.), from the Eurobarometer, and many other sources. The inventory was not designed to be the basis of a new index on corruption, but to provide elements of analysis supplementing the qualitative assessment that is at the core of the report. During preparation of the list, the Commission became aware that there might be a fundamental difficulty in relying primarily on indicators and statistical data for getting to the core of corruption problems, and most importantly for building actionable, tailor-made policy recommendations. Still, already established indicators directly relevant to the anti-corruption efforts supported by robust data were collected in order to examine the situation in Member States and identify areas for closer analysis in the country-specific research. These data (1) were used for scene setting (i.e. an introduction to the country chapters), and (2) serve as a starting/complementary point for further research on particular matters/sectors at country or EU level pointing to identification of problem and assessment of response; (3) ultimately, they also helped identify flows or lack of coherence in the different sources.

The interpretation of criminal justice statistics in the context of corruption deserves thoughtful consideration. In the case of serious crimes such as theft, robbery, burglary or assault, one could legitimately expect that a victim will report the crime to the police. Therefore, the crime statistics may indicate the scale of the problem. Corruption, unlike these crimes, is hidden, and in most cases there is no direct victim who could report the crime. Therefore the percentage of undetected cases is likely to be much higher for corruption than for other crimes.

A high number of cases reported to the law enforcement bodies, pursued through the courts and resulting in convictions may give an indication of the scale of the corruption problem. On the other hand, it also shows a positive picture: there may be less tolerance towards corruption, and therefore more willingness to report the crime; the law enforcement bodies and the judiciary are equipped with necessary means to detect and prosecute corruption cases. The contrary is also true: a low number of reported cases and prosecution is not necessarily a demonstration of low levels of corruption; it could result from the fact that there is no will to confront corruption, prosecutors and judges are not motivated, and/or they do not have the necessary tools and resources to deal with corruption cases. Furthermore, comparison of data on criminal proceedings is very difficult for the following two reasons: Firstly, there is no unified criminal definition of corruption within Member States, thus leading to different ways of recording corruption-related offences. Secondly, in view of differences in criminal procedures, for instance in requirements concerning evidence gathering, corruption might be prosecuted through other offences (e.g. fraud, money laundering).

The amount of available information on corruption, also beyond criminal cases, varies considerably among Member States. Again, the interpretation could be twofold as indicated above. On the one hand, correlation could be made between the scale of the problem and the quantity of available information. On the other hand there are cases where corruption is not prioritised and there is relatively little information that allows its scale to be measured and assess whether policy measures are sufficient and effective. This methodological challenge adds to the difficulty of making meaningful comparisons between Member States.

Measures to address corruption

The report rests on the assumption that there is no ‘one-size-fits all’ solution to the issue of corruption. It does not propose standardised solutions for all Member States: for example, what (legislative or other) solutions are needed to address the challenge related to conflicts of interests depends on a variety of factors, including the degree to which conflicts of interests are already perceived as an issue in a country, what cultural norms are in place, and the degree to which recognised societal norms need to be reflected in legislation. The report aims to present recommendations which fit the context of each Member State.

Comprehensive anti-corruption strategies were seen a decade ago as a universal recipe for putting corruption higher on the political agenda and to mustering political will and resources. Nevertheless, the results varied. While in some cases, the work on strategies was a catalyst for a genuine progress, in some others, impressive strategies had little or no impact on the situation on the ground. Therefore, the report is cautious about recommending the adoption of strategies, and it does so only where it appears that the effort of producing a strategy will lead to a positive engagement and significant improvement in cooperation between authorities.

Similarly to strategies, anti-corruption agencies have been very much in fashion. Again, diverse results followed. In some cases, where agencies have a strong mandate, independent committed leadership turned out to be the breakthrough development allowing them to prosecute high-level corruption cases. In other cases, the establishment of agencies might have played a negative role in creating an impression that other authorities do not need to do their share of the work. Therefore, the report assesses each situation on its own merits and takes account of the particular circumstances of each country, without imposing a ‘one size-fits-all’ solution.

The report draws attention to the fact that certain authorities that could play a key role in confronting corruption are not adequately equipped with human and financial resources. The Commission is keenly aware that in the current climate of austerity, allocating more resources for certain institutions and implementation efforts may face serious difficulties. However, such allocation may, in certain situations, bring substantial savings over time by reducing the cost of corruption. The report therefore, in some instances, advocates prioritising the allocation of resources to specific public bodies or programmes of key importance for preventing or fighting corruption.

Synergy with existing monitoring mechanisms and benchmark for assessment

At international level, the main existing monitoring and evaluation mechanisms are the Council of Europe Group of States against Corruption (GRECO), the OECD Working Group on Bribery, and the review mechanism of the UN Convention against Corruption (UNCAC). To prepare this report, the Commission drew extensively on the findings of these mechanisms (in particular GRECO and the OECD). The anti-corruption standards such those of UNCAC, or those set up by GRECO and the OECD (for example, the Council of Europe’s Criminal Law Convention on Corruption and its Additional Protocol, the Civil Law Convention on Corruption, Twenty guiding principles for the fight against corruption adopted by the Committee of Ministers of the Council of Europe, Council of Europe Recommendations on financing political parties, Council of Europe Recommendations on codes of conduct for public officials, and the OECD Anti-Bribery Convention) play an important role in terms of setting the reference for assessment.

The report does not replicate the detailed, technical analysis included in GRECO or the OECD reports, though it builds upon their recommendations whenever they are still not implemented and relevant to key issues in focus as identified for a particular country chapter. By bringing to the fore selected recommendations that have been previously identified within other mechanisms, the report aims at promoting their implementation.

The synergy with GRECO is particular important given that it covers all EU Member States as well as other European countries of relevance for future enlargement and the Eastern Partnership. The Commission is currently taking measures which will allow full accession of the EU in the future, allowing also for closer cooperation in view of subsequent editions of the EU Anti-Corruption Report.

[1]      http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0308:FIN:EN:PDF .

[2]      Notably the United Nations Convention against Corruption, as well as Council of Europe anti-corruption legal instruments, including the Resolution (97) 24 on the twenty Guiding Principles for the fight against corruption and the recommendations No. R (2000) 10 on codes of conduct for public officials and No. R (2003)4 on common rules against corruption in the funding of political parties and electoral campaigns.

[3]      The total economic costs of corruption cannot easily be calculated. The cited figure is based on estimates by specialised institutions and bodies, such as the International Chamber of Commerce, Transparency International, UN Global Compact, World Economic Forum, Clean Business is Good Business, 2009, which suggest that corruption amounts to 5% of GDP at world level. See also the Commission Communication on Fighting Corruption in the EU of 6 June 2011: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0308:FIN:EN:PDF .

[4]      Excellence in Public Administration for competitiveness in EU Member States (2011-2012).: http://ec.europa.eu/enterprise/policies/industrial-competitiveness/monitoring-member-states/improving-public-administration/

[5]      COM(2014)14.

[6]      A survey conducted among the general population in all Member States every two years, based on face-to-face interviews with a sample of 1000 or 500 respondents (depending on the size of the population). A total of 27 786 persons (representative sample) participated in this survey in late February and early March of 2013. The survey dealt inter alia with corruption perception generally, personal experience with corruption as well as attitudes towards favours and gifts. While the Eurobarometer surveys are run every second year since 2007, the Commission decided in 2013 to tailor questions to the needs of this report. Therefore, any comparison with previous years should be undertaken with caution. Full report is available at http://ec.europa.eu/public_opinion/archives/eb_special_399_380_en.htm#397.

[7]      A phone-based survey, so-called Flash Eurobarometer, covered six sectors in EU28, and was launched for the first time in 2013, carried out between 18 February and 8 March. Businesses from the energy, healthcare, construction, manufacturing, telecommunications and financial sectors (all company sizes) were requested to provide their opinion. Full report is available at  http://ec.europa.eu/public_opinion/archives/flash_arch_374_361_en.htm#374

[8]      Corruption Perception Index (CPI) is published every year by Transparency International: http://cpi.transparency.org/cpi2013/.

[9]      COM(2012) 363.

[10]    See general approach of 3 June 2013, Council Doc. 10232/13.

[11]    See opinion of the Committee of Legal Affairs, A7-0000/2013.

[12]    Asset disclosure does not automatically imply publication, which has to be balanced with the right to data protection. Some of the Member States which apply asset disclosure systems do not publish all asset declarations. They do however require public officials to submit detailed asset declarations to relevant authorities.

[13]    The Council of Europe has defined conflict of interest as a situation ‘in which the public official has a private interest which is such as to influence or appear to influence, the impartial and objective performance of his or her official duties’, private interest being understood to mean ‘any advantage to himself or herself, to his or her family, close relatives, friends and persons or organisations with whom he or she has or has had business or political relations.’ It includes also any liability, whether financial or civil, related thereto. See Recommendation No. R (2000) 10 of the Committee of Ministers to Member States on codes of conduct for elected officials:

http://www.coe.int/t/dghl/monitoring/greco/documents/Rec(2000)10_EN.pdf.

[14]    COM(2011) 309 final, Second Implementation Report of FD 2003/568/JHA of 6 June 2011: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0309:FIN:EN:PDF.

[15]    Findings of Quality of Government Institute, University of Gothenburg, Sweden.

[16]    http://assembly.coe.int/ASP/XRef/X2H-DW-XSL.asp?fileid=18151&lang=EN.

[17]    http://star.worldbank.org/star/.

[18]    Law 3861/2010.

[19]    http://diavgeia.gov.gr/en.

[20]    Transparency International conducted, within an EU co-funded project, a comparative analysis of the legal framework on whistleblowers’ protection across the EU, see  http://www.transparency.org/whatwedo/pub/whistleblowing_in_europe_legal_protections_for_whistleblowers_in_the_eu .

[21]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[22]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[23]    http://www.nispa.org/files/conferences/2008/papers/200804200047500.Medina_exclusion.pdf.

[24]    OECD Principles for Integrity in Public Procurement, http://www.oecd.org/gov/ethics/48994520.pdf.

[25]    France, Italy, Hungary, Lithuania, Netherlands, Poland, Romania and Spain.

[26]    ‘Identifying and Reducing Corruption in Public Procurement in the EU – Development of a methodology to estimate the direct costs of corruption and other elements for an EU-evaluation mechanism in the area of anti-corruption’, 30 June 2013, PricewaterhouseCoopers and ECORYS.

[27]    More specific examples are given in the section on positive and negative practices.

[28]    Directive 2004/18/EC of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, OJ L 134, 30.4.2004, p. 114; Directive 2004/17/EC of 31 March 2004 coordinating the procurement procedures of entities in the water, energy, transport and postal services sectors, OJ L 134, 30.4.2004, p. 1; Directive 2009/81/EC of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC, OJ L 216, 20.8.2009, p. 76.

Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts, OJ L 395, 30.12.1989, p. 33, as amended by Directive 2007/66/EC and Council Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, OJ L 76, 23.3.1992, p. 14–20.

[29]    The award of works concessions is presently subject to basic rules of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts while the award of services concessions with a cross-border interest is subject to the principles of the Treaty, and in particular the principle of free movement of goods, freedom of establishment and freedom to provide services as well as to the principles deriving therefrom such as equal treatment, non-discrimination, mutual recognition, proportionality and transparency.

[30]    SWD(2012) 342 final: http://ec.europa.eu/internal_market/publicprocurement/docs/implementation/20121011-staff-working-document_en.pdf.

[31]    Infringement procedures stand for the procedures launched by the European Commission against a Member State in case of an alleged failure to comply with EU law. Each Member State is responsible for the implementation of EU law (implementing measures before a specified deadline, conformity and correct application) within its own legal system. The European Commission is responsible for ensuring that EU law is correctly applied. Consequently, where a Member State fails through act or omission to comply with EU law, the European Commission has powers of its own to try to bring such violation (‘infringement’) of the EU law to an end and, where necessary, may refer the case to the European Court of Justice. The Commission can launch three types of infringement procedures: i.e. in case of failure to notify implementing measures within the deadlines set, when transposition is not in line with the EU rules and when there is an incorrect application (action or omission attributable to the Member States).

[32]    Other violations included: confusion of selection and award criteria, incorrect application of the rules on public-public cooperation (other than in-house), calculation of the contract value, selection criteria (problems other than discriminatory criteria), undue exclusion from the procedure, framework agreements and undue use of the defence and security exemption.

[33]    Evaluation report (SEC(2011) 853 final).

[34]    COM(2011) 895 final: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0895:FIN:EN:PDF.

[35]    COM(2011) 896 final: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0896:FIN:EN:PDF.

[36]    COM(2011) 897 final: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0897:FIN:EN:PDF.

[37]    2013 Flash Eurobarometer 374.

[38]    http://www.oecd.org/gov/ethics/oecdprinciplesforintegrityinpublicprocurement.htm.

[39]    ‘Identifying and Reducing Corruption in Public Procurement in the EU – Development of a methodology to estimate the direct costs of corruption and other elements for an EU-evaluation mechanism in the area of anti-corruption’, 30 June 2013, PricewaterhouseCoopers and ECORYS.

[40]    Decisions changing the zoning classification of a property/land or neighbourhood. Each classification entails different restrictions and obligations.

[41]    It is especially designed as guidelines for public tendering in one of areas most vulnerable to corruption, the construction sector, but is ultimately valid for all public procurement of municipalities.

[42]    Risk management policies concern the identification, assessment, and prioritisation of risks followed by concrete actions aiming at mitigating and controlling the potential impact of such risks.

[43]    ‘Red flagging’ mechanisms aimed to help contracting authorities or public procurement central bodies detect corrupt practices are ‘alert systems’ that entail the identification and monitoring of certain indicators the occurrence of which, may point to a suspicion of corrupt behavior (e.g. the accumulation of a certain number of indicators may ‘flag’ an alert in the system that would require more thorough verification or checks).

[44]    Istituto per l’innovazione e trasparenza degli appalti e la compatibilità ambientale.

[45]    For example for the building of a highway the materials may vary widely from one place to another depending on the climate, geographical features of the place where it is built, etc.

[46]    http://ec.europa.eu/internal_market/publicprocurement/docs/eprocurement/actionplan/actionplan_en.pdf.

[47]    ‘Public procurement in Europe- cost and effectiveness’, PwC Ecorys London Economics, March 2011.

[48]    Self-cleaning allows companies to take measures to remedy situations that have led to their inclusion on debarment lists and consequently lead to lifting such exclusion for public tenders.

[49]    Lists of companies excluded from public tenders due to, inter alia, final conviction decisions for corruption or other serious offences.

[50]    Names of members of the group and minutes of the meetings are available at the following link: http://ec.europa.eu/transparency/regexpert/detailGroup.cfm?groupID=2725.

BULGARIA

1. introduction – main features and context

Anti-corruption framework

Strategic approach. An Integrated Strategy for Preventing and Countering Corruption and Organised Crime was adopted in 2009,[1] followed by an action plan to prevent corruption in 2011-2012.[2] As part of the 2013 European Semester of economic policy coordination, the Council recommended that Bulgaria fight corruption more effectively.[3] In September 2013, the government presented a programme said to prioritise measures against corruption’s underlying causes, without explicitly referring to corruption.[4] Most Bulgarian authorities are open to consultation with stakeholders and civil society on draft laws and strategies. However, efforts against high level corruption have been reactive and formalistic, failing to deliver substantial improvement since EU accession in 2007.[5]  

Legal framework. Bulgaria amended corruption-related provisions in the Criminal Code following ratification of international conventions.[6] Efforts were made to keep the framework consistent, for instance by extending part of the criminalisation of bribery of domestic public officials to their foreign counterparts. According to the Council of Europe’s Group of States against Corruption (GRECO), the current criminalisation of bribery and trading in influence provide a fairly sound basis for the prosecution of various corruption offences.[7] Additional amendments were adopted in response to concerns raised by the European Commission and others regarding the lack of results of the criminal justice system against corruption and organised crime. A draft new Criminal Code was published for consultation in December 2013 and presented to Parliament in January 2014.[8]

Institutional framework. Reform efforts have resulted in the establishment of important and sometimes innovative structures to encourage specialisation in the judiciary and police. Since 2007, internal inspectorates of the administration, under the guidance of the Inspectorate General, have been strengthened. Joint teams between investigatory agencies and prosecution should also lead to a more effective response against corruption. However, the potential of this framework, including the Supreme Judicial Council’s powers to manage and lead the judiciary, has not yet been realised fully or consistently. The Commission for Prevention and Ascertainment of Conflict of Interest and the Centre for Prevention and Countering Corruption and Organised Crime (with its BORKOR project) have been embroiled in controversy. There was an overhaul in 2013 of police and security services dedicated to fighting corruption and organised crime. The outcomes of this overhaul remain to be seen. So far, few high-level cases have reached the courts. Dissuasive sanctions for corruption have not yet been applied. Public hearings in the appointment of senior magistrates marked a step in the right direction, even if many of the appointments have continued to raise doubts about political influence.

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer Survey on corruption, 84% of respondents say that corruption is widespread in Bulgaria (EU average 76%), and 73% think the only way to succeed in business is through political connections (EU average 56%). Only 9% (the lowest percentage in the EU) consider there are sufficient numbers of prosecutions to deter people from corrupt practices, while 16% view government efforts against corruption as effective (EU average 23%). The Eurobarometer survey also registered some positive developments, such as a drop (-24 percentage points since 2011) in the number of respondents who say they are affected by corruption in their daily lives (21%; EU average 26%).[9]

Experience of corruption. In the 2013 Special Eurobarometer Survey on corruption, 11% have been asked or expected to pay a bribe over the previous 12 months (EU average 4%). 

Business surveys. In the 2013 Eurobarometer business survey on corruption, 89% of Bulgarian respondents say corruption is widespread (EU average 75%), and 51% consider it a problem when doing business in Bulgaria (EU average 43%).[10]

Background issues

Cooperation and Verification Mechanism (CVM). Since Bulgaria’s EU accession, the European Commission has reported regularly on efforts to prevent and fight corruption and organised crime, and reform the judiciary. In July 2012, the Commission noted that over the previous five years, the cooperation of the Bulgarian authorities with the CVM had been inconsistent. The report called for more consistent implementation to bring together disparate actions.[11] The latest report, in January 2014, acknowledges a few steps forward but notes that overall progress has been not yet sufficient, and fragile. Broader consensus within Bulgaria is needed for a consistent approach against corruption and organised crime, although events have also illustrated widespread public aspiration for reform.[12] Monitoring will continue until all benchmarks are fulfilled satisfactorily.[13]

Conflicts of interests and asset disclosure. A law for the prevention of conflicts of interest was adopted in 2008, and a five-member commission was established in 2010 to rule on conflicts of interest and incompatibility.[14] In case of violation of the law, elected and appointed officials are subject to administrative penalties ranging from EUR 500 to EUR 10 000, and dismissal from office. The Supreme Judicial Council publishes on its website conflict of interest declarations submitted by magistrates.[15] Separately, the National Audit Office keeps a public register of the domestic and foreign assets, income and expenses of senior public officials and their spouses and children under 18. The asset declaration and verification system has however not effectively tackled illicit enrichment.[16] In March 2013, an amendment to the law extended the range of officials required to declare their assets, although it did not increase institutional capacity to handle and monitor such declarations.[17]

Private sector. Irregular payments and bribes by firms continue to be perceived as common.[18] Problem areas include patent applications, licensing, the issue of permits and the allocation of public subsidies.[19] The 2013 Global Competitiveness Report lists corruption as the most problematic factor for doing business in Bulgaria.[20] Bulgaria correctly transposed the provisions of Framework Decision 2003/568/JHA concerning the definition of active and passive corruption, including for non-profit entities, and appropriate penalties. Bulgaria partly transposed provisions on the liability of legal persons.[21] In July 2013, in response to OECD and United Nations Convention against Corruption (UNCAC) recommendations, the Ministry of Justice drafted amendments to the Law on Administrative Offences and Sanctions to increase penalties for legal persons in cases of a non-material advantage, and to extend the liability of foreign-based entities.[22] Of three cases of administrative sanctions imposed on legal persons in 2012, none concerned corruption-related crimes.[23] In 2012, the share of the shadow economy stood at 31.9% of GDP, the highest in the EU.[24]

Financing of political parties. The National Audit Office (NAO) publishes online the annual financial reports and donor lists of political parties. The 2011 Electoral Code and amendments to the Political Party Act expanded the NAO’s role, improved coherence in the framework for supervision of political financing, banned anonymous donations and donations by legal persons. Parties that fail to comply with reporting requirements may lose their state subsidy until the next parliamentary election or be fined EUR 2 500 to EUR 5 000; repeated failure may result in the dissolution of the party, pursuant to a court decision.[25] Party officials who obstruct a NAO audit may be fined EUR 500 to EUR 1000.[26] Bulgaria satisfactorily implemented GRECO recommendations concerning provisions on fundraising events, a single campaign bank account, the conservation of financial records, and NAO cooperation with the National Revenue Agency. GRECO also welcomed an increase in material support and human resources at the NAO, after 60 auditors were assigned in 2012 to audit political parties. GRECO welcomed the lowering of the ceiling for cash donations from EUR 2 500 to EUR 500 but suggested that it be lowered further, considering the local economic context.[27] GRECO also acknowledged a more coherent range of sanctions. However, the amounts of administrative fines are not dissuasive when compared with campaign spending limits,[28] while the dissolution of a political party is too severe a sanction to be of practical use.[29] In February 2013, the Electoral Code and the Law on Administrative Offences and Sanctions were amended in response to some pending GRECO recommendations. The amendments require the designation of campaign finance managers, prohibit the use of public resources for campaigning, and extend the relevant statute of limitations to two years. However, concerns remain about the extent to which official financial information submitted by parties reflects reality; one party in government declared that it had received no donations in 2012.[30]

Whistleblowing. The Administrative Procedure Code and the Conflict of Interest Prevention and Ascertainment Act contain provisions on the protection of whistleblowers’ identities, while the Criminal Procedure Code requires citizens, and specifically public servants, to report crime.[31] However, effective administrative arrangements for whistleblowers are not yet in place.[32] In 2011, a police officer was forced to resign after being identified as the source of media reports about donors to the Interior Ministry whose vehicles were allegedly exempt from road checks. Claims that donors to the Interior Ministry included suspects under investigation led the Ministry to introduce rules on donations and to publish an online list of donors, updated every three months.[33] However, no steps were taken to strengthen the protection of whistleblowers. In July 2013, all donations to the Interior Ministry were prohibited to prevent potential conflicts of interest.[34]

Transparency of lobbying. Lobbying is not regulated in Bulgaria. There is no specific obligation for registration of lobbyists or reporting of contacts between public officials and lobbyists.

Media and access to information. Media freedom is protected by law and there is a wide variety of media. However, media ownership is increasingly concentrated, compromising editorial independence.[35] Media ownership and financing lack transparency, and paid-for coverage is not consistently identified as such. Print media, especially local outlets, depend on the public sector for advertising revenue.[36] To address such concerns, Parliament is considering new legal provisions on the transparency of media ownership. In 2013, the government vowed to streamline procedures for awarding publicity contracts financed by EU funds; statistics suggest such contracts may have been allocated to the detriment of media independence.[37] An increase has been noted in media self-censorship due to corporate and political pressure.[38] Bulgaria has the lowest rank among EU members in the World Press Freedom Index.[39]

Organised crime. Corruption facilitates organised criminal activities and obstructs their prosecution. Organised crime in Bulgaria is reported to enjoy patronage through corruption in public administration, the judiciary, police and customs.[40] A minister resigned in 2008 over contact with organised crime leaders. According to one assessment, in 2010-2011, illicit cigarettes and VAT fraud led to corruption within law enforcement, state and local administration and local political parties, while corruption related to drugs and prostitution declined.[41] While its focus may shift, organised crime continues to exercise influence in the economy.[42]

2. Issues in focus

Independence and effectiveness of anti-corruption institutions

CVM reports have repeatedly noted the need for an independent institution to focus efforts, make proposals and drive action against corruption.[43] In response to this recommendation, an inter-agency working group, in consultation with civil society, examined the feasibility of an independent council to coordinate and monitor the prevention and combating of corruption. Such a council has not yet been established. The Commission for Prevention and Countering of Corruption, chaired by the Minister of Interior, coordinates and monitors the preparation and implementation of anti-corruption strategic documents.[44] However, anti-corruption bodies remain fragmented and lack independence and external oversight. Institutions tasked with investigating conflict of interest and forfeiture of illegal assets lack autonomy and resources.

Ministry inspectorates need more analytical capacity to work proactively. The anti-corruption unit at the inspectorate within the Ministry of Finance has limited powers to address corruption in customs and tax administration. It is unclear to what extent ministries implement a risk assessment methodology developed by the General Inspectorate.

At the Ministry of Interior, the Internal Security Directorate investigated 728 cases in 2011, a 30% increase over the previous year.[45] The directorate has units throughout the country and it can use covert investigative methods, yielding a degree of progress against low-level corruption in border and traffic police. However, there is duplication with the Interior Ministry’s inspectorate, which would benefit from a comprehensive system to manage tip-offs. Challenges remain in the prioritisation of higher-level cases.

In April 2013, the head of the Interior Ministry’s Directorate-General for Combating Organised Crime was dismissed and prosecutors launched a bribery investigation after an anonymous source sent the media classified documents from probes dating back over a decade. The authenticity of the documents was confirmed but it remains unclear why action was not taken earlier on indications that smuggling and drug-trafficking suspects were being shielded from within law enforcement.

Repeated wiretapping controversies revealed flaws in the system for authorisation and conduct of surveillance, with significant implications for Bulgaria’s capacity to address corruption. Leaked transcripts of wiretapped conversations appear to indicate political interference in the prosecution service and media, and shielding of businesses from investigation. In April 2013, prosecutors launched an investigation into a former minister and other officials amid claims of mass unauthorised wiretapping of politicians, magistrates and business people. A court verdict, acquitting a former defence minister of bribing an investigator to shelve an earlier investigation, noted irregularities in the approval and handling of surveillance material.[46] These cases highlighted the need for stronger guarantees against the risk of surveillance abuses, as the European Court of Human Rights ruled in 2007 and 2012.[47] In August 2013, Parliament overrode a presidential veto over amendments to the Special Surveillance Devices Act. The veto had been based on concerns over judicial independence and the powers of the newly created Bureau for control over special surveillance devices to request information and issue binding instructions.

The State Agency for National Security (SANS) was established in 2008 with significant resources, to fight high-level corruption and serious organised crime. However, its initial period was marked by controversy. After only two years of existence, a new government revised its mission and decreased its staff and budget, transforming it into a security agency dealing mostly with counterintelligence matters. SANS activities are supervised by a special parliamentary committee with rotating members. Its anti-corruption results were limited, as it was gradually stripped of its focus on corruption investigation. In May 2013, the deputy head of the SANS resigned, taking responsibility for leaks in an investigation into alleged electoral fraud.

In 2013, an overhaul of the security apparatus transferred the Interior Ministry’s Directorate-General for Combating Organised Crime to the SANS. Control over surveillance was transferred from the Interior Ministry to the Council of Ministers. The outcome of these reforms remains to be seen. As noted in the January 2014 CVM report, personnel changes since May 2013 have reinforced concerns about the political independence of officials responsible for fighting corruption and organised crime, and about continuity in the law enforcement sector.[48]

Parliament’s fast-track amendment of the SANS Law[49] in 2013 and the election of a controversial MP as head of the SANS raised concerns in Bulgaria and beyond. The European Commission urged the authorities to make key appointments in the fight against corruption and organised crime on the basis of merit and integrity, and following extensive consultation.[50] The controversial appointee was withdrawn and replaced. An appointee for deputy minister of interior was also withdrawn.

Established at the Council of Ministers in 2010, the Centre for Prevention and Countering Corruption and Organised Crime is charged with assessing risks across public institutions, focusing on procurement.[51] Its annual budget is EUR 2.5 million. In January 2013, the Centre’s first interim report presented software (BORKOR) developed to identify corruption risks, and listed numbers of vulnerable areas without naming them.[52] The head of the Centre was dismissed in 2012 for insufficient results, and its deputy head was removed without explanation in 2013. The new government has not yet confirmed its plans for the Centre. Concrete results of BORKOR are yet to be seen.

The Commission for Prevention and Ascertainment of Conflict of Interest became operational in 2011.[53] It has not yet succeeded in acting systematically and independently to prevent or uncover risks of political corruption. Instead, there are indications of an arbitrary and formalistic approach. An example is a probe into a former minister of economy, energy and tourism on his resignation in 2012. The commission established a conflict of interest based on dividends drawn on company shares nominally worth about EUR 140.[54] In July 2013, prosecutors charged the chair of the commission with abuse of office on the basis of evidence of politically manipulated investigations. An appeals court upheld his dismissal. An MP resigned over the same case.

The Law on the Forfeiture of Illegally Acquired Assets, which entered into force in November 2012, applies to all citizens and envisages proceedings regardless of criminal or administrative liability.[55] The dissuasive effect of the new provisions will depend on cooperation with prosecutors and administrative control authorities, and consistency of judicial interpretation regarding the burden of proof. In September 2013, the Asset Forfeiture Commission[56] and the Prosecutor’s Office agreed to establish joint teams in cases of discrepancy between the income and assets of persons under investigation.[57] The first such team is to investigate a former senior MP charged with money laundering. In the 2013 Eurobarometer, 12% of respondents in Bulgaria say that measures against corruption are applied impartially and without ulterior motives (EU average 33%).

Independence and integrity of the judiciary

Specialised international bodies such as UNCAC[58] and GRECO[59] have confirmed that a satisfactory legal framework is largely in place to allow the prosecution of corruption-related offences, with some remaining room for improvement. The lack of results in terms of final court rulings on high-level corruption is attributable to weaknesses (including perceived corruption) in investigative and judicial practice. UNCAC reviewers noted that legislative amendments need to be accompanied by administrative reform to enhance inter-agency coordination, streamline data collection, and promote effective implementation of relevant laws. Delays in investigations and judicial proceedings also need to be addressed.[60] As repeatedly noted in CVM reports, the prosecution of corruption and organised crime is obstructed by flawed pre-trial investigations, procedural delays and dismissal on technicalities.

Allegations surfaced in 2009 that a construction entrepreneur had acted as a power broker, promising to ‘sell’ senior positions in the judiciary. A perjury case against him for testifying that he did not know any magistrates collapsed. Two Supreme Judicial Council members resigned after telephone records revealed they had been in frequent contact with the alleged broker. In 2013, courts sent a tax evasion case against the same person back to prosecutors because of procedural flaws. Some of his assets were frozen at the initiative of the Forfeiture Commission.

In September 2012, Parliament’s vote on candidates for the Supreme Judicial Council (SJC), the judiciary’s self-governing body, followed partisan considerations. Background checks on candidates were limited to information about criminal or disciplinary offences.[61] Rulings by the newly elected SJC have not yet established a consistent record against integrity violations.

The nomination and selection of new Constitutional Justices highlighted integrity challenges in the judiciary and flaws in Parliament’s role in judicial appointments. A parliamentary committee chair refused to allow participants in a hearing on a candidate to consider corruption-related allegations raised by an MP. Instead, Parliament proceeded with the nomination. After the European Commission warned of a possible interim CVM report, the candidate was not allowed to take oath in extraordinary circumstances, after the President left the swearing-in ceremony. The candidate later requested retirement.

The next candidate for the Constitutional Court also had to withdraw after making inconsistent statements about her family’s property and financial transactions. The case highlighted the lack of vetting for specialised prosecutors, as the candidate was deputy chair of the Specialised Appellate Prosecutor’s Office, established to combat organised crime. She was subsequently demoted. While increased transparency did help prevent controversial appointments, the process also exposed enduring challenges.

The SJC has initiated checks on key courts and cases, to produce an analytical report and recommendations on the reasons for failures and delays. The new SJC’s committee for professional ethics and prevention of corruption has not yet removed doubts about its capacity to uncover corruption and safeguard integrity.[62] In September 2013, the SJC suspended one of its members, a senior prosecutor subject to a disciplinary probe, amid speculations of trading in influence ahead of the 2012 election of the SJC.[63]

Magistrates’ internal integrity mechanisms are currently under close scrutiny. The Prosecutor General ordered an investigation at the Inspectorate of the Supreme Cassation Prosecutor’s Office, which revealed violations, including destruction of documents and disciplinary proceedings against prosecutors because of their rulings on cases. The head of the Inspectorate was removed from office and the Prosecutor General has brought a proposal in the SJC for her dismissal as a magistrate, the toughest disciplinary action. In April 2013, Sofia prosecutors specialising in the misuse of EU funds charged a former agriculture minister, following an investigation that other prosecutors had allegedly delayed.

A detailed functional audit commissioned by the Prosecutor General, as suggested by the CVM, noted delays in the prosecution of high-level corruption and a ‘campaign’ approach to opening cases after ministers had left office. The Prosecutor General drafted an action plan on the basis of the functional audit and an analysis of corruption cases since 2007.

In March 2013, a senior prosecutor resigned after it emerged that he had contravened the system for random allocation of cases. The case builds on OLAF investigations into the import of equipment from Germany, entailing alleged embezzlement from the EU’s special accession programme for agriculture and rural development (SAPARD). In one case the suspects were donors to a presidential election campaign. German accomplices in the same case were sentenced and imprisoned in their country in 2008.

Events since July 2012 indicate some progress in public hearings and dismissal of tainted magistrates. However, CVM recommendations on judicial reform have not yet been taken on board fully. Citing increasing threats to judicial independence, Freedom House lowered Bulgaria’s rating for judicial framework and independence in 2012.[64]

Good practice: role of NGOs in fostering transparency and accountability

The Transparent Judicial Appointments Initiative by the Bulgarian Institute for Legal Initiatives (BILI) facilitates public scrutiny of recruitment and promotion in the judiciary, and promotes integrity as a key element in such decisions.[65] Using open sources of information, it publishes ethical and professional profiles of candidates who are allowed to have input in the assessment. BILI also works with individual courts and the Supreme Judicial Council to organise public hearings. The initiative aims for more transparent and merit-based nominations of magistrates to management positions, as part of a modernised human resources policy within the judiciary, as recommended in CVM reports.

Public procurement

The public administration has been subject to a variety of anti-corruption measures, including the adoption in 2008 of the Law on prevention and disclosure of conflicts of interests (amended in 2013), the decision to vest the State Financial Inspection Agency with ex-officio powers in 2011 (allowing it to initiate an investigation not only when alerted but also on its own initiative), the establishment of inspectorates in ministries and state bodies, awareness campaigns and training, and the establishment of BORKOR, a risk assessment tool with a special focus on the prevention of corruption in public procurement. Nevertheless, gaps remain in implementing transparency and anti-corruption provisions.

More proactive ex-ante and stronger ex-post controls, based on risk assessment, are needed to prevent, detect and address corruption in public procurement. CVM reports note risks and shortcomings in the implementation of public procurement rules, as indicated by audits conducted and complaints received by the European Commission. Sectors at risk include infrastructure works, energy and healthcare. The problem is aggravated by the scarcity of dissuasive sanctions applied in public procurement fraud cases. In August 2013, the government proposed amendments to the public procurement law aiming to open opportunities for small and medium enterprises, extend ex-ante controls to works contracts financed by national funds above certain thresholds (to date, these controls apply only to EU funds above certain thresholds), to vest the managing authorities with ex-ante control powers, and enhance the selection process for external experts. In addition, contracting authorities would be required to publish online information not just on the tender but also on the implementation of contracts.[66]

These proposals were prompted in part by popular perception that a few companies dominate the procurement market in areas such as road construction. 73% of the general population surveyed in the 2013 Eurobarometer survey say that the only way to succeed in business is through political connections (EU average 56%). In the 2013 Eurobarometer business survey, 58% of Bulgarian respondents (the highest in the EU) said that corruption had prevented them from winning a public tender or procurement contract over the last three years.[67] Bulgarian respondents from the business sector perceive the following practices as being widespread in public procurement: involvement of bidders in the design of specifications (36%), unclear selection or evaluation criteria (49%), conflicts of interests in the evaluation of the bids (57%), specifications tailor-made for particular companies (58%), abuse of emergency grounds to justify the use of non-competitive or fast-track procedures (33%) and collusive bidding (41%). 66% considered that corruption is widespread in public procurement managed by national authorities (EU average: 56%) and 78% thought this was the case with local authorities (EU average: 60%). At the end of 2011, the Bulgarian Industrial Association calculated that corruption in tenders and EU funding applications increased from 66% to 75% year-on-year, i.e. affecting 75% of all tenders in 2011, according to a survey of 500 managers from various sectors of the Bulgarian economy.[68] These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerability to corruption in public procurement procedures.

The Ministry of Defence has carried out anti-corruption initiatives such as the adoption of an ethics code for its officials and an integrity pact with business partners. However, in December 2012, the Ministry decided to purchase fighter jets without tender, in a procedure that was subsequently cancelled. In May 2013, business leaders called for greater transparency in defence procurement.

Irregularities have been reported in EU-funded tenders for distributing food to the poor. Procurement corruption is also a challenge in local government, including the involvement of political parties at local level.[69] Smaller towns face particular risks of organised crime infiltration, linked to a combination of violence, threats and collusion with local politicians and law enforcement, and concentration of economic power. Such risks have direct implications for the ability of local authorities to carry out impartial and transparent procurement procedures.

Local governments are responsible for a significant proportion of public procurement. According to CVM reports, municipalities implemented anti-corruption measures such as a ‘one-stop shop’ system to reduce the number of officials in direct contact with the public, enhancing transparency through the use of municipal newsletters and websites, codes of ethics, establishing systems for internal financial management and control, recruiting some 400 internal auditors and recruiting local public mediators (local ombudsmen). All 28 regions in Bulgaria have anti-corruption councils, which should include representatives of local government, territorial structures, the judiciary, various ministries, civil society and business.[70] The impact of these councils on the reduction of corrupt behaviour in local and regional public bodies remains difficult to assess, as no concrete information has been made public.

A crucial element supporting transparency, including on procurement, is effective access to information. This is limited in practice, despite the existence of relevant legislation.[71] No independent oversight mechanism is in place to ensure uniform and correct implementation of the law on access to public information.[72] A 2013 survey of institutional websites found that 66% included a register of procurement tenders and 10% contained information about contracts awarded.[73]

Improved knowledge and capacity of public authorities involved in the procurement process, as well as a fully operational nationwide e-procurement system allowing electronic submission of bids, would increase transparency and help prevent corruption.

Accountability and integrity of elected officials

An appropriate system to ensure the accountability and integrity of elected official sets an example to others and constitutes an important element in the prevention of high-level corruption. Members of Bulgaria’s Parliament are required to declare potential conflicts of interest when proposing bills, speaking in plenary or in a committee.[74] Attempts to pass a code of conduct for Members of Parliament have failed. In the absence of a code, Parliament’s Committee on corruption, conflicts of interest and parliamentary ethics has been ineffective as illustrated by a 2010 hearing convened after 16 MPs appeared during session time at a presentation staged by media with the promise of a free mobile telephone. In July 2013, following the election of a controversial MP as chair of the Committee, the National Assembly transferred the issue of parliamentary ethics to the Committee on religions.[75]

The former deputy chair of the parliamentary committee for agriculture and forests was accused of proposing amendments that served his private interests, including a partial lifting of the ban on construction on swapped forest land, as well as amendments to the hunting act and efforts to lift a ban on smoking in public. After lengthy deliberations, the Commission for Prevention and Ascertainment of Conflict of Interest ruled that the former MP had breached rules by opposing a smoking ban; he had transferred ownership of tobacco businesses to his relatives before entering Parliament. A conflict of interest was also established regarding proposed amendments to the forestry act.[76] If the Commission’s decision is upheld upon appeal, the former MP may be subject to a fine of EUR 2 500 to EUR 3 500 and may face confiscation of his income from public office during the period in question. He is also under investigation for vote-buying, after the emergence of a secret video recording in April 2013.

In 2010, Parliament’s Committee on corruption, conflict of interests and parliamentary ethics found evidence of a conflict of interest in the case of a political party leader who had received EUR 1 million as a consultant on hydropower projects, without engineering qualifications. The case was referred to the Supreme Administrative Court which ruled there was no conflict of interest.[77] In a separate case, an MP was arrested in July 2012 on charges of demanding a bribe to intervene in a local agricultural dispute. He later resigned from Parliament.

Electoral irregularities

Electoral irregularities often entail the corruption of public officials and undermine confidence in the institutions tasked with upholding the rule of law. In Bulgaria, public attention has long focused on the problem of vote-buying, in particular among minority groups. Waste-disposal industry owners, leading employers of members of the Roma minority, are suspected of using their influence to manipulate the voting of Roma communities. Cases were reported during the 2011 local elections and 2013 parliamentary elections. Eradicating vote-buying requires a structural and multi-disciplinary approach including consideration of access to education and employment.[78]

The Criminal Code contains a section on crimes against the political rights of citizens, including vote-buying.[79] In February 2013, the minimum prison sentence for organising vote-buying was increased.[80] There is no information available on attempts by the authorities to thoroughly audit the electoral process to identify and address weaknesses. In 2012, Transparency International Bulgaria published a detailed analysis of the transparency and integrity of the election process.[81] It recommended increasing the budgetary independence and staff of the electoral administration, including permanent experts in addition to political appointees, ensuring free access to media by registered candidates, and amending the legislation to allow closer monitoring by civil society. Effective and dissuasive sanctions have not yet been applied. Prosecutors launched an investigation into vote-buying and tax fraud following the emergence in May 2012 of a wiretapped conversation suggesting electoral abuse (vote-buying and falsification of election results) and links between political parties and organised crime.

In the lead-up to the May 2013 parliamentary elections, the message was repeatedly emphasised that buying or selling votes is a crime. International observers acknowledged the elections as competitive and well run, but noted problems with public trust in the process, provoked by allegations of pre-election wiretapping and vote-buying. Shortly before the elections, prosecutors discovered unaccounted-for ballot papers at a printing press owned by a local councillor from a leading political party. The revelation prompted speculation on the day before the elections, when campaigning is prohibited by law.

Prosecutors opened 77 investigations and seven people were arrested for electoral fraud. Plea bargains led to one sentence of a fine and five months’ imprisonment for having paid five voters EUR 7.50 each; seven others received suspended sentences.[82] Increased vigilance helped to expose individual instances of a problem whose long-term resolution requires a comprehensive effort. More senior organisers of vote-buying have not so far been prosecuted.

3. Future steps

Fighting corruption has long been a declared priority for Bulgaria. Since EU accession in 2007, these efforts have been supported by the Cooperation and Verification Mechanism, which monitors progress on six related benchmarks. Legal and constitutional reforms have resulted in the establishment of new structures and increased specialisation. However, corruption remains a serious challenge in Bulgaria at different levels, and petty bribery continues to be reported in healthcare, police, customs, local authorities and beyond. The absence of dissuasive sanctions being applied in practice for corruption, especially for senior officials, exacerbates the challenges. A focus on results and additional efforts are necessary to improve the independence and effectiveness of anti-corruption institutions and the judiciary, to boost the transparency of public procurement and the accountability and integrity of elected officials, and to prevent electoral irregularities.

The following points require further attention:

· Ensuring effective coordination of anti-corruption institutions, shielding them from political influence and appointing their management in a transparent, merit-based procedure. Conducting consistent checks and applying dissuasive sanctions for conflicts of interest.

· Applying clear integrity criteria for appointing magistrates and evaluating their performance in a transparent procedure, and ensuring random assignment of cases in courts through a single, effective nationwide system, as recommended by the CVM.

· Adopting a code of ethics for Members of the National Assembly and establishing an effective oversight mechanism. Ensuring dissuasive sanctions for electoral fraud, including for higher-level organisers, and developing a comprehensive multi-disciplinary strategy to focus on vulnerable parts of the population.

· Further extending the scope of compulsory ex ante control of public procurement, including technical specifications and exceptions from the applicable legislation, effectively using the ex-officio powers of the State Financial Inspection Agency for ex-post controls. Effectively applying dissuasive sanctions for corruption in public procurement at national and local level.

[1]      Commission on Prevention and Countering Corruption. Integrated Strategy for Prevention and Countering Corruption and Organised Crime http://anticorruption.government.bg/downloads/Normativni-aktove/strategy-KPPK.pdf.

[2]      http://anticorruption.government.bg/downloads/Normativni-aktove/Plan_za_Deistvie_2011.doc%20za%20KPPK.doc.

[3]      Council recommendation 2013/C 217/03 of 9 July 2013.

[4]      http://www.government.bg/cgi-bin/e-cms/vis/vis.pl?s=001&p=0213&n=480&g=  20 September 2013.

[5]      The lack of independent, proactive anti-corruption institutions has inhibited progress, leading to administrative activities that tend to be reactive and to focus on formal compliance alone. CVM Report, July 2012.

[6]      The Criminal Law Convention on Corruption and the Additional Protocol to this Convention, the OECD Convention on combating bribery of foreign public officials in the framework of international business transactions, and the United Nations Convention against Corruption.

[7]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282009%297_Bulgaria_One_EN.pdf

[8]      http://www.justice.government.bg/Files/proekt_NK_635232275501945576.doc.

[9]      2013 Special Eurobarometer 397.

[10]    2013 Flash Eurobarometer 374.

[11]    http://ec.europa.eu/cvm/docs/com_2012_411_en.pdf.

[12] http://ec.europa.eu/cvm/docs/com_2014_36_en.pdf.

[13]    http://ec.europa.eu/enlargement/pdf/bulgaria/bg_accompanying_measures_1206_en.pdf.

[14]    Commission for Prevention and Ascertainment of Conflict of Interest, discussed in greater detail in the section of this chapter on the independence and effectiveness of anti-corruption institutions.

[15]    http://www.justice.bg/bg/declaration/zki/kzld/pr16-t38.pdf.

[16]    See CVM Reports of July 2012, p. 15 and July 2011, p. 10.

[17]    http://cpaci.bg/2011-08-03-09-36-42/4-2011-08-03-09-17-27.

[18]    ‘Excellence in Public Administration for competitiveness in EU Member States’, report prepared in 2011 - 2012 for the European Commission, DG Enterprise and Industry by Austrian Institute of Economic Research (WIFO), Vienna; Center for European Economic Research (ZEW), Mannheim; IDEAConsult, Brussels. p. 144.

[19]    ‘Excellence in Public Administration for competitiveness in EU Member States’, report prepared in 2011 - 2012 for the European Commission, DG Enterprise and Industry by Austrian Institute of Economic Research (WIFO), Vienna; Center for European Economic Research (ZEW), Mannheim; IDEAConsult, Brussels. pp. 60 and 61.

[20]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf  p. 138.

[21]    COM(2011) 309 final, Second Implementation report of FD 2003/568/JHA of 6 June 2011: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf.

[22]    Проект на Закон за изменение и допълнение на Закона за админстративните нарушения и наказания, http://www.justice.government.bg/Files/ZID_ZANN-11_07_13_635103661595449739.doc.

[23]    These statistics relate to Article 83a of the Law on Administrative Offences and Sanctions on legal persons which (would) have benefited from various crimes, including all crimes under the bribery section of the Criminal Code, committed by company staff in the course of their duties. Prosecutor’s Office of the Republic of Bulgaria (17 September 2013) Доклад за прилагането на закона и за дейността на прокуратурата и на разследващите органи през 2012 година http://prb.bg/main/bg/Information/3923/  p. 71.

[24]    http://ec.europa.eu/europe2020/pdf/themes/07_shadow_economy.pdf.

[25]    Article 40(1) Political Parties Act.

[26]    National Audit Office, http://www.bulnao.government.bg/index.php?p=2344&lang=en.

[27]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%2914_Bulgaria_EN.pdf.

[28]    Campaign expenditure is capped at EUR 2 million for parliamentary elections and EUR 1 million for presidential elections.

[29]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%2914_Bulgaria_EN.pdf.

[30]    National Audit Office, http://erik.bulnao.government.bg/egfonew/default.aspx?year=2012.

[31]    UNCAC reviewers recommended more comprehensive provisions to protect whistleblowers. http://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/18-22June2012/V1187232e.pdf

[32]    Commission Staff Working Document SWD 232 final. (July 2012). Bulgaria: Technical Report accompanying the document: COM(2012) 411 final Report from the Commission to the European Parliament and the Council on Progress in Bulgaria under the Cooperation and Verification Mechanism. p. 24. http://ec.europa.eu/cvm/docs/swd_2012_232_en.pdf.

[33]    http://www.mvr.bg/pravila_darenia.htm.

[34]    Except for the provision of financing and equipment under international treaties and projects.

[35]    Commissioner Neelie Kroes and EU Member State ambassadors in Sofia have raised concerns about transparency and concentration of media ownership.

[36]    http://www.freedomhouse.org/report/freedom-press/2013/bulgaria.

[37]    Изпълнение на всички Комуникационни планове на Оперативните програми и на Програма за развитие на селските райони от началото на 2007 г. до 22.05.2013 г. http://www.government.bg/fce/001/0211/files/spravka%20EP.pdf.

[38]    US Department of State, 2012 Human Rights Report, http://www.state.gov/j/drl/rls/hrrpt/2012/eur/204270.htm.

[39]    Reporters without Borders, World Press Freedom Index 2013, http://en.rsf.org/press-freedom-index-2013,1054.html.

[40]    ‘Study to examine the links between organised crime and corruption’, Philip Gounev and Tihomir Bezlov, Center for the Study of Democracy, 2010.

[41]    Center for the Study of Democracy. (2012). Serious and Organised Crime Threat Assessment (2010-2011). http://www.csd.bg/artShow.php?id=15991.

[42]    SWD (2012) 232 (Accompanying the European Commission’s Report on Progress in Bulgaria under the Cooperation and Verification mechanism, p 29.

[43]    Commission Report COM(2012) 411 final. (2012, July 18). Report from the Commission to the European Parliament and the Council on Progress in Bulgaria under the Cooperation and Verification Mechanism. http://ec.europa.eu/cvm/docs/com_2012_411_en.pdf.

[44]    The Minister of Finance is Vice-Chair of the Commission.

[45]    CSD (2013), Countering Police Corruption: European Perspectives, http://www.csd.bg/fileSrc.php?id=21610. p. 105.

[46]    http://scc.spnet.net/scc/wp-content/uploads/2013/05/motivi_4048_2010.doc.

[47]    Case of Association for European Integration and Human Rights and Ekimdzhiev v. Bulgaria http://hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-81323. Case of Hadzhiev v. Bulgaria http://hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-114076.

[48]    http://ec.europa.eu/cvm/docs/swd_2014_36_en.pdf pp. 21-22. Center for the Study of Democracy, in Policy Brief 43, November 2013, notes that: ‘Such degree of sudden politically-motivated personnel changes within law-enforcement and civil service, coupled with premature and hasty restructuring of the law-enforcement institutions, has significantly weakened the state’s capacity to counter organised crime, corruption, and the grey economy’. p. 11. http://csd.bg/fileSrc.php?id=21643

[49]    National Assembly of the Republic of Bulgaria, Law on Amending and Supplementing the Law establishing the State Agency for National Security http://parliament.bg/bg/bills/ID/14377/.

[50]    http://europa.eu/rapid/press-release_SPEECH-13-561_en.htm.

[51]    Centre for Prevention and Countering Corruption and Organised Crime. http://borkor.government.bg/en/.

[52]    Centre for Prevention and Countering Corruption and Organised Crime (2013), ‘Първи доклад на ЦППКОП относно проекта „Модел на решение в областта на обществените поръчки’, http://borkor.government.bg/en/

[53]    Commission for Prevention and Ascertainment of Conflict of Interest, http://cpaci.bg/en/.

[54]    http://cpaci.bg/images/reshenia/109_16.08.pdf.

[55]    Law on the Forfeiture of Illegally Acquired Assets, http://www.mvr.bg/NR/rdonlyres/2991F5B0-8DF9-4460-92FB-41D1CA6791DC/0/ZOPDNPI.pdf.

[56]    Commission for Forfeiture of Illegally Acquired Assets, http://www.ciaf.government.bg/.

[57]    Commission on Forfeiture of Illegally Acquired Assets (3 September 2013) Инспектори на КОНПИ и прокурори ще работят съвместно в разследващи екипи.

[58]    http://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/18-22June2012/V1187232e.pdf.

[59]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2009)7_Bulgaria_One_EN.pdf.

[60]    UNODC, Country Review Report of Bulgaria, http://www.unodc.org/documents/treaties/UNCAC/CountryVisitFinalReports/2013_08_06_Bulgaria_Final_Country_review_report.pdf.

[61]    Summary setting out an appraisal of the state-of-play of judicial reform and the necessary further steps to be taken. http://www.judgesbg.org/en/library/papers/item/512-summary-setting-out-an-appraisal-of-the-state-of-play-of-judicial-reform-and-the-necessary-further-steps-to-be-taken.html.

[62]    Commission Staff Working Document SWD (2012) 232 final. (2012, July 18). Bulgaria: Technical Report accompanying the document: COM(2012) 411 final Report from the Commission to the European Parliament and the Council on Progress in Bulgaria under the Cooperation and Verification Mechanism. p. 15. http://ec.europa.eu/cvm/docs/swd_2012_232_en.pdf.

[63]    Supreme Judicial Council, 26 September 2013, http://www.justice.bg/bg/decisions/2013/pr-37-13.htm.

[64]    http://www.freedomhouse.org/sites/default/files/Bulgaria_final.pdf.

[65]    http://judicialprofiles.bg/profiles/.

[66]    http://www.government.bg/fce/001/0211/files/ZID_ZOP.doc.

[67]    2013 Flash Eurobarometer 374.

[68]    http://www.bia-bg.com/uploads/files/_oldsite_news/bulgarian_industrial_association_news_1324284448_anketa_2011.pdf.

[69]    Center for the Study of Democracy. (2012). Serious and Organised Crime Threat Assessment (2010-2011). http://www.csd.bg/artShow.php?id=15991.

[70]    Council of Ministers. (2012). Report on the State of the Public Administration 2011 http://www.strategy.bg/Publications/View.aspx?lang=bg-BG&Id=81.

[71]    Закон за достъп до обществена информация, http://lex.bg/laws/ldoc/2134929408.

[72]    ‘Money, politics, power: Corruption risks in Europe’, by Transparency International. June 2012, p. 5.

[73]    Tendencies in Online Disclosure of Information, Results from AIP 2013 Audit of the Web Sites of Executive Bodies in Bulgaria, http://store.aip-bg.org/surveys_eng/AIP_Active_Transparency_Audit_2013.pdf.

[74]    Rules for the organisation and activity of the People’s Assembly, Chapter 12, http://parliament.bg/bg/rulesoftheorganisations.

[75]    http://parliament.bg/bg/desision/ID/14481.

[76]    Commission for Prevention and Ascertainment of Conflict of Interest, http://www.cpaci.bg/images/reshenia/206.pdf and http://www.cpaci.bg/images/reshenia/205.pdf.

[77]    Supreme Administrative Court, http://www.sac.government.bg/court22.nsf/d038edcf49190344c2256b7600367606/db2227f5a1f93534c22577af0030920a?OpenDocument.

[78]    Le processus électorale en Bulgarie — Principaux risques et déficits, Fondation RiskMonitor, Sofia 2011, p 90.

[79]    Art.167, para.2 and para.3 of the Criminal Code.

[80]    The penalty is one to six years’ imprisonment and a fine of EUR 2 500 to EUR 10 000. State Gazette 17 of 2013.

[81]    Transparency International Bulgaria, Transparency and integrity of the election process: Report on the monitoring of the presidential and local elections in the Republic of Bulgaria. Sofia, 2012. www.transparency.bg.

[82]    Prosecutor General’s Office, June 2013, http://www.prb.bg/main/bg/News/3649/.

SPAIN

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. Prominent corruption cases investigated in the recent years have raised awareness of potential corruption risks and increased public authorities focus on the need to strengthen anti-corruption and integrity-related policies. The Government has acknowledged the need to address corruption as a matter of priority, along with other economic recovery measures. Moreover, anti-corruption and integrity-related policies moved to the forefront of the political debate. In February 2013, Parliament adopted a resolution on a wide range of anti-corruption measures.[1] Against this background, an ambitious programme of legislative reform is being implemented, covering a wide range of aspects, including financing of political parties, criminal law aspects, accountability of high-ranking officials and increasing the efficiency of court proceedings.[2] Furthermore, in September 2013, the Government approved a package of measures for the 'revival of democracy'. The package comprises: measures to improve the supervision of party funding through the strengthening of internal and external controls, including the Court of Audit's powers; clear rules on the obligations attached to exercising public office and the corresponding sanctions for breaches found, a proposal to reform criminal law and criminal procedure rules, including on the sanctioning regime applicable to corruption offences.[3]

First steps were taken towards implementing this package through the adoption by the Government, in December 2013, of two bills on supervision of party funding and accountability of high-ranking officials, as well as a report on plans for criminal law and criminal procedure law that would strengthen the fight against corruption. Initiatives to modernise public administration are also under way, including a draft law on local administration reform which aims to enhance control and improve coordination among the national, regional and local administrations.[4] While it is too early to evaluate these initiatives, they represent steps in the right direction. To be fully effective, they will need to be complemented by a coherent risk-based approach which goes beyond purely legislative measures to comprehensively address corruption.

Legal framework. A review conducted in the framework of the United Nations Convention against Corruption (UNCAC) concluded in 2011 that Spain's anti-corruption criminal legal framework is largely in place.[5] The Council of Europe Group of States against Corruption (GRECO) also noted in its second compliance report regarding the third evaluation round which was published in July 2013 that the criminalisation of bribery and trading in influence in the Spanish Penal Code is largely in line with Council of Europe standards. It also took note of the ratification by Spain of the Criminal Law Convention on Corruption and its Additional Protocol as 'an important step forward which also led to several amendments in the formulation of corruption offences in domestic legislation'.[6] Looking beyond criminal law, legislative measures were taken in 2012 to strengthen control over public spending, including a new law on budgetary stability and financial sustainability[7] that reinforced fiscal discipline at all levels of government and introduced amendments to increase transparency and supervision of financing of political parties.[8] Furthermore, a law on transparency, public access to information and good governance was adopted in December 2013, representing an important step forward.[9] These initiatives complement previous legislative measures that include a public procurement law,[10] a land act[11] and a statute for public and civil servants.[12] Furthermore, a number of legislative amendments are currently being considered on party funding, accountability of high-ranking officials of the State General Administration, the Court of Audit, public contracts, political offices, substantive criminal law and criminal procedure law and the organisation of the judiciary with a view to increase its efficiency. Far-reaching proposals to reform the substantive criminal laws and criminal procedure laws were submitted to Parliament in late September 2013, including proposals for a strengthened sanctioning regime for corruption offences and for increasing effectiveness of procedures.[13]

Institutional framework, law enforcement and judiciary. A Specialised Prosecution Office for the Fight against Corruption and Organised Crime (FECCO) was created in 1995 within the General Public Prosecutor's Office, and its autonomy and capacity have been strengthened in the recent years. According to the 2012 activity report of the Public Prosecutor's Office, the FECCO had 40 prosecutors at its disposal in 2011 and is supported by units from tax administration, the General Intervention Board of State Administration and the national police. Its track record of judicial proceedings has constantly improved, from 88 in 2000 to 194 in 2007 and 266 in 2011.[14] This positive trend also extends to the number of investigations completed. With regard to corruption allegations involving high-level officials, Spain’s Prosecutor General confirmed in November 2009 that the Public Prosecutor’s Office was in the process of investigating more than 800 people in over 700 political corruption cases.[15] By 2012, according to research findings,[16] nearly 150 additional people were under investigation.[17] Preliminary results of a study on the capacity of and resources available to the judiciary presented by the president of the Spanish General Council of the Judiciary (Consejo General del Poder Judicial) in April 2013 showed that 1 661 cases currently in court concern mainly corruption and financial crimes.[18] This illustrates a solid track record of investigations and prosecutions, including in high-level cases. As a result of this considerable workload, as highlighted by the General Council of the Judiciary, the pace of court proceedings is however rather slow.[19] In response to concerns regarding lengthy criminal proceedings, the Spanish Government is currently considering a reform of the criminal procedure rules, as well as an overall reorganisation of the judiciary. A GRECO report adopted in December 2013, while praising the high quality of the Spanish judiciary and prosecution services, stressed a number of concerns related to the efficient functioning of the justice system with overburdened courts which do not always have sufficient capacity to handle the cases at high speed.[20] Moreover, GRECO highlights the existing controversy regarding the structural independence of the governing bodies of the judiciary and prosecution services and the 'appearance that partisan interests could penetrate judicial decision-making processes' which is seen by GRECO as a particularly concerning aspect 'at a time when political corruption cases are on the rise'.

Opinion polling

Perception surveys. According to the 2013 Special Eurobarometer on Corruption 63% of respondents (highest percentage in the EU) feel personally affected by corruption in their daily lives (EU average: 26%), while 95% say that corruption is a widespread problem in the country (EU average: 76%) and 91% state that corruption exists in local and regional institutions (EU average: 77%). Regular national surveys carried out by the Spanish Centre for Sociological Research (CIS) currently also show negative trends.[21]

Experience of corruption. The 2013 Special Eurobarometer on Corruption shows that Spain scores better than the EU average on petty corruption: only 2% of Spanish respondents were asked or expected to pay a bribe in the past year (EU average: 4%).[22]

Business surveys. 52% of the Spanish respondents to a 2013 Flash Eurobarometer survey on businesses think that the only way to succeed in business is to have political connections (EU average: 47%).[23] 97% of Spanish businesses (second highest percentage in the EU) said that corruption is widespread in their country (EU average: 75%), while 88% (second highest percentage in the EU) consider that bribery and abuse of power is widespread among politicians, party representatives or senior officials at regional or local level (EU average: 70%). 93% of Spanish respondents (second highest percentage in the EU) to the same survey say that favouritism and corruption hamper business competition in their country (EU average: 73%).

Background issues

Economic context. After almost two decades of consistent economic growth, Spain went into recession at the end of 2008. The financial crisis was preceded by the collapse of the property market, which had previously known a booming period. Regions had invested large amounts in infrastructure and public works.[24] In this context, corruption allegations in the urban development sector, and in some instances involving illegal financing of political parties and embezzlement of large amounts of public money, have been regularly investigated in Spain in recent years.[25] Recent studies estimated that the shadow economy reached 19.2% of the GDP in 2012.[26] In the aftermath of the economic crisis, anti-corruption policies have been given more prominence in the public agenda, complementing measures targeting economic adjustment.

Private sector. Spain criminalised private sector corruption offences through amendments to its criminal code in 2010.[27] On foreign bribery, the OECD Working Group on Bribery raised serious concerns as to Spain’s commitment given that, almost 13 years after the entry into force of foreign bribery provisions, no individual or company had been prosecuted or convicted.[28] It also recommended harmonising the sanctions regime applicable to natural and legal persons to ensure that the sanctions imposed are effective, proportionate and dissuasive.[29]

Whistleblowing. Spain does not have dedicated legislation protecting whistleblowers, and the planned legislative reforms do not yet extend to establishing effective protection mechanisms. General labour law provisions are also applicable to whistleblowers in so far as unfair dismissal and discriminatory treatment of employees are concerned. The UNCAC review stressed the need for a regulatory framework focused on protection of whistleblowers.[30]

Transparency of lobbying. Lobbying is not regulated in Spain; there is no mandatory registration or obligation of public servants to report contacts with lobbyists. While there is little research on the risks associated with lobbying in Spain, recent corruption cases suggest the potential influence of certain development and construction interest groups on local and regional decision-making. A Parliamentary majority has committed to making lobbying more transparent.[31] This initiative would deserve to be followed closely.

2. issues in focus

Financing of political parties

More than three quarters of party expenses are funded by the state. A 2007 law on party funding[32] confirmed the right of political parties to use commercial bank loans for their funding. While restrictions applicable to donations were not extended to loans, parties had to specify the conditions of loans in their financial reports.[33] The law also extended the supervisory powers of the Court of Audit in this area to cover private funding; before this legislative change, its powers were limited to public funds only. Anonymous donations were banned, and parties were obliged to submit a list of donors to the Court of Audit, which is however not made public.

During the economic prosperity, political parties made extensive use of bank loans to cover their expenses. The Court of Audit reported in 2012 that the total debt of political parties (national and regional) to financial institutions amounted to EUR 227 million in 2007.[34] Over the same period, the composition of boards of directors of savings banks (cajas de ahorros) became increasingly influenced by political parties. At the same time, controls over the loans granted to parties were not comprehensive, given the limited capacity of the Court of Audit at the time to perform such checks. This created vulnerabilities in the integrity of the system for financing political parties and electoral campaigns. As a result, some loans were granted at very favourable conditions, and at times forgiven altogether.[35] The Memorandum of Understanding, signed in the context of the adjustment programme of July 2012,[36] highlighted the need to strengthen the governance structure of savings banks and of the commercial banks they controlled, including through introducing incompatibility requirements limiting the role of political appointees in such governing bodies.

GRECO also voiced concerns in mid-2011 as to the indebtedness of political parties and the correlating risk of parties’ dependence on credit institutions, and asked for a reinforcement of the regulation of loans.[37] In order to address this problem, the Court of Audit recommended that political parties better manage their resources in order to limit their debts and financial dependence on commercial banks. Despite the measures taken in 2007 to expand the Court of Audit's supervisory powers, GRECO noted that the Court's capacity to carry out efficient checks needed to be further strengthened. This was reiterated in July 2013.[38] In its compliance report of April 2011, GRECO also raised concerns as regards foundations and associations linked to political parties, which are not required to report on their expenditure, but could potentially indirectly shoulder expenditure of political parties.[39] In July 2013, it further stressed the need to ensure that 'political foundations and associations are not used as a parallel avenue for funding routine and campaign activities of political parties in spite of the applicable restrictions and thresholds set by law for the latter'.[40]

Large-scale investigations involving a former treasurer of a political party and nearly 90 other prominent politicians, business persons and bankers are ongoing on charges of corrupt practices related to public contracts and illegal party funding. Public contracts granted to these companies, business groups and their branches are also assessed in the investigations. As a result, the accounts of one of the largest political parties for the last four years were made public, as were the income tax declarations of a number of party leaders.

Following GRECO’s recommendations and the ongoing cases regarding allegations of illegal party funding, the rules for financing of political parties were strengthened[41] in 2012. Access to loans to finance party expenses was restricted;[42] transparency and independence were increased;[43] an internal audit framework was created and the sanctioning regime was strengthened[44], including by granting additional powers to the Court of Audit.[45] A ban was introduced on all donations from private foundations, associations or entities funded by public money. The new provisions also reduced public funding for associations and foundations linked to political parties by 20%. Parties must now notify the Court of Audit of all donations above EUR 50 000 or involving real estate, as well as of all agreements with banks relating to loans. These loan agreements also have to be disclosed to the Bank of Spain. Moreover, a cancellation of loans is considered as a donation. Cancellations of loans to political parties exceeding EUR 100 000 per year are now prohibited. All entities related to political parties must notify all donations and contributions received from legal persons to the Court of Audit and the Ministry of Finance and Public Administration. They must also undergo an annual external audit and publish their income statement online, including all details related to loans. However, there are no limits on the donations received. Attention needs to be paid to monitoring the risks associated with donations from companies that have contracts with the State.

In December 2012, amendments to the criminal code were adopted to also include provisions on criminal liability of political parties and new forms of criminal sanctions for concealment and falsification of public accounts.[46]

In its second compliance report, published in July 2013, GRECO recognised the progress made through the adoption of the 2012 amendments with regard to transparency, oversight and enforcement, noting at the same time that it is still too early to assess the actual impact of this recent legislation in 'an area which is acknowledged to constitute a major source of citizens’ concern in Spain.' GRECO also encouraged more efforts within political parties to make internal control mechanisms more efficient and ensure transparency of financial operations at local level. It also pointed again to the importance of providing meaningful information to the public on the identity of donors to political parties, their branches and related entities in order to effectively address any corruption risks relating to 'questionable financial ties'. Moreover, it called for a significant strengthening of the sanctioning regime for breaches of party funding rules.[47]

The 2012 legislative reform represents therefore a step in the right direction. No data is available yet, however, on its practical impact on the level of political parties' indebtedness towards credit institutions, or on the implementation of rules on incompatibilities and merit-based appointments to the boards of saving banks.

Following the above-mentioned legislative amendments and investigations into allegations of illegal financing of political parties, the Court of Audit has prioritised the supervision of party funding and electoral campaigns and taken measures to improve the speed with which it carries out verifications, including by considerably increasing the number of staff dedicated to this task. Its capacity and powers remain, however, limited when compared to the extent of verifications and inspections required. The investigative tools at its disposal are not yet sufficient, and its access to certain sources of verification, such as social security and internal revenue system data, is limited. GRECO also stressed in July 2013 that while the Court of Audit continues to have a key role in the supervision of party accounts, it must also be provided with sufficient capacity and powers to perform these tasks properly.[48]

At the beginning of 2013, the Government announced additional work on new legislative amendments aiming to further strengthen the transparency of party funding and the supervisory powers of the Court of Audit. Moreover, the Spanish Parliament, with the majority support, presented an anti-corruption resolution in early 2013 which also included legislative measures to improve supervision of party funding.[49]

In September 2013, the Government approved a package of measures for the 'revival of democracy' that also included measures to reinforce the accountability and supervision of party funding through strengthening internal and external controls, including the strengthening of the powers of the Court of Audit. The envisaged measures concern, inter alia, the following: regulating the obligations of the treasurers or financial managers of political parties, including the obligation to report annually to Parliament and the Court of Audit on the state of the political parties' accounts; requiring all political parties to report their accounts to the Court of Audit irrespective of whether they receive subsidies or not; further consolidation of accounting entries; strengthening accountancy requirements and procedures within political parties, increasing the transparency and supervision on the foundations and associations linked to political parties and clarifying the criteria that determine such links, strengthening the cooperation between the Court of Audit and other relevant public institutions, as well as credit institutions, further increasing the level of sanctions for offences related to the activity of political parties and further clarifying the sanctioning procedures. In December 2013, the Government took steps to implement the above-mentioned package and approved a bill on the control of economic-financial activities of political parties, which aims to achieve the above-mentioned objectives. The bill also proposes prohibiting donations by legal persons to political parties and prohibiting banks from forgiving debts of political parties. Moreover, the bill approved by Government for the reform of criminal law includes new offences related to the financing of political parties, including the new separate offence of illegal party funding.

Parliament resolved that integrity issues and enforcement of ethical norms within political parties needed to be prioritised.[50] Currently, no ethical codes exist for elected officials at central, regional and local level, nor are there sanctions for breaches of integrity – beyond those of a criminal nature – that would support high integrity standards. Such codes of conduct for elected officials, accompanied by regulatory provisions on sanctions applicable in case of breaches of ethical rules, including in relation to conflict of interests and incompatibilities, would enhance integrity and accountability standards and would ensure a wider range of non-criminal sanctions for unethical behaviour to the detriment of the public interest. It would also ensure more effective implementation of integrity rules through self-regulatory solutions, given the particularities of non-criminal sanctions applicable to elected officials as compared to other categories of public officials (i.e. appointed officials, civil servants, etc). In a report adopted in December 2013, GRECO recommended additional steps to 'instill, maintain and promote a strong culture of integrity among parliamentarians'.[51]

Corruption at regional and local level

Spain has 17 autonomous regions (comunidades autónomas), 2 autonomous cities in Africa (Ceuta and Melilla), 8 117 municipalities and 50 provincial governments. It is characterised by strong decentralisation with wide powers for elected officials at local level. The autonomous regions account for around 35% of total general government expenditure and have legislative power in the areas set out in their statutory legislation, such as health and social policies. Local governments are responsible for some 13% of expenditure.[52] As far as good governance performance is concerned, Spain is among the five EU Member States with the biggest intra-country variation, according to research carried out by the Quality of Government Institute, University of Gothenburg.[53]

As emphasised in the European Commission assessment of the 2013 national reform and stability programme for Spain (i.e. in the context of the European Semester), in order to facilitate the background for business operations and help fiscal sustainability, the decentralised setting needs to be complemented by enhanced coordination between the various layers of public administration and strengthened financial and budgetary supervision of local entities.[54] A bill on local administration reform was submitted to Parliament in early 2013.[55]

The overall effectiveness of checks and balances in relation to public spending at regional and local level appears to be insufficient as the wide powers are not matched in a balanced way by accountability. The Court of Audit assessments confirm this impression.[56] Numerous past and ongoing criminal proceedings into allegations of corruption concern regional and local elected officials, including involvement of 'clientele' networks. A database built on open sources includes approximately 600 municipalities and 5 144 alleged corruption cases reported in the media between 1996 and 2009.[57] The cases often involve charges or allegations of illegal party funding, illicit personal enrichment, diversion of national or EU funds, favouritism and conflicts of interest. Some of the most well-known investigations at regional and local levels concern alleged misuse of public funds by former high-ranking regional officials to award early-retirement packages and abuse of labour force downsizing plans or alleged corrupt practices with regard to vehicle inspection system public contracts, or awards of public contracts in the healthcare sector. Such cases illustrate the need for a targeted strategic approach focused on prevention and combating of corruption at regional and local levels, prioritising vulnerable sectors and ensuring increased transparency of regional and local public administration.

In 2009, the Spanish Federation of Municipalities and Provinces approved a code on good local governance and more recently took steps towards the establishment of an observatory to monitor the quality of governance at local level.[58] At regional level, efforts have also been made to combat corruption more effectively. For example, in 2008, the Catalonia Anti-Fraud Office was set up as an autonomous legal entity specialising in prevention and investigation of corruption and fraud offences at regional level.[59] The Anti-Fraud Office also provides guidance to other bodies. It is the only multidisciplinary anti-corruption agency of this nature in Spain.

In spite of the high number of investigations into allegations of corruption and the shortcomings mentioned above, no comprehensive approach has been developed centrally as a basis for addressing particular risks and vulnerabilities at regional and local levels.

Conflicts of interest and asset disclosure

Rules on conflicts of interest and asset disclosure vary between and within services, depending on the level of the public officials, the branch of power they belong to and the nature of the official's position (i.e. elected, appointed or career civil servant). Members of national government, Parliament, as well as high-ranking central and local elected and appointed officials are obliged to disclose their assets and interests.[60] By contrast, at regional level only a few regions impose an asset disclosure obligation on their officials.

At central level, high-level appointed officials must submit a declaration of assets when they take up and when they leave public office. These declarations are stored in a Registry of Assets. The officials must also provide information on the main activities of the companies in which both they and their families have interests and must submit a copy of their income tax and capital gains tax returns every year. Spouses may voluntarily provide information on their income and assets. These legal obligations are supplemented by rules that establish the public nature of the Registry of Assets of high level officials and provide for the publication of the asset declarations by members of the government and state secretaries in the Official State Bulletin.

The Registry of Assets is managed by the Office for Conflicts of Interest within the Ministry of Finance and Public Administration. The Office monitors the implementation of legal provisions on asset disclosure, detects possible breaches, opens disciplinary proceedings and proposes sanctions to be applied by the institutions where the official in question is employed; however, its own sanctioning powers are weak. The Office can detect non-compliance and investigate, but can only do the latter when there is a formal accusation and only after authorisation by the Ministry of Finance and Public Administrations. It is not entirely clear what verification methodologies are applied. As it is part of a Ministry, the Office is not independent and does not have budgetary autonomy. Independence is a key element to ensure the necessary safeguards for an impartial verification of assets and interests of public officials.

At the local level, elected and high-ranking officials similarly must submit an asset declaration when they start and when they conclude their mandate, as well as provide information on the main activities of the companies in which both they and their families have interests. Their asset declarations are public.

Parliamentary committees at central and regional level that are in charge of monitoring asset disclosure obligations of elected officials have a limited supervisory role. They are under no obligation to check the accuracy of asset declarations of elected officials and there are no records of sanctions applied by these committees. As far as appointed officials at regional and local level are concerned, there is currently no verification mechanism for their mandatory asset declarations. A number of examples of potential revolving door situations involving former members of regional cabinets in charge of healthcare (former 'Consejeros de Sanidad') would further illustrate the need for improved verification mechanisms of assets and interests.

According to current legislation, the applicable sanctions for breach of asset disclosure requirements range from publication of the decision that takes note of the breach and loss of compensatory benefits to an obligation to return the amounts received and dismissal from office. As a rule, these fall within the authority of disciplinary committees within public administration bodies. A recent law on transparency, access to public information and good governance also includes provisions on the sanctioning regime for breaching rules of conflicts of interest[61], including an obligation to pay compensation to the public treasury and disqualification from holding public office.

The Government plan for the 'revival of democracy', approved in September 2013, includes legislative measures with a specific focus on prevention and sanctioning of misbehaviour in exercising public office in the central public administration.[62] In this context, a bill on regulating the tasks of high-ranking officials of the State General Administration was passed by the Government in December 2013. It included, inter alia, provisions to: clarify the concept of high-ranking officials at the level of State General Administration, strengthen accountability standards, define rules on revolving door practices, strengthen the transparency and publicity of asset declarations, and reinforce the powers and tools at the disposal of the Office for Conflicts of Interest.

Urban development

The rapid development of public infrastructure and extensive public works prior to 2008 led to many changes in urban planning and land classification.[63] City councils and mayors act autonomously and have broad discretionary powers in urban planning, including the change of land classification and public procurement procedures, when applied. Regional governments exercise only limited control, having in some cases to apply to a court to repeal a municipality decision.[64] This contributes to the vulnerability to corruption of the urban planning and construction sectors.[65] Further risk factors include the considerable difference between the value of arable land and land for development, insufficient control mechanisms, the complexity of rules on urban development resulting in a large degree of discretion in decision-making, limited use of precautionary measures during prolonged court procedures to halt construction of works suspected of illegality, and a limited rate of real compliance with demolition rulings.[66] Amendments to the Land Act adopted in 2007 represented a step in the right direction, introducing a reinforced and more objective land classification system.[67] Decisions are no longer taken by mayors alone, but by municipal councils.

While high public spending on construction and urban development cannot be directly attributed to corruption, it contributes to an overall context which, jointly with weak supervision of decision-making at regional and local levels, increases the vulnerability of this sector to fraud and corruption. Correspondingly, the number of corruption and other criminal cases investigated and adjudicated in the area of urban planning is high and led to the creation of specialised prosecution services and of a specialised unit on land-planning crimes at the Operative Central Unit of the Guardia Civil.[68] In 2011, 1 754 judicial proceedings were opened in cases relating to alleged illegal acts in land use and urban planning, and convictions were issued in 408 cases. While these figures include other crimes related to urban planning, in addition to corruption offences, they give an indication of the exposure to illegal activities. In addition, the specialised prosecution service for the fight against organised crime and corruption increasingly focused on such cases.[69]

An unofficial database on corruption in urban planning[70] indicates that close to 700 municipalities were affected by such cases between 2000 and 2010.[71] The cases concerned practices related to illicit sales of public lands, illegal changes of land classification, embezzlement regarding construction of public facilities, etc. Numerous ongoing investigations concern similar types of alleged practices. In the last three years, 19 mayors from across the political spectrum were arrested on allegations of corruption. Some cases, in which strict prison sentences were handed down for former mayors and local councillors, revealed complex networks of local-level politicians and businesses that carried out illegal urban planning-related activities, misused public contracts and laundered money.

Public procurement

Public works, goods and services constituted 15.5% of the GDP in Spain in 2011. The value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, goods and services was 15.2% in 2011.[72] In the 2013 Eurobarometer business survey on corruption, 83% of the Spanish business respondents (highest percentage in the EU) thought corruption was widespread in public procurement managed by national authorities (EU average: 56%) and 90% (second highest percentage in the EU) in that managed by local authorities (EU average: 60%). In particular, Spanish business respondents stated that the following practices were the most widespread in public procurement procedures: specifications tailor-made for particular companies (80%); abuse of negotiated procedures (72%); conflicts of interest in the evaluation of the bids (79%); collusive bidding (71%); unclear selection or evaluation criteria (72%); and amendments of contractual terms after conclusion of contract (69%). These are among the highest percentages in the EU. While these perception indicators, which need to be read in the context of the current economic crisis that affects Spain, are not necessarily directly related to corruption, they illustrate risk factors that increase vulnerabilities to corruption in public procurement procedures.

The number of investigations for alleged corrupt practices in public procurement procedures is particularly high in the construction and waste collection sectors, pointing to a high risk of corruption in these sectors.[73]

In 2012, a report by the central Court of Audit provided an overview of the main risk areas in public procurement at regional and local level.[74] The Court warned of mismanagement and insufficient control at regional level, highlighting the increasing number of corruption cases under investigation. The Court of Audit assessed 2 500 contracts awarded between 2006 and 2007 with a total value of EUR 10 billion. The most frequent irregularities found, not necessarily based on corruption schemes, but revealing a number of vulnerabilities, included: breaking down of large contracts into smaller tenders to avoid public procurement requirements; unjustified use of emergency grounds to circumvent more stringent procurement requirements; unjustified choice of certain exceptional categories of procurement procedures; a lack of selection criteria; poor reasoning of award decision; unjustified exceptions from publication of bids, and insufficient justifications for amendments to public contracts. These practices and irregularities also revealed uneven thoroughness of monitoring through regional control mechanisms as compared to the central Court of Audit. Given the large number of public contracts and the wide range of tasks covered by the Court of Audit,[75] its capacity does not allow for more timely checks on recently concluded public contracts.

A study commissioned by OLAF on corruption in public procurement affecting EU funds confirmed many of the findings of the Court of Audit mentioned above.[76]

The Registry of Public Sector Contracts is the official centralised database of public procurement, including information on public contracts and statistics.[77] The contracting authorities of all public administrations and other bodies subject to the legislation on public contracts must report contracts to the Registry of Public Sector Contracts, within three months from their signature, in order for them to be recorded, including any modifications, extensions, changes in deadline or prices, final value and normal or abnormal termination. Amendments in 2011 to the public contracts law strengthened contracting prohibitions and included provisions on conflict of interest and annulment of contracts in cases when conflicts of interests are found.[78] One of the novelties of the law is the appointment of a natural or legal person ‘responsible for the contract’ who is charged with monitoring the entire life of the contract to ensure that deviations from its initial conditions are minimised. This person cannot belong to the contracting commission or body, or be linked to it in a contractual arrangement.

Good practices in public procurement at local level

Some good practices have been developed at regional and local level which could be further considered when planning future initiatives. For example, setting up the Office for the Monitoring and Evaluation of Public Procurement in Catalonia or the Advisory Committee of Transparency in the Baleares functioning within the regional governor’s office has set higher transparency standards, centralised data collection and enhanced oversight of public procurement procedures. The autonomous regions of Valencia and Catalonia have also developed a good practice in the framework of negotiated contracts, allowed under certain conditions by EU public procurement rules, making it compulsory to publicise the tender and allowing all companies to participate without having been formally invited beforehand.

There are a large number of public procurement platforms from different regional and local administrations. The central administration is currently building a database bringing together all information on public procurement at national level.[79] Most regions now have a single platform where the relevant documentation for the tenders in different regional departments is uploaded and procedures are followed, offering additional safeguards in terms of preventing and detecting corrupt practices by increasing transparency and better implementation of standardised procedures. These represent steps in the right direction and contribute to further enhancing transparency in public procurement procedures.

The Government's plan for 'revival of democracy' includes amendments to public sector contract law to exclude from public tenders those convicted of a wider range of corruption-related offences, including illegal party funding.

Transparency and access to information

A new law on transparency, access to public information and good governance was adopted in December 2013 after a lengthy process of public and political debates.[80] The law represents a significant step forward. It has a three-fold purpose: to expand and strengthen transparency of public activities, to recognise and safeguard the right to access to information, and to establish good governance obligations for public officials, including corresponding sanctions. It provides for compulsory quarterly publication of budgetary execution, allowing for irregularities to be identified and investigated. The law also provides for the creation of a transparency portal which will act as a single entry point to public information for citizens. It sets up a control mechanism through the Transparency and Good Government Committee whose chair is appointed by the Government and needs to be endorsed by a simple parliamentary majority. However, the new law has not ensured sufficient guarantees for the independence of its control mechanism, and further consideration could have been given to an enhanced sanctioning system and a narrower scope of exceptions from the principle of access to information. Moreover, its entry into force is postponed for two years in a number of administrations, particularly regional and local ones.

Good practices in promoting transparency

The indices on transparency in municipalities (ITA)[81] and on autonomous regions (INCAU)[82], managed by Transparency International monitor the level of transparency and accessibility of public information at regional and municipal level on the basis of 80 indicators. Each regional institution obtains an individual score, creating an index of transparency level across the 17 regions. Over the past four years, these indicators show an overall improvement in transparency standards at regional level. INCAU 2012 shows that Pais Vasco and La Rioja promote the highest levels of transparency in the country. An increasing number of regions have adopted or are about to adopt transparency laws (e.g. Galicia, Pais Vasco, Catalonia, Baleares) and some are already implementing strong transparency policies.[83]

3. Future Steps

The anti-corruption legal framework is largely in place in Spain and law enforcement has shown good results in investigation of alleged corrupt practices, including at high levels. Yet, recent large-scale corruption cases have revealed a number of alleged corrupt practices affecting public funds and financing of political parties. Political corruption and deficient checks and balances between discretion and accountability, notably in public spending, decision-making and control mechanisms at regional and local level, have been particularly challenging. Public procurement and urban development appear to be among the most vulnerable areas. To address these concerns, legislative reforms have been promoted, including with regard to financing of political parties, and the efficiency of court proceedings, the strengthening of control mechanisms in relation to public spending and freedom of information. Moreover, anti-corruption and integrity-related policies moved to the forefront of public and political debates.

The following points require further attention:

· Pursuing the ongoing reforms and ensuring effective implementation of the new rules on party funding focusing on supervision of loans, consolidation of party accounts (including regional and local branches and other entities linked to political parties), enhanced internal financial controls, thorough, timely checks carried out by the Court of Audit, and a reinforced sanctioning regime.

· Developing tailor-made strategies for regional and local administrations, preceded by corruption risk assessments. Strengthening control mechanisms, increasing transparency of decision-making and ensuring consistent monitoring of the quality of local and regional governance.

· Developing comprehensive codes of conduct for elected officials at central, regional and local levels with adequate accountability and sanctioning tools for potential violations of such codes. Consider developing ethical codes within political parties or establishing ethics pacts between parties, as recommended by the resolution of the Spanish Parliament in February 2013. Strengthening the coherence of rules on asset disclosure and conflicts of interests for elected and appointed officials at central, regional and local levels backed by an effective verification mechanism and a dissuasive sanctioning system. Strengthening the ability of the Office of Conflicts of Interests to carry out verifications in an independent and effective way and to apply dissuasive sanctions. Ensuring the necessary implementation framework for the new law on transparency, access to public information and good governance, including an independent supervisory mechanism matched with a dissuasive sanctioning system.

· Addressing the findings of the central Court of Audit and similar bodies at regional level regarding the irregularities in public procurement procedures at regional and local level. Carrying out an independent assessment of large public construction work contracts and urban planning decisions concluded over a recent period of reference at regional and municipal levels in order to identify corruption risk factors. Disseminating standardised good practices on public procurement at regional and local levels. Increasing the capacity of the central Court of Audit and of similar bodies at regional level to carry out systematic and timely checks of public contracts at regional and local level.

[1]      Parliament’s resolution refers, inter alia, to: ethical pacts among political parties; setting up of an independent commission to report on the revitalising of democracy; need for legislative measures to improve party funding regulation; Court of Audit control powers; public sector contracting; public servants’ statute, reform of the criminal code; reform of criminal proceedings; needed improvements to the bill on transparency and good governance; measures for regulating lobbying; improvements in the asset disclosure system for elected officials; measures to address political turncoatism, and the modernisation of electoral campaigns, etc: http://www.congreso.es/backoffice_doc/prensa/notas_prensa/18520_1361968355833.pdf .

[2]      See more detailed references to the legislative initiatives in preparation under 'Legal Framework'.

[3]      More details about the 'revival of democracy' package are presented below under the specific sections of issues in focus.

[4]      Commission Staff Working Document, Assessment of the 2013 national reform programme and stability programme for Spain, 29 May 2013: http://ec.europa.eu/europe2020/pdf/nd/swd2013_spain_en.pdf .

[5]      http://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/7-9September2011/V1183525e.pdf .

[6]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)20_Second_Spain_EN.pdf .

[7]      Law 2/2012 on budgetary stability and financial sustainability.

[8]      Law 5/2012 amending Law 8/2007 on financing of political parties.

[9]      http://www.leydetransparencia.gob.es/anteproyecto/index.htm .

[10]    Law No. 30/2007 – Public Sector Procurement Act.

[11]    Law No. 8/2007 – Land Act. Royal Legislative Decree 2/2008 approved the consolidated text of this law.

[12]    Law No. 7/2007 on the statute of public employees and civil servants.

[13]    Such proposals refer, among others, to: higher level of penalties for a number of corruption offences; expanding the scope of trading in influence; revising fraud offences and illicit enrichment; amending the offence of false accounting; including new offences related to funding and management of political parties; introducing new measures against concealment of assets and return of assets to the State; streamlining procedures concerning corruption cases; addressing backlog issues, including measures that would ensure speedier procedures and avoid unjustified delays, etc.

[14]    Also, the number of initiated investigations increased from 17 in 2007 to 133 in 2011. http://www.fiscal.es/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobheadername1=Content-disposition&blobheadervalue1=attachment%3B+filename%3D%27memoria2012_vol2_secc_06.pdf%27&blobkey=id&blobtable=MungoBlobs&blobwhere=1246969527252&ssbinary=true

[15]    Candido Conde-Pumpido (2009) Hearing of the Public Prosecutor in front of the Parliamentary Committee on Justice on the activities of 2008. Congreso de los Diputados, Sala Cánovas, 18 November 2009.

[16]    Jiménez, F. and Villoria, M. (2012) Political finance, urban development and political corruption in Spain. In: Mendilow, J. Public Funding of Political Competition and the Future of Democracy. Lexington Books.

[17]    In January 2013, the Spanish press published a list of 300 politicians currently under investigation for alleged corruption offences.

[18]    http://www.poderjudicial.es/cgpj/es/Poder_Judicial/Sala_de_Prensa/Archivo_de_notas_de_prensa/ Estudio_sobre_las_necesidades_de_los_juzgados_y_tribunales_en_casos_de_especial_complejidad

[19]    The President of the General Council of the Judiciary suggested that the Spanish judiciary would need another 64 judges, 18 secretaries and 150 civil servants to support 798 courts that currently are working on 2173 highly complex cases.

[20]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2013)5_Spain_EN.pdf.

[21]    In 2011, 46.8% of respondents considered that corruption is very extensive and 39.8% that is quite extensive. Only 0.4% believed there is no corruption among Spanish politicians. In 2012, the CIS survey placed corruption on fourth place of national problems, following economic crisis, unemployment, governing class and political parties. More recent surveys in February and April 2013 placed corruption second in the range of public problems identified by Spanish respondents, while unemployment was the most problematic issue mentioned. http://www.cis.es/cis/opencms/ES/busqueda.jsp .

[22]    2013 Special Eurobarometer 397.

[23]    2013 Flash Eurobarometer 374.

[24]    See also the Financial Sector Adjustment Programme for Spain: http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp118_en.pdf .

[25]    See examples of such cases and references to statistics under the section on 'Issues in focus'.

[26]    http://ec.europa.eu/europe2020/pdf/themes/06_shadow_economy.pdf .

[27]    Law 5/2010 – amendments to the criminal code.

[28]    In the last decade seven investigations on alleged foreign bribery offences were opened; all were eventually closed. The OECD also raised concerns about the regime of criminal liability of legal persons in state-owned and state-controlled companies. http://www.oecd.org/daf/briberyininternationalbusiness/SpainPhase3ReportEn.pdf.

[29]    This is without prejudice to the Commission's currently ongoing analysis of the transposition by Spain of Framework Decision 2003/568/JHA on combating corruption in the private sector

[30]    http://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/7-9September2011/V1183525e.pdf.

[31]    http://www.congreso.es/backoffice_doc/prensa/notas_prensa/18520_1361968355833.pdf.

[32]    Law 8/2007 on financing of political parties.

[33]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)5_Spain_EN.pdf.

[34]    Tribunal de Cuentas, Informe de fiscalización de los estados contables de los partidos políticos y de las donaciones percibidas por las fundaciones vinculadas orgánicamente, Ejercicio 2007, Informe aprobado el 29.3.2012.

[35]    Some former governors of saving banks faced criminal investigations into allegations of granting illegal loans and alleged unfair administration– e.g. criminal proceedings against two former presidents of Caja Madrid.

[36]    http://ec.europa.eu/economy_finance/eu_borrower/mou/2012-07-20-spain-mou_en.pdf .

[37]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)5_Spain_EN.pdf .

[38]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)20_Second_Spain_EN.pdf.

[39]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)5_Spain_EN.pdf

[40]    Idem.

[41]    Law 5/2012 amending Law 8/2007 on financing of political parties.

[42]    Provisions were included on maximum value of loans, rules on lenders, terms of repayment, etc.

[43]    The list of entities banned from financing parties was expanded to include legal persons having contracts with the State.

[44]    In the cases of failure to present accounts without just cause, or in cases of poor presentation of accounts for the last financial year, the Court of Audit could withhold the annual subsidies until the obligations are fully met. If election expenses limits are exceeded, the Court of Audit could impose a penalty equal to the excess. The Court of Audit will ensure that all fines are paid before public money is allocated by the State to the parties. Also the law clarifies the statute of limitations for these offenses, improves regulation of the process by introducing the possibility for the Court of First Instance to open a previous reporting period before making the final decision on the infringements, and establishes the supplemental application in its handling of the general administrative procedures. New sanctions are introduced if parties accept illegal donations. In these cases, the Court of Audit could impose a penalty equivalent to twice the amount illegally obtained.

[45]    The Spanish Constitution stipulates that the members of the Court of Audit shall enjoy the same guarantees of independence as judges. The members of the Court are selected by Congress and by the Senate in accordance with strict professional criteria. The selection of the rest of the Court's staff should be based as a rule on merit and capacity as established by the Constitution for all civil servants. Some of the Court's officials are appointed by the plenary of the Court. A decision of the Supreme Court in December 2012 emphasised the need to ensure a better balance between officials of the Court appointed by the Court's plenary and those selected like any civil servant, given that the former now make up the majority of staff.

[46]    Ley orgánica por la que se modifica la Ley orgánica 10/1995, de 23 de noviembre, del Código penal en materia de transparencia y lucha contra el fraude fiscal y en la seguridad social, 18 de diciembre de 2012.

[47]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)20_Second_Spain_EN.pdf.

[48]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)20_Second_Spain_EN.pdf

[49]    http://www.congreso.es/backoffice_doc/prensa/notas_prensa/18520_1361968355833.pdf

[50]    http://www.congreso.es/backoffice_doc/prensa/notas_prensa/18520_1361968355833.pdf

[51]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2013)5_Spain_EN.pdf .

[52]    Commission Staff Working Document, Assessment of the 2013 national reform programme and stability programme for Spain, 29 May 2013: http://ec.europa.eu/europe2020/pdf/nd/swd2013_spain_en.pdf .

[53]    Some regions score among the best in the EU on quality of governance, while others are among the worst. Measuring the Quality of Government and Subnational Variation, Report for the European Commission, University of Gothenburg, December 2010. The 2013 European Quality of Governance Index, which considered an increased number of European countries, regions and respondents, confirmed these findings: http://nicholascharron.wordpress.com/european-quality-of-government-index-eqi

[54]    Commission Staff Working Document, Assessment of the 2013 national reform programme and stability programme for Spain, 29 May 2013: http://ec.europa.eu/europe2020/pdf/nd/swd2013_spain_en.pdf .

[55]    Proyecto de Ley de racionalización y sostenibilidad de la Administración Local, http://www.congreso.es/public_oficiales/L10/CONG/BOCG/A/BOCG-10-A-58-1.PDF

[56]    http://www.tcu.es/uploads/I940.pdf .

[57]    Costas-Pérez, E., Solé-Ollé, A., Sorribas-Navarro, P. (2011) Corruption Scandals, Press Reporting, and Accountability. Evidence from Spanish Mayors. IEB Working Paper 2011/9 .

[58]    http://www.femp.es/CartaLocal/Front/Noticias/CL_ContenidoDetalle/_sYcniRvuy5ly-yy6MEsAr2xIyOH4RgvsLsMsOhPI4uc

[59]    http://www.antifrau.cat/es.html

[60]    Law 5/2006 regulating the conflict of interests of members of the government and senior civil servants in the General State Administration.

[61]    Ley 19/2013, de 9 de Diciembre, de transparencia, acceso a la información pública y buen gobierno.

[62]    Aprobado el Informe del Plan de Regeneración Democrática, 20.09.2013 http://www.lamoncloa.gob.es/ConsejodeMinistros/Enlaces/200913Enlace_Regeneraci%C3%B3nDemocr%C3%A1tica

[63]    Since 2000, 30% of the residential constructions in the EU were built in Spain. In 2007, the investment in the construction sector accounted for 15.7% of GDP compared to 9% in the US, Germany, France, the UK and Italy. "Approaching a geography of urban corruption in Spain” by Luis M. Perez Darias, Victor O. Martin and Ramón Pérez González, University of La Laguna.

[64]    'Identifying and Reducing Corruption in Public Procurement in the EU – Development of a methodology to estimate the direct costs of corruption and other elements for an EU-evaluation mechanism in the area of anti-corruption', 30 June 2013, PricewaterhouseCoopers and ECORYS

[65]    Fundación Alternativas (2007) Urbanismo y democracia. Alternativas para evitar la corrupción: http://www.falternativas.org/la-fundacion/documentos/libros-e-informes/informe-urbanismo-y-democracia-alternativas-para-evitar-la-corrupcion-vol-i

[66]    'Identifying and Reducing Corruption in Public Procurement in the EU – Development of a methodology to estimate the direct costs of corruption and other elements for an EU-evaluation mechanism in the area of anti-corruption', 30 June 2013, PricewaterhouseCoopers and ECORYS.

[67]    Ley 8/2007, de 28 de mayo, de suelo: http://www.boe.es/buscar/doc.php?id=BOE-A-2007-10701.

[68]    http://www.fiscal.es/cs/Satellite?c=FG_Actualidad_FA&cid=1247140274984&pagename=PFiscal% 2FFG_Actualidad_FA%2FFGE_pintarActualidad

[69]    In 2009 it launched 257 proceedings, as compared to the previous four years which counted 127 such cases:  http://www.fiscal.es/cs/Satellite?c=Page&cid=1242052134611&language=es&pagename=PFiscal%2FPage%2FFGE_memorias&selAnio=2012 .

[70]    Jerez Darias, L; Martín Martín, V; Pérez González, R (2012). Aproximación a una geografía de la corrupción urbanística en España. Ería: Revista cuatrimestral de geografía: http://www.unioviedo.es/reunido/index.php/RCG/article/view/9654

[71]    Number of municipalities within the regions affected by corruption cases in the area of urban development and construction between 2000 and 2010 ranges from 8 in Aragon, 12 in Rioja, to 66 in Galicia, 94 in Valencia and 154 in Andalucia.

[72]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[73]    E.g: cases in relation to: alleged links between party funding and construction business; contracts for garbage collection; charges against mayors of municipalities accused of corrupt practices in the procurement of cleaning services; various construction works for buildings of public interest, etc.

[74]    http://www.tcu.es/uploads/I935.pdf .

[75]    See also the section on financing of political parties.

[76]    'Identifying and Reducing Corruption in Public Procurement in the EU – Development of a methodology to estimate the direct costs of corruption and other elements for an EU-evaluation mechanism in the area of anti-corruption', 30 June 2013, PricewaterhouseCoopers and ECORYS. Additional risk factors identified at regional and local level include the acquisition of technical specifications from competing bidders, a lack of effective and independent ex-ante controls, lack of a single platform for large numbers of contractors’ profiles, and a high threshold for low-value contracts for services and works.

[77]    http://www.minhap.gob.es/es-ES/Servicios/Contratacion/Junta%20Consultiva%20de%20Contratacion%20Administrativa/Paginas/Registro%20publico%20de%20contratos.aspx

[78]    Ley de Contratos del Sector Público (Real Decreto Legislativo 3/2011, de 14 de noviembre).

[79]    http://www.minhap.gob.es/es-ES/Servicios/Contratacion/Paginas/default.aspx).

[80]    Ley 19/2013, de 9 de Diciembre, de transparencia, acceso a la información pública y buen gobierno.

[81]    http://www.transparencia.org.es/ITA%20AÑOS%20ANTERIORES/ITA%20AÑOS%20ANTERIORES.htm

[82]    http://www.transparencia.org.es/INCAU_AÑOS_ANTERIORES.htm.

[83]    E.g. the Government of Catalonia implemented an anti-corruption package which also included obligations to render certain public-sector operations more transparent. The Balearic Regional Government required all Consellerias to publish information on the Transparency International indicators on their websites.

Austria

1. Introduction – Main features and context

Anti-corruption framework

Strategic approach. At federal level, a more determined fight against corruption emerged following the joint first and second evaluation round by the Council of Europe’s Group States against Corruption (GRECO) in 2007. Following also increased public awareness due to high-profile corruption cases disclosed in 2009, Austria has made major efforts to reform its institutions to fight corruption and white-collar crime in general, and corruption has been specifically targeted as part of a strategy fighting financial crime.[1] In 2009, federal states' experts were given the task of developing proposals to implement the recommendations of GRECO at federal level, and to co-ordinate the anti-corruption efforts of the federal states. To date, these experts have developed shared standards on training, the prohibition of the acceptance of gifts, risk management, statistics and competences.[2] Despite progress towards a nationwide strategic approach, not all federal states (Länder) have developed measures to tackle corruption. As a positive example, Vienna lists awareness-raising and transparency as a key tool to fight corruption, supported by a hotline.[3] The Austrian government took an active role in promoting international efforts to fight corruption, namely by supporting the establishment of the International Anti-corruption Academy (IACA) and initiating the European contact-point network against corruption (EACN).[4]

Efforts to fight corruption in the public administration have focused on prevention: a code of conduct to prevent corruption has been provided for all levels of public administration.[5] The Government undertook public administration reform in recent years focusing on making public service more efficient and customer-friendly, and encouraging citizens to widely use e-government services.[6] The initiative consisted of 40 reform projects, to raise the quality of administrative services as well as to provide savings. These included e-government projects, the establishment of one-stop-shops and reorganisations.[7] All these measures are likely to improve the prevention efforts in the public sector. Other institutions outside the public administration also took a number of initiatives. Following recent bribery allegations, two Parliamentary Committees of Inquiry were established to deal exclusively with corruption allegations, while two others also touched on corruption issues.[8]

Legal framework. Following recommendations from the OECD and GRECO, new legislation was adopted in order to comply with the recommendations of these organisations. Austria also adopted a new Party Funding Act,[9] revised the tasks of the Audit Office in supervising party accounts, and amended its Criminal Code.[10] For instance, the act introduced the crime of ‘Anfüttern’ – an offence of offering, promising or granting an advantage that is not related to a specific official act, such as granting small favours to ‘sweeten’ a relationship with a public official. The most recent anti-corruption amendment to the Criminal Code and the Criminal Procedure Code was adopted in mid-July 2012.[11] Austria has not yet ratified the Council of Europe Criminal Law Convention on Corruption.[12]

Institutional framework. Since early 2010, anti-corruption efforts have been coordinated by the Anti-corruption Forum at federal government level. This high-level coordination committee, which meets four times a year, is composed of all competent authorities, including various federal ministries, the Länder, various authorities such as the specialised prosecution service for white-collar crime[13] (the WKStA), the federal office for preventing and fighting corruption[14] (the BAK), and the Financial Market Authority, as well as the private sector (Chamber of Commerce, Union of Civil Servants, Chamber of Notaries, Bar Association).[15]

Opinion polling

Perception surveys. 66% of Austrian respondents (below the EU average) to the 2013 Special Eurobarometer on corruption[16] agree that corruption is widespread in their country (EU average: 76%). However, the 2013 Eurobarometer also showed that Austria is the only country in Western Europe where a relatively large proportion – almost one-third of the respondents – would find it acceptable to do a favour or give a gift in exchange for a public service.

Experience of corruption. 5% of the Austrian respondents were asked or expected to pay a bribe over the previous 12 months (EU average: 4%). Only 14% of respondents, well below the EU average of 26%, felt affected by corruption in everyday life.

Business surveys. According to the 2013 Eurobarometer Business Survey,[17] 38% of business representatives think that corruption is an obstacle to doing business, and 41% of them think nepotism and patronage is also problematic in this context. 18 % of those who participated in public procurement in the last three years reported that they were prevented from winning because of corruption. Respondents in Austria reported tailor-made specifications for particular companies in 66% of cases, which is above the EU average. Collusive bidding was reported as a widespread practice by 57%. In addition, 45% of respondents noted conflicts of interest in the evaluation of bids and 35% pointed to unclear selection or evaluation criteria. According to the World Economic Forum’s Global Competitiveness Report 2013-14, Austria is ranked the 16th most competitive economy in the world, out of 152 countries.[18]

Background issues

Law enforcement and judiciary. Austria has focused its efforts to prevent and prosecute corruption via specialised institutions, which include the WKStA and the BAK.

Private sector. Austria transposed Framework Decision 2003/568/JHA on corruption in the private sector in 2008, and revised the legal framework for private sector corruption in 2012 through this law, bringing the law into line with the framework decision.[19]

Financing of political parties. Recent discussions on corruption in the context of politics have focused on (alleged) bribery of high-ranking political office holders and on illegal party funding. Criticism generated by a number of cases of illegal funding of political parties, such as the case of a prominent elected public official who was found guilty of unjust enrichment relating to political interference in exchange for a donation to his party, led to a series of reform acts. A new Political Parties Act entered into force in 2013.[20] An initial review of the implementation of the act, including its shortcomings, was presented in December 2013 by the Board of Audit (Rechnungshof).[21]

Access to information. According to the Duty to Provide Information Act of 1987,[22] public authorities (at all administrative levels) have to respond to requests for information without undue delay, unless the information is subject to a statutory duty of secrecy. Against a background of public discussions about the need to adopt a dedicated federal law on access to information, an initiative is undergoing political debates, to reduce the scope of this exemption and eliminate a wide range of existing grounds for statutory secrecy.[23]

Whistleblowing. Austria has been planning to improve the legal framework for providing whistleblower protection, but its initiatives have not yet led to adoption of specific legislation. For the public service, a provision in the Civil Service Act explicitly forbids taking detrimental actions against a public servant who in good faith reports a crime.[24] There is a general obligation for civil servants to report crimes.[25] Since 2010, each public servant at national level (but not all Länder) can submit his/her information directly to the BAK, by avoiding the management lines within his/her own administrative unit. The WKStA provides a web-based reporting mechanism which allows anonymous reporting of crimes, using the so-called Business Keeper Monitoring System (BKMS).

Transparency of lobbying. Lobbying legislation has recently been adopted which entered into force on 1 January 2013.[26] The new legislation introduces a compulsory register of lobbying and interest associations. The database is publicly available on the internet and maintained by the Ministry of Justice which publishes the data submitted by lobby organisations.[27] The law sets out basic principles of lobbying and interest representation (applicable to all groups). Additionally, lobbying firms and enterprises employing in-house lobbyists are required to apply a (publicly available) code of conduct.[28]

2. Issues in focus

Prosecution of corruption

Austria is among the best-rated countries for the deterrent effects of successful prosecutions in corruption cases, according to the 2013 Eurobarometer. This may be due to media attention on the work of the WKStA, as well as regular reports on the activities of the BAK.

Allegations of corruption in the public sector are investigated by the BAK, as the successor to a similar body, the Federal Bureau for Internal Affairs, which was created in 2001. The BAK is an institution of the Ministry of the Interior, established outside the Directorate-General for Public Security. Vested with investigative powers, and nationwide jurisdiction in the prevention of and the fight against corruption, its chief task is the examination of allegations and complaints made against employees of the Federal Ministry of the Interior and of its subordinate departments, and investigations related to malpractice in office.[29] However, its competence is not limited to internal investigations within the Federal Ministry of the Interior. In addition to the BAK, the Austrian Federal Investigation Bureau (Bundeskriminalamt) and its regional offices also conduct investigations; they have units dealing with white-collar crime and asset forfeiture.[30]

In 2011, a new office was created, known as the Public Prosecution Service for White-Collar Crime and Corruption.[31] Prosecutors receive specialised training also while in post. The number of WKStA staff is planned to be raised to 40, however, only over half of this planned number have been employed by early 2014.

Since 2009, law enforcement authorities have put more focus (in terms of available financial and human resources) on investigating economic crimes. Both police and prosecutors are reported to lack the necessary capacity.[32] For the period till 2014, Austria reported providing an additional expenditure of EUR 28 million to combat corruption and economic crime, enabling 190 extra posts to be created.[33] However, as illustrated above when looking at WKStA staff, the allocation of adequate resources for investigation and prosecution of corruption cases remains a challenge.

Court statistics show 78 convictions in 2012 and 90 in 2011 for criminal offences committed while holding public office, including corruption and breach of personal freedom and household privacy by an official.[34] In 2011, its statistics showed 701 reports of investigations run by the BAK on abuse of power,[35] and bribery represented only a very small proportion of them (29 cases). However, this is not a complete picture of bribery allegations, since BAK competence is limited to a specific area of public administration and authorities, and so does not cover the full spectrum of criminal offences related to corruption. These figures reflect focused efforts to discover and prosecute cases of corruption, and the track record of cases investigated show commendable progress in Austria.

Prosecutors are bound by instructions from the Minister of Justice. In certain situations set out in the law, [36] cases have to be referred to the higher level prosecutor who has an obligation to report to the Minister of Justice. Allegations concerning an elected representative must always be reported by the prosecutors to the Minister, unless there is no link to the political activity of the person involved. Instructions from the general prosecutor’s office and the Federal Minister of Justice may be given only in writing and reasons must be given. The Minister of Justice must approve any final settlement of criminal proceedings in which there is a supra-regional public interest. Instructions are provided via the relevant unit of the Ministry of Justice. The Minister of Justice is required to report to Parliament about his/her practice of issuing instructions. The ability of the Minister of Justice to issue instructions throughout the criminal process is perceived as a potential vulnerability that might discourage prosecutors from pursuing more sensitive cases, such as those concerning allegations of political corruption. Similar concerns were raised by the OECD in the context of foreign bribery. [37]

The WKStA is also subject to the main rules applicable to prosecutors, and is supervised by the Federal Minister of Justice, and is therefore bound by instructions in individual cases. The difference lies in the details: supervision is exercised a posteriori, i.e. prosecutors submit their report only after the measures were taken and at the end of the first stage of the criminal process, setting out how it intends to proceed with the investigation, (by either filing an indictment or dismissing the case). At this stage, the Minister of Justice must decide whether to accept the recommendation, and has the authority to order further investigation. In part due to the increased public attention and to the somewhat different rules on reporting, WKStA has a reputation of having achieved a relatively independent standing within this structure, and political pressure has not been reported.

Good practice: whistleblowing service run by the specialized prosecutors

In spring 2013 the WKStA set up a hotline for reporting corruption: the Business Keeper Monitoring System. The WKStA now manages this web-based reporting system where anonymous reports may be submitted and where the communication between the whistleblower and the authorities is possible, as the whistleblower’s identification data cannot be traced by the authorities. The system is based on a software first tested in Lower Saxony, and has reportedly been used for disclosing important details, leading to investigations into allegations of corruption.

In a case concerning a Member of the European Parliament, who was accused of agreeing to table amendments in exchange for undue advantages from undercover journalists posing as lobbyists in the so-called ‘cash-for-amendments’ sting operation involving four MEPs from different Member States, criminal proceedings were pursued in a speedy manner in Austria. These led to a conviction of first instance, followed by an appeal decision which quashed the first sentence and sent the case back to the court of first instance for a re-trial.

Law enforcement access to banking information is an essential element of the financial investigations, including those relating to corruption cases. While legal provisions and jurisprudence provide possibilities for the Austrian authorities to obtain data protected by banking secrecy,[38] requests by public prosecutors and law enforcement are subject to restrictive conditions that allow financial institutions to decline to supply information.[39] The court order must inter alia include a description of the facts justifying the order and proving its proportionality. Partial progress was made in 2010 and in 2012, when the conditions in Article 116 of the Criminal Procedure Code setting out the requirements for obtaining information subject to banking secrecy measures were substantially eased.[40] It should be noted that this procedure is not applicable in cases where corruption is connected to money laundering, where different rules apply for obtaining bank account data via the Austrian Financial Intelligence Unit).[41]

However, there are at least two potential problems with the system set out above. Firstly, where the bank records may serve as a significant basis in establishing major elements of the crime and the required amount of information is not yet in the possession of the authorities, it seems disproportionately difficult to submit a request. Such information can only be obtained by any means other than asking all potentially relevant financial institutions whether they have an account fitting the criteria. If the authorities do not know the bank account details of the suspect, they must turn to all bank associations in Austria with a court order. The bank associations are not obliged to contact their member banks before exhausting their right of appeal. Once the specific bank is contacted by its bank association, it also has in turn its own right of appeal. Secondly, and most importantly, obtaining information from all relevant financial institutions can be time-consuming. The current system leads to slow procedures for accessing bank records. Financial institutions, in order to protect themselves from legal actions by their clients, may systematically lodge an action for legal remedies,[42] which suspends the enforcement of the decision to provide access to the data requested.

In order to improve the situation, the Ministry of Justice addressed a decree on 13 August 2013 to all public prosecutors and judges containing clarifications, and providing a template for requests. Only the template containing general information needs to be forwarded to banking institutions, thus avoiding the disclosure of details which may put the investigation at risk. This may also shorten the time needed to answer such a request.

Foreign bribery

While considerable progress has been made in prosecuting ’domestic’ corruption, a common criticism concerns the prosecution of foreign bribery cases, where important economic interests may also be at stake.

In 2005, the evaluation team of the OECD working group on bribery[43] noted that six years after ratification of the OECD convention, not a single case of foreign bribery had been investigated by the Austrian authorities, despite Austrian enterprises and banks being active in Central and Eastern Europe since the 1990s. The privatizations in that region of the banking, telecommunications and energy sectors and the significant involvement of Austrian construction companies in these areas meant that these companies were participating in competitive markets vulnerable to the risk of corruption. The OECD report also showed that there was little to no awareness in the justice system and in the police about the risks of bribery in international business transactions; nor were there judges, prosecutors and the police with particular expertise in economic crime more generally. However, the Telekom case, which involved foreign as well as domestic bribery elements, has been a positive example for the leniency programme established in the criminal procedure, allowing the use of the testimony of crown witnesses and the prosecution of high-profile cases on the basis of this.[44] In this case, the court of first instance issued a conviction in July 2013.

The creation of the WKStA changed the situation. The public prosecutors of the WKStA are now increasingly building up the necessary expertise to thoroughly investigate foreign bribery cases. The gradual building-up of the service may explain the time lag for proceedings in cases which happened before the mid-2000s and are still under investigation. The OECD reported in December 2012 that ever since Austria became a member in 1999, 15 allegations had been discussed, and in six of these cases the investigation had been terminated or there was no investigation at all.[45] Since then, two cases have been concluded: one ended with a criminal conviction concerning an Austrian businessman involved in a bribery case in another EU Member State and another one concluded with an acquittal of charges of money laundering in the arms trade.

The OECD reviewers also made a number of recommendations regarding Austria’s framework for the liability of companies and other entities that bribe foreign public officials. Both the Phase 2 and Phase 3 reviews recommended introducing effective, proportionate and dissuasive sanctions for legal persons, instead of the current level of penalties set as a proportion of the annual profit of the legal person in question, with a maximum of EUR 1.8 million.[46] This has been deemed insufficient in general, and particularly in those cases where the legal person may not have generated significant profits over the relevant period.[47]

Furthermore, OECD examiners found that in most cases where the prosecution authority submits a report to the Minister of Justice at the end of an investigation, the Minister orders more investigative steps. Despite the unique status of the WKStA, the OECD repeated its concerns in its Phase 3 report. It recommended ensuring that investigations and prosecutions of foreign bribery cannot be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved, particularly in view of the Minister of Justice's decision-making authority in foreign bribery cases.[48]

Austria amended its legislation in 2012 in order to bring the criminal code in compliance with the OECD Anti-Bribery Convention. The OECD commended Austria for extending its jurisdiction in foreign bribery cases to all offences committed by Austrian citizens, regardless of where the bribe was offered, promised or paid. They also commended the efforts of Austria for removing the dual criminality requirement.[49]

The rules on accessing banking information may still represent an obstacle for foreign investigations, thereby making mutual legal assistance potentially less efficient. The Austrian authorities as part of the OECD peer review have noted banking secrecy as a leading cause for most delays in providing mutual legal assistance.[50]

Integrity of high-level elected and appointed officials

Detailed rules on declarations of income and assets are provided by a federal law which is applicable to, among others, members of the federal and state (Länder) governments, mayors, their deputies the members of the municipal council, and the members of the National Council (Nationalrat), of the Federal Council (Bundesrat) and of the Länder Parliaments. [51]

Members of the federal and the Länder governments, including secretaries of state, have to declare all their assets to the president of the Board of Audit after taking up the role, every two years while in office, and three months after leaving government. However, the obligation to submit such declarations is not coupled with a review mechanism to verify the accuracy of the data provided and consequently no sanctions are applied in case inaccurate data is provided. The law only states that in the cases of substantial increase in assets, the President of the Board of Audit shall report these to the President of the National Council and the President of the Länder Parliament respectively. The latter ones may also at any time ask the President of the Board of Audit to give a report. The declarations of assets are not publicly accessible. Conflicts of interest of government members were the subject of discussions in early 1980s and have been regulated by a general ban of any business activities since that time. If government members or secretaries of state exceptionally wish to conduct other remunerated activities, they have to request the approval from the relevant committee of the National Council or the federal states' parliament.[52]

Members of Parliament (MPs) are not required to disclose their assets.[53] Recently amended provisions introduced certain rules on declaration of their interests and income. There is an obligation to declare management positions in private companies, and every year MPs also have to submit information on their average monthly income by indicating one of the five broad categories of levels of income.[54] The Incompatibility Committee of the Parliament decides by a simple majority whether it is possible to continue the declared activity. In the case of members of the Länder Parliaments, the committee of the Länder Parliaments is in charge of the matter.. However, there is no verification mechanism to check the content of the declaration, and no sanctions for non-compliance with the rules either. MPs are expressly banned from lobbying activities, but allowed to pursue and represent business interests, provided that they follow the rules on declaring them. The law provides for sanctions in case of abuse of position, and MPs may lose office if the parliamentary committee establishes that they have abused their position for profit.

3. Future steps

Austria’s fight against corruption has been strengthened by institutional efforts in prevention and prosecution. Removing remaining obstacles to investigations by facilitating access to banking information where necessary would make the prosecution of both domestic and international bribery more effective. Austria recently introduced significant amendments to its criminal law and adopted a new act on political parties, the impact of which cannot yet be assessed.

The following points require further attention:

Ensuring the necessary capacity of the specialised prosecutors to process corruption cases, whether domestic or foreign. Prioritising the investigation and prosecution of foreign bribery. Developing guidelines for prosecutors clarifying that the prosecution of foreign bribery should not be hampered by considerations of national economist interest. Increasing the level of sanctions for legal persons to make them effective, proportionate and dissuasive. Improving the procedure allowing access to bank account information in cases of suspicion of corruption; allowing law enforcement agencies to obtain data swiftly when the gravity and relevance of the case so requires. Introducing an effective monitoring mechanism for checking declarations of assets and interest for both elected and appointed senior officials that would allow for impartial verification. Providing dissuasive sanctions for non-compliance with rules on declaring interests, incomes and assets.

[1]      See for instance the Evaluation report on the fifth round of mutual evaluations "Financial crime and financial investigations" - Follow-up to the report on Austria, Council of the European Union, doc. No. 5576/12.

[2]      See the decisions of 15 January 2009 and 23 October 2009 the Landesamtsdirektorenkonferenz (Conference of the Directors of the Governments of the Federal States), through which these tasks were delegated to a Conference of Federal States’ Experts (Länderexpertenkonferenz). The Landesamtsdirektorenkonferenz of 29 October 2010 and 30 March 2012 adopted the proposals.

[3]      http://www.wien.gv.at/verwaltung/internerevision/ethik.html.

[4]      The IACA is an independent centre of excellence, established following the joint initiative by the United Nations Office on Drugs and Crime (UNODC), Austria, the European Anti-Fraud Office (OLAF) and other stakeholders, it aims to overcome shortcomings in knowledge and practice in the field of anti-corruption, namely by training, networking and academic research. The EACN is a European network established by the Council Decision 2008/852/JHA on EPAC, an independent forum offering a platform for anti-corruption practitioners to share their experience and cooperate across national borders in developing common strategies and high professional standards.

[5]      'The Responsibility rests with me' Die VerANTWORTung liegt bei mir– Bundeskanzleramt Österreich. https://www.oeffentlicherdienst.gv.at/moderner_arbeitgeber/korruptionspraevention/infos/VerhaltenskodexDeutsch_2012_barrierefrei.pdf?3shqic.

[6]      The percentage of individuals aged 16 to 74 who have used the Internet, in the last three months to  interact with public authorities (i.e. having used the Internet for one or more of the following activities: obtaining information from public authorities web sites, downloading official forms, sending filled in forms) remained stable at 39% between 2008-2010. http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&language=en&pcode=tsdgo330&plugin=1.

[7]      https://www.oeffentlicherdienst.gv.at/fakten/publikationen/verwaltung_in_oesterreich_2011_en.pdf?3sfue1.

[8]      Protocols and decisions of these committees are published on the web site of the Austrian parliament: http://www.parlament.gv.at/PAKT/VHG/XXIV/A-USA/A-USA_00003_00314/index.shtml.

[9]      Bundesgesetz über die Finanzierung politischer Parteien (Parteiengesetz 2012 – PartG), Federal Law Gazette I No. 56/2012, http://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=20007889.

[10]    Korruptionsstrafrechtsänderungsgesetz 2012 – KorrStrÄG 2012, BGBl I no 61/2012.

[11]    Korruptionsstrafrechtsänderungsgesetz 2012 – KorrStrÄG 2012, BGBl I no 61/2012.

[12]    Draft ratification legislation is reported to have passed in the Parliament in-mid-July 2013, but the ratification document has not yet been submitted. http://conventions.coe.int/Treaty/en/Treaties/Html/173-1.htm

[13]    Wirtschafts- und Korruptionsstaatsanwaltschaft.

[14]    Bundesamt zur Korruptionsprävention und Korruptionsbekämpfung.

[15]    Evaluation report on the fifth round of mutual evaluations "Financial crime and financial investigations" - Follow-up to the report on Austria, Council document: 5576/12; Brussels, 20 January 2012. p.5.

[16]    2013 Special Eurobarometer 397.

[17]    2013 Flash Eurobarometer 374.

[18]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf.

[19]    COM(2011) 309 final, Second Implementation Report of FD 2003/568/JHA of 6 June 2011: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52011DC0309:EN:HTML.

[20]    Bundesgesetz über die Finanzierung politischer Parteien (Parteiengesetz 2012 – PartG), Federal Law Gazette I No. 56/2012, available from http://www.ris.bka.gv.at/Dokumente/BgblAuth/BGBLA_2012_I_56/ BGBLA_2012_I_56.pdf

[21]    Bericht des Rechnungshofs. Reihe Bund 13/2013, Umsetzung des Parteiengesetzes 2012 durch den RH, pp. 62-76,;   http://www.rechnungshof.gv.at/fileadmin/downloads/_jahre/2013/berichte/teilberichte/bund/Bund_2013_13/Bund_2013_13_5.pdf.

[22]    Bundesgesetz vom 15. Mai 1987 über die Auskunftspflicht der Verwaltung des Bundes und eine Änderung des Bundesministeriengesetzes 1986 (Auskunftspflichtgesetz), Federal Law Gazette No. 287/1987, last amendment: I 158/1998, http://www.ris.bka.gv.at/Dokumente/Erv/ERV_1987_287/ERV_1987_287.pdf.

[23]    For the development of the public debate, see: http://www.transparenzgesetz.at/.

[24]    New § 53a Beamten-Dienstrechtsgesetz: http://www.ris.bka.gv.at/Dokument.wxe?Abfrage=Bundesnormen&Dokumentnummer=NOR40133771 .

[25]    According to § 53 Beamten-Dienstrechtsgesetz, each public servant has to report possible criminal infringements to the head of the administrative unit. The same applies to public officials (§ 5 Vertragsbedienstetengesetz).

[26]    Lobbying- und Interessenvertretungs-Transparenz-Gesetz – LobbyG, available from http://www.ris.bka.gv.at/Dokumente/BgblAuth/BGBLA_2012_I_64/BGBLA_2012_I_64.pdf.

[27]    http://www.lobbyreg.justiz.gv.at/; the database is yet to include at least part of the lobby representatives of major campanies.

[28]    Lobbying- und Interessenvertretungs-Transparenz-Gesetz – LobbyG, available from http://www.ris.bka.gv.at/Dokumente/BgblAuth/BGBLA_2012_I_64/BGBLA_2012_I_64.pdf.

http://www.lobbyreg.justiz.gv.at/

[29]    Federal Law on the Establishment and Organisation of the Federal Bureau of Anti-Corruption, (BAK-G), BGBl. I No. 72/2009.

[30]    Evaluation report on the fifth round of mutual evaluations "Financial crime and financial investigations" Report on Austria, 6508/2/10; REV 2, Brussels, 8 April 2010.

[31]    Zentrale Staatsanwaltschaft zur Verfolgung von Wirtschaftsstrafsachen und Korruption  A special anti-corruption prosecution authority known as Korruptionsstaatsanwaltschaft was created in 2009, which became later (in 2011) the WKStA.For its powers, see in particular §2a.. of the act on the prosecution authorities, Bundesgesetz vom 5. März 1986 über die staatsanwaltschaftlichen Behörden (Staatsanwaltschaftsgesetz - StAG) StF: BGBl. Nr. 164/1986; for its competence, see especially the criminal procedure act (Strafprozessordnung, § 20a.).

[32]    OECD Phase 3-report on implementing the OECD anti-bribery convention in Austria, December 2012, p. 35. http://www.oecd.org/daf/anti-bribery/Austriaphase3reportEN.pdf

[33]    Evaluation report on the fifth round of mutual evaluations "Financial crime and financial investigations" - Follow-up to the report on Austria, Council document: 5576/12; Brussels, 20 January 2012.

[34]    https://www.statistik.at/web_de/statistiken/soziales/kriminalitaet/verurteilungen_gerichtliche_kriminalstatistik/index.html Statistics cover cases that were committed and prosecuted before the 2012 amendment to the Criminal Code (KorrStrÄG), therefore only cover cases related to a public office, and also include the so-called "Fahrlässige Verletzung der Freiheit der Person oder des Hausrechts" (§ 303 StGB) since the data is indicated for the full chapter "Strafbare Verletzungen der Amtspflicht". Statistics relevant for private sector bribery cannot be seen separately in the table. Most cases in this section are abuse of power cases, see GRECO Third Evaluation.

[35]    http://www.bak.gv.at/cms/BAK_dt/service/downloads/files/Jahresberichte/BAK_Jahresbericht_2011.pdf

[36]    §8, 8a. and 29a. of the act on the prosecution authorities, Bundesgesetz vom 5. März 1986 über die staatsanwaltschaftlichen Behörden (Staatsanwaltschaftsgesetz - StAG) StF: BGBl. Nr. 164/1986.

[37]    OECD Phase 3-report on implementing the OECD anti-bribery convention in Austria, p. 25-32. Joint First and Second Round Evaluation, Compliance Report on Austria, Greco RC-I/II (2010) 1E, paragraph 28.

[38]    Bankwesengesetz, §38., BGBl. Nr. 532/1993 zuletzt geändert durch BGBl. I Nr. 70/2013. http://www.jusline.at/38_BWG.html.

[39]    Mutual Evaluation Report – Executive Summary – Anti-Money Laundering and Combating the Financing of Terrorism – Austria, June 2009, p. 5, http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Austria%20ES.pdf.

[40]    OECD Phase 3 report on the implementation of the OECD anti-bribery convention in Austria, paragraph 69.

[41]    OECD Phase 3 report on the implementation of the OECD anti-bribery convention in Austria, paragraph 113.

[42]    OECD Phase 3 report on the implementation of the OECD anti-bribery convention in Austria, paragraph 149.

[43]    OECD Phase 2 report on the application of the convention on combating bribery of foreign public officials in international business transactions and the 1997 recommendation on combating bribery in international business transactions on Austria, 16 February 2006. Available from: http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/36180957.pdf

[44]    "§ 209a of the Criminal procedure act, amended in 2011.

[45]    OECD Phase 3-report on implementing the OECD anti-bribery convention in Austria, p. 8-12.

[46]    See  § 4. Verbandsgeldbuße in Verbandsverantwortungsgesetz; BGBl. I Nr. 151/2005 zuletzt geändert BGBl. I Nr. 112/2007.

[47]    OECD Phase 2 report, paragraph 145 et seq., OECD Phase 3-report on implementing the OECD anti-bribery convention in Austria, December 2012, paragraph 52 and sec. Available from: http://www.oecd.org/daf/anti-bribery/Austriaphase3reportEN.pdf.

[48]    OECD Phase 3 report on the implementation of the OECD anti-bribery convention in Austria, paragraph 90 to 96.

[49]    The Phase 3 Report on Austria by the OECD Working Group on Bribery.

[50]    OECD Phase 3 report on the implementation of the OECD anti-bribery convention in Austria, paragraph 149.

[51]    Bundesgesetz über Unvereinbarkeiten für oberste Organe und sonstige öffentliche Funktionäre (Unvereinbarkeitsgesetz 1983), last amended in 2013, BGBl. I Nr. 141/2013  http://www.ris.bka.gv.at/Dokument.wxe?Abfrage=Bundesnormen&Dokumentnummer=NOR40140745.

[52]    § 2 of the Unvereinbarkeitsgesetz.

[53]    The MPs who are also members of the federal and the Laender governments are nevertheless subject to the asset disclosure obligations applicable to this latter category of officials.

[54]    Unvereinbarkeitsgesetz 1983, as amended in 2013, BGBl. I Nr. 141/2013.

BELGIUM

1. Introduction — main features and context

Anti-corruption framework

Strategic approach. At federal level, for constitutional reasons, Belgium does not have a comprehensive anti-corruption strategy. Nevertheless, the number of existing regional initiatives aiming to enhance integrity provides a well-developed framework for prevention. In its Second Round Evaluation, the Council of Europe’s Group of States against Corruption (GRECO) recommended a systematic assessment of the risks of corruption in the Belgian public administration and the evaluation of measures introduced to combat corruption, but concluded in 2009 that this had only partly been done.[1] The coalition agreement in 2011 mentioned the promotion of integrity at political level only briefly.[2] At federal level, corruption is not regarded as a priority, despite recent corruption cases involving a variety of public institutions, police and the judiciary. The fight against corruption was seen as a matter of security by the national police, and therefore was part of the security strategy of the Government prior to 2011, but it is not mentioned as a priority area anymore.[3]

Legal framework. While the legal framework to fight corruption effectively is largely in place, a number of GRECO recommendations on criminal law (including on trading in influence and dual criminality) as well as on party funding have remained unimplemented or only partially implemented for a long time. In 2011, GRECO concluded that Belgium had satisfactorily implemented or addressed only one of the 15 recommendations set out in the Third Round Evaluation Report.[4] It therefore deemed the implementation of the recommendations to be ‘globally unsatisfactory’.[5] No legislative activity has followed at federal level, and the situation remained unchanged until the interim compliance report, which concluded that three recommendations altogether had been implemented by 2013.[6]

Institutional framework. At federal level, the Bureau of Administrative Ethics and Deontology coordinates integrity policy.[7] The institutional involvement of public bodies fighting corruption varies depending on the region. For example, the region of Flanders has involved the Flemish ombudsman in its whistleblowing protection scheme.[8] The Flemish, Walloon and Brussels regions have their own internal audit services. Only the Flemish region’s audit agency has the authority to conduct investigations.[9] If the audit agency finds evidence of criminal activities, it sends the file to the public prosecutor. Academic research, including the Quality of Governance index, shows divergence between Flanders and Wallonia in perception of corruption: while the former is among the best-performing regions in the EU, the latter is in the bottom half of the EU regions surveyed.[10]

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer,[11] 67 % of the general population of Belgium stated that, in their opinion, corruption was widespread in Belgium. This is below the EU average (76 %).[12]

Experience of corruption. Petty corruption seems relatively rare: 12 % of respondents felt affected by corruption in their daily lives (as opposed to 26 % in the EU), and 3 % of those who dealt with the institutions named in the survey were expected to pay a bribe in the last 12 months (EU average: 4 %).

Business surveys. According to the 2013 Eurobarometer Business Survey, business representatives ranked Belgium as one of the least corrupt countries based on a question asked of a sample of those company representatives who took part in public procurement, with only 47 % declaring that corruption was widespread, as compared with the EU average of 75 %.[13] 38 % of business representatives consider corruption to be an obstacle to business in Belgium, which is just under the EU average, and 46 % think that nepotism and patronage is a problem for doing business, which is above average (41 %). 6 % of those who participated in public procurement in the past three years reported being prevented from winning because of corruption, which is a low figure compared to the EU average (32 %). All negative practices in the context of public procurement, while they do seem to occur, are less frequent than the EU average. Respondents in Belgium reported tailor-made specifications for particular companies in 45 % of cases. Collusive bidding was reported by 36 % as a widespread practice. Moreover, 45 % of respondents noted conflicts of interest in the evaluation of bids and 35 % pointed to unclear selection or evaluation criteria. According to the World Economic Forum’s 2013-14 Global Competitiveness Report, Belgium is the 17th most competitive economy in the world, out of 152 countries.[14]

Background issues

Private sector. Belgium had transposed Framework Decision 2003/568/JHA on corruption in the private sector by 2007.[15]

Foreign bribery. A track record of foreign bribery prosecution remains to be developed, given the low number of cases detected. Although investigations are ongoing in six foreign bribery cases and a prosecution has commenced in another, not a single Belgian national or Belgian company has ever been prosecuted in a foreign bribery case to date.[16]

In the most recent Transparency International Bribe Payers index, from 2011, Belgium scored 8.7 (out of 10), indicating a low prevalence of corruption in international business transactions. Belgium’s stance against corruption in international business relations is reflected in a 2008 document from the federal government on preventing corruption in corporate life,[17] in which it raises awareness among companies operating in the international market regarding the risks and consequences of corruption. Nevertheless, Transparency International stated in its last progress report on implementation of the OECD Anti-Bribery Convention that there is only ‘a moderate enforcement’ of the Convention in Belgium and argued that there is insufficient investigation and prosecution of corruption in international business transactions, due to a lack of resources within the judiciary.[18] In 2013, the OECD recommended a long list of measures to fight foreign bribery more effectively.[19] The Working Group on Foreign Bribery was disappointed by the lack of priority Belgium gave to the fight against bribery of foreign public officials, including a lack of resources in charge of investigations, prosecutions and sentencing in these cases, which, in some foreign bribery cases, led to investigations not being opened, cases being closed and expiry of the statute of limitations.

Whistleblowing. Comprehensive legislation on the protection of whistleblowers at federal government level will enter into force on 4 April 2014.[20] Previously there has been no comprehensive protection for civil servants in the federal administration wishing to report illegal practices and integrity violations, aside from provisions prohibiting discrimination and harassment. The law also provides for a compulsory preliminary consultation for whistleblowers to prevent retaliation. The investigation of alleged integrity violations will be coordinated by the federal ombudsman. Provisions on whistleblowers have existed since 2004 in the Flemish administration, where the ombudsman provides an external communication channel and protection for those who are unable to submit their report in their own workplace. The Flemish Parliament further strengthened these provisions in a decree in 2012.[21] While the ombudsman was previously obliged to communicate the identity of the whistleblower to the head of the administration, the new decree allows for keeping the name of the whistleblower confidential for a certain period of time, as well as the possibility of transferring the whistleblower to another position in another organisation of the Flemish administration at the same level and without loss of income.

Transparency of lobbying. There is no specific requirement to register lobbyists or report contact between public officials and lobbyists in Belgium. The code of ethics for the members of the Flemish Parliament mentions contacts with citizens, groups and institutions without setting rules on reporting.[22] The rules of conduct adopted in Wallonia remain silent on this question.[23]

2. Issues in focus

Prevention of corruption

The approach to prevention and detection of corruption differs considerably according to the level of administration (federal, regional and local). Within the federal administration, while certain integrity initiatives have been launched and rules for internal auditing have been tightened, a comprehensive prevention policy is not yet in place. At federal level, the Bureau of Administrative Ethics and Deontology coordinates integrity policy, but has limited human resources, employing five people.[24]

At regional level, relevant documents from Wallonia and Brussels do not focus on issues of integrity, transparency or the fight against corruption.[25] The Flemish Government[26] has developed an integrity policy, aimed at preventing and fighting fraud and corruption in its administration. It is based on three pillars: prevention, monitoring and detection, and response and penalty. Integrity is defined as ‘acting according to written and unwritten norms and values that express concepts such as honesty, integrity, diligence, purity of intent, knowingly acting in good faith, credibility and reliability’. It thus supports a broad concept of integrity and expects its civil servants to respect and promote these. It is seen as an important instrument to earn citizens’ trust and confidence of the business community.

Good practice: integrity programme in the Flemish Region

A number of tools have been developed to implement this policy in practice. They include: (1) a code of ethics for staff in the regional/Flemish administration;[27] (2) a guide for a tailor‑made integrity policy specific to vulnerable positions in the administration; (3) a guide aimed at introducing new staff to integrity rules; (4) a set of tools to communicate on integrity and integrity infringements; (5) a dedicated code for managers based on 12 principles; (6) detection (of suspicious patterns) and forensic audits (internal investigation in cases of suspicion) based on risk analysis; (7) rules and procedures for the protection of whistleblowers; (8) training; (9) an integrity coordinator (a professional in charge of implementing and developing the in-house integrity policy, to whom staff can turn for advice); and (10) a network of integrity actors, all having specific roles and acting to promote the integrity policy (e.g. the Flemish ombudsmen, the internal audit service, etc.). The Flemish Region has an integrity coordinator who coordinates various local integrity initiatives in public administrations employing approximately 50 000 persons.[28]

Outside the administration, at political level, integrity-enhancing tools have been created. Since 1 January 1998, members of the Flemish (regional) Parliament have been subject to a code of ethics,[29] which provides the framework within which they can properly exercise their mandate. It clearly defines illegal practices such as clientelism, administrative favouritism, lobbying or undue influence over administrative acts. Since 1 January 2008, members of the Flemish Government and the staff in their cabinets have had to comply with specific ethical codes. For example, it is forbidden for members of cabinets to give policy advice on files related to associations, institutions or companies they have/had (directly or indirectly) interests in.

Finally, awareness-raising campaigns are part of the integrity policy. One example of such a campaign was the distribution of free (fake) film tickets on the back of which was written ‘have you never asked yourself why they’d give you a film ticket?’

Local government response to corruption risks has been uneven. Initiatives seem to depend largely on individual motivation rather than being the result of a coordinated approach. Some municipalities have set up a training programme for their civil servants, or created guidelines on gifts and social events, others screen job applicants based on their attitude to ethics, and others have developed whistleblowing systems.

In 2005, the Parliament of Wallonia passed a decree amending Article L1122-18 of the Code of Local Democracy and Decentralisation (CDLD) to require each local council to adopt rules of ethics and to consider ethics in its internal rules of procedure. The Flemish Association of Cities and Towns (VVSG) has developed a basic model code for local politicians concerning service provided by the communes.[30] Some local communities do, therefore, have a code of ethics for members of the local council. Despite this, allegations of corruption have been made in relation to local government. Some notable cases at local level — particularly where the same political party has had a dominant position for a long period — indicate that conflicts of interest and abuse of power are problems that require coordinated effort to tackle.[31]

In the few cases where a proactive anti-corruption policy has been implemented, it was in response to a major corruption case. The City of Antwerp has taken a tough stance against corruption and fraud after the ‘Visa scandal’, when civil servants had been using their professional credit cards for personal purchases.[32] The city of Charleroi, after allegations of corruption in a complex case involving politicians, senators and representatives of the housing industry, also made efforts to increase awareness of integrity, and now has a code of ethics which is considered to be a model initiative at local government level.[33] There are doubts, however, as to whether the office created in Charleroi to oversee matters of integrity will continue beyond 2014, when its initial mandate expires.

Conflicts of interest and asset disclosure

The most detailed policy document to prevent conflicts of interest and political corruption at federal or regional level in Belgium is the code of conduct for members of the Flemish Parliament and Government (including the staff in their private offices), which provides rules on contact with citizens in Flanders.[34] The national government coalition agreement[35] from 1 December 2011 contains a chapter on ethics in politics which states that central and all other regional parliaments should work on conflicts of interest and ethical rules. It also envisages the establishment of an independent ethics committee that should prepare a draft code of ethics for the national parliament. This code should also contain provisions on conflicts of interest. To date, this commitment has not been met and similar attempts have failed in the past.[36] It is therefore important that these commitments are kept on the agenda and that — even outside the national parliament — ethical codes and mechanisms to prevent corruption and conflicts of interest are in place for members of all regional parliaments and members of the executive at all levels, as well as for private office staff. The adoption of these codes should be accompanied by the establishment of oversight mechanisms to ensure proper implementation.

In order to prevent conflicts of interest, Members of Parliament and senior elected officials have to submit a declaration of interests to the Court of Audit at least once a year.[37] This information was published for the first time in 2012.[38] An asset declaration has also been required from MPs and senior elected officials since 2005.[39] While the Court of Audit provides extensive explanations on how to make the required declarations, there is no information available about the effectiveness of the control mechanism. The most significant information provided by the Court of Audit is the list of those who failed to submit their declarations.[40] Failing to submit declarations may be punished by a maximum penalty of EUR 5 000. No data are available on the actual implementation of this rule, although at least one person is reported to have been penalised. Asset declarations are submitted in a sealed envelope, and are opened only in the event of a criminal investigation. Lack of institutional oversight combined with the lack of public access to any data on asset declarations means that such declarations are not effectively verified in practice.

Integrity in public administration

The current ethics framework for the federal public administration is addressed in two circulars from 2007[41] and 2010.[42] The 2007 circular sets out details on principles such as neutrality, loyalty, respect and professionalism. The 2010 circular concerns conflicts of interest related to public tenders and is also applicable to members of the federal government.

The case regarding the federal government Buildings Agency was a milestone for integrity policy and for clear rules on conflicts of interest.[43] An investigation was launched following an anonymous complaint to the prosecuting authority. Lessons were learned from this case,[44] based on external studies such as a fraud vulnerability study, a forensic audit with respect to payment orders and an external audit on the construction of courthouses in Ghent and Antwerp. In addition, control over the organisation and the award of public contracts in the agency has been strengthened. Measures have been taken to increase transparency in the award process for small contracts. Training courses and awareness-raising initiatives have been launched and ‘compliance officers’ have been appointed to act as a safe haven for staff to report irregularities. While the latter is a laudable initiative, it can in no way replace a comprehensive process for whistleblowers, which could have prevented such large-scale corrupt practices, involving senior people over several years. To raise awareness, the authorities also issued an information booklet entitled Manuel de référence pour une gestion qualitative de chantier.[45]

There is no federal agency that conducts administrative audits or works to prevent corruption in public administration. All regions have their own internal audit service, with different powers and differing measures they can take.[46] Certain parts of auditing tasks are divided among the Federal Court of Audit, the regional internal audit service and external audit experts. To avoid duplication of work, cooperation among the relevant audit agencies has been formalised in Flanders.[47] The memorandum of understanding sets out agreement on the exchange of information on strategy and planning, monitoring and risk analysis, reporting, audit methodology, manuals and good practices.

Prosecution of corruption

The number of convictions concerning the bribery of people responsible for public services ranged between 19 and 35 a year in the period 2000-06.[48] The first strategic analysis on corruption in Belgium was conducted in 2002 (based on statistics gathered between 1996 and 2000 from the five biggest prosecution offices). The second report — a vulnerability analysis applicable to public tenders — dates back to 2008. Together they formed the basis for an analysis in 2009[49] conducted by the service in charge of the fight against economic and financial crime. The latter analysis showed a certain risk of corruption among the police and among (senior) federal public servants.

The number of recently prosecuted corruption cases in Belgium appears low.[50] The annual report (2010-11) of the College of Prosecutors‑General made recommendations[51] noting that Belgium should make available sufficient police capacity and ensure that protracted criminal procedures do not lead to cases reaching the statute of limitations. The Attorney-General of the Court of Appeal of Ghent pointed in his annual report to the limited capacity of the Belgian Judicial system to prosecute complex criminal cases. The annual report of the College of Prosecutors General published in October 2012 also highlighted that the fight against corruption (and financial crime in general) was not being sufficiently prioritised in Belgium.

At the end of the 1990s, the High Commission of Supervision was disbanded. Consequently, there is no national focal point with judicial, administrative and preventive responsibilities for addressing corruption. Judicial and policing powers were transferred to the Central Office for the Repression of Corruption, which was established within the Federal Police. The latter works on corruption cases in cooperation with the 27 federal police offices (PJF).[52] The 2012 police annual report announced a new strategic approach to corruption, focusing on analysing cases that were uncovered.[53] Preventive tasks were partially taken over by the Bureau for Administrative Ethics and Deontology, which now collects relevant information.

Plans were recently presented by the chief of the Belgian Federal Police for the dismantling of — among others — the Central Office fighting against economic and financial organised crime. Personnel working for this Office would be transferred to the future regional judicial districts. This is one of the recommendations in the 73-page audit report on the organisation of the Federal Police, ordered by the Minister for Home Affairs.[54] The Minister, however, still wishes to preserve the Central Office. The Minister also noted the need to increase the resources of the Central Office for the Repression of Corruption, noting that there was a decrease of cases investigated in 2011 and 2012, partly as a result of an earlier decrease in the number of officers.[55] A considerable police reform is planned, based on a bill recently approved for sending to Parliament.[56]

Another specialised police unit located in Jumet (Wallonia), the ‘Polfin pool’, was dedicated to fighting high‑level financial crime and corruption, seconded from the Central Office for the Repression of Corruption. The pool provided specialised investigators to investigate complex cases of fraud and corruption, including those involving politicians. The pool took a leading role in investigations as from February 2009, looking at sensitive cases involving senior elected officials and managers. However, this specialist unit has been recently dismantled.[57] Their investigations were passed on to other parts of the police. This might be considered a sign of comparatively less focus being given to specialised corruption investigations. On a positive note, the Asset Recovery Law of 19 December 2002 established the legal basis for specialised departments within the Federal Police to assist police investigators during criminal investigations with wide expertise in financial topics to proactively go after assets, more broadly than just in financial crimes.

Financing of political parties

Based on the Special Eurobarometer 2013 survey, 33 % of the residents of Belgium think that there is sufficient transparency and supervision of the financing of political parties, while 60 % think that transparency and supervision is not sufficient. The act on party funding (adopted in 1989)[58] was generally seen as a marked improvement. It introduced a system of public and private funding and banned donations by legal persons. The current system is based extensively on state subsidies, for a party that has obtained at least one seat in Parliament. Parties that do not receive state subsidies are not subject to the same audit mechanism. In all cases, private donations above the threshold of EUR 125 have to be individually declared. Although any donation above EUR 125 has to be declared, along with the identity of the donor, the GRECO evaluation raised concerns about donations under this threshold.

Taking into account other factors, and noting significant changes and recommendations over the last 25 years, GRECO recommended in 2009 that consideration be given to a comprehensive review of Belgian legislation on the funding of parties and election campaigns, to make it more consistent, precise and effective.[59] Most importantly, GRECO recommended introducing criteria to more systematically extend the scope of the consolidated accounts of parties and political groups to include associated structures, in particular the party’s local sections, so that oversight at local levels also takes place. It highlighted the lack of integrated bookkeeping, due to the fact that funds received by local political party bodies are not included in the parties’ consolidated accounts.

GRECO also noted weaknesses in supervisory bodies, which lack developed cooperation between the federal commission and regional commissions. A unified structure would allow a better understanding of the complexity of the financial structures and flows within the parties and their affiliates and candidates.[60] The government has plans to reform the scrutiny of electoral expenses at federal and regional level, and to introduce an appeals procedure on control of electoral expenses for parliamentary elections. However, the solution envisaged, namely the procedure of the Constitutional Court, requires an amendment to the Constitution.[61]

In the follow-up process, GRECO criticised Belgium for providing an unsatisfactory level of compliance with its recommendations. GRECO concluded in 2012 that Belgium had made very slight progress over the past three years in implementing the Third Round Compliance Report. Most recommendations on political party funding remained unimplemented and the level of compliance with the recommendations was ‘globally unsatisfactory’, as noted again in October 2013.[62] The issue of integrated bookkeeping, which would allow comprehensive insight into the finances of the political parties and their affiliated bodies, remains outstanding.

3.         Future steps

Belgium has significant elements of the necessary anti-corruption framework in place. Petty corruption does not appear to pose a challenge. However, there is a risk that corruption is not addressed in a consistent manner, given varying competences at regional and federal level. Further effort could be made to prioritise a proactive prevention policy, a more coherent use of the large variety of tools in place, and the effective prosecution of corruption-related offences. Public sector corruption, including in the police and the judiciary, conflicts of interest, and corruption at political level all require ongoing effort.

The following points require further attention:

Introducing an integrity policy in the administrations where such a policy is missing and ensuring the necessary resources to support integrity schemes. Ensuring that ethical rules, including mechanisms to prevent conflict of interest, are implemented for all appointed and elected officials, at federal, regional and local levels. Introducing internal control tools in order to assess the application of the ethical framework. Increasing the capacity of the justice system and law enforcement to avoid that corruption cases are not prosecuted due to expiry of the statute of limitations because of lengthy criminal proceedings. Providing sufficient capacity for the police to detect and investigate corruption-related offences. Ensuring that legislation on party funding, including the provisions on supervisory mechanisms, covers parties that do not receive federal subsidies. Ensuring that local entities affiliated to political parties are audited and fall under bookkeeping obligations that allow for a consolidated picture of political party funding, including a unified supervision and audit structure.

[1]      Second Evaluation Round Addendum to the Compliance Report on Belgium; Greco RC-II (2006) 9E Addendum http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC2(2006)9_Add_Belgium_EN.pdf.

[2]      http://www.premier.be/fr/accord-de-gouvernement.

[3]      Plan national de sécurité 2008–2011 http://www.polfed-fedpol.be/pub/pdf/PNS2008-2011.pdf; Plan national de sécurité 2012–2015; http://www.polfed-fedpol.be/pub/pdf/PNS2012-2015.pdf.

[4]      Greco RC-III (2011) 6E), adopted at its 51st plenary meeting (27 May 2011).

[5]      Third Evaluation Round, Interim Compliance Report on Belgium, Greco RC-III (2012) 5E Interim Report.

[6]      The 2nd Interim Compliance Report was adopted in 2013 but it has not yet been made public.

[7]      Bureau d’Ethique et de Déontologie administratives, created in July 2006. http://www.begroting.be/portal/page/portal/INTERNET_pagegroup/Internet_ethiek_voorstelling.

[8]      http://www.vlaamsparlement.be/Proteus5/showPersbericht.action?id=8792.

[9]      Interne Audit van de Vlaamse Administratie (IAVA) http://www2.vlaanderen.be/doelbewustmanagement/.

[10]    Ranked 59th (Flanders) vs 133rd (Wallonia). From Åland to Ankara: European Quality of Government Index http://www.qog.pol.gu.se/digitalAssets/1455/1455551_2013_11_charron.pdf.

[11]    2013 Special Eurobarometer 397. A similar assessment is reflected by national surveys: one tenth of the population had encountered corruption in the previous year, 3 % confessed to having paid a bribe. Mediated experience is higher: 43 % of the population has heard about corruption in their neighbourhood. Online survey by Ipsos, 13 June 2011. http://www.ipsos.cz/tiskove-zpravy/quo-vadis-korupce.

[12]    2013 Special Eurobarometer 397.

[13]    2013 Flash Eurobarometer business 374.

[14]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf.

[15]    Commission staff working document: Annex to the Report from the Commission based on Article 9 of Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector (COM(2007) 328 final), Brussels, 18.6.2007; SEC(2007) 808.

[16]    Phase 3 report on implementing the OECD Foreign Bribery Convention in Belgium, 2013 http://www.oecd.org/daf/anti-bribery/BelgiumPhase3ReportEN.pdf.

[17]    Corruption? Not in our company http://www.dsb-spc.be/doc/pdf/BROCHURE_CORRUPTION_EN_LowRes.pdf.

[18]    Exporting corruption? Country enforcement of the OECD Anti-Bribery Convention. Progress report 2012. http://www.transparency.org/whatwedo/pub/exporting_corruption_country_enforcement_of_the_oecd_anti_bribery_convention.

[19]    Phase 3 report on implementing the OECD Anti-Bribery Convention in Belgium http://www.oecd.org/daf/anti-bribery/BelgiumPhase3ReportEN.pdf.

[20]    Loi relative à la dénonciation d’une atteinte suspectée à l’intégrité au sein d’une autorité administrative fédérale par un membre de son personnel.

[21]    http://www.vlaamsparlement.be/Proteus5/showPersbericht.action?id=8792 The new Decree was promulgated on 9 November and published on 7 December 2012. http://www.etaamb.be/nl/decreet-van-09-november-2012_n2012206772.html.

[22]    Deontologische code van de Vlaamse volksvertegenwoordigers inzake dienstverlening aan de bevolking, Gedr.Stuk, 7-A (1998-1999) — Nr. 1. http://docs.vlaamsparlement.be/docs/stukken/1998-1999/g7a-1.pdf.

[23]    Charte de bonne conduite administrative http://wallex.wallonie.be/PdfLoader.php?linkpdf=3640&mode=popup.

[24]    http://www.begroting.be/portal/page/portal/INTERNET_pagegroup/Internet_ethiek_voorstelling.

[25]    http://www.federation-wallonie-bruxelles.be/fileadmin/sites/portail/upload/portail_super_editor/Docs/declaration_politique_communautaire.pdf.

[26]    http://www.bestuurszaken.be/integriteit.

[27]    A similar Code of ethics exists for staff in the administration of the French Community (Arrêté du Gouvernement de la Communauté française portant le Code de déontologie des membres du personnel des Services du Gouvernement de la Communauté française et de certains Organismes d’Intérêt public)             http://www.gallilex.cfwb.be/document/pdf/27731_000.pdf.

[28]    http://www.governance-flanders.be/integrity.

[29]    Deontologische code van de Vlaamse volksvertegenwoordigers inzake dienstverlening aan de bevolking, Gedr.Stuk, 7-A (1998-1999) — Nr. 1. http://docs.vlaamsparlement.be/docs/stukken/1998-1999/g7a-1.pdf.

[30]    Deontologische code voor lokale mandatarissen inzake dienstverlening aan de bevolking, VVSG-tekst t.b.v.. Gemeenten en OCMW’s.   http://www.vvsg.be/werking_organisatie/gemeentedecreet/documents/deontologische%20code%20 mandatarissen%20 %28nieuwe%20versie%29.pdf.

[31]    This is illustrated by a case dating back to 2005 involving corruption in the social housing sector. In the first trial where a sentence was handed down, the judge noted a flagrant case of breach of public interest and of democracy in favour of personal, financial and electoral interests (‘violation flagrante de l’intérêt public’ et de ‘règles de la démocratie au profit des intérêts personnels, financiers ou électoraux’). Certain elements of the case are still being tried.

[32]    http://jure.juridat.just.fgov.be/pdfapp/download_blob?idpdf=N-20081008-5.

[33]    http://www.uvcw.be/articles/1 354.1.0 3820.htm.

[34]    Deontologische code van de Vlaamse volksvertegenwoordigers inzake dienstverlening aan de bevolking (ethics code for members of the Flemish Parliament concerning service provision). Available from: http://www.vlaamsparlement.be/vp/informatie/begrippenlijst/deontologische_code.html.

[35]    http://www.premier.be/fr/accord-de-gouvernement.

[36]    http://www.senate.be/www/webdriver?MItabObj=pdf&MIcolObj=pdf&MInamObj=pdfid&MItype Obj=application/pdf&MIvalObj=50334005.

[37]    Les lois spéciale et ordinaire du 2 mai 1995 rel. à l’obligation de déposer une liste de mandats, fonctions et professions et une déclaration de patrimoine et celles du 26 juin 2004.

[38]    http://www.ejustice.just.fgov.be/mopdf/2012/08/14_1.pdf.

[39]    https://www.ccrek.be/FR/MandatsPatrimoine.html.

[40]    Rapport annuel 2012 (15 juillet 2013); https://www.ccrek.be/FR/Publications/PublicationsRecentes.html.

[41]    Circulaire No 573 du 17 août 2007 relative au cadre déontologique des agents de la fonction publique administrative fédérale. http://www.fedweb.belgium.be/fr/reglementation/20070817_cir_573_cadre_deontologique.jsp.

Circulaire du 21 juin 2010: Marchés publics — Déontologie        http://www.fedweb.belgium.be/fr/reglementation/20100621_circ_marches_publics.jsp.

[43]    This Agency manages approximately 8 000 000 m² spread over some 1 500 buildings across the entire country, both owned as well as rented by the federal government.

[44]    See response to a number of parliamentary questions http://www.lachambre.be/doc/CCRA/pdf/52/ac574x.pdf.

[45]    http://www.buildingsagency.be/120109_integr_FR.pdf.

[46]    Internal Audit Agency of the Flemish Administration (IAVA); Direction d’audit interne of Wallonia and Brussels respectively.

[47]    The Belgian Court of Audit, the Internal Audit Agency of the Flemish Administration (IAVA) and the Institute of Registered Auditors (IBR), through a joint memorandum of understanding in respect of financial audit in Flanders, combine their efforts to maximise coordination of their audit activities. Their goal is to avoid duplication of work, ease the audit burden for auditees and increase the cost effectiveness of their audits.           http://www.belgamediasupport.be/pressrelease/detail.do?pressId=15431&type=mostread&searchKey=ea715119-29bc-11e0-935e-a1edcaa22442&timeRangeId=0&pageIndex=1.

[48]    GRECO (2009), Third evaluation round. Evaluation report on Belgium on incriminations, p. 8-9.  http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)8_Belgium_One_EN.pdf.

[49]    Source: Belgian Senate, Reply to question 4-3617 from Senator Dirk Claes, dated 23 June 2009, by the Secretary of State in charge of the coordination of the fight against fraud, Mr De Vlies.               http://www.senate.be/www/?MIval=/Vragen/SVPrint&LEG=4&NR=3617&LANG=nl.

[50]    Third Round Evaluation, Evaluation Report on Belgium on Incriminations, p. 8.

[51]    See Jaarverslag 2010-2011 van het college van procureurs-generaal http://www.om-mp.be/images/upload_dir/DEF%20JAARVERSLAG%2010-11.pdf..

[52]    http://www.polfed-fedpol.be/pub/rapport_activites/pdf/2012/ecofin/RAecofin2012-fr.pdf.

[53]    Rapport annuel 2012, p. 46 http://www.polfed-fedpol.be/pub/rapport_activites/pdf/2012/ecofin/RAecofin2012-fr.pdf.

[54]    For the organisation of the centralised offices, see http://www.polfed-fedpol.be/org/org_dgj_djf_fr.php.

[55]    Rapport 2012 de la Direction centrale de lutte contre la criminalité économique et financière : des résultats qui confirment la nécessité et l’importance de ces services; 17/07/2013; http://www.milquet.belgium.be/fr/rapport-2012-de-la-direction-centrale-de-lutte-contre-la-criminalit%C3%A9-%C3%A9conomique-et-financi%C3%A8re-des.

[56]    Approbation de la Loi portant dispositions diverses en matière d’Intérieur : des améliorations importantes concernant la police; 12/07/2013; http://www.milquet.belgium.be/fr/approbation-de-la-loi-portant-dispositions-diverses-en-mati%C3%A8re-d%E2%80%99int%C3%A9rieur-des-am%C3%A9liorations.

[57]    Parliamentary Question nr. 14507 from Mr Georges Gilkinet to the Vice-Prime Minister and Minister of Home Affairs on ‘the future of the investigation pool Jumet’. 23.1.2013 CRIV 53 COM 653  http://www.lachambre.be/doc/CCRI/pdf/53/ic653.pdf.

[58]    Act of 4 July 1989.

[59]    Third evaluation round, Compliance report on Belgium. Public Greco RC-III (2011) 6E.             http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3 %282011 %296_Belgium_EN.pdf.

[60]    Para 78-82 of GRECO (2009), Third evaluation round. Evaluation report on Belgium Transparency of Political Party Funding.

[61]    Chambre des représentants de Belgique - Proposition de révision de l’Article 142 de la Constitution Doc 53 2969/001; Proposition de loi spéciale modifiant la loi spéciale du 6 janvier 1989 sur la Cour Constitutionnelle, Doc 53 2970/001. Proposition de loi modifiant la loi du 4 juillet 1989 relative a la limitation et au contrôle des dépenses électorales engagées pour les élections des Chambres fédérales ainsi qu’au financement et a la comptabilité ouverte des partis politiques et modifiant le Code électoral, doc 53 2972/001, Proposition de loi modifiant la loi du 19 mai 1994 doc 53 2973/001.

[62]    Greco RC-III (2013) 19E.

CYPRUS

1. introduction —  main features and context

Anti-corruption framework

Strategic approach. Upon the recommendation of the Council of Europe's Group of States against Corruption (GRECO), Cyprus established the Coordinating Body against Corruption in 2003.[1] The Body has a mandate to develop an anti-corruption strategy, which does not yet exist. The Body's tasks are to examine existing measures against corruption and to propose further measures if necessary, based on international standards and taking into account the situation in Cyprus. The Body is also tasked with raising public awareness of the risks of corruption and promoting cooperation between public authorities and the private sector. However, the Body does not have full-time staff. 

Legal framework. Following GRECO recommendations, Cyprus took steps to harmonise provisions on corruption across the criminal code and more recent laws ratifying the OECD Criminal Law Convention on Corruption.[2] Consistency was thus improved concerning pecuniary penalties for corruption offences.[3] While recognising such improvements, GRECO recommended additional steps to improve consistency and legal certainty, by removing discrepancies regarding incriminations and the standard of evidence. It also called for further efforts to apply in practice laws ratifying the Criminal Law Convention on Corruption, which have not yet been invoked in a criminal case of corruption. Cyprus abolished the requirement of dual criminality with respect to the offences of bribery and trading in influence committed abroad, and established jurisdiction over corruption offences committed abroad by domestic public officials who are foreign citizens.[4] Lack of application in practice has limited the dissuasive effect of legislative provisions against nepotism. No statutes of limitations apply for corruption offences.

Institutional framework. The Independent Commission Investigating Complaints against the Police (IAIAC) can investigate corruption allegations within the police force. Appointed by the President, the Public Service Commission has the competence to impose disciplinary penalties on civil servants but lacks investigative powers. The Commissioner for Administration (Ombudsman) has been operating since 1991.

Opinion polling

Perception surveys. 57 % of 2013 Eurobarometer respondents from the general public report that corruption affects their daily lives (EU average 26 %), and 78 % think that it is widespread (EU average 76 %).[5] In addition, 92 % say that bribery and the use of connections is often the easiest way to obtain certain public services (EU average 73 %), while 12 % state that government measures against corruption are effective (EU average 23 %), and 14 % find that such measures are applied impartially (EU average 33 %). 83 % of Cypriots (the highest percentage in the EU) say that the only way to succeed in business is through political connections, and 90 % believe that excessively close links between business and politics lead to corruption (also the highest percentage in the EU).[6]

Experience of corruption.    In the 2013 Special Eurobarometer, 3 % have been asked or expected to pay a bribe for services received over the past 12 months (EU average 4 %).[7] 12 % of respondents say they owever, experienced or witnessed a corruption case over the previous 12 months (EU average 8 %); of those 87 % did not report the case (EU average 74 %).[8]

Business surveys.       85 % of entrepreneurs think that favouritism and corruption hamper business competition in Cyprus (EU average 73 %).[9] 64 % of Cypriot business people say that corruption is a problem for their company (EU average 43 %).[10]

Background issues

Economic context. As part of a bail-out agreement reached with the European Commission, the European Central Bank and the International Monetary Fund, Cyprus committed to strengthen its banking supervision and regulatory framework and enhance the transparency of financial information. Cyprus also pledged to reinforce the framework against money laundering, based on an independent audit of its implementation at credit institutions. Specific commitments include allowing the international exchange of financial intelligence without a court order, ensuring that all trustees of trusts under Cypriot law are regulated or otherwise registered, and enabling competent authorities to obtain timely and accurate information on the beneficial ownership of legal entities registered in Cyprus.[11] The government also appointed a committee to enquire into the causes of the financial crisis. Composed of former high-ranking judges, the committee has been tasked to investigate claims that banks had written off loans by politically connected debtors, and that others had benefited from insider information before the imposition of capital controls.[12] The shadow economy accounted for 26 % of GDP in 2012.[13]

Private sector. Cyprus has correctly transposed most provisions of Framework Decision 2003/568/JHA concerning the definition of active and passive corruption in the private sector, as well as the penalties applicable to natural and legal persons.[14] The legislation provides for both administrative and criminal liability of legal persons for corruption-related offences.[15] In the 2013 Global Competitiveness Index, Cyprus ranks 58th among 148 countries.[16]

Access to information. Various laws aim to protect the right to information held by public institutions, many of which have developed relevant procedures.[17] However, Cyprus does not have general legislation on access to information, despite a GRECO recommendation to complement constitutional provisions with a law governing the practical aspects.[18] Authorisation from a minister is required to provide access to government documents.[19] Parliamentary hearings on freedom of information indicated a lack of resources to respond to legal requests for information.[20] In a 2010 test, public agencies supplied a complete answer to 8 % of a total of 220 information requests received, and provided no reply to 73 %.[21] The websites of government bodies do not generally contain up-to-date details on budgets or procurement contracts signed.

Whistleblowing. Public officials have an obligation to report instances of corruption to their supervisors in writing, with supporting evidence.[22] The new Code of Ethics for Public Officials, published in June 2013, obliges public officials to report (not necessarily in writing) to their supervisory authorities any act of corruption which comes to their knowledge. The Labour Law requires objective grounds for dismissal of officials and the Civil Service Law provides for imprisonment or a pecuniary penalty for those who impose an unjustified punishment on a whistleblower for reporting corruption.[23] However, the provision does not cover protection after the disclosure or cases when supervisors fail to follow up, or are themselves part of the problem. Following an explosion at a naval base in 2011, senior Cypriot officials called for a new law to protect whistleblowers who disclose abuse of power or other illegal behaviour in the public and private sector.[24]

Transparency of lobbying. Lobbying is not regulated in Cyprus. There is no specific obligation to register lobbyists or report contacts between public officials and lobbyists.

2. Issues in focus

Conflict of interests and asset disclosure

A law on the illicit enrichment of certain public officials, dating from the early years of the Republic, created the offence of illegal acquisition of property by ministers, Members of Parliament, mayors and other senior officials.[25] Amended in 2004 and 2008, the law provides for the confiscation of assets that have been acquired in breach of its provisions.[26] No cases have been reported under this law.

There is currently no legislation obliging politicians or high-level officials to disclose their assets. A law adopted for that purpose did not enter into force because it was found to contradict constitutional provisions on privacy.[27] GRECO has expressed the hope of a solution to reconcile constitutional considerations with the need for transparency of the assets of high-level officials.[28]

A Code of Conduct for Public Servants was drafted by the Ombudsman and approved by the Council of Ministers.[29] The Code states that public servants ought to behave properly, honestly, independently, competently, with integrity and professionalism in contacts with co-workers and the public. Public servants are also obliged to report potential conflicts of interest. The Public Servants Academy will organise training on the new Code. The Poliviou report, commissioned by the government following a naval base explosion in July 2011, had recommended among other things that civil servants be encouraged to pursue the public interest rather than personal or political party interests.[30]

A 2007 law regulates cases where officials move from the public to the private sector. An independent specialised committee, whose members come from the Office of the Attorney General, decides whether to authorise such transfers or prohibit work in the relevant business for up to two years. Failure to seek clearance or comply with this prohibition constitutes a criminal offence.[31] However, there is little public record to show to what extent these provisions are applied in practice. Questions have been raised regarding consultancies opened by retired senior civil servants, and the appointment of former finance ministers to banking positions without a 'cooling off' period.

A 2008 law states that certain positions, including that of Member of Parliament, are incompatible with the exercise of specific activities.[32] The Law establishes procedures in the event of incompatibility discovered before or after a person takes office, failure to declare an incompatibility, and the consequences of incompatibility on actions taken under it.  Penalties for untrue declarations include a fine of up to EUR 1 700 or imprisonment of up to one year, or both.

Following allegations in 2009 that a minister had interfered in appointments and promotions, the Attorney General charged two senior officials, but not the minister himself. In 2012, the two officials were found guilty of favouritism and fined; the amounts of the fines raised questions regarding the dissuasiveness of the penalties in such cases.[33]

There is growing awareness in Cyprus of the need for transparency regarding the assets of high-level officials and politicians. For the first time, three presidential candidates voluntarily published lists of assets and loans ahead of the February 2013 presidential elections. Following the elections, the President also asked ministers to disclose their assets and to sign a code of conduct. The ministers' declarations were made public in July 2013. This positive trend would be consolidated by a statutory asset disclosure mechanism that includes the means to verify declarations, accompanied by dissuasive penalties in cases of non-compliance.

Parliament's Committee on legal affairs is considering a draft amendment of the Constitution's Article 15 to allow asset disclosure for reasons of transparency of public life and prevention of corruption. Such an amendment would clear the way for other proposed legislative changes to strengthen the framework regarding the disclosure of assets of the President, ministers and Members of Parliament[34] as well as other public officials.[35]

There is no code of conduct or disciplinary procedure for Members of Parliament. Parliament's Ethics Committee reviews relevant legislative proposals, but it has no role in addressing individual integrity issues.[36] Parliament's rules of procedure oblige MPs to declare personal interests related to bills under discussion at the beginning of a meeting or at the point when such interest becomes evident.

Financing of political parties

In December 2012, the Political Parties Funding Act came into force.[37] It responds to a number of suggestions raised by GRECO. The Act aims to ensure greater accountability and provide unified standards for the accounting of political parties and for audits of parties’ accounts, extending not only to income and expenses but also to assets and debts. The legislation covers political parties and associated entities, including affiliates such as youth clubs and student associations.

Although the adoption of the 2012 Act represents an important step forward, it does not yet suffice to achieve the necessary transparency and accountability.[38] Three elements are not yet covered: the Act covers parties but not individual candidates; it does not contain separate provisions for the monitoring of finances related to election campaigns or of individual donations above a certain threshold; and timely and comprehensive publication of party accounts is not envisaged.

Under the 2012 Act, parties have to submit comprehensive annual accounts for independent auditing. Election income and expenditure is contained in these annual accounts, but there is no obligation to separately account for these sums, as GRECO had recommended, to ensure transparency of electoral income and spending.[39] Furthermore, there are no rules on the election income and spending of individual candidates. The 2012 Act sets caps on donations, but the level of these caps — EUR 1 000 per year for anonymous donations and of EUR 50 000 per year for donations from identified individuals and companies — are rather high.[40] GRECO has also raised concerns about the lack of disclosure requirements. The 2012 Act obliges political parties and their affiliates to publish the sum of all anonymous donations received over the year, but does not provide for publication of information on other donations. Therefore, there is no obligation to disclose the identity of donors or the amount of donations received from identified individuals and companies. State-owned companies may sponsor political party events (or events organised by related entities such as associations or foundations), up to EUR 20 000 per year.[41]

Cyprus has not yet complied with a GRECO recommendation to establish an independent supervisory mechanism in respect of election candidates’ income and expenditure. The Parliamentary Committee on Internal Affairs is to consider the issue.[42] 9 % of 2013 Eurobarometer respondents in Cyprus think that the financing of political parties is sufficiently transparent and supervised (EU average 22 %).[43] A particular area of concern is the practice of writing off loans as a form of financial support for political parties.

Comprehensive strategic approach on corruption

Established in 2003, the Coordinating Body against Corruption has a mandate to develop an anti-corruption strategy (which does not yet exist), continuously assess legislation and propose new initiatives. The Body has not fulfilled this mandate. No institution coordinates work on preventing and fighting corruption, or ensures follow-up of Audit Office findings and recommendations for more efficient management of public expenditure. An example of such a recommendation concerns planning at the National Guard which had constructed warehouses at considerable cost and converted them to a different use shortly after their completion.[44] In another case, the Audit Office noted significant weaknesses and failures in the control and monitoring of local authorities' contribution to urban projects.[45] Transparency International has suggested that there should be an independent institution, with its own budget, to focus solely on preventing, detecting and investigating corruption.[46] A more strategic approach could build on an analysis of corruption risks such as, for example, those that arise when local councillors make decisions on re-zoning of land for agricultural, industrial or domestic use.

The public administration does not currently carry out corruption risk assessments. In 2013, the government appointed a commissioner to oversee plans to improve public-sector accountability and transparency by simplifying procedures, introducing staff mobility within services and accelerating the introduction of e-government — measures with a potential to help prevent corruption.[47]

The Public Service Commission, whose members are appointed by the President for a term of six years, oversees the appointment and promotion of public servants.[48] It can impose disciplinary penalties on public servants, ranging from a fine to compulsory retirement. However, the Commission lacks investigative powers. It may not act on its own initiative, only on files submitted by other institutions. Decisions are based on evidence contained in such files. The Public Service Commission reported 14 disciplinary cases in 2012, four such cases in 2011, five in 2010, and 11 in 2009. Of the ten public servants disciplined in 2012, seven received a reprimand and three received a fine of EUR 1 000 to 2 000.[49] 

The Independent Commission Investigating Complaints against the Police (IAIAC) has the competence to investigate corruption allegations within the police force. Appointed by the Ministerial Council for a five-year term, the IAIAC can carry out criminal investigations, appointing additional investigators or experts when necessary. In 2010, out of 137 complaints dealt with by the Commission, only one concerned corruption. The Attorney General decides whether to institute criminal proceedings. If the matter is deemed to be of a non-criminal nature, the Chief of Police together with the Professional Standards Department (within the Police Force) determine whether to take disciplinary action. According to a 2010 IAIAC report, the police has declined to follow IAIAC recommendations citing its own parallel investigation through the Professional Standards Department.[50]

Public procurement

The procurement of public works, goods and services constitutes 10.5 % of GDP in Cyprus.[51] The value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, goods and services was 56.6 % in 2007 and 49.1 % in 2010.

Good practice: public procurement rules

A specific law regulates conflicts of interest for public servants responsible for procurement[52] and the Treasury has prepared a national code of conduct for procurement.[53] According to this code, evaluation committee members must sign a declaration of integrity, impartiality and confidentiality of information acquired in the course of duty. They are also under an obligation to disclose conflicts of interest. Moreover, awarding a contract through a negotiated procedure requires the approval of the national Public Procurement Directorate. Legislation transposing the EU directives into national law, including anti-corruption safeguards, applies also to contracts below the thresholds. Procedures for examining appeals at the Tenders Review Authority were updated.[54] E-procurement is used (5 355 contracts awarded in 2012) and a database of tender calls is publicly available.[55] The benefits of e-procurement include greater transparency, faster procedures and more competition.

The 2007 Regulations for the Coordination of Procedures for the Award of Public Work, Supply and Service Contracts aim to achieve transparency, equal treatment and impartiality. Tender boards, evaluation committees and contracting authorities are required to keep minutes of every meeting. The Attorney General, the Auditor General and the Accountant General may participate in such meetings as independent observers. Members of bodies involved in the procurement process sign a pledge to serve with integrity and impartiality. Members of ad hoc technical committees cannot simultaneously participate in bodies involved in the procurement process.

However, no specific mechanism is in place within contracting authorities to help detect potentially corrupt practices at different stages of the procurement process. The Auditor General may review public procurement contracts. The financial independence of the Auditor General remains in need of further enhancement, as noted during pre-accession monitoring by the European Commission.[56] Cyprus is currently reviewing procedures for the appointment of members of the supervisory boards of state-owned companies.

Although few cases of corruption in public procurement have surfaced, 55 % of companies surveyed that participated in a public tender or procurement process in the last three years claim that corruption prevented them from winning the contract (the third highest percentage in the EU), as reported in the 2013 Eurobarometer business survey. Respondents highlighted specifications tailor-made for particular companies (80 %), conflicts of interest in bid evaluation (76 %), collusive bidding (68 %), abuse of negotiated procedures (62 %), unclear selection or evaluation criteria (61 %), and amendment of contract terms after the contract is concluded (55 %).[57] 67 % of business respondents consider that corruption is widespread in public procurement at national level (EU average 56 %), and 61 % − in contracts managed by local authorities (EU average 60 %). These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities to corruption in public procurement procedures.

3. Future steps

Cyprus has demonstrated commitment to prevent and address corruption by amending legislation and establishing the Coordinating Body against Corruption. However, the small number of cases investigated, prosecuted or adjudicated in Cyprus indicates the need to strengthen the enforcement system and implement transparency and integrity safeguards facilitating detection and collection of evidence. Additional efforts are necessary to ensure closer coordination of relevant bodies, effective disclosure of assets and conflicts of interest, and greater transparency in the financing of political parties as well as in public procurement.

The following points require further attention:

· Strengthening the disciplinary regime for public servants, and streamlining procedures to ensure effective investigation of corruption within the police. Ensuring an effective coordination of anti-corruption policies by endowing a coordinating institution with the necessary powers.

· Introducing codes of conduct for elected and appointed officials for them to declare assets periodically and to disclose potential conflicts of interests, with independent supervision and dissuasive penalties.

· Lowering the thresholds for donations to political parties, limiting the ability of state-owned companies to sponsor political events, regulating donations to election candidates and campaigns, obliging parties to publish their financial statements and accounts online (including the identity of donors), and establishing external supervision of election candidates’ income and expenditure.

· Developing uniform and effective tools to prevent and detect corruption in public procurement at national and local level, including internal and external control mechanisms and risk management tools within contracting authorities.

[1]      Chaired by the Deputy Attorney General, the Body includes representatives of the Ministry of Justice and Public Order, the Police, the Auditor General and the chairs of the parliamentary committees on legal issues and on institutions and values, as well as the chairs of the Bar Association and Institute of Certified Public Accountants.

[2]      Laws 23(III)/2000 and 22(III)/2006.

[3]      The maximum sanction was raised from EUR 17 000 to EUR 100 000.

[4]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)24_Cyprus_EN.pdf.

[5]      2013 Special Eurobarometer 397.

[6]      2013 Special Eurobarometer 397.

[7]      2013 Special Eurobarometer 397.

[8]      2013 Flash Eurobarometer 374.

[9]      2013 Flash Eurobarometer 374.

[10]    2013 Flash Eurobarometer 374.

[11]    Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding, 29 April 2013, http://www.imf.org/external/np/loi/2013/cyp/042913.pdf.

[12]    The committee issued its report in September 2013. The Attorney General established an investigative unit to consider whether the report contains civil or criminal matters to be prosecuted.

[13]    http://ec.europa.eu/europe2020/pdf/themes/06_shadow_economy.pdf.

[14]    COM(2011) 309 final, Brussels, 6.6.2011.; http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf.

[15]    Ratification Law L. 25(III)/2008.

[16]    http://www3.weforum.org/docs/GCR2013-14/GCR_Rankings_2013-14.pdf.

[17]    Law on Public Access to Environmental Information (L. 119(I)/2004) obliges public authorities to make information concerning the environment available, Law on the Re-Use of Public Sector Information (L. 132(I)/2006) provides for rules concerning the re-use of information which is held by public sector bodies, the State Archives Law (L. 208/1991) provides for public access to records held by the State Archive and by all bodies which produce public records.

[18]    GRECO Second Evaluation Round, http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC2(2008)1_Cyprus_EN.pdf.

[19]    State Archives Law, Article 8.1.

[20]    Parliamentary hearings on freedom of information in May 2009.

[21]    http://www.accessinfocyprus.eu/images/access-info/final_report/Draft_Report_and_Recommendations_for_Consultation_24_Feb_2011_web.pdf.

[22]    Article 69A of the Civil Service Law.

[23]    Section 9 of Law No 7(III)/2004.

[24]    Comments by the Environment Commissioner of Cyprus in July 2011.

[25]    Law 65/1965.

[26]    http://www.cylaw.org/nomoi/arith/2008_1_62.pdf.

[27]    Decision 2/99 of the High Court of 12 May 2000. http://www.cylaw.org/cgi-bin/open.pl?file=apofaseis/aad/meros_3/2000/3-200005-anaf2-99.htm&qstring=ανωτατο.

[28]    GRECO Compliance Report on Cyprus (First Evaluation Round) (12 December 2003) http://www.coe.int/t/dghl/monitoring/greco/evaluations/round1/GrecoRC1%282003%2913_Cyprus_EN.pdf.

[29]    Ombudsman. (2013) Οδηγός Συμπεριφοράς και Δεοντολογίας Δημοσίων Υπαλλήλων. http://www.ombudsman.gov.cy/Ombudsman/Ombudsman.nsf/All/0BEF79D468209AF4C2257B7B004287DE/$file/οδηγός%20συμπεριφοράς%20και%20δεοντολογίας.pdf?OpenElement.

[30]    Recommendation 12, pp. 584-588.

[31]    Law no. 114(I)/2007.

[32]    Law 7(I)/2008.

[33]    EUR 1 000 and EUR 2 000 respectively.

[34]    Law 49(I)/2004.

[35]    Law 50(I)/2004.

[36]    The official name of Parliament’s Ethics Committee is the Committee on Institutions, Merits and the Commissioner for Administration.

[37]    Political Party Funding Law AR 4371, 17.12.2012, N. 175(I)/2012 http://www.cylaw.org/nomoi/arith/2012_1_175.pdf.

[38]    GRECO, Third Evaluation Round, Compliance Report on Cyprus, GRECO RC-III (2012) 24E. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%2924_Cyprus_EN.pdf.

[39]    Ibid.

[40]    The permissible acceptance limits for donations represent an increase of previous amounts which went 'much beyond the threshold levels that GRECO has accepted in respect of other member states'. GRECO Evaluation Report on Cyprus on

Transparency of Party Funding, 2011 http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282010%299_Cyprus_Two_EN.pdf.

[41]    Section 5(3) of the Political Parties Law.

[42]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%2924_Cyprus_EN.pdf.

[43]    2013 Flash Eurobarometer 374.

[44]    Audit Office of the Republic of Cyprus, 2011 Annual Report, http://www.audit.gov.cy/audit/audit.nsf/All/BC38CBA65D3FC0A1C2257AD0002B2758?OpenDocument.

[45]    Ibid.

[46]    http://www.transparencycyprus.org/el/wordpress/wp-content/uploads/2013/04/TIC_Suggestions_Anticorruption-Measures_english_March-13.pdf.

[47]    Cyprus National Reform Programme, May 2013, p. 5, http://ec.europa.eu/europe2020/pdf/nd/nrp2013_cyprus_en.pdf

[48] Article 124 of the Constitution. Article 4 of the Public Service Law.

[49] http://www.psc.gov.cy/psc/psc.nsf/All/D2EBEE16A706E7F9C2257BDA0037CE9D/$file/Etisia%20Ekthesi%202012.pdf?OpenElement pp. 19, 28.

[50]    Independent Commission Investigating Complaints against the Police http://www.iaiacap.gov.cy/iaiacap/iaiacap.nsf/All/8B928C6733FDC232C225794A003E89AA/$file/%CE%95%CE%9A%CE%98%CE%95%CE%A3%CE%97%20%CE%91%CE%A1%CE%A7%CE%97%CE%A3%202010.pdf?OpenElement.

[51]    http://ec.europa.eu/internal_market/publicprocurement/docs/indicators2010_en.pdf

[52]    Based on the Law of 2006 (N 12/06). 

[53]    www.treasury.gov.cy/.../Εθνικός%20Κώδικας%20Δεοντολογίας.pdf.

[54]    Tenders Review Authority, 2011 Annual Report, http://www.tra.gov.cy/aap/aap.nsf/All/C7EDC1BC58FE8C9BC2257AD0003B9A28/$file/EtisiaEkthesi2011.pdf?OpenElement.

[55]    https://www.eprocurement.gov.cy/ceproc/viewInfo.do?section=statistics http://www.treasury.gov.cy/treasury/publicpro/ppro.nsf/dmlstatistical_gr/dmlstatistical_gr?OpenDocument.

[56]    European Commission, Comprehensive monitoring report on Cyprus's preparations for membership, 5 November 2003, p. 48, http://ec.europa.eu/enlargement/archives/pdf/key_documents/2003/cmr_cy_final_en.pdf.

[57]    2013 Flash Eurobarometer 374.

CZECH REPUBLIC

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. Since 1999, the government has adopted consecutive, comprehensive strategies against corruption. Taking into account the limited progress made on the implementation of the strategy for 2011-2012, the European Commission recommended stepping up the fight against corruption.[1] Although in this period the government took non-legislative measures, progress in submitting legislative drafts to Parliament and in adopting them by the end of the programme was limited.[2] The latest anti-corruption strategy adopted in January 2013, while repeating the majority of measures promised by the previous strategy, covers a wide range of policies but limits itself to listing actions.[3] Parliamentary immunity rules were amended following the amendment of the Constitution in May 2013.

In many cases, the government and municipalities worked with civil society to prevent corruption and to identify risks, for instance in public procurement. A considerable amount of data on the perception and experience of corruption is gathered by public institutions, research bodies and NGOs. Research institutes and civil society organisations have created an anti-corruption platform to propose changes to legal provisions, provide training and share good practices.

Legal framework. While the Czech criminal code is largely in line with the Council of Europe Criminal Law Convention on Corruption, the Council of Europe's Group of States against Corruption (GRECO) made four recommendations, specifying the need to amend the criminal code on trading in influence, in particular as regards the acceptance of an offer or promise of an undue advantage and instances of supposed influence. The Ministry of Justice submitted to the government at the end of February 2013 a proposal to amend the provision on trading in influence, but the adoption came to a halt.[4] The Czech Republic recently ratified the United Nations Convention against Corruption (UNCAC), having previously rectified problems concerning the sanctioning of legal persons in relation to crimes.

Institutional framework. A government committee is in place to coordinate the fight against corruption. A special unit within the Czech police (UOKFK)[5] investigates corruption and financial crime and deals with an increasing number of corruption investigations.[6] Transparency International’s 2011 National Integrity System assessment concluded that the Ombudsman and Supreme Audit Office were the strongest institutions on good governance in the Czech Republic.[7] Although the Ombudsman does not have specific powers to deal with corruption, he makes recommendations and provides a model for the civil service to function impartially and transparently.[8] The legislative recommendations of the previous ombudsman, who resigned in December 2013, have been largely ignored by the legislature. The Supreme Audit Office also plays an important role in anti-corruption policies pointing, for example, to deficiencies in the public procurement process. However, recent legislative efforts to strengthen its competence in relation to corruption powers and to cover local municipalities have not achieved results.

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer,[9] 95% of Czech respondents believe that corruption is widespread in their country (EU average: 76%). 80% of Czech citizens considered corruption as the most important challenge to be addressed in the country.[10] In a 2012 national survey, 92% of respondents stated their dissatisfaction with corruption in the country, while only 1% were satisfied.[11]

Experience of corruption 28% of the 2013 Special Eurobarometer respondents felt affected by corruption in their daily lives (EU average: 26%), and 8% of those who dealt with the institutions named in the survey stated that they were expected to pay a bribe in the last 12 months (EU average: 4%).[12]

Business surveys. In the 2013 Eurobarometer business survey,[13] 71% of Czech respondents, the highest percentage in the EU, noted that corruption is a major obstacle for doing business. Patronage and nepotism are noted by 69% of the respondents as obstacles for business, also the highest figure in the EU. National surveys from 2011 suggest that 12.7% of entrepreneurs had experienced a case of corruption,[14] and 44% reported having had an opportunity to obtain an advantage in exchange for a bribe.[15] The World Economic Forum's Global Competitiveness Report 2013-14 indicates that in the Czech Republic, corruption is the most problematic factor for doing business.[16] This worldwide competitiveness survey ranks the Czech Republic 46th out of 152 countries.

Background issues

Private sector. The Czech Republic fully transposed Framework Decision 2003/568/JHA on combating corruption in the private sector.[17] In 2013, the OECD Working Group on Bribery considered that foreign bribery enforcement could be much enhanced by engaging with key actors including representatives of the private sector, and raised concerns about the lack of awareness among them of the foreign bribery offence. [18] The Czech Republic has yet to record an indictment for foreign bribery. Two investigations are ongoing, and one could not be prosecuted due to the absence of rules for the liability of legal persons at the time of the offence.

Parliamentary immunities. A previously burdensome obstacle for successful prosecution of high level bribery has now been partially removed.[19] According to the previous wording of the Constitution of the Czech Republic,[20] Members of Parliament enjoyed unlimited immunity against criminal proceedings unless the relevant chamber of Parliament voted to waive the immunity of the member in question. If the respective chamber did not waive the immunity, MPs were protected from criminal prosecution for life.[21] After several years of discussions in the Parliament, an amendment to the Constitution limited the immunity to the term of the office. Under the amended provision of the Constitution, criminal proceedings may start when an MP loses office, even if the parliamentary chamber had not lifted the immunity.

Whistleblowing. Labour legislation provides general protection against arbitrary dismissal and discrimination of employees but does not include specific protection of whistleblowers.[22] The Ethical Code adopted by the government in 2012[23] includes an obligation to report corruption to management or to law enforcement bodies, but it does not provide for the protection of whistleblowers. The OECD Working Group on Bribery  reported in 2013 that the Czech authorities had established a working group to strengthen whistleblower protection. This working group suggested amendments to four laws to provide additional protection by implementing non-discrimination principles.[24] Recent cases of whistleblowers who exposed illegal practices in public procurement at ministries point to the practical need for such additional guarantees.

Transparency of lobbying. Lobbying is not regulated in the Czech Republic. There is no specific obligation for registration of lobbyists or reporting of contacts between public officials and lobbyists. Practical problems affecting state interests were noted in the annual report of the Czech Security Information Service.[25]

2. Issues in focus

Use of EU funds

The Czech Republic has been allocated EUR 26.7 billion for the 2007-2013 programming period from the EU structural funds. In 2011, the Commission discovered systemic deficiencies in the functioning of the Czech Management and Control System for the implementation of all 14 European Regional Development Fund and Cohesion Fund (ERDF/CF) programmes.[26] These deficiencies led the Commission to interrupt payments for all operational programmes (OPs) in March 2012 and to issue an action plan covering five main areas in need of improvement: lack of independence of delegated audit bodies, the functioning of the audit authority, the national system for handling irregularities, management verifications (first-level controls), and administrative capacity.

Several high-ranking officials responsible for the use of EU funds have been investigated for corruption. In the North-West region, the European Commission interrupted payments in 2011 based on audit findings and bribery allegations against the former head of the managing authority, who was sentenced to five years imprisonment for corruption.[27] In 2012, the Czech police launched an investigation against the governor of Central Bohemia on charges of corruption. The Commission also interrupted payments to Central Bohemia in 2012.

The Czech Republic succeeded in fulfilling most of the requirements of the Commission action plan, and payments for almost all of the OPs were resumed in October 2012. In relation to Regional Operational Programme (ROP) North-West, a number of corrective measures were introduced in 2012, including financial corrections of approximately 22% of all its expenditure. In addition, payments were stopped fully or partially for another six OPs in March 2013, with further possible financial corrections under discussion. For some programmes, the payments have since been resumed. The causes of deficiencies in the implementation of EU funds include weaknesses in public administration, in the legislation dealing with conflicts of interest, lack of transparency in the ownership of participating companies and bypassing of public procurement legislation.[28]

Given the track record of irregularities leading to the interruption of payments on many occasions, the lack of an independent verification mechanism is an important deficiency in the implementation of EU Funds. The Czech authorities have to put in place effective measures to ensure the independence of the bodies responsible for the implementation of the EU funds, and to tackle the issues agreed under the action plan.

The National Coordination Authority responsible for the implementation of EU funds is established in the Ministry of Regional Development. This ministry has prepared a strategy to combat fraud and corruption in the implementation of ESI funds in 2014–2020. Furthermore, at the national level, the Government Strategy for the Fight against Corruption 2013–2014 has also been prepared and departmental anti-corruption programmes are currently being finalised.

Integrity in public administration

During the European Semester for economic policy coordination, the Commission pointed out that corruption and low operational efficiency in the public administration are perceived as major issues because of the Czech civil service's vulnerability to political influence and weaknesses in the rules regulating it.[29] Furthermore, the high rate of fluctuation in the civil service, related to frequent changes in government and lack of guarantees for appointments and dismissals, increases the risk of corruption.[30]

Despite five attempts since 2002 to put in place new legislation, there is no specific legislation for the employment in the public service. While a few provisions of the 2002 bill, for instance on training, entered into force, its full entry into force was postponed for over a decade. The most recent proposal for a Public Servants Act, presented in early 2013, does not adequately address concerns regarding the guarantees for independence and stability of state officials and a well-functioning career system.[31] In June 2013 the previous government approved the insertion of several provisions into the bill, aiming for example to establish a state-secretary responsible for human resources in each ministry. This bill, however, was left pending without adoption in Parliament, given the government crisis, which emerged in June 2013 and resulted in dissolution of the Chamber of Deputies in August 2013. After the early elections in October 2013, the political parties forming the new coalition government abandoned the Public Servants Act from 2013, and decided to regulate the legal status of state officials by amending the previously approved, but to a large extent not yet in force, Public Servants Act from 2002. Their amendment bill introduced in December 2013 is still pending in the Chamber of Deputies, together with competing amendment bill approved by the interim government.

GRECO reported that no specific measures are in place to regulate the situation where public officials move to the private sector.[32] The Czech Security Information Service reported cases of officials participating in allocating state aid for renewable energy resources who later invested in the same sector.[33] The same authority noted in the previous year that the most significant forms of dysfunction of the institutions of the State Administration and Local Government are corruption, referring to clientelistic ties built to achieve the desired benefit.[34]

The Act on Conflicts of Interest adopted in 2006 covers disclosure of interests and assets, and rules on conflicts of interest of high-level elected and appointed officials.[35] It does not apply to civil servants in general; their conflicts of interest would be regulated by the Public Servants Act not yet in force.[36] Those public officials who fall into one of the categories defined by the act are required to submit annual disclosures of financial liabilities and of changes in real-estate ownership, ownership of expensive items, securities, ownership shares in companies, and expensive gifts received while in the office. The disclosures are archived and available from the relevant authority. There is no verification procedure, but public concerns have been raised by a certain number of incorrect disclosures. Non-compliance with the disclosure rules is an administrative offence. Complete statistical data on decisions are not available. According to research, the administrative authorities do not impose deterrent penalties. The most severe fine for breaching disclosure rules corresponds to the equivalent of EUR 150.[37]

Public procurement

Public works, goods and services in the Czech Republic account for 26% of the GDP. The value of calls for tender published in the Official Journal of the European Union as a percentage of total expenditure on public works, goods and services was 17% in 2007 and 21.5% in 2010.[38]

Information on public tenders is centralised in the Journal of Public Tenders and available online.[39] The oversight of public tenders is carried out by the Office for the Protection of Competition (UOHS). The Office reported in 2012 that the most common irregularities identified concerned discriminatory and non-transparent conditions for bidders.[40]

According to the 2013 Eurobarometer business survey, 77% of respondents consider that corruption is widespread in public procurement at national level and 67% in tenders managed by local authorities.[41] In particular, Czech respondents stated that the following practices were widespread: specifications tailor-made for particular companies (73%); abuse of negotiated procedures (47%); conflicts of interests in the evaluation of the bids (60%); collusive bidding (62%); unclear selection or evaluation criteria (53%); involvement of bidders in the design of the specifications (47%); abuse of emergency grounds to avoid competitive procedures (54%); and amendments of contractual terms after conclusion of contract (51%).[42] In a 2010 survey by the Association of Small and Medium-sized Enterprises and Crafts, almost one out of three state that paying a commission or a bribe is necessary to obtain a public contract.[43]

According to the findings of a research project, 80% of contracts awarded by ministries between 2006 and 2010 were awarded non-publicly or without tender.[44] A total of 67% of these purchases took place outside the public procurement information system (PPIS) and 14% were contracts with the same number of tender participants and winners (one in most cases).[45]

In its annual reports, the Czech Security Information Service consistently raised concerns related to public procurement, pointing to undue influence and conflicts of interest in sectors such as energy, railway infrastructure, forestry and postal services. Railway infrastructure and forestry regularly appears as a particularly risk-prone area.[46] Some of the practices highlighted included undue influence over the specifications of the contract, subjective and unclear selection criteria and bid rigging. The Service identified irregular and non-transparent negotiations, elements of which frequently included cooperation between the contracting authority and the tenderer for a contract, the award of public contracts without a competitive tender, the modification of the terms and conditions for the benefit of the pre-selected candidates, overestimation of the contract, influencing the members of the evaluation committee, or the award of contracts for useless services.[47] The Service repeatedly noted that corrupt practices in public procurement were based on informal, clientelistic structures which could undermine the activities of public authorities.[48] A tender for the introduction of an electronic payment system for public transportation in Prague has revealed risk factors in public procurement such as deficiencies in drafting the tender documentation and conflicts of interest involving public officials.[49]

The Czech Republic has made substantial progress by putting in place a modern legal framework on public procurement. In 2012, the substantially amended Public Procurement Act introduced additional transparency and safeguards through stricter rules for publishing tenders and public contracts with the aim of mitigating corruption-related risks[50]. Furthermore, it established a new category of a ’significant public tender’, which has to be approved by the government or municipal council, and introduced the requirement of at least two bidders. Nevertheless, while the Commission noted some progress at local level, which previously had insufficient administrative capacity to deal with public procurements, it also highlighted the need for providing further assistance in administrative capacity building. Certain difficulties remain in implementing the Act, notably due to insufficient guidance from the UOHS.[51] Further increase in the administrative capacity and better guidance would speed up and smooth the public procurement process at local level.

The 2012 Public Procurement Act still allows to some extent the conclusion of public contracts with companies that have anonymous shareholders and does not offer sufficiently strong safeguards against conflicts of interest, since the companies' true owner may remain hidden.[52] The 2013 act regulating anonymous paper shares was expected to address this lack of transparency. However, the new civil code effective from 2014 introduces a new form of property ownership with limited transparency, which makes it difficult to establish the ownership of the proceeds from property, including from shares. Provisions of the 2012 Public Procurement Act aimed at increasing transparency were removed by an amendment adopted in 2013.[53] These steps seem to go against the proposed changes in anonymous shareholding.[54]

Financing of political parties

In the Czech Republic, the largest source of political party funding is the state. State subsidies may amount to up to 85% of a party's budget.[55] Political parties that receive over a specified percentage of votes or hold at least one seat in Parliament are entitled to state subsidies, which are calculated on the basis of the percentage of votes received and the number of candidates elected, for both parliamentary (national or European Parliament) and municipal elections. Political parties may also be funded from membership fees and donations.[56] Certain restrictions apply to sources of private donations. A political party may not 'accept free benefits and gifts' from state entities, state-funded organisations, municipalities (except for the rental of commercial premises), state enterprises and other legal entities in which the state, a state enterprise or municipality has a share of more than 10%, including legal entities which are managed and supervised by the state, charities, other legal entities defined by special regulations, foreign legal entities (except foreign political parties and foundations) and foreign natural persons who do not have permanent residence in the Czech Republic.[57]

Financial statements of political parties must be audited by an external auditor and a copy of the financial statements must be submitted to a parliamentary office which makes them publicly available at its premises, but not online). Some MPs voluntarily publish information on funding from private sources on the website of their party.

Good practice: Voluntary publication of financial data of MPs

Members of Parliament are not subject to the Free Access to Information Act, but one party has chosen to apply it to its members. The code of ethics of this party requires the MPs to inform the public in full about how they fulfil their office, with the exception of disclosing classified information specified by law.

Nevertheless, according to GRECO, the procedures for financing political parties and election campaigns are insufficiently transparent. In 2011, GRECO singled out nine areas of concern,[58] including unsatisfactory reporting requirements for campaign expenditure by political parties, the absence of a transparency requirement for the private campaigns of individual candidates (with the exception of presidential candidates, who are required to publish accounts)[59] and the absence of a requirement to publish the political parties’ financial statements online. Lack of proper accessibility to party reports is a major stumbling block for transparency: while GRECO commended the amount of information parties are required to keep on record concerning the donations they receive, together with the very low minimum threshold for declarations, but it noted that the documents are hardly accessible in practice, since only one copy is kept in the library. Even more importantly, GRECO noted concerns about the oversight authority, since external checks are carried out by the parliamentarians themselves, namely through the Supervisory Committee of the Chamber of Deputies, which is responsible for scrutinising the use of financial resources of the state.[60] The Czech supervision mechanism of party funding is only of formal nature, and is limited to checking whether the declarations have been submitted in due time and in accordance with the criteria set out by law. It is not an effective, independent control mechanism.

In January 2013, the government rejected a legislative draft which had the potential to meet the GRECO recommendations for improving the transparency of party financing. Currently there appears to be no agreement on the preferred model of control over financing of political parties. Two alternative proposals were considered: setting up a new independent oversight authority or broadening the powers of the Supreme Audit Office.[61] None of the two proposals received sufficient support to be taken forward. The previous government intended to amend the laws on political parties and on the code of elections, however, given the elections in October 2013, any bill would have to be resubmitted to the new Parliament so as to be adopted.

Prosecution of corruption

According to a study conducted for the Czech Government by Transparency International, the prosecution of bribery is mainly consistent among the courts. The study noted that most prosecuted cases concerned petty corruption. The prosecution of large scale corruption is relatively rare.[62] The prosecuted cases almost all related to corruption of public officials. Prosecution of cases of corruption within in the private sector is very rare (only eight cases in the period 2010-12).[63]

The supervision of investigation of important bribery cases rests largely with the departments of serious economic and financial criminality which have been established in the High Public Prosecutors Office in Prague and Olomouc, as well as in the Supreme Public Prosecutor’s Office. The prosecution service has also designated specialist public prosecutors to handle corruption cases. Supervision of the High Public Prosecutor’s Office is conducted in all cases by Supreme Public Prosecutor's Office.

The OECD Working Group on Bribery expressed its concern that possible political pressures over prosecutorial decisions may indirectly influence investigations and prosecutions.[64] According to the law, decisions for dismissal of the head of the Supreme Public Prosecutor's Office do not have to include reasons.[65] The Government may remove the Supreme Public Prosecutor from office at the proposal of the Minister of Justice. Instructions by the Supreme Public Prosecutor on procedures and administration of the prosecutor’s offices are binding.[66]

The government replaced the Supreme Public Prosecutor in January 2011. On the proposal of the new Supreme Public Prosecutor, the Minister of Justice appointed a new High Public Prosecutor in Prague in July 2012. Her predecessor had been removed from office on grounds of mismanagement and unprofessional conduct, whose motion had been turned down by the Supreme Administrative Court.[67] These two appointments are widely believed to mark an important step in the active fight against corruption in the Czech Republic. Since these appointments, the public prosecution has initiated several important cases at the highest levels of politics and public administration.

In October 2012, the government announced that agreement had been reached to restructure the public prosecution which was formally approved by the government in May 2013. The organisation of the prosecution authority would be simplified; three levels would replace the current four-level-structure (district offices – regional offices – Supreme Prosecution Office). The introduction of a new office for the prosecution of corruption cases, attached to the Supreme Prosecution Office, aims to centralise the prosecution of corruption, which is currently handled by individual offices, and to make it more effective. However, this legislative proposal has been withdrawn.

3.         Future steps

Over the last decade, a strategic framework for fighting corruption has been evolving in the Czech Republic. Persistent problems related to the misuse of public funds, public procurement and other interactions between business and the public sector have been noted, both by EU institutions supervising the use of European financial support and others. Ongoing attempts to put in place legislation on the civil service have not been finalised so far. Perception surveys show that corruption is widely believed to represent a major obstacle to doing business.

The following points require further attention:

· Introducing legislation on the civil service that addresses conflicts of interest, merit-based recruitment and guarantees against arbitrary dismissal. Enhancing stability of the civil service and safeguards against political interference. Introducing integrity programmes in the public service that focus on preventive measures.

· Enhancing capacities, specialisation and training for detection and removal of conflicts of interest within public procurement at all levels. Ensuring effective implementation of the Public Procurement Act. Enhancing transparency of ownership for companies participating in public tenders. Introducing an ex-ante verification mechanism to prevent conflicts of interest and corrupt practices in relation to the European Structural and Investment Funds programmes. Strengthening the independence of all bodies responsible for the implementation of EU funds.

· Disclosing in detail party and electoral campaign expenditure in annual financial reports. Ensuring that financial reports of political parties are easily accessible to the public and establishing effective and impartial supervision of financing of political parties.

· Strengthen the ability of prosecutors to handle corruption cases in an independent manner by reviewing the criteria for nomination of prosecutors, and by pursuing reforms regarding instructions by the executive in individual cases.

[1]      Commission Staff Working Document: Assessment of the 2013 national reform programme and convergence programme for the Czech Republic. Brussels, 29.5.2013; SWD(2013) 353 final.

[2]      These legislative drafts included: laws on independence of the prosecution service, conflicts of interest, freedom of information, creation of specialised courts, regulation of lobbying, the Public Servants Act, financing of political parties, extension of powers of the Supreme Audit Office, protection of whistleblowers and reform of parliamentary immunity.  See Commission Staff Working Document: Assessment of the 2013 national reform programme and convergence programme for the Czech Republic. Brussels, 29.5.2013; SWD(2013) 353 final. p. 29.

[3]      Government Resolution No. 39 of 16th January 2013 - http://www.korupce.cz/assets/Strategy-2013-a-2014_FINAL.pdf.

[4]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282013%291_CzechRepublic_EN.pdf

[5]      http://www.policie.cz/clanek/stop-korupci.aspx.

[6]      The number of indictments reached a three-year high of 781 in 2011, compared with 697 in 2010 and 688 in 2009. http://www.ceskapozice.cz/en/news/society/anti-corruption-police-see-charges-soar-2011.

[7]      http://www.transparency.org/whatwedo/pub/national_integrity_system_assessment_czech_republic.

[8]      The Ombudsman's reports are available at: http://www.ochrance.cz/en/reports/.

[9]      2013 Special Eurobarometer 397.

[10]    Annual study run by the Public Opinion Research Centre of the Institute of Sociology of the Academy of Sciences of the Czech Republic -– February 2012; http://cvvm.soc.cas.cz/politicke-ostatni/nalehavost-zabyvani-se-oblastmi-verejneho-zivota-unor-2012. Another national survey from 2011 showed similar results: according to 84% of population aged 18-65, the level of corruption in the Czech Republic is high, and the government has no real interest to punish corruption. Online survey by Ipsos, 13 June 2011. http://www.ipsos.cz/tiskove-zpravy/quo-vadis-korupce.

[11]    http://cvvm.soc.cas.cz/media/com_form2content/documents/c1/a6865/f3/ps120709.pdf.

[12]    2013 Special Eurobarometer 397. A similar assessment is reflected by national surveys: one tenth of the population has encountered corruption in the previous year, 3% confessed to have paid a bribe. Mediated experience is higher, 43% of the population has heard about corruption in their neighbourhood. Online survey by Ipsos, 13 June 2011. http://www.ipsos.cz/tiskove-zpravy/quo-vadis-korupce.

[13]    2013 Flash Eurobarometer 374.

[14]    http://www.tyden.cz/rubriky/byznys/podnikani-a-prace/kazdy-osmy-podnikatel-se-setkal-s-korupci_210789.html - Vodafone survey run in 2011.

[15]    Corruption climate, GfK survey, April 2010, the press release is available at: http://www.gfk.cz/imperia/md/content/gfkpraha/press/2010/100406_nejzkorumpovanejsi_jsou_politicke_strany.pdf.

[16]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf

[17]    COM(2011) 309 final, Brussels, 6.6.2011.; http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf; ZÁKON ze dne 27. října 2011 o trestní odpovědnosti právnických osob a řízení proti nim; http://data.idnes.cz/soubory/pravo/A120305_VR_ZAKON_418_2011.PDF.

[18]    OECD Working Group on Bribery. Phase 3 Report on Implementing the OECD Anti-Bribery Convention on the Czech Republic. (2013) OECD p 46: http://www.oecd.org/daf/anti-bribery/CzechRepublicphase3reportEN.pdf

[19]  Constitutional Act No. 98/2013 Coll. that amends Constitutional Act No. 1/1993 Coll., the Constitution of the Czech Republic, as amended.

[20]    Constitution of the Czech Republic, Article. 27 sub 4.

[21]    Code of Criminal Procedure of the Czech Republic, Article 11 sub 1 (c).

[22]    Act No. 262/2006 Coll., the Labour Code.

[23]    VLÁDA ČR Etický kodex úředníků minimalizuje korupční jednání Vláda ČR. (2012)  http://www.vlada.cz/cz/media-centrum/aktualne/eticky-kodex-uredniku-minimalizuje-korupcni-jednani-95380/.

[24]    The four regulatory impact analyses submitted to the government suggesting legislative amendments are: the Anti-Discrimination Act, the Civil Procedure Code, the Act on Professional Soldiers, and the Act on Service in Armed Forces). OECD (2013) Working Group on Bribery. Phase 3 Report on Implementing the OECD Anti-Bribery Convention on the Czech Republic. OECD p 46. Available from: http://www.oecd.org/daf/anti-bribery/CzechRepublicphase3reportEN.pdf.

[25]    For both 2012 and 2013, see chapter 2.1 on protection of important economic interests./ Ochrana významných ekonomických zájmů. http://www.bis.cz/n/2012-08-22-vyrocni-zprava-2011.html; http://bis.cz/n/2013-11-07-vyrocni-zprava-2012.html#3.

[26]    See for instance: Commission Staff Working Document: Assessment of the 2012 national reform programme and stability programme for the Czech Republic. Brussels, 30.5.2012 SWD(2012) 303 final; p. 22.

[27]    The suspects included two previous Northwest ROP directors, one of them was sentenced by the appeal court to 5 years imprisonment on 17 January 2013. In another case, an elected official and others are suspected of abuse of power and harming EU interests; crimes which carry a maximum sentence of 12 years imprisonment.

[28]    Commission Staff Working Document: Assessment of the 2013 national reform programme and convergence programme for the Czech Republic. Brussels, 29.5.2013; SWD(2013) 353 final. p. 30.

[29]    Commission Staff Working Document: Assessment of the 2013 national reform programme and convergence programme for the Czech Republic. Brussels, 29.5.2013; SWD(2013) 353 final. p. 8., p.29-30.

[30]    2013 Report of the Czech Security Information Service; see chapter 3.2 on organised crime / Organizovaný zločin http://bis.cz/n/2013-11-07-vyrocni-zprava-2012.html#3

[31]    Commission Staff Working Document: Assessment of the 2013 national reform programme and convergence programme for the Czech Republic. Brussels, 29.5.2013; SWD(2013) 353 final. p. 30.

[32]    See the GRECO report, especially recommendations vi-vii., Second Round Evaluation Report on the Czech Republic, Adopted by GRECO at its 28th Plenary Meeting (Strasbourg, 9-12 May 2006); and Addendum to the Compliance Report on the Czech Republic; Adopted by GRECO at its 47th Plenary Meeting (Strasbourg, 7-11 June 2010).

[33]    http://www.bis.cz/n/2012-08-22-vyrocni-zprava-2011.html; see chapter 2.1 on protection of important economic interests./ Ochrana významných ekonomických zájmů.

[34]    http://www.bis.cz/n/2011-09-07-vyrocni-zprava-2010.html; see chapter 1.6 on organised crime.

[35]    Act No. 159/2006 Coll., on conflict of interests; for its personal scope, see Article 2.

[36]    Consequently GRECO found that the current rules on the conflicts of interests were insufficient. Addendum to the Compliance Report on the Czech Republic to the Second Round Evaluation; Adopted by GRECO at its 47th Plenary Meeting (Strasbourg, 7-11 June 2010).

[37]    OŽIVENÍ Monitoring střetu zájmů Oživení. (2012) http://www.bezkorupce.cz/nase-temata/stret-zajmu/monitoring/sz.

[38]    http://ec.europa.eu/internal_market/publicprocurement/docs/indicators2010_en.pdf .

[39]    Ministry of Regional Development (2012) Věstník veřejných zakázek Ministry of Regional Development.

[40]    ÚOHS Výroční zpráva 2011 http://www.uohs.cz/download/VZ_verejnost/vyrocni_zprava_UOHS_2011_PRINT.pdf.

[41]    Flash Eurobarometer 374.

[42]    These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities towards corruption in public procurement procedures.

[43]    http://www.amsp.cz/uploads/soubory/pruzkum4_web_final.pdf. "Do you think it is possible to get a public contract in the Czech Republic without any commission or bribe?" 29,4% of the respondents answered "definitely NOT" and 29,9% of respondents "rather NOT", while 7,1% of the respondents replied "definitely YES" and 23,3% of the respondents "rather YES".

[44]    For the presentation of project results, see http://www.zindex.cz/data/110126-ZINDEX-MEDIA.pdf.

[45]    Press release from January 2011, see http://www.zindex.cz/data/2011-01-25-TZ_projektu_zIndex.doc.

[46]    http://www.bis.cz/n/2011-09-07-vyrocni-zprava-2010.html See chapter 1.2.

[47]    http://www.bis.cz/n/2011-09-07-vyrocni-zprava-2010.html See chapter 1.2.

[48]    See chapter 3.2; on organised crime of the 2013 Report / Organizovaný zločin of the BIS report; http://bis.cz/n/2013-11-07-vyrocni-zprava-2012.html#3; see chapter 2.2 on organised crime of the 2012 Report./ Organizovaný zločin. http://www.bis.cz/n/2012-08-22-vyrocni-zprava-2011.html.

[49]    http://zaostrenonakorupci.cz/wp-content/uploads/Podkladova_studie_Opencard.pdf - see the analysis of the Respect Institute; original in Czech, referring among others to the audit run by Ernst and Young: http://korupce.praha-mesto.cz/files/=55/MHMP_zaverecna+zprava_FINAL.pdf. The overpriced contract allegedly defrauded the public budget of Prague of around EUR 3 million.

[50]    Act 55/2012 amending the Public Procurement Act 137/2006. http://www.portal-vz.cz/cs/Aktuality/Novy-zakon-c-55-2012-Sb-kterym-se-meni-zakon-o.

[51]    Commission Staff Working Document: Assessment of the 2013 national reform programme and convergence programme for the Czech Republic. Brussels, 29.5.2013; SWD(2013) 353 final. p. 29-30.

[52]    Transparency International: Corruption risks in the Visegrad Countries – Visegrad Integrity System Study.  p. 18.; http://www.transparency.cz/doc/aktuality/corruption_risks_in_visegrad_countries_full_report.pdf.

[53]    https://apps.odok.cz/kpl-detail?pid=KORN9BQAAS3P

[54]    Commission staff working document: Assessment of the 2013 national reform programme and convergence programme for the Czech Republic. Brussels, 29.5.2013; SWD(2013) 353 final. p. 30-31.

[55]    GRECO (2011) Evaluation Report on the Czech Republic on Transparency of party funding (Theme II) http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2010)10_CzechRep_Two_EN.pdf page 15.

[56]    Act No. 424/1991 Coll., on the Association in Political Parties and Movements.

[57]    Act No. 424/1991 Coll., on the Association in Political Parties and Movements.

[58]    See the GRECO report, Third evaluation round, Evaluation Report on the Czech Republic on Transparency of party funding (Theme II).

[59]    Act No. 275/2012 Coll., on the election of the president of the republic and on amendments to certain acts (act on election of the President of the Republic).

[60]    See the GRECO report, Third evaluation round, Evaluation Report on the Czech Republic on Transparency of party funding (Theme II) p 11., p. 20.

[61]    Commission staff working document: Assessment of the 2013 national reform programme and convergence programme for the Czech Republic. Brussels, 29.5.2013; SWD(2013) 353 final. p. 29.

[62]    Transparency International: Analýzy soudních rozhodnutí vydaných v letech 2007 až 2009 a 2010 až 2012 ve věcech úplatkářských trestných činů (2013) http://www.transparency.cz/analyza-soudnich-rozhodnuti-vydanych-letech-2010-2012-vecech/, page 171.

[63]    Ibid., page 172.

[64]    OECD Working Group on Bribery. Phase 3 Report on Implementing the OECD Anti-Bribery Convention on the Czech Republic. (2013) p. 30. http://www.oecd.org/daf/anti-bribery/CzechRepublicphase3reportEN.pdf

[65]    http://www.euro-justice.com/member_states/czech_republic/country_report/1713/; Act on Public Prosecutor’s Office, 283/1993 Coll., section 9.

[66]    Act on Public Prosecutor’s Office, 283/1993 Coll., ss. 10(5) and 12.

[67]    Decision of the Supreme Administrative Court of 12 June 2012 No. 1 As 51/2012-242.

GERMANY

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. Both prevention and control of corruption is seen as key in fighting corruption in Germany. Germany invests in preventive programmes as a cost-effective way to control corruption. The Council of Europe's Group of States against Corruption (GRECO) has acknowledged the work done by German public institutions to prevent corruption, including the Guidelines for Prevention of Corruption in the Federal Administration.[1] It is a general practice in public institutions to appoint contact persons for corruption prevention. There are clear and public guidelines prohibiting gifts in the civil service. Germany has extended regulations concerning the receipt of gifts and hospitality and the disclosure of activities for five years after leaving public office.[2] The open online information system (BundOnline2005) introduced centralised electronic procurement procedures in the federal administration. The Federal Court of Audit (Bundesrechnungshof) checks compliance with statutory provisions. While it is not yet a nationwide practice, some Länder keep registers of bidders who have been excluded from public procurement procedures.

Legal framework. German criminal legislation does not fully cover the liability of elected officials for corruption and certain types of behaviour related to corruption in the private sector. Despite being a founding member of GRECO and having signed the two Council of Europe Conventions against Corruption in 1999, it remains one of the few European countries which have not ratified these conventions or the United Nations Convention against Corruption (UNCAC)[3]. In its coalition agreement in 2013, the parties forming the new German federal government have declared that they would amend the criminal statute on bribery of elected public officials,[4] which may facilitate the ratification of UNCAC.

An assessment by GRECO in November 2012 pointed to areas related to party funding in which more needs to be done.[5] While Germany has implemented several GRECO recommendations in the areas of transparency and sanctions, it has yet to implement some other recommendations. In particular, GRECO noted that Germany had given limited attention to recommendations to ensure timely publication of campaign accounts, to make direct donations to parliamentarians and candidates who are political party members more transparent, and to make further resources available to the Bundestag administration for supervising party funding. Overall, the level of compliance with the recommendations in the Third Evaluation Round remained ’globally unsatisfactory’. This was also the case in October 2013.[6]

Institutional framework. Detailed rules regulate the work of the public administration. Comprehensive codes of conduct aim to prevent corruption at federal level and in many Länder.[7] According to research, 99% of the authorities contacted apply the ’four eyes’ principle, whereby two individuals must approve important decisions, 80% have internal anti-corruption guidelines, 74% randomly monitor decision making where the risk of corruption is more prevalent, 62% have identified areas with high corruption risks, and 57% have appointed an anti-corruption commissioner.[8] A comparatively high number of people working in the public sector are willing to press criminal charges against corrupt colleagues.[9] Certain German municipalities, such as Hamburg, provide examples of local best practice for fostering integrity in the public sector.[10]

Opinion polling

Perception surveys. According to the 2013 Special Eurobarometer on Corruption, 92% of German respondents do not feel personally affected by corruption in their daily lives (the EU average is 70%). Nevertheless, 59% believe that corruption is widespread in their country (the EU average is 76%).

Experience of corruption. Less than 1% of German respondents indicate that they were asked or expected to pay a bribe over the previous 12 months (EU average: 4%), while 9% said they personally knew someone who had taken bribes (EU average: 12%).

Business surveys. While in the 2013 Eurobarometer survey, 50% of Germans (the third highest percentage in the EU) said that bribery and abuse of power for personal gain are widespread in private companies, a majority of business representatives did not think that corruption was a problem for their company when doing business in Germany. Only 3% of respondents said they were expected to pay a bribe.[11]

In the area of public procurement, according to the 2013 Eurobarometer business survey, 20% of those who participated in public procurement procedures in the past three years reported that they were prevented from winning because of corruption (EU average: 32%). Almost all negative practices in the context of public procurement are perceived to be less common than the EU average. Respondents in Germany reported tailor-made specifications for particular companies in 48% of cases (EU average 57%). Collusive bidding was reported to be a widespread practice by 54% of the respondents (EU average 52%). Conflicts of interests in the evaluation of bids were noted by 47% of respondents (EU average: 54%) and 43% reported to unclear selection or evaluation criteria (EU average 51%).

Background issues

Law enforcement and judiciary. The judicial system has taken specific steps to tackle bribery and related crimes. Police and prosecutors take part in prevention programmes. Eight out of sixteen Länder have specialised anti-corruption units in their prosecution offices. Germany is among the few EU Member States that publish comprehensive statistics on cases reported to the police and criminal investigations launched, compiled annually by the Federal Criminal Police (BKA).[12] In 2011, the BKA noted 46 795 corruption cases reported to the police, and 1 528 ongoing investigations, down from 1 813 in 2010. According to a recent survey, 83% of German judges and prosecutors opposed the right of ministers of justice to instruct prosecutors in specific cases,[13] and 50% of them think it is important to abolish this right.[14] Public prosecution departments are bound by instructions coming from the executive power, although in some Länder, the relevant minister publicly declared he did not intend to give instructions in individual cases.[15]

Conflict of interests and asset disclosure. German MPs are not obliged to declare their assets.[16] Recent debates have focused on the extent and transparency of additional income earned by parliamentarians. In 2013, the Bundestag adopted rules that require Members to disclose more details in future, at least indicating the category in which the income from an outside activity falls. The new rules came into force at the beginning of a new parliamentary mandate, in 2013.[17]

There are no precise rules regarding a waiting period for politicians and high-level public servants between leaving public service and taking up private employment.

Freedom of information. The federal law on access to information adopted in 2005[18] covers the federal bodies and agencies. Brandenburg was the first Land to pass a Freedom of Information Act in 1998, followed by Berlin in 1999 and then by others. In five federal states, however, this area remains unregulated: while Baden-Württemberg presented a draft law in 2013,[19] four federal-states (Bavaria, Hesse, Lower-Saxony[20], and Saxony) do not have legislation on access to public information. The legislation in Hamburg is particularly noteworthy, as it includes an obligation to proactively publish data, documents and contracts on the Internet without a request by a citizen.[21]

Whistleblowing. While employees have legal guarantees against arbitrary dismissal in the public and private sectors, Germany has no specific legislation on protecting whistleblowers. A number of draft laws has been discussed in the Bundestag, but no legislation has been passed.[22] According to a survey, 44% of federal, 36% of Länder, and 23% of local or municipal authorities have a whistleblowing system in the form of a hotline, website or ombudsman.[23] A private initiative providing a technical tool for protecting whistleblowers, is also in place. The Business Keeper Monitoring System, used for instance by the authorities in Lower Saxony, is a tool providing anonymity for corruption reports made electronically and aims at the early and effective disclosure of risks within companies and public authorities.[24]

Transparency of lobbying. Lobbying is not regulated in Germany. There is no specific obligation for registration of lobbyists or reporting of contacts between public officials and lobbyists. On a voluntary basis, associations may register on a list of the Federal Parliament.[25] There are currently more than 2 000 organisations registered.[26] There are similar voluntary lists in Brandenburg and the Rhineland Palatinate.[27] However, they are limited to associations and there is no register of self-employed lobbyists, lawyers, think tanks or NGOs.

2. Issues in focus

Criminal liability of officials

According to the German criminal code, a public official commits a criminal offence when giving or taking a bribe. However, Members of Parliaments and members of municipal councils do not fall under the criminal code definition of public officials (Amtsträger).[28] The bribery provisions apply inter alia to all public officials including elected officials such as mayors (kommunale Wahlbeamte). However, ’delegates‘ (i.e. assembly members) do not fall under the definition of public officials and are subject to limited criminal liability (i.e. limited to buying or selling a vote according to section 108e criminal code). ’Delegates‘[29] are Members of the European Parliament, a parliament of the Federal Republic or the Länder and (insofar as they act in their legislative capacity) members of municipal assemblies, as well as members of assemblies of municipal associations. Elected members of municipal assemblies (Gemeinderatsmitglieder) only qualify as public officials to the extent that they are not acting in a legislative but in an administrative capacity. Section 108e of the criminal code (limited to buying or selling a vote) applies to their legislative capacity.This has been confirmed with regard to municipal councils by the jurisprudence of the Bundesgerichtshof.[30] Therefore, while bribery is a crime, the criminal liability of elected officials (assembly members) is limited to buying or selling votes, otherwise they do not incur any criminal penalty for their act of passive or active bribery.[31] This issue is one of the main reasons for not having ratified the Council of Europe Criminal Law Convention on Corruption and the United Nations Convention against Corruption. The underlying argument is related among other things to the free exercise of the mandate protected under Article 38 of the German Basic Law. Repeated attempts to find a legislative solution have not yet succeeded.

GRECO has criticised MP’s exemption from criminal liability for certain acts related to corruption. In 2011 it stated that Germany had not implemented several recommendations and urged the legislator to tighten existing criminal law provisions and to introduce new ones, mostly related to the criminalisation of corruption of elected public officials and foreign public officials.[32]

A prime example where such omission of criminalisation is relevant is where MPs or members of a local governments, without exercising a public function, use their influence to obtain undue advantages for themselves or for a third party. Such behaviour on the part of elected officials is currently not criminalised. Germany has many elected officials who are therefore exempt from criminal liability for bribery offences by default.[33] As GRECO has pointed out, members of local self-governing bodies (e.g. communal and city councils and county councils) who are not entrusted with administrative duties are also exempt from liability.[34] Public officials are generally prohibited from accepting benefits. Since donations for an election campaign (regardless of their value) are considered a benefit, elected officials risk becoming criminally liable if they, or their political party, accept donations despite the fact that election campaign donations are legitimate. This can create a major disadvantage for the incumbent because his challenger does not yet hold public office, and therefore does not qualify as a public official. In order to guarantee a fair and equal treatment of both incumbent and challenger during an election campaign, the Federal Court of Justice held in the ‘Wuppertal/Kremendahl’ case that donating to an incumbent’s election campaign  is only a criminal offence if the donation is made to ‘buy influence’ over the future office holder.[35]

Corruption in the private sector

According to the World Economic Forum's Global Competitiveness Report 2013-14, out of 152 countries Germany is ranked the 4th most competitive economy of the world.[36] Germany has transposed Framework Decision 2003/568/JHA on corruption in the private sector.[37] However, doubts remain on whether some aspects of the bribery offence are adequately covered. Contrary to Article 2(1) of the framework decision, which covers a wide range of situations, section 299 of the criminal code restricts the scope to the distortion of competition in the purchase of goods and commercial services, and unfair preference in the context of competition. Consequently, when distortion of competition cannot be proven, the provision does not apply.[38] GRECO also urged Germany to amend rules on bribery in the private sector by expanding their scope beyond unfair preference in the competitive purchase of goods or commercial services, in order to cover all situations in which the offence was committed in the course of business activity.[39]

Moreover, the German criminal code does not expressly penalise corruption through an intermediary, as stipulated in Article 2(1) of the framework decision. Such conduct may be implicitly covered through other offences, based on the interpretation provided by the jurisprudence.[40]

GRECO has also noted that trading in influence – defined as the promising, giving or offering, any undue advantage to anyone who asserts that he is able to exert an improper influence over the decision-making, as well as requesting, receiving or accepting such an offer[41] – is not criminalised in Germany.[42] Thus German law does not include an offence leading to the prohibition to exert influence within the meaning of Article 12 of the Council of Europe’s Criminal Law Convention on Corruption.[43] Such acts are however covered to a large extent by other offences in German law. Giving a bribe through a third person (intermediary) or to a third person (so that the bribe remains with the third person) is an offence under section 331 of the criminal code. In addition, if assets are placed in so called slush funds in a company and are to be used to create advantages for the company through bribery or by buying influence, removing and keeping these assets in reserve is punishable as a breach of trust towards the company in accordance with section 266 of the criminal code. This liability is triggered regardless of whether the use of the money is punishable as such. The intention to use the money in the economic interest of the company is also immaterial in this case.

A public debate on corruption in the private sector has emerged recently in the context of the healthcare and pharmaceuticals sector. Since they are part of the private sector, private healthcare facilities fall outside the scope of provisions that prohibit gifts of gratitude or advantages to create a climate of appreciation or dependency in the public sector. For instance, self-employed doctors who accept presents or money from the pharmaceutical industry do not violate rules on bribery. The Federal Court of Justice ruled in 2012 that doctors under contract with the public health insurance companies do not commit an offence under section 332 of the criminal code when accepting bribes.[44] The Federal Minister for Health proposed legislative amendments to enable prosecution in such cases.

Foreign bribery

Germany has a strong track record on fighting foreign bribery. The OECD has commended the rigour with which Germany enforces legislation in this area. Efforts have led to a steady increase in the number of cases investigated since 2007 and it has resulted in prosecutions and sanctions imposed in foreign bribery-related cases against individuals. The OECD also welcomed legislative measures and jurisprudence resulting in increased reporting of suspicions of foreign bribery by tax auditors. Nevertheless, the OECD has recommended further measures to ensure effective, proportionate and dissuasive sanctions, pointing out that sanctions imposed on individuals fell within the lower range of prison sentences and that most prison sentences were suspended.[45] With regard to legal persons, Germany amended its legislation in line with OECD recommendation and substantially raised the maximum level of the administrative fine that can be imposed in corruption cases.[46] In 2011, Germany ranked fourth out of 28 countries in the Transparency International Bribe Payers' Index in terms of the perceived likelihood of companies from these countries paying bribes abroad.[47]

Compliance systems in the private sector have become more elaborate in recent years, especially in global companies dealing with international business transactions. This happened as a result of high-profile cases which triggered a significant change in attitudes towards corruption in particular among German multinational corporations.[48] Anti-corruption compliance has become a central issue, prompted in part by investigations by the US Securities and Exchange Commission which can impose considerable fines.[49] Consequently, many large companies (59% in 2011) have implemented compliance programmes, creating compliance units, and in some cases withdrawing from markets with a high corruption risk.[50] Some of these programmes, for example those implemented by Siemens, Daimler-Benz, Volkswagen and Deutsche Bank, are considered to have set an international benchmark.[51]

Good practice: the Siemens compliance system

The German private sector has made major investments relevant for anti-corruption policies and compliance procedures in the recent years: In particular, many big German companies have implemented comprehensive compliance strategies, staffed compliance units, and in some cases retreated from markets with a high corruption risk.

An example is the compliance system put in place by Siemens. Legal proceedings against Siemens AG arising from serious allegations of bribery were concluded in 2008 by the prosecution service in Munich and in Washington DC. The two decisions in that case changed the approach to compliance in the business sector. In addition to paying the fines and asset recovery imposed in Germany (approx. EUR 600 million) and in the US (approx. EUR 620 million), and recovering assets, Siemens put a compliance program in place so as to avoid paying the highest amount of fines the US authorities could impose. Under this program, equal emphasis is put on prevention, detection and response given to allegations of misconduct. In addition to the steps taken inside the company, as part of the settlement, Siemens agreed to pay USD 100 million over 15 years to support organizations and projects combating corruption and fraud through collective action, training and education.

Moreover, the Federal Ministry for Economic Cooperation and Development recently presented an anti-corruption concept aimed at reducing corruption in development and cooperation projects.[52] Following a number of bribery cases in the defence sector,[53] the Ministry of Defence has set up a new detailed procedure for preventing bribery and corruption.[54] Nevertheless, when it comes to small and medium sized enterprises, corporate governance programmes and compliance structures are not yet widespread.[55]

3.         Future steps

Germany is in the top rank internationally in terms of fighting corruption and is perceived to be among the consistently best performers. German authorities and private companies have built a good reputation for their recent efforts to prevent and combat foreign bribery. The German authorities and major players such as large corporations have provided several examples of their readiness to address problems and tackle loopholes when they arise. Continuing this trend will be central to future anti-corruption work.

Some issues have still not been dealt with, such as the lack of sanctions for corruption of elected officials and the absence of a ‘revolving door’ policy, especially in the public sector. Further steps could be taken to promote integrity and raise awareness of foreign bribery among small and medium-sized enterprises.

The following points would require further attention:

· Ensuring that dissuasive criminal and administrative sanctions are in place in key areas such as passive and active bribery of elected officials at all state levels.

· Further strengthening preventive action regarding the funding of political parties by giving consideration to GRECO recommendations on electoral campaign accounts and donations.

· Expanding the legislation transposing the Framework Decision 2003/568/JHA on combating corruption in the private sector with regard to some elements of the bribery offence. Promoting integrity and raising awareness among small and medium-sized enterprises with regard to the foreign bribery offence.

[1]      The latest guidelines from 1998 were published in 2012 under the title "Empfehlungen zur Korruptionsprävention in der Bundesverwaltung "- http://www.bmi.bund.de/SharedDocs/Downloads/DE/Themen/OED_Verwaltung/Korruption_Sponsoring/empfehlungen_zur_richtline_korruptionspraevention_de.pdf?__blob=publicationFile

[2]      Transparency International (TI): Building Integrity and Reducing Corruption Risk in Defence Establishment: Ethics and business conduct in defence establishments – the improvement of national standards, by Ben Magahy and Mark Pyman, 2009, p.23;  http://archive.ti-defence.org/publications/664-ethics-and-business-conduct-in-defence-establishments--the-improvement-of-national-standards.

[3]      Mainly due to non-compliance with the UNCAC provisions on the criminal liability of officials

[4]      CDU/CSU/SPD Deutschlands Zukunft gestalten p. 77. https://www.cdu.de/sites/default/files/media/dokumente/koalitionsvertrag.pdf p. 152.

[5]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%2915_Germany_Interim_EN.pdf.

[6]      Greco RC-III (2013) 15E,

[7]      GRECO (2004) Second Evaluation Round, Report on Germany, Strasbourg, paragraphs 25 to 26.

[8]      Salvenmoser et al. Kriminalität im öffentlichen Sektor, 2010, PricewaterhouseCoopers, Frankfurt a.M., pp. 41-42.

[9]      Salvenmoser et al. (2010), ibid., p.32.

[10]    http://www.hamburg.de/contentblob/4104536/data/korruptionsbekaempfung-in-hamburg.pdf.

[11]    2013 Flash Eurobarometer 374.

[12]    BKA: Bundeslagebild 2011 (page 6): http://www.bka.de/DE/ThemenABisZ/Deliktsbereiche/Korruption/korruption__node.html?__nnn=true

[13]    Roland Rechtsreport (2014) Sonderbericht: das deutsche Rechts- und Justizsystem  aus Sicht von Richtern und Staatsanwälten p. 10, at: http://www.roland-konzern.de/media/downloads/ROLAND_Rechtsreport_2014_Sonderbericht_Richter_und_Staatsanwaelte.pdf. The report is based on a representative survey of 1770 judges and prosecutors in Germany and was prepared under the aegis of the German Association of Judges.

[14]    Roland Rechtsreport p. 10, 16, 53.

[15]    See GRECO first round report, paragraph 83 et seq;  Transparency International Germany (2012) Nationaler Integritätsbericht Deutschland – Pillar 5 / law  enforcement; see also the declaration of the Minister of Justice of North Rhine- Westphalia not to give instructions.

[16]    GRECO noted that public officials are not required to make declarations of income (except for tax purposes and in the context of ancillary employment) or assets, since such an obligation would conflict with German constitutional law and data protection law. First Evaluation Round, Greco Eval I Rep (2001) 12E Final, paragraph 97.

[17]    http://www.bundestag.de/dokumente/textarchiv/2013/43074864_kw08_pa_geschaeftsordnung.

[18]    Gesetz zur Regelung des Zugangs zu Informationen des Bundes - "Informationsfreiheitsgesetz vom 5. September 2005 (BGBl. I S. 2722). http://www.gesetze-im-internet.de/ifg/BJNR272200005.html

[19]    http://informationsfreiheit.org/wp-content/uploads/2013/03/BW-IFG-FDP-15_3114_D.pdf

[20]    The government of Lower-Saxony has announced its intention to implement a Freedom of Information Act, which should replicate the law of Hamburg: SPD/BÜNDNIS90-DIE GRÜNEN (2013) Erneuerung und Zusammenhalt – Koalitionsvereinbarung 2013-2018 p. 68, at http://www.spdnds.de/content/362590.php.

[21]    Hamburgisches Transparenzgesetz http://www.luewu.de/gvbl/2012/29.pdf

[22]    Draft laws on whistleblowers' protection discussed in Bundestag: BT-Drs. 17/8567 and BT- Drs. 17/9782.

[23]    Salvenmoser et al. PricewaterhouseCoopers, p. 43.

[24]    http://www.business-keeper.com/whistleblowing-compliance.html.

[25]    See Annex 2 of the Bundestag’s Rule of Procedure.

[26]    http://www.bundestag.de/dokumente/lobbyliste/index.html.

[27]    http://www.landtag.rlp.de/Dokumente/Rechtsgrundlagen/; http://www.landtag.brandenburg.de/de/parlament/register_der_interessenvertretungen_in_brandenburg/607534

[28]    Strafgesetzbuch (StGB) Strafgesetzbuch in der Fassung der Bekanntmachung vom 13. November 1998 (BGBl. I S. 3322), das durch Artikel 5 Absatz 18 des Gesetzes vom 10. Oktober 2013 (BGBl. I S. 3799) geändert worden ist http://www.gesetze-im-internet.de/bundesrecht/stgb/gesamt.pdf.

[29]    According to section 108e of the criminal code.

[30]    Federal Court of Justice, judgment of 9 May 2006 – 5 StR 453/05; http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?Gericht=bgh&Art=en&sid=578a524a31dcc8c974a4fc601779de64&nr=36159&linked=pm&Blank=1;and judgment of 12 July 2007 – 2 StR 557/05: “Municipal mandate holders are not public officials if they are not entrusted with concrete administrative tasks over and above the exercise of their free mandate in the municipal assembly and the concomitant tasks.”

[31]    Despite its title: "Abgeordnetenbestechung" – § 108e StGB § 108e StGB: “(1) Wer es unternimmt, für eine Wahl oder Abstimmung im Europäischen Parlament oder in einer Volksvertretung des Bundes, der Länder, Gemeinden oder Gemeindeverbände eine Stimme zu kaufen oder zu verkaufen, wird mit Freiheitsstrafe bis zu fünf Jahren oder mit Geldstrafe bestraft. (2) Neben einer Freiheitsstrafe von mindestens sechs Monaten wegen einer Straftat nach Absatz 1 kann das Gericht die Fähigkeit, Rechte aus öffentlichen Wahlen zu erlangen, und das Recht, in öffentlichen Angelegenheiten zu wählen oder zu stimmen, aberkennen.“ See: http://dejure.org/gesetze/StGB/108e.htm.

[32]    GRECO (2009) Third Evaluation Round, Evaluation Report on Germany on Incriminations (Theme I), Strasbourg, paragraph 107 (“major lacuna”) and paragraph 123; GRECO (2011) Third Evaluation Round, Compliance Report on Germany, paragraph 15 to 24.

[33]    In 2009, GRECO referred to estimates of over 220 000 elected officials: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2009)3_Germany_One_EN.pdf.

[34]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2009)3_Germany_One_EN.pdf.

[35]    http://www.justiz.nrw.de/nrwe/lgs/dortmund/lg_dortmund/j2006/14_V_P_3_05urteil20060316.html http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?Gericht=bgh&Art=en&sid=d2211d69ab16661059b222cbcd620370&nr=30859&pos=0&anz=1

[36]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf.

[37]    Report from the Commission based on Article 9 of Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector; COM/2007/0328 final.

[38]    A declaration submitted by Germany at the time of the adoption of the framework decision expired in 2010.

[39]    Third Evaluation Round, Evaluation Report on Germany on Incriminations, GRECO EVAL III Rep (2009) 3E, paragraph 112.; GRECO (2011) Third Evaluation Round, Compliance Report on Germany, paragraphs 15 to 24.

[40]    Third Evaluation Round, Evaluation Report on Germany on Incriminations, GRECO EVAL III Rep (2009) 3E, paragraph 112.

[41]    An internationally accepted definition is provided by Article 12 of the Criminal Law Convention on Corruption. http://conventions.coe.int/Treaty/en/Treaties/Html/173.htm

[42]    Third Evaluation Round, Evaluation Report on Germany on Incriminations, GRECO EVAL III Rep (2009) 3E, paragraph 114.; GRECO (2011) Third Evaluation Round, Compliance Report on Germany, paragraphs 15 to 24.

[43]    Germany has not ratified this Convention. It is possible to enter a reservation to this provision of the Convention.

[44]    Decision of 29t March 2012, GSSt 2/11; http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?Gericht=bgh&Art=en&Datum=Aktuell&nr=60678&linked=pm.

[45]    OECD Working Group on Bribery in International Business Transactions, Report on the application of the Convention on Compating Bribery on Foreign Public Officials in International Business Transactions, adopted on 17th of March 2011.

[46]    The legislative amendment providing for a tenfold increase in administrative fines against legal persons (i.e. form 1 million to up to EUR 10 million) entered into force on June 30 2013. (BGBl. 2013, Teil I Nr. 32, S. 1738).

[47]    http://bpi.transparency.org/bpi2011/results/.

[48]    Karl Sidhu, Anti-Corruption Compliance Standards in the Aftermath of the Siemens Scandal, 10 German Law Journal 1343-1354 (2009), available at http://www.germanlawjournal.com/index.php?pageID=11&artID=1167

[49]    http://www.sec.gov/spotlight/fcpa/fcpa-cases.shtml.

[50]    Bussmann, K. / Nestler, Cl. / Salvenmoser, S. (2011) Wirtschaftskriminalität Frankfurt a.M./Halle, p. 34.

[51]    Bussmann, K. / Nestler, Cl. / Salvenmoser, S. supra, p. 60.

[52]    Bundesministerium Für Wirtschaftliche Zusammenarbeit (2012) Antikorruption und Integrität in der deutschen Entwicklungspolitik Berlin.

[53]    For example, in the so-called submarines case, in 2011, the Munich court convicted managers of a German company given the bribery in relation to procurement contracts with Portugal and Greece.

[54]    TI: Codes of conduct in defence ministries and armed forces: What makes a good code of conduct? May 2011, pp. 28 to 31; BMVg-ES Fighting Corruption in the German Bundeswehr (15 October 2001).

[55]    National Integrity System Report Germany. Transparency International Germany, 2012. See pillar 13.

DENMARK

1. Introduction – main features and trends

Anti-corruption framework

Strategic approach. Denmark has a well-developed system of legislation, law enforcement and judicial authorities to deal with corruption,[1] although there is no national anti-corruption strategy. Few studies and statistical analyses have examined the nature or extent of corruption in Denmark.[2] The Danish International Development Agency (Danida) within the Ministry of Foreign Affairs has established procedures for reporting corruption, provided training on integrity issues and conducted corruption risk management.[3]

Legal framework. Danish criminal legislation covers all forms of corruption offences contained in the Council of Europe Criminal Law Convention on Corruption[4] and the Additional protocol,[5] except trading in influence.[6] In 2013, Parliament adopted legislative amendments intended to strengthen the prevention, investigation and prosecution of cases regarding economic crimes. As regards bribery, the maximum penalty for active bribery in the public sector increased from three years to six years. For bribery in the private sector and bribery of arbitrators, the maximum penalty increased from one year and six months to four years.[7] Access to information is regulated by law and anyone may access documents of any public administrative body.[8] In early 2013, draft legislation on access to information in the public administration was submitted to a committee in Parliament.[9] The new legislation would increase openness in the public administration and should make it easier to access documents.[10] During the public consultations, concerns were raised that parts of the new legislation would restrict the public’s access to information in the legislative process.[11] The Danish Parliament adopted the law in June 2013. Denmark has not implemented  the recommendations of the Council of Europe Group of States against Corruption (GRECO) aiming to improve the Danish regulation on financing of political parties, individual candidates and election campaigns.

Institutional framework. The Public Prosecutor for Serious Economic and International Crime is the main body responsible for investigating corruption, whose multidisciplinary team is composed of prosecutors and investigators. The Danish civil service is considered to have a high degree of integrity.[12] Due to Denmark’s tradition of high ethical standards and transparency in public procedures, few formal rules regulating integrity and anti-corruption are in place in the public administration.[13] Denmark has a Code of Conduct for public officials since 2007.[14] The Code deals with practical aspects describing situations that may arise in the public administration including ‘fundamental values and principles,’ ‘freedom of expression,’ ‘duty of confidentiality,’ ‘impartiality’ and the ‘acceptance of gifts.’[15] The Code has been distributed in public-sector workplaces, and information activities have been carried out in order to raise awareness about the Code. In 2007, The Ministry of Justice issued the brochure ‘How to Avoid Corruption.’ The brochure gives examples and interpretations of the Danish anti-corruption legislation.[16]

Opinion polling

Perception surveys.   Denmark is consistently ranked among the least corrupt countries in the EU. According to the special Eurobarometer on corruption in 2013, only 20 % of the Danish believe that corruption is widespread in their country (EU average: 76 %) and only 3 % of the Danish respondents felt personally affected by corruption in their daily life (EU average: 26 %). For both of these issues, Denmark is the highest placed country in the EU.

Experience of corruption. Fewer than 1 % were asked or expected to pay a bribe over the last 12 months (EU average: 4 %), and 12 % say they personally know someone who has taken bribes (EU average: 12 %).[17]

Business surveys. According to a Eurobarometer survey, 19 % of responding Danish managers[18] believe that favouritism and corruption hamper business competition in Denmark (EU average: 73 %). Only 4 % of the Danish businesses believe that corruption is a problem for their company when doing business (EU average: 43 %).[19]

In the area of public procurement, according to the 2013 Eurobarometer business survey on corruption,[20] 14 % of respondents consider that corruption is widespread in public procurement managed by national authorities and 20 % in public procurement managed by local authorities (the EU average is 56 % and 60 %). For both of these issues, Denmark is among the highest placed countries in the EU.

Background issues

Private sector. As concerns the legal framework, Denmark has correctly transposed Framework Decision 2003/568/JHA regarding the definition of active corruption in the private sector and the penalties applicable to natural and legal persons.[21] On foreign bribery, the OECD Working Group on Bribery raised serious concerns about the lack of enforcement of the foreign bribery offence and that cases had been closed without adequate investigation or sufficient efforts to secure foreign evidence.[22] On the other hand, the OECD commended Denmark, among other things, for its efforts to raise awareness and to promote corporate social responsibility.

Conflicts of interest and asset disclosure. Danish Members of Parliament (MPs) are under no legal obligation to disclose their assets, nor are they subject to any other form of rules to monitor conflicts of interest. However, certain political parties demand that their MPs disclose their assets without any formal obligation; the control is exercised by the Parliament Presidium.[23] The Presidium also deals with cases of conflict of interest relating to ministers or MPs. Moreover, the Danish Parliament has set a positive example in improving the transparency of ministers’ expenses through the ‘openness scheme,’ an agreement between political parties whereby ministers are encouraged to declare their monthly spending, travel expenses, gifts received and other relevant information of this kind.[24] On a voluntary basis, ministers also disclose their personal and financial interests on the Prime Minister’s Office website.[25]   

Whistleblowing. Denmark does not provide any comprehensive whistleblowing protection for employees in the public or private sector. Denmark’s Code of Conduct for Public Servants[26] provides guidelines when public employees are entitled to freely disclose non-confidential information to the press and to other external partners.[27] The Danish Labour Code does not offer any protection against dismissal for private-sector employees reporting suspicions of bribery.[28] In 2009, the Ministry of Employment published an Explanatory Memorandum and a Code of Guidance with particular focus on whistleblowing and freedom of speech for private- sector employees.[29] The Code is not legally binding and therefore offers little legal recourse to whistleblowers.[30] As a consequence, the OECD Working Group on Bribery identified the need to improve the whistleblowing regime for employees in the public and private sector in Denmark.[31] The Government recently established a committee to examine the need for reform in this area.[32]

Transparency of lobbying. Lobbying is not regulated in Denmark. There is no specific obligation to register or report contacts between public officials and lobbyists. An American consultancy firm argued in a report from 2009 that access to Danish regulators is markedly easier than in other European markets.[33] Professional lobby groups in Denmark have requested a lobby register. However, the plans to set up such a register were recently abandoned by Parliament.

2. Issues in focus

Financing of political parties

The Danish system of transparency of political financing at national level is regulated in the Accounts of Political Parties Act (APPA) and the Public Funding Act (PFA).[34] These two laws have been gradually amended and improved in recent years to provide more transparency of political funding; for example, political parties are obliged to report donations above EUR 2 700 and Parliament makes party accounts available to the public.[35]

Nevertheless, gaps still remain in the current legislation on the transparency of political party funding. For example, there are no limits on donations from abroad, from legal persons or from anonymous donors, and there are no restrictions on the amounts that may be donated.[36] This leaves the public with few means to assess possible links between private funding and policy decisions.

Political parties in Denmark at the national, regional and the local levels receive significant public funding from the State. Nonetheless, the limited regulation of private funding of political parties and individual party members combined with the lack of rules on lobbying, asset declarations and special regulations governing conflict of interest make the system potentially vulnerable to corruption.[37]

According to Transparency International, the limited transparency of private party financing is one of the biggest weaknesses of the Danish integrity system.[38] In a recent Global corruption barometer, the Danish respondents perceived political parties in Denmark to be one of the institutions most affected by corruption.[39] GRECO submitted nine recommendations to Denmark to improve the transparency of party funding.[40] After a discussion in the Danish Parliament, the Danish authorities saw ‘no need for any measures to be taken in order to amend the current legislative framework of party financing.’[41] In its compliance report, GRECO described it as disappointing that nothing substantial had been achieved in respect to the recommendations even though compliance does not necessarily require legislative measures.[42] According to the Government Programme ‘a Denmark that stands together,’ the Government will set up an Expert Committee to make recommendations to improve transparency of financing of political parties.[43] In 2013, the Speaker of the Parliament initiated a review of the rules on party funding. The work is still in an incipient stage and GRECO has therefore not yet received information regarding the content of the reform.[44] The need to improve the transparency of the financing of political parties and individual candidates was recently debated in Parliament.[45]

Foreign bribery

Denmark has a number of firms with a worldwide customer base, mainly in the sectors of machinery and instruments, meat and dairy products, pharmaceuticals, and wind turbines. Denmark’s trade with and investment in emerging economies are relatively low but are expected to increase.[46] Although the Eurobarometer 2013 shows that only 4 % of Danish people within the business community believe that corruption is a problem when doing business in Denmark, the lowest out of all 28 countries,[47] another survey shows that almost half of Danish companies believe they have to bribe or break formal rules if they want to do business in certain countries such as Brazil, Russia, India or China.[48] Civil society representatives in Denmark have confirmed this perception.[49]

Efforts have been made to raise awareness of and to prevent foreign bribery and to promote corporate social responsibility and the Danish authorities and business organisations have issued several guidelines and policy documents.[50]

Good practices: preventing foreign bribery

The Mediation and Complaints-Handling Institution for Responsible Business Conduct is the OECD’s National Contact Point in Denmark. The Institution is part of the government’s ‘2012-2015 Action Plan’ for Corporate Social Responsibility[51] and has  the power to initiate investigations and to take a decision regarding breaches of the OECD;s Multinational Enterprises Guidelines.[52]

The Corporate Social Responsibility compass is a free online tool available to companies that can help companies and sub-suppliers to implement responsible supply chain management and to document and live up to environmental standards, human rights and workers’ rights etc.[53]     

The Danish Ministry of Foreign Affairs (MFA) has undertaken a range of activities to raise awareness of corruption among its employees. The new MFA Anti-Corruption Policy includes an Anti-Corruption Code of Conduct applicable to all employees working in the MFA in Copenhagen, at the Danish embassies, representative offices, the Trade Commission and to advisers and consultants employed by the MFA. The purpose of the new Code  is to prevent corruption within the Danish aid delivery system, to prevent corruption in the use of development aid and to help combat corruption in countries receiving Danish support.[54]

Despite these efforts, the OECD’s Working Group on Bribery expressed the concern that only one foreign bribery allegation out of 13 has resulted in prosecution and sanctions.[55] The charges against this company were resolved out of court. Under the settlement, the company admitted to committing private corruption, which is a less serious offence than foreign bribery.[56] The Danish authorities have also concluded 14 cases of sanctions evasions and breaches of the UN embargo on Iraq relating to the UN Oil-for-Food programme. These cases did not result in court verdicts, as the statute of limitations had expired; however, the proceeds of the offences were confiscated.

Denmark has a system of sanctions for legal persons committing foreign bribery; they are subject to fines which are set taking into account for example the company’s turnover. In the case referred to above, the defendant paid EUR 335 000 in fines, and a further EUR 2.7 million were confiscated in the out-of-court settlement. However, these sanctions appear to be low compared to the value of the bribe, which was EUR 760 000, and of the contract won by the defendant, EUR 109 million.

Moreover, the OECD Working Group on Bribery reports that the absence of prosecutions raises concern over whether sufficient inquiries have been made before cases were closed, whether Danish authorities rely too much on investigations by foreign authorities and whether adequate efforts have been made to secure foreign evidence and co-operation. GRECO has reported that the precondition of dual criminality for prosecuting bribery offences significantly limits Denmark’s score to fight corruption committed in certain foreign states.[57] GRECO believes that this legal requirement sends the wrong message regarding Denmark’s commitment to fight corruption in a determined manner.

Finally, the GRECO report refers to ‘double standards’ in the Danish legislation with regard to the use of ‘certain token gratuities’ or facilitation payments to a foreign public official.[58] A facilitation payment is a payment of small sums of money or small gifts to public employees performing tasks, for example, processing a passport or issuing a permit.

Danish legislation makes it clear that any form of undue advantage is covered by the provision of bribery of domestic and foreign public officials. However, it appears from the preparatory works of the provisions on bribery in the Criminal Code that facilitation payments to a foreign public official cannot be precluded in certain countries, taking into consideration local customs and laws. The Ministry of Justice in 2007 clarified further in a booklet that facilitation payments will always be undue, and thus constitute a criminal offence in connection with international business relations, if the purpose is to induce a foreign public employee to breach his or her duties.

Nonetheless, the OECD Working Group on Bribery reports that the facilitation payment defence lacks clarity and thus encouraged Denmark to ensure that the defence should be clearly defined, legally binding and consistent with Article 1 of the OECD Anti-Bribery Convention.[59]

3. Future steps

Denmark is among the EU’s top performers in terms of transparency, integrity and control of corruption. Several international surveys show that corruption is not considered to be a problem in Denmark, either by the Danish themselves or by international experts. As there are only few corruption cases in Denmark, the issue does not feature prominently on the political agenda. Some room for improvement remains, however, especially with regards to the financing of political parties and the framework for prosecuting and sentencing Danish corporations on grounds of foreign bribery.

The following points require further attention:

· Further strengthening preventive action regarding party funding by giving consideration to GRECO recommendations to improve the transparency and supervisory mechanisms for the financing of political parties and individual candidates.

· Pursuing the efforts for fighting foreign bribery by: raising the level of fines for corporations and legal entities; consider reviewing the provision of dual criminality in respect of foreign bribery offences and ensuring that the small facilitation payment defence is clearly defined, legally binding and consistent with the OECD Anti-Bribery Convention.

[1]      Group of States against corruption (GRECO) second evaluation round report  (2005) p. 15. The document is available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoEval2(2004)6_Denmark_EN.pdf.

[2]      Danish Statistics. 2011. Kriminalitet. Available from: http://www.dst.dk/pukora/epub/upload/17949/krim.pdf and Transparency International Danmark. National Integrity System Study Denmark (2012). Available from: http://www.transparency.org/whatwedo/nisarticle/denmark_2012.

[3]      OECD Phase 3 Report on Implementing the OECD Anti-Bribery convention in Denmark. March 2013. p 47. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf.

[4]      Council of Europe Criminal Law Convention on Corruption (ETS 173).

[5]      Council of Europe Protocol to the Criminal Law Convention on Corruption (ETS 191).

[6]      Denmark has also made a reservation concerning this Convention in respect of Article 17 (jurisdiction). GRECO Third Evaluation Round Report – Compliance Report on Denmark, (2011) p. 6. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)8_Denmark_EN.pdf.

[7]      https://www.retsinformation.dk/Forms/R0710.aspx?id=152268.

[8]      The Danish Access to Public Administration Files Act and the Danish Public Administration Act regulates general access to administrative information. GRECO Second Evaluation Round in 2005. p 8. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoEval2(2004)6_Denmark_EN.pdf.

[9]      Ministry of Justice. 2013.  L 144  Forslag til lov om offentlighed i forvaltningen, Available from: http://www.ft.dk/samling/20121/lovforslag/L144/index.htm#dok.

[10]    The law has been drafted on the basis of recommendations from a specially appointed commission, led by former Ombudsman Hans Gammeltoft-Hansen. Hans Gammeltoft-Hansen. 2009. ‘26 fremskridt – 5 tilbageskridt’. Available from: http://www.aabenhedstinget.dk/26-fremskridt-5-tilbageskridt/.

[11]    OSCE media freedom representative concerned about proposed public information law in Denmark. Stockholm, 23 May 2013 – The OSCE Representative on Freedom of the Media, Dunja Mijatovi. Available from: http://www.osce.org/fom/101841. 86,000 signatures were also collected opposing the law.

[12]    Transparency International Denmark. National Integrity System Study Denmark 2012. Executive summary. Available from: http://www.transparency.org/whatwedo/pub/national_integrity_system_assessment_denmark_executive_summary.

[13]    GRECO Second Evaluation Round, 2004. p 10. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoEval2(2004)6_Denmark_EN.pdf.

[14]    The Code was prepared by the Agency for the Modernisation of Public Administration in cooperation with various ministries, public employers’ and employees’ organisations. The Code of Conduct for public officials is available from: http://hr.modst.dk/Publications/2007/God%20adfaerd%20i%20det%20offentlige%20-%20Juni%202007.aspx.

[15]    GRECO Second Evaluation Round, Addendum of the Compliance Report on Denmark. 2009. p 3. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC2(2007)2_Add_Denmark_EN.pdf.

[16]    Ministry of Justice. 2007, Undgå corruption: http://jm.schultzboghandel.dk/upload/microsites/jm/ebooks/andre_publ/korruption/index.html.

[17]    2013 Special Eurobarometer 397.

[18]    2013 Flash Eurobarometer 374.

[19]    2013 Flash Eurobarometer 374.

[20]    2013 Flash Eurobarometer 374.

[21]    COM(2011) 309 final, Second Implementation report of FD 2003/568/JHA of 6 June 2011: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0309:FIN:EN:PDF.

[22]    OECD Phase 3 Report on Implementing the OECD Anti-Bribery convention in Denmark. March 2013. p 5. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf..

[23]    Transparency International. National Integrity System Study Denmark 2012. Available from: http://transparency.dk/wp-content/uploads/2011/12/19.1.12._elektronisk_nis_final1.pdf.

[24]    Politisk aftale mellem regeringen og Dansk Folkeparti, Socialdemokratiet, Socialistisk Folkeparti og Det Radikale Venstre om en ny åbenhedsordning om ministres udgifter og aktiviteter. Available from: http://www.stm.dk/multimedia/Politisk_aftale_om__benhedsordningen.pdf.

[25]    http://www.stm.dk/_a_1628.html.

[26]    According to the Code of Conduct, an employee can either consult the organisation for professional assistance or complain to the Parliamentary Ombudsman. p 37. The Code of Conduct for public officials is available from: http://hr.modst.dk/Publications/2007/God%20adfaerd%20i%20det%20offentlige%20-%20Juni%202007.aspx.

[27]    The Act on the Legal Relationship between Employers and Salaried Employees also deals with unfair dismissal and the provisions apply to both the public and private sector. But the provisions do not cover other forms of retaliation such as demotion and harassment. OECD Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Denmark. March 2013. p 46. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf.

[28]    OECD Phase 2 Report on Implementing the OECD Anti-Bribery Convention in Denmark. 2006. p. 17. Available from: http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/36994434.pdf.

[29]    http://bm.dk/da~/media/BEM/Files/Dokumenter/Beskaeftigelsesomraadet/Arbejdsret/privatansattes_ytringsfrihed.ashx

[30]    OECD Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Denmark. March 2013. p. 46. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf.

[31]    OECD Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Denmark. March 2013. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf.

[32]    http://www.justitsministeriet.dk/nyt-og-presse/pressemeddelelser/2013/regeringen-neds%C3%A6tter-udvalg-om-offentligt-ansattes.

[33]    The report is available from: http://www.slideshare.net/Dianova/burson-marsteller-effective-lobbying-guide-in-europe. 

[34]    The two sets of legislations constitute the legal basis for transparency in respect of political financing. https://www.retsinformation.dk/Forms/R0710.aspx?id=2409. See also GRECO Third Evaluation Round in 2009. p 12. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)9_Denmark_Two_EN.pdf

[35]    GRECO Third Evaluation Round. Compliance Report. 2011, p. 7. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)8_Denmark_EN.pdf.

[36]    GRECO Third Evaluation Round in 2009. p 11. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)9_Denmark_Two_EN.pdf

[37]    Transparency International. National Integrity System Study Denmark 2012. Executive summary. Available from: http://www.transparency.org/whatwedo/pub/national_integrity_system_assessment_denmark_executive_summary

[38]    Transparency International. National Integrity System Study Denmark 2012. English summary. Available from: http://transparency.dk/?page_id=1258.

[39]    The Transparency International Global Corruption Barometer 2013 showed that 30% of the Danish respondents felt that political parties were corruption/extremely corruption. Available from: http://www.transparency.org/gcb2013/country/?country=denmark.

[40]    GRECO Third Evaluation Round in 2009. p 16-17. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)9_Denmark_Two_EN.pdf.

[41]    GRECO Third Evaluation Round Report – Compliance Report on Denmark. 2011. p. 6-7.

[42]    GRECO Third Evaluation Round Report – Compliance Report on Denmark, 2011. p. 6-7.

[43]    Government Programme. A Denmark that stands together, 9 October 2011. p76. Available from: http://www.stm.dk/publikationer/Et_Danmark_der_staar_sammen_11/Regeringsgrundlag_okt_2011.pdf.

[44]    GRECO Third Evaluation Round Report – Second Interim Compliance Report on Denmark. 2014. P 5. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)11_Second%20Interim_Denmark_EN.pdf.

[45]    § 20-spørgsmål S 347 Om økonomisk partistøtte. Available from: http://www.ft.dk/samling/20131/spoergsmaal/S347/index.htm.

[46]    OECD Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Denmark. March 2013. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf.

[47]    The Eurobarometer special surveys on attitudes of Europeans towards corruption 20013 are available from: http://ec.europa.eu/public_opinion/archives/eb_special_en.htm.

[48]    Det Glemte o-rige.The Trade Council. Udenrigsministeriet. 0113. p.31. Available from: http://ipaper.ipapercms.dk/Udenrigsministeriet/Eksportfokus/Eksportfokus012013/?Page=31.

[49]    GRECO Third Evaluation Round in 2009. p 11. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)9_Denmark_Two_EN.pdf.

[50]    These guidelines and policy documents are: (1) Ministry of Justice booklet ‘How to Avoid Corruption’; (2) Confederation of Danish Industries publication ‘Avoid Corruption’; (3) Danish Trade Council’s Anti-Corruption Policy; (4) Danish Investment Funds Anti-Corruption Guidelines; and (5) Danida’s Anti-Corruption Code of Conduct. Danida’s Code was replaced in 2011 by the Ministry of Foreign Affairs’ Anti-Corruption Policy. OECD Phase 3 Report on Implementing the OECD Anti-Bribery convention in Denmark. March 2013. p.14. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf

[51]    Responsible growth. Action Plan for Corporate Social Responsibility 2012-2015. Available from: http://csrgov.dk/file/318420/uk_responsible_growth_2012.pdf.

[52]    Annual Report on the OECD Guidelines for Multinational Enterprises 2012. The Report is available from: http://www.oecd.org/daf/inv/mne/2012annualreportontheguidelinesformnes.htm; http://oecdwatch.org/news-en/oecd-watch-welcomes-denmark2019s-strengthened-ncp.

[53]    The CSR Compass is available from: http://csrcompass.com/about-csr-compass.

[54]    The Danish Ministry of Foreign Affairs’ new Anti-Corruption Policy was approved by the Ministry’s management in  2011. The new policy and anti-corruption code of conduct replaces Danida’s Anti-Corruption Code of Conduct from 2008 on which it to a large extent is based. The document is available from: http://uganda.um.dk/en/~/media/Uganda/Documents/English%20site/Danidaframeworktopreventandfightcorruption.pdf.

[55]    Of the remaining 12 cases, nine cases have been terminated without prosecution while three are ongoing. OECD Phase 3 Report on Implementing the OECD Anti-Bribery convention in Denmark. March 2013. p 8. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf

[56]    OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the 2009 Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions. OECD Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Denmark. March 2013. p 9. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf.

[57]    The precondition of dual criminality means that Danish residents cannot be prosecuted for bribery offences committed abroad if the offence  is not punishable in the foreign State. Moreover, Danish courts may not apply sanctions that are more severe than those applicable under the law of the foreign state. GRECO Third Evaluation Round Report, Theme I. 2009. p 15. Available from: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)9_Denmark_One_EN.pdf.

[58]    GRECO Third Evaluation Round. Compliance Report. 2011, p. 3: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)8_Denmark_EN.pdf.

[59]    Article 1 of the OECD Convention reads: Each Party shall take such measures as may be necessary to establish that it is a criminal offence under its law for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business. OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. OECD Phase 3 Report on Implementing the OECD Anti-Bribery convention in Denmark. March 2013. p 15. Available from: http://www.oecd.org/daf/anti-bribery/Denmarkphase3reportEN.pdf.

ESTONIA

1. Introduction — main features and context

Anti-corruption framework

Strategic approach. Since 2004, Estonia has had in place strategic planning of anti-corruption policy. The 2008-12 strategy included 8 objectives, 21 measures and over 60 activities with working plans and measurable indicators. Implementation costs were provided for in the budgets of relevant ministries.[1] A new strategy up to 2020 focusing on prevention and education was adopted in October 2013.[2] Further developments include the establishment of a parliamentary working group on ethics, and parliamentary and public debates about immunity and a code of conduct for parliamentarians. At the same time, cases related to political party funding and trading in influence suggest that corruption remains a challenge in Estonia. Civic and parliamentary proposals have recently given a new impetus to anti-corruption reform. In November 2012, in response to a series of corruption controversies, ‘Charter 12’ — a petition calling for increased transparency in party financing and limits on the influence of special interests — was published.[3] In response, the President convened a roundtable meeting which issued an invitation for citizens to propose amendments to open the party system to greater competition, improve the transparency of party funding, and limit political influence in civil service appointments. These initiatives have already yielded some results. While their ultimate outcome remains to be seen, they illustrate the potential of public engagement for reform.

Legal framework. The Penal Code, which was completely revised in 2002 and further amended subsequently, provides a fairly sound basis for the criminalisation of corruption offences.[4] Estonia is in the process of reforming its anti-corruption framework. Examples include the 2012 amendments to the Political Parties Act, the Public Service Act and the Anti-Corruption Act, as well as parliamentary constitutional committee hearings on party financing reform.[5] Provisions on parliamentary immunity are also being reconsidered, after the Chancellor of Justice rejected several requests from prosecutors to propose to Parliament to lift immunities of Members of Parliament.[6] Following the work of legal scholars, the Ministry of Justice is preparing draft amendments to streamline the Penal Code, including with regard to private sector corruption. In October 2013, the Council of Europe’s Group of States against Corruption (GRECO) reported progress by Estonia on criminalisations.[7] Following amendments to include arbitrators in the definition of a public official, GRECO invited Estonia to sign and ratify the Additional Protocol to the Criminal Law Convention on Corruption (ETS 191).[8] GRECO also noted that draft amendments on trading in influence, if adopted, would respond to GRECO’s outstanding concerns.[9]  

Institutional framework. The Ministry of Justice criminal policy department coordinates development and implementation of anti-corruption policy, including data collection, training and impact assessment. Law enforcement is entrusted to the Internal Security Service and Police and Border Guard (Ministry of Interior). In addition, the Ministry of Finance coordinates integrity and ethics training courses. The ministries of justice and finance are collaborating on new training programmes for civil servants to reflect updated anti-corruption rules. The government is also planning a review of practices at a wide range of public authorities concerning codes of conduct, ethics boards and ethics training. The Ministry of Finance is conducting a study on in-house risk assessment methods in central government agencies. Two parliamentary standing committees and two select committees have worked on legislative drafting, proceedings or implementation of the Anti-Corruption Act. A separate Supervisory Committee on Party Funding was formed under the Political Parties Act in May 2011.

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer Survey on corruption, 65 % of Estonian respondents consider corruption to be widespread (EU average 76 %), and 22 % say that corruption affects their daily lives (EU average 26 %). In addition, 31 % (the EU’s lowest percentage) think that corruption levels have increased in the past three years. Some 40 % of Estonians, one of the highest percentages in the EU, consider that there are sufficient successful prosecutions to deter people from corrupt practices.[10] A justice ministry survey noted a positive trend in public attitudes towards corruption between 2006 and 2010, with fewer respondents saying they were prepared to bribe an official, and fewer stating that bribery was widespread as a means of avoiding penalties.[11]

Experience of corruption. In the 2013 Special Eurobarometer Survey on corruption, 4 % of Estonian respondents say they have been asked or expected to pay a bribe over the previous 12 months (EU average 4 %).

Business surveys. In the 2013 Eurobarometer business survey, 19 % of companies in Estonia consider corruption a problem when doing business (below the EU average of 43 %) and 17 % think that corruption has prevented them from winning a public tender in the past three years (EU average 32 %). Moreover, 57 % think corruption is widespread (EU average 75 %).[12]

Background issues

Private sector. In the Global Competitiveness Index, Estonia ranks 32nd out of 148 countries.[13] According to the Commission’s Second Implementation Report, Estonia did not fully transpose provisions of Framework Decision 2003/568/JHA. It partly transposed provisions on the liability of legal persons, and fully covered non-profit entities.[14] Concerning active corruption, Estonian legislation does not cover offering a bribe or intermediaries. Regarding passive corruption, Estonia’s legislation does not refer to intermediaries, ‘requesting’ a bribe or undue advantage.[15]  

Conflicts of interests and asset disclosure. The Anti-Corruption Act obliges public officials to declare economic interests, including assets and gifts. Declarations are due within four months of assuming office and annually thereafter. They are to be retained for seven years.[16] Verification is the responsibility of Parliament’s Select Committee and internal audit and personnel departments, among others. The Tax and Customs Board will administer the register of economic interests. E-training materials on conflict of interest issues are available via the Ministry of Justice.

Whistleblowing. Estonia has no specific law on whistleblowing. The amended Anti-Corruption Act prohibits officials from concealing corruption, and requires agencies to protect the confidentiality of good-faith whistleblowers. Shared burden of proof applies for whistleblowers and those alleged to have retaliated against them, in both the public and private sectors.[17] However, according to the 2013 Eurobarometer, 90 % of those Estonians who said they had experienced or witnessed a case of corruption in the past year did not report it. Moreover, 58 % of respondents said they would not know where to report a case of corruption if they experienced or witnessed one (EU average: 44 %). Internal Security Service data for 2004-12 show at most 46 anti-corruption hotline calls each year, indicating a need for raising awareness.[18] There are three connected hotlines since 2004, run by the Corruption Crimes Bureau of the Central Criminal Police, the Ministry of Justice and the Internal Security Service.

Transparency of lobbying. Lobbying is not regulated in Estonia. There is no specific obligation for registration of lobbyists, even though rules on the drafting of legislation provide a degree of transparency.[19] GRECO recommended the introduction of rules on how Members of Parliament engage with lobbyists. Parliamentary work is ongoing to address GRECO’s recommendation to develop and enforce a code of conduct for Members of Parliament, including restrictions on their activities after leaving office.[20] The Ministry of Justice has occasionally commissioned impact assessments of corruption risks in draft legislation.

2. Issues in focus

Financing of political parties

Since 2003, Estonia allows political donations only from natural persons. Following GRECO recommendations, amendments to the Political Parties Act which entered into force in April 2011 established the Supervisory Committee on Political Party Funding.[21] The Chancellor of Justice, National Audit Office and National Electoral Committee each appoint one of seven Committee members; parties in Parliament appoint the remaining four, for a five-year term. The law also obliges parties to report on related entities (such as interest groups, foundations, trade unions and other institutions affiliated with a party or otherwise under its control), and broadens the definition of such entities. Further amendments banned the use of membership fees to circumvent transparency rules concerning donations, and strengthened the requirement for parties and candidates to publish detailed financial reports, and return illegal donations. There are now three types of report: donation reports, submitted quarterly and published online; annual fiscal reports on parties and affiliated organisations, also published online and audited prior to submission if the party has received public funding; and campaign expenditure reports submitted to the Committee within a month after elections. GRECO was pleased with reforms of the legal framework for political financing, and encouraged the authorities to ensure that the new regulations and mechanisms are effectively applied in practice.[22]

Challenges with political financing came to light when a former Member of Parliament publicly admitted having funnelled anonymous donations to a prominent political party. A subsequent investigation revealed that party members had deposited cash in their personal accounts and then transferred the amounts to party coffers. The case has been the subject of intensive debates in Parliament, leading to the resignation of the Justice Minister in December 2012. Public debates also focused on allegations that local elected officials had used municipal funds for campaigning.[23] These and other cases related to political party finances led to demands for reform and the establishment of a platform for civic participation called Rahvakogu (People’s Assembly).

Good practice: Rahvakogu online platform for civic participation 

Rahvakogu (People’s Assembly) emerged following the ‘Charter 12’ manifesto and related roundtable convened by the President. Organised by volunteers, the online platform www.rahvakogu.ee collects proposals for amending electoral and political party laws, and other reform ideas. Rahvakogu combines online and face-to-face discussions on five topics: the electoral system, competition between political parties and their internal democracy, financing of political parties, strengthening the role of civil society in politics in between elections, and depoliticising public administration.

Proposals were collected and debated online until the end of January 2013. Analysts then grouped the proposals and comments, adding impact analyses. In March 2013, public meetings deliberated on which issues to select. Many of the proposals on the Rahvakogu portal concerned political party financing. Some 86 % of public representatives demanded increased monitoring of party finances, 85 % agreed that anonymous or hidden donations should be criminalised, and 78 % supported current rules limiting political donations to individuals, not companies. In April 2013, Estonia’s President submitted 16 Rahvakogu proposals to Parliament. All of these were subsequently discussed and many were adopted, amid high interest from civil society and the media.

Rahvakogu also has its critics who have questioned its political independence. While the ultimate results remain to be seen, the initiative has helped to harness public discontent into a constructive reform process.

Parliament has been considering proposals from a wide range of sources for better regulation of political party and campaign financing. Amendments in 2012 to the Anti-Corruption Act introduced improvements, including a register of declarations of interest for elected and appointed officials. Estonia furthermore broadened the range of sanctions for infringements of political financing rules, including administrative sanctions that can be used without involving the more cumbersome criminal procedure. However, GRECO considers that the amounts of these penalty payments (up to EUR 6 400) could be seen as relatively lenient.[24] They appear low in relation to campaign costs. While the abovementioned amendments brought about some improvements in detecting and preventing irregularities in party financing, the legislative framework has been weakened in other aspects. Accepting illegal donations was decriminalised in April 2011 when amendments to the Political Parties Act entered into force.[25] Responsibility for investigating such cases passed from the Internal Security Service to the Supervisory Committee on Party Funding. However, limited administrative and analytical capacity hampers the ability of the Supervisory Committee to verify the information presented in reports on campaign finance and donations.[26] Cases that came to light revealed that checks had not been conducted on whether donations really originated from the purported donors or corresponded to their income. While the Supervisory Committee has access to Parliament’s administrative resources, additional reallocation and prioritisation may be necessary to enable effective scrutiny of campaign finance and donations.

Prior to local elections in October 2013, the Supervisory Committee on Party Funding ordered media monitoring of campaigns in order to compare the results with survey data and official reports by parties.[27] The Committee also sent detailed instructions and organised training for parties on the reporting of campaign expenditure. The Committee launched an electronic accounting register to help reduce errors and workload.

Amendments in January 2014 to the Political Parties Act extended the scope of financial data in the electronic accounting register.[28] The amendments also placed limits on the indebtedness of political parties, following controversies regarding funds owed by parties to advertising agencies, printing houses and media companies.[29] In another positive step, the amendments capped cash donations at EUR 1 200 per year, and raised the penalties for accepting illegal donations.

Public procurement

Estonia’s e-procurement portal and related e-services such as the company registration and management portal and centralisation of public sector bookkeeping facilitate transparency.[30] Since 2003, all public procurement notices are published electronically in the State Public Procurement Register (SPPR), an eTenders portal. The Public Procurement Act provides for further development of the SPPR and eProcurement (eAuctions, ePurchasing system, eCatalogues, etc.)[31] Aiming at a fully electronic tendering process in future, the Act requires electronic tenders for 50 % of overall public procurement from 2013. In 2012, about 15 % of public tenders were conducted via e-procurement, three times more than in 2011. Electronic reporting supports transparency and improves quality management. The e-procurement portal also includes information about relevant Ministry of Finance decisions and the most frequent violations of the Public Procurement Act. However, local governments are not required to submit electronic records to the SPPR if the value of contracts falls below certain thresholds.

Despite progress with e-procurement, corruption risks remain, involving possible hidden agreements between politicians, officials and entrepreneurs, creating competitive advantage through information-sharing, false information in invoices, low tender prices and additional service ordering, and breaking up contracts into smaller parts to reduce reporting obligations.[32] Recent cases suggest that vulnerable sectors include urban planning and construction, healthcare and licensing. In one case, the Internal Security Service issued a reprimand and an administrative fine of EUR 120 to a government official whose non-governmental organisation (NGO) was awarded contracts worth EUR 12 000.[33] The amount of the fine raises questions about the dissuasiveness of administrative penalties. Similarly, the mayor of Tallinn (who is also leader of a political party) was fined EUR 575 for failing to disclose a EUR 173 000 loan from a Panama-registered company.

According to the National Audit Office (NAO), local authorities have limited awareness of prevention of corruption and need assistance. Officials had used local government assets to conclude transactions with companies that were related to them.[34] After auditing ten local authorities, the NAO found eight had breached the Anti-Corruption Act, for example by allowing officials to agree transactions with companies that were linked to them. Only one municipality had ensured adequate inspection to prevent breaches. The NAO recommended clearer national guidelines on the creation of internal control systems to prevent corruption, and more transparency on municipal transactions.[35] In a positive development, since 2013, a new online application makes available the financial data of Estonian local authorities.[36] Another NAO audit raised concerns about the extent to which the Finance Ministry is supervising contracts awarded by state-owned companies and foundations.[37]

In July 2013, a European Commission-funded report coordinated by Transparency International noted corruption risks at the highest and lowest levels of the system distributing EU funds.[38] According to the report, by the end of 2012, 339 violations or ongoing procedures for alleged violations of EU funding rules were detected in Estonia involving a total amount of EUR 35 million. Of that, 52 % was not paid by the EU or has been recovered or offset. The remainder is either unclaimed or not yet repaid. In 2012, 185 violations or suspected violations were recorded, of which 110 cases remain unresolved. While these violations concern irregularities in a wider sense and not necessarily corruption, they illustrate overall vulnerabilities in the management of EU funds and, more broadly, weaknesses in the public procurement system. The report also refers to the politicisation of civil service positions. The complexity of guidance and legislation (such as the Public Procurement Act) may stretch the resources of public institutions, some of which suffer from high staff turnover. 

The Ministry of Finance department overseeing public procurement has limited capacity compared with the body monitoring the use of EU structural funds. In 2012, the Ministry of Finance announced only 76 review proceedings (0.8 % of public procurements). There are no centralised databases on detected corruption cases and no corruption risk assessment guidelines in public procurement.

Accountability and integrity of elected and appointed officials

An appropriate system to guarantee the accountability and integrity of elected officials sets an example to others and constitutes an important element in preventing high-level corruption. A range of measures are in place to promote transparency in Estonia’s Parliament. As soon as Parliament decides to commence a legislative process, it publishes on its website the contents of a bill, the proposed amendments and all other pertinent materials, allowing interested parties to send comments to the committee concerned. Since February 2012, guidelines are in effect on good practices in the legislative process.[39] Public consultations are conducted via an electronic database,[40] serving as a repository for bills and accompanying documents, including comments by ministries and others. The government has issued a booklet on public consultation good practices. In addition, parliamentary committees publish online registries of interested third parties who choose to complete a questionnaire. Agencies are obliged to give reasons when accepting or declining proposed amendments.

Parliamentary committee meetings are held in public if more than a half of members vote in favour. Experts or guests may be invited to the committee’s sittings, including those with vested interests or links to individual parliamentarians. GRECO noted the absence of complete information (through registration or publication) on all those who may have influenced a specific procedure or a Member of Parliament participating therein, as well as the rarity of cases of withdrawal of Members of Parliament from decision-making. It therefore encouraged Estonia to enhance transparency of parliamentary committee meetings, particularly when these are open for participation by third parties.[41]

The need for a code of conduct for Members of Parliament has long been debated in Estonia. A draft code prepared by a working group was not approved.[42] According to GRECO, such a code is necessary to address issues that have received little attention so far, such as conflicts of interest, revolving doors, gifts, hospitality and other advantages and outside activities. The adoption of the code, in conjunction with more focused induction courses and the provision of ongoing counselling and advice would raise parliamentarians’ awareness on corruption prevention. In order for the provisions of the code to be effectively applied in practice, GRECO recommended an effective mechanism of supervision and sanction. GRECO further recommended that detailed guidelines be developed within Parliament setting out practical examples of conflicts of interest that Members of Parliament may encounter.

In addition, GRECO has repeatedly questioned the effectiveness of Parliament’s Anti-Corruption Act Select Committee, which has a duty to scrutinise economic interest declarations of which it is the depositary. It recommended that the Committee adopt a less formalistic and more proactive and rigorous approach to the handling of such declarations.[43]

More recently, the risk of political influence in public administration appointments has been brought to public attention. A recent controversy concerned the selection of the director of the Police and Border Guard Board in February 2013. In response to public concerns, the amended Public Service Act provides for open competitions involving independent selection committees.[44]

In March 2013, it emerged that members of a political party employed by the Tallinn municipal government had agreed to pay a percentage of their salary to the party. The mayor reportedly asked for the resignation of four city officials who failed to make the agreed contribution; two resigned. The case prompted public discussions about the politicisation of public service.

According to Transparency International, appointments to the boards of municipal companies are often made according to party affiliation.[45] Some requirements and restrictions do apply to the appointment of members of management bodies.[46] However, debates have focused on accountability at state-owned companies and their alleged misuse as a means to trade in influence or reward political party donors. Other cases have attracted further public attention to this issue, such as a potential conflict of interest concerning a supervisory board chair who also managed sports organisations sponsored by the Port of Tallinn. Reflecting such concerns, Rahvakogu deliberations included proposals for closer regulation of the role and responsibility of board members of state-owned companies.[47] Currently there is limited information on transactions, appointments and potential conflicts of interest at state-owned companies. A 2013 NAO audit of nine large state-owned companies raised concerns about the procedures for appointment of board members, finding little progress since the last such audit in 2007. One proposal under consideration at the Ministry of Economic Affairs is to establish an umbrella enterprise for all state-owned companies, to improve efficiency and depoliticise management boards.

In August 2013, five officials were sentenced in a plea bargain for participating in a bribery scheme in the written portion of the driver’s licence examination. A local traffic bureau chief was sentenced to over three months in prison.[48]

3. Future steps

Corruption levels in Estonia are generally considered low in international comparison, and petty corruption rarely affects citizens’ everyday lives. Additional efforts would be useful to further improve transparency in the financing of political parties and in public procurement, as well as accountability of elected and appointed officials.

The following points require further attention:

· Effectively monitoring donations to political parties and applying dissuasive sanctions in case of violation.

· Further improving oversight of public procurement and implementation of public contracts involving national or EU funds. Developing guidelines on monitoring compliance with anti-corruption requirements at local government level and ensuring that relevant administrative penalties are dissuasive. Providing adequate training to local authorities.

· Adopting a parliamentary code of conduct accompanied by an efficient mechanism of supervision and sanction and ensuring effective scrutiny of economic interest declarations. Conducting an independent in-depth analysis into the risk of politicisation of appointments in public administration and state-owned companies, including at local level.

[1]      http://www.korruptsioon.ee/orb.aw/class=file/action=preview/id=35712/ANTI+CORRUPTION+STRATEGY+2008-2012.pdf ; See also the performance report 2008 (2009) http://www.korruptsioon.ee/strateegia.

[2]      http://www.korruptsioon.ee/orb.aw/class=file/action=preview/id=59029/Estonian+Anti-Corruption+Strategy+2013-2020.pdf.

[3]       http://petitsioon.ee/harta12.

[4]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282007%295_Estonia_One_EN.pdf.

[5]      http://www.legaltext.ee/en/andmebaas/ava.asp?m=022 http://www.riigikogu.ee/index.php?page=en_vaade&op=ems&enr=193SE&koosseis=12 http://www.legaltext.ee/en/andmebaas/paraframe.asp?loc=text&lk=et&sk=en&dok=2012X15.htm&query=anti%2Dcorruption+act&tyyp=X&ptyyp=RT&pg=1&fr=no

[6]      The Chancellor of Justice is an independent official whose duties are to ensure that legislation is constitutional and fundamental rights and freedoms are protected. The Chancellor of Justice also proposes to Parliament to waive the immunity of an MP, the President, a Minister, or a Justice of the Supreme Court, and prepares a statement of charges on the basis of a request from prosecutors. The Chancellor of Justice examines the criminal file but does not verify or evaluate the evidence, or deal with the question of guilt. http://oiguskantsler.ee/en/other-tasks.

[7]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/ GrecoRC3%282013%2910_Second_ADD_Estonia_EN.pdf.

[8]      http://conventions.coe.int/Treaty/Commun/ChercheSig.asp?NT=191&CM=&DF=&CL=ENG.

[9]      Draft amendments to Section 298.1 of the Penal Code would introduce the offence of active trading in influence, include the request of an advantage in the offence of passive trading in influence, and no longer require that the factual or alleged influence by the influence peddler be ‘illegal’. The draft amendments were proposed to Parliament in January 2014. http://eelnoud.valitsus.ee/main#ogJLGuTi.

[10]    2013 Special Eurobarometer 397.

[11]    Corruption in Estonia: The study of three target groups. Criminal policy studies 13. Tallinn: Ministry of Justice Criminal Policy Department & University of Tartu, 2010 www.korruptsioon.ee/orb.aw/class=file/action=preview/id=50629/Korruptsioon_2010.pdf.

[12]    2013 Flash Eurobarometer 374.

[13]    http://www3.weforum.org/docs/GCR2013-14/GCR_Rankings_2013-14.pdf.

[14]    As regards liability of legal persons, §14 (1) of the Penal Code (PC) stipulates: In the cases provided by law, a legal person shall be held responsible for an act which is committed in the interests of the legal person by its body, a member thereof, or by its senior official or competent representative. As regards private corruption, PC §288 (2) stipulates: In the criminal offences specified in §§ 293–298 of this Code, ‘an official’ is also an arbitrator or a natural person whose official position lies in the capacity to manage a legal person governed by private law or to operate in the interests of a legal person governed by private law or another natural person.

[15]    COM(2011) 309 final, http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf.

[16]    Anti-Corruption Act §12-16,  http://www.legaltext.ee/en/andmebaas/paraframe.asp?loc=text&lk=et&sk=en&dok=2012X15.htm&query=anti%2Dcorruption+act&tyyp=X&ptyyp=RT&pg=1&fr=no.

[17]    Anti-Corruption Act, §6.

[18]    Corruption Crimes Bureau: www.politsei.ee; Ministry of Justice: www.korruptsioon.ee; Internal Security Service: www.kapo.ee.

[19] Cabinet Rules of the normative technique of drafts of legislative acts, Parliament Rules for draft legislation in the legislative proceedings.

[20]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)5_Estonia_EN.pdf.

[21]    http://www.legaltext.ee/en/andmebaas/ava.asp?m=022.

[22]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282013%2910_Second_ADD_Estonia_EN.pdf.

[23]    Recent examples of debates include Põhja-Tallinn and Tartu.

[24]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%291_Second_Estonia_EN.pdf.

[25]    http://www.legaltext.ee/en/andmebaas/paraframe.asp?loc=text&lk=et&sk=en&dok=X1022K10.htm&query =Political+Parties+Act+&tyyp=X&ptyyp=RT&pg=1&fr=no

[26]    Transparency International Estonia and Open Estonia Foundation (2012) ‘Party and Campaign Financing Regulations in Estonia’ – Tallinn, pp 6-7. Available at: http://transparency.ee/cm/files/political_parties_financing_in_estonia.pdf.

[27]    Supervisory Committee on Party Funding (2013) Press Release: Erakondade Rahastamise Järelevalve Komisjon laseb valimiste meediakampaaniat põhjalikult monitoorida (The Committee will order a systematic monitoring of elections media campaigns). Published: 18.09.2013. Available from: http://www.erjk.ee/et/uudised/18-septembril-2013-erakondade-rahastamise-jarelevalve-komisjon-laseb-valimiste.

[28]    http://www.riigikogu.ee/index.php?op=emsplain&page=pub_file&file_id=36a544db-9fa0-4dab-969c-5a84162bd03b&.

[29]    http://www.riigikogu.ee/public/Valimisvolad_2009-2011_valimiskampaaniatest_seisuga_31.12.12.pdf.

[30]    http://www.riso.ee/en/node/102  https://ettevotjaportaal.rik.ee/index.py?chlang=eng.

[31]    http://www.legaltext.ee/en/andmebaas/paraframe.asp?loc=text&lk=et&sk=en&dok=XXX0005K3.htm &query=Public+Procurement+Act+&tyyp=X&ptyyp=RT&pg=1&fr=no.

[32]    On corruption risks in local government, see National Audit Office, Local government associations make the same errors in their economic activities as municipalities, towns and cities http://www.riigikontroll.ee/Suhtedavalikkusega/Pressiteated/tabid/168/557GetPage/1/557Year/-1/ItemId/637/amid/557/language/en-US/Default.aspx.

[33]    Corruption charges were dropped after the Supreme Court turned down an appeal by the Internal Security Service, upholding a lower court’s ruling. Kohtuotsus Eesti Vabariigi Nimel, Harju County Court, 18 March 2013, Tallinn. General procedure decision No. 913012000002 from 25.06.2012.

[34]    http://www.riigikontroll.ee/tabid/168/amid/557/ItemId/654/language/en-US/Default.aspx.

[35]    Mattson, T. (2012) Local authorities breach laws and conclude transactions presenting risk of corruption. SAO. 5.11.2012. http://www.riigikontroll.ee/Suhtedavalikkusega/Pressiteated/tabid/168/ItemId/654/amid/557/language/en-US/Default.aspx.

[36]    www.riigipilv.ee.

[37]    National Audit Office, Organisation of public procurement in public undertakings and public foundations. Tallinn, 5 February 2013. http://www.riigikontroll.ee/tabid/206/Audit/2273/Area/18/language/en-US/Default.aspx.

[38]    Tõnnisson, K. and Muuga, M. (2013) Korruptsiooniriskid Euroopa Liidu vahendite rakendamisel (Corruption risks in the implementation of European Union funds).

[39]    http://www.riigikogu.ee/?op=ems&page=dokumentide_detailid&pid=6c4446b4-6f77-4621-aab1-a4c66c738798& 

[40]    http://eelnoud.valitsus.ee.

[41]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4%282012%295_Estonia_EN.pdf.

[42]    In January 2012, Parliament’s Select Committee on the Application of the Anti-Corruption Act supported a proposal by Transparency International Estonia to draw up a code of conduct, and an informal cross-party working group was established. However, Parliament’s Board considered the Anti-Corruption Act sufficient to prevent corruption among parliamentarians.

[43]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4%282012%295_Estonia_EN.pdf.

[44]    http://www.riigikogu.ee/index.php?page=en_vaade&op=ems&enr=193SE&koosseis=12.

[45]    Transparency International’s National Integrity System assessment refers to ‘politicization of non-political positions in the public sector, which is more severe in local governments’. http://www.transparency.ee/cm/files/lisad/estonia_nis_executive_summaryrecommendations.pdf.

[46]    State Assets Act, §80. https://www.riigiteataja.ee/akt/105042013007.

[47]    https://www.rahvakogu.ee/pages/sundpolitiseerimine-poliitikud-noukogudes.

[48]    Viru County Court verdict, KOHTUOTSUS kriminaalasja number 1-13-6854 (13913000021), Riigi Teataja (State Gazette), 02.08.2013, https://www.riigiteataja.ee/kohtuteave/maa_ringkonna_kohtulahendid/menetlus.html?kohtuasjaNumber=1-13-6853/1. Legal basis: Criminal Procedure Code §202(2): Termination of criminal proceedings in case of lack of public interest or negligible guilt, http://www.legaltext.ee/et/andmebaas/tekst.asp?loc=text&dok=X60027K9&keel=en&pg=1&ptyyp=RT&tyyp=X&query=kriminaalmenetluse+seadustik.

GREECE

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. In late 2012, the European Commission Task Force and the Greek authorities agreed on a Road Map on Anti-Corruption as a basis for a comprehensive national strategy.[1] Building on this, the Greek authorities agreed in early 2013 on a national anti-corruption strategy including an action plan.[2] This filled a longstanding gap and marked an important step towards addressing the corruption challenges in the country and the need for adequate coordination of policies in this field. A national anti-corruption coordinator was appointed to oversee the implementation of the action plan.[3]

Legal framework. Greek criminal legislation covers all forms of corruption and trading in influence offences covered by the anti-corruption legal instruments of the Council of Europe. The scope of criminal law provisions concerning corruption offences covers all elected and appointed officials, and any other public officials. However, as pointed out by the Council of Europe's Group of States against Corruption (GRECO), this ‘legal framework is excessively complex, scattered among the Penal Code, other domestic laws and the various laws ratifying international instruments' which cannot but affect its implementation. Moreover, the legislation providing for criminalisation of corruption-related offences appears to be inconsistent, notably concerning the provisions on active and passive bribery and on trading in influence.[4] The OECD has also called for further improvement of the rules on foreign bribery and the liability of legal persons.[5] Most of the anti-corruption measures taken so far, legislative or otherwise, have been piecemeal, indicating a need for a more coherent approach. In August 2013, GRECO published its interim second compliance report, in which it concluded that, three years after they were issued, only one of its 27 recommendations on incriminations and party funding had been implemented satisfactorily.[6] The government has prepared draft legislation with the aim of addressing the current deficiencies and ensuring a streamlining of existing criminal law provisions.[7] In the meantime, to address most immediate concerns, amendments to the criminal code were adopted in spring 2013 in order to increase the sanctions applicable to offences of active and passive bribery and bribery of a judge.[8]

Institutional framework. The institutional anti-corruption framework is also complex, consisting of the General Inspector of Public Administration,[9] specialised departmental inspection bodies or units within agencies and ministries, the Office of the Commissioner General of the State,[10] the Financial and Economic Crime Unit (SDOE), the offices of public prosecution specialising in corruption recently established in Athens and Thessaloniki, the Financial and Economic Crime Prosecutor's Office, the Independent Authority to Combat Money Laundering, the internal affairs unit of the Greek police, the Supreme Court of Audit and the Ombudsman. Insufficient inter-agency cooperation raised concerns as to the ability of this framework to respond effectively to corruption challenges. In order to address these concerns, a national anti-corruption coordinator was appointed in mid-2013.[11]

Law enforcement and judiciary. The judiciary has recently taken steps to improve its track record on corruption. Recent high-level cases have demonstrated a move towards more effective handling of corruption cases by courts and enforcement of severe sentences. In addition to the general prosecutor's office, Greece has set up two specialised prosecution services relevant for the fight against corruption: the prosecution service in charge of economic crimes set up in 1997[12] and the prosecution service in charge of corruption offences (set up in 2011).[13] A further specialisation of prosecution services on corruption was put in place in the first half of 2013 with the setting-up of additional specialised offices of the public prosecutor against corruption tasked with supervising and coordinating investigations of corruption. Two such specialised prosecution offices were established in Athens and Thessaloniki, the jurisdictions with the highest number of complex corruption cases.[14]

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer on Corruption[15] 99% of Greek respondents consider corruption to be a widespread problem in their country (EU average: 76%), while 63% believe that it affects their daily lives (EU average: 26%) and 80% that favouritism and corruption hamper business competition in Greece (EU average: 69%). 95% say that there is corruption at regional and local level (EU average: 77%). 93% consider that bribery and the use of connections are often the easiest way to obtain a public service (EU average: 73%). In most cases, these are the highest percentages in the EU.

Experience of corruption. 7% of the Greek respondents to the 2013 Eurobarometer survey admitted that over the past 12 months they were asked or expected to pay a bribe for services (EU average: 4%).

Business surveys. According to a Eurobarometer business survey,[16] 89% of Greek businesses (EU average: 73%) and 80% of the respondents from the general population (EU average: 69%)[17] believe that favouritism and corruption hamper business competition in Greece. 92% of companies consider that bribery and the use of connections is often the easiest way to obtain certain public services (EU average: 69%). 66% of business people (EU average: 43%) believe that corruption is a problem for their company when doing business in Greece and 67% consider patronage and nepotism an obstacle (EU average: 41%).

Background issues

Economic context. Petty corruption was estimated to have cost Greece EUR 554 million in 2011.[18] The General Inspector of Public Administration noted in 2011 that corruption is widespread in local government, environmental and urban planning, transport, public works and public health services.[19] Instituting effective anti-corruption policies, reforming the judiciary and the public administration, including public procurement, and implementing an anti-fraud strategy for EU co-funded projects are part of Greece's commitments under the Memorandum of Understanding on Economic and Financial Policies.[20] The European Commission Task Force providing technical assistance to Greece, in close cooperation with the relevant Commission services, is offering support in reforming these fields.[21] As part of the economic recovery plans, Greece has committed itself to a large-scale privatisation of government assets. Independent monitoring and strong anti-corruption safeguards are essential in this context to mitigate corruption-related risks.[22]

Private Sector. In the World Economic Forum’s 2013-14 Global Competitiveness Index, Greece ranked 91st of 148 countries with low scores on favouritism in decisions by government officials and the diversion of public funds.[23] Greece transposed all provisions of Framework Decision 2003/568/JHA concerning the definition of active and passive corruption in the private sector, and those regarding penalties applicable to natural and legal persons and the liability of legal persons.[24] However, as far as practice is concerned, the OECD concluded that there are several areas in which Greece falls short of implementing the OECD Anti-Bribery Convention. In particular, it expressed concerns about Greece's limited ability to detect foreign bribery cases, pointing to the failure promptly to investigate a significant foreign bribery case and to provide timely information on anti-bribery efforts.[25]

Whistleblowing. Greece does not have dedicated legislation on the protection of whistleblowers in either the public or the private sector. The general labour law provisions against unfair dismissal and non-discriminatory treatment of employees are also applicable to whistleblowers. Both GRECO and the OECD have stressed that the current framework for the protection of whistleblowers in Greece is insufficient. The Ministry of Finance, the General Inspector of Public Administration and law enforcement bodies have put in place anonymous corruption reporting systems that have become increasingly popular in recent years. Also, civil society has implemented initiatives for reporting bribes or corrupt practices.[26] Moreover, several internationally active Greek companies have developed channels for whistleblowing as part of their general ethics and anti-bribery framework.[27] The Government is currently working on draft legislation on comprehensive arrangements for the protection of whistleblowers, as provided for in the national anti-corruption action plan.[28] Whistleblowing is also to be promoted as part of the overall reform of tax administration, as agreed under the Memorandum of Understanding on Economic and Financial Policies.[29]

Transparency of lobbying. Lobbying is not regulated in Greece. There is no specific obligation for the registration of lobbyists or the reporting of contacts between public officials and lobbyists.

Media. Greece scored low in the 2013 Freedom of the Press index of Freedom House, following a negative trend which places it in the category of countries where the press is assessed as ‘partially free’.[30] Economic weakness and a selectively enforced regulatory framework rendered the Greek media particularly vulnerable to potential undue pressure.[31]

2. Issues in focus

Comprehensive strategic approach on corruption

Greece has started to take a more comprehensive approach to tackling corruption. As highlighted by GRECO, its legislation is still 'excessively complex'.[32] This is compounded by a low level of enforcement and the fact that a large number of institutions have at times overlapping competences in the framework of anti-corruption policies, while risk assessments do not appear to be common practice for identifying future targeted actions. The Financial and Economic Crime Unit reporting to the Ministry of Finance (SDOE) includes within its structure a seconded prosecutor with a view to ensuring closer cooperation between the two services. Special consideration needs to be given to the coordination of the recently established  public prosecution offices specialising in corruption, SDOE and the regular prosecution services. In June 2013, the Government announced the merger of the General Inspector of Public Administration and the Body of Inspectors of Public Administration into a single authority to reduce the overlap between anti-corruption agencies.[33]

Good practice: transparency of decision-making in public administration and publication of concluded contracts

A law adopted in 2010 placed all public institutions under the obligation to publish their decisions online, including those relating to public procurement. [34] Since 1 October 2010, all public institutions, regulatory authorities and local governments have been obliged to upload their decisions on the internet through the Clarity Programme (diavgeia - διαύγεια).[35] The decisions of public entities cannot be implemented if they are not uploaded on the Clarity websites. Only those that contain sensitive personal data and/or information on national security are exempt. Each document is digitally signed and automatically assigned a unique number. If there is a discrepancy between the text published in the Government Gazette and that on Clarity websites, the latter prevails. Concluded public contracts are also published. There is no public information readily available on the monitoring of the implementation of public contracts, but such information can be accessed on the basis of the freedom of information legislation.

Apart from the challenges relating to institutional coordination, internal control mechanisms within the public administration appear to pose problems that affect the well-functioning of anti-corruption and integrity-related policies. The internal control mechanisms within the civil service have proven ineffective, causing considerable backlogs in the system. As of August 2012, 5 000 cases were reportedly still pending in the disciplinary councils of Greek ministries and public institutions (e.g. public hospitals, state universities, etc.)[36] Most civil servants charged with violating the civil service code were acquitted: in 2011, only 17 of the 157 civil servants whose cases were investigated by disciplinary councils were finally dismissed.[37] Data to mid-2013 show that until that date 91 Greek civil servants had been dismissed on disciplinary charges, while the cases of another 2 000 civil servants were still pending at the time.[38]

Amendments to the civil service code were adopted in 2012 to ensure speedier and more transparent disciplinary proceedings.[39] The amending law changed the composition of disciplinary councils, which previously consisted of three top civil servants and two trade unionists. The new councils include judges to ensure greater impartiality. In early 2013, provisions aimed at speeding up disciplinary procedures were adopted[40], with a commitment to prioritising the dismissals of civil servants subject to disciplinary decisions on grounds of corrupt practices or incompetence. The Minister for Administrative Reform and e-Governance also gave a commitment in mid-2013 to take related measures. As a result, 226 civil servants were dismissed on disciplinary grounds (including cases where criminal charges were brought) between July and September 2013.

In mid-2013, court proceedings commenced following allegations that civil servants in a state-owned social security agency had been involved in the embezzlement of welfare benefits in the period 2003-12. Moreover, a number of periodic checks on welfare benefits have been carried out at regional and local level in recent years by committees of doctors assessing the medical grounds on which welfare benefits were initially awarded to beneficiaries. Following one of these periodical regional checks, it was revealed that 66% of the inhabitants of a small island who had been receiving welfare benefits for blindness were in fact not suffering from blindness. A full country-wide re-evaluation of these welfare benefits is nearing completion.

The Commission issued reservations regarding 2007-13 EU funding in Greece, on the basis of suspicions of extortion by fund managers in the Ministry of Development in exchange for project approval. The Greek police made several arrests and an investigation into corruption allegations is ongoing at national level. The European Commission established an action plan for Greece to ensure that past and present expenditure is legal, regular and eligible. The Minister for Development replaced staff suspected of involvement in this case.[41] Following the satisfactory implementation of the action plan, the Commission lifted the reputational reserve in 2013.

To develop a more coherent approach against corruption, the Road Map on Anti-Corruption drawn up by the European Commission Task Force on Greece[42] in 2012 identified the following priorities: adopt an overall national anti-corruption strategy; reinforce coordination and exchange of information between institutions, including via the appointment of a national coordinator; and strengthen financial investigation and prosecution of corruption, particularly in high-risk sectors. Legislative measures aimed at more effective prevention and detection of corruption were also mentioned. The anti-corruption dimension is also present in plans to strengthen the fight against undeclared work and raise the effectiveness of the Labour Inspectorate, where the reform programme calls for reinforced anti-fraud and anti-corruption mechanisms.

Following the Road Map recommendations, in May 2013 the Government appointed, for a term of five years, a national anti-corruption coordinator who reports to the Prime Minister and Parliament. A law on the setting-up of a national coordination committee which covers all relevant public institutions and law enforcement bodies, as well as the Ombudsman and an advisory body (including civil society and international organisations) was adopted by Parliament in April 2013.[43]

Building on the main lines of the Road Map, the Greek authorities drafted a national anti-corruption strategy including an action plan agreed among the relevant Greek agencies and law enforcement bodies in January 2013.[44] Responsibility for coordinating the action plan lies with the national anti-corruption coordinator. The lack of clarity in the adoption procedure may raise some questions as to the sustainability of the government's and Parliament's commitment to the strategy.[45]

The action plan covers the period from 2013 to 2015 and provides for the development of risk assessment capabilities. Among its objectives are: efficient political leadership in the fight against corruption; responding to the increased public demand for accountability; intolerance of corrupt practices; efficient enforcement and increased compliance; accountability of public and private bodies. Roughly 70% of the measures foreseen, including the establishment of the specialised anti-corruption prosecution office and other legislative measures targeting criminal procedures, focus on enforcement. Prevention measures are less elaborated. The action plan does not include measurable indicators or benchmarks. There are no estimates of the resources needed for its implementation. Up to now, a great majority of measures provided for in the action plan have been initiated, while only a few have already been completed.

Financing of political parties

Greece’s legislative and operational framework on financing political parties and electoral campaigns remains underdeveloped. Public perception indicates further concern in this area. The 2013 Special Eurobarometer on Corruption shows that 86% of Greeks (highest percentage in the EU) consider that there is insufficient transparency and supervision of party funding (EU average: 67%).[46] Moreover, the financing of political parties in Greece has been linked over time to various allegations of corruption or illegal funding. One such case concerned allegations of illegal payments from a foreign company to officials of two political parties which were in power in 1996-2004 and 2004-09, allegedly in exchange for securing public contracts. After the Greek state claimed that it had suffered damages in excess of EUR 2 million, a settlement was reached in 2012; the criminal proceedings are not yet closed.

Greek political parties can be financed from state budget, private donations and loans. In 2010, new legislation was adopted on the electoral expenses of coalitions and candidates and control thereof in the local and regional elections[47] providing for funding and expenditure caps, and obligations on coalitions and candidates for medium and large size municipalities to disclose their revenue and expenditure on a central public database managed by the Ministry of Home Affairs, Decentralisation and e-Governance.[48] Financial reports also have to be submitted to the Committee on Expenditure Control and Election Violations by a wide range of elected local officials within one month of the announcement of election results. An ad-hoc committee is established in each district, with the participation of judges, a member of the Council of State, the Commissioner of the Audit Council and the head of local SDOE office. Its task is to check the financial situation of the elected coalitions and candidates. Penalties ranging from financial up to custodial are provided for, depending on the seriousness of the breaches found.

A committee on expenditure control and election violations is set up within Parliament including MPs from all parties (the majority of the members) and three magistrates. The effectiveness of this committee is nevertheless yet to be proven.[49] Its in-depth analysis of the expenditure during the most recent parliamentary elections of 2012 is still pending. The Supreme Court of Audit does not have the necessary powers to check the substance of the financing of political parties and electoral campaigns.

In July 2012[50] and subsequently in August 2013,[51] GRECO noted that none of its 16 recommendations in this area had been implemented. The authorities reported that amendments had been prepared but not adopted due to the fragile economic and political situation. In 2013, GRECO noted that the reform of the legislation for electoral campaigns at local and regional level improved the level of transparency to a certain extent, but at the same time expressed its disappointment that progress in the preparation of the substantial legislative amendments required for the follow-up of its recommendations in this area remained slow.[52]

Unimplemented GRECO recommendations mainly concern the need to: reinforce guarantees for tracing donations; ensure that loans are not used to circumvent party financing regulations; reinforce records and the transparency of party accounts; ensure independent auditing of political parties; strengthen the independence, efficiency and transparency of the Control Committee tasked with the supervision of party and electoral campaign funding; enhance the monitoring of financial documents; and enhance the reporting and sanctioning mechanisms. The need for transparency in party funding is echoed in the Road Map of the Task Force on Greece and the anti-corruption action plan. The Government is currently working on draft legislation to improve the legal framework on party funding.

Prosecution of corruption

As highlighted by GRECO in 2012, the effective application of the law is hampered by delays in the prosecution and adjudication of corruption offences.[53] Among the potential reasons for ineffective application of the law are the absence of effective control mechanisms in the public administration and the slowness of the justice system. However, more recently, an increased number of high level investigations into allegations of corruption have been started. Also, the courts handed down dissuasive prison sentences in several high-level cases, including in the case of a former minister of defence convicted in the first instance on charges of bribery, embezzlement and money laundering in relation to defence contracts, and making false statements regarding his assets. In another case, the former mayor of a big town was sentenced in the first instance to life imprisonment on charges of embezzlement. Several other high-ranking municipal employees were sentenced in this case. This could be an indication of a move towards more determined prosecution and adjudication of corruption cases.

A positive aspect illustrated by the above cases is the dismissal or resignation of the politician facing charges when investigations start. There are however no ethical codes applicable to elected officials at central and local level. There is only one code of conduct for government officials. Such codes of conduct for elected officials, accompanied by regulatory provisions on sanctions applicable in cases of breaches of ethics rules would enhance integrity and accountability standards and would ensure a wider range of non-criminal sanctioning of unethical behaviour to the detriment of the public interest. It would also ensure more effective implementation of integrity rules through self-regulation, given the particularities of non-criminal sanctions applicable to elected officials as compared with other categories of public officials (appointed officials, civil servants, etc).

The 2012 annual report of the Department of Internal Affairs of the Police showed an increase in the number of criminal charges for corruption offences, following recent amendments. Moreover, anonymous reporting systems of alleged corruption crimes have been put in place within law enforcement bodies leading to a considerable increase in the reporting of alleged bribery of public officials (almost double the number in 2012 as compared with 2011).[54]

A 2012 study commissioned by the European Agency for the Management of Operational Cooperation at the External Borders (FRONTEX) details a six-month investigation that uncovered a group of seven coastguards and 15–16 civilians involved in cigarette smuggling from Cyprus and Turkey into Greece in 2010.[55] A hierarchy within the criminal group was observed, with the lowest-level coastguards receiving EUR 500 per shipment and the highest-level officials - EUR 10 000. According to the study, the increase in cigarette smuggling in Greece and other countries along the EU's eastern border after 2009 may have led some financially indebted officers to turn to corruption. In spite of these patterns, the prosecution response was rather weak: in 2010, only seven prosecutions were reported, with four dismissals and one disciplinary penalty. Criminal investigations into allegations of high-level corruption face challenges as a result of a complex immunity regime, notably as regards ministers and former ministers.

According to the Greek Constitution, MPs can be prosecuted or arrested only with prior approval of Parliament.[56] If no decision is taken within three months, the approval is deemed not to have been granted. The decision does not have to give reasons. In the case of ministers, former ministers and state secretaries,[57] in addition to prosecution and arrest, the immunity also covers judicial inquiry, preliminary judicial inquiry or preliminary examination. Each stage of investigation requires a separate approval from Parliament. Only Parliament has the power to take legal action against the officials in question for criminal offences committed during the discharge of their duties. Also, only Parliament is entitled to suspend criminal prosecution. The Constitution provides for a complex and time-constrained procedure for submitting legal action in the case of offences committed by ministers, former ministers and state secretaries, which creates considerable obstacles to prosecution. The restrictions imposed by this procedure also add to the limitations of the prescription periods, preventing criminal action against the persons mentioned above unless and until Parliament gives its consent.

In addition, ministers and former ministers also benefit from an extensive statute of limitations regime which – in combination with lengthy proceedings – poses significant problems for prosecuting corruption in Greece.[58] The prescription term continues to run after the first instance court decisions are rendered; the term can be suspended, but not interrupted.[59] Moreover, an absolute prescription term runs irrespective of the course of proceedings. Furthermore, the Minister of Justice can postpone or suspend prosecution of ‘political acts’ and of ‘offences through which international relations of the state may be disturbed’.[60] To date, however, this provision has not been used for corruption offences.

GRECO has repeatedly called for the abolition of the special statute of limitations for ministers and former ministers. In its 2012 compliance report, the Greek authorities are quoted as stating that this would require a constitutional amendment, and be unfeasible in the short term.[61] In practice, the current provisions have been interpreted in a broadly by the prosecution services and the courts to allow more effective criminal proceedings in some complex cases.

Conflicts of interest and asset disclosure

The Greek Constitution sets out specific rules on incompatibilities between the mandate of the MPs and a wide range of positions in the private and public sector including executive functions in local government.

Conflict of interest was recognised by the Greek Government as an issue to be addressed in the context of the reform of public administration. As part of its commitments under the Memorandum of Understanding of Economic and Financial Policies, the Ministry of Finance adopted a code of conduct concerning the conflict of interests and declaration of interests for its own staff, including the tax administration.[62] A code of conduct, including provisions on conflict of interests and asset declarations was also recently introduced within the revenue administration.

Against this background, the national anti-corruption action plan aims to develop effective mechanisms for the prevention, detection and removal of conflicts of interest and incompatibilities for all categories of public officials, including elected officials, through the implementation of an action plan in all general government bodies at all levels (including elected officials). Moreover, the action plan provides for the setting-up of a system for reporting conflicts of interests within the public administration.[63]

Elected and appointed officials are subject to a strict asset disclosure system which has led to criminal prosecution in some cases (see example in the previous section). The declarations of ministers and MPs are publicly available and usually reported in the media. However, verification is not systematic and the cooperation between internal control mechanisms and law enforcement bodies to identify breaches of asset disclosure obligations has shown limited results. Moreover, in the case of MPs, any verification of asset declarations is carried out by the Control Committee within Parliament, which is composed predominantly of MPs and three representatives of the judiciary. Therefore, this verification system alone cannot fully guarantee impartiality.

Public procurement

The share of public procurement in the Greek economy has decreased recently as a result of the economic crisis. Public works, goods and services in Greece accounted for about 8.8% of GDP in 2011.[64] The value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, goods and services was 25.4% in 2011.

According to the 2013 Eurobarometer business survey on corruption, 76% of the Greek respondents believe that corruption is widespread in public procurement managed by national authorities (EU average: 56%) and 94% in that of local authorities (EU average: 60%). In particular, respondents stated that the following practices are widespread in public procurement: specifications tailor-made for particular companies (81%); conflicts of interests in the evaluation of bids (87%); involvement of bidders in the design of the specifications (81%); abuse of negotiated procedures (75%); collusive bidding (73%); unclear selection or evaluation criteria (73%); abuse of emergency grounds to avoid competitive procedures (72%); and amendments of contractual terms after conclusion of contract (55%). These are among the highest percentages in the EU. These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities to corruption in public procurement procedures. Greek public procurement law has in general been characterised by complexity, overlapping rules, and a fragmentary approach. These deficiencies have increased the risks of ineffective implementation. Despite several legislative initiatives,[65] such shortcomings have not been fully addressed, especially in relation to fragmented oversight, the need to further strengthen internal and external controls and the need to increase the level of enforcement.[66] Moreover, there is no indication of how potential conflicts of interests are being systematically checked in public procurement procedures, notably at local level.

In light of the above, the Greek government has recently undertaken several significant initiatives, some of which stem from its commitments laid down in the Memorandum of Understanding for the economic recovery programme concluded with the European Commission, the European Central Bank and the International Monetary Fund.[67] Such initiatives include: (a) preparing legislative reform aimed at codifying and consolidating Greek public procurement rules; (b) enhancing transparency and consistency in the Greek public procurement system by strengthening the role of the Single Public Procurement Authority (SPPA–EAADISY); (c) using central purchasing and reducing the number of contracting authorities; and (d) introducing e-procurement as a key tool for (almost) all public procurement procedures initiated by the contracting authorities.

In September 2012, the Government completed the regulatory framework of the SPPA – EAADISY, the body set up in 2011 to review the legality of all contracts signed by public institutions, including by ministries and agencies under the negotiated procedure without publication of a contract notice.[68] The SPPA–EAADISY became operational in this new framework on 1 July 2013.

The SPPA – EAADISY has been tasked with submitting a comprehensive plan for the reform of the legislation on public procurement in the first quarter of 2014.[69] The legislative reform underway includes, inter alia, the establishment of a new e-procurement platform and enhanced corruption prevention mechanisms.[70] E-procurement platforms have already been established both for information and for tendering purposes and steps are being taken to further improve their effectiveness.

In order to enhance the transparency of the public procurement process, Greece has established the Central Electronic Registry of Public Contract (KHDMS). The Registry is hosted on the portal of the national system of electronic public contracts and is managed by the General Secretariat of Commerce within the Ministry of Development. Since March 2013, all transactions regarding public tenders, public contracts and payments over a value of EUR 1 000 by any ministry or public agency must be registered and processed through KHDMS. This initiative is also expected to increase accountability and equal opportunities for interested bidders. Further efforts are being made with a view to reducing the number of contracting authorities and using central purchasing (in the field of supplies and healthcare).

In February 2013, the Hellenic Competition Commission conducted a 'dawn-raid' investigation into the largest construction companies for possible bid-rigging for the award of public works contracts (large infrastructure projects) in 2012. This also signalled a stricter approach by the Greek authorities to investigating potential anti-competitive conduct and potential corruption in the public sector.

A national strategy is currently being developed in the field of public procurement with the support of the Commission and its Task Force for Greece. In this context, the main efforts relating to procurement policy in Greece are focused on optimising economic outcomes in full compliance with EU rules, including strengthened anti-corruption measures, achieving best value for money and enhancing transparency.

Healthcare

The healthcare sector is among the sectors in which Greece faces considerable challenges with regard to corruption. It accounts for 10% of GDP. Both informal payments and the procurement of equipment and drugs are affected by corruption.

In the 2013 Special Eurobarometer, 11% of the Greek respondents who visited public medical facilities in the past year admitted to having made an extra payment (EU average: 5%) and of these 24% felt they had to make the extra payment or offer a gift before care was given.[71] Transparency International’s 2011 survey on petty bribes in Greece estimated the bribe expected for surgery in public hospitals at EUR 100 to 30 000, for faster treatment from EUR 30 to 20 000, and for medical tests from EUR 30 to 500.[72] Informal payments appear to be made most frequently to obtain access to healthcare, bypass waiting lists or secure treatment by a particular specialist.[73]

In addition to such petty corruption, the healthcare system was affected by a number of large-scale cases of corruption and fraud. One such case involved the construction of a facility for the analysis of blood plasma, costing some EUR 11.2 million in public funds. Construction began in 2000 and finished in 2001, but the facility never functioned fully. As a result, Greece still has to send large quantities of plasma for analysis abroad. Another case relates to bribes of GBP 4.5 million paid to Greek healthcare professionals in 1999-2006, for favouring the purchase of medical equipment by a subsidiary of a UK-based company. The marketing director of the company was sentenced in the first instance to one year imprisonment by a British court.[74] These cases point to substantial vulnerabilities to corruption in the healthcare sector relating to the certification and procurement of medical equipment, and the authorisation and procurement of pharmaceuticals.

Economic adjustment conditions specifically mention the implementation of mechanisms that address corruption and eliminate informal payments in hospitals.[75] Further measures taken include the setting-up of a health supplies price watch, the introduction of electronic prescriptions and the centralisation of healthcare procurement.

The extent of corruption in the healthcare system calls for a targeted strategy to address the specific challenges in this sector. The Greek authorities, supported by the Commission's Task Force, are close to finalising such a strategy.

Tax administration

Corrupt practices that facilitate tax evasion incur considerable costs for the Greek state. Recent studies on the development of the shadow economy estimated that these reached levels as high as 24.3% of GDP in 2012.[76] A former head of investigations of the anti-fraud squad (SDOE) stated in 2011 that Greece is able to collect only 20% of fines imposed for tax evasion. Another 40% is commonly written off and the remaining 40% is allegedly retained by the tax official in charge of the procedure. According to the same estimates, in cases of tax refunds, 10% of the sum is similarly embezzled by corrupt officials.

Large-scale tax evasion allegations have attracted considerable controversy in Greece. One such case concerned a list with approximately 2 000 Greek nationals (including businessmen and relatives or associates of politicians) with Swiss bank accounts who allegedly evaded taxes. The French authorities handed the list to their Greek counterparts in 2010. Investigations were opened only recently, along with a parliamentary inquiry into the failure of two successive ministers of finance to act. A parliamentary inquiry was carried out into allegations that a former minister of finance hid the names of two of his relatives from the list. Investigations are ongoing. SDOE is currently investigating the assets of 54 former and current politicians.

Given the above-mentioned challenges, the reform of revenue administration, as well as the fight against tax evasion and corruption were key elements in the reform programme accompanying the economic adjustment programmes for Greece.[77] The Commission recommended establishing procedures for the periodic rotation of managers, improving the system for the protection of whistleblowers who report corruption, setting targets for audits of asset declarations of tax officials and preparing a fully-fledged anti-corruption action plan for the tax administration.

A comprehensive strategy to address corrupt practices within the tax administration was adopted in the first half of 2013, with the support of the Commission's Task Force, and implementation is ongoing. The setting up of the specialised prosecutor’s office and police to investigate economic and financial crimes, with access to banking and tax data, represented another step in the right direction for addressing more effectively tax evasion and corruption as a facilitator of such practices. Other specific measures on which progress has been achieved include the creation of specialised units to deal with wealthy individuals and big taxpayers; new techniques based on risk assessment and enhanced use of third party information, and the deployment of new IT tools in all tax offices. It is envisaged that cash payments in tax offices will be completely abolished. Overall efforts against tax evasion, money laundering and corruption have therefore been reinforced but more efforts are called for to ensure a fully adequate response to the existing challenges.[78]

3. Future Steps

The key institutions in preventing and tackling corruption are facing the same resource pressure as felt by the whole of the public administration in Greece and therefore, in the context of the state reform which is currently being introduced, particular attention should be given to the anti-corruption work.

Steps have been taken towards a comprehensive strategic anti-corruption approach, including through the appointment of a national anti-corruption coordinator. Sectoral strategies have been or are being developed in a number of vulnerable areas. Nevertheless, the anti-corruption framework remains complex and has not yet yielded sustainable results. Some progress has been made in the prosecution of high-level corruption cases, with a few recent court sentences showing some determination to take a more deterrent stance. Internal control mechanisms must be further reinforced, while clientelism and favouritism in public administration require a more vigorous response. Issues remain regarding conflicts of interest and asset disclosure concerning politicians, and effective implementation of anti-corruption safeguards in public procurement. The determination of the political leadership to do away with corruption can be measured only through the implementation and impact of policies that are currently being established.

The following points require further attention:

· Ensuring sufficient powers and support to enable the national anti-corruption coordinator to implement anti-corruption policies. Distributing clearly the anti-corruption tasks within the institutional framework. Ensuring timely implementation of the national anti-corruption action plan. Consider carrying out an independent functional review of the anti-corruption framework, along the lines of the national anti-corruption action plan, to identify possible needs for further simplification. Ensuring effective implementation of sector-specific strategies such as healthcare and tax administration.

· Strengthening the supervision of party funding and the independence, efficiency and transparency of the Control Committee. Reinforcing the mechanisms for tracing donations and loans to political parties. Consider enhancing the powers and ensuring adequate capacity of the Supreme Court of Audit to carry out effective verification of party funding.

· Establishing comprehensive ethical codes for elected officials at central and local levels and corresponding accountability tools for potential violations of these codes, to include in case of corrupt practices or conflict of interests. Consider promoting similar codes for political parties and/or concluding ethics pacts among parties. Ensuring a professional independent verification mechanism for asset declarations of high-level elected and appointed officials at central and local levels and strengthening the cooperation between internal control mechanisms and law enforcement bodies to enhance notification rates for corruption offences or unjustified wealth. Eliminating potential obstacles to the investigation of corruption offences by reducing the extent to which immunity protects high-ranking officials from investigations, taking steps to simplify the procedure for lifting immunities and reforming the statute of limitations rules concerning current and former members of the Government while also considering expanding the scope of suspension and interruption of the prescription period, in particular during court proceedings.

· Ensuring effective implementation of the anti-corruption measures of the strategy on reform of the public procurement system which is currently being finalised, including with regard to the codification and consolidation of legislation. Enhancing the oversight of public procurement at central and local levels to detect corruption, fraud and conflicts of interests, including by ensuring that the Single Public Procurement Authority (SPPA–EAADISY) has the necessary capacity, powers and operational independence to perform its tasks effectively.

[1]      http://ec.europa.eu/commission_2010-2014/president/pdf/roadmap_en.pdf.

[2]      Hellenic National Action Plan against Corruption: http://www.ministryofjustice.gr/site/LinkClick.aspx?fileticket=KyH_7RZiUPg%3D&tabid=64.

[3]      See for more details issues in focus, section on comprehensive strategic approach on corruption.

[4]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)10_Greece_EN.pdf.

[5]      http://www.oecd.org/daf/anti-bribery/Greecephase3reportEN.pdf

[6]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)13_Interim_Greece_EN.pdf .

[7]      The intention is to include all corruption offences in the criminal code.

[8]      Law No. 4139 of 2013.

[9]      Tasked with monitoring and coordinating the performance of public administration functions and inspection bodies/units.

[10]    Independent authority competent for the supervision of all state financial inspection bodies, and the General Inspector of Public Administration for cases relating to asset recovery on the basis of inexistent or inaccurate declarations of assets by public servants.

[11]    See also 'Issues in focus' section on comprehensive strategic approach on corruption.

[12]    Article 17A of Law 2523/1997.

[13]    Law 4022/2011.

[14]    Law No. 4139 of 2013.

[15]    2013 Special Eurobarometer 397.

[16]    2013 Flash Eurobarometer 374.

[17]    2013 Special Eurobarometer 397.

[18]    National Survey on Corruption in Greece, TI Greece, 2011. This study gives also information about amount of bribes, e.g. up to EUR 20 000 for fixing a financial records audit, between EUR 40 and 500 for obtaining a driver’s licence or from EUR 200 to 8 000 for issuing a construction permit. (http://en.transparency.gr/Press.aspx?page=27&code=PressRelease&article=326).

[19]    General Inspector of Public Administration (2011) Annual Report of the General Inspector of Public Administration for 2010: http://www.gedd.gr/news.php?article=85.

[20]    http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp148_en.pdf

[21]    http://ec.europa.eu/commission_2010-2014/president/taskforce-greece/index_en.htm .

[22]    http://ec.europa.eu/commission_2010-2014/president/pdf/roadmap_en.pdf .

[23]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf

[24]    COM(2011) 309 final, Second Implementation Report of FD 2003/568/JHA of 6 June 2011: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0309:FIN:EN:PDF.

[25]    http://www.oecd.org/daf/briberyininternationalbusiness/Greece%20Phase%203%20Report%20WEB.pdf

[26]    http://www.edosafakelaki.org/ or http://www.teleiakaipavla.gr/ .

[27]    http://www.oecd.org/daf/anti-bribery/Greecephase3reportEN.pdf, p.33.

[28]    Hellenic National Action Plan against Corruption: http://www.ministryofjustice.gr/site/LinkClick.aspx?fileticket=KyH_7RZiUPg%3D&tabid=64.

[29]    http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp148_en.pdf.

[30]    http://www.freedomhouse.org/report-types/freedom-press.

[31]    http://www.mediadem.eliamep.gr/wp-content/uploads/2012/01/Greece.pdf

[32]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2009)9_Greece_One_EN.pdf

[33]    The merger of the two institutions was formally regulated in June 2013 by the Ministry of Administrative Reform: http://www.opengov.gr/minreform/wp-content/uploads/downloads/2013/06/systash.pdf .

[34]    Law No. 3861 of 2010.

[35]    http://diavgeia.gov.gr/en .

[36]    Onishenko, C. (2012), Five thousand pending disciplinary decisions, He Kathimerini, 9/08/2012.

[37]    Idem.

[38]    Idem.

[39]    Law No. 4067 of March 2012.

[40]    So-called 'Omnibus Law' adopted in April 2013.

[41]    Around 100 civil servants.

[42]    http://ec.europa.eu/commission_2010-2014/president/pdf/roadmap_en.pdf.

[43]    Law No. 4152 of 2013.

[44]    Hellenic National Action Plan against Corruption: http://www.ministryofjustice.gr/site/LinkClick.aspx?fileticket=KyH_7RZiUPg%3D&tabid=64.

[45]    The Action Plan is not 'formally' adopted by Government, or Parliament, but agreed among a number of public institutions.

[46]    2013 Special Eurobarometer 397.

[47]    Law No. 3870 of 2010.

[48]    http://www.ekloges.ypes.gr/diafaneia/index.html.

[49]    Its functions were provided by Law 3023 of 2002.

[50]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)10_Greece_EN.pdf.

[51]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)13_Interim_Greece_EN.pdf

[52]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)13_Interim_Greece_EN.pdf.

[53]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)10_Greece_EN.pdf.

[54]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)13_Interim_Greece_EN.pdf .

[55]    http://www.frontex.europa.eu/assets/Publications/Research/Study_on_anticorruption_measures_in_EU_border_control.pdf .

[56]    Article 62 of the Greek Constitution.

[57]    Article 86 of the Greek Constitution.

[58]    http://en.transparency.gr/Content.aspx?page=63 .

[59]    This means that the maximum time period for obtaining a judgment does not recommence.

[60]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2009)9_Greece_One_EN.pdf.

[61]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)10_Greece_EN.pdf

[62]    http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp148_en.pdf.

[63]    P. 54, http://www.ministryofjustice.gr/site/LinkClick.aspx?fileticket=KyH_7RZiUPg%3D&tabid=64.

[64]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[65]    Public Procurement GREECE Zepos & Yannopoulos, Lex Mundi Ltd.

[66]    http://www.transparency.org/whatwedo/pub/2012_regional_policy_paper_1_increasing_integrity_and_eu_citizens_trust_in )

[67]    http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp148_en.pdf.

[68]    Law 4013 of 2011.

[69]    A first draft of this comprehensive legislative framework was presented to the Commission in October 2013.

[70]    COMMISSION STAFF WORKING DOCUMENT Assessment of the 2013 national reform programme for GREECE, European Semester, May 2013 :http://ec.europa.eu/europe2020/pdf/nd/swd2013_greece_en.pdf.

[71]    2013 Special Eurobarometer 397.

[72]    http://en.transparency.gr/Press.aspx?page=27&code=PressRelease&article=326.

[73]    http://en.transparency.gr/Press.aspx?page=27&code=PressRelease&article=32.

[74]    http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2010/british-executive-jailed-for-part-in-greek-healthcare-corruption.aspx.

[75]    http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp148_en.pdf.

[76]    http://ec.europa.eu/europe2020/pdf/themes/06_shadow_economy.pdf.

[77]    The Second Economic Adjustment Programme for Greece, European Commission March 2012.

[78]    The Second Economic Adjustment Programme for Greece, European Commission, Second Review, May 2013.

FINLAND

1. Introduction – main features and trends

Anti-corruption framework

Strategic approach. Corruption is not perceived as a serious threat and Finland has no dedicated national anti-corruption strategy. In 1996, the Finnish Parliament approved its first programme designed to reduce economic crime and the shadow economy. The current Action Plan in this area covers the years 2012-2015[1] but anti-corruption measures are not among the priority objectives of this programme. A separate programme, the Internal Security Programme 2012, discusses the risks of corruption in public procurement and for Finnish enterprises or their representatives when conducting business abroad.[2] In order to prevent corruption, the Internal Security Programme stresses the need for greater international cooperation and sector specific preventive measures for public officials and for the business sector.[3] In 2002, the Ministry of Justice set up a specialist anti-corruption network which meets to discuss and exchange information. Questions have been raised as to the effectiveness of cooperation between the various bodies responsible for the detection and prevention of corruption, especially between law enforcement and tax authorities.[4] The tax administration has, however, after recommendations from the Organisation for Economic Cooperation and Development (OECD), published guidelines for tax officials stating their obligation to report suspected criminal offences including foreign bribery to law enforcement authorities.[5]

Legal framework. Finnish anti-corruption legislation has gradually been amended to bring it into line with international conventions and EU obligations.[6] Finland has a well-functioning criminal justice system which is capable of dealing with high-level corruption cases and which benefits from having institutionally independent prosecutors. The principle of free access to public records is laid down in the Constitution[7] as well as in the Openness of Government Activities Act.[8] Finland amended the Political Parties Act in 2010 taking into account all of the recommendations made by the Council of Europe Group of States against Corruption (GRECO).[9] The new legal framework aims to provide transparency in respect of the financing of election candidates, political parties and other entities affiliated to political parties.[10]

Institutional framework. The Finnish administration is regarded as being transparent in its practices and is characterised by high standards, relatively non-hierarchical structures and little if any politicisation of key civil service positions. Combined with other social factors, these features contribute to a low level of corruption in public institutions.[11] Rules and principles of conduct are to be found in several types of legislation such as the Constitution and the State Civil Servants Act (750/94). The handbook, ‘Values in the Daily Job – Civil Servant’s Ethics illustrates and provides guidelines on values and ethics for civil servants working in the state administration with the aim of maintaining Finland’s high standards of integrity and ensuring low levels of corruption.[12] The Ministry of Finance has also published guidelines for government officials on hospitality, benefits and gifts.[13] The National Audit Office,[14] which operates in conjunction with Parliament, is responsible for auditing Finland’s finances, monitoring and evaluating fiscal policy and overseeing the funding of elections, political parties and affiliated entities.[15] In this regard, the Audit Office may inspect the accounts of and the use of funds by any affiliated entity subject to monitoring, and has, in certain situations, the power to impose sanctions.[16]

Opinion polling

Perception surveys. The Special Eurobarometer on Corruption[17] from 2013 places Finland among the countries with the least corruption in the EU. According to the Eurobarometer, 29 % of the Finnish population believe that corruption is widespread in their country (EU average: 76 %) and 9 % of the Finnish respondents felt personally affected by corruption in their daily life (EU average: 26 %). 51 % believe the giving and taking of bribes and the abuse of power for personal gain are widespread among politicians at national, regional or local level (EU average: 56%).[18]

Experience of corruption. Fewer than 1 % of respondents surveyed for the 2013 Eurobarometer were asked or expected to pay a bribe over the last 12 months (EU average: 4 %), and 9 % of respondents reported personally knowing someone who is taking or has taken a bribe (EU average: 12 %).

Business surveys. According to a Eurobarometer survey, 44 % of the responding Finnish managers[19] believe that favouritism and corruption hamper business competition in Finland (EU average: 73%) and  17% of the Finnish managers state that corruption is a problem for their company when doing business (EU average: 43 %).[20]

In the area of public procurement, according to the 2013 Eurobarometer business survey on corruption,[21] 19 % of respondents were of the opinion that there is widespread corruption in public procurement managed by national authorities and 15% in public procurement managed by local authorities (EU average: 56% and 60%).

Background issues

Private sector. Finland has correctly transposed the provisions of the Framework Decision 2003/568/JHA regarding the definition of active and passive corruption in the private sector.[22] The OECD Working Group on Bribery commended the efforts made by Finland to investigate suspected foreign bribery cases and to raise awareness of foreign bribery both within the public and private sectors. Nevertheless, according to the OECD, more could be done to raise awareness of Finland’s framework for combating foreign bribery in high-risk sectors such as the defence industry, and among state-owned enterprises, SMEs and the legal, accounting and auditing professions.[23]

Financing of political parties. After the funding controversies of the 2007 election campaign,[24] Finland amended the Political Parties Act in 2010 to take into account all of the recommendations made by GRECO.[25] The amendments to the Act have substantially increased the general transparency of political funding.[26] According to the National Audit Office’s reports to Parliament on the monitoring of election funding in the 2012 municipal and presidential elections, the new legal framework creates conditions which are favourable to openness in candidates and political parties’ funding and functions well generally. Nevertheless, concerns have been raised as to whether the National Audit Office has enough resources to verify the information given by political parties and individual candidates and whether it has the authority to control the parties’ compliance with the Act. For instance, the National Audit Office does not have the authority to request accounts and additional information from third parties in order to check the accuracy of a disclosure. According to the National Audit Office, this restriction has a detrimental effect on the Office’s ability to monitor disclosures.[27]

Conflicts of interest and asset disclosure. The State Civil Servants’ Act Section 8a and 18,[28] the Municipal Officeholders Act Section 18[29] and the Local Government Act Sections 35 and 36[30] include provisions of conflicts of interest.[31] High-ranking civil servants, before appointment, are obliged to give an account of their involvement in business, company share holdings, secondary jobs etc.[32] Members of Parliament (MPs) are required to file a notification of interest (‘disclosure of outside ties’) to the Parliamentary office at the beginning of each parliamentary term and the information provided is then published on the Parliament’s website.[33] There is however no legal obligation on MPs to declare assets. GRECO has therefore recommended that Finland make its reporting arrangements mandatory.[34] The prevention of conflicts of interest for MPs is currently regulated under Article 32 of the Constitution. According to GRECO, this rule on conflicts of interest needs further clarification in order to guide MPs as to how to act when faced with actual or potential conflicts of interest.[35]  

Whistleblowing. There is no specific protection for whistleblowers in Finland. Employees in the public or private sector, who report in good faith and on reasonable grounds suspected acts to competent authorities, are not explicitly protected from discriminatory or disciplinary action. Instead the Finnish authorities rely on the provisions for the protection of victims and witnesses and on the provisions made within administrative and labour law. Witness protection however only provides a limited level of protection, and labour law protects in principle against dismissal but does not cover other forms of discriminations that may follow a whistleblower’s report.[36] The United Nations Convention against Corruption (UNCAC), the OECD, GRECO and Transparency International have therefore encouraged Finland to explore the possibility of establishing a comprehensive system for the protection of whistleblowers.

Transparency of lobbying. Lobbying is not regulated in Finland. There is no specific requirement for lobbyists to register or for contacts between public officials and lobbyists to be reported. After receiving recommendations from GRECO, the Finnish Parliament has set up a working group in order to prepare ethical guidelines on conflict of interest, including as related to lobbying for parliamentarians.

2. Issues in focus

Corruption at local level

Studies show that there is almost no petty corruption in Finland and that citizens hardly ever come across demands for bribes in their day-to-day interaction with the public administration.[37] The reasons for the low level of corruption in Finland’s public administration are structural and systemic; the fundamentals of the country’s public administration have evolved over a long period, in some cases over centuries. According to the Finnish authorities, the good reputation of their administration is based on the following principles:[38]

Good practice: reputable public administration

- a strong sense of the rule of law: public officials and citizens take it for granted that the law must and will be followed;

- prevention of conflicts of interest: the general and absolute requirement that no public official (or magistrate) may participate in making a decision in which he or she (or close relatives or dependants) has a personal interest;

- the referendary system: any decision must be signed off by more than one official;

- the simplicity and transparency of the administrative and judicial system: all parties with an interest in the decision have a constitutional right to be heard by the appropriate authority, all administrative and judicial decisions must be made in writing, with the substantive and legal grounds for the decision clearly laid out, and instructions given for appeal;

- public scrutiny of the work of the public officials; anyone, anywhere can request information regarding any documents held by the public authorities, unless a specific exception is laid down in law;

- education and awareness of what the law requires: citizens tend to be well-informed about their rights and about the law, and will insist on having a matter dealt with properly;

- innovative e-democracy: to a large extent, applications and requests can be submitted to the authorities online;

- ease and affordability of taking a case to court for those who believe that their rights have been violated.

The few reported bribery offences have been minor low-level corruption offences, where a public servant has been offered an unjustified benefit, usually money, to forego a certain measure.[39] The National Bureau of Investigation has however seen a structural change in reported bribery offences. While minor low-level corruption offences have declined in recent years, there has been an increase in the number of bribery offences reported involving high-level politicians and public officials.[40]

The few existing studies on corruption in Finland describe an ‘institutionalised’ type of corruption, ‘the old-boys’ network.’[41] In a report from 2009, the Minister of Justice defines the ‘old-boys’ network’ as: ‘when favours are exchanged among insiders in government and business on the basis of informal relationships.’[42] These ‘networks’ are seen as problems at national level and, in particular, in municipal governments because of their small size where close links are likely to develop between public decision-makers and the private sector.[43] Within these informal networks, money is not necessarily used to pay for services, but instead the members of such networks exchange favours, information or other benefits.

The public and private sector have been undergoing fundamental changes during the past decades and municipalities have increasingly transferred parts of their public services into municipally owned and private companies. The transfer of responsibility for public services from public authorities to private companies requires increased use of public procurement procedures. At the same time, the free access to public information laid down in the Finnish Constitution[44] only covers the public sector and not the private sector.[45] With alleged activities by ‘old-boys’ networks,’ especially in municipalities, limited transparency in municipal contracts with private companies renders public scrutiny more difficult[46] and also makes mechanism for reviewing decisions less effective.[47]

Prosecution of corruption

The National Bureau of Investigation is a police unit operating throughout the Finnish territory which is responsible for the investigation of complex organised and international crimes, including economic crime and corruption. Since 2007, the National Bureau of Investigation has operated an anti-corruption unit whose main function it is to detect economic offences. The resources devoted to this anti-corruption unit are however limited.[48] In practice, there is only one officer located at the National Bureau of Investigation. The primary function of this person is to maintain and update an overview of the national situation in respect of corruption, and to support the detection and investigation of corruption-related crime. This person also coordinates anti-corruption procedures between government agencies and participates in national and international cooperation with competent authorities and stakeholders.[49]

The National Bureau of Investigation has pointed out that the very low number of suspected corruption offences in Finland may indicate a lack of sufficient monitoring and reporting mechanisms in both public administration and the business world. The Bureau has reported that this low number ‘may also suggest deficient methods among criminal investigation authorities for combating and exposing corruption crimes.’[50]

After receiving GRECO’s recommendations, the Ministry of Justice has set up a specialist network which meets a few times a year to discuss and exchange information. The detection of corruption requires special knowledge and resources however, and certain forms of criminality will largely remain unnoticed until efforts are made to look for suspicious acts connected with such types of criminality.[51]

3. Future steps

Finland is one of the top performers in the EU as regards anti-corruption. Finnish citizens do not come across corruption in their daily life. There have however been a few high-level corruption cases involving so-called ‘old boys’ networks, where favours were exchanged on the basis of informal relationships, and lobbying by business people providing campaign financing to politicians.

The following points require further attention:

· Requiring municipalities and regions to secure a sufficient level of transparency in public contracts with private entrepreneurs. 

· Enabling the anti-corruption unit of the National Bureau of Investigations to effectively support the detection and investigation of corruption-related crimes and to coordinate anti-corruption procedures between government agencies.

[1]      Information on the programme to reduce economic crime and the shadow economy is available from: http://www.intermin.fi/en/development_projects/reducing_economic_crime_and_the_shadow_economy.

[2]      A Safer Tomorrow.- Internal Security Program 2012. p 21. http://www.intermin.fi/download/37324_STOeng_64s_web_eng.pdf.

[3]      A Safer Tomorrow- Internal Security Program 2008. P. 77, 86. http://www.intermin.fi/julkaisu/252008?docID=25069.

[4]      Salminen, A, Ikola-Norrbacka, R. and Mäntysalo, V. Kansallinen integriteettijärjestelmä Suomi. Perusraportti.Vaasa. Vaasan yliopisto, 2011. p.10-11.

[5]      As was indicated in section 28 of the Tax Administration Act 2010/503, the Tax Administration has the right to report to the police suspicions of a ‘tax offence or other related offence’. .In the phase 2 and 3 reports, the OECD expressed concerns that the Tax Administration Act did not ‘oblige’ the Tax Administration to report suspicions to the police. In response to the OECD recommendations; Finland published a guideline on 21 September 2012 concerning the obligation to report suspected criminal offences, including foreign bribery, to law enforcement authorities and another gguideline on 16 June 2011 clarifying the non-deductibility of bribes. The guidelines are publicly available on the tax administration website. OECD, Finland: Phase 3 Written follow up Report 2013 para 6 http://www.oecd.org/daf/anti-bribery/FinlandPhase3WrittenFollowUpReportEN.pdf.

[6]      E.g., active and passive bribery of a Member of Parliament has been criminalised. J. Peurala. Assessing the Corruption Prevention Measures and the Bribery Criminalisation in the Finnish Anti-Corruption Framework. Department of Criminal Law and Procedure, Helsinki University, Finland. European Journal of Crime, Criminal Law and Criminal Justice 19 (2011) 319-361.p 334.

[7]      GRECO First Evaluation Round. 2001. p 5 http://www.coe.int/t/dghl/monitoring/greco/evaluations/round1/GrecoEval1(2000)4_Finland_EN.pdf.

[8]      Laki viranomaisten toiminnan julkisuudesta 21.5.1999/621 (Act on the Openness of Government Activities).

[9]      GRECO Third Evaluation Round - Second Compliance Report on Finland 2011. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)13_Finland_EN.pdf.

[10]    Act on a Candidate’s Election Funding http://www.finlex.fi/en/laki/kaannokset/2009/en20090273.pdf.

[11]    Joutsen, M and Keränen, J. Corruption and the prevention of corruption in Finland. Ministry of Justice. 2009. p. 22.

[12]    Values in the Daily job – Civil servant’s ethics. A handbook for the state administration. http://www.vm.fi/vm/en/04_publications_and_documents/01_publications/06_state_employers_office/20050114Values/Values_in_the_daily_job.pdf.

[13]    http://www.vm.fi/vm/en/04_publications_and_documents/02_documents_on_personnel_management/ 03_guidelines/20100825Hospit/Vieraanvaraisuudesta__eduista_ENGL.pdf.

[14]    National Audit Office of Finland. http://www.vtv.fi/en.

[15]    Act on Political Parties: section 9 e(2).

[16]    The National Audit Office has  powers to impose sanctions when required documents or information has not been submitted, corrected or completed despite the Office’s reminder to do so. The Office may then use a conditional fine, which can be  levied an unlimited number of times until the information is obtained.

[17]    2013 Special Eurobarometer 397.

[18]    The results can be compared with police and customs where only 3% of the survey respondents believe that the giving and taking of bribes and the abuse of power for personal gain are widespread. Special Eurobarometer 397.

[19]    2013 Flash Eurobarometer 374.

[20]    2013 Flash Eurobarometer 374.

[21]    2013 Flash Eurobarometer 374.

[22]    COM(2011) 309 final, Second Implementation report of FD 2003/568//JHA of 6 June 2011: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0309:FIN:EN:PDF.

[23]    OECD Follow-up to the Phase 3 Report and Recommendations in Finland. 2013. p. 3 http://www.oecd.org/daf/anti-bribery/FinlandPhase3WrittenFollowUpReportEN.pdf.

[24]    A MP revealed in 2008 that he knowingly broke the law after failing to reveal who had made donations to his election campaign in 2007. The remark sparked a political controversy and several other MPs, including Ministers had to admit that they did the same. The Finnish party financing laws required state politicians to reveal the source of their donations, but contained no sanctions for those who failed to do so.

[25]    GRECO Third Evaluation Round Second - Compliance Report on Finland. 2011. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)13_Finland_EN.pdf.

[26]    Candidate’s Election Funding Act.  http://www.finlex.fi/en/laki/kaannokset/2009/en20090273.pdf; Act on Political Parties.  http://www.finlex.fi/fi/laki/kaannokset/1969/en19690010.pdf .

[27]    Statens revisionsverks berättelse till riksdagen om tillsynen över valfinansieringen vid kommunalvalet år 2012. http://www.vtv.fi/files/3507/B15_2013rd_Kommunalvalet_2012_netti.pdf; National Audit Office’s report to Parliament on the monitoring of election in the 2012 presidential election. p 20, 28  http://www.vtv.fi/files/3200/Presidential_election_2012_netti.pdf.

[28]    http://www.finlex.fi/sv/laki/ajantasa/1994/19940750#L4P18.

[29]    http://www.finlex.fi/sv/laki/ajantasa/2003/20030304#L4P18.

[30]    http://www.finlex.fi/sv/laki/ajantasa/1995/19950365.

[31]    GRECO Second Evaluation Round. 2004. p 11 http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoEval2(2003)3_Finland_EN.pdf.

[32]    GRECO Second Evaluation Round. 2004. p 11. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoEval2(2003)3_Finland_EN.pdf.

[33]    http://web.eduskunta.fi/Resource.phx/parliament/index.htx; see also GRECO Fourth Evaluation Round. Corruption prevention in respect of Members of Parliament, judges and prosecutors. 2013. p 17. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)6_Finland_EN.pdf

[34]    GRECO Fourth Evaluation Round. Corruption prevention in respect of Members of Parliament, judges and prosecutors. 2013. p 17. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)6_Finland_EN.pdf.

[35]    According to article 32 of the Constitution of Finland, ‘A Representative is disqualified from consideration of and decision-making in any matter that concerns him or her personally. However, he or she may participate in the debate on such matters in a plenary session of the Parliament. In addition, a Representative shall be disqualified from the consideration in a Committee of a matter pertaining to the inspection of his or her official duties. The Constitution of Finland, 11 June 1999. http://www.finlex.fi/en/laki/kaannokset/1999/en19990731.pdf; see also GRECO Fourth Evaluation Round. Corruption prevention in respect of Members of Parliament, judges and prosecutors. 2013. p 13. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)6_Finland_EN.pdf.

[36]    UNCAC Review of Implementation Report on Finland 2010-2011 cycle. p. 43. http://www.uncaccoalition.org/images/PDF/Full-Report-Finland-English.pdf.

[37]    Joutsen, M and Keränen, J. 2009. Corruption and the prevention of corruption in Finland. Ministry of Justice. p. 22; A. Salminen et al (2012). Transparency International National Integrity System Finland. The study is available from: http://www.transparency.org/whatwedo/pub/national_integrity_system_finland.

[38]    M. Joutsen and J. Keränen (2009). Corruption and the prevention of corruption in Finland. Ministry of Justice. p. 7-13.

[39]    The most commonly reported case of bribery was that of street corruption involving a state official and a private citizen; e.g. a driver, who was stopped by a police officer due to speeding or intoxication and offered the police officer money to ignore the violation. Typically in such cases the bribe has been offered but not accepted. Leppänen and Muttilainen. 2012. Corruption Crime Reported to the Police in Finland 2007-2010. Monitoring method development and characteristics of suspected crimes. p. 107. http://www.poliisiammattikorkeakoulu.fi/poliisi/poliisioppilaitos/home.nsf/files/107A1A652A96D5BBC22579E4004CB35A/$file/Raportteja100_web.pdf. See also National Bureau of Investigation. Corruption Crime. http://poliisi.fi/poliisi/krp/home.nsf/pages/0A2FDA8FDBE427C1C2257988003B36C7?opendocument.

[40]    Of the 469 corruption crime reported to the police in Finland 2007-2010, crimes investigated as suspected bribery only accounted for 29 cases. The most frequently reported crime  were the misuse of funds (145 cases reported or 31 %) and the misuse of information due to financial motive (90 cases reported or 19%). National Bureau of Investigation. Corruption Crime. http://poliisi.fi/poliisi/krp/home.nsf/pages/0A2FDA8FDBE427C1C2257988003B36C7?opendocument.

[41]    Examples on studies includes: Centralkriminalpolisen. Korruptionsrapport 2008. RTP 9408/213/07. Project 490092. The report is available from: http://www.poliisi.fi/poliisi/krp/home.nsf/files/Korruptionsrapport08/$file/Korruptionsrapport08.pdf; Salminen , A et al (2012). Transparency International National Integrity System Finland. The study is available from: http://www.transparency.org/whatwedo/pub/national_integrity_system_finland.

[42]    Joutsen, M and  Keränen, J. Corruption and the prevention of corruption in Finland. Ministry of Justice. 2009. p. 1.

[43]    The old-boys' network is a well-known ‘concept’ in Finland and the explanation of the existence of these networks includes the fact  that many municipalities are small (with perhaps only 20 000 or 30 000 residents), and that decisions are made by a small and active group who have lived and worked in the municipality for many years. It is therefore not unusual that both the municipal decision makers and the persons in the private sector who want certain decisions know each other and meet each other socially also. Joutsen, M. and Keränen, J. Corruption and the prevention of corruption in Finland. Ministry of Justice. 2009. p. 5.

[44]    Article 12, paragraph 2 of the Constitution of Finlandhttp://www.finlex.fi/en/laki/kaannokset/1999/en19990731.pdf.

[45]    (1999/621)  http://www.finlex.fi/sv/laki/ajantasa/1999/19990621#L3.

[46]    The municipal law does not contain any specific provision ensuring transparency in public contracts with private entrepreneurs. http://www.finlex.fi/sv/laki/ajantasa/1995/19950365.

[47]    J. Peurala (2011). Assessing the Corruption Prevention Measures and the Bribery Criminalisations in the Finnish Anti-Corruption Framework. Department of Criminal Law and Procedure, Helsinki University, Finland. European Journal of Crime, Criminal Law and Criminal Justice. 319-361.p 329.

[48]    Salminen, A, Ikola-Norrbacka, R. and Mäntysalo, V. (2011) Kansallinen integriteettijärjestelmä Suomi. Perusraportti.Vaasa. Vaasan yliopisto, p.11.

[49]    UNCAC Review of Implementation Report. Finland 2010-2011 cycle. p 43. http://www.uncaccoalition.org/images/PDF/Full-Report-Finland-English.pdf.

[50]    National Bureau of Investigation. Corruption Crime. http://poliisi.fi/poliisi/krp/home.nsf/pages/0A2FDA8FDBE427C1C2257988003B36C7?opendocument.

[51]    UNCAC Review of Implementation Report. Finland 2010-2011 cycle. p 43. http://www.uncaccoalition.org/images/PDF/Full-Report-Finland-English.pdf.

FRANCE

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. French national legislation covers a wide range of issues related to fighting corruption although there is no specific nationwide anti-corruption strategy. Issues related to corruption have been more prominent in recent years. In July 2012, following corruption allegations made during the presidential elections, the Jospin Committee was set up to prepare a reform on ethical standards in public life. To address what was described as a ‘crisis of trust’,[1] the Jospin Committee recommended a number of measures, including: limiting presidential immunity, strengthening the rules on financing of political parties and electoral campaigns, restricting multiple office-holding by politicians, and developing a strategy to prevent conflicts of interest. Building on those recommendations, a number of legislative proposals were submitted in 2013. The Government also proposed a comprehensive judicial reform, including of the prosecution service, but the discussion was suspended in mid-2013.[2]

Legal framework. France implemented a far-reaching legislative reform in 2007, following recommendations from the Council of Europe's Group of States against Corruption (GRECO) and from the Organisation for Economic Co-operation and Development (OECD). It included, a new anti-corruption law[3] composed of mostly criminal provisions. The law introduced seven new offences related to corruption, broadened the scope of previous offences, notably of trading in influence and of offences related to members of the judiciary, and also authorised the use of special investigative techniques in the investigation of corruption-related offences. While welcoming the reforms, the OECD, GRECO and United Nations recommended further amendments, including broadening the scope of trading in influence in connection with foreign public officials and members of foreign public assemblies, as well as extending prescription periods for bribery and trading in influence and reconsideration of rules regarding the jurisdiction.[4] More recent legislative reforms mark a new approach, they include laws recently adopted on conflicts of interest,[5] and provisions voted in November 2013 aimed at fighting financial crime in a more focussed manner.[6]

Institutional framework. The Central Service for Prevention of Corruption (SCPC),[7] established in 1993, analyses data on corruption in France and coordinates prevention policies.[8] Attached to the Minister of Justice and led by a magistrate, it presents the state of play on corruption, highlights selected issues, and provides recommendations in an annual activity report. Despite the valuable efforts of the SCPC, data on the scale of corruption networks and incidents is not collected systematically. Furthermore, many institutions do not have of structures available for the detection of corruption.[9] Over the years, there have been several plans to revise and expand its competences. The SCPC itself notes that its powers are no longer suitable to address the current need to prevent corruption, whether public or private, national or international.[10] The UNCAC report on France recommended exploring the possibility of citizens filing anonymous reports with the SCPC on suspicions of corruption, as well as allowing natural and legal persons to consult SCPC or similar services in case of suspicions.[11] The SCPC cannot investigate the allegations or remedy the injuries that the whistleblower may have been subject to.

Opinion polling

Perception surveys. According to the 2013 Special Eurobarometer,[12] 68% of respondents in the general population think that corruption is widespread in France (EU average: 76%). Furthermore, 62% of them believe that the only way to succeed in business is to have political connections (EU average: 56%), while 58% of the respondents consider that giving and taking of bribes and abuse of power for personal gain are widespread among politicians (EU average: 56%).

Experience of corruption According to the 2013 Special Eurobarometer, only 6% of French respondents felt personally affected by corruption in their daily lives (EU average: 26%), and 2% reported that they have been asked or expected to pay a bribe (EU average: 4%).[13]

Business surveys. 73% of French managers surveyed[14] and 75% of the respondents in the general population[15] believed that favouritism and corruption hamper business competition in France (EU average: 69%). 59% of French businesses (EU average: 43%) state that corruption is a problem for their company when doing business.[16] According to the World Economic Forum's Global Competitiveness Report 2013-14, France is ranked the 23rd most competitive economy out of 152 countries.[17]

Background issues

Private sector. France has correctly transposed the provisions of the Framework Decision 2003/568/JHA on the definition of active and passive corruption in the private sector, as well as on the penalties applicable to natural and legal persons.[18] In relation to the liability of legal persons, the legislation provides for both administrative and criminal liability for corruption-related offences. The penalties applicable to legal persons range from fines to disqualification from the activities in connection with which the offence was committed. The maximum fine for natural as well as for legal persons has been raised to EUR 1 million.[19] Previously, the UNCAC review in 2012 had concluded that the level of fines imposed on legal persons in practice remained low, and recommended reviewing the maximum level of fines.[20]

Whistleblowing. The anti-corruption law of 2007 introduced a provision in the Labour Code regarding protection of private-sector employees and of contractual staff within the public sector who report corruption in good faith.[21] If an employer imposes a disciplinary sanction, it must be demonstrated that the sanction is not linked to the whistleblowing. However, there is no specific provision to protect whistleblowers within the public service, nor on the practical implementation of the protection provided in the labour code. In its 2011 annual report, SCPC called for specific legislative and practical measures.[22] The act on the transparency of public life has recently introduced a ban on dismissing whistleblowers in the public administration.[23]

Transparency of lobbying is not expressly regulated by national law; there is no mandatory registration or obligation of public servants to report contacts with lobbyists. Nevertheless, the French Parliament adopted lobbying rules in 2009 that provide for voluntary inscription in a public register. The Senate put in place a similar measure. By the end of 2013, around 250 lobbyists were registered on the Parliament list[24] and just above 100 on the Senate list,[25] though this does not reflect the real extent of lobbying activities in France.

2. Issues in focus

Public procurement

In 2011, public works, goods and services in France accounted for 18.5% of the GDP.[26] The value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, goods and services was 18.3% in 2010.[27]

According to the 2013 Eurobarometer business survey on corruption,[28] 50% of respondents consider that corruption is widespread in public procurement managed by national authorities and 51% consider it widespread in public procurements managed by local authorities. In particular, French respondents considered that the following practices were widespread in public procurement procedures: collusive bidding (55%) (EU average: 52%); conflicts of interests in the evaluation of the bids (53%) (EU average: 54%); unclear selection or evaluation criteria (50%) (EU average: 51%); abuse of negotiated procedures (49%) (EU average: 47%); specifications tailor-made for particular companies (47%) (EU average: 57%); abuse of emergency grounds to avoid competitive procedures (46%) (EU average: 46%); involvement of bidders in the design of the specifications (41%) (EU average: 48%); and amendments of contractual terms after conclusion of contract (41%) (EU average: 44%). The survey results, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities to corruption in public procurement procedures. They indicate that the risk factors associated with public procurement mostly concern trading in influence and conflicts of interest.

Since 1 January 2012, contracting authorities have been required to accept electronic bids and applications for all contracts of EUR 90 000 or more, the use of e-procurement being an important prevention tool to reduce the risks of corruption and help further improve control mechanisms.[29] Furthermore, the Criminal Code includes a specific provision criminalising breaches of public procurement rules, known as ‘délit de favoritisme’.[30] Based on the jurisprudence, a breach of public procurement rules that cannot be qualified as corruption may still be punished as a ‘délit de favoritisme’.[31] However, the SCPC noted that between 2007 and 2010, no one served a prison sentence on the basis of this provision; there were 25 convictions that resulted in a suspended prison sentence and 20 cases in which fines were applied. The fines ranged from EUR 2 333 to 5 333.[32]

Guidance on how to apply this legislation is already in place. In late 2009, the Ministry of Economy and Finance published a Guide of Good Practices of the Public Procurement Code.[33] In 2012, an inter-ministerial Circular on the Guide of Good Practices was published,[34] which explained the scope of the legislation, the preparation and implementation of the procedure, the execution of public procurement and the arrangements applicable to contracting authorities.

The SCPC has however identified particular corruption risks in public procurement processes carried out at local level, and drawn attention to a number of cases in which senior officials, including presidents of local and regional administrations, have been convicted of corruption in this context.[35] On the preventive side, control mechanisms for local level procurement are not yet sufficiently strong and consistent countrywide and should be improved.

Conflicts of interest and asset disclosure

In its 2010 and 2011 annual reports, the SCPC analysed all aspects related to conflicts of interest, and concluded that the possibility of holding multiple mandates is one of the main factors conducive to corruption.[36] In 2012, the Jospin Committee highlighted the need to address conflicts of interest more vigorously through a comprehensive strategy.[37] Currently, between 70-80% of elected parliamentary officials hold at least one other office, a practice in line with French law.[38]

It is a criminal offence for public officials – including elected officials both at central and local levels – to take any illegal interest in an activity that they manage or supervise.[39] According to SCPC data, in 2009, defendants were found guilty in 42 cases; while in 2010, at least 28 (data was only partially available at the time of the SCPC report). Based on the partially available data from 2010, 13 convictions led to a suspended imprisonment sentence and nine to fines of EUR 2 167-5 400.[40] Revolving door practices are criminalized to some extent, as public officials must respect a three-year cooling-off period during which they cannot join a private company with which they concluded contracts or which was supervised by them while in the public position.[41] Convictions on such charges are rare; according to the SCPC, there was only one case in 2009.[42] France also criminalised ‘illicit enrichment’ under certain circumstances: this means accumulating wealth or sustaining a lifestyle without being able to justify its origins, and at the same time being in habitual relations with a person who commits serious criminal offences. This offence is punishable by three years of imprisonment and a EUR 75 000 fine.[43] Since 1988, 12 cases of illicit enrichment have been submitted to the public prosecutor, and all were dismissed.[44]

The National Assembly adopted in mid-September 2013 a legislative package on conflicts of interest.[45] The National Assembly also adopted two laws against holding multiple offices (“non-cumul des mandats”).[46] Furthermore, the Minister for the Public Administration has announced a draft law on the duties of public officials. This law aims in particular at better control of revolving door practices.[47]

The system of declarations of interests and assets is currently undergoing a major reform. France has an asset disclosure system covering, among others, candidates for the office of President of the Republic, members of government, the Senate, and the National Assembly, France’s Members of the European Parliament, Presidents of Regional Councils, Presidents of General Councils, other elected officials of local authorities, in particular those with a special status, and more recently, heads of public enterprises. Under the new legislation, by 1 February 2014, elected officials have to submit both declarations.[48] However, these declarations do not include data about assets held by their household or family members.[49] A reform introduced in 2011[50] made the submission of false asset declarations an offence. In its latest activity report, the Commission for Financial Transparency in Politics (CTFVP) called for the reinforcement of its investigative powers, for example by imposing financial sanctions for a refusal to swiftly disclose tax records.[51] Under the 2013 Act on Transparency in Public Life, the CTFVP has been replaced by an independent body responsible for monitoring declarations, the 'Haute autorité pour la transparence de la vie publique'.[52]

Foreign bribery

While the French authorities have a track record of investigating into high-profile cases in France, there is less evidence of fighting corruption in international business transactions. The SCPC and the OECD Working Group on Bribery called for increased efforts to prevent corruption in international business transactions made by private and public companies.[53]

The OECD has voiced its concerns about prosecuting international corruption offences, and highlighted that, in 2000-2012, only 33 investigations were launched, a number which is “low in relation to the size of the French economy and the exposure of French companies to the risk of transnational bribery”. The OECD also noted that the courts had ruled on a “very low number of convictions for bribery of foreign public officials”, namely five, of which one is currently being appealed.[54] Furthermore, the OECD noted that penalties did not appear to be effective, proportionate or dissuasive. For instance, the cases in which natural persons were convicted, suspended prison sentences and fines of at most EUR 10 000 were imposed.[55] However, a number of foreign bribery investigations have made progress recently: a case on the UN’s Oil-for-Food programme in Iraq went to court, and in another case, pre-trial investigations reached a new stage concerning allegations of bribery related to defence contracts.[56]

The OECD identified a number of potential underlying reasons for the shortcomings. For instance, France has jurisdiction on corruption offences only if either the offender or the victim is a French national. Additionally, the act must constitute an offence both in France and in the country where it was committed. The OECD sees the requirement of dual criminality as a substantial obstacle to prosecution.[57] In terms of substantive criminal law, OECD considered that the definition of a ‘foreign public official’ is too narrow, which could be remedied for instance by extending the offence of trading in influence. The OECD also found that the criminal liability of legal persons may be circumvented by using intermediaries (including related legal persons). Finally, it pointed to a number of difficulties encountered by the prosecution in cases concerning the defence sector due to limited access to classified information.

Prosecution of corruption

The National Integrity System assessment of Transparency International on France notes that, in general, law-enforcement authorities are well-trained, and the level of integrity is fairly high.[58] There are, however, isolated corruption cases involving highly ranked police officers. Efforts to centralise knowledge and coordinate action against corruption led to the creation of the Central Brigade for the Fight against Corruption (BCLC) in 2004.[59] Its staff includes people from the national police and gendarmerie, as well as from the Ministry of Economy. This facilitates sharing of experience and technical knowledge, and makes it easier to access the databases of the different authorities. Research suggests that some regions face particular challenges with respect to corruption and organised crime, and the efforts of the local authorities have gained support of the Minister of Justice.[60]

Recent years saw high-level cases, investigations and prosecutions into allegations of corrupt practices, illegal party funding and favouritism.[61] The existence of such investigations is a sign of efforts to detect, prosecute and adjudicate cases even when high-level decision-makers are involved. This is at least partly due to initiatives such as the BCLC as well as to the French system of independent investigative judges. Furthermore, mechanisms and structures exist to ensure sufficient specialisation of the prosecution and of the judiciary to cover corruption cases.

Good practice - JIRS – 'juridictions interrégionales spécialisées'

The eight inter-regional specialised courts (JIRS), located in Paris, Lyon, Marseille, Lille, Rennes, Bordeaux, Nancy and Fort de France, consist of prosecutors and investigating judges. They specialise in organised and financial crime, but also in complex cases that require the use of specific expertise. The JIRS are responsible for the investigation, prosecution, preliminary inquiry and judgment of the most complex cases, and have access to innovative investigative techniques such as infiltration, wiretapping, and the use of joint investigation teams from several countries. Judges are supported by specialised assistants in technical matters. They come both from the private (accountancy experts, etc.) and the public sector (tax inspectors, customs officers, officials from the Bank of France, etc.).

In 2013, the National Assembly adopted an act setting up a specialised financial prosecutor service with jurisdiction at national level in corruption and major tax fraud cases.[62] According to this act, the specialised national financial prosecutor is appointed for seven years, and will work under the coordination of the Prosecutor General.

The operational independence and capacity of French prosecution services has been analysed in detail by different anti-corruption monitoring institutions. As pointed out by the UNCAC review, prosecutors have discretionary powers and are placed, through their hierarchical position, under the Minister of Justice. The UNCAC review recommended guaranteeing their independence and analysing the implementation of the principle of discretionary prosecution in order to avoid any possibility of political interference in decisions taken by State Prosecutors.[63] Similarly, the OECD called for additional guarantees to safeguard the impartiality of prosecutors.[64] In response to these recommendations the criminal procedure code was amended in July 2013 to clearly state that the Minister of Justice cannot give instructions to prosecutors in individual cases.[65]

A public study released by the National Consultative Commission on Human Rights (Commission nationale consultative des droits de l’homme – CNCDH), recommended a number of measures to further protect the independence of state prosecutors and to enhance the Superior Judicial Council (CSM).[66] On 13 March 2013, the Government tabled a draft constitutional law aimed at strengthening the independence and authority of the CSM, aligning nomination and disciplinary procedures of state prosecutors to that of judges.[67]

French institutions dealing with corruption cases have faced important cuts in their budgets and human resources. For example, despite ongoing investigations into major corruption cases, the financial sections of the Paris Economic and Financial Unit (‘pôle financier’) have lost one third of their magistrates.[68] In 2012, the OECD called upon France to provide adequate resources for investigating and prosecuting corruption cases.[69] Additional resources have already been secured for the police and the JIRS located in Marseille.[70]

Financing of political parties

France has a mixed public-private system for financing political parties and electoral campaigns. Rules on party and electoral campaign funding[71] were put in place in 1988, and were subsequently amended in in 1990 and 1995,[72] partially as a response to a number of cases in relation to financing of electoral campaigns that emerged at the time.[73] As pointed out by GRECO, this legislation establishes five main principles: first, that holders of certain posts or elected offices are required to file a statement of their assets, secondly, a limitation of campaign spending for candidates in legislative and presidential elections, thirdly, an upper limit on donations to candidates and parties, fourthly, financial participation by the state via the funding of parties and the reimbursement of campaign expenses, subject to accounting supervision, and finally, the sanctioning of violations. The control of party financing lies with the National Commission for Campaign Accounts and Political Funding (CNCCFP).

The current legal framework on elections and financial transparency in politics was introduced in 2011, following some of GRECO's recommendations.[74] The procedures governing the financing of electoral campaigns were simplified, and the new legislation brought senatorial elections within the scope of the rules. The new legal framework clarified the role of accountants responsible for electoral campaign accounts, as well as the date of submission of electoral campaign accounts. Also, CNCCFP was given the power, under the supervision of a judge, to reduce a candidate’s state reimbursement in case of irregularities below the threshold for the dismissal of the entire electoral campaign account. Recently adopted legislation has moreover reduced the maximum limit for personal donations to parties to EUR 7 500 (for all parties combined) per year. CNCCFP will receive every year a list of those persons who donated at least EUR 3 000 for a political party.[75]

The current legal framework still appears insufficient on certain points. GRECO’s 2011 compliance report highlighted the need to address its recommendations on the activities of third parties, the transparency of political parties’ financial information in election campaigns, the role of party agents and the rules governing party members’ and elected representatives’ subscriptions.[76]

The French authorities have recognized that the capacity of CNCCFP to effectively supervise party and campaign financing is not yet sufficient.[77] GRECO’s 2011 compliance report also concluded that CNCCFP had few legal resources and limited access to documentation on parties’ accounts. According to GRECO, the CNCCFP ‘does not review parties’ expenses, cannot demand the submission of certain documents and does not have the authority to verify supporting documents or conduct on-site checks, and cannot call on the assistance of the judicial investigation services if it has any serious doubts.’[78] Two years later, in 2013, GRECO once again noted its disappointment because its recommendations had not been implemented. In the context of the transparency of political funding it noted that while a number of the planned legislative amendments have finally materialised, France did not remedy weaknesses previously recalled by GRECO, and no real progress has been made since 2011. This statement also applies to reinforcing supervision by CNCCFP.[79]

3. Future steps

Petty corruption does not appear to pose a problem in France. Conversely, French politics has been subject to allegations of corruption and nepotism, extending to high-ranking politicians and public officials. French authorities have acknowledged underlying problems, by introducing an agenda to address what the Government described as a 'crisis of trust'. Although France recently put in place legislative measures concerning conflicts of interest, corruption-related risks in the public procurement sector and in international business transactions have not been addressed. Party funding remains an area in which legislative improvements would contribute to integrity.

The following points require further attention:

· Conducting a comprehensive assessment to identify specific risks at local level and set priorities for anti-corruption measures related to control mechanisms in public procurement. Pursuing the ongoing reforms on asset disclosure and conflicts of interest concerning public officials.

· Improving the legislation on foreign bribery, including the rules on dual criminality and jurisdiction, as recommended by the OECD, GRECO and the UNCAC review mechanism. Increasing the effectiveness of investigations and prosecutions of foreign bribery cases.

· Monitoring the implementation of legislation seeking to protect the operational independence of prosecutors and pursuing current efforts to enhance further their statutory independence. Assessing whether additional resources are needed to investigate, prosecute and adjudicate corruption cases.

· Addressing GRECO recommendations on party funding concerning activities of third parties, the transparency of financial information in election campaigns, the role of party agents and the rules governing party members' and elected representatives' subscriptions. Strengthening the supervisory functions and capacity of the National Commission for Campaign Accounts and Political Funding.

[1]      Commission de rénovation et de déontologie de la vie publique: Pour un renouveau démocratique. (2012) p.3. http://www.commission-rdvp.gouv.fr/

[2]      http://www.vie-publique.fr/actualite/panorama/texte-discussion/projet-loi-constitutionnelle-portant-reforme-du-conseil-superieur-magistrature.html

[3]      Loi no. 2007-1598 du 13 novembre 2007 relative à la lutte contre la corruption http://www.textes.justice.gouv.fr/lois-et-ordonnances-10180/loi-relative-a-la-lutte-contre-la-corruption-13707.html.

[4]      GRECO: Third Round Evaluation: Compliance Report on France: 'Incriminations' & Transparency of Party Funding', April 2011, p.6.; OECD Report: http://www.oecd.org/daf/anti-bribery/Francephase3reportEN.pdf and Review of implementation of the United Nations Convention against Corruption, Executive summary (France) adopted by the Implementation Review Group, Third session, Vienna, 18-22 June 2012. CAC/COSP/IRG/I/1/1/Add.3: http://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/18-22June2012/V1187226e.pdf.

[5]      Loi organique et loi ordinaire du 11 octobre 2013 relatives à la transparence de la vie publique.

[6]      Loi 2013/1117 du 6 décembre 2013 relative à la lutte contre la fraude fiscale et la grande délinquance économique et financière. JORF n°0284 du 7 décembre 2013 page 19941.

[7]      Loi n° 93-122 du 29 janvier 1993 relative à la prévention de la corruption et à la transparence de la vie économique et des procédures publiques, dont les modalités d'application ont été fixées par le décret n° 93-232 du 22 février 1993.

[8]      http://www.archives-judiciaires.justice.gouv.fr/index.php?rubrique=10774&ssrubrique=10832.

[9]      See the 2011 report: "Rapport du Service central de prévention de la corruption" page 17.- original in French: http://www.justice.gouv.fr/publications-10047/autres-rapports-dactivite-10287/rapport-du-service-central-de-prevention-de-la-corruption-2011-24367.html.

[10]    See the report of the SCPC (2011), see these points on page 9-10.

[11]    Review of implementation of the United Nations Convention against Corruption, Executive summary (France) adopted by the Implementation Review Group, Third session, Vienna, 18-22 June 2012. CAC/COSP/IRG/I/1/1/Add.3: http://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/18-22June2012/V1187226e.pdf .

[12]    2013 Special Eurobarometer 397.

[13]    2013 Special Eurobarometer 397.

[14]    2013 Eurobarometer o 374.

[15]    2013 Special Eurobarometer 397.

[16]    2013 Flash Eurobarometer 374.

[17]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf.

[18]    COM(2011) 309 final, Second Implementation report of FD 2003/568/JHA of 6 June 2011: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf.

[19]    Loi 2013/1117 du 6 décembre 2013 relative à la lutte contre la fraude fiscale et la grande délinquance économique et financière. JORF n°0284 du 7 décembre 2013.

[20]    Executive summary (France) adopted by the Implementation Review Group, Third session, Vienna, 18-22 June 2012. CAC/COSP/IRG/I/1/1/Add.3: http://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/18-22June2012/V1187226e.pdf.

[21]    Article L.1161-1 of the Labour Code.

[22]    http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/124000499/0000.pdf, p. 163.

[23]    “Dispositive d’alerte éthique” Loi n° 2013-907 du 11 octobre 2013 relative à la transparence de la vie publiqu, Article 25, e http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000028056315

[24]    ASSEMBLEE NATIONALE (2012) Public Register of Lobbyists http://www.assemblee-nationale.fr/representants-interets/liste.asp.

[25]    Senat: Public Register of Lobbyists. (2012) Available from: http://www.senat.fr/role/groupes_interet.html.

[26]    These percentages ranged from 17.7% in 2007 to 18.9% in 2010. http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf

[27]    http://ec.europa.eu/internal_market/publicprocurement/docs/indicators2010_en.pdf .

[28]    2013 Special Eurobarometer 397.

[29]    Annual Public Procurement Implementation Review 2012, SWD(2012) 342 final: http://ec.europa.eu/internal_market/publicprocurement/docs/implementation/20121011-staff-working-document_en.pdf.

[30]    For conflicts of interests and corruption: Articles 432-11 to 13; 433-1 of the French Penal code; for favouritism: Articles 432-14.

[31]    Code pénal Article 432-14.

[32]    http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/124000499/0000.pdf.

[33]    http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000021570204, Circulaire du 29 décembre 2009 relative au Guide de bonnes pratiques en matière de marchés publics .

[34]    http://legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000025364925&fastPos=1&fastReqId=997275869&categorieLien= id&oldAction=rechTexte.

[35]    http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/124000499/0000.pdf .

[36]    http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/124000499/0000.pdf, page 77.

[37]    "Notre pays doit, pour toutes ces raisons, rompre avec sa vielle habitude du cumul des mandats." "Il est nécessaire de mettre en œuvre une stratégie globale de prévention des conflits d'intérêts, afin de garantir un exercice exemplaire des responsabilités publiques et de renforcer la confiance des citoyens dans leurs institutions." Commission de rénovation et de déontologie de la vie publique: Pour un renouveau démocratique. 2012 p. 54. et seq.;  and p. 122. See also Proposition no. 15, propositions 20 et seq. http://www.commission-rdvp.gouv.fr/.

[38]    For the exact figures see: Commission de rénovation et de déontologie de la vie publique: Pour un renouveau démocratique. 2012 p.58. http://www.commission-rdvp.gouv.fr/

[39]    Article 432-12 of the Criminal Code.

[40]    http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/124000499/0000.pdf , p.33.

[41]    Article 423-13 of the Criminal Code.

[42]    http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/124000499/0000.pdf, p. 34

[43]    Article 321-6. of the Criminal Code, introduced by Law No. 2006-64 of 23 January 2006.

[44]    CTFVP (2012) 15ème Rapport annuel, op. cit., p. 6.

[45]    Loi organique et loi ordinaire du 11 octobre 2013 relatives à la transparence de la vie publique

[46]    http://www.assemblee-nationale.fr/14/dossiers/non-cumul_executif_local_depute_senateur.asp#non-cumul_executif_local_depute_europeen.

[47]    Projet de loi relatif à la déontologie et aux droits et obligations des fonctionnaires Ministère de la fonction publique. http://www.fonction-publique.gouv.fr/files/files/statut_et_remunerations/statut_general/pdf/deontologie-projet-de-loi.pdf

[48]    Loi n° 2013-907 and loi organique n° 2013-906  du 11 octobre 2013 relative à la transparence de la vie publique.

[49]    Décision n° 2013-676 DC du 9 octobre 2013.

[50]    Law No. 2011-410 of 14 April 2011: http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000023877019&dateTexte=&categorieLien=id and Law No. 2011-412 of 14 April 2011 on simplifying the provision of the Electoral Code and financial transparency in politics: http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000023877131&dateTexte=&categorieLien=id

[51]    Commission pour la transparence financiere de la vie politique; 15ème Rapport annuel, JO of 25 January 2012, p. 11: http://www.commission-transparence.fr/rapports/15iemeRapport_joe_20120125.pdf

[52]    Loi organique et loi ordinaire du 11 octobre 2013 relatives à la transparence de la vie publique

[53]    Phase 3 report on implementing the OECD Anti- Corruption Convention on France, October 2012., Recommendations and follow up on France (2012), para 183.: "However, the Working Group continues to be concerned by the very low number of convictions in France for bribery of foreign public officials since the entry into force of the offence more than twelve years ago – a total of five of which just one, under appeal, holds a legal person liable. In view of the very important role its companies play in the international economy, France appears particularly exposed to the risk of bribery of foreign public officials. The Working Group's concern is all the more acute insofar as, despite foreign judgments involving certain French companies, France does not seem to have pursued criminal action in such cases as vigorously as expected."

[54]    Phase 3 report on implementing the OECD Anti- Corruption Convention on France, October 2012., Recommendations and follow up on France (2012).

[55]    Phase 3 report on implementing the OECD Anti- Corruption Convention on France, October 2012., para 10. The case involving the legal person is subject to appeal, therefore neither the conviction nor the level of sanctions are final.

[56]    Transparency International's report on the enforcement of the OECD Anti-Bribery Convention http://www.transparency.org/whatwedo/pub/exporting_corruption_country_enforcement_of_the_oecd_anti_bribery_conventio.

[57]    Phase 3 report on implementing the OECD Anti- Corruption Convention on France, October 2012., Recommendations and follow up on France (2012).

[58]    http://issuu.com/transparencyinternational/docs/2011_nisfrance_en?e=2496456/3025518.

[59]    A pending reform would integrate the Brigade into the future "Office central de lutte contre la corruption et la fraude fiscale". See "Projet de loi relatif à la lutte contre la fraude fiscale et la grande délinquance économique et financière".

[60]    Center for the Study of Democracy: Examining the links between organised crime and corruption. Commissioned by the Directorate General Justice, Freedom, and Security (2010). Motivated by the increase in intensity of organised crime, the Minister of Justice announced on 26 November 2012 a new global criminal policy for Corsica, including measures against economic and financial crime.

[61]    As an example, three successive French presidents had to face investigative measures related to allegations of corruption. One former President was convicted in first instance on corruption charges and agreed to pay compensation.

[62]    Loi 2013/1117 du 6 décembre 2013 relative à la lutte contre la fraude fiscale et la grande délinquance économique et financière. JORF n°0284 du 7 décembre 2013 page 19941.

[63]    UNCAC Implementation Review (2011) Résumé analytique : rapport de la France. Vienna : UN, p. 5. http://www.unodc.org/documents/treaties/UNCAC/COSP/session4/V1186620f.pdf .

[64]    Phase 3 report on implementing the OECD Anti- Corruption Convention on France, October 2012, p. 5.

[65]    Loi no 2013-669 du 25 juillet 2013 relative aux attributions du garde des sceaux et des magistrats du ministère public en matière de politique pénale et de mise en oeuvre de l’action publique.

[66]    CNCDH (2013), Avis sur l’indepandence de la justice, JORF n°0176 of 31 July 2013 [WWW] Legifrance.

http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000027778844&dateTexte=&categorieLien=id.

[67]    http://www.legifrance.gouv.fr/affichLoiPreparation.do?idDocument=JORFDOLE000027174144&type=general

[68]    Association Française des magistrats instructeurs (AFMI) (2011) Les enquêtes économiques et financières sont en danger à Paris: http://www.afmi.asso.fr/com_detail.php?num=43.

[69]    OECD (2012) Phase 3 Report on Implementing the OECD Anti-Bribery Convention in France, p. 43.

[70]    Réunion de ministres sur l’agglomération marseillaise. Relevé de conclusions  6th September 2012  http://www.gouvernement.fr/sites/default/files/dossier_de_presses/09.06_releve_de_conclusions.pdf. Réunion du 22 octobre 2012 sur la lutte contre la criminalité en Corse. Relevé de conclusions , 22 October 2012 http://www.gouvernement.fr/sites/default/files/dossier_de_presses/10.22_releve_de_conclusions_-_reunion_sur_la_lutte_contre_la_criminalite_en_corse_-_releve_de_conclusions.pdf

[71]    Law No. 88-226 and Law No. 88-227 of 11 March 1988: http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=LEGITEXT000006069060&dateTexte=20110106

[72]    Law No. 90-55 of 15 January 1990 and Law No. 95-65 of 19 January 1995.

[73]    GRECO (2009) Third Evaluation Round. Evaluation Report on France Transparency of Party Funding (Theme II). Strasbourg: Council of Europe, 19th February, 36 p: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282008%295_France_Two_EN.pdf.

[74]    Loi organique n° 2011-410 du 14 avril 2011 : http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000023877019&dateTexte=&categorieLien=id and n° 2011-412 du 14 avril 2011on simplifying the provision of the Electoral Code and financial transparency in politics: http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000023877131&dateTexte=&categorieLien=id

[75]    Loi n° 88-227 du 11 mars 1988 relative à la transparence financière de la vie politique, as amended by loi n°2013-907 du 11 octobre 2013 - art. 15.

[76]    GRECO (2011) Third Evaluation Round. Compliance Report on France. Strasbourg : Council of Europe, 1st April, see especially pp 10-17.

http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282011%291_France_EN.pdf.

[77]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)1_France_EN.pdf, p. 14.

[78]    Idem, p. 14.

[79]    Second Compliance Report on France; Greco RC-III (2013) 3E; http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282013%293_Second_France_EN.pdf. The following interim report, adopted in December 2013, has not been made public.

CROATIA

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. In recent years, with intensive reforms in preparation for its accession to the EU, Croatia has invested considerable efforts in establishing a wide-ranging legal and institutional anti-corruption framework so as to foster a more comprehensive approach. It has put in place a number of anti-corruption strategies, the most recent in 2008[1], accompanied by action plans that have been subsequently updated, including in 2013.[2] While covering a wide range of objectives, the strategy and its action plans would have benefited from a more unitary vision. Also, most of the measures as well as deadlines, budget and responsibilities, are insufficiently defined. Further amendments were made to the action plans in 2013, adding more detailed operational measures notably with regard to the verification tools concerning conflict of interests and asset declarations, monitoring of political party funding and prevention of corruption in public procurement. Currently, there is a clear imbalance between repression and prevention of corruption, to the detriment of the latter.[3]

Legal framework. As highlighted by the Commission's last Monitoring Report on Croatia's accession preparations, 'the legal framework for the suppression of corruption and organised crime is adequate.'[4] A new criminal code which increased the level of sanctions for some corruption offences entered into force on 1 January 2013. The legal framework for the prevention of corruption has also largely improved, including on aspects relating to access to information, asset disclosure and public procurement. A reformed criminal procedure code was adopted in late 2008 aimed, inter alia, at enhancing the efficiency of proceedings. The code was subsequently amended several times, the most recent and extensive amendments entering into force in December 2013. These latest amendments aimed to align the code with an earlier decision of the Constitutional Court[5] which declared that a number of its provisions were unconstitutional. Nevertheless, the new amendments also drew public criticism, including from some representatives of the judiciary, as to their potential to make investigations more cumbersome and lead to delays in concluding criminal proceedings in complex corruption and organised crime cases.

Institutional framework. Specialised prosecution services (i.e. Bureau for Combating Corruption and Organised Crime–USKOK) and the more recently established specialised police for the fight against corruption and organised crime (PNUSKOK) are now well equipped to carry out effective investigations. They have proven to be proactive, and have developed a good track record of investigations into allegations of high-level corruption. However, at judicial level, corruption-related crimes are frequently punished with low or even conditional sanctions, creating a climate of impunity.[6] The recent first instance conviction of a former prime minister for corruption and the ongoing criminal proceedings against a number of former ministers illustrate allegedly illegal links between politicians and businesses, often related to public procurement. On the other hand, the high-level investigations also signalled that there is a will to prosecute high-level corruption. The sustainability of this trend will need to be assessed on a longer time perspective. Challenges still remain, notably when it comes to the effectiveness of the institutional framework and internal control mechanisms at both central and local levels, and the inter-institutional coordination, both horizontal and vertical, of anti-corruption policies.

Opinion polling

Perception surveys. According to the 2013 Eurobarometer Survey on Corruption, 94% of the Croatian respondents believe that corruption is widespread in their country (EU average: 76%).[7] 55% believe that corruption affects their daily lives (EU average: 26%). 89% of the respondents say that bribery and the use of connections is often the easiest way to obtain certain public services in Croatia (EU average: 73%). A 2011 study conducted by the United Nations Office on Drugs and Crime (UNODC) revealed that Croatian citizens rank corruption as the third most important problem[8] facing their country.[9] The same study showed that 16% of those interviewed secured a job in the public administration with the help of a bribe.[10] In the 12 months prior to the UNODC survey, 18% of Croatian citizens had either direct or indirect exposure to a bribery experience involving a public official. According to the study, the healthcare sector and the police are particularly vulnerable to petty corruption in Croatia.

Experience of corruption. 6% of the Croatian respondents to the 2013 Eurobarometer Survey on Corruption admitted that over the past 12 months they were asked or expected to pay a bribe for services (EU average: 4%).

Business surveys. According to the 2013 Eurobarometer Business Survey on Corruption,[11] 81% of Croatian businesses believe that favouritism and corruption hamper business competition in Croatia (EU average: 73%), while 59% say that corruption is a problem for their company when doing business (EU average: 43%). According to the 2013–14 Global Competitiveness Report, corruption is mentioned as the third most problematic factor[12] for doing business in Croatia.[13]

Background issues

Access to information. Croatia adopted dedicated legislation on the right to access public information already in 2003 and subsequently amended it in 2010 and 2011.[14] The results of testing the law by Transparency International remained somewhat mixed: while most information about anti-corruption policies, conflict of interests and licensing was made available, no information at all was provided on privatisation, and little information on public procurement and the financing of political parties has been made available over time.[15] A new law on access to information was adopted in February 2013, introducing proportionality and public interest tests in all cases of denial of access to information, implementing the EU acquis on the re-use of information and establishing a new independent body (the Information Commissioner) for monitoring its implementation.[16]

Financing of political parties. Croatia made considerable efforts to meet all the recommendations of the Council of Europe Group of States against Corruption (GRECO) on transparency in political funding. In 2011 and December 2013, GRECO stated that all its recommendations in this area had been satisfactorily fulfilled by Croatia.[17] New legislation was adopted to enhance the transparency of general party funding and supervision of the annual financial reports of political parties.[18] In addition, independent lists and candidates had been complemented by specific campaign finance monitoring carried out by the State Audit Office and the State Election Commission, while the criminal sanctions for violations of the political funding provisions had been complemented with more flexible administrative sanctions. In February 2013, new amendments to the Act on the Financing of Political Parties and Electoral Campaigns were adopted, simplifying the overall regulation and streamlining financial information.[19] The State Election Commission and the State Audit Office notified the State Attorney's Office of cases of non-submission or non-publication of financial reports for 2011. The overall verification and sanctioning systems are still to prove their effectiveness, notably as regards electoral campaigns at local level. Verifications regarding the financing of the 2013 local elections’ campaign are ongoing. Some steps have already been taken to strengthen the enforcement of dissuasive sanctioning in the event of political parties failing to submit financial reports. In one case, the ruling party was fined for submitting its report only a couple of days late. In 2013, the Ministry of Finance adopted a regulation widening the scope of the obligations on keeping records, issuing confirmations of receipt of donations and membership fees, and keeping election campaign expense reports and financial statements.[20]

Transparency of lobbying. Lobbying is not regulated in Croatia. There is no obligation for lobbyists to be registered and no transparency standards are set in this field. Although over time there has been some reflection at government level on the possible regulation of lobbying, no legislative initiative has materialised to date. Some ad-hoc initiatives are being implemented, such as that of the Croatian Society of Lobbyists consisting of 80 members, which has taken steps to promote ethics and transparency in lobbying activities, including the setting-up of a voluntary registration system.[21]

Organised crime poses particular challenges in Croatia.[22] Corruption is used as a facilitator in this context (e.g. letting a shipment pass the border unchecked or laundering proceeds of crime by reinvesting them in real estate).[23] A recent study estimated that the shadow economy reached 29.5% of GDP in 2012 in Croatia.[24] Being situated on the 'Balkan Axis', Croatia is a transit country (and to a lesser extent a country of origin) for the trafficking of persons and a range of illicit commodities, including drugs, arms and cigarettes.[25] Following its accession to the EU, the risk of the country becoming also a country of destination may increase. Specialised law enforcement and prosecution services have been set up to target organised crime activities. While their track record of investigations has improved slightly over time, the Commission's March 2013 Monitoring Report concluded that 'overall the level of sentences in organised crime cases remains low.'[26]

2. issues in focus

Conflict of interest and asset disclosure

Croatia has had a dedicated Conflict of Interest Prevention Act since 2000 which was substantially amended in 2010, 2011 and 2012, notably with regard to the scope of provisions, the disclosure obligations, the verification procedures and the sanctioning regime.[27] The Act applies to high-level elected and appointed officials at both central and local level. It also provides for cooling-off periods after officials have left public office and for the obligation to disclose assets. Annual asset declarations to be submitted by public officials must include assets owned by spouses and dependent children.

The criminal code criminalises certain acts relating to conflict of interests, notably abuse of office by a public official who gives preferential treatment in a competitive process in order to obtain pecuniary gain.[28] The number of successful prosecutions on such charges is very low however.[29]

In spite of the existence of dedicated legislation, the verification mechanisms concerning the wealth and assets of public officials and the corresponding sanctioning systems have still not shown their effectiveness.[30]

A Commission for the Resolution of Conflicts of Interest was set up in 2003, following the first piece of legislation on conflict of interests. Members must have an apolitical profile (i.e. no affiliation to political parties) and a good reputation. Currently, the Commission for the Resolution of Conflicts of Interest has five members appointed by Parliament and is tasked with verifying the compliance of elected and appointed officials with their obligations under the Conflict of Interest Prevention Act, notably as regards conflict of interests and asset declarations. The Commission for the Resolution of Conflicts of Interest had a poor track record up to the end of 2011, when its members' mandate expired. The level of the sanctions applied at the time was low, with little or no deterrent effect.[31] Only four decisions were taken within this reference period to cut officials' monthly salary (the most severe sanction applied at the time),[32] the highest sanction amounting to around EUR 2 700.[33]

With the entry into force of substantial amendments to the Conflict of Interest Act in March 2011, a new Commission for the Resolution of Conflicts of Interest was to be established within 90 days. The new Commission was appointed by Parliament only in January 2013 and took office in early February 2013.[34] Previously, it only performed administrative checks of asset declarations.[35] In its new composition, the Commission was tasked with checking asset declarations on substance (i.e. the origin of assets and truthfulness of statements), although it is not yet entirely clear how this is being done in practice.

Apart from a number of opinions issued at officials' request, the Commission for the Resolution of Conflicts of Interest reported that 79 proceedings on conflict of interests had been initiated as of mid-April 2013, of which 21 had been concluded. As with asset declarations, there is no clarity as to the detailed verification methodology applied by the Conflict of Interest Commission. It has adopted an ordinance on the working methodology that covers general aspects of organisation but does not spell out the detailed verification methods to be followed, the type of data to be checked and the tools to be used for this purpose. It is unclear how verifications are prioritised, and how specific account is taken of particularly vulnerable positions or targeted checks considered where conflict of interest risks seem higher (e.g. at local level).

The Conflict of Interest Prevention Act provides for limited sanctions applicable in case of breach of obligations regarding conflict of interest or asset disclosure, ranging from reprimand to reductions in salary and the publication of the decisions of the Conflict of Interest Commission. Soon after the adoption of the Conflict of Interest Prevention Act in 2011, a political party filed an unconstitutionality claim with the Constitutional Court. At the end of 2012, the Court repealed a number of provisions referring to the powers of the Conflicts of Interest Commission which it found to be in contravention of the principle of separation of powers.[36] Following this ruling, several competences of the Conflict of Interest Commission were repealed, in particular its power to issue decisions that can trigger dissuasive sanctions, including its right to call on employers to initiate procedures to dismiss officials found to be in serious breach of the law. Another issue covered by the ruling was access to data, in particular bank data. The Court found that the Conflict of Interest Commission was not specialised in taxation, financial and accounting services and that it is not its duty to establish whether office-holders have declared incorrect and untrue data for the purpose of keeping secret the size of their property. According to the Constitutional Court, this falls within the jurisdiction of the courts only.

A working group involving public authorities and civil society was set up a few months after the ruling, at the beginning of 2013, to consider possible new amendments to the Conflict of Interest Prevention Act that would still guarantee an effective verification and sanctioning mechanism, while complying with the Constitutional Court decision. The prerogative of proposing such legislative amendments belongs to the Commission for the Resolution of Conflicts of Interest, which announced that it would rather establish a solid track record before developing any such proposals.

The Commission for the Resolution of Conflicts of Interest cannot annul contracts or repeal decisions taken in breach of the Conflict of Interest Prevention Act. Separate civil action is needed in such cases. The Commission cannot submit in court a request for seizure or confiscation of unjustified wealth (the only public authority that may do so is the public prosecutor). Some recent cases, such as that of a former minister of tourism who resigned as a result of a failure to accurately declare the assets of his spouse, have shown that political accountability may play an important role in ensuring effectiveness of the verification mechanisms.

The Commission's 2013 Monitoring Report stressed that 'Croatia needs to ensure that immediate measures are taken to put in place a strong and effective mechanism for preventing, detecting and sanctioning conflict of interest cases, based on thorough checks and deterrent sanctions'.[37] At present, the verification powers of the Conflict of Interest Commission rely heavily on the competences and proactiveness of other authorities such as the tax administration. The Croatian authorities nevertheless stress that cooperation among these bodies has been working smoothly. While it is indeed important to have a clear separation between the verification and enforcement powers granted to the Conflicts of Interest Commission and those of other (tax administration, law enforcement, prosecution) authorities, the setting up of a specialised structure for checking the interests and wealth of public officials should serve the purpose of prioritising checks that cannot be covered in a systematic manner by the other institutions. All authorities must cooperate closely, while also having their own adequate powers and tools, including access to relevant information and databases, and the power to impose deterrent sanctions.

The Conflict of Interest Commission is working on setting up its own databases and integrated registers that would comprise relevant data regarding public officials and legal entities in which public officials may hold interests; this would allow them to carry out verifications more swiftly. The national anti-corruption action plan also provides for the development of more user-friendly electronic forms for asset declarations that would facilitate registration and cross-checking.

For civil servants (at both central and local level), conflicts of interest and asset disclosure are regulated by other pieces of legislation.[38] Breach of these rules is treated as any other breach of duty, disciplinary sanctioned with reprimand up to demotion and termination of service, depending on the seriousness of the deed. The top management of the central or local authority where the civil servant is employed is responsible for such disciplinary procedures. In cases of severe breaches, the Civil Service Tribunal and High Civil Service Tribunal, both appointed by government, may decide at first instance and on appeal.[39] Consistency of disciplinary procedures in such cases, including clarity on the role of internal control mechanisms or ethics commissioners within each public administration authority pose challenges in practice.[40]

Conflicts of interests in the judiciary are governed by its statutory legislation and supervised by the Judicial Council and the State Prosecutorial Council. Recent amendments to the legislation on the organisation of the judiciary require that the asset declarations of judges and prosecutors are made public. Over 20 disciplinary sanctions were applied for non-disclosure of declarations. Decisions on conflicts of interest and asset declarations in the judiciary are scarce.

The Commission's 2010 Progress Report stated that 'the concept of conflict of interest is still little understood in Croatia'.[41] Since then, some efforts have been made to raise awareness. Guidelines on Conflicts of Interest for Public Officials were issued in September 2011, which also provided instructions on the submission of asset declarations. While this is laudable, a more proactive approach to raising awareness and increasing training is needed, notably at local level and within state-owned and state-controlled companies, where the risks associated with conflicts of interest are higher. The issue of conflicts of interest is especially important with regard to these companies, given the share of the Croatian public sector in the overall economy (which is still significant), the prominence of these companies and the challenges they are facing with regard to appropriate resource allocation and efficiency of operations.

Integrity in public administration

A number of safeguards are in place (e.g. code of ethics for civil servants, hotlines to report corruption, internal control mechanisms in most of the public administration bodies) to ensure integrity within the Croatian public administration. Still, according to the 2013 Special Eurobarometer on Corruption, 89% of the Croatian respondents considered that bribery and the use of connections is often the easiest way to obtain certain public services in Croatia (EU average: 73%).[42] With the appointment of each new government, systematic reshuffles of public officials in mid-management positions create a climate of instability and contribute to the perception of favouritism in the public administration. The Commission's 2011 Monitoring Report underlined the need to 'improve the professionalism of the public service' and the need 'to address the administrative capacity constraints'.[43] In the 2013 Report, the Commission called for the completion of a new legal basis for a professional civil service through a salary system that would ensure merit-based promotion and retention of skilled staff.[44] The draft legislation is now in preparation at government level and consultations with the trade unions are ongoing.

As regards state-owned companies, legislative amendments were adopted at the beginning of 2012 whereby, although the same general criteria for recruitment were maintained, the previous competitive selection procedure for the supervisory boards was replaced with direct political appointments.[45] While public officials covered by the Conflict of Interest Prevention Act cannot be members of these supervisory boards, members of their political parties can. Some general criteria apply to the background of the nominees for such position, but these do not relate to expertise in that particular field or experience on similar boards. It is not entirely clear how ex ante and ex post integrity checks are carried out for these appointments or how actual, potential or apparent conflicts of interests are checked before and after the appointment.

The Commission's 2012 Monitoring Report stressed that 'Croatia needs to ensure that a strong system is in place for preventing corruption in state-owned companies'.[46] The Monitoring Report of March 2013 noted that there was no further progress.

Moreover, the state-owned companies have discretionary rights to make donations or grant sponsorships without following transparent and competitive procedures. It should be noted that there is a total ban on state-owned companies making donations to political parties or to politicians. A 2012 report on state-owned companies showed that such donations/sponsorships were as high as EUR 20 million. The updated anti-corruption action plan provides for the laying down of criteria, benchmarks and procedures for the transparent allocation of sponsorship through public company donations to associations and NGOs. The Government is therefore currently working on a set of guidelines regarding the transparency of donations and sponsorship in state-owned and state-controlled companies. The Ministry of Justice has started monitoring and publishing a list of donors and sponsors from local state-owned and state-controlled companies.[47] These companies have an obligation to develop anti-corruption action plans and to publish online a list of beneficiaries of donations and sponsorships.[48] It is not yet clear how the implementation of these action plans will be monitored.

Integrity of elected and appointed officials

A number of recent cases indicate that ethics in politics remains an outstanding issue, but also illustrate a relatively solid track record of USKOK investigations into allegations of high-level corruption at both central and local level. Several former ministers (e.g. a former minister of defence, a former deputy prime minister and minister of economy, a former minister of the interior, and a former minister of agriculture), and a political party have been investigated for corruption-related offences. In November 2012, a former prime minister was convicted at first instance to 10 years' imprisonment for receiving a commission from a bank and bribe taking in exchange for controlling rights in an oil company.

Cases against high-level officials at local level (i.e. mayors, heads of municipalities), some of which resulted in convictions, revealed corrupt practices at the interface between politicians and businesses, notably in areas such as urban planning, land acquisition, exchange of land, construction and the granting of loans. USKOK is able to carry out impartial investigations into allegations of corruption irrespective of the political affiliation or connections of those involved. However, final court decisions against high-level officials remain scarce.

Currently there are no codes of conduct for elected officials at central and local level. Such codes of conduct, accompanied by regulatory provisions on sanctions applicable in case of breaches of ethical rules, would enhance integrity and accountability standards and ensure a wider range of non-criminal sanctioning of unethical behaviour to the detriment of the public interest. Given the particularities of non-criminal sanctions applicable to elected officials as compared with other categories of public official (i.e. appointed officials, civil servants, etc), it would also ensure more effective implementation of integrity rules through self-regulation.

Although an Electoral Code of Ethics[49] has been in force since 2007, research shows that vote buying is not yet eradicated in Croatia.[50] The practice of offering goods, favours and money to attract voters was in evidence during the last local and national elections when reportedly 4% of citizens were approached at local elections and 3% at the last parliamentary or presidential elections. Also the accuracy of voter lists was reported as a concern by OSCE election observers.[51]

Public procurement

Public procurement in Croatia was worth about EUR 5.4 billion in 2009 and EUR 3.3 billion in 2010.[52] Overall, Croatia has put in place a fairly sound legal and institutional framework. As part of its preparations to join the EU, it has repeatedly amended its public procurement legislation to bring it in line with EU legislation. A new Public Procurement Act came into force on 1 January 2012, which included specific conflict-of-interest rules applying to public procurement officials.[53]

Good practice: transparency requirements

Steps have been taken to enhance transparency in public procurement. The State Commission for Monitoring Public Procurement Procedures (DKOM) publishes all its decisions on its website.[54] Moreover, all public bodies are obliged to publish concluded and executed contracts. It is not yet clear, however, how the sound implementation of public contracts is being monitored. The contracting authorities are obliged to publish their procurement plans and the register of public contracts on their websites. Where they are not in a position to publish data on their websites, these are published on the public procurement portal coordinated by the Ministry of Economy.[55] Web-links to the information published by the contracting authorities are listed on the central public procurement portal.

E-procurement has been in place and easily accessible since early 2012. However, the system is still not used by all contracting authorities.[56]

Contracting authorities are also obliged to publish on their websites declarations regarding conflict of interest. The public procurement documentation must contain a list of businesses with regard to which conflicts of interest may arise or expressly confirm the absence of such situations. A public contract concluded in breach of these provisions is null and void.

In March 2013, a web portal and public procurement electronic database[57] was launched by a local NGO as a result of an EU-funded project.[58] The database consolidates information on the implementation of public procurement procedures and companies involved and is available to the public free of charge. It also contains information on the assets and interests of public officials, in line with asset disclosure rules. Such aggregated data allow the carrying out of cross-checks.

The impact of corruption-related offences on public procurement in Croatia has been estimated at 10 to 15% of the value of public contracts.[59] According to the 2013 Eurobarometer Business Survey on Corruption,[60] 64% of Croatian businesses consider that corruption is widespread in public procurement managed by national authorities (EU average: 56%)[61] and 63% in that managed by local authorities (EU average: 60%). In particular, Croatian respondents stated that the following practices were widespread in public procurement procedures: specifications tailor-made for particular companies (62%); abuse of negotiated procedures (50%); conflicts of interests in the evaluation of the bids (54%); collusive bidding (58%); unclear selection or evaluation criteria (53%); abuse of emergency grounds to avoid competitive procedures (51%); and amendments of contractual terms after conclusion of contract (51%). As illustrated by this survey, tailor-made specifications targeting certain companies appear to be one of the most frequent irregularities associated with public procurement in Croatia. These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities to corruption in public procurement procedures.

The ex ante and ex post control mechanisms for public procurement procedures and the implementation of public contracts could be further improved. Sound risk assessment tools are not being systematically used, in particular at local level. There appears to be no prioritising of vulnerable sectors where corruption risks are more prominent. There is no systematic publication by (central or local) administrative entities of annual accounts and balance sheets, including details on costs of public works and contracted services. In order to address some of these shortcomings, the Ministry of Justice has started monitoring the level of transparency of local governments, including on issues relating to public procurement.[62]

The Commission's 2013 Monitoring Report mentioned that corruption at local level deserves attention, in particular as regards public procurement. It also pointed to the need for additional measures to prevent irregularities and reinforce management and control systems in relation to the procurement procedures for Cohesion Policy projects.[63] A brochure with recommendations to contracting authorities and suppliers on how to prevent corruption and conflict of interest has been produced with the support of an EU-funded project.[64] Such initiatives could be pursued further, targeting in particular vulnerable sectors or administrations. The capacity of the Central Office for Procurement tasked with overseeing the implementation of public procurement procedures, is rather low (less than 20 staff) given the considerable challenges it faces in relation to big procurement procedures.

Protection of whistleblowers

Croatia has no dedicated whistleblower protection legislation. Protection of whistleblowers in the public and private sectors is however covered by a variety of legislative acts.[65] In December 2009, new provisions were inserted in the Labour Act regarding protection against dismissal for those who have reported an instance of corruption in good faith, while putting the burden of proof on employers in cases when the latter would claim that discrimination or retaliation against the whistleblower are unrelated to the reporting of the alleged illegal practices. With subsequent amendments to the Civil Service Act, the above-mentioned provisions of the Labour Act also apply to civil servants. Nevertheless, the existing legal and institutional framework appears to be unable to fully protect whistleblowers. This was illustrated by certain recent cases. Two police officers who reported alleged corruption within the Ministry of the Interior were not relocated and protected by the management of the Ministry, which kept them in the same groups they reported about, indirectly allowing harassment and other disruptive behaviour. In another case, the workers' representative on the supervisory board of the Institute of Immunology in Zagreb and member of the works council was suspended from work and banned from entering the Institute's premises after denouncing a lack of transparency in the Institute's decision-making regarding a purchase of swine flu vaccine.[66]

It also appears that there is insufficient awareness-raising in this regard. According to the UNODC study, more than half of all Croatians think that people who report corruption are likely to regret it, and nothing constructive will come of reporting it.[67]

The Croatian Parliament has however called for specific measures to raise the quality of whistleblower protection.[68] The Ministry of Justice is currently working on an analysis of the implementation of the existing legal framework. It has also published guidelines on whistleblowing and the potential protection of whistleblowers.[69]

Healthcare

A 2011 UNODC study pointed to healthcare as one of the sectors most vulnerable to corruption in Croatia. More than half of bribe-payers in Croatia make informal payments to doctors (56%) and more than a third to nurses (36%).[70] In relation to informal payments, according to the 2013 Special Eurobarometer on Corruption, 20% of the Croatian respondents who admitted to having made informal payments felt they needed to give an extra payment or a valuable gift before medical care was given.[71]

The problems in the healthcare sector were also illustrated by recent large-scale anti-corruption cases. In November 2012, following an operation dubbed "Hippocrates", 350 doctors were put under investigation for bribery. At a press conference on the case the Croatian Health Minister stated that 'in the last few years, corruption has become socially acceptable behaviour, which is intolerable'.[72]

Favouritism and conflict of interests appear to pose the highest risks both when it comes to provision of medical services and the procurement of medical equipment. Medical equipment is often donated to public hospitals without a transparent overview of the follow-up of the relationship between the donating company and the hospital and in particular of public contracts granted to the company.[73] The Healthcare Act does not sufficiently cover the issues relating to the prevention of corruption. While all the above-mentioned aspects are dealt with by general legislation, the specific risks of the healthcare sector should be taken into account when developing suitable measures to address corruption. Currently, the control mechanisms within the healthcare sector are rather weak, with a low capacity for carrying out targeted and ad-hoc inspections and controls. Such mechanisms do not have a specific focus on the prevention and detection of corruption within the healthcare system.[74]

On the positive side, some ethics agreements in the healthcare sector appear to be a step in the right direction, although it remains to be seen what impact these will have in practice. One example is the Agreement on Ethical Advertising of Medical Products according to which healthcare workers should not be encouraged or influenced to procure or prescribe certain drugs.[75]

The updated national anti-corruption action plan also includes a number of prevention measures targeting the healthcare sector, including action aimed at strengthening supervisory powers, although it is not yet clear what capacity is in place for their implementation.

3. Future steps

Croatia has made considerable efforts to improve the anti-corruption framework, although implementation has still to demonstrate sustainable results. In the field of law enforcement, the Bureau for Combating Corruption and Organised Crime (USKOK) is carrying out important high-level corruption investigations. There appears to be more emphasis on repression of corruption than on prevention, and the overall sanctions applied, with the exception of some notable high-level cases, appear to be insufficient deterrents. Favouritism and politicising of the public administration, as well as integrity standards in politics, remain causes for concern. More steps need to be taken to strengthen anti-corruption safeguards concerning state-owned companies. Further key issues include: the verification mechanisms for conflicts of interest and asset disclosure of public officials; risk control in public procurement; the protection of whistleblowers; and the need to address effectively corruption risks in the healthcare sector.

The following points require further attention:

· Carrying out substantial checks of the asset declarations and conflict of interests of public officials at central and local levels, in line with the Constitutional Court decision of 2012; ensuring prioritisation of checks, improved methods and techniques of verification, including use of electronic tools, access to relevant information, cooperation with other authorities and accessibility of public interest information in a user-friendly format. Ensuring that the Conflict of Interest Commission has sufficient powers to impose deterrent sanctions. Ensuring a fully professional and merit-based recruitment, promotion and dismissal system for public officials at mid-management and lower levels. Developing comprehensive codes of conduct for elected officials at central and local level and ensuring corresponding accountability tools and dissuasive sanctions for potential violations of such codes.

· Establishing an effective mechanism for prevention of corruption in state-owned and state-controlled companies, including aspects relating to donations and sponsorships. Ensuring implementation of effective anti-corruption action plans within state-owned and state-controlled companies to promote comprehensive prevention policies, effective reporting mechanisms and high accountability standards. Ensuring access to public interest information relating to these companies presented in a user-friendly format.

· Implementing a comprehensive strategic approach to preventing and reducing corruption risks in public procurement at both central and local levels, including effective monitoring of the implementation of transparency and access to public information rules, systematic risk assessments, prioritisation of controls in vulnerable sectors and procedures, enhanced checks on compliance with public procurement rules and on the implementation of public contracts. Ensuring effective control mechanisms in the healthcare sector, including public procurement aspects.

· Implementing effective protection mechanisms and raising awareness in both the public and private sectors for whistleblowers who report corruption and malpractice.

[1]      Anti-Corruption Strategy. Official Gazette No: 75/2008: http://narodne-novine.nn.hr/default.aspx.

[2]      Ministry of Justice (2008) Action Plan of the Anti-Corruption Strategy: http://www.antikorupcija.hr/Default.aspx?sec=502

[3]      This is also supported by the findings of the European Commission's Monitoring Report on Croatia's accession preparations of March 2013: http://ec.europa.eu/commission_2010-2014/fule/docs/news/20130326_report_final.pdf.

[4]      http://ec.europa.eu/commission_2010-2014/fule/docs/news/20130326_report_final.pdf.

[5]      Decision of the Constitutional Court of the Republic of Croatia No. U-I-448/2009 from July 19, 2012. Official Gazette 091/2012: http://cadial.hidra.hr/searchdoc.php?query=&lang=hr&annotate=on&bid=tOF7aAnPaLBnOASNXDMOaw%3D%3D 

[6]      The European Commission's Monitoring Report on Croatia's accession preparations of March 2013: http://ec.europa.eu/commission_2010-2014/fule/docs/news/20130326_report_final.pdf.

[7]      2013 Special Eurobarometer 397.

[8]      The first two being unemployment and performance of the Government.

[9]      Corruption in Croatia: bribery as experience by the population. UNODC Vienna and the Institute of Economics, Zagreb. 2011. http://www.unodc.org/documents/data-and analysis/statistics/corruption/Croatia_corruption_report_web_version.pdf

[10]    Corruption in Croatia: bribery as experience by the population. UNODC Vienna and the Institute of Economics, Zagreb. 2011. http://www.unodc.org/documents/data-and analysis/statistics/corruption/Croatia_corruption_report_web_version.pdf

[11]    2013 Flash Eurobarometer 374.

[12]    The first two being inefficient government bureaucracy and policy instability.

[13]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf.

[14]    Right to Access Information Act. Official Gazette No: 172/03, 144/10, 37/11, 77/11:  http://narodne-novine.nn.hr/clanci/sluzbeni/307079.html.

[15]    Access Info Europe - Anti-Corruption Transparency Monitoring Methodology. A practical guide to using the right of access to information for preventing and exposing corruption. October 2011. http://www.access-info.org/documents/Access_Docs/Using/Anticorruption/Anti_Corruption_Transparency_Monitoring_Methodology_25_Oct_2011.pdf

[16]    Right to Access Information Act, Official Gazette No. 25/13 of 28 February 2013.

[17]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)12_Croatia_EN.pdf  and http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)28_Second_Croatia_EN.pdf

[18]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)12_Croatia_EN.pdf

[19]    Political Activity and Electoral Campaign Financing Act. Official Gazette No: 24/11, 61/11, 27/13.

[20]    Ministry of Finance (2013) Regulation on amending and widening of the regulation on keeping records and issuing confirmations on receipts of voluntary contributions (donations) and membership fees, reports on received donations for campaign finance and expense reports (expense) of election campaign and financial statements for campaign finance. Available from:  http://narodne-novine.nn.hr/clanci/sluzbeni/2013_05_55_1124.html.

[21]    OECD (2012), Lobbyists, Governments and Public Trust, Volume 2: Promoting Integrity through Self-regulation, OECD Publishing. http://dx.doi.org/10.1787/9789264084940-en

[22]    http://ec.europa.eu/commission_2010-2014/fule/docs/news/20130326_report_final.pdf

[23]    Croatia: Corruption, Organized Crime and the Balkan Route. By Katelyn Foster, Research Associate, Adriatic Institute for Public Policy. January 25, 2012 http://adriaticinstitute.org/?action=article&id=32

[24]    http://ec.europa.eu/europe2020/pdf/themes/06_shadow_economy.pdf.

[25]    https://www.europol.europa.eu/sites/default/files/publications/octa_2011_1.pdf

[26]    http://ec.Europa.eu/commission_2010-2014/fule/docs/news/20130326_report_final.pdf.

[27]    Conflict of Interest Prevention Act. Official Gazette No: 26/11, 12/12.: http://narodne-novine.nn.hr/clanci/sluzbeni/2011_03_26_547.html

[28]    Article 338 of the Croatian Criminal Code.

[29]    Only three reported convictions between 2009 and 2011: http://expertforum.ro/wp-content/uploads/2013/03/Conflicts-of-interest-and-incompatibilities-in-Eastern-Europe.-Romania-Croatia-Moldova.pdf.

[30]    The European Commission's Monitoring Report on Croatia's accession preparations of March 2013: http://ec.europa.eu/commission_2010-2014/fule/docs/news/20130326_report_final.pdf

[31]    Of 342 decisions issued by the Commission between 2006 and 2011, only 19 were related to conflict of interests, while all others concerned breaches of asset disclosure obligations (following administrative checks) or incompatibilities.

[32]    The rest of the sanctions consisted of reprimand (2) and publication of Commission decisions at the expense of the official (9): http://expertforum.ro/wp-content/uploads/2013/03/Conflicts-of-interest-and-incompatibilities-in-Eastern-Europe.-Romania-Croatia-Moldova.pdf

[33]    Three of these pecuniary sanctions concerned the same mayor.

[34]    The uncertainty about the setting up of the Commission over the past two years also led to additional ambiguity on the scope of its verification powers over time: i.e. it was not entirely clear whether, once fully operational, the Commission will also check retroactively the declarations of interests and assets of the officials who ended their mandate in 2011. Once set up, the Commission gave assurances that such verifications will be carried out.

[35]    i.e. verifications as to whether the asset declaration templates were filled in as required by law and whether they were submitted on time.

[36]    Constitutional Court of the Republic of Croatia (2012), Decision on constitutionality of the Conflict of Interest Prevention Act, Official Gazette No: 126/12.

[37]    http://ec.europa.eu/commission_2010-2014/fule/docs/news/20130326_report_final.pdf.

[38]    Civil Servants Act, Law on Public Administration and Law on Civil Servants and Employees in Local and Regional Government.

[39]    Administrative procedures.

[40]    http://expertforum.ro/wp-content/uploads/2013/03/Conflicts-of-interest-and-incompatibilities-in-Eastern-Europe.-Romania-Croatia-Moldova.pdf..

[41]    http://ec.europa.eu/enlargement/pdf/key_documents/2010/package/hr_rapport_2010_en.pdf.

[42]    2013 Special Eurobarometer 397.

[43]    http://ec.europa.eu/enlargement/pdf/key_documents/2012/package/hr_rapport_2012_en.pdf.

[44]    http://ec.europa.eu/commission_2010-2014/fule/docs/news/20130326_report_final.pdf.

[45]    Conflict of Interest Prevention Act. Official Gazette No: 26/11, 12/12: http://narodne-novine.nn.hr/clanci/sluzbeni/2011_03_26_547.html.

[46]    http://ec.europa.eu/enlargement/pdf/key_documents/2012/package/hr_rapport_2012_en.pdf.

[47]    http://www.antikorupcija.hr/popis-korisnika-i-iznosa-donacija-i-sponzorstava-u; http://www.antikorupcija.hr/p-alignjustifydonacije-i-sponzorstva-trgovackih-dr.

[48]    http://www.antikorupcija.hr/p-alignjustifyakcijski-planovi-za-trgovacka-drustv.

[49]    http://www.legislationline.org/download/action/download/id/2266/file/Croatia_Electoral_Code_Ethics_2007.pdf.

[50]    Corruption in Croatia: bribery as experienced by the population. UNODC Vienna and the Institute of Economics, Zagreb. 2011.

http://www.unodc.org/documents/data-and-analysis/statistics/corruption/Croatia_corruption_report_web_version.pdf p35-36.

[51]    http://www.osce.org/odihr/87655

[52]    IPA 2008 twinning light project 'Strengthening capacities to remedy irregularities in public procurement procedures'. Public Procurement against corruption: http://www.javnanabava.hr/userdocsimages/userfiles/file/Razne%20publikacije/Brochure_anticorruption_ENG.pdf.

1€ equals 7,5 HRK on 1 December 2012

[53]    Public Procurement Act. Official Gazette No: 90/11.

http://narodne-novine.nn.hr/clanci/sluzbeni/2011_08_90_1919.html.

[54]    www.dkom.hr.

[55]    www.javnanabava.hr.

[56]    Electronic Announcement of Public Procurement. Available from: https://eojn.nn.hr/Oglasnik/.

[57]    integrityobservers.eu.

[58]    Anti-Corruption Response to Implementation of the Procurement Policies (ACRIP) – IPA 2008.

[59]    Corruption in Croatian public procurement. by Jagoda Radojcic. 2012. http://www.docstoc.com/docs/136907647/Corruption-in-Croatian-public-procurement.

[60]    2013 Flash Eurobarometer 374.

[61]    Highest percentage in the EU.

[62]    http://www.antikorupcija.hr/p-alignjustifyrezultati-istrazivanja-o-transparent.

[63]    http://ec.europa.eu/commission_2010-2014/fule/docs/news/20130326_report_final.pdf.

[64]    IPA 2008 twinning light project “Strengthening capacities to remedy irregularities in public procurement procedures”. Public Procurement against corruption pp 5-7  .http://www.javnanabava.hr/userdocsimages/userfiles/file/Razne%20publikacije/Brochure_anticorruption_ENG.pdf.

[65]    including the Labour Act, the Civil Servants Act, the Civil Servants and Employees in Local and regional Self-Administration Act, the Data Confidentiality Protection Act and the Act on the System of Internal Financial Controls in the Public Sector.

[66]    Tasks and challenges: Making whistleblowing work in Croatia. Dr. Snjezana Vasiljevic, Faculty of law, University of Zagreb http://www.whistleblowing-cee.org/countries/croatia/research/

[67]    Corruption in Croatia: bribery as experienced by the population. UNODC Vienna and the Institute of Economics, Zagreb. 2011.

[68]    http://www.sabor.hr/Default.aspx?sec=2726.

[69]    http://www.antikorupcija.hr/p-alignjustifybrosura-o-pravima-zvizdacap.

[70]    http://www.unodc.org/documents/data-and-analysis/statistics/corruption/Croatia_corruption_report_web_version.pdf.

[71]    2013 Special Eurobarometer 397.

[72]    http://dalje.com/en-croatia/minister-350-family-doctors-suspected-of-bribery-health-care-not-in-danger/450502

[73]    Study on corruption in the healthcare system in the EU, ECORYS, December 2013: http://ec.europa.eu/dgs/home-affairs/what-is-new/news/news/docs/20131219_study_on_corruption_in_the_healthcare_sector_en.pdf.

[74]    Idem.

[75]    Idem.

HUNGARY

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. Hungary has an integrity and prevention-oriented approach within its public administration.[1] The Hungarian Government adopted a two-year anti-corruption programme in early 2012 comprising a range of integrity-related measures for the public administration.[2] It does not cover the business sector, Parliament and local governments. Nevertheless, some municipalities have adopted ethical codes, which mostly provide general guidelines on fair treatment of clients without necessarily covering practical rules on gifts or favours.[3] In the latest annual integrity research of the State Audit Office, the factors raising the risk of corruption have increased by 5% as compared to the previous year, while the use of soft control measures such as codes of ethics has slightly improved.[4]

In relation to the central public administration, the anti-corruption programme focuses on prevention policies, such as the setting up of an integrity management system that started in 2013. This includes the appointment of integrity officers responsible for monitoring compliance with ethical requirements, anti-corruption training for civil servants, publication of a code of conduct for employees of state institutions, corruption impact assessment of governmental proposals and decrees, protection of whistleblowers, and further awareness-raising activities. Based on a Green Paper on ethical standards in the public service, a code of professional ethics of public servants and a code of conduct and ethical process for law enforcement bodies were adopted in mid-2013.[5] While the focus on prevention is welcome, the national anti-corruption programme, as highlighted by the Commission assessment of the 2013 national reform programme and convergence programme for Hungary, does not tackle adequately either the issue of insufficient law enforcement efforts in this area, nor the issue of stricter checks on party financing.[6] The programme addresses insufficiently the risks associated with clientelism, favouritism and nepotism at high levels of public administration, or those arising from the interface between businesses and political actors. The Council has also called on Hungary to take further adequate measures to tackle corruption.[7]

To increase coordination, the Minister of Public Administration, the President of the State Audit Office, the President of the Supreme Court and the Prosecutor General signed a statement of commitment for joint action against corruption at the end of 2011. Moreover, legislative amendments established the practice of publishing information on the website of all public institutions over the last decade to further enhance transparency in the use of public funds by limiting business secrets, expanding disclosure requirements and providing for the publication by budgetary authorities of financial information.[8]

Hungary has reinforced its integrity education system, introducing anti-corruption related matters in the national core curriculum since 2012. It has set up postgraduate programmes for public servants focused on integrity issues and included integrity programmes in the curriculum of the National University of Public Service since 2013. These programmes and training curricula promote innovative learning processes and were tested on targeted public administration groups (management and civil servant level) through close cooperation of government experts, civil society, private sector and academia.[9] Since the programme began in September 2013, about 2 000 public officials and civil society representatives have been trained.

Legal framework. Anti-corruption and integrity-related policies, both on the prevention and the repression side, are largely covered by a wide range of legislation. An extensive criminal legal framework is in place, covering both public and private sector corruption. A new Criminal Code has entered into force in July 2013.[10] The Code contains a number of new provisions on corruption offences, such as simplified definitions of crimes and longer prescription terms. In addition to active and passive trading in influence, the Criminal Code criminalises budget fraud and provides for new aggravating circumstances for a range of corruption-related offences. The Council of Europe Group of States against Corruption (GRECO) noted that the new legislation met an acceptable level of compliance with its recommendations.[11] Several additional amendments, including some to the criminal procedure code, were recently adopted to ensure speedier court proceedings.[12]

Institutional framework. Anti-corruption policies at national level are coordinated by the Ministry of Justice. Police and law enforcement were seen as one of the reliable pillars of national integrity by Transparency International’s National Integrity System report in 2011, while the judiciary received a less favourable score.[13] The National Election Office, the National Election Committee and the Ombudsman were assessed in the same report as the strongest pillars. The State Audit Office also plays an important role in the implementation of anti-corruption policies, notably through its control mechanism role. In 2011 an anti-corruption unit was established within the Chief Prosecutor’s Office. Public perception reveals some concerns regarding the effectiveness of prosecution of corruption. 82% of the Hungarian respondents to the 2013 Special Eurobarometer Survey on corruption[14] say that high-level corruption cases are not sufficiently pursued (EU average: 73%).

In 2011, the prosecution service reported 249 indictments out of 465 cases of alleged bribery and trading in influence.[15] According to the Hungarian authorities, in 2011 and 2012 there were over 700 detected corruption cases. However, there are few examples of high-profile cases that have reached the courts. One such example concerns a former mayor of a Budapest district who was convicted in the first instance for selling local government property at a loss to straw-man companies to re-sell them at an unfair level of profit. The conviction was confirmed on appeal and is now undergoing second appeal proceedings. Overall, criminal proceedings in corruption cases appear to be rather lengthy. Over the last decade, successive governments have implemented several anti-corruption measures within the police where a number of corruption cases involving police officers have revealed vulnerabilities. Such measures concerned: the elimination of cash payments for fines and the introduction of integrity testing within the National Protection Service in 2012.[16]

Opinion polling

Perception surveys. According to the 2013 Special Eurobarometer on Corruption[17], 89% of Hungarian respondents consider that corruption is a widespread problem in Hungary (EU average: 76%), while 19 % of respondents feel affected by corruption in everyday life (EU average: 26%).

Experience of corruption. When it comes to petty corruption, approximately 13% of Hungarian respondents to the 2013 Special Eurobarometer on Corruption stated that they were expected or asked to pay a bribe (as compared to an EU average of 4%). The vast majority of these allegations concerned the healthcare sector.

Business surveys. According to the Flash 2013 Eurobarometer Business Survey on corruption[18], 81% of the Hungarian business respondents consider that favouritism and corruption hamper business competition (EU average: 73%) and 59% of the respondents to the same survey say that corruption is a problem for their company when doing business in Hungary (EU average: 43%).

Background issues

Judiciary. In spite of an overall legislative and institutional framework that sets the main guarantees for the independence of the judiciary and of control institutions, alleged political ties of certain high-level officials within control institutions such as the State Audit Office or the National Judicial Office have raised a number of concerns over the recent years. A well-functioning judiciary system is a key element in the assessment of anti-corruption policies, given that the judiciary plays an important role in the repression of corruption and that the handling of sensitive corruption cases cannot prove its effectiveness without this prerequisite. Likewise, guarantees for constitutional checks and balances are crucial aspects that heavily influence the reliability of anti-corruption policies and limit the scope of potential abuses of power to the detriment of the public interest. In 2011 and early 2012, the Commission voiced concerns on a number of legislative and institutional measures, as well as controversial decisions concerning the premature termination of the mandate of the former president of the Supreme Court[19] and the extensive powers attributed to the President of the National Judicial Office.[20] Hungary took steps to address these issues, notably as regards the discriminatory retirement of judges and prosecutors.[21] In April 2013, the Commission expressed concerns with regard to the fourth amendments to the Constitution of Hungary, including those regarding the powers conferred on the President of the National Judicial Office to transfer cases, and, subject to a more detailed analysis, restrictions on the publication of political advertising.[22] In June 2013, the Council of Europe Venice Commission issued a report on the fourth constitutional amendment raising concerns regarding the 'supremacy of the basic principles contained in the Fundamental Law of Hungary'[23] Responding to these concerns, the Hungarian Government has withdrawn the measures concerning the transfer of court cases; the main line of these measures was confirmed by the Constitutional Court at the end of 2013. In September 2013 the Hungarian Parliament voted a fifth amendment to the Constitution addressing all the concerns mentioned above, including allowing advertising campaigns broadcast in commercial TVs and radio.

Private sector. The Second Implementation Report issued by the European Commission in June 2011 on the implementation of Framework Decision 2003/568/JHA on combating corruption in the private sector[24] concluded that Hungary has partially transposed the Framework Decision, given that some shortcomings remain as regards the definition of offences and the liability of legal persons, in particular as regards liability in case of lack of supervision and control. Through the new Criminal Code that entered into force in July 2013, the scope of the criminal liability of legal persons has been extended, including some areas where criminal liability of natural persons does not apply.[25] Some measures were taken to decrease the backlog of procedures. With regard to foreign bribery, the OECD noted in early 2012 that there has been progress in Hungary's enforcement actions, while stressing that the number of convictions remains low, possibly due to difficulties in applying provisions on the criminal liability of legal persons. The OECD also recommended improving awareness-raising efforts targeting the private sector, as well as public administration and public agencies that work with Hungarian companies active in foreign markets.[26]

Whistleblowing. A new law on whistleblowing was adopted in October 2013.[27] Previously, provisions on employees submitting information about violations of public interest were covered by the Act on the Protection of Fair Procedures of 2009.[28] The Act was accompanied at the time by another piece of legislation to set up the Public Interest Protection Office, but the latter did not enter into force.[29] The recently adopted law on whistleblowing aims to ensure safeguards of confidentiality of reporting and protecting whistleblowers from any negative consequences of their action. It also provides for the appointment of an official from the staff of each public institution tasked with minimising the institution's exposure to corruption and forwarding information received from witnesses to the Ombudsman. The new law also establishes the legal framework for protection of whistleblowers in the private sector and includes provisions on the confidentiality of the client-lawyer relationship. However, the law does have a number of shortcomings, such as the fact that whistleblowers are not protected from procedures against them in case they reveal professional or commercial secrets.

Transparency of lobbying. Hungary adopted an Act on lobbying in 2006.[30] However, given that it did not contain dissuasive sanctions and had little impact in practice,[31] this was repealed in 2010.[32] Currently there is no mandatory registration of lobbyists or any obligation on public officials to disclose or report contacts with lobbyists to a control body. The Government decree on the system of integrity management within public administration issued in 2013 obliges public servants to ask prior permission from their hierarchy to meet lobbyists and to also report back on the contacts or outcome of meetings.[33] There is no mechanism in place targeting the monitoring of the implementation of these obligations.

2. Issues in focus

Financing of political parties

Financing of political parties is regulated by an act which has been amended since its adoption in 1989.[34] Party funding has been subject to political debates across various governments. Political parties in Hungary get most of their financing from direct state funding.[35] Contributions from entities benefiting from state support, from foreign states and from anonymous donors are banned. If such contributions are accepted, they have to be paid to the state budget and, as a sanction, the state subsidy is reduced by a corresponding amount.[36] Party accounts with the limited amount of details prescribed by law have to be published once a year in the Official Journal. All donations above a certain threshold must be reported and published.[37] Since 2003, political parties have been allowed to establish one foundation for supporting their social, educational and similar social activities; these foundations are entitled to accept donations[38] from a large circle of supporters and are also entitled to state funding.[39]

As regards the electoral process, until 2013, individual candidates were allowed to spend very limited amounts on electoral campaigning.[40] Concerns have been raised that larger parties actually spend three times more on campaigns than the legislation allows.[41] In July 2013, a new act regulating candidates’ expenses for parliamentary electoral campaigns was adopted.[42] Municipal elections and referenda fall outside the scope of this new act. The act raised the threshold for individual candidates' expenses in parliamentary elections campaigns. However, it did not address some of the existing shortcomings also pointed out by GRECO in its evaluations.

The current legislation does not require parties to keep particularly detailed accounts or to submit them for examination.[43] The connections between the parties and their affiliated foundations are not clearly highlighted in the accounts. In its evaluations, GRECO raised concerns regarding the lack of transparency in the financing of electoral campaigns where ‘a great majority of such funding is not accounted for or reported at all'.[44] According to the new act on parliamentary elections, a minor share (i.e. approximately 20%) of campaign spending and campaign incomes will be traceable through campaign accounts, while the rest will be monitored by the State Audit Office.

There is no requirement to subject political parties to independent auditing on a regular basis. The State Audit Office is tasked with verifying the financing of political parties and electoral campaigns, carrying out a legality check every second year.[45] It regularly publishes reports and recommendations based on its findings from the examination. However, its narrow competence for sanctions and the detail of the information provided by parties limits the possible impact of the reports.[46] The State Audit Office has no direct powers at its disposal to impose administrative sanctions for infringement of certain rules, for example, when a party has not published its accounts on time. If it finds unlawful activities in the operation of any party, it is obliged to notify the prosecution services. GRECO called on the State Audit Office to considerably reinforce its monitoring of political party funding, with more frequent and thorough checks, and to be provided with the necessary capacity to do so.[47] It also recommended a review of the current sanctioning system to ensure that flexible, effective, proportionate and dissuasive sanctions can be applied for infringements of party funding rules. These matters have not been satisfactorily addressed to date.

Public procurement

Public procurement accounts for a significant proportion of the Hungarian economy. Public works, goods and services were worth about 22% of GDP in Hungary in 2011. The value of the calls for tender published in the Official Journal as a percentage of total expenditure on public works, good and services was 23.3% in 2011.[48]

According to the 2013 Eurobarometer Business Survey on corruption,[49] 47% of the Hungarian respondents consider that corruption is widespread in public procurement managed by national authorities (EU average: 56%) and 48% in that managed by local authorities (EU average: 60%). In particular, Hungarian respondents stated that the following practices were widespread in public procurement procedures: specifications tailor-made for particular companies (64%); abuse of negotiated procedures (48%); conflicts of interests in the evaluation of the bids (42%); collusive bidding (58%); unclear selection or evaluation criteria (48%); abuse of emergency grounds to avoid competitive procedures (42%); involvement of bidders in the design of the specifications (48%); and amendments of contractual terms after conclusion of contract (42%). These perception indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities to corruption in public procurement procedures.

Academic research[50] and assessments carried out by the Commission on public contracts (in particular EU-funded projects) suggest that, while practices appear generally formally compliant with the existing public procurement legal framework in Hungary, the following risks are most frequent, in particular affecting major infrastructure projects: conflicts of interest, high frequency of certain companies being successful in tenders for EU co-financed contracts, use of disproportionate selection and award criteria to favour particular bidders. In relation to EU structural funds, the Commission requested Hungary to define and undertake a set of actions in order to mitigate the above risks and in particular: market concentration analysis, ex-ante and ex-post procurement controls, training and guidance on procedures in practice, steps to stabilise staff and management. The Commission also raised reputational reservations in 2011 regarding 2007-2013 programmes and asked Hungary to take action to address the above-mentioned risks. Hungary took steps to follow these recommendations and undertook regular reporting. The reserve was therefore lifted in 2012.

In January 2012, a new Public Procurement Act entered into force, intended to increase transparency and simplify the procurement framework.[51] Additional amendments to the Public Procurement Act were adopted in June 2013.[52] Following these amendments, contracting authorities must publish on their websites information on negotiated procedures which take place without publication of contract notices, and the scope of the Public Procurement Database was broadened.[53] However, there is no effective sanctioning mechanism should this obligation be breached. A central procurement webpage[54] lists most of public procurement notifications, although it is not mandatory to disclose all types of public procurement documents.[55]

In accordance with the 2012 Act on Public Procurement, persons or organisations acting on behalf of the contracting authority and persons or organisations involved by the contracting authority in any activity related to the procedure or the preparatory work thereof shall provide a declaration in writing concerning conflicts of interest. The official taking the decision on the award of the contract in the name of the contracting authority may not be a member of the evaluation committee. In the case of a collective decision-making process, the persons delegated by the decision-making body in the evaluation committee may only have a consultant capacity and not a decision-making one. Breach of conflict of interest provisions triggers the annulment of the tender. Moreover, economic operators are excluded from participating in the procedure if they give false data or make false statements which may prejudice the fairness of competition. The rules on conflict of interest are the same at local and central level. However, there appears to be no centralised view of how the provisions on conflicts of interest are applied in practice.

In spite of the legislative changes, challenges remain as to the overall effectiveness of control mechanisms throughout the procurement cycle and in the post-award phase. As confirmed by the State Audit Office, particular weaknesses can be noted at local level.[56] Capacity problems, lack of transparency and control, and strong informal relations between local businesses and political actors make local governments more vulnerable to corrupt practices.

The Commission's assessment of the 2013 national reform programme and convergence programme for Hungary[57] stressed that, in spite of the 2012 procurement legislation, there is a persistently low level of competition in public procurement. A very high proportion of public procurement procedures involved a single bidder: 54.3 % in 2010 and 49.1 % in 2011. This figure was even higher when a negotiated procedure was used (on average 61 %). Furthermore, the above-mentioned assessment pointed out that questionable direct awards continue to surface. The electronic submission of tenders is currently not possible in Hungary, so the economic benefits of e-procurement cannot be exploited fully. All these aspects further enhance corruption-related risks.

In relation to local government supervision, in terms of general legal compliance (i.e. not necessarily limited to public procurement), the ongoing public administration reforms that reduced the level of decentralisation also ensured that government offices regained the power to supervise local governments on legal compliance. There is no available data for an assessment of the impact of this reform on control mechanisms at local level. Recent research on transparency of public procurement at local level showed that 40% of the municipalities do not sufficiently fulfil their obligation to disclose public interest data.[58] As good practice, some municipalities took steps towards ensuring public access to information concerning the execution phase of public contracts or the content of the public contracts.

In 2012, the State Audit Office (SAO) published a report on the deficiencies of internal audits at local government level in small entities, based on a pilot involving 12 municipalities.[59] The most frequent deficiencies found concerned: lack of internal regulations, lack of definitions regarding powers and responsibilities, insufficient financial risk management, lack of staff expertise, insufficient reporting, lack of separation of responsibilities, unregulated communication with external partners, and lack of a hierarchical management information system.

The State Audit Office has recently implemented an EU-funded project aiming at mapping, classifying and analysing corruption risks and evaluating the effectiveness of controls as regards the mitigation of corruption risks in the public sector. The first two surveys were implemented in 2011 and 2012, when over 1 000 budgetary authorities voluntarily filled in electronic data sheets each year, measuring the corruption risk profile. In 2013, the number of respondent authorities exceeded 1 400. The database with these electronic forms is publicly accessible on the web portal of the State Audit Office.[60] As part of this integrity project, detailed analyses of corruption risks in authorities involved in public procurement, administrative licensing and recipients of EU subsidies were prepared annually, and a new audit guide, covering also anti-corruption aspects, was developed by the State Audit Office.

Cooperation between audit and public procurement authorities on the one hand, and law enforcement bodies and prosecution on the other, could be improved. The notification rate of the former with regard to suspicions of corruption within public procurement is rather low.[61]

Asset disclosure and conflicts of interests

A wide range of civil servants (essentially everyone who proposes or makes decisions or carries out controls) as well as judges and prosecutors are obliged to submit a detailed asset and interest declaration of their household every one, two or five years.[62] In 2013, the regulations on asset declarations for high-level officials were further standardised. The Act covers officials of the State Audit Office, the General Attorney’s Office, National Bank of Hungary, Media Council, State Competition Office, Procurement Council and Fiscal Council. MPs are subject to detailed rules on conflicts of interest, and there is a temporary ban on taking up activities in the private sector under certain conditions.[63] Asset and interest declarations of government members, as well as senior civil servants and parliamentarians are available on the internet.[64] Data related to family members of civil servants and high-level officials are not published. While it is commendable that asset declarations are accessible on the internet, hence generating ample public debates, there is no comprehensive electronic system for their submission. Most of the published asset declarations are handwritten, thus making cross-checking more difficult. The declarations do not always include information enabling the identification of the assets.

The Parliamentary Committee of Immunity and Credentials is tasked with checks on asset declarations. This procedure can only be initiated if a person who requested a verification submits proof of factual indication that certain items of the asset declarations are suspicious. There is no independent oversight with verification powers over asset declarations or conflicts of interest concerning high-level elected and appointed officials. More broadly, favouritism and too close links between certain businesses and politicians in power are perceived as matters of concern which raise the risk of corrupt practices.[65]

Lower-ranking public officials have to submit more detailed asset declarations, which also contain asset identification data.[66] In case of suspicious of unjustified increase in wealth, tax proceedings may also be initiated. The declarations also include data on the relatives’ assets.

As regards public officials and law enforcement bodies, based on the Green Book of ethical standards detailed codes of conduct were put in place in mid-2013 containing provisions on conflicts of interest. The Green Paper also gives some general guidance to elected officials as far as their work in public service is concerned. There are, however, no codes of conduct for elected officials at central or local level and no particular statutory provisions that could trigger dissuasive sanctions in case of unjustified wealth or conflicts of interest. The Government’s anti-corruption programme for public administration requires the development of codes of conduct, but does not cover high-level elected and appointed officials.

Research conducted by Transparency International in the framework of the 'EU Funds Watch' project commissioned by OLAF that assessed the issues of fraud and corruption related to the distribution of EU funds concluded that, while the legal and institutional framework for the management of EU funds in Hungary is relatively well designed, serious corruption risks persist. They include: restriction of open competition and overwhelming presence of 'priority' projects, insufficient professional checks at the selection phase of project proposals, formalistic approach to audit and controls in the implementation phase, and inefficient regulation of conflict of interests, especially in relation to revolving door practices.[67]

The law on transparency of spending of public funds[68] contains a definition of conflict of interest which is interpreted very narrowly in some cases. For example, a decision maker cannot be a beneficiary of its own decision unless his decision was 'discretionary', a notion which in practice is interpreted narrowly. Moreover, it is problematic that only the conflict of interest between a public official and the beneficiary or contractor is considered, but not between these actors and their consultants.

Transparency and access to information

Laws on freedom of information were enacted in 2003 and 2005. They included provisions on the mandatory publication of public data (information on procurement, expenditure and contracts included)[69] and handling of freedom of information requests.[70] Though a new law on freedom of information entered into force in 2012,[71] key features remained the same. The new Constitution sets the ‘transparency of public ownership and public spending’ as a principle.[72]

Good practices – online platforms for facilitating access to information

http://www.k-monitor.hu/: K-Monitor Watchdog for Public Funds was founded in 2007 with the aim of creating an independent non-governmental forum that monitors Hungarian and international corruption-related cases. K-Monitor's website was created to gather, store and make available online articles concerning corruption, public financing, and the transparency of public life in Hungary. The articles stored in the database either deal with various kinds of corruption in public finances or contain specific cases. A record of both incriminating and exonerating material is kept. K-Monitor also recently launched a new website: http://ahalo.hu/ which links data on public contracts, farm subsidies and EU funds with information on company registries.

http://kimittud.atlatszo.hu/: After the user chooses the public authority to which the request for information is directed, a user-friendly interface loads a model request to be filled in. The system sends a message to the public authority. All answers received are stored and published on the webpage.

http://tasz.hu/informacioszabadsag/egyszeregy: contains detailed information and guidelines for those interested in obtaining public data.

In spite of the above-mentioned legislative framework on freedom of information which allows in principle for swift access to public interest information, several new legal provisions created some confusion as to the interpretation of the law.[73] Public institutions can refrain from fulfilling public interest information requests on grounds of business confidentiality. This appears to generate inconsistent interpretations in practice. Several other new laws have also led to problems in the interpretation of the overall framework. The new law on the re-use of public sector information[74] brought uncertainties with regard to free access to information of public interest. There are similar interpretation issues regarding the new law on budget, which no longer regards the contracts of companies with majority state-ownership as being information of public interest.

Recent amendments to the law on freedom of information[75] were passed in June 2013. These raised some additional concerns as regards the risks of too wide interpretation of provisions on abusive requests for information. Concerns related to the amendments of the freedom of information law were also linked to debates generated by the implementation of a new tobacco retail licensing system.[76]

As regards state-owned companies, the Act on Freedom of Information (in case of companies fulfilling public functions),[77] the Act on State Property,[78] and the Act on the economic operation of state-owned companies set out the basic rules on the information that should be published on the website of these entities. However, interpretation and practical application of these legal provisions varies widely. In 2012, a new act was adopted extending the powers of the Government Control Office (KEHI) to control the management of state-owned companies.[79] This may help to ensure more consistent application of the transparency provisions and of control mechanisms. In late 2013, the National Development Agency reinforced transparency obligations for subsidised companies which have to fill in a questionnaire about their beneficial owners.

Healthcare (informal payments)

Successive Eurobarometer surveys showed that petty corruption is particularly prevalent in Hungary's healthcare sector. While approximately 13% of the respondents in the 2013 Special Eurobarometer Survey on corruption stated that they were expected or asked to pay a bribe, an overwhelming majority of these cases were linked to healthcare (8%, meaning 2/3 of all cases as compared to an EU average of 2%). Similarly, among Hungarian respondents who had come into contact with the medical institutions, 10% (fourth highest percentage in the EU) admitted to having made an extra payment or giving a valuable gift to a nurse or doctor or having made a donation to a hospital. 32% mentioned that they did so before the care was given, while 47% made the payments or provided the gifts after the care was given.

‘Gratitude’ payments made after the delivery of standard medical services are a tolerated practice in Hungary and, unlike payments that precede the medical intervention or those concerning ‘non-standard’ services such as prioritising on waiting lists, are not considered to be corruption. As early as 2003, GRECO pointed to the ‘gratitude’ payments for public services especially in the healthcare sector as a form of ‘accepted’ corruption.[80] Not much has changed in practice in this regard ever since.

Under the Labour Code, the director of a healthcare institution can make gratitude payments legal by allowing the acceptance of the facilitation payment offered by the patients in a written agreement.[81] If the manager does not allow such payments, they are considered to be an 'undue advantage', and personnel accepting a gratitude payment commits a crime.[82] While the criminalisation of accepting a promise of a gratitude payment or the payment itself is a commendable step, only broader reforms are likely to improve the situation in practice. The current legislative solution carries a risk of creating legal uncertainly as well as unequal treatment among personnel in the healthcare sector. This is an interpretation that enables the legalisation of an outright form of corruption.

Despite efforts to reduce incentives to pay gratitude payments, including raising the salaries of healthcare employees by 50 % in late 2002, and despite that fact that GRECO declared the efforts satisfactory,[83] the statistics show limited progress. The rather low level of salaries of doctors and medical staff in the public sector create additional challenges.

3. Future steps

Steps have been taken to implement ample integrity strategies and to promote better transparency standards within the public administration, supported by civil society. However, clientelism, favouritism and nepotism in public administration remain matters of concern. Concerns related to strong informal relations between businesses and political actors at local level, making local governments more vulnerable to corrupt practices, persist. Some shortcomings remain, notably as regards financing of political parties and effectiveness of control mechanisms, especially for public procurement. Petty corruption appears to be a problem in the healthcare sector where incentives to pay informal fees for preferential treatment are fairly common.

The following points require further attention:

· Further clarifying the rules on accounting and bookkeeping of political parties and ensuring that all other entities affiliated to the parties are recorded and accounted for. Strengthening transparency and the internal and independent auditing of political parties, and the checks on party funding carried out by the State Audit Office, as well as the dissuasiveness of the sanctioning system.

· Strengthening independent ex- ante and ex-post checks throughout the entire public procurement cycle at both central and local levels. Ensuring adequate verification mechanisms to detect conflicts of interest and widening the scope of conflict of interest provisions on public spending. Further developing consistent and effective prevention tools within contracting authorities, with a particular focus on the local level. Improving cooperation between auditing and public procurement authorities on the one hand and law enforcement on the other.

· Further enhancing transparency and independent verification mechanisms for asset declarations and conflicts of interest of elected and appointed officials, both at national and local levels. Developing comprehensive codes of conduct for elected officials at central, regional and local levels, also covering conflict of interest aspects and ensuring adequate accountability tools and dissuasive sanctions for potential violations of such codes. Taking firmer steps to address the corruption risks associated with clientelism and favouritism within public administration. Ensuring a consistent and adequately broad interpretation of the legislation on access to information.

· Elaborating a comprehensive programme to progressively eliminate the practice of gratitude payments, rewards or other forms of informal payments to public employees in the healthcare sector.

[1]      http://korrupciomegelozes.kormany.hu/

[2]      Governmental decree of 1104/2012. (IV. 6.) [A Közigazgatás Korrupció-megelőzési Programja 2012-2014.] The corruption prevention program of the public administration, 2012-2014. http://www.kormany.hu/hu/kozigazgatasi-es-igazsagugyi-miniszterium/parlamenti-allamtitkarsag/hirek/atfogo-korrupcioellenes-program-indul.

[3]      Among the municipalities with the largest populations, Miskolc, Győr, Pécs and Szeged have not published any ethical code. http://www.miskolc.hu/; http://www.gyor.hu/; http://hivatal.pecs.hu/onkormanyzat/; http://www.szegedvaros.hu/. For a good example, see the code of ethics of Debrecen. http://portal.debrecen.hu/upload/File/varoshaza/onkormanyzat/egyeb/etikai_kodex2011.pdf. For an overview of the existence of such codes, see the following: "A helyi önkormányzatok működésének átláthatósága – kérdőíves felmérés tükrében", HUSK/0901/1.5.1/0246. project; http://www.transparency.hu/uploads/docs/esettanulmany.pdf.

[4]      http://integritas.asz.hu/uploads/files/Összefoglaló_tanulmány_aláírt.pdf.

[5]      Resolution of the National meeting of the Hungarian Government Officials’ Body on the Code of professional ethics of the Hungarian Government public officials which provides, among others, detailed provisions on professional ethics, reporting of misconduct, obligation to ensure impartiality, conflict of interests, acceptance of gifts, obligation to refrain from offering any undue advantages. The code also contains detailed provisions on disciplinary procedures that can be triggered as a result of a breach of ethical obligations.

[6]      Commission Staff Working Document: Assessment of the 2013 national reform programme and convergence programme for Hungary, Accompanying the document Recommendation for a Council Recommendation on Hungary’s 2013 national reform programme of 29 May 2013, SWD(2013) 367 final: http://ec.europa.eu/europe2020/pdf/nd/swd2013_hungary_en.pdf.

[7]      Council Recommendation 2013/C 217/10 of 9 July 2013.

[8]      Act No. XXIV of 2003 [2003. évi XXIV. törvény a közpénzek felhasználásával, a köztulajdon használatának nyilvánosságával, átláthatóbbá tételével és ellenőrzésének bővítésével összefüggő egyes törvények módosításáról] - http://www.complex.hu/kzldat/t0300024.htm/t0300024.htm; the act was replaced by the act on the right to self-determination and freedom of information [2011. évi CXII. törvény az információs önrendelkezési jogról és az információszabadságról] –; http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A1100112.TV

[9]      http://korrupciomegelozes.kormany.hu/lezarult-az-integritasmenedzsment-vezetoi-trening-elso-pilot-kepzese ; http://korrupciomegelozes.kormany.hu/kozszolgalati-etika-es-integritas-pilot-trening-a-magyar-allamkincstar-munkatarsainak

[10]    Criminal Code of 2012 [2012. évi C. törvény a Büntető Törvénykönyvről] ; http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A1200100.TV

[11]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)3_Hungary_EN.pdf.

[12]    Act no CXII of 2013 [2013. évi CXII. törvény a büntetőeljárások időszerűségének javítása érdekében szükséges egyes törvények módosításáról] - http://njt.hu/cgi_bin/njt_doc.cgi?docid=161469.243992

[13]    http://www.transparency.org/whatwedo/nisarticle/hungary_2011.

[14]    2013 Special Eurobarometer 397.

[15]    These statistics cover only those corruption cases where the prosecutor has exclusive investigation powers; other, mostly minor cases of corruption are investigated by the police and are not included in these: statisticshttp://www.mklu.hu/cgi-bin/index.pl?lang=hu/

[16]    http://nvsz.hu/en/activities/test.

[17]    2013 Special Eurobarometer 397.

[18]    2013 Flash Eurobarometer 374.

[19]    http://europa.eu/rapid/press-release_IP-12-24_en.htm.

[20]    Particularly in relation to the power to designate a court in a given case and to transfer judges without consent: http://europa.eu/rapid/press-release_MEMO-12-165_en.htm.

[21]    In 2012, the European Commission brought a case before the European Court of Justice for violations of the EU legislation on grounds of discriminatory retirement rules in relation to the Hungarian legislation that drastically reduced the retirement age of judges, prosecutors and public notaries. This would have led to the early retirement of 236 judges in 2012 alone (i.e. 10% of all judges within just one year). The Court ruled against Hungary, acknowledging the discriminatory nature of the law. Shortly before this decision, Hungary’s Constitutional Court ruled on its unconstitutionality, the law being consequently repealed. While this case was related to infringement of European employment rules, it also raised some concerns as to its effect on the overall stability and independence of the justice system.

[22]    http://europa.eu/rapid/press-release_IP-13-327_en.htm

[23]    http://www.venice.coe.int/webforms/documents/?pdf=CDL-AD(2013)012-e .

[24]    COM(2011) 309 final, Second Implementation report of FD 2003/568/JHA of 6 June 2011: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0309:FIN:EN:PDF

[25]    Act No. CIV of 2012 on criminal measures applicable against legal persons [2001. évi CIV. törvény a jogi személlyel szemben alkalmazható büntetőjogi intézkedésekről]

[26]    http://www.oecd.org/daf/anti-bribery/Hungaryphase3reportEN.pdf.

[27]    A panaszokról és a közérdekű bejelentésekről szóló 2013. évi CLXV. Törvény: http://www.kozlonyok.hu/nkonline/MKPDF/hiteles/MK13173.pdf.

[28]    Act CLXIII of 2009 on the Protection of Fair Procedures [2009. évi CLXIII. törvény a tisztességes eljárás védelméről, valamint az ezzel összefüggő törvénymódosításokról] http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A0900163.TV

[29]    The Office was tasked with receiving reports of wrongdoing and carrying out the corresponding investigations, assisting whistleblowers, analysing corruption trends, advising public and private bodies on adopting anti-corruption measures, designing codes of conduct and providing anti-corruption training.

[30]    Act XLIX of 2006 on lobbying [2006. évi XLIX. törvény a lobbitevékenységről]: http://www.complex.hu/kzldat/t0600049.htm/t0600049.htm.

[31]    Tóth E. (2010) 'A lobbitörvény és a láthatatlan lobbi', Új Magyar Közigazgatás, Vol. 3, No. 4, pp. 22-39.

[32]    Act repealed by act No. CXXXI of 2010; the latter however incorporated certain basic rules into the act on the legislative process [2010. évi CXXXI. törvény a jogszabályok előkészítésében való társadalmi részvételről].

[33]    50/2013. (II. 25.) Korm. Rendelet az államigazgatási szervek integritásirányítási rendszeréről és az érdekérvényesítők fogadásának rendjéről

[34]    Act no. XXXIII of 1989 on the functioning and financing of parties [1989. évi XXXIII. törvény a pártok működéséről és gazdálkodásáról] - http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=98900033.TV.

[35]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2009)8_Hungary_Two_EN.pdf.

[36]    Section 4 of Act No. XXXIII  of 1989 on the functioning and financing of parties.

[37]    See the annex to Act No. XXXIII  of 1989. All private donations have to appear under one of two categories: inland or foreign donors. All donations above HUF 500 000, the equivalent of EUR 1 666 from Hungarians and above HUF 100 000 (EUR 333) from foreigners have to be separately entered in the books.

[38]    Albeit not anonymous.

[39]    See Act No XLVI of 2003 amending Act No. XXXIII of 1989.

[40]    Act No. C. 1997 on the political elections, 92. § (1)

[41]    Party and Campaign Financing  (2012) Hungary: Transparency International: http://www.transparency.hu/PARTY-_AND_CAMPAIGN_FINANCING  .

[42]    Act No. XXXVI of 2013 [2013. évi XXXVI. törvény a választási eljárásról].

[43]    See the annex to the Act no. XXXIII  of 1989.

[44]    GRECO (2011) Evaluation Report on Hungary Transparency of Party Funding. 7-11 June. Strasbourg. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282009%298_Hungary_Two_EN.pdf. p. 21

[45]    Sections 9-10 of Act No. XXXIII  of 1989 on the functioning and financing of parties.

[46]    See for the parties represented in the Parliament: http://www.asz.hu/jelentes/1207/jelentes-a-lehet-mas-a-politika-2009-2010-evi-gazdalkodasa-torvenyessegenek-ellenorzeserol/1207j000.pdf; http://www.asz.hu/jelentes/12111/jelentes-a-rendszeres-allami-tamogatasban-nem-reszesulo-egyes-partok-utoellenorzeserol/12111j000.pdf; http://www.asz.hu/jelentes/1206/jelentes-a-jobbik-magyarorszagert-mozgalom-2009-2010-evi-gazdalkodasa-torvenyessegenek-ellenorzeserol/1206j000.pdf; http://www.asz.hu/jelentes/1205/jelentes-a-magyar-szocialista-part-2009-2010-evi-gazdalkodasa-torvenyessegenek-ellenorzeserol/1205j000.pdf;  http://www.asz.hu/jelentes/1105/jelentes-a-2010-evi-orszaggyulesi-valasztasra-forditott-penzeszkozok-elszamolasanak-ellenorzeserol-a-jelolo-szervezeteknel-es-a-fuggetlen-jeloltnel/1105j000.pdf; http://www.asz.hu/jelentes/13018/jelentes-a-fidesz-magyar-polgari-szovetseg-2010-2011-evi-gazdalkodasa-torvenyessegenek-ellenorzeserol/13018j000.pdf .

[47]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282009%298_Hungary_Two_EN.pdf. p. 21

[48]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[49]    2013 Flash Eurobarometer 374.

[50]    Papanek G. (2010) 'Corruption in public procurement and in general in Hungary', Public Finance Quaterly, Vol. 1, No. 2, pp. 298-320.

[51]    Act CVIII of 2011.

[52]    Act CXVI of 2013 on the amendment of Act CVIII. of 2011 on public procurements.

[53]    Negotiated procedures without publication of contract notice accounted for 34% of total procurement value in the national procurement regime in 2012: A Közbeszerzési Hatóság 2012. évi beszámolója. Annual Report of the Public Procurement Authority, 2012: http://www.parlament.hu/irom39/10294/10294.pdf, page 21

[54]    www.kozbeszerzes.hu.

[55]    E. g. detailed evaluation forms etc.

[56]    "Tiszta társadalom, tiszta gazdaság", Conference at the Széchenyi István University in 2012. The short summary of the speech is available at the website of the SAO: http://www.aszhirportal.hu/hirek/tiszta-tarsadalom-tiszta-gazdasag-konferencia-a-gyori-szechenyi-istvan-egyetemen/

[57]    Commission Staff Working Document: Assessment of the 2013 national reform programme and convergence programme for Hungary, Accompanying the document Recommendation for a Council Recommendation on Hungary’s 2013 national reform programme of 29 May 2013, SWD(2013) 367 final: http://ec.europa.eu/europe2020/pdf/nd/swd2013_hungary_en.pdf .

[58]    http://www.transparency.hu/Municipalities_and_public_procurement?bind_info=index&bind_id=0.

[59]    Tóth, K. (2013): http://www.asz.hu/jelentes/1282/osszegzes-a-helyi-onkormanyzatok-penzugyi-helyzetenek-es-gazdalkodasi-rendszerenek-2011-evi-ellenorzeseirol/1282j000.pdf.

[60]    http://integritas.asz.hu/.

[61]    Burai P. and Hack P.(eds) (2012) Corruption Risks in Hungary 2011. Budapest: Transparency International Hungary, p. 124.

[62]    Act on the obligation of asset declarations [2007. évi CLII. törvény egyes vagyonnyilatkozat-tételi kötelezettségekről]

[63]    Chapter VIII of act No. XXXVI of 2012 on the Parliament [2012. évi XXXVI. törvény az Országgyűlésről] http://www.complex.hu/jr/gen/hjegy_doc.cgi?docid=A1200036.TV

[64]    Act No. XLIII of 2010 on the standing of the members of government and state secretaries [A központi államigazgatási szervekről, valamint a Kormány tagjai és az államtitkárok jogállásáról szóló 2010. évi XLIII. törvény] 12. § http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A1000043.TV. Declarations of members of the government are linked to their profile on the website of the government, see http://www.kormany.hu/hu/a-kormany-tagjai. For members of Parliament, see http://parlament.hu/internet/plsql/ogy_kpv.kepv_lis?p_ckl=39.

[65]    http://www.transparency.org/whatwedo/nisarticle/hungary_2011.

[66]    Act CLII of 2007. [2007. évi CLII. törvény egyes vagyonnyilatkozat-tételi kötelezettségekről]: http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A0700152.TV.

[67]    EU Funds Watch Project, Hungary, June 2013, Transparency International Hungary, OLAF/Hercule 2012/2013, Grant Agreement OLAF/2012/D5/024.

[68]    Law CLXXXI of 2007.

[69]    Act XXIV of 2003. [2003. évi XXIV.törvény a közpénzek felhasználásával, a köztulajdon használatának nyilvánosságával, átláthatóbbá tételével és ellenőrzésének bővítésével összefüggő egyes törvények módosításáról] http://www.complex.hu/kzldat/t0300024.htm/t0300024.htm.

[70]    Act XC of 2005. [2005. évi XC. törvény az elektronikus információszabadságról] t http://www.complex.hu/kzldat/t0500090.htm/t0500090.htm.

[71]    Act CXII of 2011. [2011. évi CXII. törvény az információs önrendelkezési jogról és az információszabadságról] http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A1100112.TV&timeshift=1.

[72]    Art. 38-39 of Fundamental Law of Hungary http://www.kormany.hu/download/4/c3/30000/THE%20FUNDAMENTAL%20LAW%20OF%20HUNGARY.pdf.

[73]    Péterfalvi Attila (2012) A nemzeti vagyonnal gazdálkodó vagy azzal rendelkező, piaci szereplő gazdasági társaságok üzleti adatainak nyilvánosságáról [Online]. Hungary: Nemzeti Adatvédelmi és Információszabadság Hatóság. Retrieved from: http://naih.hu/files/-zleti-titok-kontra-nyilvanossag-AJ-NL-S.pdf

[74]    Act LXIII of 2012. [2012. évi LXIII. törvény A közadatok újrahasznosításáról].

[75]    2013. évi XCVI. Törvény – 11 June 2013

[76]    New legislation passed in April 2013 monopolising the retail of tobacco products. Only retailers with concession contracts would be licenced to the retail trade with tobacco products. The transparency of the concession process, including evaluations and awards, was heavily criticised by the civil society.

[77]    Act CXII of 2011. [2011. évi CXII. törvény az információs önrendelkezési jogról és az információszabadságról] http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A1100112.TV&timeshift=1.

[78]    Act CVI. of 2007. [2007. évi CVI. törvény az állami vagyonról] http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A0700106.TV.

[79]    2012. évi CLXXXIX. törvény egyes törvényeknek a kormányzati ellenőrzéssel összefüggő módosításáról. http://www.complex.hu/kzldat/t1200189.htm/t1200189.htm

[80]    GRECO Eval I Rep (2002) 5E Final, Evaluation Report on Hungary, First Evaluation Round, adopted by GRECO at its 13th Plenary Meeting (Strasbourg, 24-28 March 2003) – para 8.

[81]    See the labour code, section 52 [2012. évi I. törvény a munka törvénykönyvéről] http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A1200001.TV

[82]    See the Criminal Code, section 291 (1), criminalising the acceptance of a promise of a payment.

[83]    Compliance Report on Hungary GRECO Eval RC- I (2004) 14E Final, adopted by GRECO at its 22nd Plenary Meeting (Strasbourg, 14-18 March 2005).

IRELAND

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. The Government is following an ambitious programme of political and legislative reform aimed at enhancing openness, transparency, accountability and anti-corruption standards.[1] It has responded to a number of shortcomings identified as a result of the investigations into several large-scale cases where politicians and industry players colluded either in an illegal and corrupt manner or legally but in an improper or unethical manner.[2] As part of this reform, the Government has taken up the recommendations of the Mahon Tribunal of Inquiry and is in the process of implementing or considering the majority.[3] A number of additional legislative measures have already been passed or are in preparation, such as those concerning parliamentary inquiries, privileges and procedures, strengthening the sanctioning regime for corruption offences, whistleblower protection and lobbying.[4]

Legal framework. Ireland has recently ratified the United Nations Convention against Corruption (UNCAC). In 2011, it introduced a Criminal Justice Act that increases the investigative powers of law enforcement when dealing with white-collar crime. As confirmed by the Council of Europe's Group of States against Corruption (GRECO) in December 2013, criminal legislation is largely compliant with the requirements of the Council of Europe instruments and in line with the vast majority of GRECO recommendations.[5] Furthermore, a broad anti-corruption legislative reform programme is being implemented. Ireland has tightened rules on the financing of political parties and promoted greater transparency as regards party accounts.[6] It is currently reviewing a draft law to consolidate the seven overlapping anti-corruption statutes and create a set of new offences, including trading in influence, and strengthening the penalties for corruption, including removal from or ban on holding public office.[7] The Houses of the Oireachtas (Inquiries, Privilege & Procedures) Act 2013 seeks to establish a comprehensive statutory framework to conduct inquiries, clarifying the role of the Houses in securing accountability through investigations into matters of significant public importance and providing protection for confidential communication from members of the public who wish to bring wrongdoing to the attention of the Members of the Houses without having their identity disclosed.[8] An (Amendment) Bill was signed into law in October 2012[9] to extend the remit of the Ombudsman.[10] The Government also submitted a Freedom of Information Bill aimed at further removing obstacles to freedom of information and strengthening the necessary safeguards for the disclosure of information in the public interest.[11] Moreover, it has committed itself to overhauling the existing statutory framework for ethics and for strengthening civil service accountability.[12] In January 2014, the Department of Public Expenditure and Reform published a consultation paper on strengthening civil service accountability and performance.[13]

Institutional framework. The competence to prevent, detect, investigate and prosecute corruption and white-collar crime is spread across a number of agencies with a mandate to tackle corruption such as tribunals of inquiry, commissions of inquiry, high court inspectors, the Financial Regulator, the Standards in Public Office Commission (SIPO), local authorities, the Ombudsman, parliamentary committees on members' interests, the Garda Bureau of Fraud Investigation within the police, the Criminal Assets Bureau (CAB), the Office of the Director of Corporate Enforcement (ODCE), the Comptroller and Auditor-General, the Public Accounts Committee and the Director of Public Prosecutions (responsible for all criminal prosecutions of the most serious cases).

Opinion polling

Perception surveys. According to the 2013 Special Eurobarometer on Corruption.[14] 27% of the Irish respondents consider that they are affected by corruption in their daily lives (EU average: 26%), while 81% believe that corruption is widespread in their country (EU average: 76%).

Experience of corruption. In the 2013 Special Eurobarometer on Corruption, Ireland has among the lowest percentages of respondents who say that they personally know someone who takes or has taken bribes (8%, as compared with an EU average of 12%). Likewise, only 3% of the Irish respondents admitted that over the previous 12 months they were asked or expected to pay a bribe for services (EU average: 4%).

Business surveys. According to the 2013 Eurobarometer survey on businesses, only 16% of businesses in Ireland (among the four lowest percentages in the EU) claim that corruption is an obstacle to doing business in their country (EU average: 43%).[15] However, 74% of the Irish business respondents say that favouritism and corruption hamper business competition (EU average: 73%), while 61% state that bribery and the use of connections is often the easiest way to obtain certain public services (EU average: 69%). 28% of the respondents (EU average: 32%) say that corruption has prevented them or their company from winning a public tender or a public procurement contract. 39% of the respondents considered that corruption is widespread in public procurement managed by national authorities and that managed by regional and local authorities.

Background issues

Economic context. As noted in the 2011 Economic Adjustment Programme for Ireland, the country experienced strong growth from the early 1990s onwards, after decades of poor economic performance.[16] Amid intense competition for profits in the booming economy and property market, the pace of credit expansion accelerated sharply. By the autumn of 2010, the loss of investor confidence in Ireland triggered a crisis. Deposit outflows from the banking sector accelerated and the cost of government borrowing reached unsustainable highs. The credibility and effectiveness of government guarantees in the banking sector faded. These challenges led the Irish authorities in November 2010 to request financial assistance from the EU, the euro-area Member States and the International Monetary Fund (IMF); they complied in a satisfactory manner with their commitments to 2013. Lengthy investigations that have not yet led to court decisions regarding financial institutions at the heart of the banking crisis in Ireland have contributed to a general climate of mistrust in the transparency and accountability of the financial sector in the country, and in the capacity of corporate oversight and enforcement. For instance, the investigation of the alleged irregularities concerning the Anglo Irish Bank lasted nearly four years before an indictment was issued against its former CEO, who is facing 12 charges in connection with financial irregularities.

Private sector. Ireland correctly transposed the provisions of Framework Decision 2003/568/JHA concerning the definition of active and passive corruption in the private sector, as well as those regarding penalties applicable to natural and legal persons and liability of legal persons.[17] In relation to foreign bribery, in its 2013 progress report on the implementation of the OECD Anti-Bribery Convention Transparency International placed Ireland within the cluster of countries where no enforcement could be noted and no investigations had recently commenced, were underway or had been concluded.[18] In December 2013, the OECD raised concerns about the fact that Ireland has not prosecuted any foreign bribery cases in 12 years, though it is currently investigating one case and assessing three.[19] The OECD stressed that Ireland has taken an insufficiently proactive approach to the investigation of foreign bribery, mainly due to a lack of adequate resources, and recommended a review of the legislation on corporate liability for foreign bribery.

Public procurement. Public works, goods and services in Ireland accounted for 14.6% of GDP in 2011.[20] The National Public Procurement Policy Unit (NPPPU) attached to the Department of Finance is responsible for procurement policy in Ireland. The NPPPU published public procurement guidelines[21] that make contracting authorities responsible for guarding against corrupt or collusive practices.[22] The Government Contracts Committee and the NPPPU also published general ethics in public procurement guidelines to help public-sector buyers conduct purchasing operations in line with probity and accountability standards.[23] These contain detailed provisions on the disclosure of conflicts of interest and acceptance of gifts and hospitality by those involved in public procurement.

Conflict of interests and asset disclosure. Ireland has put in place a (legal and institutional) ethics framework for public offices covering disclosure of interests and assets, codes of conduct, tax clearance obligations and the Standards in Public Office Commission (SIPO).[24] A large number of recommendations by the Mahon Tribunal of Inquiry concerned conflicts of interests, described by the Tribunal as the 'root cause of corruption'.[25] Codes of conduct for public officials caution against, but do not prohibit, seeking or taking up employment in the private sector within a cooling-off period. Nevertheless, former senior civil servants and senior local authority officials in certain sensitive areas must observe a 12-month moratorium before taking jobs in the private sector. Moreover, the 2013 General Scheme of the Lobbying Regulation Bill lays the basis for further provisions on revolving-door practices.[26] More recently, mainstream political parties made ending cronyism in Irish political life part of their political programmes. The transparency and accountability system for ministerial appointments to the boards of, or to other positions in, public bodies appears to require further consideration, as analysis of the network of persons involved within these boards revealed risks relating to favouritism, cronyism and patronage.[27] The Department of Public Expenditure and Reform has started a project to review the legal framework on ethics and undertake a reform of the current system in order to develop a single, comprehensive piece of legislation.

Whistleblowing. The Protected Disclosures Bill was published in July 2013 and is expected to be adopted into law soon. The Bill establishes a comprehensive far-reaching legal framework for the protection of whistleblowers across the public and private sectors against reprisals for sharing information relating to wrongdoing, cover-ups and other harm to the public interest which comes to their attention in the workplace.[28] The Bill provides for a wide definition of wrongdoing and the safeguards provided in the legislation are extended to a wide definition of ‘workers’. Whistleblowers will benefit from civil immunity from actions for damages and a qualified privilege under defamation law.[29] The Bill seeks to ensure that the worker is encouraged to raise any concern with his or her employer in the first instance by establishing the simple requirement that the whistleblower reasonably believes that the information being disclosed shows or tends to show wrongdoing. It also seeks as much as possible to ensure protection of the identity of a whistleblower. Special arrangements are put in place for disclosures relating to law enforcement matters and those that could adversely affect Ireland’s security, defence or international relations.

Transparency of lobbying. As yet, Ireland has no legislation on lobbying. In spring 2013, the General Scheme of the Lobbying Regulation Bill was approved by the Government, setting out the policy approach to the drafting of legislation in this area.[30] The Bill provides for a mandatory register of lobbying to make information available to the public on the identity of those communicating on specific policy and legislative matters or prospective decisions with designated public officials or office-holders. It also provides for a framework for holding those engaged in lobbying accountable for the manner in which they conduct the activity. The General Scheme of the Lobbying Regulation Bill 2013 lays down restrictions and conditions, applicable for a specified period of time, on designated officials and office-holders taking up certain posts where a possible conflict of interest arises. Overall, the focus of the Bill appears to be on the responsibilities of lobbyists and to a lesser extent on the public officials.

Media. The Irish media plays an important role in exposing and following corruption allegations. However, some concerns have emerged over time with regard to the consolidation of ownership. The Minister of Communications, Energy and National Resources has noted that there is a growing consolidation of media ownership, also stressing that the 'government's commitment in respect of ensuring that there is both diversity of content and diversity of ownership in the media remains in place'. In her report on Ireland, the United Nations Special Rapporteur on Human Rights noted that the reported use of litigation and threatened litigation intimidate journalists. She underlined ‘the importance of the Press Ombudsman and the Press Council, established to safeguard and promote professional and ethical standards in Irish printed media, and which can resolve complaints about the accuracy and fairness of coverage’.[31]

2. Issues in focus

Prosecution of corruption

The Criminal Justice Act 2011 has enhanced the powers of the Office of the Director of Corporate Enforcement (ODCE), including as regards gathering of evidence in relation to witnesses, who may now be compelled to provide certain documents and information. It also identifies new categories of white-collar crime, so that more corrupt practices are covered. However, since February 2009, the ODCE's efforts have been largely focused on the investigation into the Anglo Irish Bank, which has been at the centre of the Irish banking crisis. The investigations in that complex case have proved to be rather lengthy.

The overall ability of the oversight agencies to impose dissuasive sanctions on those identified as having engaged in corrupt practices or ethical breaches appears limited. The number of indictments and convictions in such cases is rather low and dissuasive sanctions are scarce. Statistics show that convictions for white-collar crime fell substantially between 2003 and 2010, even though the number of cases increased.[32]

The Standards in Public Office Commission (SIPO) has a mandate to oversee political finance regulations and to enforce the Ethics Acts, which regulate conflicts of interest at national level, mainly through disclosure rules. However, as SIPO itself has highlighted, since 2004, its position is weakened as it has no right to initiate investigations but depends on a complaint having been made.[33] It has repeatedly called on the authorities to increase its powers.[34] Furthermore, the Mahon Tribunal of Inquiry recommended introducing a simplified complaints procedure, allowing anonymous complaints and extending SIPO’s role to the local and regional levels, including in relation to conflicts of interest. The same Tribunal openly criticised the police's failure adequately to investigate persons implicated in the period under review by the Tribunal and its general 'hands-off' approach when members of the political establishment were involved.[35]

Tribunals of inquiry are set up in accordance with the Tribunals of Inquiry (Evidence) Act 2005, with specific terms of reference to investigate certain matters of public importance, and are usually chaired by judges or senior lawyers.[36] At the end of the investigation, the tribunal submits a report to Parliament which may contain recommendations. The Tribunals of inquiry do not have the power to assign criminal or civil liability and therefore cannot penalise individuals or companies. The tribunals have examined various matters, including major disasters involving loss of life, and allegations of corruption, including wrongdoing in the land development and planning process.

The Tribunals of inquiry with specific terms of reference to investigate corruption allegations have been at the forefront of efforts to expose corruption in Ireland. The multitude of evidence produced and testimonies heard by the tribunals over the years have revealed corrupt practices in various strands of public life and exposed collusion between politicians and business persons.

The two most recent tribunals (known as the Moriarty and Mahon Tribunals after the names of the judges who chaired them) have dominated the attention of the media and the public in the past decade.[37] Although some of the facts examined by the tribunals date back more than a decade, their recently published findings have been a crucial catalyst for change, with profound implications for anti-corruption policy in Ireland.

The Moriarty Tribunal focused on the circumstances surrounding the award of Ireland's biggest procurement award at the time. Its final report was published in March 2011, centred on the circumstances in which the then Minister for Transport, Energy and Communications awarded the second mobile phone licence to a company in 1996. The licence was the largest single procurement award in the history of Ireland. The Tribunal found that the Minister's influence, including bypassing considerations of his cabinet colleagues, was such that he had 'irregular interactions with interested parties at its most sensitive stage [...] and thereby not only influenced, but delivered, the result' that allowed the company in question to win the evaluation process.[38] The Tribunal concluded it was 'beyond doubt' that the Minister gave 'substantive information to the CEO of the company of significant value and assistance to him in securing the licence'. According to the Tribunal, the company's CEO gave the Minister loan support and payments in 'clandestine circumstances'. These came in three separate instalments that 'were demonstrably referable to the acts and conduct of [the Minister] in regard to the GSM process that inured to the benefit of [the CEO's] winning consortium'. The same CEO also made very substantial donations to the Minister's political party which happened to come, according to the Tribunal, 'during the currency of the GSM competition and subsequent licensing negotiations'. The Tribunal also found that the Minister had sought to influence the outcome of an arbitration in relation to the rent payable by a state-owned company for property owned and controlled by another high-profile businessman. The hike in rents agreed by the Minister's department led to millions in gains for the businessman. The Minister was criticised for abuse of office and his refusal to acknowledge the impropriety of his financial arrangements with both businessmen. He was expelled from the party he belonged to at the time of the facts in 1996 but remains an independent Member of Parliament.

The Government promised a robust response saying it would not remain passive in the face of the Tribunal's findings. There was however a perception that, following the findings of the Moriarty Tribunal, the Government did not properly distance itself from the persons involved in the case.[39] No criminal action was taken against the businessmen in question.

The Mahon Tribunal investigated corruption allegations surrounding planning permissions and land re-zoning, but its findings went further due to connections with other areas of public life. The Tribunal investigated concerns regarding corruption in the planning process from the late 1980s to the late 1990s. The 2012 final report concluded that those concerns were well-founded. According to the Tribunal, '[…] corruption affected every level of Irish political life [and] those with the power to stop it were frequently implicated in it'.[40] It made findings of corruption against 11 county councillors. These local politicians were found to have received bribes to ensure that certain planning decisions were taken. The Tribunal criticised the involvement of senior cabinet members in seeking financial contributions from a businessman at a time when he was lobbying government to support a commercial venture. It found that a former Prime Minister had failed to 'truthfully account for the origins of specific cash lodgements' and that 'an abuse of political power and government authority' had occurred when he, while Minister of Finance, had, together with the then Prime Minister, put pressure on a developer to give a party donation.[41] Another politician was found to have sought a donation from a developer which was then used for personal benefit. The Mahon Tribunal issued 64 recommendations to improve transparency and accountability in various policy areas.[42]

In July 2012, the Government published its response to the recommendations of the Final Report of the Mahon Tribunal.[43] A 2012 General Scheme for a Criminal Justice (Corruption) Bill, endorsed by the Government, incorporates several of the Mahon recommendations, including the creation of a new offence of bribing through an intermediary, corporate liability for corruption offences, the presumption that public officials who have accepted gifts or undisclosed donations have acted corruptly and the possibility for courts to remove public officials from office if they are convicted of a corruption offence and to bar them from seeking office again for a period of up to 10 years.[44]

A tribunal of inquiry follows an inquisitorial process, rather than an adversarial judicial procedure. It is not a court of law and its activity does not constitute the administration of justice. Consequently, it can only investigate facts and make recommendations, rather than assign criminal or civil liability.[45] Evidence given by a person before a tribunal cannot subsequently be used against that person in criminal proceedings.[46] Although the findings of the tribunals of inquiry have played a critical role in driving further legislative and institutional reforms, they have led only to a limited number of prosecutions. Moreover, the long duration of the proceedings of the tribunals of inquiry and the considerable costs involved have been subject of public debates. In the wake of the publication of the Mahon Report, only one person named in the report has faced corruption-related charges and received a prison sentence. However, some of the senior politicians involved resigned from their party. Concern about excessive dependency on the system of tribunals of inquiry is reflected in a recent recommendation by the Irish Law Reform Commission, when reviewing the Tribunals Act. It stated that, in view of the nature of tribunals, 'those charged with the power to establish inquiries should give careful consideration to the public interest in the matter under examination before deciding to establish an inquiry'.[47]

The length of time it takes for inquiries to finish may also influence the eventual criminal or civil proceedings. When the unsuccessful bidders for the procurement contract that the Moriarty Tribunal found to be affected by corruption brought a case against the Irish State, the latter attempted to use the length of time argument in its defence. The Irish Supreme Court rejected this, however, and ruled that the bidders should still be allowed to seek damages from the State since it was obvious that the plaintiffs were waiting for the outcome of the Tribunal's inquiry and also since 'it is a matter of public interest as to whether a minister of government corrupted a State process'.[48] Even if criminal proceedings are not time-barred, there is a risk of them being weakened by waiting for the conclusion of the inquiry tribunals.

A comprehensive reform and consolidation of the legislation relating to tribunals of inquiry is in the pipeline. The Tribunals of Inquiry Bill 2005 is currently before the Irish Parliament.[49] The reform aims at putting in place a modern statutory framework governing all aspects of the operation of a tribunal, from the time of its establishment to the publication of its final report. It sets out detailed procedures of operation and reporting and for the suspension and dissolution of a tribunal. The Bill took into account the 2005 Law Reform Commission of Ireland's Report on Public Enquiries including Tribunals of Inquiry and the recommendations of the Comptroller and Auditor-General's 2009 Report into Tribunals. In regard to admissibility of reports in further proceedings, the reform proposed that a tribunal's final, interim or divisional report should be admissible in certain civil proceedings.[50] This proposal is now being examined in the light of more recent case-law in which the Supreme Court found that extracts from the interim reports of the Mahon Tribunal may not be admitted in evidence by the Director of the Office of Corporate Enforcement.[51]

Financing of political parties

Since the 1990s, Ireland has been developing its system of regulation on the financing of political parties, with important changes with regard to both public and private funding. Until recently, it was difficult to draw a complete picture of the sources of political funding in Ireland, since political parties' annual accounts were only partially disclosed. Due to high disclosure thresholds for political donations, only a small proportion of the parties' income in the last two elections was disclosed.[52]

Good practice: tighter rules on political party financing

Through the adoption of the Electoral (Amendment) (Political Funding) Act 2012,[53] Ireland has made significant progress in the area and complied with GRECO's 2009 recommendations to reduce the disclosure threshold and to submit independently audited accounts. In December 2013, GRECO concluded that the majority of its recommendations in this area have been implemented satisfactorily or dealt with in a satisfactory manner and gave a positive assessment of the efforts made by Ireland to enhance the transparency of party funding and strengthen the financial discipline of political parties.[54]

Corporate donations above EUR 200 can be made only by companies listed in the register of corporate donors or if a statement is made to the oversight agency (SIPO) showing the recipient that the corporate donor has approved the donation. Membership fees paid to a political party are treated as donations in line with the Mahon Tribunal recommendations to extend the definition of 'donation' to 'any contribution given, used or received for political purposes'. Anonymous donations are accepted only if they do not exceed EUR 100. The cap on donations to political parties has been reduced (from EUR 6 349 to EUR 2 500), as has the cap on donations to an individual electoral candidate or elected representative (from EUR 2 539 to EUR 1 000). Furthermore, the threshold above which political parties must publicly declare donations and disclose them to SIPO has been reduced considerably (from EUR 5 080 to EUR 200).

All political parties are now required to submit an independently audited statement of accounts to SIPO by 30 June each year. These accounts should include details of income from public and private sources and expenditure by the political party concerned and will be available on the SIPO website.[55] The auditor's report is also published. The relevant sections of the 2012 Act dealing with political party accounts came into force in September 2012.

Parties which do not comply with these requirements will lose their State funding. Where audited accounts are not furnished, SIPO has the power to appoint its own auditor to undertake this task and to levy the cost from the political party concerned. Electoral candidates or elected representatives are not required to submit accounts, however. Furthermore, the Criminal Justice (Corruption) Bill 2012 provides for a presumption of corruption when a donation is received that is prohibited under the electoral legislation.

The new Political Funding Act also provides for the development of guidelines on how to present political party accounts. SIPO published the draft guidelines in June 2013 and submitted them to public consultation.[56] The public consultations were concluded in autumn 2013. [57]

Despite these positive changes, some challenges still remain. The Mahon Tribunal report highlighted ways in which the new thresholds could be circumvented and noted that there is nothing to prevent an individual donor from giving a donation to a political party and to each individual member of the same party.[58] This could lead to a significant amount of money, capable of giving rise to corruption or the appearance of corruption. Furthermore, the new legislation does not set specific time-frames within which political parties are to discharge their disclosure obligations. This is a significant shortcoming since it is more difficult to identify potential links between a donation and a kickback if a considerable period of time has passed from the receipt of the donation to its disclosure.[59]

In its December 2013 report GRECO stressed that there is still room for improvement as regards the transparency in local branch and third party accounts, and called for further efforts to strengthen the sanctioning regime for breaches of party funding rules.[60]

There is no legislation to regulate the funding of referendum campaigns, even though referenda are quite frequent in Ireland. The 2012 Annual Report of the Standards Commission highlighted its ongoing difficulties in supervising the provisions of the electoral legislation relating to accounting units which are requested to furnish a certificate of monetary donations and bank statement.[61] SIPO requested that 'third parties' and political parties be required to disclose details of expenditure on referenda campaigns for the purpose of providing more transparency. It also requested that information be made available on the sources of funding available to both third parties and political parties.[62] The Irish authorities are currently working on legislative solutions to close this legal gap.

Urban development

The construction and planning sectors were found to be vulnerable to corruption by the Mahon Tribunal whose hearings exposed failings in the public administration system.[63]

Since most planning decisions are taken by elected local councillors, conflicts of interest are a notable risk factor, hence the need to monitor that disclosure obligations are functioning, that they are correctly adhered to and enforced. According to the Mahon Tribunal, this appeared not to have been the case. Tribunal also revealed the extent to which elected local members or more senior politicians in central government are exposed to an increased risk of corruption involving developers seeking the re-zoning of areas in which they want to invest in order to increase the value of their land.[64] The Tribunal found that 11 local government councillors received corrupt payments of this type. Earlier on in 2007, the chair of the planning appeals board commented that 'sometimes zoning decisions seem to have more to do with pressure from local developers rather than sustainable development'. In addition, the major banks supported re-zoning as a precondition of the property construction boom they financed. The Mahon Tribunal issued a number of recommendations aimed at increasing transparency and accountability and reducing the incentives and opportunities to engage in corrupt practices.[65]

In response to these concerns, safeguards have been introduced to make the planning system more resilient to corruption. In May 2013, the Government approved proposals for the preparation of a Planning and Development Bill to establish a new Office of the Planning Regulator in line with the most significant planning recommendation contained in the Final Report of the Mahon Tribunal, that would ensure enhanced independent supervision of the urban planning process.[66] The Department of the Environment, Community and Local Government is currently preparing this General Scheme.

In view of the scale and extent of corruption in the past, the effort to reduce incentives for corruption in matters relating to re-zoning of land should be sustained. Furthermore, the Mahon Tribunal found that the 'self-regulatory approach to enforcement of conflict of interest provisions is a matter for concern' and lacks independence, credibility and effectiveness, and called for a 'radical overhaul' of the system for enforcing conflict-of-interest measures in local government. Currently, local authorities are primarily responsible for supervising and enforcing conflict-of-interest provisions as part of their ethics framework. According to Transparency International, as of July 2012 only five of the 34 local authorities had published their councillors' declarations of interest online.[67] Moreover, revolving-door practices pose particular risks in this area.

3. Future steps

In recent years, the Irish Government has undertaken comprehensive reforms at both legislative and policy levels to address many of the issues that have come to light in tribunals of inquiry amid growing public concern about corruption and related issues of transparency, accountability and integrity. Considerable steps have been taken to improve the framework for the supervision and transparency of political party funding. More consideration could be given to ensuring dissuasive sanctioning of corrupt behaviour and the more timely adjudication of large-scale corruption cases. Corruption-related risks associated with close ties between politicians and industry continue to be a cause for concern. More determined action could be taken to address the risk of conflicts of interest effectively, notably at local level and in vulnerable sectors such as urban development.

The following points require further attention:

· Improving the track record of successful prosecutions and dissuasive sanctions in corruption cases handled by the Standards in Public Office Commission (SIPO), the Office of the Director of Corporate Enforcement (ODCE) and the police. Enhancing the power of all investigating authorities to start inquiries on their own initiative and extending their remit with regard to the enforcement of conflict of interest provisions to the regional and local levels. Pursuing the reform for the consolidation of the legal framework of the tribunals of inquiry so as to ensure speedier proceedings and more effective follow-up.

· Placing an overall limit on the amount an individual may give to a political party and electoral candidates or elected representatives who are members of that party, in line with the Mahon Tribunal recommendation. Imposing a reasonably short time-limit for political parties to discharge their financial disclosure obligations. Regulating financing of referendum campaigns.

· Ensuring that planning enforcement powers are vested in an independent urban planning regulator with capacity and powers to investigate systemic problems. Ensuring that local authorities implement plans for the prevention of fraud and corruption. Ensuring the effective prevention and detection of conflicts of interest, notably at local level.

[1]      Merrion Street, Irish Government News Service (2012) Programme for Government: http://www.merrionstreet.ie/index.php/about/programme-for-government/; Department of Public Expenditure and Reform (2012) Progress on the implementation of the Government's Public Service Reform Plan: http://per.gov.ie/2012/09/06/progress-on-the-implementation-of-the-governments-public- service-reform-plan/

[2]      http://www.citizensinformation.ie/en/government_in_ireland/national_government/tribunals_and_investigations/ tribunals_of_inquiry.html.

[3]      According to the Government Response to Mahon Recommendations, almost half have been or are being implemented partly or fully, while most of the rest will be implemented through new planned initiatives or are under consideration.

[4]      For more details see the paragraph on legal framework, whistleblowing and lobbying below.

[5]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)10_Second_Ireland_EN.pdf.

[6]      Irish Statute Book (2012) Electoral (Amendment) (Political Funding) Act 2012, http://www.irishstatutebook.ie/pdf/2012/en.act.2012.0036.pdf.

[7]      Department of Justice and Equality (2012) Criminal Justice (Corruption) Bill 2012 - General Scheme: http://www.iustice.ie/en/JELR/Pages/WP12000178.

[8]      Houses of the Oireachtas (2013) Houses of the Oireachtas (Inquiries, Privileges and Procedures) Bill 2013, from: http://www.oireachtas.ie/viewdoc.asp?DocID=23499&&CatID=59.

[9]      http://www.oireachtas.ie/documents/bills28/acts/2012/a3812d.pdf .

[10]    From May 2013, over 180 additional publicly funded organisations are subject to independent oversight by the Ombudsman.

[11]            http://per.gov.ie/wp-content/uploads/Freedom-of-Info-Bill-13.pdf.

[12]    Department of Public Expenditure and Reform (2012) Minister for Public Expenditure and Reform, Brendan Howlin TD, Response to Policy Recommendations - Mahon Report: http://per.gov.ie/2012/07/19/minister-for-public- expenditure-and-reform-brendan-howlin-td-response-to-policy-recommendations-mahon-report ; http: //per.gov.ie /civil- service-accountability/.

[13]    http://per.gov.ie/wp-content/uploads/Consultation-Paper-Strengthening-Civil-Service-Accountability-and-Performance.pdf

[14]    2013 Special Eurobarometer 397.

[15]    2013 Flash Eurobarometer 374.

[16]    http://ec.europa.eu/economy_finance/publications/occasional_paper/2011/pdf/ocp76_en.pdf 

[17]    COM(2011) 309 final, Second Implementation Report of FD 2003/568/JHA of 6 June 2011: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf

[18]    http://www.transparency.org/whatwedo/pub/exporting_corruption_progress_report_2013 _assessing_enforcement_of_the_oecd

[19]    Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Ireland: http://www.oecd.org/daf/anti-bribery/IrelandPhase3ReportEN.pdf .

[20]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf .

[21]    National Public Procurement Policy Unit (2004) Public Procurement Guidelines - Competitive Process: http://www.environ.ie/en/Publications/LocalGovernment/ProcurementModernisation/FileDownLoad,15592,en.pdf.

[22]    Directorate for Financial and Enterprise Affairs (2010) Collusion and Corruption in Public Procurement: Contribution from Ireland.  Paris: OECD, DAF/COMP/GF/WD(2010)30.

[23]    National Public Procurement Policy Unit (2005) Ethics in Public Procurement: http://etenders.gov.ie/generalprocguide.aspx.

[24]    Ethics in Public Office Act 1995, Standards in Public Office Act 2001 and Part 15 of the Local Government Act 2011.

[25]    http://www.planningtribunal.ie/images/finalReport.pdf.

[26]    General Scheme of the Lobbying Regulation Bill 2013: http://per.gov.ie/the-general-scheme/.

[27]    A Study entitled 'Mapping out the Golden Circle' conducted by Think Tank for Action on Social Change (TASC) found that 'a network of 39 individuals held powerful positions in 33 of 40 top public organisations and private Irish businesses in three of the critical Celtic Tiger years (2005-07), and held more than 93 directorships between them in these companies during this period; as well as an average of ten directorships each in other companies.' More recently, appointments to the Heritage Council and the Department of Health allegedly without formal merit-based procedures caught the public attention.

[28]    Protected Disclosures Bill 2013: http://www.oireachtas.ie/viewdoc.asp?DocID=23966&&CatID=59.

[29]    Making a protected disclosure or reasonably believing a disclosure is protected is a defence against any charge of breaching provisions prohibiting or restricting the disclosure of information.

[30]    General Scheme of the Lobbying Regulation Bill 2013: http://per.gov.ie/the-general-scheme/

[31]    Sekaggya, M. (2013) “Report of the Special Rapporteur on the situation of human rights defenders” Available from: http://www.ohchr.org/Documents/HRBodies/HRCouncil/RegularSession/Session22/A-HRC-22-47-Add-3_en.pdf

[32]    Central Statistics Office: the number of convictions for white-collar crime fell to 178 in 2010 compared with 579 in 2003.

[33]    i.e. it cannot start investigations ex officio, but only following the reporting of an alleged crime.

[34]    SIPO Annual Report 2011 op cit 49-52.

[35]    It criticised the failure to investigate one former local councillor who also happened to be a Member of Parliament and was found by the Tribunal to have engaged in corrupt behaviour.

[36]    The Mahon Tribunal report notes that the 'origin of a Tribunal of Inquiry can usually be traced to serious public disquiet regarding a matter' and 'typically used as a last resort, when other agencies of investigation have failed to work or are unlikely to work … ' ; p.22, para 1.84 of the Mahon Tribunal Final Report.

[37]    The Moriarty Tribunal lasted eight years and the Mahon Tribunal lasted 15 years, the latter being the longest inquiry in the history of Ireland.

[38]    The Moriarty Tribunal of Inquiry (2011) The Tribunal Report into Payments to Politicians and Related Matters Part II, Volume 1, Dublin. Available from: http://www.moriarty-tribunal.ie/

[39]    Seven months after the publication of the report, the CEO in question was a guest of the Government at the Global Ireland Forum. A year after the report was published, he accompanied the Prime Minister when he opened the New York Stock Exchange to mark St Patrick’s Day in March 2012.

[40]    http://www.planningtribunal.ie/images/finalReport.pdf.

[41]    http://www.planningtribunal.ie/images/finalReport.pdf..

[42]    Idem.

[43]    http://www.environ.ie/en/Publications/DevelopmentandHousing/Planning/FileDownLoad,30749,en.pdf .

[44]    Criminal Justice (Corruption) Bill 2012: www.justice.ie/en/JELR/Pages/PB12000183 .

[45]    Section 5 of the Tribunal of Inquiry (Evidence) (Amendment) Act 1979. Supreme Court Judge, Justice Adrian Hardiman argued that the evidence gathered by the Tribunal is “devoid of legal consequences” and could not be used in legal proceedings as either a weapon or a shield. Bovale Developments DCE v Bailey & anor [2011] IESC 2.

[46]    In Goodman v Hamilton [1992] 2 IR 542 Finlay CJ held as follows: 'With regard to the suggestion that the findings of the Tribunal, if not an impermissible administration of justice by anybody other than a court, is a usurpation of the activities of courts in cases where either civil cases are pending or may be instituted, it seems to me that again this submission arises from a total misunderstanding of the function of the Tribunal. A finding by this Tribunal, either of the truth or falsity of any particular allegation which may be the subject matter of existing or potential litigation, forms no part of the material which a court which has to decide that litigation could rely on. It cannot either be used as a weapon of attack or defence by a litigant who in relation to the same matter is disputing with another party rights arising from some allegation of breach of contract or illegal contract or malpractice.' (at p. 590).

[47]    Report on Public Inquiries Including Tribunals of Inquiry (LRC 73-2005), Summary of Recommendations, p.169; available at http://www.lawreform.ie/_fileupload/Reports/rPublicInquiries.pdf

[48]    Bovale Developments DCE v Bailey & anor [2011] IESC 2: “ the subject matter of this litigation is truly exceptional, indeed unique […] If the plaintiffs have indeed been damnified by corruption at the highest levels of government and public administration, it is clearly a requirement of basic commutative justice that they be compensated–if they can make out their case. In doing this the findings of the Moriarty Tribunal are inadmissible. But the evidence developed over nine years is not irrelevant and is publicly available to the plaintiffs as to any other citizen and to the state itself. The state does not appear to have rejected or criticised that evidence.” [2012]IESC 50.

[49]    http://www.oireachtas.ie/viewdoc.asp?fn=/documents/bills28/bills/2005/3305/document1.htm .

[50]    as evidence of the findings of facts by the tribunal set out in the report without further proof unless the contrary is shown, and of the opinion of the tribunal in relation to any matter contained in the report

[51]    ODCE v Bovale case on 14 July, 2011

[52]    For instance, of the EUR 10.1 million spent by parties and candidates in the 2007 general elections, only EUR 1.3 million was disclosed with no information available as to the origin of the remaining EUR 8.8 million. At the 2011 general election, EUR 9.28 million was spent yet just EUR 30 997 was disclosed in donations. Fianna Fáil, Fine Gael and Labour disclosed a zero return in disclosed donations for 2009, the year that all three parties ran substantial local, European, by-election campaigns and a Lisbon Treaty referendum. Fine Gael and Labour did not disclose any donations for 2011, while Fianna Fáil and Sinn Féin disclosed EUR 6 348 and EUR 12 000 respectively. This suggests that the main source of political funding originated from donations below the then threshold limit of EUR 5 078.95.

[53]    Electoral (Amendment) (Political Funding) Act 2012, Number 36 of 2012: http://www.irishstatutebook.ie/pdf/2012/en.act.2012.0036.pdf .

[54]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)10_Second_Ireland_EN.pdf.

[55]    In 2013, political parties disclosed donations worth in total EUR 33 606 for 2012 to the Standards in Public Office Commission. Donations disclosed by the Socialist Party amounted to EUR 24 600; Sinn Féin disclosed EUR 6 000 and Comhar Chríostaí - The Christian Solidarity Party disclosed EUR 3 006. No other party disclosed any donations in 2012, including the coalition partners, Fine Gael and Labour and the main opposition party, Fianna Fail. Donations exceeding EUR 5 078.95 in value received by them during 2012 were required to be disclosed. The maximum value of donations which a political party could accept from the same donor in the same year was EUR 6 348.69: http://www.sipo.gov.ie/en/About-Us/News/Press-Releases/2013-Press-Releases/Political-parties-disclose-donations-received-in-2012.html .

[56]    http://www.sipo.gov.ie/en/Guidelines/Draft-Political-Party-Account-Guidelines/.

[57]    http://www.sipo.gov.ie/en/guidelines/draft-political-party-account-guidelines/submissions-received/

[58]    http://www.oireachtas.ie/viewdoc.asp?fn=/documents/bills28/bills/2005/3305/document1.htm

[59]    National Integrity Systems, Country Study Addendum, 2012, p.23. http://www.transparency.org/whatwedo/pub/nis_ireland_2012 .

[60]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)10_Second_Ireland_EN.pdf..

[61]    Standards in Public Office Commission (2013) Standards in Public Office Commission Annual Report, Available from: http://www.sipo.gov.ie/en/Reports/Annual-Reports/2012-Annual-Report/AnnualReport2012/media/sipoc_ar_2012_english.pdf.

[62]    Ibid.

[63]    Mahon Tribunal Final Report p.15.

[64]    The first public representative in the history of the Irish State was convicted for corruption in 2012. A former town councillor was convicted for receiving corrupt payments totalling EUR 80 000 from a property developer who was seeking to rezone agricultural land for residential and industrial use in Waterford. He received a six-year sentence.

[65]    http://www.planningtribunal.ie/images/finalReport.pdf.

[66]    Electoral, Local Government and Planning and Development Bill 2013: http://www.environ.ie/en/Legislation/DevelopmentandHousing/Planning/FileDownLoad,33584,en.pdf.

[67]    National Integrity Systems, Country Study Addendum, 2012: http://transparency.ie/sites/default/files/TI%20Country%20Study%20Addendum2012.pdf.

ITALY

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. For the last two decades, Italy's strategic anti-corruption approach has relied to a considerable extent on the repression side. A new anti-corruption law was adopted on 6 November 2012, aiming at ensuring a more balanced approach towards anti-corruption policies and providing for a strengthened preventive line and enhanced accountability within public administration.[1] In September 2013, the national anti-corruption authority (the Commissione indipendente per la Valutazione, la Trasparenza e l'Integrità – CIVIT) approved the three-year national anti-Corruption plan prepared by the Department of Public Administration.[2] The action plan takes a risk-oriented approach and focuses on preventive and transparency measures for the public administration, but also comprises few measures aimed at increasing detection of corrupt practices. Some performance indicators are also provided, while deadlines for fulfilment of the measures are not defined in detail. The wide preventive framework provided by the new legislative framework puts significant burden on the public administration and requires considerable efforts to ensure the necessary capacity for effective implementation. Similar considerations apply with regard to the capacity of the national anti-corruption agency (CIVIT) to drive forward ambitious anti-corruption policies.

Legal framework. Italy ratified the Council of Europe Criminal Law and Civil Law Conventions on Corruption in June 2013.[3] In response to serious corruption-related concerns reflected by perception surveys[4] and by the number of high-level corruption cases investigated,[5] a new set of anti-corruption reforms was launched by the Italian Government in 2012. The Government called a confidence vote to secure adoption of a new anti-corruption law adopted on 6 November 2012.[6] The new law aims at securing a shift of mentality within the Italian public administration and providing, inter alia, for: strengthened coordination of anti-corruption policies at central, regional and local level; an enhanced prevention approach; an obligation on all public institutions to adopt and apply integrity plans; a widened scope of criminal law provisions on corruption-related offences; enhanced integrity rules for elected officials; transparency of public expenditure; access to information, etc.[7] The law nevertheless left certain issues unaddressed. It does not introduce new rules on the statute of limitations or any new criminal law provisions on false accounting and self-laundering ('autoriciclaggio'). It does not provide for vote-buying offences. It further fragments the criminal provisions on bribery and corruption, which may lead to ambiguities in practice and possibly to more limited discretion for prosecution.[8] Moreover, the new provisions on private sector corruption and whistleblower protection are still not comprehensive, as explained in more detail below. In the context of the 2013 European Semester of economic policy coordination, the Council recommended that Italy strengthen its legal framework for the repression of corruption, including by revising the rules governing limitation periods.[9]

Institutional framework. Italy’s drivers for anti-corruption measures have for a long time been limited to law enforcement, prosecution, the judiciary and, to some extent, the Court of Audit. The latter has had an active role in the implementation of anti-corruption policies, including with regard to the new anti-corruption law, and through its operational activity consisting of an effective control coupled with a rather unique prosecutorial power for recovery of damages for losses incurred by the public administration. Transparency International's 2011 National Integrity Report assessed that the Court of Audit, law enforcement authorities, the judiciary and electoral services perform relatively well against corruption.[10] However, the overall capacity of public administration, Parliament, Government, anti-corruption agencies, political parties, businesses, the Ombudsman and the media to control corruption was found to be rather low.[11]

Opinion polling

Perception surveys. The 2013 Special Eurobarometer on Corruption[12] showed that 97% of Italian respondents (second highest percentage in the EU) believe that corruption is widespread in their country (EU average: 76%), while 42% say that they are personally affected by corruption in their daily life (EU average: 26%). 88% of Italian respondents believe that bribery and the use of connections is often the easiest way to obtain certain public services (EU average: 73%). Mistrust in public institutions appears to be widespread. According to the same survey, the public offices and sectors most distrusted are: political parties; politicians at national, regional and local levels;[13] officials awarding public tenders and officials issuing building permits.

Experience of corruption. When it comes to direct experience with bribery, Italy scores better than the EU average in the 2013 Special Eurobarometer on Corruption, with only 2% saying that they were asked or expected to pay a bribe in the previous year (EU average: 4%).

Business surveys. 92% of Italian business respondents to the 2013 Eurobarometer Business Survey on Corruption[14] believe that favouritism and corruption hamper business competition in Italy (EU average: 73%), while 90% say that bribery and the use of connections is often the easiest way to obtain certain public services (EU average: 69%) and 64% that the only way to succeed in business is to have political connections (EU average: 47%). According to the Global Competitiveness Index 2013-14, diversion of public funds due to corruption, favouritism in decisions of government officials and declining public trust in the ethical standards of politicians are among the most problematic areas of governance in Italy.[15]

Background issues

Estimated impact of corruption. The Italian Court of Audit pointed out that the total direct costs of corruption amount to EUR 60 billion each year (equivalent to approximately 4% of GDP). In 2012 and 2013 the president of the Court of Audit reiterated concerns as to the impact of corruption on the national economy.[16] This had an impact on the country's economy, already affected by the consequences of the economic crisis. A 2012 Report by the ad-hoc commission[17] set up to analyse and develop proposals on transparency and prevention of corruption within public administration stated that, apart from the estimates of the Court of Audit on direct costs of corruption, there are also indirect economic costs (e.g. costs linked to administrative delays, malfunctioning of public office, the inefficiency or even uselessness of public works or services rendered, loss of competitiveness, and reduced investments).[18] For large public works, such indirect costs were estimated at around 40% of the public procurement costs. Studies on the development of the shadow economy estimated that it reached 21.5% of the Italy's GDP in 2012.[19]

Whistleblowing. The anti-corruption law introduced for the first time provisions on the protection of whistleblowers for reporting corruption within the public sector. The provisions are applicable to government employees who report wrongdoing under the condition that they do not commit libel or defamation or infringe on anybody's privacy. The information can be disclosed by the employees only to their superior, the Judicial Authority or the Court of Audit. The identity of whistleblowers cannot be revealed without their consent. These provisions are however rather generic and not comprehensive as they do not consider all reporting aspects or all the types of protection that should be granted under these circumstances. Moreover, whistleblowing in the private sector remains unregulated. To ensure a fully functional whistleblower protection mechanism, additional measures would have to be put in place, including clarity on reporting channels, protection mechanisms, and awareness-raising.

Transparency of lobbying. Lobbying is not regulated by law in Italy. There are no obligations to register lobbyists or to report contacts between public officials and lobbyists.

Media. While the capacity of printed media to report corruption is quite high,[20] independence and ownership, mainly of electronic media, have faced considerable challenges over time, notably due to a long-standing quasi-monopoly.[21] More recently, market competition in this area has slightly improved. Italy has a low score in the 2013 Freedom of the Press index of Freedom House, which places it in the category of countries where the press is assessed as ‘partially free’.[22]

2. issues in focus

High-level corruption and links with organised crime

The prosecution of corruption is key to the credibility of an effective and dissuasive anti-corruption framework. Public perceptions indicate some concern as to the dissuasiveness of sanctions applied in this area. As reflected by the 2013 Special Eurobarometer on Corruption,[23] only 27% of Italian respondents consider that there are sufficient successful prosecutions to deter people from giving and receiving bribes.

The reports issued by the Council of Europe's Group of States against Corruption (GRECO) and the OECD indicate that the overall criminal legislative framework is in place. Nevertheless, there are a number of shortcomings that contribute to the perception of a climate of quasi-impunity and act as obstacles to successful prosecutions and finalisation of court proceedings.[24]

The relationship between politicians, organised crime and businesses, and the degree of integrity within the ranks of elected and appointed officials, are among the most present concerns in Italy today, as reflected by the number of investigations and corruption cases, both at national and regional level. A study carried out by the Center for the Study of Democracy in 2010 argues that the case of Italy is among the most illustrative for showing how closely organised crime and corruption are related.[25] According to the study, it is mainly widespread corruption within the social, economic and political spheres that attracts organised criminal groups rather than organised crime being the main cause for corruption. According to Italian prosecutors, the links between mafia and corruption are still evident, including in regions outside the home territories of the organised criminal groups.

Over recent years, public attention was drawn to a considerable number of investigations into allegations of corruption and illegal electoral and party financing involving prominent politicians and elected officials at regional level. These led to a series of resignations, triggering in one case early regional elections, and government decisions to dissolve municipal councils because of alleged links with mafia groups. Criminal investigations and pre-trial arrests of several regional politicians in almost half of the 20 Italian regions were reported for 2012 alone. Out of the 201 municipal councils dissolved in Italy in application of Law 221/1991,[26] 28 have been dissolved since 2010 (mostly in southern Italy, but some also in the north) because of alleged links with organised crime. There were also situations in which some of the charges in such cases became time-barred before any conclusion in court.

A series of corruption cases in recent years has also led to resignations of party leaders and senior members. In many of these cases the allegations concerned misuse of party funds. More than 30 MPs of the former Parliament have been or are being investigated for corruption-related offences or illegal party financing. Some of these are still undergoing investigation or court proceedings, and some have been convicted in the first instance. For some, the cases were dismissed as they became time-barred or the offences were decriminalised. For some, the statute of limitations intervened before the cases were adjudicated in court through a final decision. One case to be mentioned concerns an MP investigated for links with the Camorra – the Casalesi criminal group – related to the financing of his electoral campaign in exchange for exerting political influence at national level, notably in the area of recycling toxic waste. A pre-trial arrest of the MP in question was twice denied in the Italian Parliament (i.e. refusal to lift immunity). During the parliamentary electoral campaign of early 2013, a petition circulated and gathered over 150 000 signatures from citizens and 878 from electoral candidates who committed to making the new anti-corruption law more effective.[27]

Establishing a legal framework that would ensure effective processing and finalisation of court proceedings in complex cases was hampered on various occasions. On a number of occasions, Parliament passed or attempted to pass ad personam laws favouring politicians who were also defendants in criminal proceedings, including for corruption offences. One example is the draft law on 'short prescription term' (prescrizione breve) which would have increased the risk of dismissing cases involving defendants with no prior convictions.[28] Another one was the law allowing for the suspension of criminal proceedings until the end of the term of office for offences committed prior to or while in office by a certain category of high-level officials.[29] The law was later found to be unconstitutional.[30] Another law adopted in 2010 gave the members of the Council of Ministers the possibility to invoke a 'legitimate impediment' for not showing up at court hearings in a criminal proceeding.[31] These provisions were declared unconstitutional.[32] Decriminalisation of certain offences, such as certain forms of false accounting in 2002,[33] could also be mentioned in this context.

A positive step was taken with the new anti-corruption law, and the legislative decree subsequently adopted by the Government at the end of 2012 regarding the ineligibility for public office at both central and regional level of those who have been convicted under a final court decision for corruption offences or other offences against public administration.[34] According to the decree, the ineligibility term runs twice as long as the corresponding penalty and in any case no less than six years. A legislative decree was also adopted in early 2013 concerning the ban (temporary or permanent, depending on the type of penalty applied) on holding public office for those convicted through final or non-final court decisions for offences against the public administration, including corruption.[35] The ineligibility provisions resulting from the anti-corruption law have been enforced in a case leading to the exclusion from the Senate of a former prime minister and MP convicted on tax evasion charges. Also, the president of a province was suspended from office as a result of the same provisions following his conviction on abuse of office charges. The implementation of the legislative provisions with regard to the termination of the MP's mandate as a result of a final conviction required a vote of the chamber of Parliament to which the MP belongs to with regard to the termination of the MP's mandate as a result of the final conviction.

Apart from the above-mentioned provisions, there are no codes of ethics applicable to elected officials at central or regional level. In relation to conflicts of interest, there are no specific verification mechanisms in place. Such codes of conduct for elected officials, accompanied by regulatory provisions on sanctions applicable in case of breaches of ethical rules would enhance integrity and accountability standards and would ensure a wider range of non-criminal sanctioning of unethical behaviour that is to the detriment of the public interest. It would also ensure more effective implementation of integrity rules through self-regulatory solutions given the particularities of non-criminal sanctions applicable to elected officials as compared with other categories of public officials (appointed officials, civil servants, etc).

Financing of political parties

Financing of political parties in Italy currently relies both on public (which can currently be as high as 80% of the party's resources) and private sources. In March 2012, GRECO identified 'critical shortcomings' in the legal framework on financing of political parties in Italy, as well as in practice.[36] It concluded that the current deficiencies leave room for abuse and hence there are insufficient guarantees in place for effective detection and disclosure of potential improper influence on party funding. The control exerted by public authorities over political funding was found to be fragmented and formalistic, and exercised by three different institutions with limited powers and no coordination either among themselves or with law enforcement bodies. Thus, the Board of Auditors in Parliament checks the annual financial reports of political parties, the Board of Comptrollers of the Court of Audit is in charge of verifying electoral expenditure of political parties, while the Regional Electoral Guarantee Board checks electoral expenditure of candidates.

GRECO urged political parties to develop their own internal control systems and to subject their accounts to an independent audit. Political parties are not required to prepare financial statements in a consolidated form. Currently the financial reports submitted by political parties do not provide a complete overview of their financial activities. GRECO also recommended more transparency in political finances by substantially lowering the thresholds for individual candidates and political parties under which the identity of the donor remains unknown to the public. Likewise, a ban on anonymous donations was recommended.[37]

The current sanctions provided by legislation consist of fines and suspension of electoral reimbursement. A criminal offence of illegal party funding is also provided. GRECO noted in its report of 2012 that the current sanctioning regime for the violation of funding rules appeared insufficiently dissuasive and recommended to review the existing administrative and criminal sanctions relating to infringements of political financing rules so as to ensure that they are effective, proportionate and dissuasive.[38]

In December 2013, the Government adopted a law decree for the gradual abolition over three years of the public funding,[39] replacing it with individual contributions from citizens that can later be deducted from their taxes.[40] The law decree comprises some guidelines on the definition of strict procedures regarding transparency statutes and budgets of parties. It does not however address some of the concerns raised by GRECO as regards the rigour of internal control mechanisms, the level of private donation caps or the dissuasiveness of the applicable sanctions. More recently, the Court of Audit was granted the power to check the funding of regional political groups.

Statute of limitations

The issue of the statute of limitations has been a constant serious concern as to the general framework for investigating and adjudicating corruption cases in Italy. The prescription period applicable under Italian law, in combination with lengthy court proceedings, the rules and calculation methods applicable to statute of limitations, the lack of flexibility regarding the grounds for suspension and interruption and the existence of an absolute time-bar that cannot be interrupted or suspended led and continue to lead to the dismissal of a considerable number of cases.[41] Revising the existing rules governing limitation periods was raised by the country specific recommendations addressed by the Council to Italy in July 2013, in the context of the European Semester, as an important driving force to strengthen the legal framework for the repression of corruption.

According to Transparency International’s 2010 study on the impact of statutes of limitations on prosecution of corruption in the EU, roughly one in ten proceedings in corruption cases had been closed during the period examined (i.e. between 2005 and 2010) due to expiry of prescription terms.[42] The situation does not appear to have improved over time, in spite of concerns expressed repeatedly by GRECO[43] and the OECD,[44] from 2009 to 2013. According to one study,[45] approximately 11.14% of the criminal cases in Italy in 2007 were time-barred during court proceedings and 10.16% in 2008. The average for other Member States mentioned in the study in the same reference period is between 0.1 and 2%. OECD data show that, as of 2011, cases of foreign bribery against 30 of 47 defendants (i.e. over 62 %) became time-barred.

For most of the 'classic' corruption-related offences[46] the relative prescription term[47] was, before the entry into force of the new anti-corruption law, of around 6 years,[48] while the absolute prescription term was 7.5 years.[49] A reform of the statute of limitations rules in 2005 changed the calculation rules only to differentiate the extension of the prescription term according to the criminal record of the defendant.[50] Aggravated circumstances for first time offenders would not lead to higher prescription terms. A notable, more fundamental, impediment of the current rules arises from the fact that the statute of limitations continues to run after the first instance court decision (i.e. until the court judgment becomes final). Against a background of rather lengthy court proceedings, this led to situations where cases have been dismissed as time-barred even after a first instance conviction.

The 2012 anti-corruption law did not however change the prescription rules. The new law increases the maximum penalty for some offences, leading to an extension of the prescription period, since the two are interlinked. Nevertheless, for some other new offences, such as the so-called 'concussione per induzione' (or 'induzione indebita a dare o promettere ultilità)[51] which is considered by practitioners as occurring more frequently than classic 'concussione', the penalties are lower, leading to a shorter prescription period[52]. Account should also be taken of the fact that the more favourable criminal law applies to ongoing proceedings, i.e. those which would ensure a shorter prescription period for the defendant.

The Ministry of Justice set up a working group (ad hoc commission) to study the issue of the statute of limitations and available alternatives for a reform in this area.[53] The commission analysed the impact of the statute of limitations on cases from 2005 to 2010 and presented the results of its analysis in April 2013. The analysis covered the most representative prosecution services in Italy and showed a slight decrease (lower than 3%) in the rate of time-barred corruption cases. In the opinion of the ad hoc commission, this represents a normal rate, partly justified by the legality principle (i.e. mandatory prosecution) system. GRECO stressed that it is the combination of the calculation method for prescription terms and other factors (such as delays, overload of criminal proceedings, and complexity of corruption cases) that increases the risk of corruption cases becoming time-barred. It highlighted that the increase in the level of sanctions for certain corruption offences cannot in itself adequately address the concerns and called for the adoption of a plan with a specified timeframe and available policy options to address this problem.[54]

Ability to ensure effective implementation of the new anti-corruption law

The Government adopted a number of implementation decrees after the adoption of the 2012 anti-corruption law. The first legislative decree at the end of 2012 concerned the ineligibility for public office of public officials convicted under final decisions for certain offences against the public administration, including corruption.[55] Two other decrees were adopted in March and April 2013. One concerned the ban on holding certain public offices in case of convictions (final or non-final) for offences against the public administration, including corruption, and the incompatibility and prohibitions for holders of public office to move to the private sector.[56] The other decree concerned the transparency and dissemination of information by public administration.[57] In 2013, the Government approved a code of ethics for the public administration as prepared by the Department for Public Administration.[58] Some other areas covered by the 2012 law, such as a coordinated approach for control mechanisms, are still to be considered.

The 2012 anti-corruption law designated the Commissione indipendente per la Valutazione, la Trasparenza e l'Integrità (CIVIT) as the national anti-corruption authority for Italy, in charge of coordinating the preventive anti-corruption policies nationwide. CIVIT appears however to lack the necessary capacity to effectively perform such a role. It counts only three members and some 30 support staff, the latter subject to frequent replacement. CIVIT itself sees its role in a rather limited way, mostly in a reactive rather than a proactive function, with a focus on transparency, advisory functions and formal verification of strategic documents prepared by administrations. The investigative and inspection tasks referred to in the anti-corruption law appear to have low priority. CIVIT’s sanctioning powers are almost non-existent, notably when it comes to regional and local levels.

The 2012 anti-corruption law provides for the adoption of a three-year national anti-corruption plan, and integrity action plans (focused on the prevention side) for all administration bodies. The integrity action plans must be based on risk assessments. The trade chambers at regional level are also developing multi-annual action plans for the prevention of corruption. A large number of chambers have already prepared such action plans.[59]

In July 2013, CIVIT adopted a set of guidelines for updating the three-year programme for transparency and integrity 2014-16.[60] In September 2013, it approved the three-year national anti-corruption plan prepared by the Department of Public Administration.[61] The action plan sets the general lines for implementing the anti-corruption law by public administrations. Many administrations (including local) have already submitted their action plans to CIVIT; over 100 integrity plans were prepared in 2011 and 2012.[62]

Each administrative body must appoint an official to be responsible for integrity issues whose accountability in case of deficiencies found would be triggered from both a disciplinary and managerial point of view. The vast majority of these appointments were already made in 2013.

While the ambition of the new approach related to integrity policies within public administration is welcome, it is equally important to mitigate the risk of this large-scale exercise turning into a formalistic process focusing more on programmatic documents and institutional settings rather than taking more targeted and immediate actions to address existing vulnerabilities. It is not clear whether all administrations have the necessary capacity to develop relevant action plans and ensure their effective implementation and monitoring. This is a particular concern with regard to local administrations.

In 2012, the ad hoc commission responsible for preparing proposals on transparency and prevention of corruption within public administration assessed that one of the main corruption risk areas concerns local governments. Among the risks highlighted: the relationships between administration and politics (notably regarding urban planning decisions), and between administration and the private sector (e.g. increased use of outsourcing and of negotiated procedures as a consequence of the economic crisis), and the lack of clarity in the division of powers across various levels of governance. The ad hoc commission proposed a series of measures to address these risks, including: a clear delimitation of competences between regional councils and administrative bodies; more transparency and discipline in implementing administrative procedures; strengthened internal control mechanisms and prioritising areas of higher risk such as urban planning.[63]

Conflicts of interest and asset disclosure

The legislation applicable to public administration[64] and the 2012 anti-corruption law comprise specific provisions defining a broad scope of the actual, apparent and potential conflicts of interest, and follow-up actions, including on revolving door practices (i.e. cooling-off periods of three years). Contracts or other assignments taken in breach of revolving door rules are null and void. In case of violation of revolving door rules, private entities that have entered such assignments will not be awarded any public administration contract in the subsequent three years.

Following the adoption of the 2012 anti-corruption law, in March 2013, the Government passed a legislative decree on transparency of information within public administration[65] under which assets of elected and appointed officials and their relatives as far as second degree are made public. The decree builds on the principle that access to public information is the rule and that exceptions should be expressly provided for by law. This asset disclosure system is applicable to elected and appointed officials at central, regional and local level, including those who carry out temporary tasks on behalf of public authorities. Moreover, a legislative decree issued in May 2013 sets out incompatibility rules and a prohibition on having certain public managerial positions in case the official in question was previously convicted for offences against public administration, whether under first instance or final court decision.[66] It also provides for incompatibilities between public managerial positions and those of state-owed and state-controlled companies or companies regulated or financed by public administration, as well as incompatibilities between public managerial positions and political appointments.

In spite of these commendable rules, there is not much clarity in the legal framework as to the setting up of an independent professional verification mechanism and a corresponding sanctioning system that acts as a deterrent relating to asset disclosure and conflicts of interest for public officials at central, regional and local levels. It is not entirely clear how severe breaches in this area can lead to sanctions such as dismissal from office, nor how decisions taken in such situations can be repealed and damages remedied. The same is valid for asset disclosure concerning elected and appointed officials.

GRECO's latest assessment concerning the first and second joint evaluation rounds includes references by the Italian authorities to the Competition Authority's role in monitoring conflicts of interest of members of Government (including their spouses and relatives). According to the Italian authorities, the Competition Authority adopted strict interpretation guidelines promoting a wide scope of the legal provisions in this area. The available case law appears to confirm this approach. Moreover, the Italian authorities reported that the Competition Authority has also used financial declarations submitted to it to determine particular sectors at risk where conflicts of interest were more likely to occur (e.g. radio and television).[67] It is not clear, however, how the verification of asset declarations and conflicts of interest will be carried out in practice in view of the 2012 anti-corruption law. CIVIT is now responsible for ensuring that publication requirements are respected and for monitoring potential irregularities, but its powers are mainly of a regulatory, advisory or guiding nature. It does not have any role in verifying in substance conflicts of interest and asset declarations regarding public officials. GRECO also stressed that 'the issue of conflict of interest is a highly controversial matter in Italy which merits careful oversight in order to preserve the credibility of the system'.[68]

Public procurement

Public works, goods and services in Italy accounted for about 15.9% of GDP in 2011.[69] The value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, goods and services was 18.3% in 2011. In the report of October 2012 of the ad hoc commission tasked to analyse and prepare proposals on transparency and prevention of corruption within public administration, public procurement was highlighted as an area where corruption risks are high.[70] The use of negotiated procedures in Italy (in particular without publication of contract notices) appears to be higher than the average: in 2010, it accounted for 14% of value of contracts, as compared with 6% in the EU. This may be a factor which increases the risk of corrupt and fraudulent practices.

According to the 2013 Eurobarometer Business survey on corruption,[71] 70% of Italian respondents consider that corruption is widespread in public procurement managed by national authorities (EU average: 56%) and 69% in that managed by local authorities (EU average: 60%). In particular, Italian respondents stated that the following practices were widespread in public procurement procedures: specifications tailor-made for particular companies (52%); abuse of negotiated procedures (50%); conflicts of interest in the evaluation of the bids (54%); collusive bidding (45%); unclear selection or evaluation criteria (55%); involvement of bidders in the design of the specifications (52%); abuse of emergency grounds to avoid competitive procedures (53%); and amendments of contractual terms after conclusion of contract (38%).

Infrastructure appears to be among the areas most vulnerable to corruption in public procurement in Italy. Given the large resources it accounts for, this sector is more exposed to corruption and infiltration by organised criminal groups. Moreover, the type of works, supplies and services to be provided in these areas concerns a rather limited number of providers, thus increasing the risk of collusion. According to empirical research, corruption returns in Italy most frequently occur in the post-award phase, notably as regards checks on the quality or completion of works, services or supplies.[72] The Court of Audit concluded on several occasions that the public procurement process is proper, procedures are respected, and winning bids indeed seem to be the most advantageous, but in contrast, the quality of deliverables is intentionally compromised in the execution phase. While not necessarily indicating corrupt practices, such irregularities, and the Eurobarometer indicators above, illustrate the vulnerabilities of the current control mechanisms, notably as regards the implementation phase of public contracts. The Court of Audit has also pointed to a weakness regarding its powers of control: the impossibility to perform ad hoc checks without advance warning which may decrease the detection rate of irregularities.[73] False accounting is not penalised,[74] which affects adversely the prevention of irregularities, notably in the execution phase.

For large public works alone, corruption (including indirect losses) is estimated to amount to as much as 40% of total public procurement value.[75] Large construction works such as those related to the reconstruction in L’Aquila after the 2009 earthquake, the World Expo 2015 to take place in Milan or the future Turin-Lyon high-speed railway, were identified in the public sphere as large-scale projects facing high risk of potential diversion of public funds or infiltration by organised crime. High-speed railway is among the most expensive infrastructure works and gives rise to considerable discussion as to unit price comparisons. According to research, one kilometre of high-speed railway track on the Paris-Lyon line costs around EUR 10.2m, from Madrid to Seville it is EUR 9.8m; from Tokyo to Osaka, EUR 9.3m, while from Rome to Naples, EUR 47.3m, from Turin to Novara, EUR 74m; from Novara to Milano, EUR 79.5m and from Bologna to Florence, EUR 96.4m. In total, the estimation was of an average cost in Italy of EUR 61 million per km.[76] While the differences in cost do not prove anything in themselves, they may serve as an indicator, to be corroborated with others, of potential mismanagement-related issues or irregularities in public procurement procedures.

Given the risks of corruption and infiltration by organised crime in public procurement, Italy has paid increasing attention to these challenges. It has adopted new legislation such as on traceability of funds in public procurement, promoted new projects to trace financial transactions and to prevent infiltration by mafia groups, and increased the capacity of the Committee for coordination of high-level surveillance of large public works (grandi opere).[77]

Further measures provided by the 2012 anti-corruption law included the online publication by all administrations of annual accounts and balance sheets, and the broken down costs of public works and services, and detailed information about ongoing and past tendering procedures. The law also provides for a database on public contracts and for the obligation on prefects to establish ‘white lists’ of economic operators who are not exposed to risks of infiltration by organised crime. The implementation of this measure is ongoing.

With regard to the wider issue of transparency of public spending and public administration, the Italian authorities implemented a considerable number of measures to ensure increased transparency. A legal initiative worth mentioning in this context is Law No. 136 of 2010 on the control of financial flows which provides for a single dedicated account for all payments in the execution of public procurement contracts, thus contributing to the overall prevention of corruption in this area.[78] Moreover, a 2012 legislative decree provides for the use of e-administration, streamlined application procedures for companies participating in public tenders, and the appointment of managers to whom citizens can turn in the event of administrative inaction.[79]

Good practice – transparency platforms

Bussola della trasparenza[80]: a tool managed by the Department of Public Administration and Simplification that monitors the availability and level of accessibility of information on the websites of ministries.

Avviso Pubblico (http://www.avvisopubblico.it/): a network of over 200 regional, municipal and provincial administrations working together with the aim of actively preventing corruption and mafia infiltration in public structures.

ITACA[81]: an association working on transparency in public procurement and of public expenditure in general. Its members cover almost 90% of regional public administration.

CAPACI[82] (Creation of automated procedures against criminal infiltration in public contracts): an EU-funded project for monitoring financial flows in the supply chain of large public contracts. The system will enable authorities to prevent the infiltration of capital of illicit origin by creating a database of bank transfers and alerts to identify abnormal behaviour. The project is at a piloting stage in a number of regions in Italy.

Linee guida[83]: The Committee for coordination of high-level surveillance of large public works approved an anti-mafia strategic document as a prevention measure against mafia infiltration in the programme for strategic infrastructures. Guidelines were issued including instructions for anti-mafia checks on contracts and sub-contracts regarding works, supplies and services in strategic infrastructure projects such as the reconstruction of Abruzzo or the World Expo 2015.

Corruption in the private sector

Italy has not yet fully transposed the Framework Decision 2003/568/JHA on combating corruption in the private sector.[84] Private sector corruption is not designated as a crime in the Italian Criminal Code, but is covered by criminal law provisions in the Civil Code. The 2012 anti-corruption law amended these provisions, providing for a new definition of private sector corruption and new sanctions. However, they still do not address all deficiencies related to the scope of corruption offences in the private sector and to the sanctioning regime. The new provisions do not define broadly enough the leading positions in a company that may make the company liable for corruption offences committed by the holders of these positions. They do not provide for liability in cases of lack of supervision. The sanctioning regime applicable to legal persons appears to be insufficiently dissuasive. The current provisions on bribery in the private sector are therefore too narrow, and they limit the scope as to the categories of private sector managers accountable for the offence. In addition, it is not prosecuted ex officio, but only upon complaint, except for the cases where it leads to distortion of competition in the procurement of goods and services.

With regard to accounting requirements for companies, GRECO noted that the accounting system in Italy does not comply with the Council of Europe Criminal Law Convention on Corruption. This is evident in particular as regards the thresholds for liability, the limited scope of accounting requirements (i.e. applicable only to listed companies, state-owned companies and insurance companies), the setting of penalties and the scope of false accounting offences.[85]

When it comes to foreign bribery, Italy has a comprehensive framework for prosecution of this crime and has made significant efforts to investigate and prosecute such offences.[86] Recent investigations of alleged corrupt practices abroad in the defence and energy sectors suggest that foreign bribery is still present, but also show that law enforcement is making credible efforts in detecting and investigating such cases. The OECD points to remaining deficiencies in the sanctioning regime, noting in December 2011 that although 60 defendants had been prosecuted and 9 cases are under investigation, final sanctions were only imposed against 3 legal persons and 9 individuals, in all cases through settlement ('partteggiamento').[87] It also stressed that many cases against legal persons were dismissed as time-barred.

3. Future steps

The adoption of the anti-corruption law in November 2012 represents a significant step forward in the fight against corruption in Italy. It highlights prevention policies that aim to raise the level of accountability within public administration and political elites and to balance the anti-corruption burden which is currently falling almost exclusively on the law enforcement side. However, despite considerable efforts by the Court of Audit, law enforcement bodies, prosecution services and the judiciary, corruption remains a serious challenge in Italy. A new wave of political corruption cases has emerged, involving a number of top regional elected officials and revealing illegal financing of electoral campaigns and political parties, as well as ties with mafia groups. Cases against high-level officials in which dissuasive sanctions were actually enforced remain scarce. Concerns have not been addressed as to the obstacles posed by the restrictive regime of the statute of limitations to the adjudication of corruption cases. The framework applicable to conflicts of interest and financing of political parties remains to some extent unsatisfactory. Public procurement and the private sector continue to be sectors vulnerable to corruption despite a number of measures already taken. Overall, further efforts need to be made to ensure effective implementation and monitoring of the anti-corruption legal framework, including the legislative decrees, to secure a sustainable impact on the ground.

The following points require further attention:

· Strengthening the integrity regime for elected and appointed officials, at national, regional and local levels, including through comprehensive ethical codes with adequate accountability tools and dissuasive sanctions for potential violations of such codes. Consider promoting codes of ethics within political parties or ethical pacts among political parties and groups. Refraining from passing ad personam laws. Strengthening the legal and implementation framework on party funding, notably as regards stricter provisions on donations, consolidation of accounts of political parties, coordination and adequate level of powers for supervision of party funding and application of dissuasive sanctions.

· Addressing the deficiencies of the statute of limitation regime, as requested by the recommendations addressed to Italy in July 2013 in the context of the European Semester, by considering amending the rules applicable to the course of prescription (including exclusion of appellate instances from the prescription term) and introducing more flexible rules on suspension and interruption. Evaluating the risks of pending corruption cases becoming time-barred and ensuring prioritisation of cases that are running such risks.

· Reinforcing the powers and capacity of the national anti-corruption agency (CIVIT) for it to perform a strong coordination role and effective inspection and supervisory functions, including at regional and local levels. Ensuring a uniform framework for internal controls and use of external independent audits at regional and local levels with regard to public spending, including in the implementation of public contracts. Ensuring a uniform, independent and systemic verification of conflicts of interest and asset declarations of public officials and a corresponding sanctioning system that acts as a deterrent.

· Enhancing transparency in public procurement, pre- and post-award, as requested by the recommendations addressed to Italy in July 2013, in the context of the European semester. This could be achieved through publication online by all administrative structures of annual accounts and balance sheets, as well as broken down costs of public works, supplies and services, in line with the anti-corruption legislation. Consider granting the Court of Audit the power to carry out ad-hoc checks without prior warning. Ensuring full transposition and implementation of Framework Decision 2003/568/JHA on combating corruption in the private sector. Consider developing anti-corruption prevention and monitoring tools for companies active in sectors where large-scale cases revealed vulnerabilities to foreign bribery, such as defence and energy.

[1]      Law No. 190 of 6 November 2012 on the prevention and repression of corruption and irregularities in the public administration.

[2]      http://www.funzionepubblica.gov.it/media/1092881/p_n_a.pdf.

[3]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Add_Italy_EN.pdf.

[4]      See below under 'Opinion Polling'.

[5]      See for more details below.

[6]      Law No. 190 of 6 November 2012 on the prevention and repression of corruption and irregularities in the public administration.

[7]      The law provides, inter alia, for a national anti-corruption authority in charge of the overall policy (task to be fulfilled by the Commissione indipendente per la Valutazione, la Trasparenza e l'Integrità - CIVIT), widens the scope of corruption offences, criminalises trading in influence through a new provision that covers also the active side of the offence, criminalises private sector corruption, and increases criminal penalties for a number of corruption-related offences. It provides for new corruption offences (such as 'undue inducement to give or promise money or other advantages' – induzione indebita a dare o promettere utilità), for the ineligibility of those convicted in last instance of offences against public administration, and for increased accountability of management positions for prevention and repression of corrupt practices. It introduces an obligation upon administration to develop its own anti-corruption action plan, introduces provisions on enhanced transparency of public expenditure, and facilitates access to information, disclosure of assets (i.e. disclosure of data on the wealth of officials entrusted with political powers – elected officials and any other persons with policy-making powers at national, regional and local levels). It introduces material accountability for damage to the reputation of public administration, provides for codes of ethics, introduces provisions on whistle-blowers protection and reinforces some provisions on conflicts of interest and incompatibilities (such as introduction of cooling-off periods) and disciplinary proceedings.

[8]      The new law provides for more specific and circumstantiated offences derived from the text of a single offence defined in more general terms (e.g. the case of 'concussione' and the new offence of 'induzione indebita a dare o promettere utilità').

[9]      Council recommendation 2013/C 217/11 of 9 July 2013.

[10]    http://www.transparency.org/whatwedo/nisarticle/italy_2011.

[11]    The assessment concluded that Italy's National Integrity System is not sufficiently robust, stating that corruption is 'able to flourish almost everywhere, as state institutions enjoy considerable autonomy not corresponding to standards of accountability and integrity'.

[12]    2013 Special Eurobarometer 397.

[13]    In terms of regional variation, the Quality of Governance study commissioned by the European Commission, which looked into the regional perspective of governance-related issues and was published in December 2010, placed Italy among the Member States with the highest degree of sub-national disparities: i.e. it has regions that are both well above and well below the average EU score of quality of governance. The 2013 European Quality of Governance Index, which considered an increased number of European countries, regions and respondents, confirmed these findings: http://nicholascharron.wordpress.com/european-quality-of-government-index-eqi/

[14]    2013 Flash Eurobarometer 374.

[15]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf.

[16]    http://www.corteconti.it/procura/giudizio_parificazione/parifica_2011/.

[17]    The Commission was set up by the Government and its members are among the ranks of magistrates and academia.

[18]    http://www.giustizia.it/giustizia/it/mg_6_1_1.wp?contentId=NOL783861.

[19]    http://ec.europa.eu/europe2020/pdf/themes/06_shadow_economy.pdf.

[20]    In the Global Integrity Report 2010 the capacity of media to report corruption scores 89 out of max.100: https://www.globalintegrity.org/global/the-global-integrity-report-2010/italy/.

[21]    ECtHR also ruled against Italy in the case Centro Europe 7 srl and Di Stefano v. Italy finding a violation of article 10 ECHR (freedom of expression) due to broadcasting legislation that did not favour market competition: http://hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-111399#{"itemid":["001-111399"]}.

[22]    http://www.freedomhouse.org/report-types/freedom-press.

[23]    2013 Special Eurobarometer 397.

[24]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2011)7_Italy_One_EN.pdf. http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/Italyphase3reportEN.pdf.

[25]    Examining the links between corruption and organised crime. Center for the Study of Democracy, 2010. http://ec.europa.eu/home-affairs/doc_centre/crime/docs/study_on_links_between_organised_crime_and_corruption_en.pdf.

[26]    Of these 75 were in Campania, 49 in Sicily and 34 in Calabria.

[27]    Riparte Il Futuro: http://www.riparteilfuturo.it/petizione/.

[28]    Ex-Cirielli law: http://leg16.camera.it/561?appro=715&Il+c.d.+%22processo+breve%22+%28A.C.+3137%29.

[29]    Law No. 128 of 2008: http://leg16.camera.it/561?appro=677.

[30]    Constitutional Court Decision 262/2009: http://www.cortecostituzionale.it/actionPronuncia.do;jsessionid=5F85228828EDDCABC6A33FB0A18C7FD2.

[31]    Law No. 51 of April 7, 2010, on Rules Regarding Lawful Impediment (Legittimo Impedimento):

[32]    Constitutional Court Decision 23/2011: temiap/temi16/corte%20costituzionale%2023%202011.pdf.

[33]    Legislative Decree 61/2002: http://www.parlamento.it/parlam/leggi/deleghe/02061dl.htm.

[34]    Legislative Decree 235 of 31 December 2012: http://www.gazzettaufficiale.it/atto/serie_generale/caricaDettaglioAtto/originario?atto.dataPubblicazioneGazzetta=2013-01-04&atto.codiceRedazionale=13G00006.

[35]    Legislative Decree 39 of 8 April 2013: http://www.gazzettaufficiale.it/atto/serie_generale/caricaDettaglioAtto/originario?atto.dataPubblicazioneGazzetta=2013-04-19&atto.codiceRedazionale=13G00081&elenco30giorni=false.

[36]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2011)7_Italy_Two_EN.pdf.

[37]    Now at EUR 50 000.

[38]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2011)7_Italy_Two_EN.pdf.

[39]    i.e. reduced to 60% in the first year after the law would have passed, 50% in the second year, 40% in the following year and ultimately full abolition.

[40]    http://www.governo.it/Governo/ConsiglioMinistri/dettaglio.asp?d=71338.

[41]    These include a case against a former prime minister that was dismissed as statute-barred in February 2012. The case concerned an allegation of corruption in judicial proceedings against the former prime minister who allegedly paid 600 000 USD bribe to a foreign lawyer in exchange for his testimony in a number of older trials against the same defendant. The court proceedings had lasted five years before the statute of limitations intervened. Other defendants involved in the same offence (i.e. the active side of the corruption deed) were convicted in first instance (confirmed on appeal). However, even for the latter the prescription intervened on second appeal. More recently, some of the corruption charges against one vice-president of a regional council in a large scale case were also prescribed.

[42]    Timed Out: Statutes of Limitations and Prosecuting Corruption in EU countries.

[43]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Italy_EN.pdf. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2011)7_Italy_One_EN.pdf; http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Add_Italy_EN.pdf.

[44]    http://www.oecd.org/daf/briberyininternationalbusiness/anti-briberyconvention/49377261.pdf.

[45]    http://www.transparency.it/upload_doc/SOL.pdf.

[46]    Bribery, trading in influence.

[47]    The so-called 'relative' prescription term can be suspended or interrupted, while 'absolute' prescription terms are lengthier but cannot be suspended or interrupted.

[48]    Higher for some offences, such as concussione – an aggravated form of passive bribery in which the public official forces/imposes/induces the act of bribery upon the bribe giver, money laundering, corruption within judiciary – 12 to 20 years for aggravated forms.

[49]    Higher for some offences, such as concussione, money laundering, corruption within the judiciary – 15 up to 25 years in aggravated forms.

[50]    Ex-Cirielli law no. 251 of 5 December 2005.

[51]    Form of active bribery in which the public official, abusing his office or his powers, determines somebody to give or promise undue advantage (material or otherwise) for the official or for third persons.

[52]    E.g. as far as concussione per induzione is concerned, penalties are from 3 to 8 years, instead of 4 to 12 years and the prescription term would fall from 15 to 10 years.

[53]    http://www.giustizia.it/giustizia/it/mg_1_12_1.wp?previsiousPage=mg_1_12&contentId=SPS914317.

[54]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Add_Italy_EN.pdf.

[55]    Decreto Legislativo 31 dicembre 2012, n. 235: Testo unico delle disposizioni in materia di incandidabilita' e di divieto di ricoprire cariche elettive e di Governo conseguenti a sentenze definitive di condanna per delitti non colposi, a norma dell'articolo 1, comma 63, della legge 6 novembre 2012, n. 190.

[56]    Decreto Legislativo 8 aprile 2013, n. 39: Disposizioni in materia di inconferibilita' e incompatibilita' di incarichi presso le pubbliche amministrazioni e presso gli enti privati in controllo pubblico, a norma dell'articolo 1, commi 49 e 50, della legge 6 novembre 2012, n. 190.

[57]    Decreto Legislativo 14 marzo 2013, n. 33:Riordino della disciplina riguardante gli obblighi di pubblicita', trasparenza e diffusione di informazioni da parte delle pubbliche amministrazioni.

[58]    Code of Conduct approved on 4 June 2013 through Decree of the President of the Republic 62/2013 which substitutes in its entirety the Code of Conduct contained in the Ministerial Decree of the Department of Public Function approved 28 November 2000.

[59]    http://www.unioncamere.gov.it/P42A0C1570S1064/Piani-di-prevenzione-della-corruzione.htm.

[60]    Deliberation no. 50/2013 'Guidelines for the updating of the three-year programme for transparency and integrity 2014-2016'.

[61]    http://www.funzionepubblica.gov.it/media/1092881/p_n_a.pdf.

[62]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Add_Italy_EN.pdf.

[63]    http://www.giustizia.it/giustizia/it/mg_6_1_1.wp?contentId=NOL783861.

[64]    Law 215 of 2004 on conflicts of interest: http://www.camera.it/parlam/leggi/04215l.htm.

[65]    Legislative Decree No. 33 of 14 March 2013 Disclosure, Transparency and Dissemination of Administrative Information.

[66]    Decreto Legislativo 8 aprile 2013, n. 39: Disposizioni in materia di inconferibilita' e incompatibilita' di incarichi presso le pubbliche amministrazioni e presso gli enti privati in controllo pubblico, a norma dell'articolo 1, commi 49 e 50, della legge 6 novembre 2012, n. 190.

[67]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Add_Italy_EN.pdf.

[68]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Add_Italy_EN.pdf.

[69]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[70]    http://www.giustizia.it/giustizia/it/mg_6_1_1.wp?contentId=NOL783861.

[71]    2013 Flash Eurobarometer 374.

[72]    Ecorys, PwC, London Economics, Public Procurement in Europe: cost and effectiveness, 2011.

[73]    Idem.

[74]    There is no actual offence of false accounting, as it was de-criminalised in 2002. It can be however considered to some extent under some other offences.

[75]    http://www.corteconti.it/procura/giudizio_parificazione/parifica_2011.

[76]    Ivan Cicconi, Il libro nero della TAV

[77]    http://www1.interno.gov.it/mininterno/export/sites/default/it/sezioni/ministero/ccasgo. and http://www.civit.it.

[78]    Law 136 of 13 August 2010 regarding an extraordinary anti-mafia plan: http://www.gazzettaufficiale.it/gunewsletter/dettaglio.jsp?service=1&datagu=2010-08-23&task=dettaglio&numgu=196&redaz=010G0162&tmstp=1283782945903

[79]    The decree 'Semplifica Italia' of 4 April 2012: http://www.funzionepubblica.gov.it/media/970067/semplificaitalia_opuscolo.pdf

[80]    http://www.magellanopa.it/bussola/.

[81]    http://www.itaca.org/index.asp

[82]    http://www.cbi-org.eu/Engine/RAServePG.php/P/280110010410/L/0.

[83]    http://www1.interno.gov.it/mininterno/export/sites/default/it/sezioni/ministero/ccasgo/linee_guida/.

[84]    COM(2011) 309 final, Second Implementation Report of FD 2003/568/JHA of 6 June 2011: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf.

[85]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoRC1&2(2011)1_Add_Italy_EN.pdf

[86]    http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/Italyphase3reportEN.pdf .

[87]    Idem.

LITHUANIA

1. Introduction — main features and context

Anti-corruption framework

Strategic approach. The national anti-corruption programme for 2011-14 sets out a comprehensive action plan and identifies institutions responsible for its implementation.[1]  Objectives include expanding e-services by the tax inspectorate, publishing land-planning projects online, and sponsoring anti-corruption advertisements in the media. Implementation of the programme is facing delays.[2] While recent public discussions have focused on the punishment of corruption, its prevention also merits closer attention.

Legal framework. Lithuanian provisions criminalising corruption are comprehensive, covering active and passive bribery and trading in influence, extending to officials operating abroad. The Supreme Court’s overview of court practice containing guidance for the application and interpretation of legal provisions aims to contribute to consistency in handling corruption cases.[3] According to the Council of Europe’s Group of States against Corruption (GRECO), this interpretation is in line with the Criminal Law Convention on Corruption and sometimes goes beyond it.[4] In response to GRECO recommendations, Lithuania amended laws to cover both material and immaterial benefits in the definition of a bribe, including bribes offered through a third party, and to extend the statutes of limitation.[5] Also following GRECO recommendations, Lithuania reviewed the sanctions applicable to bribery and trading in influence to increase their consistency and the level of penalties.[6] The 2012 review of implementation of the United Nations Convention against Corruption (UNCAC) commended Lithuania for criminalising illicit enrichment and a wide array of corrupt practices (including by legal persons). UNCAC reviewers emphasised however the need for more statistics on the implementation of legal provisions and concrete information on how anti-corruption institutions cooperate in practice.[7]

Institutional framework. The Special Investigation Service (STT) is in charge of prosecuting and preventing corruption. The Immunity Service, reporting to the Commissioner General of the Police, is responsible for the prevention and investigation of corruption within the Police. The prosecution service contains a division on investigation of organised crime and corruption. The Judicial Ethics and Discipline Commission decides on disciplinary action against judges. The Chief Official Ethics Commission (COEC) is charged with supervising adherence to institutional ethics standards, regulating public and private interests in civil service, and controlling certain lobbying activities. UNCAC reviewers called for stronger inter-agency coordination and cooperation in enforcing anti-corruption laws.[8]

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer, 29 % say that corruption affects their daily lives (EU average 26 %). Moreover, 95 % of Lithuanians regard corruption as widespread in their country (EU average 76 %), and 88 % agree that bribery and the use of connections is often the easiest way of obtaining certain public services (EU average 73 %).[9]

Experience of corruption. In the 2013 Special Eurobarometer, Lithuania has the EU’s highest percentage (29 %) of respondents who say they have been asked or expected to pay a bribe for services received over the past 12 months (EU average 4 %).

Business surveys. In the 2013 Eurobarometer business survey, 89 % of respondents think corruption is widespread (EU average 75 %) and 36 % consider corruption a problem when doing business in Lithuania (EU average 43 %).[10]

Background issues

Private sector. Lithuania did not provide information on transposition measures for the Commission’s 2011 report regarding Framework Decision 2003/568/JHA on combating private sector corruption. The 2007 report noted that Lithuania had fully transposed provisions on the liability of legal persons and those requiring effective, proportionate and dissuasive criminal penalties.[11] In 2012, the shadow economy accounted for 29 % of GDP, the third highest percentage in the EU.[12] In the 2013 Global Competitiveness Index, Lithuania ranks 48th among 148 countries.[13]

Conflicts of interest and asset disclosure. A broad range of elected and appointed officials and their spouses are required to publicly declare their assets on an annual basis.[14] The Tax Inspectorate is responsible for the management and supervision of asset declarations. In an October 2012 report, the National Audit Office pointed to deficiencies in the asset declaration procedure and called for improvements.[15] A working group has been established to address these deficiencies. In addition, public servants are required to submit conflict of interest declarations to the Chief Official Ethics Commission, and violations can lead to dismissal. However, these declarations require closer supervision.

Whistleblowing. Legal provisions protect various categories of witnesses, victims and other participants in criminal proceedings from potential retaliation and intimidation.[16] However, there is no specific legislation on whistleblower protection in the public or private sector. A draft law on the protection of whistleblowers was submitted to Parliament in September 2010 but was not adopted.[17] The government argued that separate legislation on this issue would be superfluous.[18] However, UNCAC reviewers recommended that Lithuania reconsider the need for such a law.[19] Following bribery charges filed against 29 customs officers (one third of the entire staff at Medininkai customs office) in December 2012, customs officials took steps to encourage internal reporting of attempted bribery.

Transparency of lobbying. The law on lobbying requires all lobbyists to register in a publicly available list.[20] However, at the end of November 2012, the list contained only 34 registered lobbyists. The law does not cover foundations and associations, and parliamentarians are not required to disclose contacts with lobbyists.[21]

2. Issues in focus

Public procurement

Public works, goods and services accounted for about 16 % of the GDP in Lithuania in 2011. In the same year, the value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, good and services was 34.7 %.[22]

The government’s strategy for improving the procurement system from 2009 to 2013 aims at greater transparency, effectiveness and competition.[23] In addition, the national anti-corruption programme (2011-14) sets specific targets in the field of public procurement. These include 80 % of tenders to be carried out electronically, the cost of public tenders not to exceed those in the private sector by more than 7 %, and targets specific to the healthcare sector.[24]

Amendments to the Law on Public Procurement in 2012 have increased transparency requirements; their impact on the extent of corrupt practices remains to be seen.[25] Other positive trends include a significant decrease in the relative value of direct awards without tender (if not necessarily in the frequency of such awards), with wide variation among individual tendering institutions.[26] Since 2012, direct awards are possible only with the authorisation of the Public Procurement Office, with a number of exceptions where the Office must still be notified immediately. The Central Purchasing Organisation was set up in November 2012 to centralise certain tenders. The Public Procurement Office reported that in 2012 it had given particular focus to preventing irregularities, based on risk analysis and concentrating on high value contracts and those financed by EU Structural Funds.[27]

Good practice: e-procurement

E-procurement can help improve transparency, speed up procedures and enhance competition. Lithuania has made progress in providing online access to combined data on public procurement, with institutions required to publish procurement plans and reports on the internet. The range of information due to be published exceeds the requirements of EU law, including draft technical specifications. Suppliers are also required to indicate subcontractors in their bids. Since 2009, the Law on Public Procurement obliges purchasing organisations to procure at least 50 % of the total value of their public bids electronically. Since the introduction of this requirement, the share of e-procurement rose to 63 % in 2010, 76 % in 2011 and 83 % in 2012.[28]

Members of tender boards are obliged to sign an impartiality declaration. However, there are no substantial consequences for failing to declare a potential conflict of interest: one year after an administrative penalty, violators may participate in decisions on other procurement contracts at the same organisation.[29] There is no common guidance on red-flagging mechanisms to help detect corruption in procurement.

A broad definition of confidentiality in public procurement documentation may limit transparency and facilitate abuse. Public procurement regulations allow contracting authorities to change tender requirements after the contract is signed if its value falls below a national threshold. Tenders under this threshold accounted for almost 98 % of bids and 15.4 % of the entire volume of public procurement.[30] In the absence of requirements to publish small-value tenders or changes therein, this situation gives rise to potential corruption risks.

According to the 2013 Eurobarometer business survey on corruption,[31] 48 % of Lithuanian respondents consider that corruption is widespread in procurement managed by national authorities (EU average 56 %) and 51 % in contracts managed locally (EU average 60 %). In particular, Lithuanian respondents stated that the following practices were widespread in public procurement procedures: specifications tailor-made for particular companies (62 %); abuse of negotiated procedures (43 %); conflicts of interest in bid evaluation (42 %); collusive bidding (51 %); unclear selection or evaluation criteria (37 %); abuse of emergency grounds to avoid competitive procedures (27 %); involvement of bidders in the design of the specifications (40 %) and amendments of contractual terms after conclusion of contract (32 %). Generally, these figures are below EU average. These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerability to corruption in public procurement procedures.

According to the 2011 Map of Corruption by the Special Investigation Service (STT), businesses in Lithuania continue to identify corruption as a major problem in public procurement.[32] Additional areas of concern identified by the National Audit Office include inadequate monitoring and impunity for procedural violations.[33]

Corruption in public procurement appears to pose particular challenges at local level. In one case, senior municipal officials received prison sentences for kickbacks in procurement contracts.[34] In 2011, the Public Procurement Office monitored public tenders totalling EUR 828 million, amounting to 22.3 % of the annual volume of public procurement. The Office cancelled 39 tenders, ordered the re-evaluation of 15 and referred 9 to law-enforcement.[35] However, the Public Procurement Office has assumed steadily increasing responsibilities without a corresponding increase in budget or staff, raising questions about its capacity to conduct effective monitoring. According to the Office’s financial report, in 2012 it had 72 staff and needed an additional 10 to conduct its activities properly.[36]

In April 2013, the Ministry of Economy proposed amendments to the Law on Public Procurement to decrease the monitoring of contracts awarded through undisclosed negotiations, to raise the expenditure ceiling for small-value tenders and to introduce a new category of large-scale tenders.[37] STT warned that the proposed amendments would increase corruption risks.[38] Most of the amendments were adopted in October 2013.[39]

Independence and effectiveness of anti-corruption institutions

The Special Investigation Service (STT) is Lithuania’s anti-corruption agency dealing with prosecution, prevention and education. It was founded as part of the Interior Ministry in 1997 to coordinate hitherto fragmented anti-corruption activities. As part of preparations for EU accession, STT became independent in 2000 and, as UNCAC reviewers noted, it appears to be equipped with sufficient powers for its tasks.[40] It is accountable to the President and Parliament. Its head is nominated by the President and approved by Parliament.

In June 2004, STT agents raided the offices of the four largest political parties as part of a longstanding investigation that ultimately implicated five MPs. The raids were controversially timed five days before presidential elections. MPs accused STT of politicisation and leaking confidential information, and threatened to amend legislation governing law enforcement operations. The head of STT resigned in September 2004, blaming legislators for sheltering their peers from prosecution. Following this conflict with Parliament, STT adopted a more cautious approach that drew criticism that the Service was shying away from high-profile investigations.[41] Upon coming into office in 2009, Lithuania’s President urged law enforcement bodies and STT in particular, to take a more active stance against corruption and pursue larger, more prominent cases.[42] In 2011, citing recent legislative improvements, she said, ‘there are no more reasons why law enforcement agencies should underperform or not produce results’.[43] In 2011, 38 % of survey respondents said they trusted STT.[44]

Against this background, STT reported that in 2011 it had completed and referred to court 45 pre-trial investigations (compared to 56 in 2010). The Service attributed the lower number to the increased complexity of cases. The Service launched 35 % of its investigations based on tipoffs received through its hotline. In 2011, courts convicted 71 and acquitted 9 persons investigated by STT at the pre-trial phase.[45]

In 2012, STT investigated 290 pre-trial cases, of which 89 were considered complex, including that of a former MP suspected of accepting bribes to draft bills. Other high-level cases also led to convictions. In April 2012, former managers at a water utility company received a suspended sentence for bribery and falsification of documents related to public procurement. In 2010, a former deputy minister received a suspended sentence for bribery. Following another STT investigation, a senior prosecutor also received a suspended sentence for demanding a bribe.

STT has also prepared educational materials on preventing corruption and worked with schools to incorporate them into the curriculum. As part of its prevention work, STT analysed corruption risks at the Ministry of Energy and identified weaknesses in the rules for granting authorisations and trade licences.[46] In 2012, STT raised objections to a proposed amendment to the Law on Public Procurement to exempt political parties from rules on public procurement. The President subsequently vetoed the amendment.[47] Another presidential veto resulted from an STT review of a proposed forest law to facilitate the rebuilding of former farmsteads. STT found that the draft law lacked both clear criteria for changing the status of public lands, and adequate safeguards against abuse of authority and submission of false data.[48]

The economic crisis imposed budget cuts on the administration, including STT. The STT budget fell from some EUR 7.2 million in 2008 to EUR 5.8 million in 2009 and EUR 4.8 million in 2010, resulting in salary cuts and curtailing education and prevention activities.[49] In 2012, the STT budget was somewhat higher at EUR 5.2 million.[50]  STT management told the Parliamentary Committee on National Security and Defence that the level of funding compromised its ability to attract and retain experienced officers, to combat large-scale bribery, and to monitor political corruption. The chair of the Committee declared that better results required increased funding.[51] UNCAC reviewers also asked Lithuania to consider the allocation of additional resources to strengthen the efficiency and capacity of law enforcement agencies.

Another key anti-corruption institution, the Chief Official Ethics Commission (COEC) is charged with supervising adherence to the standards of institutional ethics, regulating public and private interests in the civil service, and controlling certain lobbying activities. Its goals include transparency of civil service activities and decisions, prevention of breaches of institutional ethics, and building public trust in national and municipal institutions.[52] The head of the Commission is nominated by the Speaker of Parliament and approved by Parliament. The head of the Supreme Court, the Prime Minister, the Parliament Speaker and the President of the Association of Municipalities each nominate one COEC member, for a five-year term. The Commission reports annually to Parliament.

Public officials are required to submit conflict of interest declarations annually, and some declarations are published on the COEC website. However, COEC lacks sufficient capacity to fulfil its mission in terms of monitoring, analysis and follow-up on findings. In its 2011 activity report, the Commission stated that its small budget limited its ability to carry out its tasks. COEC’s budget was about EUR 320 000 in 2010, EUR 400 000 in 2011 and 2012, and EUR 390 000 in 2013.[53] In its 2012 activity report, COEC noted that it cannot ensure compliance with conflicts of interest and lobbying laws and investigate violations without greater involvement of other national and municipal institutions.[54] In 2012, the Commission conducted 263 investigations and took 105 decisions compared with 244 investigations and 85 decisions in 2011.[55] In 2012, 44 of the Commission’s decisions noted a violation by a public official, 31 decisions reinstated the person under investigation, and 24 investigations were closed for insufficient evidence.

A COEC finding on conflict of interests led to the resignation of a minister. In another case, a mayor found by COEC to be in conflict of interest remained in office.

The rules on publication of conflict of interest declarations have changed repeatedly. Since July 2013, the rules require publicity for contracts worth more than EUR 2 900; the actual amount may remain undisclosed.[56] In August 2013, the President proposed amendments to make all declarations public. In October 2013, the Supreme Administrative Court ruled that public servants must submit a new declaration only if new circumstances might affect decisions related to their duties.[57]

COEC does not deal with conflicts of interest of elected officials. The Parliamentary Commission on Ethics and Procedures analyses the declarations submitted by MPs and advises them on how to avoid conflicts of interest. Parliamentarians can be warned if they do not follow the recommendations made by the Commission. No effective mechanism is in place to monitor potential violations.[58] 

Deficiencies in the system for dealing with conflicts of interest involving Members of Parliament were highlighted in the case of an MP who served on a ministerial committee and also led an organisation which received a contract from the same ministry. STT referred the case to Parliament and the Chief Official Ethics Commission, which does not have the power to investigate MPs. Parliament’s Ethics and Procedure Commission issued a notice to the MP for failing to declare his private interests in violation of the Law on the Adjustment of Public and Private Interests in the Civil Service.

Financing of political parties

According to GRECO, the legal framework set by the 2004 law on financing and financial control of political parties and political campaigns[59] provides for detailed regulations and definitions, a comprehensive list of the subjects of political campaigns and their responsibility, provisions aimed at financial transparency, caps on campaign expenditure, a control mechanism and sanctions. However, GRECO noted that stricter enforcement was needed to detect shadow financing and donations through third persons, and to ensure compliance with deadlines for publication of donor lists.[60] In the 2013 Eurobarometer, 17 % of respondents say there is sufficient transparency and supervision of political party financing (EU average 22 %).[61]

On the recommendation of GRECO, authorities offered political parties guidance and training on financing rules in 2010. Lithuania also made progress in regulating entities indirectly related to political parties. Rules were tightened for the handling of inadmissible donations, unused campaign funds, and in-kind contributions. Further amendments strengthened the role of campaign treasurers in controlling income and expenditure. Lithuania conferred a leading role in the supervision of political financing on the Central Electoral Commission (in cooperation with law enforcement bodies), empowering it to investigate violations of procedural rules or failure to file documents. Additional reforms strengthened requirements for the independence of auditors who certify party and campaign accounts. Lithuania also increased and clarified the sanctions for violating party and campaign financing regulations.[62] However, GRECO noted a need for additional efforts to ensure effective enforcement of the rules.[63] Lithuania complied with GRECO’s recommendation to extend the statute of limitation for political finance violations.[64]

In 2011, additional amendments banned donations from legal persons and restricted individual donations to the campaign period.[65] Questions persist regarding the regulation of political advertising, and the valuation and declaration of non-financial donations to parties.[66] Party membership fees are not capped or monitored effectively.

There is growing recognition within Lithuania of the need to address problems with the funding of political parties and campaigns. These concerns were brought to the forefront when irregularities were discovered during the 2012 parliamentary elections. In particular, the elections raised concerns about vote-buying and the capacity of state institutions to effectively monitor and address such reports. Investigations into vote-buying led the Central Electoral Commission and the Constitutional Court to annul election results in several constituencies.

Political finance issues were also highlighted by the case of a major political party charged with failing to declare income and expenditure between 2004 and 2006. In July 2013, the party’s founder, an MP, was convicted and his successor as party leader was fined. The court case against the party itself was dropped after it merged with another party under a new name.

The 2012 elections raised further questions about the extent of hidden political advertising and the capacity of the Central Electoral Commission to effectively monitor it. Such concerns have been raised repeatedly, with little changes to investigative and analytical capacities of the Central Electoral Commission.[67] The apparent availability of funds to pay for votes and hidden advertising reinforces questions about the transparency of party and campaign funding.

Vote buying allegations in the 2012 parliamentary elections prompted amendments to increase relevant penalties and broaden the powers of law-enforcement institutions.[68] It remains to be seen to what extent the amended laws will help to deter electoral fraud in future.

Healthcare

The healthcare system in Lithuania is organised on two levels: national and municipal. The Ministry of Health is responsible for the regulation and general supervision of the healthcare system. Municipalities are responsible for providing primary and social care, public health activities, and running polyclinics and small to medium-sized hospitals.

Central and local level public healthcare institutions have constantly appeared among the public institutions perceived as most corrupt in Lithuania.[69] The 2013 Eurobarometer survey on corruption shows that healthcare remains among the sectors most vulnerable to corruption in Lithuania.[70] While 29 % of Lithuanian respondents stated that they were expected or asked to pay a bribe, in 21 % of the cases these practices were related to the healthcare sector, the second highest percentage in the EU (as compared to an EU average of 2 %). These data reflect the percentage of people who were in contact with public healthcare institutions. The same percentage (21 %) of Lithuanian respondents who had come into contact with public medical institutions admitted to having made an extra payment or giving a valuable gift to a nurse or a doctor or made a donation to a hospital. Some 32 % mentioned that they did so before the care was given, while 38 % made the payments or provided the gifts after the care was given.

In response to these concerns, the national anti-corruption programme 2011-14 covered the issue of corruption in healthcare. The programme features an entire section dedicated to anti-corruption measures in the healthcare system aiming at decreasing the percentage of informal payments, and actions concerning public procurement. The programme provides for measures that further clarify the term of office and procedures for the appointment of the management of healthcare institutions, and actions aiming to raise public awareness of healthcare services and their corresponding costs, including through advertising. Nevertheless, the programme does not set out a comprehensive strategic line of action to address consistently the causes of corruption in this sector. In June 2013, a Ministry of Health report on the state of healthcare in Lithuania included a separate section on corruption.[71] Since August 2013, patients may request information on the actual costs of their treatment, in a move partly designed to reduce corruption.[72]

While offering, promising or giving any kind of gift to — or accepting any gift from — doctors is not allowed by Lithuanian legislation, public knowledge and interpretation of these provisions varies considerably, leading to an overall climate of tolerance towards informal payments in this sector. To address this, the Association of Lithuanian Medical Students has promoted an initiative which aims at engaging doctors in openly declaring that they do not need gifts from patients to carry out their duties. In 2013, the initiative features 16 healthcare institutions from 5 towns in comparison with 10 institutions from 2 towns in 2011.

Corruption risks within the healthcare system also concern public procurement, given the rather weak control mechanisms over the procurement process. The national anti-corruption programme 2011-14 has acknowledged these weaknesses. It includes an action point that aims to decrease corruption levels in independent public purchases of medication. The programme also seeks to increase public tenders (60 % in 2011; 65 % in 2012; 68 % in 2013 and 71 % in 2014) by more procuring healthcare institutions (30 % in 2011; 50 % in 2012; 70 % in 2013; 90-95 % in 2014) via the Central Purchasing Organisation.[73]

Since 2010, as good practice aiming to reduce corruption risks within the pharmaceutical industry, pharmacies have been required to present comparative price information on monitors. Moreover, a substantial number of pharmaceutical companies joined the Lithuanian Medicines Marketing and Ethics Code, which was adopted in 2006 and amended in 2012. It provides rules and guidance on transparency in contacts between the industry and medical providers or patient organisations, and on sponsorship of scientific events.

3. Future steps

Lithuania has demonstrated commitment to prevent and combat corruption, including through an extensive legal framework. The challenge is to apply relevant provisions in practice and to promote appreciation of their meaning and rationale, in order to tackle both petty and high-level corruption. Further reinforcing the independence and effectiveness of anti-corruption institutions would help address challenges in public procurement, the financing of political parties, and healthcare.

The following points require further attention:

· Assessing the Public Procurement Office’s monitoring capacity and prioritisation of larger cases, and developing additional prevention tools within contracting authorities to help detect corruption at various stages of procurement, with a focus on the local level and the healthcare sector. Developing a targeted strategy against informal payments in healthcare, establishing control mechanisms with the necessary powers, training and operational independence.

· Analysing the effectiveness of the Special Investigation Service (STT) focusing on the number of indictments and seriousness of cases, to identify potential areas for improvement including coordination with other institutions and proactivity in the investigation of high-level corruption.

· Strengthening the Chief Official Ethics Commission, improving the methodology for checking declarations of conflict of interest by elected and appointed officials, monitoring violations, and enforcing dissuasive sanctions.

· Ensuring that political parties provide timely and adequate information on their sources of funding, strengthening the monitoring of party expenditure and income, including membership fees, and assessing the monitoring capacity of the Central Electoral Commission.

[1]      National Anti-Corruption Program 2011-2014.

[2]      In December 2013, Parliament adjusted the programme. Dėl Lietuvos Respublikos Seimo nutarimo ‘Dėl Lietuvos Respublikos nacionalinės kovos su korupcija 2011-2014 metų programos patvirtinimo’ pakeitimo ir papildymo [XII-634] http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=461405.

[3]      Issue No 26 of the Bulletin on court practice.

[4]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282008%2910_Lithuania_One_EN.pdf

[5]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)7_Lithuania_EN.pdf.

[6]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282013%296_Second_Lithuania_EN.pdf

[7]      http://www.unodc.org/unodc/treaties/CAC/country-profile/profiles/LTU.html.

[8]      http://www.unodc.org/unodc/treaties/CAC/country-profile/profiles/LTU.html.

[9]      2013 Special Eurobarometer 397.

[10]    2013 Flash Eurobarometer 374.

[11]    COM(2011) 309 final, Second Implementation report of FD 2003/568/2003 of 6 June 2011: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf.

[12]    http://ec.europa.eu/europe2020/pdf/themes/07_shadow_economy.pdf.

[13]    http://www3.weforum.org/docs/GCR2013-14/GCR_Rankings_2013-14.pdf.

[14] Article 2 of the Law on Declaration of Assets and Income of Residents.

[15]    Lietuvos respublikos valstybės kontrolė (2012), Valstybinio audito ataskaita: Gyventojų turto ir pajamų deklaravimas, http://www.vkontrole.lt/failas.aspx?id=2737.

[16]    A law supplementing the Criminal Procedure Code, in force since December 2010, provides for partial anonymity of witness testimony and offers additional guarantees to secret witnesses who report corruption.

[17]    Bill No XIP-2459 on the Protection of Whistleblowers.

[18]    Governmental Resolution No 1649 of 17 November 2010.

[19]    http://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/ExecutiveSummaries/V1255483e.pdf.

[20]    Law on lobbying activities No. VIII-1749. The list of lobbyists is available on the website of the Chief Official Ethics Commission: http://www.vtek.lt/vtek/index.php?option=com_content&view=article&id=371&Itemid=41.

[21]    Palidauskaitė, J. and J. Baltrimas (2012), Lietuvos nacionalinė atsparumo korupcijai sistema: Seimas. In: Čepas (ed.) Lietuvos atsparumo korupcijai tyrimas. Vilnius: Eugrimas, p. 50.

[22]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[23]    Lietuvos viešųjų pirkimų sistemos tobulinimo ir plėtros 2009-2013 metų strategija (1332) http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=355759&p_query=&p_tr2=.

[24]    Nacionalinės kovos su korupcija 2011–2014 metų programos įgyvendinimo priemonių planas ir jo vykdymo iki 2012 m. gruodžio 31 d. Ataskaita, pp. 19-21 http://www.stt.lt/documents/nkkp/NKKP_vykdymo_iki_2012-12-31_atask_pildymui.pdf.

[25]    Viešųjų pirkimų įstatymas [Law on Public Procurement] (1996), Nr. 84-2000, amended version 2012, I-1491  http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc l?p id=421381.

[26]    Transparency International Lietuvos skyrius (2012), Lietuvos Respublikos ministerijų 2011 metais vykdytų neskelbiamų viešųjų pirkimų tendencijos http://transparency.lt/media/filer_public/2013/01/24/tils_neskelbiami_ministeriju_pirkimai_analize_2011m.pdf.

[27]    Viešųjų pirkimų tarnybos, 2012 Metų Veiklos Ataskaita, 2013 m. balandžio 16 d.

[28]    Lietuvos Respublikos Valstybės kontrolė (2011), Išankstinio tyrimo ataskaita, Viešųjų pirkimų sistemos apžvalga, (2011 m. lapkričio 25 d. IT-P-20-1-14) Vilnius, pp. 17-18.  Viešųjų pirkimų tarnyba, 2012 Metų elektroninių viešųjų pirkimų pažangos ataskaita.

[29]    Kavoliūnaitė-Ragauskienė E. (2012), p. 107.

[30]    Viešųjų pirkimų tarnyba (2012), 2011 m. veiklos ataskaita, p.5 http://www.vpt.lt/vpt/uploaded/2012/VP%20Ataskaita%202012.pdf.

[31]    2013 Flash Eurobarometer 374.

[32]    Lithuanian Map of Corruption 2011: http://www.stt.lt/documents/soc_tyrimai/Korupcijos_zemelapis.pdf.

[33]    Lietuvos Respublikos Valstybės kontrolė (2011), Išankstinio tyrimo ataskaita: viešųjų pirkimų sistemos apžvalga. IT-P-20-1-14. Vilnius, p. 5 www.vkontrole.lt/failas.aspx?id=2475.

[34]    Court ruling Baudžiamoji byla / Nr. 1-69/2010.

[35]    Viešųjų pirkimų tarnyba (2012), 2011 m. veiklos ataskaita, p.3. http://www.vpt.lt/vpt/uploaded/2012/VP%20Ataskaita%202012.pdf.

[36]    Transparency International Lietuvos skyrius (2012), Viešieji pirkimai: viešieji pinigai ir skaidrumas, p. 3, http://transparency.lt/media/filer_public/2013/03/15/lt_viesieji_pinigai_ir_skaidrumas_.pdf.

[37]    Lietuvos Respublikos Ūkio ministerija (2013), Vyriausybė pritarė viesųjų pirkimų įstatymo pakeitimams  http://www.ukmin.lt/web/lt/naujienos/naujienos/vyriausybe_pritare_viesuju_pirkimu_istatymo_pakeitimams.

[38]    Specialiųjų tyrimų tarnybą (2013), STT įvertino siūlomus Viešųjų pirkimų įstatymos pataisas http://www.stt.lt/lt/naujienos/,nid.1730,cat.1.

[39]    http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=458234.

[40]    http://www.unodc.org/unodc/treaties/CAC/country-profile/profiles/LTU.html.

[41]    http://www.princeton.edu/successfulsocieties/content/data/policy_note/PN_id219/Policy_Note_ID219.pdf.

[42]    Gabrilavičiūtė, L. (2009), D.Grybauskaitė: STT turėtų daugiau dėmesio skirti stambioms byloms http://www.15min.lt/naujiena/aktualu/lietuva/d-grybauskaite-stt-turetu-daugiau-demesio-skirti-stambioms-byloms-56-75011.

[43]    Pankūnas, G. (2011), Grybauskaitė: nesu patenkinta STT darbo tempu ir rezultatais  http://www.alfa.lt/straipsnis/11870167/Grybauskaite..nesu.patenkinta.STT.darbo.tempu.ir.rezultatais=2011-07-12_14-33/.

[44]    http://www.stt.lt/documents/planavimo_dokumenatai/STT_report__2011_EN.pdf.

[45]    http://www.stt.lt/documents/planavimo_dokumenatai/STT_report__2011_EN.pdf.

[46]    http://www.stt.lt/documents/planavimo_dokumenatai/STT_report__2011_EN.pdf.

[47]    Parliament subsequently overturned the presidential veto.

[48]    Law on Public Procurement, Forest Law.

[49]    The information on institutional budget was taken from the website www.viesai.lt, which agglomerates publically available data in user-friendly formats and presents trends over time; for the SIS budget see: http://www.viesai.lt/biudzetai/biudzetu-vaizdavimas/#b15416.

[50]    2012 metų valstybės biudžeto ir savivaldybių biudžetų finansinių rodiklių patvirtinimo įstatymas (XI-1823) (The Law on the Approval of the Financial Indicators of the State Budget and Municipal Budgets). Available from: http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=415665&p_query=&p_tr2=2.

[51]    http://www.15min.lt/en/article/in-lithuania/despite-handcuffed-suspects-and-masked-officers-lithuanian-fbi-fails-to-impress-525-303674#ixzz2NVVz3oAP.

[52]    COEC: http://www.vtek.lt.

[53]    Ibid. p. 184; 2013 metų valstybės biudžeto ir savivaldybių biudžetų finansinių rodiklių patvirtinimo įstatymas (XII-65)         http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=440373&p_query=&p_tr2=2; 2012 metų valstybės biudžeto ir savivaldybių biudžetų finansinių rodiklių patvirtinimo įstatymas (XI-1823).  http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=415665&p_query=&p_tr2=2.

[54]    COEC activity report.

[55]    Chief Official Ethics Commission (2013), 2012 m. VTEK veiklos ataskaita, p. 4.  http://www.vtek.lt/vtek/images/vtek/Dokumentai/Apie_mus/ataskaitos_seimui/VTEK_2012_metu_ataskaita.pdf.

[56]    Privačių interesų deklaracijų pildymo, tikslinimo ir pateikimo taisyklės  http://www.vtek.lt/vtek/index.php?option=com_content&view=article&id=364&Itemid=32.

[57] Lietuvos vyriausiasis administracinis teismas (2013), LVAT pateikė išaiškinimą dėl pareigos patikslinti privačių interesų deklaraciją http://www.lvat.lt/lt/naujienos/visos-naujienos/lvat-pateike-isaiskinima-3ycj.html.

[58]    Palidauskaitė, J. and J. Baltrimas (2012), pp. 50-51.

[59]    Law on Financing and Financial Control of Political Parties and Political Campaigns, adopted on 23 August 2004.

[60]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282008%2910_Lithuania_Two_EN.pdf.

[61]    2013 Special Eurobarometer 397.

[62]    Draft legislation further increasing the minimum fine for violations in the area of transparency of party and campaign financing was submitted to Parliament.

[63]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2011)7_Lithuania_EN.pdf.

[64]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282013%296_Second_Lithuania_EN.pdf.

[65]    Politinių partijų ir politinių kampanijų finansavimo bei finansavimo kontrolės įstatymo 2, 7, 8, 10, 11, 12, 14, 20, 22, 23, 25, 27, 28 straipsnių pakeitimo ir 16 straipsnio pripažinimo netekusiu galios ĮSTATYMAS [XI-1777].  http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=413830.

[66]    Mickevičiūtė, N. (2012), Lietuvos nacionalinė atsparumo korupcijai sistema: Vyriausioji rinkimų komisija. In: Čepas (ed.) Lietuvos atsparumo korupcijai tyrimas. Vilnius: Eugrimas, p. 150.

[67]    Mickevičiūtė, N. (2012), Lietuvos nacionalinė atsparumo korupcijai sistema: Vyriausioji rinkimų komisija. In: Čepas, A. (ed.) Lietuvos atsparumo korupcijai tyrimas. Vilnius: Eugrimas, p. 150.

[68]    Amendments in November 2012 to the Criminal Code, the Law on Criminal Intelligence, and the Law on the Central Electoral Commission.

[69]    Lithuanian Map of Corruption 2011: http://www.stt.lt/documents/soc_tyrimai/Korupcijos_zemelapis.pdf.

[70]    2013 Special Eurobarometer 397.

[71]    Lietuvos Respublikos Sveikatos apsaugos ministerija (2013), Sveikatos priežiūros sistemos analizės ir vertinimo ataskaita http://www.sam.lt/go.php/lit/Veiklos_ataskaitos/660.

[72]    National Health Insurance Fund, Naujovė: nuo šiol pacientams bus teikiama informacija, kiek kainavo jų gydymas  http://www.vlk.lt/info/item/id/2126.

[73]    Nacionalinės kovos su korupcija 2011–2014 metų programos įgyvendinimo priemonių planas ir jo vykdymo iki 2012 m. gruodžio 31 d. Ataskaita, p. 19-21: http://www.stt.lt/documents/nkkp/NKKP_vykdymo_iki_2012-12-31_atask_pildymui.pdf.

LUXEMBOURG

1. Introduction — main features and context

Anti-corruption framework

Strategic approach. Corruption is not perceived to be a serious threat to society in Luxembourg. Although it lacks a national anti-corruption strategy, soft law instruments provide an ethical framework for judges and members of the government. Furthermore, soft law instruments and codes of conduct have been developed in some sectors by private companies, including the financial, accounting and auditing services. Codes of ethics are, however, yet to be adopted for elected officials. Awareness of the need for efficient control in public institutions has recently been increased: for instance, during the governmental crisis following allegations of misuse of power and corruption in the national intelligence agency.[1]

Legal framework. Luxembourg’s legal framework aiming at preventing and combating corruption underwent a number of significant changes over the past 12 years.[2] The criminal law provisions governing corruption were last amended in 2011 as part of an anti-corruption legislative package.[3] After the amendment, Council of Europe's Group of States against Corruption (GRECO) noted that all of the seven recommendations from the third round evaluation on incriminations were fully implemented.[4] Luxembourg adopted provisions on the criminal record for legal persons in 2013.[5] Although accepting gifts in public office is expressly prohibited,[6] a legal framework governing conflict of interest, lobbying and access to information of public interest is lacking, or subject only to limited monitoring.

Institutional framework. An inter-ministerial committee, the Corruption Prevention Committee, was established in 2007 and meets on average once a year.[7] Within the police, the Economic and Financial Department is specialised in fighting economic and financial crime. The EU Fifth Round Evaluation noted that, given Luxembourg’s importance as a financial centre and as regards the actual workload encountered, the Grand Duchy Police appeared to be critically understaffed in the financial sector.[8] With the actual number of staff, the Service de Police Judiciaire (SPJ) seemed not to be in a position to adopt a pro-active approach. The Luxembourg public prosecutor’s office has an economic and financial section, although its major tasks are related to financial crime in general rather than to corruption specifically.[9]

Opinion polling

Perception surveys. 42 % of respondents on the Special Eurobarometer 2013 survey think corruption is widespread in Luxembourg (well below the EU average of 76 %).[10]

Experience of corruption. Petty corruption seems to be non-existent, since almost none of the respondents declared to have been expected to pay a bribe over the last 12 months (1 %) (EU average: 4 %).[11] The overwhelming majority did not witness corruption (94 %), and 92 % of them did not feel affected by corruption in everyday life (EU average: 70 %).

Business surveys. According to the 2013 Eurobarometer business survey[12], corruption was an obstacle to doing business for 30 % of respondents (against the EU average of 46 %), while nepotism and patronage seems to create more concerns, given that 47 % of respondents think this constitutes an obstacle to doing business, above the EU average of 41 %. The same survey revealed that 22 % of those who participated in public procurement in the past three years reported that they were prevented from winning because of corruption, as opposed to the EU average of 32 %. Respondents in Luxembourg reported tailor-made specifications for particular companies in 44 % of cases. Collusive bidding is reported by 40 % as a widespread practice, 42 % of respondents noted conflicts of interest in the evaluation of bids and 36 % pointed to unclear selection or evaluation criteria. These figures are all below the EU average. According to the World Economic Forum’s Global Competitiveness Report 2013-14, Luxembourg is ranked the 22nd most competitive economy of the world out of 152 countries.[13]

Background issues

Private sector. Luxembourg transposed Framework Decision 2003/568/JHA on corruption in the private sector.[14] As regards foreign bribery, in 2011, the OECD acknowledged Luxembourg’s efforts to comply with the Anti-bribery Convention, but also called upon Luxembourg to step up its efforts to detect and prosecute cases of bribery of foreign public officials. Since March 2010, the Luxembourgish legal framework allows criminal proceedings to be taken, also against companies involved in such offences.[15] OECD raised concerns regarding the capacity and effectiveness of law enforcement in pursuing foreign bribery cases and noted shortcomings in the criminal legislation.[16] It recommended reviewing the applicability of the offence of bribery of foreign public officials, reviewing the protection afforded under Luxembourg legislation to whistleblowers and increasing awareness of both public and business sectors reporting foreign bribery.[17] In 2013, the OECD acknowledged efforts to raise awareness. However, it also noted that no measure has been taken to amend the criminal code and the provisions on the liability of legal persons.[18]

Banking data and law enforcement. Breaching bank secrecy is a crime. An exception allows the transfer of banking data for cases defined by law, including for criminal procedures.[19] Luxembourg’s legal and regulatory framework provides for the availability of ownership, accounting and bank information, but the authorities did not use their information gathering and enforcement powers to obtain the requested information in all instances.[20] The anti-corruption report of the OECD confirmed in September 2013 that in relation to investigations and prosecutions, Luxembourg had not taken any measures to facilitate access to bank and tax information by law enforcement authorities, including by clarifying the criteria of ‘exceptionally’, a condition for authorising access to this information by the investigating judge.[21] The government pledged to issue new rules allowing the automatic exchange of information in the EU starting from 2015.[22]

Whistleblowing. In February 2011, Luxembourg adopted legislation on whistleblowing as part of an anti-corruption package, which included amendments to the Labour Code and the law on public service.[23] The law does not provide for an independent body dealing with allegations of corruption by the whistleblower, but bans prejudice and repressive actions towards the employee reporting corruption.

Good practice: active involvement of the civil sector in protecting whistleblowers

A hotline enabling the public to submit anonymous reports is run by Transparency International Luxembourg. It receives a state subsidy.

Under the laws of Luxembourg, registered associations representing public interests have the right to participate in criminal proceedings in cases involving the unlawful taking of interest, corruption or the abuse of influence. Any association wishing to exercise this right in a criminal proceeding has to submit a request for approval to the Ministry of Justice. Since Transparency International Luxembourg has obtained this status, it is able to process cases presented to them by potential whistleblowers, and then represent the public interest in criminal proceedings, while keeping the identity of the whistleblower confidential.

Transparency of lobbying. Lobbying is not regulated in Luxembourg. There is no specific obligation to register lobbyists or report contacts between public officials and lobbyists.

2. Issues in focus

Financing of political parties

Political parties are mostly financed by the state, only a small proportion of the budget comes from donations by natural persons. Donations from anonymous donors and from legal persons to parties are prohibited. Under the law on party financing adopted in 2007, the donors and the financial balance of the parties are published and accessible on the website of the Chamber of Deputies.[24] Compliance with the rules of transparency is a condition for public funding.[25] The global balance, expenses and incomes, including all donations above EUR 250, are also subject to audit by the Court of Audit. In the most recent Eurobarometer survey, 57 % of respondents thought that there was insufficient transparency and supervision of political party financing, less than the EU average of 67 %.[26]

The third evaluation round of GRECO on party financing made 10 recommendations in 2007. One of the major shortcomings of the system at the time of the adoption of the law on party financing in 2007 was that independent candidates were not subject to the regulations and that the financing of election campaigns conducted by political parties was not regulated in a sufficiently detailed manner, as noted by GRECO.[27] Mainly as a result of changes in the law in 2011, Luxembourg has increased the applicable penalties and further increased transparency.[28] In 2012, GRECO noted that four of the 10 recommendations had not been fully met[29] but commended the considerable progress made thanks to legislative amendments in 2011. Progress included the adoption of a standardised format for political party accounts, training for party personnel, and amendments of the Electoral Law regulating election campaign funding.

Nevertheless, GRECO pointed out that Luxembourg still failed to address a number of issues related to financing electoral campaigns (including at local level), and noted that the exact scope of political parties’ accounting duties has still not been sufficiently spelt out in terms of the various structures directly or indirectly attached to the parties (e.g. press bodies and the associations responsible for managing party affairs). GRECO noted that parties, lists and candidates not receiving a public grant were not subject to the legislation, and the latter still do not cover local elections or specify the extent to which income and expenditure linked to such elections should be taken into account. Furthermore, it stressed the absence of a supervisory mechanism specifically applicable to campaign accounts, highlighted inconsistencies in the rules for penalties, raised the lack of clarity on the scope of political parties’ accounting duties, called for granting legal personality to political parties, and referred to gaps in the tools for supervising declarations of donations received by parliamentarians. GRECO therefore recommended making donations to elected representatives subject to the general legislation on party funding and financing of campaigns, or prohibiting donations from legal persons to parliamentarians.[30]

Conflicts of interest

The members of the Parliamentary Assembly are obliged to declare their remunerated activities. Since MPs do not hold a professional mandate, they can maintain their original occupation, as long as it is not in the public sector, and are granted leave in order to be able to carry out their duties related to being a deputy. It is also possible to hold office simultaneously in the national parliament and in local government, and it is common practice. It is not compulsory to abstain from participation in decision making in the event of a conflict of interest, whether declared or not, and there are no general rules on managing conflicts of interest.[31] The declaration of income is therefore used to provide transparency on the income of the deputy from diverse sources. However, such declarations do not provide information about the assets of MPs. There are no rules on receiving valuable gifts or similar benefits by elected officials.

There is no asset disclosure system for local elected officials either. Furthermore, as opposed to MPs, local elected officials do not have to declare their other incomes. The former Luxembourg Ombudsman in his activity report 2009-2010 highlighted the increase in numbers of complaints related to potential conflicts of interest, above all at local level. He called for more vigilance and for taking each of these complaints seriously.[32]

In its recent Fourth Round Evaluation, GRECO expressed concerns about the lack of rules on gifts and similar benefits. GRECO also found that rules on declarations of interests and assets still needed to be extended to give more clarity on incompatibilities, in particular in respect to politicians that are members of boards of private companies. The weakness of the system was also partly attributed to its voluntary nature, as under the rules of procedure of the Chamber of Deputies, all members must disclose their occupations or any other remunerated posts or activities and financial support from third parties under their personal responsibility. Especially because there is no verification mechanism to check conflicts of interest and undue enrichment, GRECO regarded the system income declaration as ‘neither efficient nor reliable.’[33] The system also disregards the interests of relatives or other persons close to the MP. Some of these concerns may be solved once the code of conduct, drafted in 2013 with a view to preventing conflicts of interest, is adopted for the Chamber of Deputies.[34] The preparation of the draft code of conduct was triggered by a parliamentary inquiry into the context of alleged bribery in two competing building projects, which led to calls for more transparency and accountability in the decision-making process.[35] On 13 October 2011, the Chamber of Deputies unanimously adopted a resolution calling for the establishment of a code of ethics for ‘public officials, political representatives and local and national government members to preserve the values of the Luxembourg civil service and to avoid future conflicts of interest’.[36] The new government coalition once again pledged for the adoption of a code of conduct for the deputies.[37]

The code of conduct for government members, adopted by the previous government in March 2013, was due to enter into force on 1 January 2014.[38] The new government is considering introducing legislation instead of guidelines to cover this area.[39]

In addition, Luxembourg law does not ban conflicts of interest in public procurement or set rules on cooling-off periods for public servants taking up employment in the private sector. Codes of conduct for civil servants (with the exception of the financial services regulator) and mechanisms for checking conflicts of interest for civil servants are also lacking. The absence of such rules and mechanisms, combined with the absence of rules on access to public interest information (see below) raises questions about overall transparency and about resilience to the risk of corruption in interactions between the state and the private sector.

In September 2013, potential conflicts of interest between the financial services sector regulator and the public sector led to an exchange of letters between European Commission and Luxembourg. It appeared that a high level official of the Ministry of Finance, who is also the chair of the financial services sector regulator (CSSF) is at the same time a member of the Board of Directors of one of three systemic banks and member of the Board of Directors of the Luxembourg Stock Exchange company. The regulator, the Prime Minister[40] and the Minister of Finance do not consider there to be a conflict of interest, but they do not dispute the fact that this civil servant holds these positions.[41] This was followed by an exchange of views between the authorities and European Commission by letter of 20 September 2013.[42] The government concluded that the person in question complied with the legal rules and did not breach any duty, despite the fact that the person undertook various activities in both the private and the public sector in the financial services sector.

Transparency and access to information

Luxembourg is one of the very few remaining EU Member States that does not regulate the conditions of access to information of public interest. As early as in June 2000[43] a first draft of freedom of access to information law was submitted to Parliament, but it had never been adopted.[44] In December 2011, the Conseil d’Etat issued an opinion on the draft and sent it back to the specialised parliamentary committee in March 2012; where it still remains. Another bill on access to documents was filed with Parliament on 5 February 2013 but by January 2014 it had not yet been adopted.[45] The bill would bring in free access to administrative documents without requiring any personal interest on behalf of the requesting person. The bill limits access in a number of cases, including when the request represents a threat to someone’s privacy, to legally protected secrets, to the secrecy of the decision-making process of the government and other authorities, and also to the commercial and economic interests of Luxembourg. Under the bill, the authorities would have to process the request within a month.

Until this legislation is adopted, many questions remain on access to information and documents of public interest, such as who is entitled to have access to what kind of administrative documents, conditions of refusal and deadlines. In most cases, when the person is unable to show evidence of a personal interest in accessing the document, the request is now likely to be declined.[46]

3.         Future steps

Luxembourg is perceived to be a country where petty corruption is not a problem and systems are in place to deter corruption in public services. However, the absence of rules on access to information, lobbying, and the lack of a revolving-doors policy raise the risk of conflicts of interest and other undetected instances of corruption. Further progress could be made to improve the rules on public officials’ conflicts of interest and to reinforce transparency and access to information of public interest.

The following points require further attention:

· Clarifying the applicable accounting obligations and the scope of political parties’ accounting duties to include all structures directly or indirectly attached to the parties. Introducing a supervisory mechanism specifically applicable to campaign accounts and to the financing of individual candidates, and making the rules on donations from legal persons to individual candidates consistent with the rules applicable to parties.

· Ensuring verification by an independent mechanism of conflicts of interest of elected officials and civil servants at national and local levels. Adopting legislation on access to public information that clearly establishes the obligation of the public authorities to provide access to information and documents of public interest, and defining the conditions under which requests may be refused.

· Increasing the resources used to combat financial and economic crime, including those within the judiciary and the police, to ensure a proportional response to the risks, in line with the importance of Luxembourg as a financial centre.

[1]      Rapport de la Commission d’enquête sur le Service de Renseignement de l’Etat in http://www.chamber.lu/wps/PA_RoleEtendu/FTSByteServingServletImpl/?path=/export/exped/sexpdata/Mag/136/267/123656.pdf.

[2]      Overview of the main anti-corruption laws in Luxembourg: http://www.transparence.lu/cadrecorruption.html.

[3]      Loi du 13 février 2011 renforçant les moyens de lutte contre la corruption; Recueil de législation A-no. 32., 18 février 2011. http://www.legilux.public.lu/leg/a/archives/2011/0032/a032.pdf#page=2.

[4]      Third Evaluation Round Compliance Report on Luxembourg; Greco RC-III (2010) 4E, adopted in Strasbourg, 11 June 2010.; Second Compliance Report on Luxembourg ‘Transparency of political party funding’ Greco RC-III (2012) 8E.

[5]      Loi du 29 mars 2013 relative à l’organisation du casier judiciaire et aux échanges d’informations extraites du casier judiciaire entre les etats membres de l’union européennehttp://eli.legilux.public.lu/eli/etat/leg/loi/2013/03/29/n10.

[6]      Loi du 1er avril 1979 sur le statut de la fonction publique — it also refers to the principles of neutrality and impartiality.

[7]      See the OECD Phase 3 report on Luxembourg, paragraph 170.

[8]      Evaluation report on the fifth round of mutual evaluations ‘Financial crime and financial investigations’ Report on Luxembourg, p. 35, 75. 15644/3/10; REV 3., Brussels, 17 May 2011.

[9]      Evaluation report on the fifth round of mutual evaluations ‘Financial crime and financial investigations’ Report on Luxembourg, p.35, 75. 15644/3/10; REV 3., Brussels, 17 May 2011.

[10]    2013 Special Eurobarometer 397.

[11]    2013 Special Eurobarometer 397.

[12]    2013 Flash Eurobarometer 374.

[13]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf.

[14]    Report from the Commission to the European Parliament and the Council based on Article 9 of Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52011DC0309:EN:HTML.

[15]    Act of 3 March 2010 amending the criminal code and the Criminal Procedure Code.

[16]    http://www.oecd.org/daf/briberyininternationalbusiness/anti-briberyconvention/48270224.pdf  see p. 58-62.

[17]    To be followed up: written follow up is due to be published in October, some recommendations have reportedly been implemented.

[18]    Luxembourg: Follow up to Phase 3 Report and Recommendations (2013 September) http://search.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/WGB%282013 %2920/FINAL&docLanguage=En.

[19]    Article 41. ‘L’obligation au secret professionnel’; Loi du 5 avril 1993 relative au secteur financier. http://eli.legilux.public.lu/eli/etat/leg/loi/1993/04/05/n1.

[20]    OECD ‘Global Forum on Tax Transparency: New reports review jurisdictions’ information exchange’ report dated 31 July 2013 http://www.oecd.org/newsroom/globalforumontaxtransparencynewreportsreviewjurisdictionsinformationexchange.htm and for the country report on Luxembourg OECD on 31 July 2013 in http://www.eoi-tax.org/jurisdictions/LU.

[21]    See the follow up to recommendation 4(a); in: Luxembourg: Follow up to Phase 3 Report and Recommendations (2013 September) http://search.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/WGB%282013 %2920/FINAL&docLanguage=En.

[22]    http://www.gouvernement.lu/3352618/10-gramegna-ecofin.

[23]    Loi du 13 février 2011 renforçant les moyens de lutte contre la corruption; Recueil de législation A-no. 32., 18 février 2011. http://www.legilux.public.lu/leg/a/archives/2011/0032/a032.pdf#page=2.

[24]    http://www.chd.lu/wps/portal/public/FinancementDesPartisPolitiques.

[25]    Loi du 21 décembre 2007 portant réglementation du financement des partis politiques. http://www.chd.lu/wps/PA_Archive/FTSShowAttachment?mime=application%2fpdf&id=923883&fn=923883.pdf.

[26]    2013 Special Eurobarometer 397.

[27]    Third Evaluation Round, Evaluation Report on Luxembourg on the ‘Transparency of Political Party Funding’; Greco Eval III Rep (2007) 6E Theme II; Strasbourg, 13 June 2008.

[28]    Loi du 16 décembre 2011 1. portant modification de la loi du 21 décembre 2007 portant réglementation du financement des partis politiques; 2. portant modification de la loi électorale modifiée du 18 février 2003. http://www.legilux.public.lu/leg/a/archives/2011/0261/2011A4326A.html.

[29]    Second compliance report on Luxembourg http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)8_Second_Luxembourg_EN.pdf.

[30]    Second compliance report on Luxembourg http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)8_Second_Luxembourg_EN.pdf. Para 23-30. Urging Luxembourg to resume its examination of this matter, this argument was repeated in the Fourth Evaluation Round, see page 18.

[31]    Fourth Evaluation Round — Corruption prevention in respect of members of parliament, judges and prosecutors. Para 31, 39, 41, 50 et seq. Greco Eval IV Rep (2012) 9E. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)9_Luxembourg_EN.pdf.

[32]    http://www.ombudsman.lu/doc/doc_accueil_124.pdf, p. 41-42.

[33]    Corruption prevention in respect of members of parliament, judges and prosecutors. Fourth Evaluation Round, Greco Eval IV Rep (2012) 9E, p. 15. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)9_Luxembourg_EN.pdf.

[34]    Avant–projet d’un Code de conduite des députés luxembourgeois en matière d’intérêts financiers et de conflits d’intérêts ; 5 March 2013; http://www.chd.lu.

[35]    Exposé des motifs — Avant–projet d’un Code de conduite des députés luxembourgeois en matière d’intérêts financiers et de conflits d’intérêts ; 5 March 2013; http://www.chd.lu.

[36]    ‘Se racheter une bonne conduite’. http://www.lejeudi.lu/index.php/l-actualite/4619.html — Le Jeudi, 2012. 08.23.

[37]    http://www.gouvernement.lu/3322796/Programme-gouvernemental.pdf.

[38]    While the new government implies that it feels bound by the code of conduct, the code has not been officially published in its final version, and no measure has been taken to declare its entry into force either. The draft version is available at:         http://www.mj.public.lu/actualites/2013/03/Code_deontologie/Dossier_de_presse_Code_de_deontologie_12-3-13.pdf.

[39]    http://www.gouvernement.lu/3323377.

[40]    Government on 20 September 2013 in http://www.gouvernement.lu/salle_presse/communiques/2013/09-septembre/20-reponse-premier-barnier/index.html.

[41]    CSSF on 13 September 2013 in http://www.cssf.lu/fileadmin/files/Publications/Communiques/Communiques_2013/CP1339_130913.pdf.

[42]    Government on 20 September 2013 in http://www.gouvernement.lu/salle_presse/communiques/2013/09-septembre/20-reponse-premier-barnier/Barnier-Protinvest_20_09_13.pdf.

[43]    Proposition de loi concernant la liberté d’accès à l’information http://www.chd.lu/wps/portal/public/RoleEtendu?action=doDocpaDetails&id=4676&backto=/wps/portal/public/!ut/p/c0/04_SB8K8xLLM9MSSzPy8xBz9CP0os3gXI5ewIE8TIwN302BXA6Og0CDPIF8TY_cQA_2CbEdFAF1Ik60!/.

[44]    Waiting for Transparency in Luxembourg: Eleven Years and Counting — Madrid, 20 June 2011 http://www.access-info.org/en/european-union/176-luxembourg-transparency-eleven-years-and-counting Luxembourg Urged to Revive Effort to Pass FOI Law — 24 June 2011 http://www.freedominfo.org/2011/06/luxembourg-urged-to-revive-effort-to-pass-foi-law/.

[45]    Projet de loi relative a l’acces des citoyens aux documents détenus par l’administration; no. 6540. Chambre des deputes; for the work in progress, see http://www.chd.lu.

[46]    For the description of the current situation, including the condition of presenting a personal interest, see the explanatory report attached to the bill mentioned above.

LATVIA

1. Introduction — main features and context

Anti-corruption framework

Strategic approach. The overall framework of anti-corruption policy is set out in the Guidelines for the Prevention and Combating of Corruption covering the 2009-13 period.[1] Policy actions are further detailed in the Corruption Prevention and Combating Programme 2009-13, which contains 70 tasks to be implemented by various institutions. The government has adopted both documents. The programme is results-oriented and lists specific deadlines, indicators and responsibilities. It does not include detailed budgetary estimates. The Corruption Prevention and Combating Bureau (KNAB) is the coordinating body for implementing the programme. KNAB has identified particular corruption risks in public procurement and utilities, local government and state-owned companies.[2] In February 2013, the government approved a framework plan for human resources in the central administration, entailing wider use of open competitions and a unified system of disciplinary liability. A unified code of ethics is planned by 2015.[3]

Legal framework. According to the Council of Europe’s Group of States against Corruption (GRECO), the frequently amended provisions on bribery in Latvian criminal law provide a fairly sound basis for the criminalisation of corruption offences.[4] Latvia partly implemented a GRECO recommendation to clarify the way in which criminal law covers the offering and request of an undue advantage, as well as the unrequested receipt of such an advantage. GRECO’s recommendations to criminalise active bribery of state- and local government employees and indirect active trading in influence also remain partially implemented.[5] In response to these and other recommendations, Latvia amended the Criminal Code in December 2012 and March 2013. In August 2013, the government proposed amendments to the Civil Service Law to centralise the selection of heads of administrative agencies: the State Chancellery would draft the selection procedure and criteria, announce competitions, and assess the competence of candidates.[6] The proposed rules aim to limit political influence and the role of personal contacts in such appointments.

Institutional framework. In 2008, Latvia imposed budget cuts on institutions involved in fighting and preventing corruption. The Corruption Prevention and Combating Bureau (KNAB) continues to play a central role. It has a record of carrying out high-profile investigations, despite a recent internal crisis. KNAB’s draft strategy for 2013-15 focuses on institutions in charge of significant assets and resources, healthcare, the judiciary, law enforcement, and political party finance.[7] KNAB works in cooperation with the Finance Police, State Border Guard and other institutions. The Internal Security Bureau (ISB) of the State Police investigates criminal offences committed by police officers and reviews citizen complaints, including corruption-related ones. It is to become a separate body under supervision of the Ministry of Interior.[8] The State Audit Office (SAO), which controls the use of central and local government resources, has a high degree of independence in law and in practice. In 2011, SAO discovered serious shortcomings in the annual reports of seven state institutions. Between 2006 and 2012, its findings resulted in 23 cases of administrative proceedings, 15 cases dismissed due to the statute of limitations, and 56 cases of criminal proceedings, of which one has led to a conviction and fine.[9] Although criminal matters are generally adjudicated more swiftly than civil or administrative matters, delays in complex criminal cases are perceived as hindering the effective combating of corruption, given that few cases of high-level corruption have reached a final verdict.[10] Convictions for corruption-related offences usually relate to lower to mid-level officials and transactions of modest amounts.[11]

Opinion polling

Perception surveys.   According to the 2013 Special Eurobarometer, 83 % of respondents think corruption is widespread in Latvia (EU average: 76 %), and 67 % say that it is acceptable to give a gift to obtain something from the public administration (highest percentage in the EU). Some 20 % say that corruption affects their daily lives (EU average: 26 %). 81 % agree that bribery and using connections is often the easiest way to obtain public services (EU average: 73 %).[12]

Experience of corruption.    Some 6 % of Latvian respondents in the 2013 Special Eurobarometer state that they have been asked or expected to pay a bribe over the past 12 months (EU average: 4 %) and 25 % say that they personally know someone who takes or has taken bribes (EU average: 12 %).

Business surveys.       According to the 2013 Eurobarometer business survey, 20 % of companies consider corruption a problem when doing business in Latvia (EU average: 43 %) and 37 % think that corruption has prevented them from winning a public tender in the past three years (EU average: 32 %). Some 79 % consider corruption to be widespread (EU average: 75 %).[13]

Background issues

Private sector. Latvia partly transposed the provisions of Framework Decision 2003/568/JHA on the liability of legal persons. When reporting on transposition in 2011, the Commission found that, for active corruption, Latvia did not cover the element of promising a bribe and also limited the offence to cases where the offer or promise was accepted. According to the second implementation report, acceptance of an offer was not included in Latvian legislation for passive corruption.[14] More recent amendments have addressed some of these concerns. The shadow economy accounted for 26.1 % of GDP in 2012.[15] In the 2013 Global Competitiveness Index, Latvia ranks 52nd out of 148 countries.[16] 

Conflicts of interest and asset disclosure. For two years after leaving a public office, officials may not earn income from an enterprise if they had made procurement decisions, decided on granting funds or supervised the same enterprise when in office.[17] While in office and for two years thereafter, MPs, ministers and other senior officials cannot own shares in enterprises that are involved in public procurement or receive public funds, except if the funds are granted following an open competition. Similar rules apply for senior officials of agencies and local governments.[18] GRECO noted that the conflict-of-interest regime for public officials, while comprehensive, is complex and rigid.[19] The legally established incompatibilities and other restrictions for public officials prioritise formalistic compliance over evaluating the merits of individual cases. Fine-tuning measures relating to conflicts of interest in accordance with the distinct needs of different professions would encourage officials to understand and ‘internalise’ relevant rules and adopt a more proactive approach.[20] In December 2011, Parliament adopted the Law on the Declaration of Assets of Physical Persons and Undeclared Income. It obliged residents (not just public officials) with assets above certain thresholds to submit a one-time asset declaration in 2012.[21] The aim was to facilitate audits by limiting the ability of suspects to explain their wealth by citing old and unverifiable sources. However, failure to submit a declaration or the provision of false data carries a relatively minor administrative sanction.[22]

Financing of political parties. Financing of political parties and electoral campaigns is relatively transparent. Following GRECO recommendations, Latvia strengthened provisions on the liability of natural persons for political finance violations, and extended the statute of limitations for administrative offences.[23] Latvia limits individual donations to parties (only natural persons may donate) and the amount a party is allowed to spend during a campaign. The law also provides for full and speedy disclosure of all donations, and disclosure of party expenditure.[24] However, there is a risk that parties may use unregistered funds to pay for hidden advertising.[25] There are still possibilities to unofficially pay for favourable coverage (hidden advertising) in some media.[26] Major donations to political parties by people of modest means have raised suspicions of intermediation, which is a criminal offence if done on a large scale.[27] In November 2012, Parliament adopted the new Pre-election Campaign Law and amended the Law on the Financing of Political Organisations (Parties) to lower the cap on campaign spending by a half.[28] The new legislation appears a prima facie significant move in limiting the risk of political corruption, but its implementation in practice will require strengthened controls. In June 2013, KNAB used for the first time its authority to discontinue payment of state funding to a political party. The party had not disclosed transactions of EUR 54 137 in its 2011 election revenue and expenditure declaration.[29] According to the party, the expenditure was incurred by candidates who had left the party.

Whistleblowing. The Labour Law prohibits retaliation against employees who have exercised their legal rights or notified the authorities about a suspected violation at the workplace.[30] No confidentiality requirements are envisaged in this law. The Prevention of the Conflict of Interest Law protects the confidentiality of a public official or an employee who has reported a conflict of interest of another public official.[31] However, this protection does not apply to those reporting bribery or abuse of office. The Law on Submissions prohibits disclosure of information about the contents of the submission and its source, if so requested by the person who made the submission.[32] Overall, these provisions are a step in the right direction but do not amount to a comprehensive system of whistleblower protection. 92 % of Eurobarometer respondents say that they did not report corruption that they experienced or witnessed (EU average 74 %).

Transparency of lobbying. Latvia has no explicit regulations on lobbying although annotations accompanying draft legislation provide information about consultations held.[33] GRECO suggested that Latvia do more to improve access to information in the legislative process, in particular with respect to lobbying.[34] A draft law has been under discussion since 2012.[35] The Ministry of Environment Protection and Regional Development and several other agencies publish online basic information on contacts with lobbyists, based on internal codes of ethics.[36]

2. Issues in focus

Independence and effectiveness of anti-corruption institutions  

Operational since 2003, the Corruption Prevention and Combating Bureau (KNAB) has established a positive reputation. KNAB combines tasks related to prevention, investigation and education, including the control of party financing. KNAB also acts as a pre-trial investigatory body with traditional police powers and access to bank and tax databases.

Good practice: searchable online database of political donations 

KNAB’s searchable online database of political donations contains up-to-date and complete records of donations to parties, which they are required to disclose within 15 days, including date, value, source and recipient. Similar databases cover membership fees and required financial declarations and annual reports.[37] The accessibility of this information contributes to the prevention and detection of corruption.

Following the controversial dismissal of a KNAB director in 2008, the Bureau underwent a period of instability with a conflict between staff and the next director appointed in 2009. Amid budget and salary cuts, nearly 20 % of KNAB’s 142 employees had left by the end of 2010. Still KNAB’s anti-corruption efforts continued and 2010 saw the arrest of managers at a state-owned electricity company and the mayor of a seaside resort. Several KNAB investigations concern the former head of the Criminal Board of Customs; one of these has resulted in conviction.[38]

Following the appointment of a new director in November 2011, KNAB has consolidated its public standing. However, recurrent internal conflicts and the surrounding public controversy have raised questions about the long-term sustainability of KNAB’s independence. No KNAB director has concluded a full term of office. In August 2013, the director of KNAB dismissed KNAB’s Ethics Commission following their letter to the Prime Minister alleging conflict-of-interest violations by him and his deputy. KNAB’s director also initiated disciplinary proceedings against another deputy after she, as acting director in his absence, reversed some of his decisions. She was dismissed in December 2013 and reinstated in January 2014. In response to the internal tensions within KNAB, the Prime Minister set up a working group, headed by the Prosecutor General, to assess the effectiveness of legal norms governing KNAB and to draft recommendations for improving KNAB’s overall effectiveness.

GRECO’s Third Round Evaluation noted several institutional issues regarding KNAB’s independence: (1) KNAB is under the direct supervision of the Prime Minister; (2) the director is appointed and dismissed by Parliament on the government’s recommendation; (3) the budget is proposed and decided by Parliament whose Members KNAB might potentially investigate. To address these shortcomings, GRECO recommended measures to strengthen KNAB’s independence, including on the external supervision of its activities, the procedure for appointing and dismissing its director and deciding on its budget.[39] Latvia subsequently set up a commission composed of high-ranking magistrates and government officials to assess candidates for KNAB director in an open competition according to pre-stipulated criteria. The head of the commission may invite additional experts, including from NGOs. These measures have gone some way in minimising the risk of political interference in the appointment of KNAB’s director.

However, as noted by GRECO’s Fourth Round Evaluation, legislative measures, including on budgetary aspects, have not been adopted, and the Cabinet of Ministers has yet to decide on proposals to reform the government’s role in supervising KNAB.[40]

Judicial independence and effectiveness require further attention. The Venice Commission (the Council of Europe’s advisory body on constitutional matters) warned that, because of the scope of powers held by Parliament over judges, ‘judicial appointments may over time be more likely than otherwise to become a subject of party politics’.[41] While the overall risk of direct political influence in judicial decisions is relatively low, concerns have been raised about potential interference in appointments. In October 2009 and December 2010, without apparent justification, Parliament refused to confirm the appointment of two separate candidates to the Supreme Court. One had previously issued an arrest warrant for an influential politician. The other candidate was a well-known criminal law expert from a non-governmental think-tank. Both had satisfied formal requirements and passed previous stages of the procedure.

In the context of the 2013 European Semester of economic policy coordination, the Council recommended that Latvia complete pending reforms to improve the efficiency and quality of the judiciary and reduce the backlog and length of proceedings.[42] GRECO has identified potential weaknesses that may affect the judiciary’s capacity to prevent and punish corruption: budget setting and control, court funding and resources (including pay levels for court staff and a sufficient number of judges); political influence in judicial appointment; judicial control over career progression; effective disciplinary processes for judges; judicial immunity for administrative offences; internal ethos of self-governance; and ethical norms and control.[43] Latvia has already moved the power over judicial transfers from Parliament to the Judicial Council. However, as noted by GRECO, in order to ensure judicial independence, responsibility for the appointment and career of judges (including reappointment and promotion) needs to rest with the judiciary.[44]

According to GRECO, without further assurances of due process for dismissals of judges, clear assessment criteria, and proper resourcing of the Judicial Qualification Board[45] and those charged with assessment, there are potential risks to judicial independence, particularly with respect to the security of tenure of judges. At the same time, to promote accountability, GRECO has recommended the abolition of administrative immunity for judges and prosecutors, and measures to ensure that disciplinary cases are decided before the statute of limitations expires. A new system of reviewing judges’ performance came into force in 2013. Judges may be suspended if a disciplinary case has been initiated against them and must be suspended if a criminal case has been initiated. In July 2013, the Justice Minister refused to confirm the president of a regional court for a second term, overruling the evaluation committee.

In order to improve transparency, an obligation was introduced to publish court judgments on the internet.[46] Other positive developments for judicial independence and integrity include the setting up of the Judicial Council, Judicial Qualification Board, Judicial Disciplinary Board, and Disciplinary Court of Judges, in addition to the existing Commission of Judicial Ethics, to facilitate collective problem solving and to encourage initiative among magistrates. According to GRECO, these bodies lack full-time staff and their members struggle to combine ordinary daily work with specific tasks in the judicial bodies.[47] In June 2013, Parliament amended the Law on Judicial Power in an effort to address court delays.[48]

Public procurement

Public works, goods and services accounted for about 20 % of Latvia’s GDP in 2011. The value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, good and services was 87.2 % in 2011 (highest percentage in the EU).[49] According to the 2013 Eurobarometer Business Survey on corruption, 66 % of Latvian respondents consider that corruption is widespread in procurement managed by national authorities (EU average: 56 %) and 58 % in contracts awarded locally (EU average: 60 %).[50] In particular, Latvian respondents stated that the following practices were widespread in public procurement procedures: specifications tailor-made for particular companies (73 %); abuse of negotiated procedures (36 %); conflicts of interest in bid evaluation (53 %); collusive bidding (56 %); unclear selection or evaluation criteria (55 %); abuse of emergency grounds to avoid competitive procedures (45 %); involvement of bidders in designing specifications (50 %); and amending contractual terms after contracts were concluded (50 %). These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerability to corruption in public procurement procedures. The European Commission’s assessment in the framework of the European Semester also noted insufficient competition for public contracts for maintenance works and construction of roads and bridges.[51]

Public procurement in the construction sector faces particular challenges. Following a KNAB investigation, municipal- and private-sector managers were convicted of bribery in relation to construction projects. The Procurement Supervision Bureau has noted cases in which procuring agencies failed to make documentation available to bidders, requirements for bidders and subcontractors were missing or unclear, or requirements regarding bidders’ qualifications were disproportionate.[52] Such violations may not necessarily reflect corruption but they do indicate a corruption risk. Further risks arise from the decentralised procurement of a range of standardised goods and services (such as internet services), despite the existence of a centralised e-procurement system.

Amendments to the Code of Administrative Violations are now in force, establishing administrative sanctions for violations of procedures in public procurement, public-private partnerships and the award of concessions.[53] This will make it possible to sanction officials for procurement violations which do not amount to criminal offences. The government has been drafting proposals to improve the public procurement system. Amendments made to the Public Procurement Law in June 2013 include an obligation for local governments to use centralised procurement, stricter consequences for suppliers who fail to deliver according to procurement contracts, and the requirement to publish small procurement contracts online.[54]  In July 2013, the government modified regulations on centralised electronic procurement, widening the circle of buyers who can register in the system.[55] Taken together, these changes mark a gradual move towards the wider use of centralised procurement. The government also adopted new regulations for procurement procedures carried out by private companies or associations receiving EU or other public funding.[56] The new rules focus on transparency and prevention of conflicts of interest.[57]

A Construction Law adopted in July 2013 introduces a new register for construction entrepreneurs, and companies now have to obtain specific classification documents to be eligible to participate in public procurement procedures. Individual purchasing agencies are no longer under an obligation to evaluate the companies.[58]

Accountability and integrity of elected officials

Appropriate standards for the accountability and integrity of elected officials set an example for others, and are a crucial element in preventing high-level corruption. Concerns regarding the integrity of individual Members of Parliament have been raised. For example, MPs allegedly hired each other’s relatives to circumvent the prohibition on hiring one’s own relatives.[59] In May 2011, the President initiated the dissolution of the legislature, citing a number of such cases in addition to Parliament’s refusal to lift the immunity of an MP under KNAB investigation and thus preventing a search of the premises. The President also expressed concerns over the political influence of oligarchs.[60] The dissolution was confirmed by a referendum in July 2011, leading to early elections in September 2011. There has been a stronger focus on anti-corruption issues in the new parliament.

In 2012, Parliament amended its rules of procedure, introducing an open vote on the appointment of judges, the Prosecutor General, KNAB director and others. This is an improvement over the previous secret ballots, which led to controversial decisions on appointments and dismissals relating to anti-corruption policy. Continuing this trend, in September 2013 Parliament amended the Constitution to introduce an open vote on the appointment of Constitutional Court judges.[61] It also adopted amendments to clarify the status of Constitutional Court judges and prosecutors who have been suspended because of a criminal prosecution or disciplinary proceedings.[62]

Apart from the Law on Prevention of the Conflict of Interest,[63] MPs are also subject to Parliament’s Code of Ethics. [64] The code contains provisions against actual and apparent conflicts of interest, attempts to illegally influence decisions of state and municipal authorities, and use of confidential information for private purposes. The Committee of Mandates, Ethics and Submissions oversees the code’s implementation and may issue oral or written warnings.[65] Since the code was adopted in 2006, its impact has been limited, with only a few MPs sanctioned for corruption-related breaches. GRECO attributed this limitation to the abstract and outdated nature of the code and the lack of a proactive approach by the Committee, which acts only upon an MP’s complaint.[66] It recommended that the Code of Ethics be revised and complemented with practical channels for discussing and resolving ethical issues, through confidential advice and institutional guidance and training.[67] GRECO also recommended a system requiring ad hoc oral declarations at the outset of parliamentary proceedings which can then be put on public record, to ensure that potential conflicts of interest which might arise are duly noted and reported. Most of the Committee’s decisions do not contain detailed reasoning and thus contribute little to MPs’ and the broader public’s understanding of the practical application of ethics principles.[68]

MPs are exempt from a number of corruption prevention provisions in the Conflict of Interest Law, including procedures to report conflicts of interest. Reporting to KNAB is possible with respect to other MPs but not with respect to oneself. GRECO noted that relying on the common sense of individual MPs to resolve such matters sends the wrong signal to the public. It also encouraged KNAB to continue its efforts to inform MPs about the course of action to take if a conflict of interest question arises, but noted that it was up to Parliament to assume more self-responsibility in this area. A stronger system for regulating parliamentary ethics would help build public trust.[69]

Provisions on MPs’ immunity have not been revised since they were first introduced. GRECO recommended that administrative immunity be lifted, as it no longer serves its original purpose and gives the impression that MPs are above the law.[70] However, recent attempts to abolish administrative immunity did not reach the 2/3 majority required to amend the Constitution.

The effective accountability of elected officials and the dissuasive impact of relevant penalties require timely adjudication. A major case against a major political party for overspending during the 2006 election campaign reached a final verdict in 2011, after two other elections had passed and the party had dissolved. The delay made it impossible to enforce the court judgment, which fined the party for overspending and accepting illegal donations.

State-owned companies

There is a perception that supervisory and managerial positions are reshuffled to reflect changes in the governing coalition, with associated risks of conflicts of interest and corruption. Further increasing public accountability at state-owned companies would help to address this perception.[71] In an improvement, in 2012 and 2013 the Privatisation Agency organised a merit-based selection of members for supervisory boards in four major companies with a state share.[72] Members of management boards of state-owned companies are subject to the same rules on incompatibility of offices and asset disclosure applicable to public officials.[73] State-owned companies are required to disclose criteria for determining the remuneration of their officials and employees.[74] The law also grants public access to information on donations granted by state-owned companies.[75] While the State Audit Office has the authority to audit state-owned enterprises, it has been noted that internal auditors do not have independent board members or independent audit committees to which to report.[76]  Moreover, state-controlled parent companies purchase services from subsidiaries on terms that are not fully transparent. The government is planning to establish a partially centralised ownership agency, which would report to the Prime Minister.[77] Draft amendments submitted to Parliament in May 2013 aim to improve the governance of state-owned companies and ensure a more professional appointment of managers and reduced possibilities for the politicisation of enterprises.[78] These plans, still under consideration, also include the reinstatement of the supervisory boards for larger companies, abolished in 2009 for all companies solely owned by the state.

3. Future steps

Latvia has made progress in preventing and addressing corruption, with a searchable online database of political donations, and a track record of KNAB investigations. Moreover, anti-corruption laws are gradually being developed and refined, although implementation in practice remains uneven. Further efforts can help address corruption risks in public procurement and improve the accountability of elected officials as well as the transparency of state-owned companies.

The following points require further attention:

· Maintaining KNAB’s achievements by strengthening its independence and protecting it from potential political interference, notably in supervisory and budgetary procedures.

· Promoting greater competition for public contracts and greater use of centralised e-procurement. Further enhancing KNAB’s efforts to detect corruption in public procurement. Improving the transparency of state-owned companies and defining professional selection criteria for supervisory and management posts.

· Strengthening the ability of the judiciary to handle corruption cases in an independent manner by reinforcing the role of self-governing judicial bodies in relation to appointments and career progression, by taking further measures to uphold due process in disciplinary proceedings, and by restricting Parliament’s powers to the confirmation of judicial appointments.

· Revising and applying more rigorously Parliament’s Code of Ethics, providing practical guidance on conflicts of interest, requiring ad hoc oral declarations at the outset of proceedings, and lifting administrative immunities for MPs.

[1]      Guidelines for the Prevention and Combating of Corruption 2009-2013 (Informative Part): http://www.knab.lv/uploads/eng/guidelines_for_corruptionprevention_combating_2009_2013.pdf.

[2]      KNAB 2011 Publiskais pārskats. Rīga: p. 5.  http://www.knab.lv/uploads/free/parskati/knab publiskais parskats 2011.pdf.

[3]      Valsts pārvaldes cilvēkresursu attīstības koncepcija (informatīvā daļa). Endorsed on 5th Feb. Available from: http://www.mk.gov.lv/lv/mk/tap/?pid=40265608.

[4]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282008%291_Latvia_One_EN.pdf.

[5]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%2913_Second%20Latvia_EN.pdf.

[6]      Grozījumi Valsts civildienesta likumā, VSS-358, TA-1775. Approved by the Cabinet of Ministers on 06/08/13. Likumprojekta „Grozījumi Valsts civildienesta likumā’ sākotnējās ietekmes novērtējuma ziņojums (anotācija). http://www.mk.gov.lv/lv/mk/tap/?dateFrom=2012-10-07&dateTo=2013-10-07&text=civildienesta&org=0&area=0&type=0

[7]      KNAB (2012) KNAB izstrādājis darbības stratēģijas projektu turpmākajiem trim gadiem http://www.knab.lv/lv/knab/press/article.php?id=391584.

[8]      Ministru Kabinets (2013) Koncepcija par Valsts policijas Iekšējās drošības biroja pārveidošanas par iekšlietu ministra pārraudzībā esošu institūciju risinājumiem (informatîvâ daďa). Endorsed on 30/07/13.  http://www.mk.gov.lv/lv/mk/tap/?pid=40273130&mode=mk&date=2013-07-30.

[9]      SAO Annual Report 2012, pp. 16, 17. http://www.lrvk.gov.lv/upload/VK_Publiskaisgadaparskats_23Jan2013.pdf.

[10]    See section on accountability and integrity of elected officials below.

[11]            Trial Statistics for Offences Committed in Public Service in Latvia 2004 - 2011 Centre for Public Policy PROVIDUS.  http://corruption-c.wikidot.com/statistics-on- trials-of-corruption-cases.

[12]    2013 Special Eurobarometer 397.

[13]    2013 Flash Eurobarometer 374.

[14]    COM(2011) 309 final, Second Implementation report of FD 2003/568/JHA of 6 June 2011: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf

[15]    http://ec.europa.eu/europe2020/pdf/themes/07_shadow_economy.pdf..

[16]    http://www3.weforum.org/docs/GCR2013-14/GCR_Rankings_2013-14.pdf.

[17]    Law on Prevention of the Conflict of Interest in Activities of Public Officials. Section 10, Paragraph 7.

[18]    Law on Prevention of the Conflict of Interest in Activities of Public Officials. Section 10.

[19]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)3_Latvia_EN.pdf.

[20]    See Informatīvais ziņojums „Korupcijas novēršanas un apkarošanas programmas 2009. – 2013.gadam īstenošana’ (Information Report Implementation of the Action Plan for the Prevention and Combating of Corruption for the Years 2009-2013). http://www.knab.lv/uploads/free/valsts_programma/zino-knap_2010.pdf.

[21]    Fizisko personu mantiskā stāvokļa un nedeklarēto ienākumu deklarēšanas likums (Law on the Declaration of Assets and Undeclared Income of Physical Persons). Available from: http://www.likumi.lv/doc.php?id=241275.

[22]    Fine of up to EUR 360. Latvijas Administratīvo pārkāpumu kodekss (The Code of Administrative Violations of Latvia), Section 165. http://www.likumi.lv/doc.php?id=89648#saist_4.

[23]    However, GRECO’s recommendation on KNAB’s independence remains only partly implemented, as noted in the next section. GRECO: Third Evaluation Round - Compliance Report on Latvia, October 2010, p.11. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2010)6_Latvia_EN.pdf.

[24]    Law on the Financing of Political Organisations (Parties).

[25]            KAŽOKA, I. (2011) Kas buru jāuzlabo Latvijas partiju finanšu un priekšvēlēšanu aģitācijas regulejumā? Sabiedriskās politikas centrs PROVIDUS, p. 9.   http://www.providus.lv/upload file/Jaunumi/2010/ZinioiumsPartiiuFinanses2011gatavs2.pdf

[26]    PROVIDUS.  http://www.providus.lv/upload_file/Jaunumi/2010/ZinjojumsPartijuFinanses2011gatavs2.pdf

[27]    Krimināllikums. Adopted on 17/06/98, last amended on 13/12/12. Section 288.3  http://www.likumi.lv/doc.php?id=88966

[28]    Likumprojekts trešajam lasījumam Likumprojekts ‘Priekšvēlēšanu aģitācijas likums’ (Nr.273/Lp11)  http://titania.saeima.lv/LIVS11/saeimalivs11.nsf/0/B9056E70F4F3DE64C2257ABE00528881?OpenDocument Likumprojekts trešajam lasījumam Likumprojekts ‘Grozījumi Politisko organizāciju (partiju) finansēšanas likumā’ (Nr. 222/Lp11).  http://titania.saeima.lv/LIVS11/saeimalivs11.nsf/0/D8683EBE18A74B15C2257ABE00523BC6?OpenDocument.

[29]    KNAB (2013) KNAB pieņēmis lēmumu par valsts budžeta finansējuma izmaksas pārtraukšanu Reformu partijai. http://www.knab.lv/lv/knab/press/article.php?id=413202.

[30]     Darba likums (Labour Law). Available from: http://www.hkumi.lv/doc.php?id=26019. Section 9, paragraph 1.

[31]     Law on Prevention of the Conflict of Interest in Activities of Public Officials. Section 20, paragraph 7.

[32]    Iesniegumu likums (Law on Submissions). http://www.likumi.lv/doc.php?id=164501.

[33]    MK noteikumi Nr.300 ‘Ministru kabineta kārtības rullis’ (Rules of Procedure of the Cabinet of Ministers). Article 3. http://www.likumi.lv/doc.php?id=190612  MK instrukcija Nr.19 ‘Tiesību akta projekta sākotnējās ietekmes izvērtēšanas kārtība’ (Procedure for the Initial Impact Assessment of a Draft Legal Act). http://www.likumi.lv/doc.php?id=203061. Saeimas kārtības rullis (Rules of Procedure of Saeima). Section 85, Paragraph 5, Item 6. http://www.likumi.lv/doc.php?id=57517.

[34]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)3_Latvia_EN.pdf.

[35]    Ministru kabineta rīkojums Nr. 113 ‘Grozījumi Ministru kabineta 2011.gada 12.decembra rīkojumā Nr. 647 ‘Par koncepciju    ‘Publiskās pieejamības nodrošināšana informācijai par lobētājiem’. http://www.likumi.lv/doc.php?id=255743.

[36]    Vides aizsardzības un reģionālās attīstības ministrija. Par lobētāju sniedzamie dati. http://www.varam.gov.lv/lat/lidzd/informacija_par_lobijiem/.

[37]    http://www.knab.lv/lv/finances/db/.

[38]    Rīgas pilsētas Ziemeļu rajona tiesas 2011. gada 21. oktobra spriedums.

[39]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)13_Second%20Latvia_EN.pdf.

[40]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)13_Second%20Latvia_EN.pdf.

[41]    Opinion on the Draft Law on Judicial Power and Corresponding Constitutional Amendments of Latvia, CDL

AD (2002) 26.

[42]    Council recommendation 2013/C 217/12 of 9 July 2013.

[43]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)3_Latvia_EN.pdf

[44]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4%282012%293_Latvia_EN.pdf

[45]    The Judicial Qualification Board oversees the qualification process for new judges, and assesses their suitability and professional preparedness. It also oversees the process of granting qualification levels which are linked to salary. The Board is composed of nine members elected by the Conference of Judges for a four-year term: three judges from the Supreme and regional courts, two district judges and one land register judge. Opinions of the Judicial Qualification Board can be appealed to the Disciplinary Court. Article 93, Law on Judicial Power.

[46]    Likumprojekts otrajam lasījumam Grozījumi likumā ‘Par tiesu varu’ (Nr.223/Lp11)  http://titania.saeima.lv/LIVS11/SaeimaLIVS11.nsf/0/036A899E3C47A43EC2257AEF004FAEB8?OpenDocument

[47]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4%282012%293_Latvia_EN.pdf

[48]    Grozījumi likumā ‘Par tiesu varu’. http://likumi.lv/doc.php?id=258013

[49]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[50]    2013 Flash Eurobarometer 374.

[51]    http://ec.europa.eu/europe2020/pdf/nd/swd2012_latvia_en.pdf, p. 20.

[52]    Iepirkumu uzraudzības birojs (2012) Pārskats par Iepirkumu uzraudzības biroja darbu 2011.gadā (Vadības ziņojums), pp. 2, 3.  http://www.iub.gov.lv/files/upload/VadibasZinojums2011gadu.pdf.

[53]    Likumprojekts Grozījumi Latvijas Administratīvo pārkāpumu kodeksā.  http://titania.saeima.lv/LIVS11/saeimalivs11.nsf/0/04FE04808DD722B9C2257A87003B67A2?OpenDocument.

[54]    Grozījumi Publisko iepirkumu likumā. Adopted on 20/06/13. http://likumi.lv/doc.php?id=258040.

[55]    Grozījumi Ministru kabineta 2010.gada 28.decembra noteikumos Nr.1241 ‘Centralizēto elektronisko iepirkumu noteikumi’. Adopted on 30/07/13. http://likumi.lv/doc.php?id=258671.

[56]    04/06/13. MK noteikumi Nr.299 ‘Noteikumi par iepirkuma procedūru un tās piemērošanas kārtību pasūtītāja finansētiem projektiem’. http://likumi.lv/doc.php?id=257257

[57]    Lapiņš, A. (2013) Jauna kārtība patērētāju finansētiem iepirkumiem. Iepirkumi, 2 July. http://zurnalsiepirkumi.lv/jauna-kartiba-pasutitaju-finansetiem-iepirkumiem/

[58]     Ekonomikas Ministrija (2013) D.Pavļuts: Jaunais Būvniecības likums dos pozitīvu stimulu visai ekonomikai. http://www.em.gov.lv/em/2nd/?id=33374&cat=621.

[59]    GRECO (2012) Fourth Evaluation Round. Evaluation Report Latvia. Strasbourg: pp. 13, 14. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)3_Latvia_EN.pdf

[60]    Address by President Valdis Zatlers to the People of Latvia, 28 May 2011, http://www.president.lv/pk/content/?cat_id=605&art_id=17537.

[61]    Grozījums Latvijas Republikas Satversmē. http://likumi.lv/doc.php?id=260656

[62]    Grozījumi Satversmes tiesas likumā. http://likumi.lv/doc.php?id=259938   Grozījumi Prokuratūras likumā. http://likumi.lv/doc.php?id=259941

[63]    Likums Par interešu konflikta novēršanu valsts amatpersonu darbībā (Law on Prevention of the Conflict of Interest in Activities of Public Officials). http://www.hkumi.lv/doc.php?id=61913

[64]    Saeimas kārtības rullis (Rules of Procedure of Saeima). Adopted on 28/07/94, last amended on 19/01/12. Section 179, Annex.  http://www.likumi.lv/doc.php?id=57517.

[65]    Saeimas kārtības rullis (Rules of Procedure of Saeima). Adopted on 28/07/94, last amended on 19/01/12. Section 179, Paragraph 1, Item 3 and Paragraph 7.  http://www.likumi.lv/doc.php?id=57517.

[66]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)3_Latvia_EN.pdf.

[67]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)3_Latvia_EN.pdf.

[68]    Mandātu, ētikas un iesniegumu komisija (2010-2013) Par Saeimas deputātu ētikas kodeksa pārkāpumiem Saeima.  http://mandati.saeima.lv/lemuma-projekti/par-saeimas-deputtu-tikas-kodeksa-prkpumiem.

[69]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)3_Latvia_EN.pdf.

[70]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4%282012%293_Latvia_EN.pdf.

[71]    Kalniņš, V. and Litvins, G. (2011) Augošas vērtības meklējumos. Valsts un pašvaldību kapitālsabiedrības: rīcībpolitikas un prakses izvērtējums Sabiedriskās politikas centrs Providus, pp. 54-64.

[72]    Spridzāns, A (2013) Padomes locekļu atlases prakse 2012/2013 VAS ‘Privatizācijas aģentūra’.  http://delna.lv/business-integrity-conference/conference-materials/.

[73]    As defined in the Law on Prevention of the Conflict of Interest.

[74]    Valsts un pašvaldību institūciju amatpersonu un darbinieku atlīdzības likums (Law on Remuneration of Officials and Employees of State and Local Government Institutions). Section 2.

[75]    Likums ‘Par valsts un pašvaldību finanšu līdzekļu un mantas izšķērdēšanas novēršanu’ (Law on Prevention of Waste of Financial Means and Property of the State and Local Governments). Section 14. http://www.likumi.lv/doc.php?id=36190

[76]    Baltic Institute of Corporate Governance (2012) Governance of State-Owned Enterprises in the Baltic States, p. 49. http://corporategovernance.lt/uploads/docs/Governance%20of%20State-owned%20Enterprises%20in%20the%20Baltic%20States.pdf

[77]    Ministru kabinets (2012) Valsts kapitāla daļu pārvaldības koncepcija. http://polsis.mk.gov.lv/view.do?id=3990

[78]    Ministru kabinets (2013) Sēdes protokols Nr. 32, 28. maijs. http://www.mk.gov.lv/lv/mk/mksedes/saraksts/protokols/?protokols=2013-05-28.

MALTA

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. In 2008, Malta adopted a National Anti-Fraud and Corruption Strategy, aiming to set up a normative, institutional and operational framework, reflecting local requirements and international obligations. The strategy was drafted by the Ministry of Finance’s Financial Management Monitoring Unit and the Internal Audit Investigations Directorate, designated as the implementing body for the strategy. The document had four main objectives: capacity building, communication, national cooperation and international cooperation. The Ministry of Finance is currently updating the strategy. However, various policy areas have attracted attention due to corruption allegations. The management of public funds by local councils and the issuing of building and land development permits have also shown vulnerabilities.[1] Reforms already undertaken to address these areas are an encouraging development, but it is still too early to evaluate their effectiveness. A corruption allegation that led to the resignation of Malta's European Commissioner in 2012 has intensified the debate on corruption in Maltese politics.

Legal framework. Criminal Code provisions on corruption, in particular those introduced more recently, such as international bribery offences, private sector bribery and trading in influence are in line with the OECD Criminal Law Convention on Corruption. The definition of public officials is sufficiently broad, including public servants with delegated powers.[2] The Public Administration Act contains a code of ethics applicable to public employees.[3] The Freedom of Information Act aims to promote transparency and accountability in government.[4]

Institutional framework. Parliament set up a Select Committee on Strengthening Democracy in 2008 to consider transparency and accountability, public financing of political parties, and conflicts of interest of the Members of Parliament, parliamentary secretaries and ministers.[5] The Economic Crime Unit of the Malta Police Force, set up in 1987, investigates corruption offences and produces annual statistics on its investigations. Police officers are subject to disciplinary rules and a code of ethics applicable to all public officials. The Anti-Fraud and Corruption Unit within the Internal Audit and Investigations Department (IAID) examines government activities and provides internal financial investigative services, separate from criminal investigations.[6] The National Audit Office (NAO) has a mandate to promote accountability of public officers and to contribute to better management of public resources. It has access to all documents and records relating to the accounts of the bodies audited.[7] However, investigative institutions face obstacles in collecting evidence such as witness testimony, and often rely on the police to take corruption allegations forward. The Permanent Commission against Corruption (PCAC) and Ombudsman also play a role, as detailed in a subsequent section of this chapter.

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer Survey on corruption, 83 % of respondents consider corruption to be a widespread problem in Malta (EU average 76 %) and 29 % say it affects their daily lives (EU average 26 %). 53 % say corruption is particularly widespread among officials issuing building permits (EU average 43 %).

Experience of corruption. According to the 2013 Special Eurobarometer, 2 % of respondents have been asked or expected to pay a bribe over the previous 12 months (EU average 4 %).

Business surveys. In the Eurobarometer business survey, 43 % of companies that competed for public contracts in the last three years say that corruption prevented them from winning (EU average 32 %).[8] Maltese respondents from the business sector perceive the following practices as widespread in public procurement: involvement of bidders in the design of specifications (48 %), unclear selection or evaluation criteria (48 %), conflicts of interest in bid evaluation (58 %), specifications tailor-made for particular companies (64 %), abuse of emergency grounds to justify the use of non-competitive or fast-track procedures (40 %) and collusive bidding (48 %). 57 % considered that corruption is widespread in public procurement managed by national authorities (EU average: 56 %) and 50 % in the case of local authorities (EU average: 60 %). These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerability to corruption in public procurement procedures.

Background issues

Public procurement. Public procurement regulations cover contracts awarded by central or local authorities and bodies governed by public law.[9] The Department of Contracts is responsible for the administration of procurement procedures. Its Director is assisted by the General Contracts Committee and, in cases that require specialised expertise, the Special Contracts Committee. The two committees are required to report any irregularities detected in the tendering process, and to make relevant recommendations. In the context of the 2013 European Semester of economic policy coordination, the Council recommended that Malta improve the efficiency and reduce the length of public procurement procedures.[10] Public procurement in the energy field has attracted attention due to a recent corruption controversy, and the Maltese government has plans for reforms in this area. A July 2013 report by the National Audit Office raised concerns regarding oil contracts extended by state utility corporation Enemalta and an increase in the rates payable to the contractor.[11] Following this report, the Energy Minister asked the Police Commissioner to investigate Enemalta's fuel procurement since 2008. The Public Accounts Committee discussed the matter and the government appointed a former judge to investigate claims that fuel purchased by Enemalta did not meet contract specifications.

Private sector. In the 2013 Eurobarometer business survey, 53 % report corruption as a problem when doing business in Malta (EU average 43 %). In the Global Competitiveness Index, Malta ranks 41st out of 148 countries.[12] Malta partly transposed the provisions of Framework Decision 2003/568/JHA concerning the liability of legal persons, and fully complied with the requirements regarding passive corruption. The position of Maltese law regarding the inclusion of non-profit entities remains unclear.[13] The size of the shadow economy was estimated at 25.3 % of GDP in 2012.[14]

Conflicts of interests and asset disclosure. The Public Administration Act contains provisions on conflicts of interest and acceptance of gifts and benefits.[15] In July 2013, ministers and parliamentary secretaries submitted to Parliament their asset declarations, following the code of ethics applying to them.[16] However, there is no monitoring mechanism to ensure compliance with the code of ethics for ministers and parliamentary secretaries, or to verify declarations. Concerns have also been raised about the 'revolving door' between the public and private sectors, giving rise to potential conflicts of interest. The government pledged to set up a Parliamentary Commissioner for Standards who would be appointed by Parliament to independently monitor the behaviour and declarations of assets and interests of MPs (including the Cabinet), as well as to carry out investigations where appropriate.[17] Such measures aim to address concerns that the issue of conflict of interest has not been dealt with sufficiently. In July 2013, Parliament adopted amendments to allow ministers, parliamentary secretaries and MPs to sit on government boards.[18]

Whistleblowing. It is a criminal offence to victimise a person for having disclosed illegal or corrupt practices under the Employment and Industrial Relations Act.[19] The Protection of the Whistleblower Act came into force in September 2013. Applying to the public sector and larger private companies, it aims to incentivise employees to report wrongdoing, including their own.[20]

Transparency of lobbying. Lobbying is not regulated in Malta. There is no specific obligation for registration of lobbyists or reporting of contacts between public officials and lobbyists. A code of ethics requires Members of the House of Representatives to declare connections with persons that have a direct interest in legislation before the House.[21]

2. Issues in focus

Financing of political parties

Transparency of political financing is almost non-existent in Malta.[22] In the 2013 Eurobarometer business survey, Malta has the EU's second highest percentage (44 %) of companies who believe funding political parties in exchange for public contracts or influence over policy making is widespread. No specific rules apply regarding the financing of political parties. Anonymous donations to parties and electoral campaigns, irrespective of the amount, can be made without restriction. Each party represented in Parliament receives EUR 100 000 annually as a direct grant to develop international relations. This is the only public funding for political parties apart from indirect support such as tax exemption and media access. Party expenditure is not limited. The caps on candidate expenditure are low (EUR 1 400) and reports by candidates are often considered not to reflect reality, generating confusion about whether donations to candidates are reported and what counts as a donation for these purposes.[23] Malta also lacks proper accounting requirements for political parties and electoral campaigns as well as requirements for publication of accounts that would allow for public scrutiny. The Electoral Commission is composed of members nominated by the two main political parties and is thus seen as lacking independence.[24]

The absence of legislation in this area has long been the subject of debate in Malta and the Council of Europe's Group of States against Corruption (GRECO) highlighted it as a shortcoming.[25] It recommended revising spending limits for election candidates and introducing a general requirement for political parties and election candidates to disclose all individual donations (including of a non-monetary nature) above a certain threshold along with the identity of the donor. GRECO further recommended banning anonymous donations and requiring political parties to keep proper books and accounts, to be reported at appropriate intervals in a coordinated way and audited independently. It also recommended independent monitoring of the funding of political parties and electoral campaigns, and application of effective, proportionate and dissuasive sanctions.[26] A draft Political Parties Act only partially addressed these recommendations, but this Act was not adopted.[27] A January 2012 private member’s draft bill to regulate the formation, inner structures, functioning and financing of political parties and their participation in elections automatically lapsed with the dissolution of Parliament in January 2013. The government is drafting a new version aiming to address GRECO recommendations.

Prosecution of corruption

While the police have successfully prosecuted some cases, other organisations have faced challenges in conducting thorough investigations because they lack the necessary means, powers or resources. The Ombudsman reports to the House of Representatives but his/her recommendations are not binding.[28] The Internal Audit and Investigations Department carries out financial investigations of suspected corruption of public officers but it is not empowered to conduct criminal investigations. The Public Accounts Committee (PAC), a standing parliamentary committee, may ask the National Audit Office to investigate and report back but it is understaffed and challenged by uncooperative witnesses. The Committee consists of up to seven members, chosen to fairly represent the proportion of opposition members. If the Committee suspects a criminal offence, the findings are reported to the Attorney General and to the Commissioner of Police for further investigation.[29]

In addition, the absence of established procedures to ensure efficient coordination in responding to corruption allegations makes institutions more liable to executive discretion, resulting in similar cases being treated differently. On one occasion, the government asked the NAO to investigate possible irregularities in the award of a contract for the extension of a power station. The NAO lacked the powers necessary to conduct such an investigation in the face of a reluctant key witness.[30] The government is not bound to follow up on the Auditor’s conclusions. On another occasion, the government asked the police to investigate allegations of procurement corruption at a hospital, resulting in a prison sentence for fabrication of the report alleging corruption.[31]

The 2008 National Anti-Fraud and Corruption Strategy envisaged the setting up of a Coordination Committee that would consist of representatives from authorities involved in the fight against corruption and would review the existing mechanisms to identify gaps in coordination.[32] Neither the Committee nor the IAID, which is the implementing body for the strategy, appear to be playing an internal coordination role. Apart from cases where the police or an agency initiate their own investigations, it is also common practice for ministers to task a particular agency or the police with an investigation, without standard guidelines for this decision. Alternatively, a minister may appoint a magistrate or an ad hoc commission to conduct an inquiry.[33] These options also involve ministerial discretion in nominating the members of the ad hoc commission and establishing its remit. 

The Maltese judiciary has traditionally enjoyed trust and confidence. A code of ethics for the Judiciary is in place and a Commission for the Administration of Justice has the authority to enforce it.[34] However, a high-profile bribery case in 2002 dented this positive image. A former Chief Justice and another former judge sitting in the same Court of Appeal were found guilty of receiving bribes in return for lowering a sentence of a convicted drug-trafficker. Both were sentenced to prison.

The system for ensuring integrity in the judiciary requires closer attention, as indicated by the case of a judge and the magistrate who refused to resign from the Malta Olympic Committee after the Commission for the Administration of Justice ordered them to do so.[35] The issue sparked a broader debate on integrity and conflicts of interest in the judiciary, and a possible revision of the current appointment mechanism by which the President, acting in accordance with the advice of the Prime Minister, nominates persons to the bench in line with certain basic criteria with the option of consulting the Commission for the Administration of Justice. 

In May 2013, the Commission for the Holistic Reform of the Justice System ('Reform Commission') suggested setting up a Judicial Appointments Commission (to be appointed by the President) to recommend to government the appointment or promotion of members of the judiciary, on the basis of qualitative criteria including integrity, subject to a call for applications, followed by a competition consisting of written and oral examinations to be held in public.[36] A separate Judicial Discipline Commission (also to be appointed by the President) would examine cases of punishment or removal of members of the judiciary. The judiciary opposes these proposals as they reach beyond the Reform Commission's terms of reference. According to the judiciary, these proposals would infringe on judicial independence. Instead, the judiciary advocates authorising the Commission for the Administration of Justice to take the initiative, rather than wait for a removal motion to be put before Parliament.[37] The Reform Commission published its final report in November 2013.[38]

GRECO has recommended removing certain discrepancies within Maltese law such as a harsher punishment for attempted than for actual bribery.[39] It also recommended raising the penalty for trading in influence (one of the charges against the former Chief Justice) and recent amendments of the Criminal Code accordingly increased penalties for trading in influence substantially.[40] Punishments for judges were also raised.[41] Moreover, the amendments removed time limits for abuse of office by ministers, parliamentary secretaries, MPs, mayors, local councillors and their accomplices.[42] 

The Permanent Commission against Corruption (PCAC), a specialised body dealing exclusively with the investigation of alleged or suspected corrupt practices within public administration, was established in 1988[43] and is composed of a Chair and two members appointed by the President of Malta, following the advice of the Prime Minister, given after consultation with the opposition leader. According to the law, in the exercise of its functions the PCAC is not subject to the direction or control of any other person or authority.[44] The PCAC's Chair must be a current or former magistrate or advocate and the members cannot have served as parliamentarians or ministers. The Chair and members are appointed for five years and cannot be removed from office except when unable to discharge their duties due to infirmity. The PCAC may investigate the conduct of any public officer, including ministers, parliamentary secretaries, as well as the practices and procedures of government departments, local authorities, statutory bodies or other bodies in which the government has a controlling interest or effective control. The PCAC also instructs, advises and assists ministers and other officials on corruption prevention. The PCAC conducts investigations on its own initiative or following reports made to it by any person and confirmed on oath. The Commission has the power to summon witnesses, request files or other documentary evidence and seek police assistance.[45]

The PCAC's institutional setup has been criticised. Apart from being under-resourced (with a budget of EUR 84 000), the PCAC cannot appoint specialists in its own capacity during investigations but must ask the Prime Minister to do so.[46] A debate about possible reforms to strengthen its role in fighting corruption has been ongoing for years. In 2007, GRECO had already noted that 'almost five years after the adoption of the [First] Evaluation Report, no decision to further empower the PCAC has been taken.'[47]

In July 2013, the Reform Commission proposed that the PCAC be abolished.[48] According to the Reform Commission, none of the 425 investigations conducted by PCAC since its creation in 1988 had resulted in criminal proceedings in court. As part of a proposed separation of the Attorney General’s functions, the Reform Commission suggested entrusting the investigation and prosecution of corruption to a General Prosecutor, who would enjoy a constitutional safeguard of independence and be endowed with an investigations division, which the PCAC lacks.[49] It appears that the General Prosecutor, as proposed by the Reform Commission, would not specialise exclusively in corruption cases. The judiciary reacted with cautious agreement on some procedural and administrative changes proposed by the Reform Commission. However, the judiciary expressed serious concern over proposed institutional reforms, particularly those which would curtail the functions and powers of the Commission for the Administration of Justice.[50]

Environmental planning

The granting of planning permits, particularly to developers for large-scale projects has given rise to contention and controversy. In the 2013 Eurobarometer survey, 53 % of Maltese respondents think corruption is widespread among officials issuing building permits, the highest percentage in Malta's public institutions.[51]

The absence of a party financing law makes it possible for donations to remain undeclared, thereby feeding a public perception that large-scale permits are not granted on objective criteria.[52] While factors unrelated to corruption could also be at play in shaping negative perceptions of the Malta Environmental Planning Authority (MEPA), including discontent when permits are refused in line with established policy, negative findings by MEPA’s former auditor in relation to certain MEPA decisions appear to support the public's perception.[53]

Rather than outright bribery of MEPA officials, corruption allegations tend to consist of other irregularities in the decision-making process.[54] No actual case of direct political interference or pressure has been proved thus far, although a media investigation, confirmed by MEPA’s former auditor, revealed that MEPA’s Development Control Commission (DCC) had processed a suspiciously large number of cases in the last week prior to the 2008 general election (three times more than the same period the year before) and in 49 of the 430 cases the DCC issued a building permit despite the case officers’ recommendations against doing so.

Good practice: reform to address corruption vulnerability in environmental planning and granting of development permits

Following the launch of a nine-month public consultation, a document proposing MEPA reform was published.[55] The plan was based on four key principles: consistency, efficiency, accountability, and enforcement. It resulted in the adoption of the Environment and Development Planning Act 2010, containing provisions on disclosure of conflicts of interest by MEPA members, staff and consultants. Failure to disclose an interest may result in removal from office or termination of contract.[56] As an additional safeguard, relevant proceedings and hearings are held in public.

Moreover, the Ombudsman Act was amended to allow the Ombudsman to appoint Commissioners for Administrative Investigations who are considered to be Officers of Parliament. A Commissioner for Environment and Planning was appointed to investigate complaints related to MEPA and replaced the office of Auditor of MEPA.[57] This structural change is significant since the Commissioner has the same powers as the Ombudsman and can, for instance, require the production of documents and summon witnesses as well as report to Parliament where necessary.[58] He has more resources available and is independent from MEPA. When investigating a case, MEPA will be informed and given a reasonable time to make submissions. The Ombudsman's annual report will include a section on the work of the Commissioner for Environment and Planning. The Commissioner will also publish regular case notes, similar to those published by the Ombudsman, as well as ad hoc publications on important principles.[59]

The number of complaints has reportedly decreased since the MEPA reform. The reform started by addressing long delays in processing but has also strengthened the decision-making process and made it more transparent with online accessibility of MEPA files.[60] One of the most important changes in the law is that third-party objectors have been given more power to challenge decisions. Increased enforcement and the possibility of withdrawing permits have increased deterrence, while stricter application of established policies has brought more consistency to the decision-making process. The new Appeals Tribunal is also full-time and is autonomous from MEPA, whereas the previous appeals system was one of reconsideration by the same Board.

The MEPA Board and Development Control Commissions take decisions in meetings open to the public. Applications are published in a register, posted on site, listed in the media, and made available at local councils. Decisions on each application are to be logged in real time on the MEPA website.[61]

In May 2013, the government and MEPA launched a public consultation called Semma' Leħnek (‘Have Your Say’) on how to simplify and streamline the planning system and other procedures at MEPA.[62] The government's reform proposals include a division of MEPA's planning and environmental remits into two separate agencies, which has not yet taken place. In October 2013, MEPA decided to improve transparency by publishing the names of those who submit representations or proposals for revision of local plans.

3. Future steps

Preventing and addressing corruption has been a priority in Malta, leading to reforms aiming for greater transparency. However, the financing of political parties remains largely unregulated. Coordination should be improved among the institutions investigating corruption to ensure a streamlined approach and effective collection of evidence. Continued efforts are also necessary to improve the transparency of judicial appointments and of decision-making in environmental planning.

The following points require further attention:

· Introducing disclosure obligations and caps on political donations, a ban on anonymous donations beyond a reasonable threshold, publication of independently audited party accounts, and monitoring by the Electoral Commission of compliance with the transparency requirements.

· Defining clear standard procedures and rules on the distribution of cases of alleged corruption among the competent anti-corruption institutions. Improving coordination among these institutions to optimise the collection of evidence. Prioritising the effective investigation and prosecution of corruption and, should the Permanent Commission against Corruption (PCAC) be retained, widening its remit, and empowering it to appoint its own specialists.

· Strengthen the ability of the judiciary to handle corruption cases by revising the appointment and dismissal procedures for judges to ensure transparent and merit-based selection and removal, and enforcing decisions of the Commission for the Administration of Justice that find a breach of the Code of Ethics for the Judiciary.

· Continuing reforms at the Malta Environmental Planning Authority (MEPA) to further build public confidence in its integrity and impartiality.

[1]      In 2012, a former mayor was found guilty of soliciting a bribe and sentenced to one year in prison.

[2]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2009)2_Malta_One_EN.pdf.

[3]      Chapter 497, First Schedule. http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8963.

[4]      Chapter 496, http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8962.

[5]      http://www.parlament.mt/selectcommittee.

[6]      The Internal Audit and Investigations Directorate carries out internal audits and its Director provides a report to the Permanent Secretary under whose supervision the auditee falls. Within one month of receipt of such report, the Permanent Secretary must give instructions to the auditee to remedy any shortcomings and inform the Director accordingly. The Director conducts follow-up reports.  Any suspicion of irregularity or fraud must be referred to the Director and if the Director is of the opinion that the irregularity constitutes a criminal offence, he is obliged to inform the Attorney General. If on the other hand, the irregularity is of an administrative nature, the Director must inform the auditee’s Permanent Secretary. In the fulfilment of their functions, the Director and the officers of the Directorate shall not be subject to any direct or indirect influence or control by the auditee and shall not themselves influence or control the auditee. The Internal Audit and Investigations Board oversees the work of the Directorate and safeguards its independence. Chapter 461 of the Laws of Malta. Subsidiary Legislation 461.02.

[7]      The National Audit Office is headed by the Auditor General, appointed by the President acting in accordance with a resolution of the House of Representatives supported by the votes of not less than two thirds of all the members of the House. In the exercise of his functions, the Auditor General is not subject to the authority or control of any person. Constitution, Article 108(12).

[8]      2013 Flash Eurobarometer 374.

[9]      Subsidiary Legislation 174.04.

[10]    Council recommendation 2013/C 217/15 of 9 July 2013.

[11]    National Audit Office, Performance Audit Report: An Analysis of the Effectiveness of Enemalta Corporation's Fuel Procurement.  16 July 2013.  http://www.nao.gov.mt/loadfile.ashx?id=e5b06974-1496-4414-8304-cc66f270aaed

[12]    http://www3.weforum.org/docs/GCR2013-14/GCR_Rankings_2013-14.pdf.

[13]     COM(2011) 309 final, Brussels, 6.6.2011; http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf.

[14]    http://ec.europa.eu/europe2020/pdf/themes/07_shadow_economy.pdf.

[15]    Chapter 497, First Schedule. http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8963.

[16]    Some ministers subsequently amended their declarations. Parliament ta’ Malta, Code of Ethics for Ministers and Parliamentary Secretaries http://www.parlament.mt/codeofethics-ministers?l=1 Paper Laid No: 982 — Declaration of assets for 2012 made in accordance with paragraphs 48 and 49 of the Code of Ethics for Ministers and Parliamentary Secretaries of Governments of the Eleventh and Twelfth Legislatures, 17 July 2013 http://www.parlament.mt/file.aspx?f=42424.

[17]    In October 2013, Parliament (Motion No 77) appointed a select committee to make recommendations to Parliament on the setting up of a Commissioner for standards, ethics and good behaviour in public life. On 16 December 2013, the select committee presented a draft bill. http://www.parlament.mt/file.aspx?f=45245.

[18]    Bill 9 of 2013, Functions of Members of Parliament (Various Laws) Amendment Bill.  http://www.parlament.mt/billdetails?bid=431&l=1&legcat=13.

[19]    Chapter 452. Article 28. http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8918&l=1.

[20]    Protection of the Whistleblower Act http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lp&itemid=25151&l=1.

[21]    Code of Ethics of Members of the House of Representatives.   http://www.parlament.mt/codeofethics-mp?l=1.

[22]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282009%292_Malta_Two_EN.pdf point 65.

[23]    Paragraph 61. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282009%292_Malta_Two_EN.pdf.

[24]    According to Article 60 of the Constitution, members of the Electoral Commission are appointed by the President, acting in accordance with the advice of the Prime Minister, given after he has consulted the Leader of the Opposition. 'In the exercise of its functions under this Constitution the Electoral Commission shall not be subject to the direction or control of any other person or authority'. http://justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8566.

[25]    Council of Europe, Group of States against corruption (2011) Fighting Corruption: Political Funding: Thematic Review of GRECO’s Third Evaluation Round. Strasbourg: GRECO, 57212, pp. 9-10, paragraph 14. http://www.coe.int/t/dghl/monitoring/greco/general/DOUBLET_EN.pdf.

[26]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282009%292_Malta_Two_EN.pdf.

[27]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282011%2911_Malta_EN.pdf.

[28]    The Ombudsman investigates and resolves citizens' grievances about public bodies, and contributes to an improvement in the quality of public administration. http://www.ombudsman.org.mt/index.asp?pg=missionstatement.

[29]    Article 120E of the Standing Orders of the House of Representatives.

[30]    The Electoral Manifesto of the new government in power since March 2013 promises to increase the investigative powers of the Auditor General especially in relation to uncooperative witnesses and to possibly use such powers also to re-open past cases that could not be investigated further due to lack of cooperation from witnesses.

[31]    Investigations by the NAO or others do not preclude the police from conducting its own investigation or prosecuting suspects.

[32]    L-Istrateġija Nazzjonali kontra l-Frodi u l-Korruzzjoni (National strategy against fraud and corruption), pp. 39-41.

[33]    Inquiries Act, Chapter 273. http://justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8763.

[34]    When so requested by the Prime Minister, the Commission for the Administration of Justice advises on appointments of judges and magistrates. The Commission also decides whether there is a prima facie case to impeach a judge or magistrate when a motion for impeachment has been presented in Parliament.

[35]    However, the judge decided not to re-contest for president of the Olympic committee when his term expired. The magistrate in question was sworn in as a judge in June 2013.

[36]    Commission for the Holistic Reform of the Justice System, First Document for Public Consultation. May 2013. http://mhas.gov.mt/en/MHAS-Information/KRHG/Documents/Document%20for%20Public%20Consultation%20by%20the%20Commission%20for%20the%20Holistic%20Reform%20of%20the%20Justice%20System.pdf.

[37]    The Judiciary Malta, Judges and Magistrates submit their views. August 2013 http://www.judiciarymalta.gov.mt/newsdetails?id=90.

[38]    https://opm.gov.mt/en/krhg/Documents/Rapport%20Finali.pdf.

[39]    Article 120 of the Criminal Code.

[40]    Act IV of 2013, in force since June 2013. The punishment for trading in influence was increased from 3-18 months to 3-6 years.

[41]    Article 117 of the Criminal Code.

[42]    Article 115 of the Criminal Code.

[43]    Act XXII of 1988.

[44]    Permanent Commission against Corruption Act, Chapter 326.

[45]    http://mhas.gov.mt/en/MHAS-Departments/Justice/Pages/Permanent-Commission-Against-Corruption.aspx.

[46]    In addition to PCAC, the Public Accounts Committee, the Police, the Attorney General’s Office and the Judiciary have limited resources and staff.

[47]    Addendum to the Compliance Report on Malta (First Evaluation Round), adopted by GRECO at its 34th Plenary Meeting (Strasbourg, 16-19 October 2007), Greco RC-I (2005) 3E.

[48]    Kummissjoni dwar Riforma Ħolistika fil Qasam tal-Gustizzja, It-Tieni Dokument għall-Konsultazzjoni Pubblika. July 2013. http://mhas.gov.mt/en/MHAS-Information/KRHG/Documents/00%20Consultation%20Document%2029%2007%2013%20Final%20Versionx.pdf The final report of the Reform Commission was published in November 2013. https://opm.gov.mt/en/krhg/Documents/Rapport%20Finali.pdf.

[49]    Kummissjoni dwar Riforma Ħolistika fil Qasam tal-Gustizzja, It-Tieni Dokument għall-Konsultazzjoni Pubblika.  July 2013.  http://mhas.gov.mt/en/MHAS-Information/KRHG/Documents/00%20Consultation%20Document%2029%2007%2013%20Final%20Versionx.pdf, pp. 89-90.

[50]  The Judiciary Malta (2013) Judiciary reacts to second Commission report http://www.judiciarymalta.gov.mt/newsdetails?id=93.

[51]    2013 Special Eurobarometer 397.

[52]    In 2010, a public awareness survey commissioned by MEPA revealed that 63 % of Maltese believe that the applicant's choice of architect has a direct bearing on MEPA's decisions.

[53]    The cases involved mainly a failure to justify the granting of permits and setting aside established policy. Among the most well-known are the Irregular Supermarket Permits (two cases involving the same developer in different localities) which led to the resignation en masse of MEPA's Development Control Commission following the MEPA Auditor's negative opinion; the Bahrija Villa case (2009) in which the MEPA Auditor again found the DCC had ignored policies and advice from the properly constituted bodies of MEPA.

[54]    There has been only one case, still ongoing, where a MEPA official allegedly requested a bribe in exchange for issuing a compliance certificate.

[55]    A blueprint for MEPA's reform, 9 July 2009. https://opm.gov.mt/file.aspx?f=1224.

[56]    Chapter 504, Article 16.

[57]           Rule 20(1) of the Commissioners for Administrative Investigations (Functions) Rules, 2012.

[58]           See also Article 19 of the Ombudsman Act.

[59]    Ibid.

[60]    http://www.mepa.org.mt/permitting.

[61]    http://www.mepa.org.mt/topics-planning

[62]            Malta Environment and Planning Authority, Semma' Leħnek http://www.mepa.org.mt/semma-lehnek.

The Netherlands

1. Introduction — main features and context

Anti-corruption framework

Strategic approach. Significant anti-corruption initiatives enhancing integrity have been taken in the Netherlands, such as a White Paper[1] from 2005 on corruption prevention, as well as legal and administrative reforms, most of which involved promoting integrity. For instance, in 2006, the Civil Servant Act and other laws governing municipalities were amended to provide a compulsory implementation of an integrity policy for civil servants. Another recent and significant example is the adoption of the Act on the Financing of Political Parties in 2013. The government’s programme against financial and economic crimes (FINEC) was introduced to prioritise the fight against fraud, money laundering and corruption; however, a self-standing and comprehensive anti-corruption programme does not exist.[2] The focus of FINEC is on prevention, asset recovery, and improving coordination among the law enforcement agencies in charge of detecting and investigating these crimes.

Legal framework. The legal framework for fighting corruption is essentially in place. In the Third Round of Evaluations, all recommendations by the Council of Europe Group of States against Corruption (GRECO) concerning incriminations had been implemented by 2010;[3] progress has been slower for the recommendations on party funding. The most recent legislative reform related combating corruption was announced in July 2012; it would extend measures to fight financial and economic crimes.[4] The bill includes an increase in penalties for corruption and extends the statute of limitation for corruption. It also raises the maximum fine to 10 % of an organisation’s annual turnover. The Fourth Round of Evaluations of GRECO praised Dutch efforts to ensure public trust in public institutions, but voiced concerns about the lack of supervisory mechanisms for those measures that are in place; for example for declarations of interests by members of parliament.[5]

Institutional framework. While there is no dedicated agency for the prevention and fight against corruption, anti-corruption and integrity policies are central to the Dutch public administration both at national and local level, with a particular focus on prevention. An Office for the Promotion of Public Sector Integrity (BIOS) has the specific task of helping the public administration to draft and enforce anti-corruption policies.[6] For combating corruption, the Dutch police has had a highly specialised investigation service (National Police Internal Investigations Department — Rijksrecherche) since 1996. It reports to the Board of Procurators-General. It is responsible for investigating cases of corruption involving police officials, members of the judiciary and prominent public office-holders. More recently, it has also been given the task of investigating foreign bribery. GRECO recently pointed out that in the Netherlands, prevention of corruption among MPs, judges and prosecutors relies to a large degree on mutual trust, openness and public scrutiny, and commended their efforts on integrity.[7] As to the risks in practice, the Rijksrecherche carried out a strategic analysis of vulnerabilities that might increase the risk of bribery of civil servants in 2010.[8] It concluded that while reports of allegations of bribery were not evenly distributed in the civil service, the overall picture was positive — corruption was not widespread.

Opinion polling

Perception surveys. While 61 % of Dutch people think that corruption is widespread in their country, this is below the EU average (76 %).

Experience of corruption. Only 9 % of the Eurobarometer 2013 respondents felt affected by corruption in everyday life (EU average: 26 %), and actual experience of petty corruption was almost non-existent at 2 % (EU average: 4 %).

Business surveys. The World Economic Forum’s Global Competitiveness Report 2013-14 ranks the Netherlands as the eighth most competitive economy in the world out of 148 countries.[9]According to the 2013 Eurobarometer business survey,[10] only 24 % of the Dutch business respondents believe that corruption is a problem for their company when doing business in the Netherlands, as compared to an EU average of 43 %. Likewise, only 26 % of the Dutch respondents believe that the only way to succeed in business is to have political connections, as compared to an EU average of 47 %. Moreover, only 21 % of those who participated in public procurement in the past three years in the Netherlands reported that they were prevented from winning because of corruption, as opposed to the EU average of 32 %. On the Eurobarometer business survey, 24 % of business representatives felt that corruption was an obstacle to doing business in the Netherlands, while the same percentage of Dutch respondents said that nepotism and patronage were obstacles; this perception is considerably more positive than the EU average of 43 % and 41 % respectively.

Background issues

Private sector. The Netherlands transposed Framework Decision 2003/568/JHA on corruption in the private sector and notified the Commission as early as in 2003 that, in its view, the Dutch Criminal Code already complied with the Framework Decision.[11] The Commission noted a number of potential legislative shortcomings in 2007 in the Netherlands’ criminal legislation, as did GRECO in 2008. The Netherlands amended its provisions on corruption in the private sector in 2009, and GRECO acknowledged the improvement by declaring in 2010 that implementation of the Criminal Law Convention was satisfactory.[12]

Law enforcement. The 2013 Eurobarometer survey shows that only 5 % of the Dutch respondents claim that they have experienced bribery; another 3 % claimed they had witnessed such a case, and 36 % of the witnesses reported it. There seems to be public trust in law enforcement and the ombudsman, since around half of the respondents would report such a case to these institutions. Crime statistics only provide a partial picture since there is no common system for recording corruption offences;[13] furthermore, many cases are dealt with under internal disciplinary procedures.[14] Nevertheless, a study confirmed that in nine out of ten cases, the prosecution of a suspect leads to a criminal conviction and that most people who are convicted for a corruption crime are sentenced to probation service or a fine. [15] In 2011 the guidelines for public prosecutors on how to identify and investigate public sector corruption were amended and fine-tuned.[16]

Financing of political parties. Despite the comprehensive legislative framework on political parties, rules on transparency of party funding and donations have been the subject of recent public debates. In the run-up to the elections in 2012, the media questioned the lack of transparency regarding the electoral campaign funding of one of the biggest political parties.[17] In its Second Compliance Report of 2013 concerning the financing of political parties, GRECO expressed its concern about the large number of recommendations that had been met only partially or not at all.[18] At the same time, it recognised that the new draft of the Financing of Political Parties Act[19] — still in preparation after several years — would significantly improve the degree of transparency of party funding in the Netherlands. The Act, drafted partly in response to earlier GRECO recommendations, was passed on 7 March 2013. It entered into force on 1 May 2013.The threshold for disclosure of donations is set at EUR 4 500, similar to that in the previous legislation criticised by GRECO. The threshold for anonymous donations is EUR 1 000. In June 2013, GRECO acknowledged that a number of additional recommendations had been implemented, with the exception of those concerning the thresholds on anonymous private donations, the accounts of local branches of political parties and the requirement of independent financial supervision.[20]

Whistleblowing. The 2010 Whistleblower Regulation for the public sector[21] introduced a reporting system and established a public integrity commission dealing with reports. Confidential treatment of the whistleblower’s data is a fundamental element. Serious questions were however raised about its effectiveness in practice.[22] Until late 2013, the only whistleblower provision for the private sector was in the Dutch Corporate Governance Code, applicable to stock-listed companies.[23] In December 2013 the Dutch House of Representatives approved a bill (No 33.258) to protect whistleblowers from the consequences of their revelations.[24] The bill aims to protect them by creating a new organisation, under the office of the National Ombudsman, empowered to investigate cases in both the public and the private sectors.

Transparency of lobbying. In 2012 Parliament established a voluntary public register for lobbyists,[25] available online since 1 July 2012.[26] However, lobbying is not regulated by law at national, regional or local level, and the need for more transparency is shared by most political parties represented in Parliament.

2. Issues in focus

Integrity in public administration and of appointed and elected officials

Integrity is one of the Dutch public administration’s fundamental values. The Dutch anti-corruption policy is mainly but not exclusively focused on awareness raising and prevention. In a European Commission survey on corruption in the public administration, only 1 % of respondents reported an incidence of corruption in interaction with the Dutch public authorities, while the EU average is 10 %.[27]

There is a sophisticated administrative framework in place to prevent corruption-related offences in the public service, and the Dutch Civil Service Act incorporates basic rules on integrity policy. Codes of conducts are in place in most public administrations, as required by Dutch law. All rules applicable to prevent conflict of interests of civil servants are in detail described and explained in the Conflict of Interests Manual.[28] Those rules are supported by a self-assessment tool known as ‘SAINT’ (Self-Assessment INTegriteit) which was developed to assess risks and to self-assess the impact of the integrity policy of public bodies. The government has also made efforts to further enhance the impact of integrity measures: the academic research commissioned by the Ministry of Interior and Kingdom Relations is a confirmation of this effort.[29] The study pointed to certain shortcomings in the experience with integrity investigations in public authorities and in the knowledge of procedures to be followed in the event of allegations of a breach of integrity rules. It also raised concerns about the professional standards among staff conducting integrity investigations, and about upholding transparency standards. The study is planned to be discussed throughout 2014 with MPs, municipalities and professional associations so as to draw conclusions for action.

Good practice: one-stop shop for promoting and developing public sector integrity

Integrity, transparency and accountability are concepts that are proactively promoted in the Dutch public administration. The importance attached to public sector integrity and its further development is illustrated through a number of initiatives.

A central role is played by BIOS (the Office for the Promotion of Public Sector Integrity — Bureau Integriteitsbevordering Openbare Sector). BIOS encourages and supports the public sector in the design and the implementation of an integrity policy. Set up by the Ministry of Interior and Kingdom Relations, it operates as independent central office focusing on the promotion[30] of integrity (policy) in the public sector, at both organisational and strategic levels. BIOS has a variety of tasks, including knowledge, development, network and signalling functions: it acquires and develops integrity-related knowledge for the entire public sector and makes it available through meetings, lectures, courses and via its website. It also conducts research.

BIOS translates its know-how into practical models, methods, products, education and training directed to its target group. The bureau also supports public sector bodies in establishing and maintaining their integrity policies. It brings together experts to exchange knowledge through a variety of platforms (knowledge networks, conferences, learning communities and national meetings). BIOS acts as a central and independent office for integrity issues, identifying and critically analysing developments in the area by organising meetings for specific actors, drawing attention to integrity-related issues and conducting scientific research. On this basis, BIOS gives advice to the public sector.

BIOS also organises the annual National Integrity Day. This is meant to be a yearly stocktaking event where a variety of aspects related to public sector integrity are discussed, where challenges are identified, policies assessed and future developments tested through workshops and lectures. On that day, the Integrity Yearbook is published. It contains interviews and articles on various aspects of integrity as a key feature of good governance and is widely distributed, including online.

The Netherlands has also adopted innovative methods to tackle corruption at local level. Many towns and communities have developed a toolbox for ethical behaviour and integrity for local and regional politicians and administrations. The importance of local tools to fight corruption was illustrated by the recent conviction for bribery, money laundering and fraud of a former provincial governor who was involved in planning and finance.[31] Overall, Dutch citizens are well aware of the behaviour they are entitled to expect from their elected local officials or public servants. They also have various means of reporting improper behaviour, as illustrated by the local integrity policy of the city of Amsterdam.

Good practice: promoting integrity at local level — the integrity policy of the city of Amsterdam

Most if not all Dutch cities and communities have developed and are implementing a local integrity policy. In 2010 a study assessing this local integrity policy[32] noted that the number of detected cases of illicit practices had increased quite significantly from 135 per year in 2003 to 301 in 2010. Part of the explanation for this increase was better detection methods.

A part of the administration of the city of Amsterdam, the Integrity Office (Bureau Integriteit — BI) is a centre of expertise on integrity. It promotes integrity with the local political and administrative level, but also with service providers and businesses. BI supports all municipal units with the following services: advice, training, risk assessments, handling of disciplinary cases and legal advice, and integrity investigation; it acts as a contact point for people who want to report a breach of integrity rules. The staff of the office has extensive experience working for the municipality and is trained in integrity counselling. For example, they can assist a department in formulating and implementing a tailor-made integrity policy, or provide coaching on how to apply the concept of integrity in specific questions or in work situations. BI risk analysts advise businesses, service providers and even other municipalities in the identification, control and reduction of integrity risks. Integrity breaches can be reported to the BI, which can conduct an internal investigation. If a department or service proposes a penalty to be imposed for a breach of integrity rules, it has to request an opinion from the BI’s in-house lawyers. The purpose of this mandatory request is to ensure that the policy on penalties for such breaches is consistent.

The BI also operates an Integrity Hotline (launched in 1996 and hosted by the BI since 2001) which provides an insight into the type and number of integrity breaches that occur in Amsterdam. The data obtained through the hotline contribute to better mapping and pinpointing of problematic areas/sectors and to developing a prevention policy. The most recent figures available are for 2010, when the BI received 85 reports of suspected integrity breaches. This resulted in 21 investigations and 35 opinions on disciplinary measures. Nine employees were dismissed for serious breaches of integrity. The BI issued 30 opinions, and hundreds of staff received integrity training.

While integrity is one of the most reliable pillars of the Dutch public administration, certain weaknesses have been detected in the integrity framework applicable to politicians, as illustrated by recent cases such as one concerning property fraud and corruption involving a pension scheme, in which a verdict was rendered in January 2012.

At some levels, there are no rules or correction mechanisms for conflicts of interest. One example is transparency and oversight of the financial and business interests of ministers and state secretaries.[33] Before their appointment, these interests need to be set aside and the prime minister informs the Second Chamber when this is done. There is, however, no transparency on how this is done, the current procedure being based on trust. Furthermore, Members of the States General are not subject to any restriction on the duties they may take up after their term of office, nor as regards their contacts with third parties.[34] The policy on ‘revolving doors’ is based on general guidance, focusing on avoiding the appearance that action while in office may have been inappropriate or that knowledge obtained in that office may have been dealt with incorrectly.[35]

Asset disclosure for members of parliament, ministers, state secretaries and senior officials has long been practiced, in that their public income has to be published. Still, disclosure of private, financial and business interests is considered a private matter, and therefore data on such assets and interests is not available.[36] There are no rules compelling MPs to declare potential conflicts of interest and/or barring them from holding financial interests or engaging in external activities. Members of the States General are not subject to any restrictions on accepting gifts. Members of the House of Representatives have to register gifts above EUR 50, as well as foreign travel at the invitation of third parties.[37] However, the register of gifts does not cover other benefits, such as hospitality or invitations to different kinds of events. There is no reporting obligation for members of the Senate, who are not obliged to report the income they earn from their other activities, nor gifts received, sponsored foreign trips or other benefits. These points were raised by a recent GRECO evaluation, which found that the current registers were inadequate for bringing to light many potential or actual conflicts of interest.[38]

In practice, alleged conflicts of interest involving former ministers and state secretaries have been subject to discussions in Parliament and society. A recent revolving door case led to a motion by Parliament expressing the need to establish clearer rules.[39] However, the government did not follow up on this motion.[40]

Foreign bribery

Criminal investigations into foreign bribery are rare, as illustrated by the most recent OECD Report, adopted in December 2012.[41] The OECD commended the Netherlands for its efforts to raise awareness of the offence of foreign bribery in the public and private sectors, its measures to facilitate the reporting of foreign bribery and its efficient confiscation regime. Nevertheless, the OECD called upon the Netherlands to do more to enforce its foreign bribery laws. It pointed out that 14 out of 22 foreign bribery allegations had not prompted an investigation. The OECD subsequently issued a number of recommendations aiming at increasing the Dutch law enforcement capacity to investigate and prosecute foreign bribery in a more proactive manner. At the time of the OECD’s Phase 3 Evaluation, the office of the National Public Prosecutor for Corruption, responsible for coordinating the prosecution of foreign bribery, was only staffed with two prosecutors. The OECD noted that law enforcement authorities must be adequately resourced to be able to effectively deal with the significant number of foreign bribery allegations requiring investigation. It also recommended that the Netherlands increase financial penalties for companies and organisations, as envisaged in a bill announced in July 2012,[42] and allow additional penalties for them, such as suspension from public procurement or other publicly-funded contracts.[43] According to the OECD, by late 2012 no penalties had been imposed on any companies for a foreign bribery offence.[44]

In Transparency International’s Bribe Payers Index of 2011, the Netherlands was one of the highest-ranked among 28 of the world’s largest economies according to the perceived likelihood of companies’ resisting paying bribes abroad. Nevertheless, the same organisation noted in its 2012 progress report on the implementation of the OECD Anti-Bribery Convention[45] that there was only ‘moderate’ enforcement by the Netherlands, and it called for an ‘improvement and strengthening of foreign bribery enforcement, increasing sanctioning for foreign bribery and expanding and institutionalising the cooperation between relevant institutions’.

Since then, a new version of the ‘Instructions for the investigation and prosecution of foreign corruption’ has been issued, listing the factors to be considered in determining whether a prosecution for bribery should be brought.[46] Economic and trade interests are no longer mentioned as factors in determining whether or not to prosecute for foreign bribery. All cases of foreign bribery need to be reported to the National Public Prosecutor on Corruption (Landelijk Corruptieofficer van Justitie) and the instructions refer to the general commitment of the Dutch authorities to fight foreign bribery. The public prosecutor may not take national economic interests into account. The impact of the amendments has yet to be assessed in practice, however.

Recognising the importance of fighting foreign bribery, several ministries (Security and Justice, MFA and economic affairs), together with business organisations representing small and medium-sized businesses and an organisation representing large companies (the VNO/NVW) published the report ‘Honest business, without corruption’ in October 2012.[47] It contains guidelines on what businesses can do when confronted with corruption abroad. The public prosecutor’s guidelines were amended in early 2013 to strengthen measures to curb corruption in foreign countries; however, whether it will result in more prosecutions remains to be seen. Furthermore, the Dutch government announced its intention to present a policy document to reflect recommendations by international organisations including the OECD.[48]

3.         Future steps

Integrity is traditionally highly valued in the Netherlands. There is strong public demand for transparency and accountability, both in the public and the private domain. The integrated approach to preventing and detecting corruption both at central and local level could serve as a model elsewhere in the EU. There is a strong collective understanding of the damaging effects of corruption, matched with continuous public pressure to maintain a high level of transparency and accountability. Evidence that foreign bribery is tackled adequately is, however, lacking despite the importance that Dutch firms play in worldwide trade.

The following points require further attention:

· Extending the rules on the assets and interests to elected officials and members of government and ensuring an effective and transparent verification system. Developing a framework for post-employment conflicts of interest.

· Focusing efforts on prosecuting both natural and legal persons for corruption in international business transactions, also by increasing capacity to investigate and prosecute foreign bribery in a more proactive manner. Considering broadening the range of sanctions and raising the level of fines applicable to legal persons.

[1]      Nota Corruptiepreventie — Rijksoverheid Kamerstukken 2005-2006, III, 30374 nr 2 and 6.

[2]      Verzamelbrief financieel-economische criminaliteit 12 July 2012. http://www.rijksoverheid.nl/documenten-en-publicaties/kamerstukken/2012/07/12/verzamelbrief-financieel-economische-criminaliteit.html; Memorie van Toelichting Wijziging van het Wetboek van Strafrecht, het Wetboek van Strafvordering en de Wet op de economische delicten met het oog op het vergroten van de mogelijkheden tot opsporing en vervolging, alsmede het voorkomen van financieel-economische criminaliteit (verruiming mogelijkheden bestrijding financieel-economische criminaliteit). On 5th of July 2013 the actual law proposal was sent to the Second Chamber.

[3]      Third Evaluation Round; Compliance Report, adopted on 11 June 2010. GRECO RC-III (2010) 5E.

[4]      Ministerie van Veiligheid en Justitie (2012). Verzamelbrief financieel-economische criminaliteit 12 July 2012. The bill has not been adopted; the Second Chamber provided its opinion on the 12th of November 2013. .

[5]      Corruption prevention in respect of members of parliament, judges and prosecutors, Fourth Evaluation Round, adopted on 21 June 2013. GRECO Eval IV Report (2012) 7E.

[6]      See more details below in the section on ‘Integrity in public administration and of appointed and elected officials’.

[7]      Corruption prevention in respect of members of parliament, judges and prosecutors, Fourth Evaluation Round, GRECO Evaluation Fourth Report (2012) 7E: 

http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)7_The_Netherlands_EN.pdf.

[8]      Rijksrecherche (2010). Niet voor persoonlijk gebruik! Omkoping van ambtenaren in de civiele openbare sector. Summary available from: http://www.binnenlandsbestuur.nl/Uploads/Files/Document/6403.00.003-Rapport-1-.pdf.

[9]      http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf.

[10]    Flash Eurobarometer 374.

[11]    Commission Staff Working Document: Annex to the Report from the Commission based on Article 9 of the Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector {COM(2007) 328 final}- Brussels, 18.6.2007; SEC(2007) 808.

[12]    Compliance Report on the Netherlands, Third Evaluation Round. GRECO RC-III (2010) 5E: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2010)5_Netherlands_EN.pdf.

[13]    http://www.binnenlandsbestuur.nl/bestuur-en-organisatie/nieuws/meer-corruptie-in-publieke-sector-geen-zicht-op.6261839.lynkx.

[14]    The main reason for the public prosecution department to waive prosecution is that the civil servant’s employer has taken disciplinary measures. Source: Public corruption and law enforcement, H. Nelen. In Justitiiële Verkenningen, 2007.

[15]    Public corruption and law enforcement, H. Nelen. In Justitiiële Verkenningen, 2007.

[16]    http://www.om.nl/organisatie/beleidsregels/overzicht/opsporing/@156023/aanwijzing-opsporing-4/.

[17]    https://zoek.officielebekendmakingen.nl/stb-2013-93.html.

[18] .  In 2013, GRECO concluded that seven recommendations had been partly implemented, while six recommendations had not been implemented.

[19]    http://www.eerstekamer.nl/wetsvoorstel/32752_wet_financiering_politieke.

[20]    Third Evaluation Round; Interim Compliance Report, adopted on 21 June 2013. GRECO RC-III (2013) 8E.

[21]    Besluit van 15 december 2009, houdende een regeling voor het melden van een vermoeden van een misstand bij de sectoren Rijk en Politie (Besluit melden vermoeden van misstand bij Rijk en Politie). http://www.integriteitoverheid.nl/fileadmin/BIOS/data/Publicaties/Downloads/Klokkenluidersregeling.pdf.

[22]    Bovens, M. and Pikker, G. (2010). Klokkenluidersregelingen: Nuttig maar Niet Afdoende. p.38-47. In: Karssing, E, and Zweegers, M. (Eds). Jaarboek Integriteit 2010. Den Haag: Bureau Integriteitsbevordering Openbare Sector.

[23]    https://docs.google.com/viewer?url=http%3A%2F%2Fwww.mccg.nl%2Fdownload%2F%3Fid%3D606.

[24]    http://www.eerstekamer.nl/wetsvoorstel/33258_initiatiefvoorstel_van_raak. The Senate will discuss the bill in January 2014.

[25]    Tweede Kamer der Staten-Generaal (2012), Lobbyistenregister. http://www.tweedekamer.nl/over_de_tweede_kamer/lobbyistenregister/index.jsp (Assessed 1/10/12).

[26]    Register van lobbyisten in de Tweede Kamer (2012) http://www.tweedekamer.nl/images/Formulier_lobbyisten_(18_sept_2012)_118-229467.pdf .

[27]    Excellence in Public Administration for competitiveness in EU Member States, report prepared in 2011 – 2012 for the European Commission, DG Enterprise and Industry by Austrian Institute of Economic Research (WIFO), Vienna, Austria (overall responsibility); Centre for European Economic Research (ZEW), Mannheim, Germany; IDEAConsult, Brussels, Belgium. p. 140.

[28]    Bureau Integriteitsbevordering Openbare Sector (BIOS/CAOP), Handreiking Belangenverstrengeling July 2010. http://www.integriteitoverheid.nl/fileadmin/BIOS/data/Toolbox/Handreikingen/BIOS_Belangenverstrengeling_handreiking.pdf .

[29]    Ministerie van Binnenlandse Zaken en Koninkrijksrelaties (2013). Toezeggingen en uitvoering moties integriteit in het openbaar bestuur; aanbieding rapport Tilburg University n.a.v. motie Heijnen c.s. 8 November 2013. p.5.

[30]    For example through regular publications in which it reflects on various aspects of integrity policy. See for example: http://www.integriteitoverheid.nl/fileadmin/BIOS/data/Brochures/BIOS_Jaarboek_Integriteit_2012.pdf.

[31]    The Provincial Governor of Noord-Holland was sentenced to three years of imprisonment in December 2013 at first instance.

[32]    Integriteit van het lokale bestuur. Rapport, December 2010. Ministerie van Binnenlandse Zaken en Koninkrijksrelaties en de Vereniging van Nederlandse Gemeenten met de steun van het Nederlands Genootschap van Burgemeesters, de Vereniging van Gemeentesecretarissen en de Vereniging van Griffiers.

 http://www.rijksoverheid.nl/documenten-en-publicaties/rapporten/2010/12/08/integriteit-van-het-lokaal-bestuur.html.

[33]    Rijksoverheid Kamerstukken 2010-2011, II, 32 500 No 14.

[34]    Corruption prevention in respect of members of parliament, judges and prosecutors, Fourth Evaluation Round, GRECO Eval IV Report (2012) 7E  http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)7_The_Netherlands_EN.pdf.

[35]    Handboek voor aantredende bewindspersonen; http://www.rijksoverheid.nl/documenten-en-publicaties/richtlijnen/2013/04/16/handboek-voor-aantredende-bewindspersonen.html.

[36]    Wet openbaarmaking uit publieke middelen gefinancierde topinkomens; http://www.wetboek-online.nl/wet/Wet%20openbaarmaking%20uit%20publieke%20 middelen%20gefinancierde%20topinkomens.html.

[37]    Article 150a, Rules of Procedure of the House of Representatives).

[38]    Corruption prevention in respect of members of parliament, judges and prosecutors, Fourth Evaluation Round, GRECO Eval IV Report (2012) 7E para 55.

[39]    In 2011 a former Transport Minister took up a senior position at KLM Royal Dutch Airlines right after he stepped down as a minister. The aviation business had previously been subject to his ministerial responsibility.

[40]    Slingerland, W., F. Eijkelhof, M. van Hulten, O. Popovych and J. Wempe (2012) ‘National Integrity System Assessment Netherlands’, The Hague: Transparency International Netherlands pp. 78-79. http://www.transparency.nl/wp-content/uploads/2012/05/TI-NL-NIS-report.pdf.

[41]    http://www.oecd.org/daf/briberyininternationalbusiness/Netherlandsphase3reportEN.pdf.

[42]    Ministerie van Veiligheid en Justitie (2012). Verzamelbrief financieel-economische criminaliteit 12 July 2012 [not yet adopted].

[43]    The maximum financial penalty for legal persons is 10 times the fine applicable to natural persons, i.e. EUR 780 000, but fines for different offences can be added together. Fines can also be combined with confiscation measures.

[44]    The OECD Third Round Evaluation Report (para 47) provides a detailed account of penalties applied in alleged bribery cases and notes that when companies were punished, it was mostly through out-of-court settlements, or for charges other than bribery. http://www.oecd.org/daf/briberyininternationalbusiness/Netherlandsphase3reportEN.pdf.

[45]    Exporting corruption? Country enforcement of the OECD anti-bribery convention. Progress report 2012 http://www.transparency.org/whatwedo/pub/exporting_corruption_country_enforcement_of_the_oecd_anti_bribery_convention.

[46]    Aanwijzing opsporing en vervolging buitenlandse corruptie. http://wetten.overheid.nl/BWBR0032624/CIRDIV1344379/CIRDIV1344385/Tekst/geldigheidsdatum_19-12-2013.

[47]    ‘Eerlijk Zakendoen, zonder corruptie’.

[48]    http://www.rijksoverheid.nl/nieuws/2013/01/08/nederland-doet-meer-tegen-buitenlandse-omkoping.html; http://www.rijksoverheid.nl/documenten-en-publicaties/kamerstukken/2013/02/21/antwoorden-kamervragen-over-het-bericht-dat-nederland-laks-is-in-de-bestrijding-van-corruptie.html.

POLAND

1. introduction — main features and context

Anti-corruption framework

Strategic approach. Perceptions of corruption in Poland have improved, but priorities of successive governments have lacked continuity. Some ministries have introduced their own systems to prevent corruption, with limited coordination. Poland's last anti-corruption strategy expired in 2009. Following domestic and international pressure, consultations on a draft 2014-2019 Programme for fighting corruption are now underway.[1]

Legal framework. A 1997 law governs conflicts of interest and asset disclosure.[2] The Council of Europe's Group of States against Corruption (GRECO) found that Polish criminal law provides a sound basis for the investigation, prosecution and adjudication of corruption offences, with a legal framework largely compliant with relevant standards in the Criminal Law Convention on Corruption. Poland has adjusted the penal code provisions in line with the Convention.[3] The challenge remains to fully implement relevant legal provisions, such as the ban on employing spouses or relatives (up to the second degree) in local government if there is a direct reporting relationship; the law does not specify penalties for violations of this provision.[4]

Institutional framework. The Central Anti-Corruption Bureau (CBA), a separate agency, carries the main responsibility for combating corruption. Specialised departments within appellate prosecutor’s offices as well as the Supreme Audit Office (NIK) and the Ombudsman (RPO) also play a role, as detailed later in this chapter.

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer on Corruption, 82 % of Polish respondents state that corruption is a widespread problem in their country (EU average 76 %) and 27 % say that corruption affects their daily lives (EU average 26 %).[5]  

Experience of corruption. According to the same Eurobarometer, 15 % of Polish respondents were asked or expected to pay a bribe over the past 12 months (EU average 4 %), mostly in relation to healthcare.

Business surveys. In the 2013 Eurobarometer business survey, 32 % of entrepreneurs (EU average 43 %) report corruption as a problem when doing business in Poland. However, 92 % (highest percentage in the EU) say that bribery and the use of connections is often the easiest way to obtain certain public services, and 56 % (EU average 47 %) say the only way to succeed in business is through political connections.[6] Business representatives also admitted to having been asked or expected to pay a bribe in specific sectors such as environmental permits (7 %, EU average 1 %).[7]

Background issues

Conflicts of interests and asset disclosure. MPs are required to file declarations on their financial situation with the Speaker of the Sejm or of the Senate annually and upon taking up and leaving office.[8] Such declarations are available online but not easily searchable.[9] According to GRECO, these regulations may be circumvented by transferring property to family members. GRECO therefore recommended that close family members of MPs also be required to register their assets. Such declarations would be verified by competent officials but would not necessarily be published, respecting privacy and data protection principles in the Constitution.[10] Separately, the law requires benefits received by MPs or their spouses to be disclosed in a public register of interests kept by the Speakers of the Sejm and Senate. GRECO commended Poland's regulations on incompatibilities of posts and functions, which help to avoid conflicts of interest. However, according to GRECO there is still room for improvement to develop and refine the existing legal and ethical standards and to provide specific guidance on handling conflicts of interest.[11] According to GRECO, while the mechanisms for monitoring compliance are highly developed, they often appear too complex — involving the participation of various authorities — to be fully effective.[12] Apart from MPs, a range of elected and appointed officials at central, regional and municipal level are obliged to submit asset declarations on taking up and leaving office.[13] CBA is responsible for verifying these declarations, some of which are public and others classified. Recently, one minister was dismissed as a result of irregularities found in his assets declaration. Plans are underway to streamline the complex system of asset declarations and remove ambiguities as to which officials are subject to this requirement, as suggested by the Ombudsman in April 2013.[14]

Private sector. In the 2013 Global Competitiveness Index, Poland ranks 42nd among 148 countries.[15] Amendments in 2008 to the penal code on bribery in the private sector covered the full range of persons who manage or work for private sector entities, as well as all instances of breach of duty by the bribed person, and — in the case of passive bribery — asking for advantageous treatment. These amendments satisfied GRECO's recommendation.[16] Poland correctly transposed the provisions of Framework Decision 2003/568/JHA regarding the inclusion of non-profit entities and the penalties applicable to natural and legal persons. However, Poland limited the definition of active corruption in the private sector to behaviour resulting in losses, unfair competition or inadmissible preferential action.[17]

Financing of political parties. The National Electoral Commission (PKW) has earned recognition for independence in imposing penalties on political parties that fail to comply with financing regulations. Funds may be transferred to a political party solely by natural persons. Parties are obliged to report regularly on donors. The introduction of state subsidies for parties in 2001 is perceived to have improved the transparency of campaign funding.[18] Poland also harmonised relevant rules into a single election code, including provisions for online publication of information on political funding and a more frequent declaration of donations.[19] However, to follow GRECO recommendations, Poland would still need to extend control of political funding beyond financial audit of reports provided by the parties. For example, PKW does not at present check whether political events may have been financed by undeclared funds. PKW staff would benefit from greater specialisation to carry out effective checks of party finances.[20] In June 2013, the ruling party proposed a draft law to abolish state subsidies for political parties, without reference to the potential impact on prevention of corruption.[21] Parliament is now considering the draft law.

Whistleblowing. There is no specific legislation concerning the protection of whistleblowers apart from general provisions in the Labour Code on unfair dismissal. Training courses and manuals prepared by the Central Anti-Corruption Bureau encourage public officials to be proactive in identifying corruption. However, whistleblowing is reportedly discouraged in Poland by fear of retaliation by the employer.[22]

Transparency of lobbying. A 2005 law provides a broad definition of lobbying, but regulates only some of its aspects, excluding government functions outside law-making.[23] There is a mandatory public register of professional lobbyists, which at present includes nearly 300 entries.[24] The 2005 law is a step in the right direction but there has been extensive discussion on the need to amend it, notably to reduce the ways in which it may be circumvented. Public authorities (but not individual parliamentarians) have to publish in the Public Information Bulletin, without delay, information on professional lobbying activities aimed at them. It is unclear to what extent annual declarations by government agencies are verified. GRECO’s fourth round evaluation recommended more transparency in interactions between parliamentarians and lobbyists, including within parliamentary subcommittee meetings.[25] In 2010, the Prime Minister’s Chancellery published a detailed analysis recommending improvements in the process of drafting legislation.[26] The Council of Ministers is now considering changes to the way legislation is drafted, to improve transparency.[27] The President has also published recommendations.[28]

2. Issues in focus

Independence and effectiveness of anti-corruption institutions

Founded in 2006, the Central Anti-Corruption Bureau (CBA) has been at the heart of a polarised public debate in Poland, attracting both praise for its effectiveness and doubts (especially in the past) as to its impartiality. CBA combines intelligence and police functions including control of public procurement, privatisation, and all asset declarations. It can trigger both administrative and criminal proceedings. Since 2009, the CBA has also emphasised the preventive and educational aspects of fighting corruption through public awareness activities.

The Head of the CBA is appointed and supervised by the Prime Minister for a term of four years and may be removed by the Prime Minister following non-binding consultation with the President, Special Services Committee and Parliamentary Committee for Special Services.[29] The CBA Head reports annually to Parliament. 

CBA’s legal basis does not provide sufficient guarantees against potential misuse of the Bureau as a political tool.[30] The Prime Minister may issue a range of ordinances and guidelines, from general directions to rules for staff recruitment and templates for disciplinary proceedings. These powers, in combination with an appointment procedure that does not require any specific professional background for the CBA management, and a strict hierarchy in which the Head of the CBA has wide discretionary powers over staff, may increase risks of abuse. The previous CBA Head resigned his party membership shortly before being appointed in 2006 and resumed it after being dismissed in 2009, becoming an MP.

Before the 2007 elections, it was also argued that appointment of the CBA Head by the Prime Minister created risks of politicisation. A new appointment procedure was envisaged. Under this procedure, the CBA Head would be elected by Parliament for one term, longer than the term of Parliament itself, and could not be removed from the post during his term.[31] However, no such reform has been introduced. The issue is now part of a broader debate about control over the secret services and their overall organisation and respective mandates. The Interior Ministry proposed the establishment of a Commission for the Control of Special Services to monitor compliance with the law, supervise the processing of wiretaps, and investigate complaints. Chaired by an experienced judge, the proposed Commission would consist of six members elected by Parliament.[32] The Head of CBA pledged to address shortcomings in the process of recruiting new officials and in training, following a negative assessment by the Supreme Audit Office.[33] The CBA has made progress in the enforcement of anti-corruption laws, which also has a preventive effect on the conduct of officials and politicians. However, its use of some methods (such as sting operations) and choice of targets have proved contentious.

Under new management from 2009, the CBA came to be seen as less politicised. However, controversy regarding CBA investigative methods has occasionally resurfaced in relation to investigations that CBA conducted in the past. When convicting a cardiac surgeon for bribery, the judge raised questions about the methods used by CBA agents. In another case, an appellate court acquitted a former opposition Member of Parliament who had been convicted on the basis of a CBA sting operation.

The CBA also collects data on corruption investigations and prosecutions in its 'map of corruption'. The latest edition noted a total of 10 972 corruption cases registered in 2012, as compared with 9 703 in 2011 and 13 938 in 2010.[34] In 2012, the CBA closed preparatory proceedings in 95 cases, which ended in 55 indictments, whereas the police closed 2 357 cases, of which 1 674 resulted in indictment.[35] CBA’s most recent report (from 2012) did not illustrate highly complex investigations that involved substantial amounts of money or top-level officials. Statistical analysis is hampered by incompatibility between the systems of crime registration used by various institutions.

Appellate prosecutors’ offices include departments specialising in organised crime and corruption. Separation in 2010 of the functions of Prosecutor-General and Minister for Justice aimed to limit the risk of political influence on prosecutors' work in particular cases. It is not yet clear how this reform impacted the effectiveness of the prosecution service and how existing guarantees against undue influence work in practice.

The Ombudsman (RPO) has built a reputation for independence despite limited resources. Maintaining transparency of internal operations and a strong position vis-à-vis other authorities, the Ombudsman has helped strengthen standards of public life, even though these are not the Ombudsman's primary focus.[36] The Supreme Audit Office (NIK) also enjoys a reputation for impartiality and professionalism and plays an important role in the fight against corruption.

Good practice: track record of the Supreme Audit Office

Founded in 1919, the Supreme Audit Office (NIK) is an independent body charged with safeguarding public spending. Nearly half of NIK's employees work in its 16 regional branches. The NIK audits the activity of central and local government agencies. In addition to disclosing irregularities, it proposes practical and regulatory improvements. It drew attention to problems such as the high degree of discretion exercised by officials who issue permits.[37] In 2010, the NIK uncovered financial irregularities costing the taxpayer an estimated PLN 14.5 billion.[38]

However, the NIK has limited ability to ensure implementation of its decisions. This limitation was highlighted during the 2012 bankruptcy of an alleged large-scale Ponzi scheme. As a quasi-deposit institution, it was exempt from supervision because of the lack of implementing regulations for the anti-money laundering law, despite a prior NIK report drawing attention to this loophole.[39] The authorities’ failure to react sooner, even though the scheme's founder had multiple convictions for fraud, highlighted the need for Polish institutions to share information and cooperate more closely. The authorities also did not follow up on a NIK report on allegedly undue remuneration of board members at a state-owned company overseen by the Agricultural Market Agency.[40] In January 2013, two former directors of the Agency received suspended prison sentences in a separate case.[41]

Comprehensive strategic approach on corruption

International experience suggests that anti-corruption strategies are neither indispensable nor sufficient in themselves to achieve tangible results. However, the situation in Poland indicates a need for greater overall coordination. Secondary legislation appears to be needed to specify the exact terms of cooperation among the institutions charged with preventing and fighting corruption. Such clarification would help avoid overlaps in competencies and potential competition among agencies which currently cooperate on an ad hoc basis.

Poland has made progress in checking on petty bribe-seeking by front-line officials.[42] The introduction of 'one-stop shop' desks in local governments (which separate decision-makers from applicants), rising wages, and the elimination of on-the-spot cash fines for the speeding offences have been among the measures that helped to reduce opportunities for bribery.[43] However, bribery persists, particularly in the healthcare sector. According to the Central Anti-Corruption Bureau, sectors at risk include road and rail infrastructure, information technology in the public administration, EU funds, defence, and healthcare.[44] Poland’s fight against corruption has been perceived as politicised, with public opinion divided on certain investigative methods (such as sting operations) and their potential misuse for political purposes.

Corruption-related allegations in recent years led to resignations and dismissals, demonstrating that politicians were held politically accountable, without however further consequences.[45]

The government's last anti-corruption strategy expired at the end of 2009. In July 2013, the Ministry of Interior published for consultation a draft Programme for fighting corruption in the period to 2019.[46] Comprehensive in scope, the document puts considerable focus on prevention in addition to prosecution. The draft contains plans for setting up various coordinating structures within the central administration, with the Ministry of Interior responsible for overall coordination. The document envisages a range of risk assessments and reviews of existing legislation, which could serve as the basis for future legislative and policy initiatives. The document provides for general measures and objectives that might lead to the elaboration of an actual strategy, but does not contain a detailed time-frame. The 2014 state budget allocates nearly EUR 240 000 for implementation of the Programme.[47]

Overall responsibility for implementing the draft Programme rests with an inter-ministerial body appointed by the Prime Minister and chaired by the Minister for the Interior, with the Head of the CBA as deputy chair. A coalition of non-governmental organisations (NGOs) welcomed the arrangements, as well as the draft Programme's focus on prevention, education and internal control. However, the NGOs also note a need for greater detail in the draft Programme on concrete measures and benchmarks for measuring performance.[48]

Public procurement

Procurement of public works, goods and services accounted for about 19.9 % of GDP in Poland in 2011. The value of calls for tender published in the official gazette as a percentage of total expenditure on public works, good and services was 38.9 % in 2011.[49] The Public Procurement Office (a separate institution) plays a policy-making and coordinating role. Its president is appointed by the Prime Minister. Duties of the Office include drafting legislation, arranging appeal proceedings, checking the regularity of procedures, and organising training programmes.[50] Procurement information is published using a searchable online platform, the Bulletin of Public Procurement.[51]

In 2008, the Prime Minister established the 'anti-corruption shield', a cooperation platform of civilian and military secret services, including CBA, to protect the largest privatisations and public tenders.[52] The institutions involved in the shield have not yet reported publicly on their results.[53]

According to the 2013 Eurobarometer business survey on corruption, 16 % of businesspeople who had contact with the public administration claimed that they had been expected or asked to pay a bribe over the previous 12 months (EU average: 5 %).[54] 65 % of the Polish respondents consider that corruption is widespread in public procurement managed by national authorities (EU average 56 %) and 67 % in that managed by local authorities (EU average: 60 %). In particular, Polish respondents stated that the following practices were widespread in public procurement procedures: specifications tailor-made for particular companies (74 %); abuse of negotiated procedures (54 %); conflicts of interest in bid evaluation (48 %); collusive bidding (55 %); unclear selection or evaluation criteria (52 %); abuse of emergency grounds to avoid competitive procedures (56 %); involvement of bidders in the design of the specifications (50 %) and amendments of contractual terms after conclusion of contract (43 %). These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities to corruption in public procurement procedures.

There are indications of corruption in public procurement, including with regard to EU funds. In December 2012, further to information provided to the European Commission by the Polish authorities, the Commission froze nearly EUR 950 million in reimbursements due for road infrastructure projects after Polish prosecutors charged a senior official from Poland's general directorate of national roads and motorways. As a result of an action plan implemented by the Polish authorities (including a specific audit of road projects), the Commission resumed payments in March 2013.

CBA notes that EU funds are exposed to corruption risks. According to CBA, corrupt officials offer bidders 'help', for financial gain, in preparing tender documents for EU funds.[55] Moreover, NIK pointed to ineffective supervision mechanisms in state-owned companies.[56] As a remedy, a Polish think tank, the Civil Development Forum (FOR), has suggested greater transparency of the ownership structure of public companies and of political party membership to facilitate exposure of nepotism.[57] Board members of state-owned companies are subject to requirements concerning professional qualifications and excluding political party employees. However, plans for a non-partisan appointments committee to select candidates for management and supervisory board positions in state-owned companies have not yet been implemented.

The situation is exacerbated by weaknesses in the internal control of public tenders, many of which are awarded at local level. Internal audit in municipalities would benefit from a broader scope and more independence. A 2013 Ministry of Finance report on internal audit in the public sector found that many auditors' recommendations were not followed, and many auditors did not monitor implementation or perform effective risk assessments.[58]

The need for closer scrutiny of public procurement was illustrated by a controversy concerning EU-cofinanced tenders for information technology. The Public Procurement Office noted in 2011 that, out of 299 audited procedures, a violation of the Law on Public Procurement was detected in 125 cases (42 %), of which 54 (18 %) showed violations that may have had an impact on the outcome of the proceedings.[59] Most of the violations affected small value tenders where legal procedures were not followed. The Office of Competition and Consumer Protection proposed changes to transparency rules for early stages of the procurement procedure, to help prevent bid-rigging.[60]

Additional amendments to the Law on Public Procurement (which came into force on 20 February 2013[61] to transpose Directive 2009/81/EC)[62] limit opportunities for price fixing and ensure better verification of the credibility of the bidder. The amendments also seek to unify contracting procedures for the supply of military equipment and associated construction works services. This large market previously lacked clear and uniform public procurement procedures. Additional amendments oblige defence sector bidders to reveal potential subcontractors when applying.

Healthcare

The partial privatisation of medical services and the opening of private health insurance plans are thought to have limited corruption in healthcare, traditionally considered by Poles as one of the most corrupt sectors.[63] Higher salaries and publicised arrests may also have reduced the incentive for doctors to accept informal payments from patients.

However, healthcare remains prone to corruption.[64] 8 % of Poles who came into contact with the healthcare sector said they had been requested or expected to pay a bribe over the previous 12 months.[65] Patients report that they bribe doctors to receive better or faster treatment. While the problem of informal payments is decreasing, corruption remains a challenge with regard to the purchase of equipment and medicine, and in contacts between doctors and pharmaceutical companies.[66] Tender specifications are sometimes tailored to favour a particular bidder in ways that are difficult for auditors to spot. In one case, one deputy minister was convicted of having accepted, in a previous job in hospital management, a bribe from an international pharmaceutical producer in a case of tender-rigging.[67]

The NIK has noted anti-corruption gaps in healthcare. Audits in selected hospitals revealed tender irregularities and improper links between doctors and pharmaceutical companies.[68] For example, doctors conducting clinical studies financed by a pharmaceutical company routinely served on a tender committee where the same company was a bidder. Multiple corruption cases involve doctors and pharmaceutical companies which pay them to participate in conferences abroad. These problems persist despite longstanding awareness and recognition by the authorities, as noted in a 2007 booklet by the health ministry’s team for the prevention of fraud and corruption in healthcare.[69] The NIK report has not resulted in improvements in the regulation of contacts between doctors and pharmaceutical companies.[70] No specific system is in place to help healthcare institutions prevent and detect corruption.

Procedures for introducing a drug on the reimbursement list were improved in January 2012 to allow more direct competition.[71] In addition, the CBA was tasked with supervising contacts between relevant health officials and the pharmaceutical industry.

3. Future steps

The authorities are implementing measures and fine-tuning policies which have contributed to progress, especially against petty corruption. However, a more strategic approach and closer coordination are called for to transform ad hoc amendments and activities into comprehensive solutions. Further reforms are needed to safeguard the independence and effectiveness of anti-corruption institutions, and the transparency of public procurement and healthcare.

The following points require further attention:

· Implementing a coherent long-term strategy against corruption, streamlining the activities of relevant institutions (including follow-up of findings by the Supreme Audit Office and internal auditors) as well as listing specific actions, the timeframe and resources for their implementation and those responsible.

· Strengthening safeguards against potential politicisation of the Central Anti-Corruption Bureau (CBA) by introducing: a more transparent and impartial procedure for the appointment of its Head, training and monitoring to ensure that investigative methods comply with human rights standards. Analysing CBA effectiveness focusing on the number of indictments and seriousness of cases, to identify potential areas for improvement such as coordination and cooperation with police, other special services and prosecution.

· Strengthening anti-corruption measures in a number of areas such as: public procurement, notably through effective and uniform ex ante and ex post checks at central and local level (including on EU programmes); supervision of state-owned companies, in particular through enhanced transparency, professionalism and integrity standards; and the healthcare sector, notably by implementing comprehensive measures to address corruption risks in the interaction between the pharmaceutical industry and public healthcare staff.

[1]      Ministry of Interior (2013) Projekt uchwały Rady Ministrów w sprawie 'Rządowego Programu Przeciwdziałania Korupcji na lata 2014-2019' Available from: http://bip.msw.gov.pl/portal/bip/435/22313  Summary of comments received during the consultations: http://www.akop.pl/public/files/Zestawienie_uwag_z_konsultacji_spolecznych.pdf.

[2]      Ustawa z dnia 21 sierpnia 1997 r. o ograniczeniu prowadzenia działalności gospodarczej przez osoby pełniące funkcje publiczne. http://antvkorupcja.edu.pl/index.php?mnu=l2&app=docs&action=get&:iid=l0590.

[3]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)2_Poland_One_EN.pdf; http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)19_Second%20Poland_EN.pdf.

[4]      Article 26 of the Law on Local Government Employees.

[5]      2013 Special Eurobarometer 397.

[6]      2013 Flash Eurobarometer 374.

[7]      2013 Flash Eurobarometer 374.

[8]      Act on the Exercise of the Mandate of a Deputy or Senator, Section 35. http://www.sejm.gov.pl/prawo/mandat/kon6.htm.

[9]      http://www.sejm.gov.pl/Sejm7.nsf/PoslowiePE.xsp.

[10]    Articles 47 and 51.

[11]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)4_Poland_EN.pdf.

[12]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)4_Poland_EN.pdf.

[13]    Act on Commune Self-Government (Article 24h), Act on Restricting Economic Activity of Persons Holding Public Positions (Article 10).

[14]    Rzecznik Praw Obywatelskich, Wystąpienie do Szefa Kancelarii Prezesa Rady Ministrów w sprawie przepisów regulujących obowiązek składania oświadczeń majątkowych, RPO/699508/12/I/116.6 RZ, 2 April 2013, http://www.sprawy-generalne.brpo.gov.pl/pdf/2012/03/699508/1712250.pdf.

[15]    http://www3.weforum.org/docs/GCR2013-14/GCR_Rankings_2013-14.pdf.

[16]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2010)7_Poland_EN.pdf.

[17]    http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf.

[18]    http://www.batory.org.pl/doc/Jak_walczyc_zkor_EN.pdf.

[19]    Article 102 of the Election Code requires election committees to inform the National Electoral Commission of the website on which financial information subject to disclosure is posted. Article 143§1 of the Election Code requires financial reports submitted by the election committees for parliamentary and presidential elections to be published, within 30 days of their submission, in the Public Information Bulletin. The financial reports of political parties are published in the official gazette, in accordance with Articles 34.5 and 38.4 of the Law on Political Parties. They also appear in the Public Information Bulletin.

[20]     http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%2919_Second%20Poland_EN.pdf

[21]    http://orka.sejm.gov.pl/Druki7ka.nsf/Projekty/7-020-704-2013/$file/7-020-704-2013.pdf.

[22]    Fundacja im. Stefana Batorego, CBOS  (2012) Bohaterowie czy donosiciele? Co Polacy myślą o osobach ujawniających nieprawidłowości w miejscu pracy? p.4 http://www.batory.org.pl/upload/files/Programy%20operacyjne/Przeciw%20Korupcji/Raport_Sygnalisci.pdf

[23]    Act on Lobbying Activities During Legislative Process. http://www.sejm.gov.pl/prawo/lobbing/kon12.htm

[24]    http://mac.bip.gov.pl/prawo-i-prace-legislacyjne/dzialalnosc-lobbingowa_11_11_11_11_11_11_11_11_11_11_11.html.

[25]    GRECO (2013) Fourth Evaluation Round. Corruption prevention in respect of members of parliament, judges and prosecutors. p. 60       http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4%282012%294_Poland_EN.pdf.

[26]    Kancelaria Premiera Rady Ministrów (2010) Proces nowelizacji ustawy o grach i zakładach wzajemnych w latach 2008- 2009. Warszawa. http://bi.gazeta.pl/im/5/8194/m8194155.pdf.

[27]    Rada Ministrów (2013) Projekt z dnia 20 września 2013 zmieniający Uchwałę Nr 49 Rady Ministrów z dnia 19 marca 2002 r. Regulamin pracy Rady Ministrów. Available from: http://bip.rcl.gov.pl/rcl/legislacja/inne-projekty-w-toku/projekt-uchwaly-rady-m/4034,dok.html.

[28]    Kancelaria Prezydenta (2013). Zielona Księga – Proces Stanowienia Prawa w Polsce. Available from: http://www.prezydent.pl/kancelaria/aktywnosc-ministrow/art,739,minister-dziekonski-nt-zielonej-ksiegi-o-stanowieniu-prawa.html.

[29]    Law of 9 June 2006 on Central Anti-Corruption Bureau. http://cba.gov.pl/ftp/filmy/ACT_on_the_CBA_updated_13_06_2011.pdf.

[30]    http://www.cba.gov.pl/ftp/filmy/ACT_on_the_CBA_updated_13_06_2011.pdf.

[31]    http://www.akop.pl/public/files/raport_nawww-1321873027.pdf.

[32]    Ministry of Interior (2013) Ustawa o Komisji Kontroli Służb Specjalnych. (Act on the Commission of the Control of Special Services). 11 October 2013. http://legislacja.rcl.gov.pl/docs//2/181401/181409/181410/dokument87492.pdf?lastUpdateDay=16.10.13&lastUpdateHour=13%3A01&userLogged=false&date=%C5%9Broda%2C+16+pa%C5%BAdziernik+2013

[33]    Najwyższa Izba Kontroli, (2013) Nabór, postępowanie kwalifikacyjne i szkolenie nowo przyjętych funkcjonariuszy ABW, CBA, Policji i Straży Granicznej, http://www.nik.gov.pl/plik/id,4786,vp,6221.pdf.

[34]    CBA (2013) Mapa Korupcji  http://www.antykorupcja.gov.pl/ftp/filmy/Mapa%20korupcji%202013.pdf.

[35]    Ibid.

[36]    Transparency International, National Integrity System Assessment http://files.transparency.org/content/download/200/804/file/2011_NIS_ExecSummaryPoland_EN.pdf.

[37]    Najwyższa Izba Kontroli (2012) Sprawozdanie z działalności Najwyższej Izby Kontroli w 2011 roku. pp. 383-4. http://www.nik.gov.pl/o-nik/sprawozdania-z-dzialalnosci-nik.

[38]    http://www.nik.gov.pl/plik/id,3964.pdf.

[39]    The NIK report referred to the lack of implementing regulations for the anti-money laundering law, not to any particular case. NIK (2011) Informacja o wynikach kontroli realizacji przez Generalnego Inspektora Informacji Finansowej obowiązków w zakresie przeciwdziałania praniu pieniędzy oraz finansowaniu terroryzmu (Information on Outcome of Audit of Activities of General Inspectorate of Financial Information in the Area of Prevention of Money Laundering and Terrorism Financing). Zielona Gora: NIK, p 11.  http://www.nik.gov.pl/plik/id.3369.vp.4270.pdf.

[40]    NIK (2011) Informacja o wynikach kontroli funkcjonowania ELEWARR sp. z o.o.

[41]    Białystok Court, 22 January 2013 subject to appeal.

[42]    See Czubek, G. Kopińska, G, Sawicki. A, Wojciechowska-Nowak, A and Wojciechowicz, J. (2010) How to fight corruption? Principles for developing and implementing anti-corruption strategy for Poland. Warszawa: Stefan Batory Foundation. www.batory.org.pl/doc/Jak walczyc zkor EN.pdf.

[43]    The elimination of cash fines does not apply to foreign drivers.

[44]    CBA Anticipated Corruption Risks in Poland. 13 November 2013.

[45]    Recently, one minister resigned after the publication of a recording that claimed to show officials describing political corruption and nepotism in appointments at the ministry. In another case, wiretaps were leaked of conversations between a parliamentary group leader and a gambling entrepreneur seeking to block a proposed tax. A CBA investigation implicated other government figures, resulting in the dismissal of the parliamentary group leader, three ministers, a deputy minister and the Head of CBA. Parliament appointed a commission to investigate the case but its work was split along partisan lines. No charges were filed in these cases.

[46]    Ministry of Interior (2013) Projekt uchwały Rady Ministrów w sprawie 'Rządowego Programu Przeciwdziałania Korupcji na lata 2014-2019' Available from: http://bip.msw.gov.pl/portal/bip/435/22313  Summary of comments received during the consultations: http://www.akop.pl/public/files/Zestawienie_uwag_z_konsultacji_spolecznych.pdf.

[47]    Sejm Rzeczypospolitej Polskiej (2013) Rządowy projekt ustawy budżetowej na rok 2014. Available from: http://sejm.gov.pl/sejm7.nsf/PrzebiegProc.xsp?id=CF77EBB4C2A87C04C1257BF7004E05B1.

[48]    Opinion on Draft Government Anti-Corruption Programme, 2 August 2013, http://www.akop.pl/public/files/Opinia%20nt%20Rządowego%20Programu%20Przeciwdziałania_02.08.2013.pdf.

[49]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[50]    http://www.uzp.gov.pl/cmsws/page/?F;374.

[51]    http://bzp1.portal.uzp.gov.pl/index.php?ogloszenie=browser.

[52]    http://www.akop.pl/public/files/list-kancelaria-prezesa-rady-ministrow-2009-05-12.pdf.

[53]    Other than to the Sejm Special Services Committee. Stenographic record of sitting of Administration and Interior Commission, 13 September, 2012. http://orka.sejm.gov.pl/SQL2.nsf/Main7?OpenForm&ASW

[54]    2013 Flash Eurobarometer 374.

[55]    CBA (2012) Mapa Korupcji 2011 (2011 Map of Corruption) p. 57 http://antykorupcja.edu.pl/index.php?mnu=12&app=docs&action=get&iid=17444.

[56]    NIK (2009) Informacja o wynikach kontroli sprawowania nadzoru właścicielskiego w spółkach z większościowym udziałem Skarbu Państwa w 2009 r. p. 4 http://www.nik.gov.pl/plik/id,1682,vp,1900.pdf.

[57]    http://www.forumsamorzadowe.pl/files/FOR%20nepotyzm.ppt.

[58]    Ministerstwo Finansów (2013)  Sprawozdanie roczne. Audyt i kontrola zarządcza w sektorze publicznym w2012 r. MF. http://www.mf.gov.pl/documents/764034/5425261/20130814_SPRAWOZDANIE_ROCZNE_2012.pdf.

[59]    Urząd Zamówień Publicznych (2012) Wyniki przeprowadzonych w 2011 r. przez Prezesa Urzędu Zamowień Publicznych kontroli zamowień współfinansowanych ze środkow Unii Europejskiej. http://www.uzp.gov.pl/cmsws/page/?D;612;zbiorcze_informacje_o_wynikach_kontroli_zamowien_wspolfinansowanych_ze_srodkow_ue.html.

[60]    Urząd Ochrony Konkurencji i Konsumenta (2013) System zamówień publicznym, a rozwój konkurencji w gospodarce. http://uokik.gov.pl/aktualnosci.php?news_id=10594.

[61]    Ustawa z dnia 29 stycznia 2004 o zamówieniach publicznych. http://www.uzp.gov.pl/cmsws/page/?F;356.

[62]    Directive 2009/81/EC on defence and sensitive security procurement.

[63]    CBOS surveys from 2010: http://www.cbos.pl/SPISKOM.POL/2010/K_063_10.PDF and earlier ones by the Stefan Batory Foundation: http://www.batory.org.pl/doc/barometr-korupcji-2007.pdf.

[64]    CBA (2010) Mapa Korupcji (Corruption Map). http://www.cba.gov.pl/ftp/zdjecia/Mapa korupcji.pdf.

[65]    2013 Special Eurobarometer 397.

[66]    http://www.batory.org.pl/doc/Jak_walczyc_zkor_EN.pdf.

[67]    In the USA, global pharmaceutical companies agreed to pay fines to settle claims that subsidiaries had violated the Foreign Corrupt Practices Act by paying bribes to doctors in Poland in exchange for contracts and agreements to prescribe the companies’ drugs.

[68]    NIK. (2010) Informacja o wynikach kontroli realizacji zakupów sprzętu medycznego i leków przez szpitale kliniczne oraz finansowania przez dostawców różnych sfer działalności tych szpitali, w tym dotyczących badań klinicznych.  Available from:  http://www.nik.gov.pl/plik/id,1862,vp,2203.pdf.

[69]    http://www.mz.gov.pl/wwwfiles/ma_struktura/docs/zal_5_poszustwoz_19102007.pdf.

[70]    Majewski P. (2007) Raport na temat korupcji w Polskim systemie ochrony zdrowia. http://www.mz.gov.pl/wwwfiles/ma_struktura/docs/rnkpsoz_21062007.pdf.

[71]    A 2012 report by PricewaterhouseCoopers identified problems with the transparency of negotiations on the prices of reimbursed drugs. http://www.pwc.pl/pl_PL/pl/publikacje/raport_ustawa_refundacyjna_po_publikacji_trzech_pierwszych_wykazow.pdf.

PORTUGAL

1. introduction – main features and context

Anti-corruption framework

Strategic approach. Over recent years, Portuguese governments have pursued a number of legislative and institutional anti-corruption measures. Investigations into high-profile allegations of corruption in defence procurement and party funding have contributed to a renewed public awareness of the outstanding issues. The Government has pledged to end the 'time of impunity' through amendments to criminal legislation, exploring the possibility of criminalising illicit enrichment and a new law on merit-based recruitment for senior management in public administration. Moreover, as part of the economic adjustment programme, the Government has committed to improve auditing procedures, banking supervision and accountability standards within public administration and state-owned enterprises. It also pledged to enhance supervision of public private partnerships (PPPs), increase transparency in public spending and the control over the ongoing privatisation process, renegotiate public private partnership contracts and restructure the defence sector.[1] These efforts could represent first steps towards the development of a national anti-corruption strategy. A more comprehensive effort is needed by law enforcement, internal and external control bodies and the judiciary with the aim of increasing efficiency in addressing corruption-related risks.

Legal framework. Parliament adopted an anti-corruption package in 2010, adding the violation of urban planning rules as a new type of crime, extending the prescription terms for corruption offences, setting up a central register of bank accounts and amending the party funding law.[2] An assessment by the Council of Europe Group of States against Corruption (GRECO) published in October 2013 pointed out that Portugal has implemented satisfactorily or dealt with in a satisfactory manner six of the thirteen recommendations on incriminations and party funding. Six other recommendations have been partly implemented and one has not been implemented to date.[3] Amendments to criminal law were adopted in early 2013, including an increase in sanctions for offences committed by holders of political office or senior public officials.[4] In early October 2013, an anti-corruption legislative proposal was submitted to Parliament, including amendments to the criminal code, the law on the responsibility of political and senior public officials and the law on bribery of foreign officials.[5] In relation to incriminations, the recent legislative proposals appear to address the remaining shortcomings noted by GRECO as regards the level of criminal sanctions for corruption offences in the private sector, the criminalisation of the active side of trading in influence, the limitation period for trading in influence, and the scope of corruption offences which do not cover foreign officials.

Institutional framework. Specialised agencies within the prosecution service (the Central Department of Investigation and Penal Action – DCIAP) and the police (the National Unit for Combating Corruption) have been designated to investigate corruption cases. The Court of Auditors also takes a leading role in fighting corruption. The Council for Prevention of Corruption (CPC), set up within the Court of Auditors in 2008, is tasked with coordination and analysis of prevention policies.[6] The Council recommended that all central and local public bodies, including state-owned companies, prepare plans for the management of corruption-related risks.[7] Over 1 000 corruption prevention plans have been submitted to the CPC for assessment. The impact of these plans is yet to be assessed. The CPC does not have verification or sanctioning powers and cannot carry out checks on the substance of asset declarations or conflicts of interest. These tasks fall within the competence of the Constitutional Court and the Attorney General.

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer on Corruption[8], 90% of Portuguese respondents stated that corruption is a widespread problem in their country (EU average: 76%), while 72% believed it had become worse over the past three years. 36% of Portuguese respondents say that they are personally affected by corruption in their daily life (EU average: 26%). In 2011, the Portuguese named corruption as one of the top problems affecting democratic institutions.[9]

Experience of corruption. Direct experience with petty bribery is rare, since less than 1% of the general population (EU average: 4%), and of business representatives admitted to having been asked or expected to pay a bribe in a number of specific sectors.[10] Portugal also scores better than the EU average when citizens are asked whether they have experienced or witnessed corruption.[11]

Business surveys. According to a 2013 Eurobarometer survey, 68% of businesses in Portugal (the second highest percentage in the EU) see corruption as an obstacle for doing business in their country (EU average: 43%).[12] 87% of respondents to the same survey said that favouritism and corruption hamper business competition (EU average: 73%), while 79% stated that bribery and the use of connections is often the easiest way to obtain certain public services (EU average: 69%) and 76% (highest percentage in the EU) that the only way to succeed in business is through political connections (EU average: 47%).

Background issues

Private sector. Portugal has transposed all provisions of Framework Decision 2003/568/JHA concerning the definition of active and passive corruption in the private sector, as well as those regarding penalties applicable to natural and legal persons and liability of legal persons.[13] However, GRECO recommended increasing criminal sanctions for bribery and trading in influence in the private sector and matching the scope of criminalisation of trading in influence in the private sector with that in the public sector. A legislative proposal submitted to Parliament in October 2013 appears to follow these recommendations.[14] As regards foreign bribery, the OECD has expressed concern that there is 'little enforcement' of the OECD Anti-Bribery Convention in Portugal, with four pending cases in 2010-2011 and no new investigations.[15] According to the Portuguese authorities, three new foreign bribery investigations have been initiated since January 2012. In the World Economic Forum’s competitiveness reports, Portugal's ranking has dropped from 28th worldwide in 2000 to 51st in 2013.[16] Recent studies on the shadow economy estimated that in 2012 it reached 19.4% of GDP.[17]

Privatisation. As a result of the economic crisis, adjustment conditions have been agreed with the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF), including structural reforms aimed at reducing the deficit and the weight of public debt. As part of international economic adjustment plans, Portugal committed to a swift, large-scale privatisation of state assets. Some of these privatisations have been subject to controversy on the grounds of alleged unlawful access to privileged information or insufficient transparency. The Portuguese Council for Prevention of Corruption (CPC) pointed to certain corruption-related risks in the privatisation process and recommended the setting up of monitoring committees at the beginning of the process.[18] The Government has established committees for ex-post monitoring. Parliament also set up a committee to follow the implementation of economic adjustment commitments. In 2013, the mandate of the Ombudsman was extended to private bodies exercising public authority or providing services of general interest, in view of the ongoing privatisation process.[19]

Whistleblowing. There are general provisions on protection of whistleblowers for public sector employees.[20] The Labour Code protects contracted staff from unfair action by employers when exercising rights such as reporting a crime. The law regulating public officials and civil servants contains similar provisions.[21] Moreover, the Criminal Procedure Code obliges public officials to report crimes discovered while carrying out their duties.[22] However, there are no specific mechanisms in the public institutions to ensure protection of whistleblowers in practice. Moreover, the scope of the current legal protection does not include private sector employees, the judiciary, or government or trade union officials. A bill adopted by Government in October 2013 proposes to extend the scope of protection of whistleblowers to the private sector. The bill also extends the application of the criminal code provisions on witness protection to whistleblowers. To further facilitate whistleblowing, DCIAP launched an online reporting tool in November 2010.[23] The OECD has noted more generally that more efforts are needed to ensure effective mechanisms to protect whistleblowers.[24]

Transparency of lobbying. There is no dedicated regulation of lobbying, requirement for registration of lobbyists or for disclosure of their contacts with public officials.

2. Issues in focus

Prosecution of corruption

The prosecution of corruption is key to the credibility of an effective and dissuasive anti-corruption framework. Public perceptions indicate concern in this area. In the 2013 Special Eurobarometer on Corruption, 17% of Portuguese respondents considered that there are enough successful prosecutions to deter people from corrupt practices (EU average: 26%), while 77% said that high-level corruption cases are not pursued sufficiently (EU average: 73%).[25]

The Ministry of Justice has reported 549 convictions for corruption and related offences during the last decade.[26] Out of these, 50 public officials convicted were given a prison sentence. The procedures appear to be lengthy, with only 8.5% of 838 corruption-related cases investigated during 2004-2008 having concluded with court decisions by 2010. Of these, 6.9% had reached a conviction by 2010 in the first instance only.[27] Police statistics[28] on corruption cases from 2007 to 2012 show a decrease in the number of new, completed and pending cases of corruption.[29] The number of corruption cases in which first instance court decisions had been reached during 2007-2011 also decreased, from around 60 cases in 2007 to 49 in 2011, while the number of defendants increased from 105 in 2007 to 149 in 2011.[30] The average duration of first instance proceedings varied between 14 months in 2007 to 12 months in 2011.[31] There are examples of cases involving allegations of high-level corruption or illegal party funding where judicial proceedings have lasted over six years. Complex corruption cases are often not finalised in a speedy manner and rarely lead to enforcement of final dissuasive sanctions.[32] The delays and relatively small proportion of dissuasive sentences imposed have led to concerns about the capacity of the judicial system to pursue cases effectively.

Regarding prosecution, issues have been raised concerning the capacity of the specialised Central Department of Investigation and Penal Action (DCIAP) and the National Unit for Combating Corruption of the judicial police (UNCC) to step up the number and quality of investigations.[33] The Economic Adjustment Programme for Portugal of June 2011 includes a commitment to a more sustainable and transparent budget for the judiciary. A Judicial Reform Map is being implemented.[34] The operational independence of the prosecution services is guaranteed by the Constitution and by law.[35] There were, however, cases where changes in the composition of prosecution teams investigating high-profile cases raised some concern. The Court of Auditors appears to have sufficient resources to perform effectively. Better cooperation between, on the one hand, the Court of Auditors and other control mechanisms and, on the other hand, law enforcement, could further improve effectiveness of detection and prosecution of corruption.

Financing of political parties

Financing of political parties in Portugal relies mostly on state funding. Since 2005, a single authority, the Entity for Accounts and Political Financing (ECFP), has supervised party accounts. It is attached to the Constitutional Court and has ex officio auditing powers. In 2010, GRECO commended Portugal on its detailed legal framework governing funding for political parties, including detailed rules on private financing, limits on donations and a ban on corporate donations. Nevertheless, GRECO also identified at the same time shortcomings in relation to the publication of parties’ accounts, which were published with significant delays and in a non-user-friendly format, notably with respect to the funding of electoral campaigns. As a result, it made a number of recommendations, including improved monitoring and better training on implementation of the law.[36] In October 2013, GRECO concluded that the majority of its recommendations on party funding had been implemented satisfactorily.[37] However, it recommended introducing more frequent reporting on income and expenditure related to electoral campaigns, and strengthening the capacity of the Constitutional Court to efficiently ensure the monitoring process of annual party and electoral accounts in due time. It also recommended analysing third party contributions to the various political stakeholders.

In December 2010, Parliament adopted legislative amendments on party funding[38] which raised a number of new issues. New sources of funding were introduced which may pose some risks in terms of circumvention of supervisory mechanisms, such as contributions from electoral candidates without a ceiling and a new type of public subsidy to political groups in Parliament paid directly to parties. Fundraising activities are no longer recorded in full and loans are not fully transparent. The amendments also introduced a new form of indirect subsidy which contained a provision that applied retroactively and validated transfers from regional parliaments to political parties that were not allowed under the previous law and had been previously declared illegal by the Constitutional Court.[39]

In the context of austerity measures, the subsidies and the limit to expenditure in electoral campaigns were subsequently reduced, and thresholds for subsidies for outdoor advertising were introduced.[40] Moreover, in early 2013, a new regulation on standardisation of procedures for political parties’ accounts was adopted. It aims to increase transparency by introducing a common format[41] for the presentation of the accounts of political parties and electoral campaigns,[42] and also covering the internal structures of political parties, including regional and local divisions. The political parties' annual accounts are published by the ECFP on its website within five to eight days of their submission.

Some of the corruption-related cases that have come to the public’s attention in recent years concerned allegations of illicit political financing. While the ECPF has taken steps to intensify its supervisory activity, its powers to apply administrative sanctions remain limited. In recent years, the Constitutional Court has started imposing some heavier fines in cases where irregularities in party funding were found. In one case, the Constitutional Court sentenced a company to EUR 600 000 in fines in relation to illegal party financing.[43] The CEO and the party treasurer were also fined in the same case.

Currently there are no ethical codes applicable to elected officials at central and local level and no accompanying sanctions for integrity breaches (other than those of a criminal nature) that would ensure the promotion of high integrity standards. There is one code of conduct for government officials.[44] Such codes of conduct for elected officials accompanied by regulatory provisions on sanctions applicable in case of breaches of ethical rules would enhance integrity and accountability standards and ensure a wider range of non-criminal penalties for unethical behaviour which is to the detriment of public interest. It would also ensure more effective implementation of integrity rules through self-regulatory solutions, given the particularities of non-criminal sanctions applicable to elected officials as compared to other categories of public officials (i.e. appointed officials, civil servants, etc).

Conflicts of interest and asset disclosure

At national level, both MPs and ministers are obliged by law to declare all actual and potential conflicts of interest. The declarations are recorded in a public register which is available online.[45] Steps have been taken to ensure the declarations were in electronic format. In addition, elected officials must comply with incompatibility[46] and asset disclosure rules.[47] All MPs, ministers, other elected and high-ranking appointed officials must declare their assets to the Constitutional Court at the beginning and at the end of their mandate.[48] These declarations are detailed but exclude assets owned by elected officials’ families and connected persons.

The Constitutional Court and the Attorney General are responsible for the verification of all declarations.[49] Legislative amendments in 2010 extended the scope of the declarations and the Constitutional Court decided on a wide interpretation of this scope.[50] In the case of MPs, the Ethics Commission is responsible for integrity and disciplinary aspects. MPs may be forced to leave their office if the Ethics Commission finds any incompatibility or impediment. The frequency of checks by the above-mentioned institutions is however unclear and the authorities report few cases of dismissals.[51] The Attorney General has stressed that in order for the verification mechanism to be more effective there is a need to strengthen the Constitutional Court's capacity and to improve inter-institutional cooperation and exchange of information.[52]

The Council for Prevention of Corruption (CPC) has drawn attention to the issue of revolving door practices. There are cases where ministers in charge of public works have taken up leading positions in the companies with whom they signed contracts in their previous capacity. Later, these companies have sought to be included in public private partnerships. Consequently, the CPC recommended the creation of conflicts of interest monitoring and management mechanisms, particularly with regard to revolving door practices.[53]

At local level, conflicts of interest are not uniformly regulated. Local elected officials are obliged to declare conflicting interests only if municipal assemblies have adopted legislation regarding this question.

In relation to civil servants,[54] there are regulations on asset disclosure, conflict of interest and incompatibilities.[55] A general Ethical Charter for Public Administration has been in place since 1997, stipulating the fundamental principles of public service: legality, justice, impartiality, loyalty and integrity.[56]

Legislation adopted in 2013 on the staff regulations for judicial administrators established rules on incompatibilities, together with criteria for excluding people with convictions for corruption from such positions.[57] Both the Ombudsman[58] and the Council for Prevention of Corruption recommended the adoption of a comprehensive code of ethics for public administration. The Ministry of Justice decided to incorporate such a code in the code of administrative procedures which is currently undergoing reform.

Following commitments made in a Memorandum of Understanding on Economic and Financial Policies, recent legislation aims at a more objective recruitment process for public officials, including at middle management, setting criteria for transparency, impartiality and merit.[59]

Public procurement

Public procurement accounts for an important share in the Portuguese economy. Public works, goods and services in Portugal accounted for about 19.6% of GDP in 2011. The value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, goods and services was 10.9% in 2011.[60]

The legal framework for public procurement in Portugal provides for guarantees of transparency, non-discrimination and fair competition. Amendments to the public procurement code were adopted in July 2012 aiming at improving public contract award practices to ensure a more transparent and competitive business environment.[61] The amendments address, in particular, the system for awarding additional works and services, and eliminate exemptions permitting direct awards. The Court of Auditors' regulations were amended in 2012 to strengthen its auditing powers and notably its capacity to perform ex ante and ex post control of public contracts.[62]

Good practice: transparency of procurement procedures

The e-procurement programme was launched in June 2003 as a centralised and high-quality platform that promotes efficiency and competition through increased transparency, as well as savings in the public procurement process. Through enhanced transparency, the use of e-procurement creates the framework for enhanced prevention and detection of irregularities affecting the procurement process, including potential corrupt practices.

The portal http://www.ancp.gov.pt/EN/Pages/Home.aspx offers the possibility of downloading the entire bid documentation and specifications free of charge. It also disseminates calls for tender, receives suppliers’ queries and manages all information exchange online. A Contract Management Tool allows for uploading of public contracts, the monitoring of contracts concluded and e-invoicing. The Information Management System also helps collect, store and organise statistics on the procurement process.

Since 2008, after the entry into force of the Public Contracts Code, Portugal put in place a national web portal, BASE (www.base.gov.pt) that centralises information on public contracts. The Institute of Construction and Real Estate (InCI) is responsible for the management of this portal. BASE receives data from the electronic edition of the Portuguese Official Journal and from the certified electronic platforms concerning open and restricted pre-award procedures. All public contracting authorities use the reserved area of the portal to record contract data, upload the contracts and record information on their performance. From 2008 to 2011, BASE only publicised contracts relating to direct awards. Since January 2012, and as a result of measures adopted under the Adjustment Programme, BASE must advertise all contracts resulting from all types of procedures subject to the Public Contracts Code. It also publishes information on contract performance. The publication of contracts in both BASE and in the Official Gazette is now mandatory for direct awards, increases of 15% in the price of already concluded contracts and potential penalties. The information available does not enable the public to monitor intermediate proceedings. However, such information is recorded in the database and is accessible to the auditing authorities.

According to the 2013 Eurobarometer business survey on corruption,[63] 78% of the Portuguese respondents consider that corruption is widespread in public procurement managed by national authorities (EU average: 56%) and 83% in the case of local authorities (EU average: 60%). The respondents whose companies participated in public tenders for the last three years perceived the following practices as widespread: specifications tailor-made for particular companies (72%); abuse of negotiated procedures (63%); conflicts of interest in the evaluation of the bids (67%); collusive bidding (65%); unclear selection or evaluation criteria (68%); abuse of emergency grounds to avoid competitive procedures (74%); amendment of contractual terms after conclusion of contract (62%); and involvement of bidders in the design of the specifications (57%). These perception indicators, while not necessarily directly related to corruption, illustrate risk factors that increase the vulnerability to corruption in public procurement procedures.

In its 2009 report, the Council for Prevention of Corruption (CPC) pointed to corruption risk areas in public procurement: weak monitoring and verification of conflicts of interest and favouritism, insufficient awareness among civil servants of corruption-related risks, limited monitoring of contractual amendments, and weak verification mechanisms in the post-award and implementation phase.[64] While elected and appointed senior officials are subject to rules on asset disclosure and declaration of interests, public procurement officials are not covered by that obligation.[65]

More recently, concerns were raised in the area of public-private partnerships (PPPs). PPPs have been widely used by the Government to launch public works which are then managed by private investors through concessions. The works ranged from hospitals and water systems to road construction. In early 2012, legislation was adopted to strengthen the supervision of the process, by setting up a technical unit for project monitoring.[66] The staff of this new unit are subject to the legislation concerning asset disclosure, conflict of interest and incompatibilities applicable to all public officials. There is also a three year cooling-off period, barring them from taking any job or providing any service to entities that are or were partners in PPP processes with the involvement of the unit.

The Court of Auditors recently released a report on PPPs in the road sector stating that auditors had discovered parallel contracts between the state-owned road management company (Estradas de Portugal), the private partners and the banking institutions that financed the business deal.[67] The Court stressed that the rather complex model of management and financing of the road sector has obstructed financial control. It added that the existing PPP models require stricter control and supervision by the management bodies. The DCIAP has recently launched an inquiry into allegations of illicit economic advantage, maladministration, corruption and trading in influence in the signing of a number of motorway concessions, their implementation and renegotiation. In addition, the prosecutors launched criminal investigations into former Government officials over the negotiation and renegotiation of concessions that allegedly provided the recipients with unexpected benefits. A parliamentary inquiry committee was also set up. Overall, the revolving door practices between government and administration positions involving decision-making and supervision responsibilities for PPPs and private companies in charge of those PPPs are cause for concern.[68] The Court of Auditors has also reported weaknesses related to some PPPs at local level, pointing to insufficient transparency in the tenders, shortcomings in project evaluation, unclear reasoning of the award decision and delays in the setting up of monitoring committees.[69] Currently, a number of PPPs are being renegotiated by the Government, in particular road PPPs, with the objective of reducing public authorities' financial liability. Significant savings are expected for 2013 and beyond.[70]

Urban development

Portugal has 308 municipalities and 3 092 communities which have responsibility for urban planning. Urban planning has been recognised by the Portuguese authorities among the sectors most vulnerable to corruption. This is illustrated by the fact that in 2010 a legislative amendment made violation of urban planning regulations a separate criminal offence.[71] Moreover, the law on the functioning of the Council for Prevention of Corruption (CPC) stipulates that territorial planning is among the sectors that present the highest corruption risks and should be closely analysed by CPC.[72] The Ombudsman has intervened in cases of abuse of power and illegal acts in the area of urban planning and construction licences at municipal level.[73] The factors contributing to an increased risk of corruption in this area include: potentially high profits, complex regulatory frameworks including urban municipal plans, the wide discretionary powers of local authorities in re-zoning decisions, project approvals and licensing procedures, and weak checks-and-balances.[74] Preventive mechanisms in this area need further improvement as the powers of local authorities have increased in the past two decades without a proportional increase in checks and balances or control mechanisms.

According to a study coordinated by the DCIAP, out of 838 court cases on corruption analysed in 2004-2008, 345 involved local government authorities and municipal enterprises and were related to urban development, commercial licensing and public procurement.[75] The CPC noted that in 2012 almost half of corruption-related court decisions involved local level administrations.[76] Overall, the number of investigations has increased, but very few mayors or councillors have been convicted through final court decisions.

A recent reorganisation of public administrative structures led to the incorporation of the Inspectorate-General of Local Administration (IGAL) into the Inspectorate-General of Finance (IGF) with the aim of unifying control mechanisms at local administration level, in line with the Plan for the Rationalisation and Improvement of Central Administration (PREMAC).

3. Future steps

The key institutions in preventing and tackling corruption in Portugal are facing the same resource pressure as the whole of public administration in Portugal and therefore, in the context of the State reform which is currently being introduced, attention should be paid to anti-corruption work.

Various initiatives over the last decade have demonstrated a degree of political commitment to address corruption, including the adoption of new legislation. The economic crisis has also led to an increase in the population’s vigilance towards corruption. However, there is no comprehensive national anti-corruption strategy in place. Effective prosecution and adjudication of high-level and complex corruption cases remains a challenge. While some progress has been made with regard to supervision of party funding, more steps could be taken to support integrity-related policies for elected officials. Urban planning and construction remain among the sectors most vulnerable to corruption. With respect to privatisations, some measures have already been taken to increase transparency and mitigate corruption-related risks, but further efforts could be made to secure strengthened anti-corruption safeguards.

The following points require further attention:

· Setting a track record of successful prosecution of corruption allegations, notably by ensuring that law enforcement, the prosecution and the judiciary are equipped to effectively deal with complex corruption cases and by strengthening cooperation between control mechanisms and law enforcement bodies.

· Further strengthening preventive action on party funding, taking account of the outstanding GRECO recommendations. Developing codes of conduct for elected officials at central and local levels, with adequate accountability and sanctioning tools to address possible violations of these codes. Consider establishing ethical codes within political parties or ethics pacts between parties. Putting in place minimum standards on conflicts of interest, revolving door practices, incompatibilities and asset disclosure for local elected and appointed officials; ensuring an effective monitoring mechanism and dissuasive sanctioning in this regard.

· Further strengthening transparency and ex ante and ex post verification of public procurement procedures, together with monitoring of the execution phase of public contracts, including contracts concluded by state-owned companies and public private partnerships. Enhancing prevention, detection and awareness-raising concerning conflicts of interest within public procurement. Ensuring uniform application of asset disclosure rules to public procurement officials.

· Assessing a representative sample of urban planning decisions on projects concluded recently at local level to identify risk factors and further improving the effectiveness of preventive measures, including transparency of decision-making. Further strengthening control mechanisms in this sector.

[1]      http://ec.europa.eu/economy_finance/publications/occasional_paper/2011/pdf/ocp79_en.pdf.

[2]      Law No. 26 of 30 August 2010 amending the Code of Criminal Procedure. Law 32 of 2 September 2010 amending the Criminal Code. Law 55 of 24 December 2010.

[3]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)18_Interim_Portugal_EN.pdf .

[4]      Law No. 4 of 14 January 2013.

[5]      Draft Law 453/XII.

[6]      Law No. 54 of 4 September 2008.

[7]      http://www.cpc.tcontas.pt/documentos/recomendacao_cpc_20090701.pdf.

[8]      2013 Special Eurobarometer 397.

[9]      The other top problems named by the Portuguese respondents regarded confidence in politicians and the executive power, inefficiency of governance and social inequality. 2011 National Barometer for the Quality of Democracy: http://www.bqd.ics.ul.pt/index.php?option=com_phocadownload&view=category&id=1&Itemid=75&lang=pt .

[10]    The sectors concerned: healthcare, police, customs, private companies.

[11]    Both in 2011 and 2013 Eurobarometer, 5% of Portuguese respondents admitted to having experienced or witnessed corruption in the last 12 months, as compared to an EU average of 8%.

[12]    2013 Flash Eurobarometer 374.

[13]    COM(2011) 309 final, Second Implementation report of FD 2003/568/JHA of 6 June 2011: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf

[14]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)18_Interim_Portugal_EN.pdf.

[15]    See comparative data on enforcement at http://www.transparency.org/whatwedo/pub/exporting_corruption_progress_report_2013_assessing_enforcement_of_the_oecd.

[16]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf

[17]    http://ec.europa.eu/europe2020/pdf/themes/06_shadow_economy.pdf .

[18]    2012 Annual Activity Report of the CPC: http://www.cpc.tcontas.pt/documentos/relatorios/Rel_Actv_CPC_2012.pdf . See also the recommendations of the Portuguese Council for Prevention of Corruption (Recomendação do CPC, de 14 de Setembro de 2011, sobre Prevenção de riscos associados aos processos de privatizações; http://www.cpc.tcontas.pt/documentos/recomendacao_cpc_20110914.pdf regarding the risks associated with privatisations.

[19]    http://dre.pt/pdf1sdip/2013/02/03400/0097900986.pdf.

[20]    Law 19/2008 and Decree-Law 190/2003.

[21]    Law 59 of 11 September 2008.

[22]    Article 242 of the Criminal Code.

[23]    http://www.smmp.pt/?p=19482

[24]    http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/44424102.pdf .

[25]    2013 Special Eurobarometer 397.

[26]    Approximately 60 convictions per year: http://www.siej.dgpj.mj.pt/webeis/index.jsp?username=Publico&pgmWindowName=pgmWindow_634832407639218750.

[27]    A corrupção participada em Portugal 2004-2008. Resultados globais de uma pesquisa em curso [Final Report]. Lisbon: PGR/DCIAP and CIES-ISCTE.

[28]    General Directorate of Judicial Police (DGPJ) – Thematic Statistical Bulletin, May 2013 – statistics on corruption 2007-2012.

[29]    There was a 38.6% decrease in the number of cases from 2007 to 2012 corresponding to an annual decrease rate of 11.5%. There was a similar decrease in the number of completed cases: i.e. 30.5% from 2007 to 2012, with an annual decrease rate of 8.7%.

[30]    General Directorate of Judicial Police (DGPJ) – Thematic Statistical Bulletin, May 2013 – statistics on corruption 2007-2012.

[31]    Idem.

[32]    http://www.transparencia.pt/wp-content/uploads/2011/07/Corrupção-Fora-de-Prazo-Vs.-Impressa.pdf .

[33]    According to Transparency International's National Integrity System assessment published in 2012, investigative authorities, and in particular the specialised units of public prosecution departments focusing on corruption-related offences, work under strained financial conditions.

[34]    http://ec.europa.eu/economy_finance/publications/occasional_paper/2011/pdf/ocp79_en.pdf .

[35]    Constitution of the Portuguese Republic, Seventh Revision [2005], Chapter IV.  Law 60/98 (27 August 1998) on Status of the Public Prosecution Department.

[36]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2010)6_Portugal_Two_EN.pdfhttp ://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2010)6_Portugal_Two_EN.pdf

[37]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)18_Interim_Portugal_EN.pdf .

[38]    Law No. 55 of 24 December 2010.

[39]    Decisions: 515/2009 and 498/2010.

[40]    Law No. 1 of 3 January 2013.

[41]    http://www.tribunalconstitucional.pt/tc/file/regulamento%202013.pdf?src=1&mid=1971&bid=1303 .

[42]    Regulation 16 of 10 January2013.

[43]    Tribunal Constitucional, Acórdão 371/2007. Lisboa, 27.06.2007. http://www.tribunalconstitucional.pt/tc/acordaos/20070371.html.

[44]    http://dre.pt/pdf1sdip/2008/09/17400/0626006274.pdf .

[45]    Law No. 24/95, August 18; Law No. 28/95, August 18; Law No. 3/2001, February 23; Amd. No. 9/2001, March 13; Law No. 45/2006, August 25; Law No. 43/2007, August 24.

[46]    Incompatibilities refer to the multiple holding of positions.

[47]    Law 64 of 26 August 1993.

[48]    Law No. 4/83, April 2; Law No. 38/83, October 25; Law No. 25/95, August 18; Law No. 19/2008, April 21; Law No. 30/2008, July 10; Law No. 38/2010: www.parlamento.pt/Legislacao/Documents/Legislacao_Anotada/ControlePublicoRiquezaTitularesCargosPoliticos_Simples.pdf.

[49]    Legislative amendments introduced through Law 19/2008 allowed for an enhanced cooperation between the Attorney General and the Constitutional Court as far as verification of asset declarations is concerned.

[50]    Law No. 38 of 2 September 2010. Decision of the Constitutional Court No. 302/2011: http://www.tribunalconstitucional.pt/tc/acordaos/20110302.html.

[51]    The Attorney General reports only four cases in 2011 in which dismissal was requested from the administrative courts. Often the officials in question decide to resign before the handing down of a decision: http://www.pgr.pt/pub/relatorio/2011/Relatorio-do-Ministerio-Publico_2011.pdf.

[52]    2011 Annual Activity Report of the Attorney General: http://www.pgr.pt/pub/relatorio/2011/Relatorio-do-Ministerio-Publico_2011.pdf.

[53]    Conselho de Prevenção da Corrupção, Recomendação do CPC de 7 de Novembro de 2012, in http://www.cpc.tcontas.pt/documentos/recomendacao_conflitos_interesse.pd.

[54]    Professional officials who are neither elected nor appointed politically.

[55]    Law 12A of 27 February 2008.

[56]    Resolution of the Council of Ministers 47/1997.

[57]    Law No. 22 of 26 February 2013.

[58]    http://www.provedor-jus.pt/site/public/archive/doc/Rec_1B2012.pdf.

[59]    Law No. 8 of 18 January 2012.

[60]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[61]    Decree Law 149/2012 published on 12 July 2012.

[62]    Lei de Organização e Processo e Regulamento Geral do Tribunal de Contas (versão consolidada - Janeiro de 2012), http://www.tcontas.pt/pt/apresenta/legislacao/LOPTC.pdf

[63]    2013 Flash Eurobarometer 374.

[64]    Report of the Corruption Prevention Council (CPC) on the Questionnaire on Management Assessment of Risks of Corruption and Related Offences regarding public procurement and public subsidies, 2009: http://www.cpc.tcontas.pt/documentos/relatorio-sintese_avaliacao_gestao_riscos_corrupcao.pdf.

[65]    Controle Público da Riqueza dos Titulares de Cargos Políticos, Law 4 of 2 April 1983, and subsequent amendments through Law 38 of 25 October 1983, Law 25 of 18 August 1995, Law 19 of 21 April 2008, Law 30 of 10 July 2008, Law 38 of 2 September 2010.

[66]    Decree Law 111 of 23 May 2012.

[67]    Tribunal de Contas, 2012, Auditoria ao Modelo de Gestão, Financiamento e Regulação do Setor Rodoviário, Relatório n.º 15/2012 – 2.ª Secção, p. 10-11. Available at: http://static.publico.pt/docs/politica/auditoriaPPP.pdf.

[68]    'Corrupção' by Luis de Sousa published by Fundação Francisco Manuel dos Santos, 2011, pages 52-53.

[69]    http://www.tcontas.pt/pt/actos/rel_auditoria/2012/1s/audit-dgtc-rel004-2012-1s.pdf.

[70]    http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp124_en.pdf.

[71]    Articles 278 and 382 of the Criminal Code introduced through Law No. 32 of 2 September 2010 which entered into force on 1 March 2013.

[72]    Article 7 of Law 54/2008.

[73]    http://www.provedor-jus.pt/?idc=16&idi=15214.

[74]    TIAC (2012), Corrupção e Urbanismo: as preocupações da TIAC.: http://www.transparencia.pt/wp-content/uploads/2012/03/CORRUP%C3%87%C3%83O-E-URBANISMO-AS-PREOCUPA%C3%87%C3%95ES-DA-TIAC.pdf.

[75]    Estudo da Corrupção em Portugal - A Realidade Judiciária - Um enfoque Sociológico: http://www.cies.iscte.pt/projectos/ficha.jsp?pkid=365.

[76]    http://www.cpc.tcontas.pt/documentos/relatorios/relatorio_comunicacoes_recebidas_2012.pdf.

ROMANIA

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. The most recent national anti-corruption strategy 2012-2015 was adopted by the Government and endorsed by Parliament in 2012.[1] It is based on a wide consultation process and was welcomed by most stakeholders. The strategy takes a multi-disciplinary approach and requires the development of sector- and institution-specific anti-corruption strategies across the board. A peer-review mechanism, involving civil society, was put in place to monitor its implementation. Cooperation platforms grouping various categories of stakeholders were also set up.[2] Monitoring is carried out through evaluation rounds by topic. The activities undertaken within the monitoring process and the assessments made are published on a dedicated portal.[3] Implementation is ensured within the limits of the fiscal budgetary strategy for 2012-2014. The national anti-corruption strategy follows a project-based approach: i.e. a number of measures are covered through specific projects while others are considered not to require additional funding and should consequently be covered by the regular budgets of the institutions concerned. The latter category represents 80% of the foreseen measures. While some progress was made on combating high-level corruption, the fight against petty corruption has not yielded sufficient results, while the prevention side remains rather weak both at central and at local levels. The Council recommended to Romania, in the context of the 2013 European Semester for economic policy coordination, to fight corruption more effectively.[4]

Legal framework. The legal framework is largely in place, including recent steps taken to reform the criminal code and the criminal procedure code, which are due to enter into force in early 2014. These reforms aim at fine-tuning the legal framework, strengthening law enforcement authorities and anti-corruption institutions and ensuring increased efficiency and coherent practice of the judiciary in dealing with high-level corruption cases. However, a number of the most recent legislative initiatives of Parliament in December 2013, which, among others, would have narrowed the scope of corruption offences and criminal law provisions on conflicts of interest have seriously called into doubt the stability of the current legislation and the political commitment to see the anti-corruption reforms through. The above-mentioned legislative amendments were declared unconstitutional by the Romanian Constitutional Court in January 2014.[5] Other considerable challenges remain, including on the implementation of the new codes. The instability of these legislative acts and a number of legal problems identified by practitioners which may require amendments of the codes or interpretative guidelines before their entry into force raise additional difficulties.[6]

Institutional framework. Romania has set up a comprehensive institutional anti-corruption framework. The National Anti-Corruption Directorate (DNA), a specialised prosecution office, is tasked to investigate high-level corruption cases. The DNA has established a solid track record of non-partisan investigations into allegations of high-level corruption.[7] The successful investigations it has carried out in the last decade revealed corrupt practices involving high-level politicians and public officials, members of the judiciary, law enforcement officials, and people from a wide range of sectors: transport, infrastructure, healthcare, extractive industries, energy, agriculture, sports, etc. For a long time the judiciary had been less effective in dealing with high-level corruption. A change was noted over recent years; the High Court of Cassation and Justice in particular set an example by increasing efficiency in the adjudication of complex corruption cases. The service known as the Anti-Corruption General Directorate (DGA) within the Ministry of Home Affairs is a specialised police structure mainly responsible for investigating corruption within the police, while also covering other sectors. The National Integrity Agency (ANI) checks conflicts of interests, incompatibilities and personal wealth of public officials. Since its establishment in 2008, the ANI has shown good results overall. In the past five years, the confirmation rate of the ANI's decisions on incompatibilities, as well as the administrative decisions on conflicts of interest exceeded 80%. Following the ANI's decisions, over EUR 1 million in unjustified personal wealth was confiscated on the basis of final court decisions. However, over time the follow-up of the ANI's decisions encountered considerable difficulties.[8] The political will to support the independence, stability and capacity of the anti-corruption institutions and the judiciary has not been constant over time.

Opinion polling

Perception surveys. According to the 2013 Special Eurobarometer on Corruption[9], 93% of Romanian respondents agreed that corruption is a widespread problem in their country (EU average: 76%), while 42% say that they were personally affected by corruption in their daily lives (EU average: 26%). 82% consider that bribery and use of connections are often the easiest way to obtain certain public services (EU average: 73%).

Experience of corruption. 25% of the Romanian respondents to the 2013 Special Eurobarometer on Corruption admitted that over the past 12 months they had been asked or expected to pay a bribe for services. This is the second highest percentage in the EU and compares to an EU average of 4%.

Business surveys. In the 2013 Eurobarometer Business survey on corruption[10], 81% of Romanian businesses said that favouritism and corruption hamper business competition in Romania (EU average: 73%). 65% of the respondents believed that corruption was a problem for their company doing business in Romania (EU average: 43%), while 64% considered that patronage and nepotism did so (EU average: 41%).

Background issues

Cooperation and Verification Mechanism (CVM). Romania has been subject to CVM monitoring since its accession to the EU. Its performance is measured against four benchmarks covering the areas of justice reforms, integrity, high-level corruption, and prevention and fight against corruption in the public sector. The Commission Decision establishing the CVM requires all benchmarks to be 'satisfactorily' fulfilled.[11] In 2012, five years after accession, a stock-taking exercise was carried out. The assessment concluded that many of the 'building blocks' required by the CVM benchmarks were in place, yet that sustainability and irreversibility of the reforms was still questionable and a track record of implementation which would be required for the Commission to decide to end the CVM was not yet present.[12] The most recent assessment of the state of play of January 2014, which took stock of more recent developments, highlighted that 'progress is not straightforward, so that advances in one area can be constrained or negated by setbacks elsewhere'.[13]

Private sector. In the Global Corruption Index 2013-14 of World Economic Forum, corruption is mentioned as the second most problematic factor for doing business in Romania, after tax rates.[14] Romania has fully transposed the provisions of Framework Decision 2003/568/JHA concerning the liability of legal persons and penalties applicable to legal persons.[15] However, the second implementation report regarding the Framework Decision noted that further clarifications were needed as to how the Romanian legislation treats third-party advantages resulting from active bribery in the private sector. The shadow economy was estimated to be 29.6% of GDP in 2012, which is the second highest percentage in the EU.[16]

Financing of political parties. High-profile corruption cases show vulnerabilities in the supervision of party and electoral campaign financing, as well as in the prevention of electoral fraud. In its compliance report of December 2012, GRECO pointed out that 10 out of its 13 recommendations on party funding are still not fully implemented. Legislative amendments are being prepared and, if adopted, will fill a number of existing gaps, notably on access to annual financial statements of political parties. Moreover, existing provisions are not being properly implemented.

Whistleblowing. Romania has had dedicated legislation in place since 2004 on protection of whistleblowers in the public sector.[17] The law requires public employees to report corruption in connection with the public service. Apart from protection against retaliation, the law also provides for protection of the whistleblowers' identity. However, the effectiveness of this legal framework remains to be established. In a 2009 study on protection of whistleblowers in 10 EU Member States, Transparency International noted that implementation of the legislation is uneven and pointed out that in 40% of the cases monitored in Romania various forms of retaliation took place against whistleblowers.[18] A more recent report of Transparency International published in November 2013 noted that some steps were taken to further improve whistleblowers' protection.[19] Improving the mechanisms that ensure whistleblower protection and better implementation of the existing legislation are also among the objectives of the national anti-corruption strategy.

Transparency of lobbying. Lobbying is not regulated in Romania. There is no mandatory registration or obligation of public servants to report contacts with lobbyists. The Romanian authorities were of the view that such new legislation is not necessary since the risks related to lobbying are already covered by the existing rules on conflicts of interest and incompatibilities applicable to public officials. One draft law regulating lobbying is currently discussed by the Chamber of Deputies. In 2010, a Romanian Lobbying Association was set up, with the aim to further promote lobbying activities and possibly ensure self-regulation. However, so far its impact has been limited.

Media and access to information. Objective reporting has deteriorated over the past years and journalism is 'often overruled by the vested interests and political affiliations of the media outlets’ owners'[20], including at times intimidation of magistrates or anti-corruption actors. Limits on media freedom further reduced access to information countrywide. This is compounded by the fact that Romania has the lowest rate of internet coverage in the EU.[21] Poor implementation of legislation regulating access to information also affects the capacity to prevent and control corruption. Freedom House’s Freedom of the Press 2013 index ranked Romania with a score that qualifies it as 'partially free'.[22]

2. Issues in focus

Prosecution of corruption

A central autonomous specialised anti-corruption prosecutor’s office was set up in 2002. In its first years, it did not establish a track record of high-profile cases. It was reorganised in 2005, with reshaped powers and staffing, and renamed National Anti-Corruption Directorate (DNA). The  focus was shifted to high-level and particularly complex cases. The DNA now investigates cases of high and medium-level corruption,[23] and offences against the EU's financial interests.[24] Apart from the central office, it also has 15 regional services[25] and four territorial offices.

With a new leadership and political will to advance the fight against corruption, after 2006, the DNA started building what is today an impressive track record of high-level corruption cases. The CVM Report of July 2012 stated that 'the performance of DNA in the investigation and prosecution of high-level corruption cases can be considered one of the most significant advances made in Romania since accession. [...] Since 2007, cases at the highest levels of political life and within the judiciary have been raised by DNA against people from all major political parties'.[26] Key to the DNA’s success has been the fact that its structure incorporates not only prosecutors, but also judicial police and specialists in economics, finances, banking, customs and IT.[27]

While progress was made in bringing high-level corruption cases to court, the judiciary’s capability to handle such cases came under scrutiny. The CVM reports have extensively analysed the reasons for serious delays in court proceedings in high-level corruption cases, some of which incurred the risk of becoming time-barred.[28] Still, the rate of adjudicated high-level corruption cases in courts has noticeably risen in the last two years, particularly as a result of efforts made by the High Court of Cassation and Justice. Reports of the judicial inspection service analysing the length of proceedings and reasons for significant delays in a number of high-level corruption cases confirmed that the number of delayed decisions has decreased.[29] It remains to be seen whether this is a lasting trend. In a number of pending high-level cases more than six years have passed since the alleged offenders were indicted.[30]

Good practice: the DNA's achievements in high-level corruption cases[31]

From 1 January 2006 to October 2012, the DNA indicted 4 738 defendants, of whom 2 101 held important positions.[32] In the past seven years, the confirmation rate of DNA indictments through final court decisions has reached 90.25%. In this period, 1 496 defendants were convicted in final court decisions, of which almost half held political office (including: one former prime minister, one minister, 8 MPs, one state secretary, 26 mayors, deputy mayors and prefects, 50 directors of national companies and public institutions, 60 officials from control authorities). Between 1 January and 15 November 2013, the track record was maintained, with indictments against 823 defendants and 179 final court decisions issued against 857 defendants.

Over the last two years, the number of cases closed with a judgment has risen sharply. The number of final convictions issued in the first three quarters of 2012 was almost double the number of the previous year and four times higher than the conviction rate seven years ago. In 2011, over 230 border police and customs officers from six border crossing points were prosecuted for bribe-taking and participation in an organised crime group, mainly in connection to cigarette smuggling.[33] Among the most notable DNA cases, mention should be made of two cases of a former prime minister who served an imprisonment sentence on charges of illegal funding for his presidential electoral campaign and who is also currently serving time in prison for another conviction on corruption charges. Other notable DNA cases covered the entire political spectrum: a former mayor of Cluj indicted for bribe-taking in exchange for securing public contracts who was investigated in pre-trial arrest at a time when he was an influential member of the ruling party; a minister in office (now former) convicted at first instance for abuse of office for deeds allegedly committed in a previous capacity; an MP who was given prison terms in two corruption cases following final court decisions (aiding and abetting abuse of office in connection with illegal property swaps involving land owned by the Ministry of Defence and bribery involving the players of a football club).

As regards petty corruption, for 2013 the Public Ministry has reported an increase in the number of resolved cases by about 9% compared to a similar period of reference in 2012. The number of indictments went up by about 15%. However, while some progress can be noted over the recent years as regards petty corruption cases investigated by the prosecutor’s offices across the country,[34] overall these have not yet reached a convincing track record.[35] Each prosecutor's office has designated at least one prosecutor to handle corruption cases. Most of the cases sent to court by the prosecutor’s offices in the country concern police officers, which may also be a result of the effectiveness of the General Anti-Corruption Directorate within the Ministry of Home Affairs. However, the overall number of other petty corruption cases sent to court is rather low.

DNA's drive to investigate high-level cases has also benefited from political circumstances that enabled it to act impartially and independently. A decisive element for the DNA’s efficiency concerns the appointment of its leadership.[36] As highlighted by the January 2014 CVM Report,[37] 'the nomination of the General Prosecutor and of the leadership of DNA and the Directorate for Investigating Organised Crime and Terrorism (DIICOT) was a protracted process.' The procedure through which the leadership of these institutions was eventually appointed, while also including some figures with established track record, 'was essentially a political choice, rather than the result of a procedure designed to allow scrutiny of the candidates' qualities and a real competition.'[38] More recently, as stressed by the January 2014 CVM Report, the decisions taken in early October 2013 in relation to the appointments of the heads and deputy heads of section in the DNA raised additional difficulties. Delegations to ad interim positions were abruptly cancelled, and nominations were made by the Minister of Justice which had not fully followed the procedure of consulting the head of DNA. The timing also created concerns that a link was being made with DNA decisions on cases relating to political figures. Following public criticism, including by the Superior Council of Magistracy, new nominations were later on made following consultations with the head of DNA. Following the appointment of the new leadership, the DNA maintained the previous pace of investigations.[39] It is important to keep this trend in the longer term.

Accountability and integrity of elected and appointed officials

Romania has developed the requisite framework both for the prosecution of high-level corruption and for independent verification of wealth, potential conflicts of interest and incompatibilities of public officials, all of which are key elements of anti-corruption policy. High-level officials are subject to strict asset disclosure obligations and their asset declarations are publicly accessible. However, political support for the current integrity framework, both from a legislative and institutional point of view, has been inconsistent.[40]

Since 2008, the ANI identified more than 469 incompatibilities, 194 administrative and criminal conflicts of interest, 46 cases of unjustified wealth, 346 cases of potential criminal offences and applied more than 5 200 fines for breach of asset disclosure legislation. Among the officials investigated by ANI: 50 MPs, 12 presidents and vice-presidents of country councils, 10 ministers and state secretaries and over 700 local elected officials, managers of public agencies, police officers, magistrates, etc. Over the last five years, more than 80% of the ANI's decisions on incompatibilities and conflicts of interest remained final. Nevertheless, there were also notable cases in which the follow-up of its decisions has not been satisfactory.[41]

Parliament has shown a lack of consistency in taking decisions related to integrity issues, including on the follow-up of the decisions of the ANI on conflicts of interest or incompatibilities. Once these decisions are final, they should lead to termination of office of the elected official in question. Since mid-2012, however, the judiciary had to refer twice to the Constitutional Court following unwillingness of Parliament to terminate mandates as a result of final court decisions on incompatibility of MPs. The most recent case dates from the autumn of 2013 and concerns the ANI's decision on the incompatibility of a senator confirmed by the High Court of Cassation and Justice and which was left unenforced by the Senate. The Constitutional Court had therefore to intervene once more, ruling on the constitutional conflict between the legislative power and the judiciary.[42] Since then, the Senate has not taken any action.

Parliament's failure to implement some of the ANI's final decisions affected the credibility of its commitment to the fight against corruption. Moreover, elected officials have frequently and seriously undermined the institutional stability of the ANI through legislative proposals.

Recently, there has been wide public debate concerning the possible amendment of the legislation on incompatibilities applicable to local elected officials. This regarded in particular the ban on participation in supervisory boards of local state-owned or state-controlled companies and inter-community development associations which are responsible for contracting public utility services for a number of city halls. The issue came to the fore when the ANI discovered a number of breaches of these legal provisions. The incompatibility rules regarding the boards of state-owned or state-controlled companies are important elements that address potential corruption and conflict of interest risks in public procurement and supervision of public contracts and at the interface with political party or electoral campaign financing.

Furthermore, Parliament’s decisions to lift immunity have so far been unpredictable.[43] MPs do not have immunity from criminal investigation, although they do enjoy immunity from pre-trial arrest and search. However, MPs who are or were ministers enjoy immunity for offences committed in relation to their ministerial duties, and particular difficulties seem to arise in such cases. Procedures for lifting immunity do not require Parliament to motivate its decisions. In three recent cases in 2012 and 2013, the Chamber of Deputies voted against lifting the immunity of former ministers from criminal investigation into allegations of corruption, economic crimes and electoral fraud.

In January 2013, Parliament adopted amendments to the statute of MPs. However, as these were challenged before the Constitutional Court, they did not take effect until July 2013, and the implementing regulations and a new code of conduct[44] had not yet been adopted at the time of writing. While some of the proposed new provisions are welcome, notably as regards the enforcement of final decisions on incompatibility, their effectiveness will need to be assessed over time.[45]

In early December 2013, Parliament adopted a number of amendments to the criminal code which, among others things, excluded MPs, the President and the liberal professions from the scope of the definition of public officials. This meant that these categories could no longer be charged with corruption offences in the public sector. Moreover, a number of amendments were passed which considerably narrowed the scope and application of criminal law provisions on conflicts of interest. These recent amendments raise serious concerns as to the level of integrity and anti-corruption standards to which elected officials are committed. In January 2014, the Constitutional Court found all these amendments unconstitutional.[46]

Integrity of the judiciary

The DNA indicted 23 judges and 30 prosecutors between January 2006 and the fourth quarter of 2012. Final convictions on corruption charges were rendered in the same reference period for 12 judges and 11 prosecutors. In recent years, six cases concerned judges of the High Court, including heads of sections. They were charged with bribery, trading in influence and complicity to other criminal offences.[47] Two members of the Superior Council of Magistracy were indicted on corruption charges. Further monitoring is needed to assess the dissuasiveness of sanctions applied.[48] The most recent cases concerned various levels of the judiciary and revealed networks involving judges, attorneys and defendants trading in influence to secure favourable court decisions, or prosecutors shielding certain criminal networks from investigation. In one case the alleged level of the bribes was as high as EUR 1 million. In another case, two prosecutors,[49] one judge and one police officer were indicted on charges of being complicit to, instigating and participating in the unauthorised use of classified information belonging to the police intelligence service in exchange for money, services and other undue advantages related to leading positions in the DNA and the Prosecutor-General's Office. The Superior Council of Magistracy has reacted promptly to these cases, endorsing in due time requests for search and pre-trial arrest, suspending from magistracy the defendants in question and requesting various checks, for instance to see whether the random distribution of cases system was being manipulated.

At the end of 2011, the Superior Council of Magistracy adopted a strategy for integrity within the judiciary and a corresponding action plan aiming, among others, at enhancing integrity rules and improving disciplinary liability mechanisms.[50] The judicial inspection, now an autonomous body, was strengthened and took steps to improve its methodology. New legislation on disciplinary liability of magistrates allows for more effective disciplinary procedures.[51] It has also introduced the possibility of suspending magistrates pending disciplinary investigation. In August 2013, the Superior Council of Magistracy endorsed a legislative proposal by the Ministry of Justice to eliminate the special pensions[52] for magistrates who have incurred final convictions on charges of corruption or offences related to the exercise of their office when committed with intent or any other offences that harm the reputation of the judiciary. The legislative proposal was approved by the Government in August 2013 and is currently tabled for adoption in Parliament.

Public procurement

Public procurement represents an important share of the Romanian economy. Public works, goods and services constituted 24.6% of GDP in Romania in 2011. The value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, goods and services was 30.9% in 2011.[53] While the legislative framework for public procurement is in place, frequent changes and lack of a uniform practice or guidance from the institutions concerned are a source of uncertainty for stakeholders.[54] If nothing else, these successive modifications generated confusion about the scope of public procurement legislation with regard to state-owned and state-controlled companies. Furthermore, the consistency of decisions by courts and review bodies could be improved further. The use at national level of the negotiated procedure without publication of a tender notice is well above the EU average (it amounts to about 15% of the total number of procurement procedures,[55] while the EU average is about 5%).

According to the 2013 Eurobarometer business survey on corruption,[56] Romanian respondents from the business sector perceive the following practices as being widespread in public procurement: involvement of bidders in the design of specifications (49%), unclear selection or evaluation criteria (56%), conflicts of interest in the evaluation of the bids (57%), specifications tailor-made for particular companies (59%), abuse of emergency grounds to justice the use of non-competitive or fast-track procedures (51%) and collusive bidding (53%). 64% considered that corruption is widespread in public procurement managed by national authorities (EU average: 56%) and 59% in the case of local authorities (EU average: 60%). A 2012 study by the Romanian Institute for Public Policy (IPP) showed that 90% of Romanian respondents viewed the public procurement process as corrupt due to its lack of transparency, fairness and competitiveness.[57] These are among the highest percentages in the EU. These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities to corruption in public procurement procedures.

As shown by a number of external audits, as well as surveys and studies, the Romanian national public procurement system is hampered by numerous irregularities, conflicts of interest and high corruption risks.[58] Among the most frequent irregularities that could indicate higher risks of corruption include insufficient transparency at all stages of procurement, excessively short deadlines for submitting tenders, changes to the initial information of the tender procedure that are published only at national level, excessively strict selection criteria and irrelevant or artificial algorithms for evaluation of tenders.[59] Other negative practices noted in external audits and verifications concern the use of tailor-made specifications favouring a specific candidate and the direct award of a large number of public contracts by the same contracting authority to a very limited number of economic operators through unjustified use of a negotiated procedure and without publication of tender notice. The current legislation on public procurement does not have clear provisions on revolving door practices and there appears to be a lack of awareness as to the conflict of interest situations that may arise from such practices.

In terms of the supervision of public procurement procedures, a complex institutional structure is in place.[60] However, the effectiveness of internal and external control mechanisms remains to be established. The independent status of the Romanian review authority on public procurement has not yet been fully secured. Moreover, the institutional framework is overly complex and limited inter-institutional cooperation leads to divergent practices. As a result, substantial irregularities go undetected and unpunished. The weak capacity of the contracting authorities to prepare sound tendering documentation, define adequate selection and award criteria, evaluate the offers or put in place clear red flagging mechanisms is also a source of inefficiency and lack of transparency. The National Authority for Regulating and Monitoring Public Procurement (ANRMAP) is currently working on interpretative guidelines for contracting authorities on a number of governance and procedural-related aspects, including conflicts of interest.

An Electronic Public Procurement System (SEAP) is in place, but challenges remain as to its effective functioning. Since January 2013, contracting authorities have been required to upload in SEAP all notifications on direct procurement exceeding EUR 5 000. A study by the Romanian Institute for Public Policy reports significant irregularities in the execution of public contracts, such as acceptance of works or supplies below the standard of quality stated in the initial offer and a lack of sanctions for late execution or delivery, even when the necessary time for execution or delivery was one of the award criteria, while post-award monitoring is almost non-existent.

The most recent CVM reports also stressed that very limited progress was made in the prevention and sanctioning of corruption in public procurement.[61] Few cases of public procurement fraud were concluded in court with dissuasive sanctions. Between January 2006 and the fourth quarter of 2012, only 15 officials received final convictions in cases brought by the DNA. The cases usually take a long time to process, and frequently contracts or projects have been completed by the time corrupt practices are discovered. Some steps have been taken to train prosecutors and judges on public procurement aspects.

A decentralisation reform is being implemented, through a number of bills and administrative decisions at government or ministry levels. Given the significance and nature of the risks associated with corruption, conflict of interest and favouritism, as highlighted in this section and the section below, there is a need for this reform to be accompanied by effective prevention in response to such risks.[62]

In relation to EU funds, according to aggregate DNA statistics, between 2006 and 2012, EUR 36 million in EU funds was diverted in Romania through corruption and fraud. The DNA indicted 406 defendants, and the courts handed down 82 final decisions against 127 persons. At the local level public procurement is particularly vulnerable to corruption.

Since 2010, several audits by the European Commission have highlighted substantial shortcomings in the Romanian public procurement system. The fact that these were not prevented, detected or corrected by the national management and control system, is indicative of systemic deficiencies. The Romanian institutional set-up for public procurement was found to have insufficient capacity and capability for effective controls on spending of EU funds. These shortcomings led to temporary interruptions of payments within Structural Funds to protect the financial interests of the EU. The Commission also raised reputational reservations in 2011 regarding 2007-13 programmes in Romania. The management and control systems were adapted and financial corrections were accepted and implemented by the Romanian authorities, as a result of which the Commission lifted the reservations and resumed payments.

Conflicts of interest and favouritism

As illustrated in the previous section, conflicts of interest and favouritism appear to be among the most recurrent problems in the allocation and spending of public money (including EU funds) both at central and at local levels while current prevention and control mechanisms are difficult to enforce or not sufficiently dissuasive. The detection and notification rate of conflict of interest by public procurement authorities appears rather low as compared to the size of the actual risks related to this issue as demonstrated by the ANI's findings. To remedy this, memoranda were signed in 2013 between the Public Procurement Authority (ANRMAP) and the ANI to launch an integrated information system for preventing and detecting through ex ante controls potential conflicts of interest.

In 2012, the ANI carried out a study on local administration which revealed a high number of cases of conflicts of interest.[63] Many local councillors concluded contracts with their own companies or with companies controlled by their relatives. The ANI found 78 cases of local elected officials incompatible or in conflict of interest. Of these, 33 cases were submitted to the prosecution service on suspicion of criminal conflict of interest, and an additional 17 on suspicion of other alleged criminal offences, including corruption and forgery. 75 incompatibility decisions were issued, of which 24 became final and 51 are currently being challenged in court.

The ANI reports that more than 80% of court decisions confirm its reports on conflicts of interest and incompatibilities.[64] While this represents an improvement, the case-law in the area of conflicts of interest remains inconsistent. Courts have issued contradictory decisions for comparable cases. For example, in three cases concerning presidents of county councils who in their official capacity signed contracts on behalf of local administration with their own companies, two courts decided that there was a conflict of interest, while a third decided there was not. The CVM report of January 2014 also noted that more remains to be done to ensure dissuasiveness of sanctions applied and effectiveness in recuperating the damage caused to the public interest.[65] Separate court proceedings are required to adjudicate on appeals lodged against a finding of conflict of interest, and then to enforce the final decision and revoke any legal acts signed while the offending official had the conflict of interest. Such proceedings can take years to complete, delaying the sanctioning.

To remedy this situation, a more systematic approach to ex ante checks is needed, a task to which the ANI is best suited, provided it is given the necessary resources. In April 2013, the Government approved a memorandum[66] tasking the ANI to carry out systematic ex ante checks on conflict of interest using a nationwide database of all public officials who manage EU funds. Careful consideration must be given to the capacity needed for the implementation of this verification system.

While conflict of interest is a criminal offence under Romanian law, prosecution services have long been reluctant to prosecute such cases. Recently they have become more active. During 2008-2013, 138 cases were referred for prosecution on suspicion of criminal conflicts of interest. More than half of these concerned elected public officials. Effective criminal investigation remains limited: 7% of cases were sent to court and an additional 7% resulted in pre-trail proceedings. In 36% of cases no proceedings were launched, and the remaining 50% are under investigation by the prosecution. In March 2013, the acting Prosecutor-General overturned prosecutors’ decisions not to bring charges in 15 conflict of interest cases involving former and current MPs. In 2012 and 2013, 20 indictments were made with regard to conflict of interest cases. In mid-2013, all prosecutors' offices attached to courts of appeal developed regional strategies for addressing conflict of interest. As mentioned above, in early December 2013, Parliament adopted a number of amendments to the criminal code narrowing the scope and application of the conflict of interest offence, removing public officials and administrative decisions from its scope and limiting applicability to contractual personnel of public authorities. The amendments were declared unconstitutional by the Constitutional Court in January 2014.

Research suggests that the allocation of public funds in Romania, notably at local level, remains a problematic area where political favouritism often prevails over objective criteria and the public interest.[67] To measure the extent of political clientelism in public administration, the research looked into different types of funds transferred from the state budget during 2004-2011. These ranged from reserve funds to funds for environmental purposes. The allocation of these funds was analysed in correlation with the political affiliation of the allocating officials. The research revealed a high correlation between the two to the detriment of public interest considerations. For example, the research suggested that the national disaster relief emergency fund, earmarked for natural disasters, had been influenced by all political parties in government to channel resources to allegedly partisan reasons unrelated to the occurrence of natural disasters. The share of funds allocated to the main government party ranged from 49% in 2004 and 45% in 2008 to 62% in 2010.[68]

Another research report shed light on other opportunities for discretionary allocation, such as the funds for roads (county and rural), schools, rural water systems and bridges.[69] In addition, only 25% of Romanian municipalities are able to cover their payroll expenses from revenues alone, creating a serious dependence on discretionary allocations. The largest allocations, worth over EUR 1 billion, were made during the boom years of 2007-2008. This period overlaps with the highest level of clientelism identified by the research.

The study on clientelism also pointed to major flaws in the management and supervision of state-owned companies and assessed the impact of discretionary allocations on the balance sheets. The most widespread practices involve the overstating of public procurement contracts, where state-owned enterprises conclude non-competitive purchase contracts above market prices with favoured partners or sales below market prices.

Healthcare

Informal payments are widespread in the Romanian public healthcare system. Low salaries of doctors and medical staff in the public sector make it more difficult to address this issue effectively. A 2005 national study conducted by the World Bank for the Romanian Ministry of Health estimated the extent of informal payments in healthcare at around EUR 280 million annually.[70] The actual numbers might be even higher.

According to the 2013 Special Eurobarometer on Corruption, 28% of Romanian respondents who visited public medical facilities in the preceding year had to make an extra payment, or offer a gift or donation besides the official fees. This is the highest percentage in the EU, far above the EU average of 5%. Half of the respondents (highest percentage in the EU, against an EU average of 19%) felt they had to make an extra payment or offer a gift before care was given. Local research carried out in 2011 showed that only 33% of respondents believed that co-payments would reduce informal payments in the health system, while 83% believed that medical personnel is poorly paid and considered this a core cause of corruption in this field.[71]

The European collaborative research project ASSPRO CEE (2008-2013) studied informal payments across six countries[72] and found that they were made by 55% of outpatient healthcare users and 72% of inpatient care users in Romania.[73] 81% respondents would prefer to convert the current payments to a system of additional formal payments, while 54% would prefer to use private services instead of paying bribes. 34% of respondents considered informal payments inevitable.[74]

Several projects and strategic plans to address informal payments have been considered by the Ministry of Health, but to date no concrete results have been achieved in reducing the spread of this practice. Recent attempts to set up hotlines for reporting corrupt practices in the medical system failed due to low awareness and reluctance of the general public to report corruption in this sector.[75] Several measures were also considered in the context of a healthcare reform.

In 2012, a co-payment law was passed requiring some medical services to be paid with coupons, thus reducing the risk of informal payments.[76] Co-payments started being implemented in March 2013, but only in small fixed amounts for services (except emergencies).

As for procurement in the healthcare sector, general public procurement rules apply. Corruption risks are present not only in the public procurement process as such, but also in preceding stages related to eligibility for the national lists of drugs, procurement for the National Health Programmes or in relation to adding a specific drug, equipment or medical device to the list of reimbursed services and gratuities covered by the National Social Health Insurance Fund. Currently, only the drugs, devices and materials covered by the National Health Programmes follow a centralised procedure of procurement. A law for re-centralisation of public procurement of medicines, materials, devices and equipment was adopted in 2013 establishing the Ministry of Heath as a centralised contracting authority.[77]

In 2011, an integrity department was set up within the Ministry of Health, tasked to develop and implement strategies to fight corrupt practices and counter risks within the healthcare system. It coordinates prevention and combating of corruption policies in public procurement and budgetary allocations within this sector, but has not been tasked to address the issue of informal payments. Since its establishment, the department has faced considerable challenges that have prevented effective verification. These were related to the powers, tools, financial resources and staff it has been given.[78] The department has started to carry out a few checks, but their impact and follow-up remain to be seen.

3. Future steps

Corruption, both petty and political, remains a systemic problem in Romania. While some anti-corruption reforms have been pursued over the past years, their outcome proved to be unstable and easily reversible. Positive results were noted in the prosecution and more recently in the adjudication of high-level corruption cases, following efforts by specialised law enforcement bodies, prosecutors, and judges. However, the political will to address corruption and promote high standards of integrity has been inconsistent over time. The Cooperation and Verification Mechanism (CVM) Report of January 2014 highlighted that, while progress was made in many areas of judiciary and anti-corruption policies, 'the readiness with which the foundation stones of reform could be challenged in Parliament served as a reminder that there is far from consensus about pursuing the objectives of the CVM.'[79] Accountability and integrity of elected and appointed officials remain matters of concern. More determined efforts are needed to address corruption effectively within the judiciary and healthcare systems, and in connection with public procurement. The policy for preventing corruption remains underdeveloped and inefficient.

The following points require further attention:

· Ensuring that all necessary guarantees remain in place to safeguard the stability, independence and continuation of the track record of anti-corruption institutions and the judiciary regarding non-partisan investigations and effective court proceedings concerning high-level corruption cases, including with regard to elected and appointed officials. Implementing coherent preventive and awareness-raising measures, accompanied by an effective sanctioning regime, to reinforce integrity standards in the judiciary, actively involving all relevant actors in the judiciary, including the Superior Council of Magistracy, the Judicial Inspection, magistrates’ associations, courts and prosecutors’ offices.

· Implementing comprehensive codes of conduct for elected officials and ensuring corresponding accountability tools and dissuasive sanctions for corrupt practices, conflicts of interest or incompatibilities. Consider developing ethical codes for political parties or establishing ethics pacts between parties to promote high integrity standards. Ensuring that all decisions regarding lifting of immunities are duly reasoned and taken promptly, and that no obstruction of justice is allowed.

· Developing uniform and effective prevention tools within contracting authorities and public procurement supervisory institutions, with particular focus on conflict of interest at local level. Ensuring systematic monitoring and transparency of the implementation of large-scale public contracts, including EU-funded projects. Ensuring the stability of the legal framework on conflicts of interests and the incompatibility rules applicable to elected representatives and local level officials. Developing a more efficient system permitting to early detect, remedy and effectively sanction conflicts of interest in public procurement. Effectively implementing clear rules on revolving door practices in public procurement and raising awareness of the risks such practices entail. Establishing effective control mechanisms targeting the allocation of government funds to local administrations and state-owned companies and implementing safeguards against discretionary allocation to the detriment of the public interest. Strengthening anti-corruption safeguards for public procurement processes within state-owned companies.

· Implementing effective strategies to achieve a reduction in the level of informal payments in the public healthcare system, including by considering improving remuneration and working conditions for medical staff. Ensuring the necessary powers, professionalism and operational independence of the integrity department within the Ministry of Health and enabling it to carry out effective integrity controls, including on budgetary and procurement aspects. Ensuring effective follow-up of the department's findings.

[1]      http://www.just.ro/LinkClick.aspx?fileticket=T3mlRnW1IsY%3D&tabid=2102.

[2]      Independent agencies, law enforcement and judiciary; local administration; ministries; business sector; civil society.

[3]      http://sna.just.ro/Paginăprincipală.aspx

[4]      Council recommendation 2013/C 217/17  of 9 July 2013.

[5]      http://www.ccr.ro/noutati/COMUNICAT-DE-PRES-75.

[6]      This was confirmed by successive reports of the Commission in the framework of the Cooperation and Verification Mechanism and reiterated in the most recent CVM report on 22 January 2014: http://ec.europa.eu/cvm/docs/com_2014_37_en.pdf .

[7]      For more details on the track record see the section on 'Prosecution of Corruption'.

[8]      http://ec.europa.eu/cvm/docs/com_2012_410_en.pdf.

[9]      2013 Special Eurobarometer 397.

[10]    2013 Flash Eurobarometer 374.

[11]    Commission Decision of 13 December 2006 establishing a mechanism for cooperation and verification of progress in Romania to address specific benchmarks in the areas of judicial reform and the fight against corruption, C (2006) 6569 final, http://ec.europa.eu/enlargement/pdf/romania/ro_accompanying_measures_1206_en.pdf.

[12]    http://ec.europa.eu/cvm/docs/com_2012_410_en.pdf.

[13]   http://ec.europa.eu/cvm/docs/com_2014_37_en.pdf.

[14]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf

[15]    COM(2011) 309 final, Second Implementation report of FD 2003/568/JHA of 6 June 2011: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf

[16]    http://ec.europa.eu/europe2020/pdf/themes/06_shadow_economy.pdf.

[17]    Law 571/2004 on the protection of employees of public authorities, public institutions and other entities who report violations of the law.

[18]    An Alternative to Silence, Whistle-Blower Protection in 10 European Countries, November 2009, p. 9 and 15.: http://archive.transparency.org/global_priorities/other_thematic_issues/towards_greater_protection_of_whistleblowers/enhancing_whistleblower_protection_in_the_european_union

[19]   http://www.transparency.org/whatwedo/pub/whistleblowing_in_europe_legal_protections_for_whistleblowers_in_the_eu.

[20]    Bertelsmann Stiftung (2012) BTI 2012 – Romania Country Report. Gütersloth: Bertelsmann Stiftung, p. 8: http://www.bti-project.org/fileadmin/Inhalte/reports/2012/pdf/BTI%202012%20Romania.pdf .

[21]    The Europe 2020 Index of 2012 shows that the internet coverage for Romania is of only 39.9%. http://reports.weforum.org/the-europe-2020-competitiveness-report/?utm_source=EU2020map&utm_medium=mapembed&utm_campaign=EU2020%2Bembeds#=

[22]    http://www.freedomhouse.org/report-types/freedom-press  .

[23]    The high and medium-level corruption cases are identified based on three alternative criteria: the value of the bribe or undue advantages exceeds EUR 10 000 or the damage exceeds EUR 200 000;or the alleged offender is a high-level official (including elected and appointed) or an official at mid-management level.

[24]    http://www.pna.ro/faces/cine_lucreaza.xhtml .

[25]    corresponding to the jurisdictions of the courts of appeal.

[26]    http://ec.europa.eu/cvm/docs/com_2012_410_en.pdf.

[27]    http://www.pna.ro/faces/structura.xhtml.

[28]    http://ec.europa.eu/cvm/docs/swd_2012_231_en.pdf.

[29]    http://emap.csm1909.ro/Documente.aspx?path=emap_docs/200704Documente/1154000000400463.pdf .

[30]    Media monitoring project co-financed by the EU which follows all stages of criminal proceedings in a number of high-level corruption cases and keeps public records thereof: http://anticoruptie.hotnews.ro/.

[31]    http://www.pna.ro/faces/obiect2.jsp?id=193.

[32]    These included one former prime minister, nine ministers, five state secretaries, 23 MPs, 105 mayors and deputy mayors, eight presidents and vice-presidents of county councils, eight directors of national agencies, 40 directors of national companies and autonomous administrations and 42 Financial Guard officers, and 48 legal entities.

[33]    A study commissioned by FRONTEX on anti-corruption measures in EU border control estimated that the network in question brought the implicated border guard roughly EUR 500 in bribes per person per day. While this case illustrated the effectiveness of law enforcement in detecting large-scale corruption schemes of this kind, it also exposed the level of infiltration of corruption at the borders and its links with organised crime: http://www.frontex.europa.eu/assets/Publications/Research/Study_on_anticorruption_measures_in_EU_border_control.pdf .

[34]    Between 2012 and the first semester of 2013, there were 432 indictments concerning 722 defendants. Among these: police officers, officials within local administration, doctors, employees of state agencies, etc. 25% of these cases where indictments were issued started ex officio. In the same reference period, 266 final court decisions concerning 332 defendants were rendered in corruption cases (conviction rate of 92.77%). Only 20.78% of the sentences are to be served in prison.

[35]    See also January 2014 CVM Report: http://ec.europa.eu/cvm/docs/swd_2014_37_en.pdf .

[36]    According to Romanian law, the heads of the DNA, of the General Prosecutor’s Office and the Directorate for Investigating Organised Crime and Terrorism (DIICOT) are appointed by the President of Romania, based on a proposal of the Minister of Justice, followed by a consultative opinion of the Superior Council of Magistracy. The Minister of Justice has the prerogative to propose any prosecutor, but nothing prevents making the proposal on the basis of a procedure that follows criteria of transparency and professionalism.

[37]    http://ec.europa.eu/cvm/docs/swd_2014_37_en.pdf.

[38]    Idem.

[39]    See statistical data mentioned at the beginning of this section.

[40]    http://ec.europa.eu/cvm/docs/com_2014_37_en.pdf.

[41]    http://ec.europa.eu/cvm/docs/com_2014_37_en.pdf.

[42]    http://www.ccr.ro/noutati/COMUNICAT-DE-PRES-70.

[43]    Between 2007 and mid-2012, DNA, through the General Prosecutor, filed 7 requests to Parliament for lifting immunity for investigation of MPs and 5 to the Romanian President with regard to the investigation of ministers and former ministers. Parliament approved 5 of these 7 requests and dismissed the rest, while the President approved all requests. In another case regarding an MP (and former minister), the extension of the criminal investigation to other offences was dismissed by Parliament. As far as search is concerned, Parliament rejected a request against an MP (and former minister). Since 2007, until mid-2013 there were three requests for preventive arrest of MPs: in one case the request was dismissed and in two other cases accepted.

[44]    The President of the Chamber of Deputies sent a draft of the code for consultation to the European Parliament in December 2013.

[45]    http://ec.europa.eu/cvm/docs/swd_2014_37_en.pdf.

[46]    http://www.ccr.ro/noutati/COMUNICAT-DE-PRES-75 .

[47]    Notably offences related to disclosing information on authorisation of search, arrest or interception of other magistrates.

[48]    http://ec.europa.eu/cvm/docs/swd_2014_37_en.pdf.

[49]    Of whom one member of the Superior Council of Magistracy at the time and one advisor in the same Council.

[50]    http://www.csm1909.ro/csm/index.php?cmd=0901.

[51]    Law no. 24 of 2012 amending Law 303 of 2004 on the statute of judges and prosecutors and Law 317 of 2004 on the Superior Council of Magistracy.

[52]    These pensions are restricted to magistrates and are exempt from the general pension rules. They are considerably higher than the general norm.

[53]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[54]    There is a high frequency of Government Emergency Ordinances (GEO) and amendments to the legislation in this area that create legal instability and lead to inconsistencies in implementation. An example of this is GEO 34/2006 concerning public procurement which was amended four times between December 2012 and June 2013 (i.e. by  GEO 77/2012, GEO 31/2013, GEO 35/2013 and Law 193/2013).

[55]    Data concerning 2011.

[56]    2013 Flash Eurobarometer 374.

[57]    Adrian Moraru, Elena Iorga, Loredana Ercus (2012) Transparency, fairness and competitiveness of public procurement in Romania, Institute for Public Policy: http://www.ipp.ro/pagini/transparen355a-corectitudine-351i-1.php

[58]    The report delivered by Deloitte commissioned by DG REGIO provides detailed information on the existing shortcomings of the Romanian public procurement system and was also considered in this assessment. The report was made publicly available by the Romanian authorities: http://www.sn-seap.ro/wp-content/uploads/2012/07/DG-Regio-Third-Interim-Report-Part-C-FINAL-RO-version.pdf .

[59]    'Identifying and Reducing Corruption in Public Procurement in the EU – Development of a methodology to estimate the direct costs of corruption and other elements for an EU-evaluation mechanism in the area of anti-corruption', 30 June 2013, PricewaterhouseCoopers and ECORYS.

[60]    The National Authority for Regulating and Monitoring Public Procurement (ANRMAP), coordinated by the prime minister, is in charge of regulating and monitoring public procurement (including systematic ex ante control of tender documents and ex post controls of public procurement procedures based on risk assessments). The Central Unit for Coordination and Verification of Public Procurement (UCVAP), which is part of the Ministry of Public Finance, is responsible for ex ante control of the regularity of procurement procedures (selected on the basis of risk assessments) through local observers participating in tendering committees (their reports are consultative). The National Council for Solving Complaints (CNSC) is a specialised administrative-jurisdictional body competent to hear public procurement complaints in first instance, before contracts are signed. The National Management Centre for Informational Society (CNMSI), which is part of the Ministry of Communications and the Information Society, implements and operates the national Electronic System for Public Procurement (SEAP).

[61]    http://ec.europa.eu/cvm/docs/com_2013_47_en.pdf and http://ec.europa.eu/cvm/docs/swd_2014_37_en.pdf.

[62]    See also analysis on these issues of the CVM Report of January 2014: http://ec.europa.eu/cvm/docs/swd_2014_37_en.pdf.

[63]    http://www.integritate.eu/UserFiles/File/Rapoarte/Raport_ActivitateaANI_Anul2012_CfLegii544_2001.pdf .

[64]    Period 2008-2013.

[65]    http://ec.europa.eu/cvm/docs/swd_2014_37_en.pdf.

[66]    Memorandum 05/04/2013.

[67]    http://expertforum.ro/extra/harta-bugetelor/EFOR-rap-anual-2013.pdf  and Romanian Academic Society (2010) Beyond perception-Has Romania’s governance improved after 2004? SAR: http://www.sar.org.ro/dincolo-de-perceptii-a-devenit-guvernarea-romaniei-mai-integra-dupa-2004-3/

[68]    http://www.sar.org.ro/dincolo-de-perceptii-a-devenit-guvernarea-romaniei-mai-integra-dupa-2004-3/

[69]    Expert Forum (2013) 'Clientelismul in Romania' (EFOR): http://expertforum.ro/en/clientelism-in-politics-and-administration-conflicts-of-interest-and-preferential-allocations-of-resources/.

[70]    Medical care in Romania comes at an extra cost, 8 March 2009.

[71]    Romanian Institute for Evaluation and Strategy about the general perception of Romanian healthcare (IRES) 2011.

[72]    Poland, Romania, Hungary, Bulgaria, Lithuania and Ukraine.

[73]    20-35% of them had to borrow to be able to pay and one third of respondents did not go to a doctor because they could not afford to.

[74]    Mihaescu-Pintia C., Florescu S., ASSPRO CEE, 2012.

[75]    www.medalert.ro.

[76]    The co-payments are to be calculated as a percentage of the value of health services received, while the total amount for an insured person should not exceed 1/12 of their annual net income.

[77]    Law 184 of 2013.

[78]    http://ec.europa.eu/cvm/docs/com_2012_410_en.pdf.

[79]    http://ec.europa.eu/cvm/docs/com_2014_37_en.pdf.

Sweden

1. Introduction – main features and trends

Anti-corruption framework

Strategic approach. Sweden has no national anti-corruption strategy but has carried out several risk assessment studies and reports on corruption. These assessments have covered, among other aspects, risks of corruption in Sweden’s local government sector, risks of corruption in public procurement and risks of corruption in the Swedish central authorities.[1] The government has recently created a group, ‘the value delegation’, which will work to maintain public confidence in the civil service by promoting a culture that prevents corruption.[2]

Legal framework. Sweden has a well-developed system of legislation, law enforcement and judicial authorities to deal with corruption. Swedish criminal legislation covers all forms of corruption offences contained in the Council of Europe Criminal Law Convention on Corruption[3] and the Additional Protocol.[4] A new anti-corruption law entered into force in 2012. The new law covers a broader range of public officials and private individuals than the previous legislation. It also introduced two new offences: trading in influence and negligent financing of bribery.[5] More general rules and principles of conduct, including provision on conflicts of interest, are set out in several legislative documents such as the Constitution, the Administrative Act (1986:223), and the Act on Public Employment (1994:260). In 2006 the Swedish Association of Local Authorities and Regions published guidelines on conflicts of interests and corruption for public employees working in municipalities, counties and regions. These guidelines were updated in 2012.[6] The six principles in the ‘Shared Values for Civil Servants’ are based on laws and regulations and provide guidelines on how government agencies and employees should conduct their work.[7]

Institutional framework. The public administration is generally regarded as efficient, providing comprehensive services of a high quality to both citizens and enterprises. The low levels of perceived and experienced corruption in Sweden are linked to the long tradition of openness and transparency of Swedish society and institutions and strong respect for the rule of law.[8] The National Anti-Corruption Unit of the Office of the Prosecutor General was established in 2002 after recommendations made by Group of States against Corruption (GRECO). It focuses on collecting information on corruption and developing methods of combating corruption, both at central and at the local/regional levels of governance. The National Anti-Corruption Unit has reported that, between 2003 and 2009, 280 pre-investigations led to 90 convictions.[9] In January 2012, the National Anti-Corruption Police Unit was created to support the National Anti-Corruption Unit in corruption investigations, including foreign bribery.[10]

Opinion polling

Perception surveys. The Special Eurobarometer 2013 places Sweden among the countries with the least corruption in the EU. According to the Special Eurobarometer on Corruption, 40 % of Swedish respondents believe that corruption is widespread in their country (EU average: 76 %) and 12 % feel personally affected by corruption in their daily life (EU average: 26 %).

Experience of corruption. Fewer than 1 % were asked or expected to pay a bribe over the last 12 months (EU average: 4 %),[11] but as many as 18% of respondents reported they personally know someone who takes or has taken a bribe (EU average: 12 %).

Business surveys. According to a Eurobarometer survey, 36 % of responding Swedish managers[12] believe that favouritism and corruption hamper business competition in Sweden (EU average: 73 %). 12 % of Swedish businesses state that corruption is a problem for their company when doing business (EU average: 43%).[13] Sweden consistently scores among the top in competitiveness indices, ranking first among EU Member States in the Europe 2020 index and 6th worldwide in the World Competitiveness Index 2013-14.

In the area of public procurement, according to the 2013 Eurobarometer business survey on corruption,[14] 22 % of respondents consider that corruption is widespread in public procurement managed by national authorities and 33 % in public procurement managed by local authorities (EU average: 56 % and 60 %).

Background issues

Private sector. Sweden has transposed the provisions of Framework Decision 2003/568/JHA regarding the definition of active and passive corruption in the private sector as well as liability applicable to natural and legal persons.[15] The OECD Working Group on Bribery reports that Sweden’s tax administration is making significant efforts to detect and report foreign bribery offences and Sweden has assisted several countries with their foreign bribery investigations. Nonetheless, the OECD stresses that Sweden needs to make greater efforts to actively enforce its anti-bribery legislation governing foreign bribery and increase the awareness of the Swedish public on foreign bribery enforcement.

Conflicts of interest and asset disclosure. The Parliament Act includes provisions that apply to conflicts of interest[16] and since 2008 makes it mandatory for Members of Parliament (MP) to declare their assets. It is the MPs own responsibility to determine whether s/he faces a conflict of interest and to decide whether to participate in a chamber or committee meeting.[17] GRECO has raised concern that the current system governed by MPs’ self-restraint does not guarantee a satisfactory level of transparency. In the view of GRECO, the MPs should publicly declare actual and potential conflicts of interest in order to enable the public to monitor when and how the interests of MPs might influence the decision-making process. GRECO has also suggested developing the current asset declarations system and including quantitative information of the assets, such as the approximate value or number of shares and income.[18]

Whistleblowing. The laws protecting civil servants regarding the disclosure of information to the media and access to official records are clearly laid down in the Freedom of the Press Act and the Freedom of Expression Act.[19] The law also provides that civil servants have the right to remain anonymous and it may constitute a criminal offence for a representative of an authority to enquire into the identity or for the journalist to reveal it.[20] There is no equivalent protection in the private sector. However, a recent Swedish government official report has proposed new legislation to strengthen whistleblowing protection in the private sector for employees working in publically funded activities and services: health, education and welfare.[21] Furthermore, an independent expert committee of inquiry has been launched to review and propose recommendations to increase protection for employees who blow the whistle on various forms of misconduct, irregularities or offences.[22]

Transparency of lobbying. Lobbying is not regulated in Sweden. There is no specific obligation for registration of lobbyists or reporting of contacts between public officials and lobbyists. The provision on trading in influence is applicable to illegal lobbying.

2. Issues in focus

Financing of political parties

Political parties at the national level in Sweden receive significant public funding from the State and Parliament.[23] The public funding system provides political parties with the possibility of pursuing their political activities on a long-term basis without being dependent on other contributions.[24] Depending on the level of public financial support that is linked to election results, certain parties in Parliament rely on private funding up to as much as 50 per cent during an election year, whereas others are funded almost entirely through public funding.[25] In order to provide transparency on political parties’ funding, the political parties have developed a voluntary Joint Agreement.[26] The agreement provides, for example, that the parties’ sources of income must be made as transparent as possible and that voters have a right to know how the parties and candidates finance their activities and campaigns. Nonetheless, there is no ban on anonymous donations to political parties from private or legal persons and no regulation to  make the accounts of political parties accessible to the public. The agreement does not cover all political parties in Parliament and it does not include parties at county and municipal level.

After repeated criticism from GRECO,[27] including suggestions from an Expert Committee,[28] in 2014, the Swedish Government presented draft legislation aiming to increase the transparency of financing of political parties and individual candidates participating in elections to Parliament or to the European Parliament.[29] Under the draft legislation, a party or an individual candidate must disclose information annually on their revenues and the information will be published on Kammarkollegiet’s website.[30] Political parties will also be obliged to report donations over EUR 2 500,[31] including the identity of the donor and the amount of the donation. The current draft legislation has received some criticism mainly because it will not prohibit political parties from receiving anonymous donations and it will not apply to regional and local levels. The government has announced that a separate parliamentary Expert Committee will investigate these issues.[32] The draft legislation is planned to be adopted in April 2014.

Corruption at local level

A number of public corruption cases have been revealed in municipalities and several studies point out that municipalities and counties are especially vulnerable to corruption.[33]

In 2012, the Swedish Agency for Public Management undertook a study on corruption in Sweden’s local government sector.[34] During the period between 2003 and 2010, the National Anti-Corruption Unit at the Swedish Prosecution Authority received 130 complaints of corruption within the Swedish municipalities, out of a total of 723 complaints, and 24 municipal employees have been prosecuted, mainly for bribery offences.[35] The majority of detected and reported instances of corruption in municipalities involved the building and construction industry, the management of facilities and infrastructure and the social care sector. Although cases of corruption have been reported in all counties,[36] corruption seems to be more common in larger cities and suburban municipalities of large cities.[37]

Sweden’s 290 municipalities administer a large share of public resources and they are granted relatively strong powers of local self-government to decide autonomously on the allocation of their resources. Since the early 1990s, Swedish municipalities have increasingly converted parts of their public activities and services into municipally-owned companies and private companies.[38] The transfer of public service delivery to municipally and state-owned companies and private companies has had major legal consequences[39] Resources that previously were administered and controlled by public law now fall under civil law.[40] The principle of freedom of access to public records (offentlighetsprincipen) applies to Sweden’s public institutions and state-owned and municipality owned companies, but not to private companies.[41]

According to the current municipal law,[42] a municipality or a county contracting out business to private providers ‘shall pay regard to the interest of being assured by the agreement that it receives information that enables the general public to secure a clear view of how the business is being conducted.’ However, while certain municipalities and counties include provisions of transparency in their contracts with private companies, there is no legal requirement to do so,[43] and other municipalities have forgone this option.[44] Therefore, a recent Swedish Government official report has proposed amendments to the municipal law to make it mandatory for municipalities and counties to provide sufficient information for transparency to be ensured.[45] Increased transparency lower the risk of corruption and, according to the Swedish Government official report, the proposed amendments could help prevent crime.

Good practice: the principle of public access to information

The principle of public access to information is a very important and cross-cutting element in Sweden’s political culture, constitution, and legal order.[46] It means that the public and the media – newspapers, radio and television – are entitled to receive information about state and municipal activities. It plays a key role in ensuring high level of transparency and therefore is crucial for effective prevention of corruption.

The principle of public access to information is expressed in various ways. Everyone is entitled to read the documents of public authorities (access to official documents); officials and others who work for the state or municipalities are entitled to say what they know to outsiders (freedom of expression for officials and others); officials and others in the service of the state or municipalities are normally entitled to disclose information to newspapers, radio and television for publication or to personally publish information (right to communicate and publish information); the public and the mass media are entitled to attend trials: (access to court hearings); the public and the mass media may attend when the chamber of the Riksdag (the Swedish Parliament), the municipal assembly, county council assembly and other such bodies meet (access to meetings of decision-making assemblies).

Restrictions to this principle are clearly set out in law and the conditions for document secrecy and the duty of confidentiality are laid down in the Public Access to Information and Secrecy Act, in the Freedom of the Press Act, and in the Fundamental Law on Freedom of Expression to safeguard a limited number of important public and private interests.[47]

The transfer of responsibility for public services from public authorities to private companies also requires increased use of public procurement procedures. However, the control mechanisms to prevent cronyism and nepotism in connection with the granting of contracts in  municipalities appear to be relatively weak.[48] It has been argued that these risks are higher due to, inter alia, less independent and effective municipal auditing[49] and lesser media attention in municipalities in comparison to the national level.[50]

Moreover, to date, there is no specific requirement in the Swedish Local Government Act for municipal auditors to identify risks of corruption or other irregularities.[51] Their main function is to ensure that internal monitoring procedures are reliable. Internal monitoring and control does not provide for verification on the ground (e.g. inspection of renovation and repair work) in order to ensure that the invoices are consistent with the work actually carried out.  Monitoring of compliance should be prioritised. These controls could be carried out by auditors, and experts in the area in which the work was carried out (e.g. construction experts).[52]

Foreign bribery

Sweden has the highest number of multi-national corporations per capita and has increasingly exported to emerging markets; its economy is reliant on exports.[53] This carries risks of  foreign bribery, where in particular the effective enforcement of existing legislation seems to be an issue.

Although Sweden has ratified the OECD Anti-Bribery Convention,[54] an OECD evaluation in 2012 raised a number of significant issues regarding Sweden’s implementation of the Convention. Specifically, there has only been one successfully prosecuted case involving the bribery of foreign public officials,[55] and Sweden has never held a company liable since the entry into force of the Convention.[56] The OECD examiners wrote that, in view of the many allegations reported by the media involving Swedish companies, the size of the Swedish companies and the sectors of business, including defence, telecommunications, construction and energy, the lack of cases could indicate problems with effectiveness of the criminal justice framework governing the bribery of foreign public officials.[57]

The apparent weakness of enforcement against companies for foreign bribery offences can, at least partly, be attributed to the stringent demands of penal law provisions establishing corporate liability for bribery carried out through foreign subsidiaries, joint ventures and agents, to the requirement of dual criminality and to the low level of sanctions applicable to legal persons.[58]

Under Swedish law, Swedish prosecutors must demonstrate that an individual paid a bribe in order to establish corporate liability.[59] According to the OECD, the focus on the individual rather than on the corporate entity has led to the termination of several investigations. For example, one Swedish construction company, based on its own internal investigations, dismissed several of its executives in a foreign country because their actions had failed to ‘comply with the company’s standards of transparency.’[60] Despite the involvement of a Swedish-owned company in a foreign country, Swedish authorities terminated the investigation because the alleged offenders were not Swedish nationals. The Swedish authorities concluded that the suspected misconduct constituted an act of ‘domestic bribery’ and the investigation was terminated because of a lack of jurisdiction due to the nationality of the offenders. Thus, if a Swedish company pays bribes using a non-Swedish national through a third party agent or a separate legal entity, Swedish companies are not in practice subject to ‘corporate fines’ by Swedish authorities.[61] The Swedish authorities have reported that the new offence of ‘negligent financing of bribery’ from 2012 will address the difficulties involving intermediaries. However, for the negligent financing offence to apply, the bribery must be committed by someone representing a Swedish company, and in practice may exclude a foreign subsidiary.[62]

The level of criminal sanctions in foreign bribery cases is an issue of concern. In 2005, Sweden raised the level of ‘corporate fines’ that may be imposed on legal persons for foreign bribery. The current range of available fines for legal persons is from SEK 5000 to SEK 10 million (EUR 1.1 million). The reputational harm corruption allegations have on corporations within the Swedish society may have a strong deterrent effect. However, given the size and importance of Swedish multinationals in international businesses, the maximum fine may not be ‘effective, proportionate and dissuasive.’[63]

Moreover, according to Swedish legislation, dual criminality is a necessary condition for jurisdiction on the basis of nationality,[64] including the need to obtain information through mutual legal assistance. The dual criminality requirement means that a given offence has to be a crime under the law of the country in which it has allegedly been committed as well as under Swedish law. In order to reduce the risk that Swedish prosecutors fail to act against Swedish companies that committed foreign bribery offences solely on the grounds of jurisdiction, the provision of dual criminality should be reviewed.[65]

3. Future steps

Sweden is among the least corrupt countries in the EU. It has taken an ambitious approach to fighting corruption, and several anti-corruption initiatives have been carried out during the last years. However, a few areas of concern remain such as corruption risks at local levels and gaps in the Swedish framework for prosecuting and sentencing Swedish corporations on grounds of foreign bribery.

The following points require further attention:

· Further improving the transparency of the financing of political parties and of individual candidates in line with GRECO’s recommendations; considering that future legislation introduces a general ban on donations from donors whose identity is not known to the party or candidate and extending the scope of that legislation to cover regional and local levels.

· Requiring municipalities and counties to secure a sufficient level of transparency in public contracts with private entrepreneurs. Ensuring the independence of municipal audits reviewing municipal activity and that monitoring of compliance at local governance level is prioritised.

· Ensuring that the liability of legal persons for foreign bribery is triggered in cases where the offence is committed through lower-level employees, intermediaries, subsidiaries, or third-party agents including non-Swedish nationals. Raising the level of fines for corporations and other legal entities. Consider reviewing the provision of dual criminality.

[1]      Examples on risk assessments recently carried out by Sweden are: Bergh, A. et al (2013) Allmän nytta eller egen vinning? En ESO-rapport om korruption på svenska. Stockholm: Regeringskansliet, ESO-rapport 2013:2: http://eso.expertgrupp.se/rapporter/20132-allman-nytta-eller-egen-vinning/; Riksrevisionen (2013) Statliga myndigheters skydd mot korruption. Stockholm: Riksdagstryckeriet, RiR 2013:2: http://www.riksrevisionen.se/PageFiles/16836/RiR_2013_2_Anpassad_Myndigheters%20korruption.pdf; Statskontoret (2012) Köpta relationer –om korruption i det kommunala Sverige. Stockholm: Statskontoret, 2012:20: http://www.statskontoret.se/upload/Publikationer/2012/201220.pdf.

[2]      http://www.regeringen.se/sb/d/119/a/213443.

[3]      Council of Europe Criminal Law Convention on Corruption (ETS 173). Sweden has made a reservation concerning this Convention in respect of Article 17 (jurisdiction). Group of States against corruption (GRECO) third evaluation round report on Sweden on incriminations (2009), p. 3: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)4_Sweden_One_EN.pdf.

[4]      ETS 191.

[5]      The law introduced two new offences and re-organised all the bribery-related offences by placing them in five sections within Chapter 10 of the Swedish Penal Code: passive bribery (Section (a)); active bribery (Section (b)); gross bribery (Section c)); trading in influence (Section (d); and negligent financing of bribery (Section 5(e)). The bill is available from: http://www.regeringen.se/sb/d/108/a/184838.

[6]      Om mutor och jäv. Vägledning för anställda inom kommuner, landsting och regioner. Reviderad 2012-09-01. http://webbutik.skl.se/bilder/artiklar/pdf/5275.pdf?issuusl=ignore.

[7]      The six guiding principles are: democracy; legality; objectivity, impartiality, and equal treatment; free formation of opinions and freedom of expression; respect; efficiency and service. An introduction to Shared Values for Civil Servants, Government Ethics – a good administrative culture: http://www.his.se/Global/Antalld/Shared%20Values%20for%20Civil%20Servants.pdf.

[8]      Since the beginning of the 18th century, Sweden has applied the general principle that everyone has the right to look into, print and publish any official document. GRECO First Evaluation Round in 2000. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round1/GrecoEval1(2001)3_Sweden_EN.pdf.

[9]      GRECO Third Evaluation Round Theme I. http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)4_Sweden_One_EN.pdf

[10]    http://polisen.se/Om-polisen/Organisation/Specialkompetenser/Korruptionsgruppen/

[11]    2013 Special Eurobarometer 397.

[12]    2013 Flash Eurobarometer 374.

[13]    2013 Flash Eurobarometer 374.

[14]    2013 Flash Eurobarometer 374.

[15]    COM(2011) 309 final, Second Implementation report of FD 2003/568/2003 of 6 June 2011: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0309:FIN:EN:PDF.

[16]    Chapter 2, section 11 of the Parliament (Riksdag) Act states that ‘no one may be present at a meeting of the chamber when a matter is being deliberated which personally concerns her/himself or a close associate.’ Chapter 4, section 14 of the Parliament Act states that ‘no one may be present at a meeting of a committee when a matter is being deliberated which personally concerns her/himself or a close associate.’ GRECO Fourth Evaluation Round. Corruption prevention in respect of members of parliament, judges and prosecutors. 2013, p 15: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2013)1_Sweden_EN.pdf.

[17]    GRECO Fourth Evaluation Round. Corruption prevention in respect of members of parliament, judges and prosecutors. 2013, p 15.: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2013)1_Sweden_EN.pdf.

[18]    GRECO Fourth Evaluation Round. Corruption prevention in respect of members of parliament, judges and prosecutors. 2013, p 15.: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2013)1_Sweden_EN.pdf.

[19]    SFS 1949:105 and SFS 1991:1469.

[20]    Andersson, Staffan (2002). Corruption in Sweden: Exploring Danger Zones and Change (PhD dissertation), Umeå University: Department of Political Science (ISBN 91-7305-265-5).

[21]    Swedish Government Official Report SOU 2013:79. Stärkt meddelarskydd för privatanställda i offentligt finansierad verksamhet http://www.regeringen.se/content/1/c6/22/92/58/66ada80c.pdf.

[22]    Kommittédirektiv 2013:16 ‘Stärkt skydd för arbetstagare som slår larm’ http://www.regeringen.se/content/1/c6/20/92/42/967aef41.pdf.

[23]    Estimations of the total amount of public support to political parties at various levels indicate that 70-80 per cent of all party activities are financed through public means. GRECO Third Evaluation Round in 2009. p 12: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)4_Sweden_Two_EN.pdf.

[24]    Estimations of the total amount of public support to political parties at various levels indicate that 70-80 per cent of all party activates are financed through public means. GRECO Third Evaluation Round in 2009. p 12: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)4_Sweden_Two_EN.pdf.

[25]    GRECO Third Evaluation Round in 2009. p 12.: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)4_Sweden_Two_EN.pdf.

[26]    The agreement is not binding and the agreement does not contain any means, such as sanctions. GRECO Third Evaluation Round in 2009. p 12: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)4_Sweden_Two_EN.pdf.

[27]    GRECO’s Third Evaluation Round from 2009 on political party financing points out that Sweden’s system of political party financing does not fulfil the standards provided for in the Recommendation Rec(2003)4 of the Committee of Ministers of the Council of Europe on common rules against corruption in the funding of political parties and electoral campaigns: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2008)4_Sweden_Two_EN.pdf.

[28]    Utredningen om offentlighet för partiers och valkandidaters intäkter SOU 2004:22. http://www.regeringen.se/content/1/c6/01/05/55/6bf31419.pdf.

[29]    Promemorian Allmänhetens insyn i partiers och valkandidaters finansiering Ds 2013:31 (3 June 2013): http://www.regeringen.se/content/1/c6/21/86/59/065771ad.pdf; Lagrådsremiss. Ökad insyn I partiers och valkandidaters finansiering (19 December 2013) is available from: http://www.regeringen.se/content/1/c6/23/10/57/f3d6a845.pdf; Regeringens proposition 2013/14:70 Ökad insyn i partiers och valkandidaters finansiering (14 January 2014) is available from: http://www.regeringen.se/sb/d/17854/a/232254.

[30]    Regeringens proposition 2013/14:70 Ökad insyn i partiers och valkandidaters finansiering (14 January 2014) is available from: http://www.regeringen.se/sb/d/17854/a/232254.

[31]    Halvt prisbasbelopp SEK 22 200. Regeringens proposition 2013/14:70 Ökad insyn i partiers och valkandidaters finansiering (14 January 2014) is available from: http://www.regeringen.se/sb/d/17854/a/232254.

[32]    Regeringens proposition 2013/14:70 Ökad insyn i partiers och valkandidaters finansiering (14 January 2014). p 36, 55: http://www.regeringen.se/sb/d/17854/a/232254.

[33]    Andersson, S. et al. (2012) Motståndskraft, Oberoende, Integritet –kan det svenska samhället stå emot korruption? Stockholm: Transparency International National Integrity System Sverige: http://files.transparency.org/content/download/215/864/file/2011_NIS_Sweden_SV.pdf; Statskontoret (2012) Köpta relationer –om korruption i det kommunala Sverige. Stockholm: Statskontoret, 2012:20 http://www.statskontoret.se/upload/Publikationer/2012/201220.pdf; Bergh, A. et al (2013) Allmän nytta eller egen vinning? En ESO-rapport om korruption på svenska. Stockholm: Regeringskansliet, ESO-rapport 2013:2: http://eso.expertgrupp.se/rapporter/20132-allman-nytta-eller-egen-vinning/.

[34]    Statskontoret (2012) Köpta relationer –om korruption i det kommunala Sverige. Stockholm: Statskontoret, 2012:20: http://www.statskontoret.se/upload/Publikationer/2012/201220.pdf.

[35]    The total number of complaints directed to municipalities has remained relatively constant over the period. Statskontoret (2012) Köpta relationer –om korruption i det kommunala Sverige. Stockholm: Statskontoret, 2012:20. p 11. http://www.statskontoret.se/upload/Publikationer/2012/201220.pdf.

[36]    The Swedish National Council for Crime Prevention. (BRÅ). Den anmälda korruptionen i Sverige. Struktur, riskfaktorer och motåtgärder. Rapport 2013:15. p 22.: http://www.bra.se/bra/publikationer/arkiv/publikationer/2013-07-02-den-anmalda-korruptionen-i-sverige.html.

[37]    Statskontoret (2012) Köpta relationer – om korruption i det kommunala Sverige. Stockholm: Statskontoret, 2012:20. p 11: http://www.statskontoret.se/upload/Publikationer/2012/201220.pdf.

[38]    Statskontoret (2012) Vad händer i den offentliga sektorn. En översikt över utvecklingen 2000-2010. Stockholm: Statskontoret, p 51: http://www.statskontoret.se/upload/Publikationer/2012/Offentliga-sektorns-utveckling_översikt_2011.pdf.

[39]    Swedish Government Official Report. SOU 2013:53. Privata utförare - kontroll och insyn. p 98: http://www.regeringen.se/sb/d/16889/a/220274.

[40]    Erlingsson, Gissur Ó., Andreas Bergh & Mats Sjölin (2008). ‘Public Corruption in Swedish Municipalities - Trouble Looming on the Horizon?’, Local Government Studies 34 (5): 595-608: http://www.tandfonline.com/doi/pdf/10.1080/03003930802413780.

[41]    Andersson, S. et al. (2012) Motståndskraft, Oberoende, Integritet – kan det svenska samhället stå emot korruption? Stockholm: Transparency International National Integrity System Sverige. p 210: http://files.transparency.org/content/download/215/864/file/2011_NIS_Sweden_SV.pdf..

[42]    Kommunallagen 1991:900, 3 kap. 19a§.

[43]    See on this issue Swedish Government official report. SOU 2011:43. Offentlig upphandling från eget företag?! – och visa andra frågor (p 587-588: http://www.regeringen.se/content/1/c6/16/72/89/8e0351ba.pdf.

[44]    Swedish Government official report. SOU 2011:43. Offentlig upphandling från eget företag?! – och visa andra frågor (p 587-588): http://www.regeringen.se/sb/d/14253/a/167289.

[45]    Swedish Government official report. SOU 2013:53. Privata utförare - kontroll och insyn. p 243. The document is available from: http://www.regeringen.se/sb/d/16889/a/220274.

[46]    The fundamental rules on public access to official documents are found in one of the constitutional laws - the Freedom of the Press Act. Public Access to Information and Secrecy Act, http://www.government.se/content/1/c6/13/13/97/aa5c1d4c.pdf.

[47]    Public Access to Information and Secrecy Act, http://www.government.se/content/1/c6/13/13/97/aa5c1d4c.pdf.

[48]    Statskontoret (2012) Köpta relationer –om korruption i det kommunala Sverige. Stockholm: Statskontoret, 2012:20. p 219-222. http://www.statskontoret.se/upload/Publikationer/2012/201220.pdf.

[49]    The Municipal Audit, the governing body charged with reviewing the municipal activity has been criticized during the last decade for lacking independence. Municipal audits are elected by the Municipal assembly and the auditors are appointed on a party political basis. The appointed auditors have the responsibility to review the municipal activities. Thus, the audit involves scrutinizing members of one's own party, which according to a Report of the Expert Group on Public Economics is ground for criticism of the system's construction. Report of the Expert Group on Public Economics. Revision reviderad – en rapport om en kommunal angelägenhet. 2010:6. http://eso.expertgrupp.se/rapporter/20106-revisionen-reviderad-en-rapport-om-en-kommunal-angelagenhet/.

[50]    Statskontoret (2012) Köpta relationer – om korruption i det kommunala Sverige. Stockholm: Statskontoret, 2012:20. p 63: http://www.statskontoret.se/upload/Publikationer/2012/201220.pdf.

[51]    Statskontoret (2012) Köpta relationer – om korruption i det kommunala Sverige. Stockholm: Statskontoret, 2012:20: http://www.statskontoret.se/upload/Publikationer/2012/201220.pdf.

[52] The Swedish National Council for Crime Prevention. (BRÅ). Den anmälda korruptionen i Sverige. Struktur, riskfaktorer och motåtgärder. Rapport 2013:15. p 65: http://www.bra.se/bra/publikationer/arkiv/publikationer/2013-07-02-den-anmalda-korruptionen-i-sverige.html.

[53]    Approximately half of Sweden’s GDP is attributed to exports and Sweden's share of world export is 1.2 per cent 2011. Exporting corruption? Country enforcement of the OECD anti-bribery convention, progress report 2012 available from: http://www.transparency.org/whatwedo/pub/exporting_corruption_country_enforcement_of_the_oecd_anti_bribery_conventio.

[54]    OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the 2009 Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions.

[55]    In 2004, two Swedish nationals were convicted for bribery of World Bank officials in order to received consultancy contract on World Bank-funded projects. The case was reported to Swedish authorities by the World Bank after its own investigation.  

[56]    A District Court recently found two former Swedish executives from a construction equipment subsidiary guilty for violations of international sanctions for having offered kickbacks to the Iraqi regime in connection with the Oil-for-Food Programme in Iraq.

[57]    OECD (2012) Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Sweden: OECD, p. 10: http://www.oecd.org/daf/anti-bribery/Swedenphase3reportEN.pdf.

[58]    Annex I of the 2009 Recommendations provides that liability of legal persons should not be restricted ‘to cases where the natural person or persons who perpetrated the offence are prosecuted or convicted’. Moreover, Annex I requires that ‘a legal person cannot avoid responsibility by using intermediaries, including related persons, to offer, promise or give a bribe to a foreign public official on its behalf’. OECD (2012) Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Sweden. Paris: OECD, p. 16.   http://www.oecd.org/daf/anti-bribery/Swedenphase3reportEN.pdf.

[59]    Under Swedish law, it is not possible to aggregate the (bribery) intent across several individuals within the company to establish mens rea (the intention or knowledge of wrongdoing) of the company. OECD (2012) Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Sweden. Paris: OECD, p. 18: http://www.oecd.org/daf/anti-bribery/Swedenphase3reportEN.pdf.

[60]    OECD (2012) Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Sweden. Paris: OECD, http://www.oecd.org/daf/anti-bribery/Swedenphase3reportEN.pdf.

[61]    Since 2005 have no corporate fines been imposed on Swedish legal persons for foreign bribery. OECD (2012) Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Sweden. Paris: OECD, p. 17: http://www.oecd.org/daf/anti-bribery/Swedenphase3reportEN.pdf.

[62]    Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Sweden. Paris: OECD, p. 19: http://www.oecd.org/daf/anti-bribery/Swedenphase3reportEN.pdf.

[63]    Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Sweden. Paris: OECD, p. 21.: http://www.oecd.org/daf/anti-bribery/Swedenphase3reportEN.pdf.

[64]    Dual criminality must be established in order to apply nationality jurisdiction to all offences in the Penal Code, except for certain crimes, such as: hijacking, maritime or aircraft sabotage, airport sabotage, a crime against international law, unlawful dealings with chemical weapons, unlawful dealings with mines or a false or careless statement before an international court. Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Sweden. Paris: OECD, p. 25.: http://www.oecd.org/daf/anti-bribery/Swedenphase3reportEN.pdf.

[65]    Exporting Corruption? Country enforcement of the OECD anti-bribery convention, progress report 2012: http://www.transparency.org/whatwedo/pub/exporting_corruption_country_enforcement_of_the_oecd_anti_bribery_conventio .

SLOVENIA

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. Slovenia has improved its legal and institutional framework over time, ranking best in terms of perception and control of corruption among the Central and Eastern European Member States.[1] All Slovenian public authorities have a duty to develop integrity plans reflecting corruption-related risk assessments.[2] Nevertheless, some gaps remain between the legal and strategic framework and its effective enforcement, due in particular to weak control mechanisms.[3] In January 2013, the Commission for Prevention of Corruption (KPK) reported that the two most prominent political leaders in the country had violated asset disclosure laws.[4] This announcement led to political instability and eventually to the fall of the government. Criminal and administrative investigations carried out in recent years into alleged corrupt practices covered a number of elected and appointed officials, as well as business executives.[5] At the end of November 2013, the three-member leadership of the KPK resigned, citing insufficient support and political will to ensure follow-up of the risk assessments and cases handled by their institution.[6] While the KPK and other independent institutions made considerable progress in the fight against corruption, more effort appears to be needed from other public institutions in terms of promoting integrity standards and prevention of corruption . The Council of Europe Group of States against Corruption (GRECO) also highlighted in its report published in May 2013 that there is not yet a widespread culture of integrity amongst elected officials.[7] It stressed that budgetary and staff constraints in the KPK need to be addressed to ensure that its anti-corruption activity is not hindered.

Legal framework. Fairly well-developed anti-corruption legislation is in place. Recent legislative changes in 2010 and 2011 focused on integrity and prevention of corrupt practices, conflicts of interest, transparency of lobbying, whistleblower protection, public procurement, criminal law provisions and criminal procedure. In particular, through the Integrity and Prevention of Corruption Act adopted in 2010 and amended in 2011[8] a solid legislative framework was created to support prevention and integrity policy, defining the tasks and powers of the KPK, providing for verification mechanisms on asset disclosure, and including provisions on protection of whistleblowers and lobbying. Some loopholes remain, however, in the legislation concerning the financing of political parties and electoral campaigns where GRECO found in mid-2012[9] and reiterated in a report adopted in March 2013 and published in January 2014[10] that its recommendations had not been satisfactorily implemented. In mid-2013 the government proposed new legislation on financing of political parties, elections and referendum campaigns. This is currently undergoing parliamentary debate. The government also proposed in mid-2013 new legislation on access to information, including provisions on transparency with regard to state-owned and state-controlled companies, and companies where the State has a significant number of shares, as well as transparency on services provided to the public sector. GRECO also stressed that the implementation of rules on conflicts of interest and lobbying is still insufficient and more needs to be done to raise awareness.[11]

Institutional framework. The KPK was established in 2002 and has gone through several institutional changes since then[12], further strengthening its powers and capabilities. The scope of the KPK's powers is very broad, ranging from administrative investigations to preventive measures, research and awareness-raising activities. Criminal investigation powers are vested in the criminal police, the National Bureau of Investigations and the prosecution services, which have recently taken steps to improve their track record of effective investigation policies.[13] Specialised law enforcement teams focusing on corruption and economic crime have also been set up.

Opinion polling

Perception surveys. A negative trend in overall public perception of corruption was visible, with a recent increase in public protests calling for reform of the political system. The 2013 Special Eurobarometer on Corruption[14] showed that 76% of Slovenian respondents (second highest percentage in the EU) believe that corruption increased in their country in the previous three years (EU average: 56%), while 91% say that corruption is widespread in their country (EU average: 76%). 88% of Slovenians responding to the same survey consider that bribery and the use of connections is often the easiest way to obtain certain public services (EU average: 73%) and 38% that are personally affected by corruption in their daily life (EU average: 26%).

Experience of corruption. Petty corruption does not appear to be a widespread problem in Slovenia. According to the 2013 Special Eurobarometer on Corruption, Slovenia scores slightly better than the EU average as regards direct experiences of corruption, with only 3% of Slovenian respondents having said that they were asked or expected to pay a bribe in the last year (EU average: 4%).[15]

Business surveys. According to the 2013 Eurobarometer survey on businesses[16], 94% of Slovenian businesses say that business competition in their country is hampered by favouritism and corruption. This is the highest percentage in the Union (EU average: 73%).

Background issues

Economic context. Shortly after independence in 1991, Slovenia underwent fundamental reforms and experienced strong economic growth, becoming one of the frontrunners for EU integration among the Central and Eastern European countries. Slovenia was the first of the new EU Member States to join the eurozone in 2007, just three years after accession. However, the third quarter of 2008 brought an end to Slovenia's rapid economic growth and marked the beginning of a recession period characterised by major bankruptcies, particularly in the construction sector.[17] Partially as a result of this economic downturn, the shadow economy was estimated in 2012 to constitute 16% of the GDP.[18] As part of the economic recovery process, a number of state-owned companies are being privatised. Independent monitoring and strong anti-corruption safeguards are essential in this context to mitigate corruption-related risks.

Private sector. Slovenia largely transposed the provisions of Framework Decision 2003/568/JHA concerning the definition of active and passive corruption in the private sector, as well as those regarding penalties applicable to natural and legal persons and liability of legal persons.[19] Favouritism and corruption are perceived as considerable obstacles to doing business in Slovenia.[20] This impression is reinforced by the 2012-13 Global Competitiveness Index where Slovenia ranks 56th out of 144 countries, while registering a low score of 2.6 (out of a maximum 7) in terms of favouritism in decisions of public officials.[21] Moreover, academic research has voiced concern about the alleged development of informal networks between businesses and politicians.[22] The KPK recently reported that, with the vast majority of the banking sector being at least partially controlled by the state, loans were granted according to political criteria.[23] Consequently, the KPK, jointly with the Court of Audit, proposed legislative anti-corruption safeguards for the banking sector, including on transparency aspects. However, these have not yet been put into place, despite a recent opportunity when the legislator adopted ‘bad bank’ legislation to introduce emergency procedures for banks in difficulty.[24]

Whistleblowing. The Integrity and Prevention of Corruption Act regulates protection of whistleblowers, including compensation in case of retaliation.[25] The KPK is tasked with ensuring that both the reporting and the protection systems function well. Nevertheless, as the KPK itself admits, the implementation of whistleblower protection is not without its flaws, and has produced few results to date.[26]

2. Issues in focus

Asset disclosure

Slovenia introduced an asset disclosure system for public officials in 1994. This was strengthened in 2010 through the Integrity and Prevention Corruption Act, subsequently amended in 2011. A wide range of public officials, including high-level, central and local, elected and appointed, must submit asset declarations when taking up and after leaving public office (i.e. for one year after leaving office).[27] They must also declare any changes to their situation of assets that take place while they hold public office. The asset disclosure obligation covers a wide range of assets.[28] However, the declarations do not cover other interests or relationships that may create conflicts of interest, including those related to businesses. Approximately 10 000 officials are subject to asset declarations.

In 2004, the KPK was tasked with checking the asset declarations of public officials. However, it was only in 2011 that the KPK's powers were strengthened and electronic monitoring of assets became possible, through the introduction of an electronic system for submission of asset declarations which allowed cross-checking of data. Certain data included in the asset declarations are published on the KPK website.[29] Data can only be made public if they concern assets acquired during the public office.

The Slovenian legislation on asset recovery states that any suspicion of unjustified wealth of public officials exceeding EUR 50 000 should be investigated by the prosecution services. Current legislation does not allow for reversal of the burden of proof in cases regarding such wealth. Public authorities have launched debates on whether this should change.

In 2012, KPK investigations into the asset declarations of a number of holders of top public offices and heads of seven political parties represented in Parliament found that the then-prime minister and the mayor of Ljubljana, who was also the leader of the main opposition party at the time, had breached asset disclosure laws. In total, the then-prime minister allegedly failed to report assets amounting to approximately EUR 210 000. The KPK also found that the mayor of Ljubljana had not declared EUR 2.4 million during the six years he had been in office, as well as a number of share transactions. The then-prime minister and the mayor acknowledged some administrative errors, but nevertheless denied the main KPK findings and the allegations related to the illegal origin of the undeclared assets. The case against the then-prime minister led to the fall of the government. The mayor of Ljubljana stepped down from his leadership position in his party but did not resign from the public office. During a general strike in January 2013, protest rallies took place in 14 towns across Slovenia. Following the above-mentioned cases, 36 MPs challenged the constitutionality of the law on integrity and prevention of corruption, including provisions regarding the procedures and powers of the KPK. The case is pending before the Constitutional Court.

In order to verify asset declarations, the KPK may request data on the assets of relatives of public officials where it can be reasonably concluded that assets were transferred to family members to avoid supervision provided for by the law. Nevertheless, the KPK has called for further changes to the current legislation to mitigate corruption-related risks including by facilitating access to data concerning assets transferred to third parties.[30] Moreover, the KPK has rather limited capacity, which prevents it from carrying out a large number of thorough checks.[31] Furthermore, it cannot check assets abroad.

The scope for sanctioning breaches of asset disclosure laws is limited.[32] The KPK can impose a relatively small fine[33] in cases of failure to declare assets or in case of incomplete or false data. If the public official fails to submit the required data within the timeframe set by the law, the KPK can ask the employer to cut the official’s salary by 10%. If an official is found to have a considerable and unjustified difference between their income and their actual wealth and is unable to reasonably explain the discrepancy, the KPK will notify the official’s institution and, if other irregularities or offences are suspected, any other competent authorities. The legislation allows for confiscation of unjustified wealth but no court decision has yet been rendered in such a case. The official’s institution may, but is not obliged to, start disciplinary procedures for dismissal or termination of office. For directly elected officials, no sanction is provided. The KPK may also ask relevant authorities (law enforcement, tax, Financial Investigation Unit, etc) to take precautionary measures in order to interrupt transactions or seize assets if there is a reasonable risk that such assets may be hidden or transferred.[34]

Accountability and integrity of elected and appointed officials

The Integrity and Prevention of Corruption Act comprehensively covers conflicts of interest, imposing restrictions on business activities and including provisions on businesses of officials’ family members. In addition, the KPK has issued a number of guidelines on conflicts of interest, covering topics such as retaining of law firms and the decision-making process in public institutions and in working groups and commissions where individuals from outside the public sector are involved.[35] The cancellation of public contracts awarded or decisions taken in conflict of interest situations is provided for by the Integrity and Prevention Corruption Act, as well as by general civil law and public procurement regulations. The Act also contains provisions regarding incompatibilities and gifts, as well as provisions on cooling-off periods, preventing non-elected officials from acting as the representative of a business entity they supervised while holding public office for two years after leaving the office, and preventing the office from doing business with bodies represented by a former public official for one year after the official’s departure from the office. Recent legislative amendments banned people from simultaneously holding the positions of Member of Parliament and local elected official.[36]

However, in its report published in May 2013, GRECO pointed out that in spite of a relatively well-developed legal framework, a widespread culture of integrity is not yet in place and there is a low degree of public confidence in the integrity and performance of elected officials.[37] Recent criminal investigations into allegations of corrupt practices concerned high-level elected and appointed officials, ranging from a former prime minister to former ministers, current and former MPs, and current and former mayors of municipalities. Most of these investigations are still ongoing, and some are currently being tried. In a few cases, the courts of first instance have handed down judgments, with most of the convictions resulting in suspended sentences. In one prominent case, a former prime minister was convicted in the first instance and sentenced to two years imprisonment for alleged bribe solicitation from a foreign company in exchange for a military supply contract. The decision is subject to appeal. Only in a few high-level corruption cases a final judgment has been handed down.

There are examples of political accountability where political parties have dismissed members on integrity grounds, or politicians have resigned from public office due to integrity issues, such as the case of a former Slovenian MEP involved in the ‘cash for amendments’ case in the European Parliament in 2011. Criminal investigations against the former MEP are ongoing. On the other hand, there are also examples where political accountability on integrity issues is less visible.

The KPK, as the institution responsible for administrative investigations into conflicts of interest, opened investigations into 65 cases between 2004 and December 2011.[38] In 35 cases, violations of conflict of interest rules were found; 16 of these concerned public procurement procedures and 13 involved environmental issues and urban planning.[39] At local level, the risks relating to conflicts of interest appear to be particularly high. Follow-up of confirmed conflicts of interest for elected officials at central and local level also poses certain problems. This view is confirmed by a 2012 study which highlighted public procurement as the most vulnerable area, and noted a rather weak sanctioning system, particularly as regards the lack of power to dismiss public officials.[40] The weaknesses of the sanctioning system are even greater in the case of elected officials, where a narrower range of sanctions is available. In addition, there are no standardised rules applicable to elected officials at the central or local levels when it comes to conflicts of interest or integrity standards in 'revolving doors' cases and lobbying. There are no codes of ethics applicable to elected officials at either central or local level. Moreover, awareness of and accountability for these matters seem to be limited, as highlighted by GRECO in its fourth evaluation round.[41] GRECO therefore recommended that codes of conduct or standards of behaviour are adopted for members of the National Assembly and the National Council and that a credible corresponding mechanism of supervision and sanction is elaborated.

More than 30% of the companies in Slovenia are state-owned or state-controlled.[42] Recent administrative investigations carried out by the KPK pointed to a number of issues regarding employment and conflicts of interest in state-owned or state-controlled companies.[43] These companies are not yet subject to the KPK's anti-corruption verifications (including on conflicts of interest, soundness of procedure, transparency standards, etc.). This is also true of privatisation procedures.

Financing of political parties

The Political Parties Act that regulates party funding in Slovenia dates back from 1994 and was subsequently amended. In 2007, GRECO concluded that the party funding legislation in Slovenia fulfils many of the Council of Europe standards, yet in practice the rules appear to be easily circumvented without any dissuasive sanctioning system in place. In 2012, GRECO’s compliance report noted that none of the 13 recommendations issued in 2007 had been implemented satisfactorily.[44] This was reiterated in a report adopted in March 2013 and published in January 2014 when GRECO noted that 'Slovenia has not made any substantial progress' in this regard.[45] The main shortcomings identified by GRECO concern: the transparency of donations and loans for electoral campaigns; the guarantees related to corporate donations that should avoid the risk of kickbacks; the scope of the supervisory powers of the Court of Audit, and the insufficiently dissuasive sanctioning system. Two pieces of legislation to amend the Political Party Financing Act and the Elections and Referenda Campaign Act have been drafted in the recent years, but nevertheless encountered difficulties in reaching political consensus.

According to the legislation in force,[46] the Court of Audit can only check the accuracy and legality of the regular reports submitted by the parties. It has no power to check on substance the origin of funding and the financial flows. The sanctioning system provided for in current legislation in cases of breaches of the Political Parties Act appears to be ineffective. No financial sanctions have been applied to date to any political party, although violations have been found in the form of failure to submit financial reports, and receipt of donations above the legal threshold. Cooperation between the KPK and the Court of Audit does not yet ensure systematic cross-checks between the data on public expenditure verified by the former and the financing of political parties and electoral campaigns audited by the latter. Closer cooperation in this regard would allow more effective detection of possible corrupt practices.

Key areas for further improvement concern the transparency of party and campaign accounts, in particular regarding donations (including from legal entities operating under public law) and loans, as well as the supervisory powers and capacity of the Court of Audit (which is prevented from auditing all party and campaign finances)[47] and the level of sanctions for violations of the law. The Ministry of Finance has established a list of companies in which the state owns at least 25% of the shares; these companies are not allowed to give donations to political parties or electoral campaigns. The list does not include companies where local authorities hold 25% or more of the shares, nor does it give any information on the legal entities in which the listed companies themselves hold shares. As regards corporate donations, amendments to the Political Parties Act and the Elections and Referenda Campaign Act were adopted at the end of 2013. The amendments provide for a total ban on corporate donations to political parties. They also provide for new rules on transparency and reporting of loans, as well as increased levels of sanctions, although in the case of the latter shortcomings remain in relation to the variety and nature of applicable sanctions and their capacity to deter and ensure high accountability standards.

Transparency of lobbying

Lobbying is regulated in Slovenia. Registration of lobbyists is mandatory and a monitoring mechanism for lobbying activities is in place.[48] In its regional report on the assessment of National Integrity Systems in Europe, Transparency International highlights lobbying legislation in Slovenia as a promising best practice for achieving greater transparency.[49] The KPK, in charge of monitoring lobbying, set up a registry for lobbyists and the number of registrations is on the rise.[50] The law requires all public officials to report all contacts with lobbyists, and any attempt at illegal lobbying, to the KPK. Public officials may agree to establish contact with a lobbyist only if the latter is registered. There are also sanctions provided for by the law, ranging from warnings to temporary bans from lobbying and deletion from the register.

Nevertheless, there is room for improvement in the implementation of this legislation. The KPK found that public officials in practice rarely report lobbying contacts and agree to meetings with non-registered lobbyists.[51] In April 2012, the KPK conducted an assessment of the lobbying reports from both lobbyists and public officials and found that in 12% of lobbying contacts, the reports did not match.[52] According to the KPK, 216 lobbying reports were filed in 2012 and 171 in 2011.[53] The KPK issued 19 final administrative decisions on lobbying, anti-corruption clauses and additional business performance and it has carried out 60 procedures to control lobbying. The KPK issued warnings with regard to corruption risks, conflicts of interest and breach of lobbying regulations in a number of cases, including a large-scale project in the energy sector.[54] There is very limited reporting on lobbying by municipalities.[55]

Therefore, there are strong indications that the provisions on lobbying in the Integrity and Prevention of Corruption Act have not been fully implemented. The KPK warned that it has limited ability to intervene in this field. The shortcomings identified include not using the standard form required to report lobbying contacts, which creates difficulties in the verification procedure, and the lack of rules on lobbying abroad and foreign lobbyists in Slovenia (who are currently not registered, although verifications revealed such lobbying contacts).[56] The KPK noted that its resources are too limited to be able to carry out a thorough and systematic check of all lobbying activities.[57]

GRECO recommended that the implementation of rules on contacts with lobbyists by members of the National Assembly and the National Council be subject to a thorough review.[58]

Independence and effectiveness of anti-corruption institutions

In 2010 the powers and mandate of the KPK were extended significantly and its independence was strengthened, allowing for a more effective role in the implementing anti-corruption policies.[59] The KPK conducts administrative investigations into allegations of corruption, conflicts of interest, and illegal lobbying. It also monitors the financial status of public officials’ wealth, keeps a central registry of lobbyists, undertakes tasks related to the protection of whistleblowers, coordinates the development and implementation of the national anti-corruption action plan, assists public and private institutions in developing integrity plans and monitoring their implementation, develops and enforces preventive measures such as awareness-raising, training, etc., and serves as a national focal point for anti-corruption matters for international organisations and mechanisms.

Since 2010, the KPK has consolidated its role. Given the rather limited resources at its disposal,[60] its track record of implementation is solid: 1 389 reviews/investigations were completed in 2011 and 1 214 in the first three quarters of 2012.[61] The KPK's guarantees of stability and independence are key to carrying out its investigative and oversight tasks effectively and without undue pressure. However, the KPK alone cannot ensure effective prevention and measures against corruption across the board. GRECO also noted that the financial and human resources of the KPK dedicated to asset disclosure, lobbying and conflicts of interest are insufficient and must be increased as a matter of priority to avoid hampering its core activities in the future.[62] Internal control and supervision mechanisms, external oversight and police, prosecution and the judiciary also have an important role to play. At the end of November 2013, the KPK leadership resigned in protest against the insufficient support from other authorities and their limited effort to follow-up on the work of KPK and address corruption risks identified by the KPK.[63]

Law enforcement bodies and prosecution services have recently taken steps towards improving their track record on effective investigation policies. However, as stressed by GRECO in its report published in May 2013, recent changes to the framework governing the exercise of their powers have raised concern as to their future operational independence.[64] In early 2012, the government moved the coordination of the prosecutors’ office from the Ministry of Justice to the Ministry of Interior, a decision that led to intense debate on the potential risks posed by this new organisational setting to their operational independence and effectiveness.[65] GRECO stressed that the transfer of responsibility for the prosecution service to the Ministry of Interior 'may further increase the fear of citizens that prosecutors are vulnerable to improper influence' and that in these circumstances 'the appearance of intervention in the conduct of cases can be as damaging as real interference'. It recommended that the authority of the Ministry of Interior over the prosecution services is exercised 'in such a way as not to undermine prosecutors' integrity and create risks of improper influence'.[66] In 2013, in new amendments to the law on state administration the prosecutors' offices were moved back under the coordination of the Ministry of Justice.[67]

The stronger supervisory mechanisms introduced by the Integrity and Prevention of Corruption Act and the creation of specialised law enforcement teams focusing on corruption and economic crime are welcome. The resources at their disposal seem, however, to be insufficient. The judiciary's capacity to deal with complex corruption and economic crime cases could also be further enhanced, including through specialised training. According to the annual report of the Supreme Prosecution Office, investigations into 129 defendants were carried out in corruption cases in 2012. In the same period, 35 defendants were indicted and 22 were convicted.[68]

Public procurement

Public works, goods and services in Slovenia accounted for about 16.9% of GDP in 2011. The value of calls for tender published in the Official Journal as a percentage of total expenditure on public works, good and services was 31.7% in 2011.[69]

Good practice: transparency of public expenditure

The online application ‘Supervizor’ provides information on business transactions by public sector bodies, including the legislative, the judicial and the executive branch, autonomous and independent state bodies, local communities and their branches with legal personality, etc. It does not monitor transactions by state-owned, state controlled companies or companies where the State holds significant shares. The application indicates contracting parties, the largest recipients of funds, related legal entities (for all services and goods and payments above EUR 4 000), dates, amounts and purpose of transactions. It will be further upgraded to include contracts and financial details. It provides an overview of the EUR 4.7 billion spent on average per year on goods and services by the public sector. It also provides details on management and supervisory boards of all state-owned and state-controlled companies and on their annual reports. The tool was a success from its first day, when it was used 1 200 000 times, climbing to 2 616 000 in just 6 days.

In 2013, 'Supervizor' was awarded the UN Public Service Award.[70]

In addition, an online project called Transparency was also launched as a public web-based service to ensure transparency on a number of activities carried out by the KPK, including oversight of lobbying.

As the above example of good practice shows, Slovenia has taken some steps to ensure better transparency of public spending and contracts. It has also reinforced its criminal legislation, introducing new provisions for offences affecting public funds, including the procurement process.

In 2007, an e-procurement portal was launched by the Ministry of Finance to publish public procurement and contract documentation.[71] Shortcomings remain, however, in the way the portal works and the timely publication of documentation.

As is the case for any other official, those responsible for public procurement are obliged to declare their assets which are monitored by the KPK.[72] Public contracts must also include an anti-corruption clause that provides for more effective follow-up if corrupt practices are proven during the lifetime of the contract (e.g. clear-cut procedures for declaring a contract null and void or for applying other contractual penalties). The contracting authorities are obliged to adopt integrity plans and assess corruption risks. Current public procurement legislation also provides for low national thresholds for publishing notices on the national public procurement platform[73] and mandatory publication of ex ante contract award notices in negotiated procedures without prior publication of a contract notice. Moreover, addenda to the contracts may be concluded only if the supervisory body of the contracting authority agrees to this beforehand. Stricter rules are provided for procurements by privately owned companies if they are co-financed or subsidised by public funds. Current public procurement legislation also provides for the right to access submitted bids. In addition, all documentation on public procurement is made public after the decision to award a contract becomes final.

Despite the transparency provided by ‘Supervizor’ and changes in legislation, shortcomings remain in enforcing public procurement rules and in the effectiveness of control mechanisms, as illustrated by the perception of widespread corruption in the public procurement sector. Public procurement legislation was also made more complex, which may adversely affect the effectiveness of implementation. According to the 2013 Eurobarometer on businesses' attitudes towards corruption in the EU, Slovenian respondents from the business sector whose companies participated in public tenders in the last three years perceived the following practices as being widespread in public procurement procedures: abuse of negotiated procedures (53%), involvement of bidders in the design of specifications (63%), unclear selection or evaluation criteria (60%), conflicts of interest in the evaluation of the bids (60%), specifications tailor-made for particular companies (73%), and collusive bidding (74%). 77% considered that corruption is widespread in public procurement managed by national authorities (EU average: 56%) and 71% considered it to be widespread in procurement managed by local authorities (EU average: 60%). In spite of a high risk of corruption, currently the number of notification of suspicions of corruption coming from public procurement authorities is quite low, amounting to fewer than 10 per year.[74] These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities to corruption in public procurement procedures. Public procurement carried out at municipalities level poses particular corruption-related risks.[75]

The KPK has identified particular vulnerabilities in the energy, construction, urban planning and healthcare sectors.[76] In the construction sector in particular, deficiencies were found in the preparation of the specifications leading to unfair competition and conditions that are too narrow, as well as instances of substantial changes that occurred after the award of the contract. Recent corruption cases adjudicated by courts further highlight vulnerabilities in public procurement procedures in the construction sector, such as one case concerning corrupt practices in the tendering process for the construction of the control tower at Ljubljana airport. In this particular case, prison sentences were handed down in the first instance against three former presidents of companies, and a number of criminal proceedings are still ongoing at municipal level.

3. Future steps

Slovenia has a fairly well-developed legal and institutional anti-corruption framework. However, recent years appear to have seen a decline in the political drive against corruption, amidst allegations of corruption and doubts about the integrity of high-level officials, both elected and appointed, and of other officials within the public administration and state-owned or state-controlled companies. Corruption at both central and local levels came to the forefront of public attention, culminating in the fall of a government. In this context, anti-corruption institutions such as the Commission for Prevention of Corruption (KPK), which has shown tangible results in the detection and prevention of corrupt practices, demonstrated the importance of preserving their independence and strength. In this context, there is a need for control and supervisory mechanisms at all layers of Slovenian public institutions to continue and intensify their efforts to curb corruption.

The following points require further attention:

· Applying dissuasive sanctions to elected and appointed officials at central and local levels for breaches of asset disclosure requirements, conflicts of interest and unjustified wealth. Developing comprehensive codes of conduct for elected officials, with adequate accountability and sanctioning tools for violations of such codes. Consider developing ethical codes within political parties or establishing ethics pacts between parties. Ensure effective supervision of party funding and electoral campaigns, focusing on donations and loans. Enhancing the powers of the Court of Audit to ensure more dissuasive sanctioning.

· Carrying out targeted ex ante and ex post checks to prevent, detect, and sanction conflicts of interest in supervisory boards of state-owned, state-controlled companies and companies where the State holds significant shares. Extending Supervizor's scope to cover transactions and contracts of state-owned, state-controlled companies and companies where the State holds significant shares. Ensuring anti-corruption checks and guarantees for holdings of state-owned companies and privatisation procedures. Ensuring effective implementation of the legislation on lobbying.

· Ensuring that the independence of the Commission for Prevention of Corruption is preserved and its powers and capacity further strengthened. Safeguarding the operational independence of prosecution services specialising in combating financial and economic crime and their powers to supervise investigations. Ensuring fair engagement in anti-corruption responsibilities and effective cooperation by all relevant public institutions and mechanisms.

· Strengthening ex ante and ex post control mechanisms for enforcement of public procurement and implementation of public contracts and ensuring a track record of dissuasive sanctions for breaches. Strengthening the anti-corruption measures taken by contracting authorities notably in vulnerable sectors such as energy, construction, urban planning and healthcare. Further encouraging notifications from public procurement authorities of suspected corrupt practices, including conflicts of interest.

[1]      In 2011, Slovenia had the best score in Central and Eastern Europe on control of corruption in the World Bank's index: http://info.worldbank.org/governance/wgi/mc_chart.asp.

[2]      This obligation is provided by the Integrity and Prevention of Corruption Act. 1 216 such integrity plans were inspected by the Commission for Prevention of Corruption (KPK) in 2012: https://www.kpk-rs.si/sl/preventiva-in-nacrt-integritete .

[3]      Društvo Integriteta (2012) National Integrity System in Slovenia- assessment 2012. http://nis.integriteta.si/publikacija/nacionalni-sistem-integritete-v-sloveniji .

[4]      https://www.kpk-rs.si/en .

[5]      Cases where such investigations were carried out concerned both central and local level appointed and elected officials. See for more details the section on the 'Accountability and Integrity of Elected and Appointed Officials'.

[6]      https://www.kpk-rs.si/en

[7]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)1_Slovenia_EN.pdf , p. 5

[8]      Integrity and Prevention of Corruption Act (2010), Official Journal of the Republic of Slovenia N. 45/10, 4/6/2010 (Zakon o integriteti in preprečevanju korupcije – ZIntPK, Uradni list RS, št. 45/10 z dne 4. 6. 2010). Amended in 2011, http://www.uradni-list.si/1/objava.jsp?urlid=201169&stevilka=3056

[9]      http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)6_Second_Slovenia_EN.pdf.

[10]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)4_Interim_Slovenia_EN.pdf.

[11]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)1_Slovenia_EN.pdf . p. 5.

[12]    Including denomination.

[13]    For more details on the institutional setting, see issues in focus: ' Independence and effectiveness of anti-corruption institutions'.

[14]    2013 Special Eurobarometer 397.

[15]    In 2011, 7% of Slovenian respondents said that they were asked or expected to pay a bribe in the last 12 months as compared with the EU average of 8%.

[16]    2013 Flash Eurobarometer 374.

[17]    http://ec.europa.eu/economy_finance/publications/european_economy/2012/pdf/ee-2012-1_en.pdf .

[18]    http://ec.europa.eu/europe2020/pdf/themes/06_shadow_economy.pdf. .

[19]    COM(2011) 309 final, Second Implementation Report of FD 2003/568/JHA of 6 June 2011: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/docs/report_corruption_private_sector_en.pdf

[20]    See the results of the 2013 Eurobarometer survey on businesses mentioned above.

[21]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf

[22]    Dobovšek, B., Meško, G. (2008) Informal networks in Slovenia: a blessing or a curse. Problems of post-communism, 55(2), p. 25-37. Dobovšek, B., (2005). Report of Informal Networks – Slovenia. Ljubljana, Faculty of criminal justice and security; and Guasti,P., Dobovšek, B., Ažman, B. (2012) Deficiencies in the Rule of Law in Slovenia in the Context of Central and Eastern Europe: http://www.fvv.uni-mb.si/rV/arhiv/2012-2/04_Guasti_Dobovsek_Azman-E.html .

[23]    Ocena stanja korupcije 2013.

[24]    Members of the executive boards of these banks are not obliged to declare assets. No particular provisions on prevention of conflicts of interests were included.

[25]    Integrity and Prevention of Corruption Act (2010), Official Journal of the Republic of Slovenia N. 45/10, 4/6/2010 (Zakon o integriteti in preprečevanju korupcije – ZIntPK, Uradni list RS, št. 45/10 z dne 4. 6. 2010). Amended in 2011, http://www.uradni-list.si/1/objava.jsp?urlid=201169&stevilka=3056.

[26]    The KPK implemented only 33 requests for protection of whistleblowers in 2011 and 22 in 2012.

[27]    Members of the National Council who are elected indirectly by local communities and interest groups (employers, employees, farmers, crafts, trade, etc) do not submit asset declarations.

[28]    These include: income, revenues, movable and immovable property, shares, management rights in companies or other entities, bank deposits, loans, savings, values and securities, etc.

[29]    Information on taxable income is not public. Full publication of asset declarations is not possible due to a Constitutional Court decision issued in 2007 that found certain provisions on publicity of such data unconstitutional on the grounds of data protection (Ustavno sodišče Republike Slovenije (2007) Odločba Ustavnega sodišča Republike slovenije. Ljubljana: U-I-57/06-28, pp. 16-20: http://odlocitve.us-rs.si/usrs/us-odl.nsf/0/5d317be6d9d8bb26c12572b30036f92b/$FILE/U-I-57-06.pdf).

[30]    Nasprotje interesov: https://www.kpk-rs.si/sl/zavezanci-in-njihove-dolznosti/nasprotje-interesov.

[31]    In 2001, the KPK had the capacity to carry out financial investigations in seven cases and in the first three quarters of 2012 it carried out financial investigations in 12 cases.

[32]    Cases in which dissuasive sanctions were applied are few and on rare occasions findings of violation of asset disclosure law or cases of unjustified difference in wealth triggered political consequences for the holder of a public office.

[33]    EUR 400 to EUR 1 200.

[34]    Integrity and Prevention of Corruption Act (2010), Official Journal of the Republic of Slovenia N. 45/10, 4/6/2010 (Zakon o integriteti in preprečevanju korupcije – ZIntPK, Uradni list RS, št. 45/10 z dne 4. 6. 2010). http://www.uradni-list.si/1/objava.jsp?urlid=201169&stevilka=3056.

[35]    KPK (2012): https://www.kpk-rs.si/sl/zavezanci-in-njihove-dolznosti/omejitve-poslovanja.

[36]    Before 2011, 18 of 90 MPs were also mayors of municipalities. In the following Parliamentary term, eleven MPs had to renounce their mayor posts to keep their mandate.

[37]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)1_Slovenia_EN.pdf , p. 5 and 6.

[38]    Documents are publicly available on the KPK's website: http://www.kpk-rs.si/sl/nadzor-in-preiskave/odlocitve-in-mnenja-komisije.

[39]    Dobovšek, B., Škrbec, J. (2012) Nasprotje interesov v teoriji in praksi. In: Revija Varstvoslovje. Ljubljana: Fakulteta za varnostne vede pp. 42-59: http://www.fvv.uni-mb.si/rV/arhiv/2012-1/03_Dobovsek_Skrbec.pdf.

[40]    Dobovšek, B. and Škrbec, J. (2012) Nasprotje interesov v teoriji in praksi. In: Revija Varstvoslovje. Ljubljana: Fakulteta za varnostne vede pp. 42-59: http://www.fvv.uni-mb.si/rV/arhiv/2012-1/03_Dobovsek_Skrbec.pdf

[41]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)1_Slovenia_EN.pdf .

[42]    Društvo Integriteta (2012) National Integrity System in Slovenia- assessment 2012. http://nis.integriteta.si/publikacija/nacionalni-sistem-integritete-v-sloveniji .

[43]    https://www.kpk-rs.si/sl/nadzor-in-preiskave.

[44]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2012)6_Second_Slovenia_EN.pdf.

[45]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2013)4_Interim_Slovenia_EN.pdf.

[46]    The Elections and Referenda Campaigns Act (2007): Zakon o volilni in referendumski kampanji (Uradni list RS, št. 41/07 in 103/07 ZPolS-D, 11/11, 28/11 Odl. US, v nadaljnjem besedilu ZVRK) adopted in 2007, amended in 2011 and the Political Parties Act (1994), as subsequently amended.

[47]    STA (2009) Računsko sodišče objavilo revizije financiranjakampanj za volite v DZ.

[48]    Integrity and Prevention of Corruption Act (2010), The Official Journal of the Republic of Slovenia N. 45/10, 4/6/2010 (Zakon o integriteti in preprečevanju korupcije – ZIntPK, Uradni list RS, št. 45/10 z dne 4. 6. 2010). http://www.uradni-list.si/1/objava.jsp?urlid=201169&stevilka=3056 .

[49]    Transparency International (2012) Money, politics, power: corruption risks in Europe. p. 28. http://nis.integriteta.si/images/pdf/enis_regional_report.pdf  .

[50]    https://www.kpk-rs.si/sl/nadzor-in-preiskave/odlocitve-in-mnenja-komisije/pojasnila/07/2011/sistemsko-pojasnilo-o-lobiranju ; https://www.kpk-rs.si/en/lobbying .

[51]    KPK (2011) https://www.kpk-rs.si/sl/komisija/medijsko-sredisce/arhiv-kpk-vestnik.

[52]    I.e. 41 lobbying reports inspected in 2012.

[53]    KPK (2013) Letno poročilo o delu Komisije za preprečevanje korupcije. p. 12-13: https://www.kpk-rs.si/sl/komisija/letna-porocila.

[54]    http://bankwatch.org/sites/default/files/StateCommissionReport-corruption-TES6-23Feb2012.pdf .

[55]    KPK (2012) Obdobno poročilo 2011-2012: https://www.kpk-rs.si/download/t_datoteke/5564 .

[56]    DELIĆ, A. (2012) Lobiranje: Kdo si podaja kljuke funkcionarjev? Journal Delo: http://www.delo.si/zgodbe/ozadja/lobiranje-kdo-si-podaja-kljuke-funkcionarjev.html .

[57]    See the KPK activity report covering 2010-2012 published at the beginning of 2013. There is only one full-time employee tasked with monitoring lobbying for the entire public sector.

[58]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)1_Slovenia_EN.pdf, p. 54.

[59]    Integrity and Prevention of Corruption Act (2010), The Official Journal of the Republic of Slovenia N. 45/10, 4/6/2010 (Zakon o integriteti in preprečevanju korupcije – ZIntPK, Uradni list RS, št. 45/10 z dne 4. 6. 2010). Amended in 2011, http://www.uradni-list.si/1/objava.jsp?urlid=201169&stevilka=3056.

[60]    Overall 40 staff and an annual budget of approximately EUR 1.7 million.

[61]    Other relevant statistics regarding the activity of the KPK include: 33 civil administrative sanctions imposed on private and legal entities in 2011, and 53 in the first three quarters of 2012; 32 requests for annulment of public/private contracts due to violations of integrity provisions and 156 in the first three quarters of 2012; 237 criminal reports filed in 2011 and 115 in the first three quarters of 2012, etc.

[62]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)1_Slovenia_EN.pdf, p. 41.

[63]    https://www.kpk-rs.si/en.

[64]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)1_Slovenia_EN.pdf, p. 41.

[65]    Transparency International:tožilci pod MNZ-jem je korak v napačno smer, MMC, 6, Sept. 2012 7:12. http://www.rtvslo.si/slovenija/transparency-international-tozilci-pod-mnz-jem-je-korak-v-napacno-smer/290893 .

[66]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4(2012)1_Slovenia_EN.pdf, p. 41-42.

[67]    Uradni List RS (2013) Zakon o spremembah in dopolnitvah Zakona o državni upravi (ZDU). Št. 47. Ljubljana, petek; 31. 5. 2013; ISSN 1318-0576; Leto XXIII: http://www.uradni-list.si/_pdf/2013/Ur/u2013047.pdf#!/u2013047-pdf.

[68]    http://www.dt-rs.si/sl/informacije_za_medije/147/ .

[69]    http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-indicators-2011_en.pdf.

[70]    http://workspace.unpan.org/sites/Internet/Documents/2013%20UNPSA%20Winners%20Category%201.pdf.

[71]    The Portal of E-procurement: http://www.enarocanje.si/?podrocje=portal.

[72]    KPK (2011) Pojasnilo o načinu sporočanja seznamov oseb, odgovornih za javna naročila, Številka: 035-2/2011/10, 2.12.2011: https://www.kpkrs.si/upload/datoteke/Pojasnilo_o_nacinu_sporocanja_seznamov_oseb_odgovornih_za_javna_narocila(1).pdf.

[73]    (portal javnih naročil) - Article 12(2) of Public Procurement Act (Official Gazette no. 128/06, 16/08, 19/10, 18/11, 43/12 - Constitutional Court Decision and 90/12; hereafter: ZJN-2).

[74]    KPK (2011) Ocena stanja korupcije v Republiki Sloveniji: http://www.kpk-rs.si/download/t_datoteke/965.

[75]    KEČANOVIĆ, B. (2012) Nadzor občinskih funkcionarjev- med formalnostjo in dejasnko učinkovitostjo. Pravna Praksa. 13.9.2012.

[76]    KPK (2013) Ocena stanja korupcije 2013, p. 36-40: https://www.kpk-rs.se/upload/t_datoteke/Ocena_stanja_korupcije_v_RS.pdf.

SLOVAKIA

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. In 2011 the government approved a strategic plan to tackle corruption[1] which included the following measures: publication of state contracts, reform of the judiciary to increase the transparency of court decisions, competitive selection of judges and presidents of courts, as well as stricter rules for judicial governance and clear provisions for public procurement. However, the implementation of certain aspects of the strategic plan has slowed down over the last year. A number of amendments passed as part of the anti-corruption efforts are currently pending review by the Constitutional Court. An interdepartmental working group of experts representing ministries, the General Prosecutor’s Office and the municipalities evaluates tasks based on the strategy, while NGOs participate as observers. This working group, however, has not been convened since the end of 2011.[2] Some local administrations have created their own anti-corruption strategies in cooperation with NGOs. Their involvement has allowed the NGOs to foster a lively public debate, which together with the new transparency measures creates an opportunity for continuing improvements in Slovakia.

Legislative framework. Slovakia has made considerable efforts to improve the legal framework for criminal law and public procurement but has failed to respond to international recommendations for party financing.[3] Criminal liability of legal persons was introduced in 2010,[4] and the Criminal Code was substantially amended in 2011 in line with GRECO recommendations.[5] In 2012, the Council of Europe's Group of States against Corruption (GRECO) concluded that all its recommendations concerning incriminations had been implemented satisfactorily. However, with respect to legislation covering the financing of political parties, none of the ten recommendations have been satisfactorily implemented.[6] Draft legislation on pre-election campaigns and on political parties, aimed at addressing those recommendations, is under discussion in the Slovak parliament.

Institutional framework. In an effort to fight serious crime more effectively, Slovakia created a specialised criminal court (SCC) with exclusive jurisdiction to hear corruption cases, including domestic and foreign bribery. The Court, which started its work in July 2005, is responsible for cases involving organised crime, serious economic crimes and crimes committed by certain categories of officials. It appears that the SCC is equipped with the necessary resources, its judges and auxiliary staff are adequately trained, and the proceedings are concluded within a sufficiently short timeframe.[7] Other institutions, including the Supreme Audit Office, also play an important role within the Slovak institutional framework.[8] However, despite efforts to make public procurement and the judiciary more transparent in the context of the implementation of EU structural funds, the European Commission recently recommended addressing a number of challenges related to the functioning of public institutions, law enforcement, efficiency of justice and the business environment.[9]

Opinion polling

Perception surveys. According to the 2013 Special Eurobarometer,[10] 90 % of Slovak respondents believe that corruption is widespread in their country (EU average: 76 %). More than half of the respondents think that the abuse of positions for personal gain and giving or taking bribes are widespread in courts, political parties and in the public health sector.

Experience of corruption. Petty corruption appears to be widespread, with 40 % of respondents claiming to have been affected by corruption in their daily lives (EU average: 26 %). Among those who had come into contact in the last 12 months with Slovak institutions mentioned in the survey, 14 % were asked or expected to pay a bribe (EU average: 4 %).[11] 21 % of the population have experienced or witnessed a case of corruption in the last 12 months (EU average: 8 %). Transparency International's Global Corruption Barometer from 2013 noted that every fifth person having a contact with the institutions listed in the survey paid a bribe.[12] These findings are similar to the results in the 2013 Special Eurobarometer.

Business surveys. Corruption is perceived as the most important obstacle for doing business in Slovakia, mentioned by 66 % of the 2013 Eurobarometer business survey respondents,[13] 13% of those who were in contact with institutions were asked or expected to pay a bribe (EU average: 5 %). The World Economic Forum's Global Competitiveness Report 2013-14 indicates that in Slovakia, corruption is the second most problematic factor for doing business,[14] and the report ranked Slovakia as only the 78th most competitive economy worldwide.

Background issues

Private sector. Slovakia transposed the Framework Decision 2003/568/JHA on combating corruption in the private sector, with the exception of offering a bribe or an undue advantage.[15] With regards the private sector, practical concerns are related to ties between business and politicians. Furthermore, the Slovak national security agency (SIS) pointed out in its annual report that ties between politicians and business damaged national interests, especially in the case of state- and municipality-owned companies.[16]

Conflicts of interest and asset disclosure. Conflicts of interest and assets of MPs have to be declared by law, but only to a limited extent. A draft law on conflict of interest,[17] which would alleviate major problems with the application of the current law, is under discussion in Parliament. NGOs provide a voluntary platform to publish such declarations of interests.[18]

Whistleblowing. Slovakia does not have specific laws to protect whistleblowers. Labour legislation provides general protection against arbitrary dismissal and discrimination of employees. In this respect, the procedures envisaged by the anti-discrimination act could serve as a best practice example.

Transparency of lobbying. Despite previous attempts to establish rules on lobbying, it is not regulated in Slovakia. There is no specific obligation for registration of lobbyists or reporting of contacts between public officials and lobbyists.

2. Issues in focus

Independence of the judiciary

Independence of the judiciary is a key element of anti-corruption policies from the point of view of the capacity of the justice system to handle corruption cases efficiently, including high-level corruption. It is also important from the viewpoint of integrity standards within the justice system. Effective independence safeguards and high ethical standards within the judiciary are essential in securing the necessary framework for an efficient judiciary which renders justice in corruption cases in an objective and impartial manner without any undue influence.

The Slovak Constitution guarantees the independence of judges. However, perception of judicial independence in Slovakia is low with Slovakia registering the lowest score on perceived judicial independence in the EU Justice Scoreboard, as well as in the 2013-2014 Global Competitiveness Report.[19] Moreover the use of the powers of the Minister of Justice to remove presidents and vice-presidents of courts, without a possibility for review or legal remedy[20] has raised serious concerns. For example, over a relatively short period of time, a considerable number[21] of court presidents were removed by two consecutive Ministers of Justice, thus contributing to an overall perception of politicisation and limited independence of the Slovak judiciary.

Furthermore, some judges who publicly criticised the state of the judiciary were subjected to disciplinary proceedings that they considered arbitrary.[22] Experts criticised the way in which the head of the judiciary made use of his powers to influence disciplinary panels, notably in procedures concerning judges who seemed to resist his influence. First instance disciplinary panels include one member nominated by regional councils of the judiciary, the Slovak Parliament  and the Minister of Justice. At second instance, this ratio is 1:2:2, leading in both cases to an overrepresentation of politically elected panel members.[23]

Over the last five years, these issues have been subject to a public debate involving judges, NGOs, international experts and Slovak political leaders. In September 2009, 15 judges sent a letter to the President, the Prime Minister and other leaders drawing attention to the improper use of disciplinary procedures against independent judges.[24] A subsequent open statement was signed by 105 judges in October 2009.[25] In 2010, an organisation counting  eleven Supreme Court judges as founding members, pointed to a number of issues, including political interference, selection procedures not based on meritocracy, unjustified delays in court proceedings, lack of rules on ethics, misuse of disciplinary actions and insufficient transparency.[26] The issues raised increase the vulnerability of the justice system to corruption.

The government responded to the call for reform by adopting a legislative amendment in 2011. Presidents and vice presidents of the courts have to pass a competitive procedure, the aim of which is to verify the skills and the ability of the candidates to ensure proper administration of justice and courts. Judgments now have to be published in an effort to create more transparency. Furthermore, the dismissal procedure of a president or a vice-president of a court must be launched by one of the three judicial bodies named by the act, or, in the case vice-presidents, also by the court presidents. The decision on dismissal is however taken by the Minister. While this system appears to be a step in the right direction, certain problems seem to persist in practice: for example, the Minister removed the court presidents of two county courts from office in 2012 on the basis of oral notification to them only.[27] This will require further improvement of existing criteria for the removal from office of presidents and vice-presidents of courts.

Prosecution of corruption

Slovakia has created the Office of the Special Prosecutor (SPO) to prosecute all cases brought before the SCC which is a commendable effort to focus on high profile cases needing special expertise. The Special Prosecutor is elected by Parliament upon a proposal by the General Prosecutor on the basis of competitive proceedings.

The Slovak prosecution service is an independent, hierarchical and uniform organisation headed by a Prosecutor General, who is appointed by the President upon proposal of the Parliament. The position was vacant between February 2011 and July 2013. Multiple constitutional court appeals were lodged in this regard, and the head of state did not appoint the elected candidate. The protracted absence of the head of the prosecution office had a negative impact on the confidence of prosecution services, including the ones specialised in corruption, in that they are effectively protected from any undue influence. The parliament subsequently elected another person to be Prosecutor General, and the President appointed him to the office in mid-2013.

According to prosecution statistics, in 2010, 18 persons were indicted for accepting bribes, 74 for active bribery, four for trafficking in influence, and five for favouritism. These figures represent an important increase from 2009,[28] but are still low in view of the size of the country and the scale of the problem as presented by surveys on actual experience of bribery.[29] It is too early to evaluate the new criminal legislation which came into force in September 2011. However, low numbers of prosecutions in the context of corruption can only partially be attributed to insufficient legislation. According to a recent assessment by the European Commission, there are structural weaknesses in the functioning of law enforcement.[30] In its National Integrity System analysis (NIS), Transparency International considered the police force to be among the weakest institutions in Slovakia as they scored the second lowest (after the judiciary).[31] The NIS points to extensive changes in the leadership of the police force after every parliamentary election that included not only the head of police but also heads of key departments, including the unit for fight against corruption.

Financing of political parties

The 2005 Act on political parties imposed stricter rules on parties’ accounting, obliging them to publish annual reports including information on party income and expenditure.[32] However, in 2011, GRECO identified significant shortcomings in the legal framework for party financing and issued ten detailed recommendations, including establishing a single body with sufficient resources to supervise and investigate party funding and election campaign financing, enhancing transparency of funding of presidential candidates and putting in place effective sanctions for violations of the rules on political funding.[33] In particular, GRECO noted that the act does not clarify the level of detail required for local and regional branches of parties. The legislation furthermore does not cover campaign expenses of individual candidates. The law is insufficiently implemented, as the supervision exercised by the Ministry of Finance and the parliamentary committee is considered to be a purely formal exercise. GRECO strongly recommended that Slovakia take measures to enhance the transparency of income and expenditure of parties and candidates at local and regional level (in particular in connection with mayoral elections) and that the authorities provide advice and training to political parties and election candidates on the applicable political funding regulations.[34]

In the context of sanctions, Slovakia provides for administrative liability of political parties for infringements of political finance rules. The Ministry of Finance has to impose administrative fines of approximately EUR 3 000 for infringements relating to the late or incomplete submission of the election campaign and annual reports. If a party accepts a gift or service in violation of 2005 Act, the Ministry of Finance may also impose a fine of up to twice the value of the gift or service. Finally, public funding may be suspended if deficiencies in the annual report have not been remedied by the party. GRECO expressed concerns as to whether these sanctions were deterrent, and noted that sanctions were not known to have been imposed for infringements of party funding rules, other than for non-submission of financial reports.[35] The recommendation on improving sanctions had not been implemented by early 2013.[36]

GRECO considered in its last evaluation that none of its recommendations with respect to political party financing had been implemented.[37] A draft law on pre-election campaigns[38] and a draft law on elections,[39] aimed at addressing GRECOʼs concerns, are now under discussion in the Slovak Parliament. The legislation under discussion aims at limiting the possibility of donations made in cash, increasing the transparency of accounts related to election campaigns, and strengthening sanctions for violation of campaign financing rules.

Good practice: database for tracing public money

Slovakia reformed its access to information laws in 2000 and created a system that has become exemplary over the last 12 years. Freedom of access to information has allowed NGOs and think-tanks to devise innovative solutions to flag risks and to build an information network allowing the detection of conflicts of interest and improper influence on decision making. The NGO Fair Play Alliance created a database that anyone can access via their website.[40] The database focuses on public money paid to private entities (state subsides, privatisation, tax and custom remissions, grants, European funds, debts to the public sector) and on public representatives (managers of state institutions, governments, elected positions, the judiciary, self-governing bodies, Parliament, advisers to political leaders). It provides media and NGOs with tools for monitoring and makes public administration aware of the fact that their decisions can be easily monitored. This database is also helpful for investigative journalism; for example, the media were able to draw attention to concrete allegations of illicit practices regarding political party finance including fake donors and non-transparent party loans. The network has been emulated by NGOs abroad and the software is used in the Czech Republic, Hungary and Georgia. The know-how is also used in Montenegro.

Use of EU funds

The Slovak national security agency (SIS) reported in 2011 on corrupt practices in the distribution of subsidies from the EU and the state budget.[41] The SIS found evidence of non-transparent allocation of both EU and state funds, which were not used in accordance with the declared purpose.

The European Commission found that the risk of corruption in the allocation of EU funds creates a reputational risk for the funds and threatens their efficient and effective use. As a result, the Commission interrupted payments for the Transport Programme of the Cohesion Fund in the 2007-13 programming period, citing allegations of bribery and conflicts of interest in rail projects as one of the reasons. These suspicions are currently being investigated by the European Anti-Fraud Office (OLAF). There have also been allegations of corruption in the area of public tenders for urban transport projects which were tailored to one bidder (cancelled at the request of the Commission). Furthermore, in other tenders, major construction companies submitted complaints to the Commission that the lowest bids were rejected on unfair grounds.

In the context of the European Social Funds operational programmes (OP Employment, Social Inclusion and Education) repeated Commission audits identified material shortcomings in the public procurement and in the verification of cost eligibility. As a result of the malfunctioning management and control systems, the programmes underwent the procedure for suspending payments until the weaknesses were corrected.

Tackling corruption is highlighted as a central action in the Commission’s position paper for Slovakia for the 2014-2020 programming period,[42] which proposes restricting the room for corruption, conflicts of interest and cronyism in the use of EU co-financed spending. The annual joint roadmaps for Structural Funds implementation in Slovakia agreed at political level have highlighted the need to continue to strengthen the management and control systems to ensure their effective implementation, in particular in the areas of public procurement and project selection.

Audits by national and European Commission auditors have confirmed that significant weaknesses exist in the practical implementation of financial management and control procedures in Slovakia, and that there are shortcomings in the structure of the main national control bodies. Procurement procedures, management verification and project selection remain the main areas of weakness. These weaknesses are reflected in the high costs of infrastructure projects and in the level of errors detected. For example, a review of public procurement contracts in the Environment Operational Programme in 2012 detected an error rate of 7.3 %, causing the Commission to impose a corresponding correction of 7.3 % of expenditure.

Public procurement

In Slovakia, the total expenditure on works, goods and services in public procurement is estimated at EUR 15.61 billion in 2010. According to the 2013 Eurobarometer business survey, 57 % (the second highest percentage in the EU) of those who participated in public procurement in the past three years reported that they were prevented from winning because of corruption. Respondents in Slovakia reported tailor-made specifications for particular companies in 84 % of cases and 77 % reported collusive bidding as being a widespread practice.[43] Moreover, 63 % of respondents noted conflicts of interest in the evaluation of bids and 62 % pointed to unclear selection or evaluation criteria.[44] Given the perception of business representatives that these practices are widespread, monitoring them by introducing ex-ante checks would improve the situation.

The SIS reported on cases of corruption and cronyism in the bodies of national, local and regional governments, as well as in entities with state participation involved in public procurement and in the allocation of state funds.[45] The SIS also noted that tenders for contracts for the construction and modernisation of transport infrastructure were designed in favour of predetermined suppliers. More specifically, the SIS pointed to corruption and rigging of competition for the reconstruction of a building for state institutions. Lack of transparent management was also found in the energy and heating sectors, water companies and companies using transport infrastructure.

A Slovak weekly published an award-winning analysis of tenders for construction of highways during the years 2006 to 2010, which pointed to significant overpricing and inefficient use of public finances. For example, the tender for the collection of an electronic toll was awarded to the bidder with the highest offer after the procuring entity excluded competitors from the bidding.

One of the underlying structural issues is the status of the Public Procurement Office (PPO), whose operational and financial independence is not guaranteed by law. The law on public procurement[46] does not prevent political appointments at the PPO, nor does it ensure sufficient guarantees against undue interference in decisions taken by PPO staff. Although recent amendments have ensured that the president of the PPO is elected by Parliament on a proposal from the government.[47] However the legal provisions on the dismissal of the PPO’s chair are vaguely formulated and may be misused, thus limiting guarantees of independence.[48] Public procurement in healthcare appears to be particularly vulnerable to corruption in Slovakia. Transparency International published a review of prices that hospitals paid for purchasing medical equipment (CTs) between 2007 and 2012. According to the review, the hospitals’ purchase price varied significantly. For a CT with the same technical parameters, the price in one hospital is double the price paid in another hospital. The review argues that one of the main problems in this case is lack of competition – very often only one bidder applies for a tender, or the criteria are tailored to a specific bidder. Furthermore, according to the review, it is often unclear what exactly is included in the price for the CT – the type of software and service, which makes comparison of prices difficult.

In 2012, the government prepared a major amendment of the Public Procurement Act, which aimed at – inter alia – streamlining lengthy tender procedures and increasing competition and transparency.[49] Part of the amendment was adopted in February 2013. As a consequence, the government also decided to strengthen human resources at the PPO. Moreover, there are credible efforts to make the business environment less prone to the risks of corruption. In 2010 and 2011, the Slovak government created an obligation to publish all contracts concluded by the public sector online.[50] The Central Register of Contracts[51] provides a list of contracts concluded by ministries, state administration bodies, public bodies and their subordinate organisations since 1 January 2011. All such contracts have to be published in the Register and only enter into force the next day following their publication in the register. Despite greater transparency, irregularities in public procurement remain.[52] The effective application of the new procurement rules, however, could be facilitated by further developing the skills of officials in charge of drafting terms of references, and of evaluating and selecting bids.[53]

Furthermore, an internal appeal mechanism within the PPO was created. The first-level decisions on complaints received by the PPO shall be submitted to appeal before a ‘Council of Public Procurement Office’. The Council shall be composed of PPO employees and some external persons in order to ensure greater independence in the decision making-process.

Good practice: transparency in local public procurement

As part of measures allowing the external monitoring of public spending, the Open Local Government initiative ranks 100 Slovak towns according to a set of criteria based on transparency in public procurement, access to information, availability of data of public interest, public participation, professional ethics and conflicts of interests. Saľa, Martin and Rožňava currently appear at the top of the list. The project is run by Transparency International Slovakia. The northern city of Martin received the prestigious UN Public Service Award for its anti-corruption reforms.[54] These were based on close cooperation with TI Slovakia: In late 2008, the newly elected mayor of Martin approached the organisation looking for a transparency package that he could implement in the city of 60 000 inhabitants. TI Slovakia proposed to carry out the project in three phases. First, experts drew up a list of recommendations in 17 policy areas such as procurement, staffing, awarding grants, public participation and municipal company policy. In a second step, they compared them with the city’s legislation and internal rules. Having identified the gaps, the team of experts, together with municipal officials, drafted new by-laws and regulations adapted to Martin’s conditions, which were then implemented by the municipality.

3.         Future steps

Problems with legislation and its application, the perceived lack of independence of part of the judiciary, and close ties between the political and business elite limit the effectiveness of the anti-corruption framework. Structural reforms, measures to address conflicts of interest, focused efforts for prevention of corruption and good coordination in investigations should therefore be prioritised. Both legislative reforms and practical disincentives for corruption are required in party funding, public procurement and conflicts of interest.

The following points require further attention:

· Strengthening the independence of the judiciary, in particular by laying down well-defined criteria for the removal from office of presidents and vice-presidents of courts. Strengthening procedural guarantees in disciplinary proceedings against judges and ensuring the independence of disciplinary panels.

· Strengthening a merit-based approach to appointments to management positions within the police. Developing a strategy to more effectively detect and prosecute corruption crimes.

· Increasing transparency of party funding at local and regional levels, including by completing the pending legislative process. Setting up an independent body to investigate and supervise party financing, and ensuring that the sanctions applicable in case of violations of political funding rules are proportionate and dissuasive.

· Intensifying checks by relevant authorities in order to decrease the risk of misuse of EU funds and strengthening control mechanisms for prevention, detection and dissuasive sanctioning of conflicts of interest. Developing a policy to fight corruption in healthcare, including public procurement. Reinforcing efforts of law enforcement, prosecution and judiciary to pursue corruption cases affecting EU funds. Carrying out efficient independent ex-ante checks of public procurement procedures at central and local levels. Strengthening the internal control mechanisms within contracting authorities and their capacity to effectively prevent corrupt practices. Monitoring the impact of the recent amendments to the Public Procurement Act, especially on the independent functioning of the Public Procurement Office. Promoting greater stability, efficiency, independence and expertise in Slovak public administration, including central and local public procurement authorities.

[1]      Návrh strategického plánu boja proti korupcii v Slovenskej republike - upravené nové znenie http://www.rokovania.sk/Rokovanie.aspx/BodRokovaniaDetail?idMaterial=20071.

[2]      http://bojprotikorupcii.vlada.gov.sk/19327/medzirezortna-pracovna-skupina-expetrov-pre-boj-tproti-korupcii.php.

[3]      Third Evaluation Round, Compliance Report on the Slovak Republic, GRECO RC-III (2010) SE, Strasbourg, 26 March 2010.

[4]      By Act no. 224/2010 Coll. which amended the Criminal Code (new sections 83a and 83b of the Criminal Code).

[5]      Act no. 262/2011 Coll and other acts were adopted on 13 July 2011. For the evaluation of the rules, see the Second Interim Compliance Report on the Slovak Republic, GRECO RC-III (2010) 3E Second Interim Report, Strasbourg, 9 December 2011.

[6]      Third Evaluation Round –Second Compliance Report on the Slovak Republic. GRECO RC-III (2012) 23E, Strasbourg, 7 December 2012. See also Greco RC-III (2013) 21E.

[7]      See Transparency International, National Integrity System, Executive Summary: http://www.transparency.org/whatwedo/nisarticle/slovakia_2012.

[8]      Idem.

[9]      Commission staff working document. Assessment of the 2013 national reform programme and stability programme for Slovakia. Brussels, 29.5.2013 SWD(2013) 375 final. p. 8-9: http://ec.europa.eu/europe2020/pdf/nd/swd2013_slovakia_en.pdf.

[10]    2013 Special Eurobarometer 397.

[11]    2013 Special Eurobarometer 397.

[12]    http://www.transparency.org/gcb2013/report.

[13]    2013 Flash Eurobarometer 374.

[14]    http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf.

[15]    Report from the Commission to the European Parliament and the Council, based on Article 9 of Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector.

[16]    The report of the Slovak Intelligence Service from 2011. (Správa o činnosti SIS v roku 2011, Bratislava, október 2012.) http://www.sis.gov.sk/vyr_sprava.html.

[17]    National Council of the Slovak Republic Návrh ústavného zákona, ktorým sa mení a dopĺňa ústavný zákon č. 357/2004 Z. z. o ochrane verejného záujmu pri výkone funkcií verejných funkcionárov v znení ústavného zákona č. 545/2005 Z. z.. http://www.nrsr.sk/web/Dynamic/Download.aspx?DocID=389419].

[18]    See Politikaopen.sk.

[19]    Based on the 2010 data in the EU Justice Scoreboard. http://ec.europa.eu/justice/effective-justice/files/justice_scoreboard_communication_en.pdf. See also http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf

[20]    Section 38 and 41 of Act 757/2004 on courts (Zákon o súdoch a o zmene a doplnení niektorých zákonov).

[21]    E.g. 14 court presidents removed in May 2011.

[22]    See Bojarski, L. and Stemker Koster, W. (2012) The Slovak jusdiciary: Its current state and challenges. Bratislava: Nadácia otvorenej  spoločnosti - Open Society Foundation.

[23]    The disciplinary panel is composed of three or five members selected from the three database set up by law, which stores 15 names, elected by judges, by the Minister and the National Council respectively. See Title Two of act on judges and lay-judges (Zákon č. 385/2000 Z.z. o sudcoch a prísediacich a o zmene a doplnení niektorých zákonov v znení neskorších predpisov).

[24]    ʻOpen Letterʼ http://sudcovia.sk/en/documents/archive/204-open-letter.

[25]    ʻFive Sentencesʼ http://sudcovia.sk/en/documents/archive/202-five-sentences.

[26]    http://sudcovia.sk/en/documents/archive/211-orientation-initiative-for-open-judiciary.

[27]    Assessment of the 2013 national reform programme and stability programme for Slovakia. Brussels, 29.5.2013 SWD(2013) 375 final. p. 31. As the document notes, references to previous recommendations with regards to the judiciary remained valid in 2013 and 2012, as no major progress was observed.

[28]    http://www.genpro.gov.sk/statistiky-12c1.html. These statistics are based on the old legislation, ie. before the amendment of the Criminal Code.

[29]    See the results of consecutive Eurobarometer surveys from 2007, 2009, 2011 and 2013; see also the Eurobarometer Flash survey for businesses from 2013, where the percentage of respondents having been expected to pay a bribe was always among the highest in the EU.

[30]    Assessment of the 2013 national reform programme and stability programme for Slovakia. Brussels, 29.5.2013 SWD(2013) 375 final. p. 8-9..; the Commission’s position paper for Slovakia for the 2014-2020 programming period http://ec.europa.eu/regional_policy/what/future/pdf/partnership/sk_position_paper.pdf.

[31]    TI, NIS executive summary.

[32]    85/2005 Z.z. ZÁKON zo 4. februára 2005o politických stranách a politických hnutiach.

[33]    GRECO: Third Evaluation Round – Second Interim Compliance Report on the Slovak Republic, December 2011, http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3(2010)3_2nd_Interim_Slovakia_EN.pdf.

[34]    GRECO: Third Evaluation Round – Second Interim Compliance Report  pp. 8 and 11.

[35]    GRECO: Third Evaluation Round - Evaluation Report on the Slovak Republic on Transparency of party funding (Theme II). Strasbourg, 15 February 2008.

[36]    Second Compliance Report, on the Slovak Republic, Greco RC-III (2012) 23E http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%2923_Second_SlovakRepublic_EN.pdf.

[37]    GRECO: Third Evaluation Round – Second Interim Compliance Report pp. 8. When adopting the 3rd Interim Third Round Compliance Report in October 2013, GRECO described the level of compliance as ʻglobally unsatisfactoryʼ, see http://www.coe.int/t/dghl/monitoring/greco/documents/2013/Greco%282013%2914_Summary%20Report%2061_EN.pdf.

[38]    Ministry of Justice Zákon o volebnej kampani, ktorým sa mení a dopĺňa zákon č. 85/2005 Z.z.  Citing electronic source of information. (2013) Ministerstvo spravodlivosti SR. https://lt.justice.gov.sk/Attachment/navrh%20zakona.rtf?instEID=-1&attEID=56854&docEID=318935&matEID=6443&langEID=1&tStamp=20130803000119053.

[39]    Ministry of JusticeZákon o podmienkach výkonu volebného práva  a o zmene Občianskeho súdneho poriadku. (2013) Ministerstvo spravodlivosti SR.: https://lt.justice.gov.sk/Attachment/navrh%20zakona.rtf?instEID=-1&attEID=56862&docEID=318944&matEID=6444&langEID=1&tStamp=20130803000148247.

[40]    http://datanest.fair-play.sk/en/pages/index.

[41]    The report of the Slovak Intelligence Service from 2011. (Správa o činnosti SIS v roku 2011, Bratislava, október 2012.) http://www.sis.gov.sk/vyr_sprava.html.

[42]    Position of the Commission Services on the development of the Partnership Agreement and programmes in Slovakia for the period 2014-2020 p. 44. http://ec.europa.eu/regional_policy/what/future/pdf/partnership/sk_position_paper.pdf.

[43]    These are the highest percentages in the EU.

[44]    These indicators, while not necessarily directly related to corruption, illustrate risk factors that increase vulnerabilities t corruption in public procurement procedures.

[45]    The report of the Slovak Intelligence Service from 2011. (Správa o činnosti SIS v roku 2011, Bratislava, október 2012.) http://www.sis.gov.sk/vyr_sprava.html.

[46]    Act on Public Procurement (Zákon o verejnom obstarávaní - Zákon č. 25/2006 Z. z).

[47]    Rules on the status of the chair are in Article 110. of the public procurement act.

[48]    According to Article 110. (1), the Office is headed by the President, on the proposal of the Government of the Slovak Republic shall be elected and recalled by the National Council of the Slovak Republic. (2) The Chair, Deputy Chairperson of the Authority. Vice-Chair is appointed and dismissed by the Government on the proposal of the President of the Office. For the reasons of dismissal, see Art 111 which is limited to the lack of compliance with duties.

[49]    Z 19. marca 2013, ktorým sa mení a dopĺňa zákon č. 25/2006 Z. z. o verejnom obstarávaní a o zmene a doplnení niektorých zákonov v znení neskorších predpisov a o zmene zákona č. 455/1991 Zb. o živnostenskom podnikaní (živnostenský zákon) v znení neskorších predpisov.

[50]    Act No. 546/2010 Coll. amending Act No. 40/1964 Coll., the Civil Code, as amended.

[51]    Centrálny register zmlúv. http://crz.gov.sk/.

[52]    Commission staff working document: Assessment of the 2013 national reform programme and stability programme for Slovakia. Brussels, 29.5.2013 SWD(2013) 375 final. p. 30: http://ec.europa.eu/europe2020/pdf/nd/swd2013_slovakia_en.pdf .

[53]    Commission staff working document: Assessment of the 2013 national reform programme and stability programme for Slovakia. Brussels, 29.5.2013 SWD(2013) 375 final. p. 30: http://ec.europa.eu/europe2020/pdf/nd/swd2013_slovakia_en.pdf.

[54]    http://unpan1.un.org/intradoc/groups/public/documents/un-dpadm/unpan048624.pdf.

United Kingdom

1. Introduction – main features and context

Anti-corruption framework

Strategic approach. Government efforts to control corruption have not produced a centralised strategy. However, the United Kingdom has had laws against corruption since the 19th century. Anti-corruption plans in the public sector tend to be statements of intent, rather than comprehensive programmes. The Civil Service Management Code contains advice for reducing corruption risks.[1] In February 2013, the government outlined its policy on making public services simpler, clearer and faster for users, in an effort aiming mainly at efficiency but also at transparency and accountability in the delivery of public services.[2]

Legal framework.     The Bribery Act 2010 is considered stringent as it exceeded the requirements of the OECD Anti-Bribery Convention.[3] There is no statute of limitations in UK criminal law, and no general immunity from criminal prosecution for Members of Parliament, judges or prosecutors. Corruption provisions in the Bribery Act 2010, Fraud Act 2006, and offences such as perverting the course of justice and misconduct in public office have different requirements for conviction and sanctions.[4] This legislative framework allows for nuanced targeting of prosecutions and thorough consideration of the appropriate penalty for different types of corruption. However, it also makes it difficult to gauge whether a given action is prohibited and what the potential consequences are. For example, misconduct in public office, often invoked to prosecute corruption, has a broad legal interpretation without substantive guidance for public servants on behaviour deemed corrupt or acceptable.[5] The legislative framework also complicates the collection of data on corruption, such as the number of convictions, and contributes to a lack of information on corruption risks within the UK.[6]

Institutional framework. There is effective cooperation among the Committee on Standards in Public Life, the Parliamentary Commissioner for Standards, the Adviser on Ministerial Interests, and the Advisory Committee on Business Appointments.[7] The Cabinet Office houses the International Anti-corruption Champion who coordinates activities across government. A wide, and potentially confusing, variety of channels exist for citizens to report suspected corruption, including a secure online platform at the Serious Fraud Office,[8] a police central point of contact on fraud,[9] sector-specific reporting mechanisms (such as healthcare[10] and tax and customs[11]), as well as mechanisms at local level.[12] There has not yet been a systematic effort by the government to streamline corruption reporting channels and raise public awareness of their existence.

Opinion polling

Perception surveys. In the 2013 Special Eurobarometer, 64 % of respondents think that corruption is widespread in the UK (EU average 76 %), and 16 % feel personally affected by it in their daily lives (EU average 26 %). In addition, 63 % think that high-level corruption cases are not sufficiently pursued (EU average 73 %).[13]

Experience of corruption. The UK has the EU’s lowest proportion of respondents who say they have been asked or expected to pay a bribe over the previous 12 months (0 %), or that they know someone who has taken bribes (7 %).

Business surveys. In the 2013 Eurobarometer business survey, 15 % of respondents consider corruption to be a problem for their company when doing business in the UK (EU average 43 %) and 46 % think corruption is widespread (EU average 75 %).[14]

Background issues

Law enforcement and judiciary. In 2013, UK law enforcement mechanisms were deemed adequate and in some ways exemplary for the purposes of the United Nations Convention against Corruption (UNCAC).[15] The Attorney General is the minister overseeing the Crown Prosecution Service and the Serious Fraud Office (SFO). The SFO is the lead agency for investigating and prosecuting cases of overseas corruption. Other national, regional and local authorities (including the Metropolitan Police, the City of London Police and others) have competence to deal with corruption-related offences, depending on the context or location. The wide variety of institutions dealing with corruption, with overlapping competences, calls for close coordination. The Serious Organised Crime Agency was replaced by a new National Crime Agency (NCA) in October 2013 as part of wider efforts to improve coordination in the fight against crime.[16] The NCA has a unit dealing with economic crimes (including fraud, bribery and corruption), which is to play a strategic and coordinating role. According to the Council of Europe’s Group of States against Corruption (GRECO), the judiciary has an untarnished reputation of independence, impartiality and integrity, with no evidence of inappropriate influence on judges. GRECO also commended efforts to safeguard the integrity and impartiality of prosecutors.[17] Following the 2006 decision of the SFO director to cancel an investigation into allegations of corruption between BAE Systems and officials in Saudi Arabia, however, the OECD recommended that the UK strengthen the independence of the SFO Director by clarifying that the Attorney General may not give directions in individual foreign bribery cases.[18]

Conflict of interests and asset disclosure. The UNCAC review recommended that the UK consider expanding the current system of declarations of interest by public officials and parliamentarians to a system of asset declarations, to help detect and prove the existence of corrupt payments.[19] Public service values are set out in the Civil Service Code and the Seven Principles of Public Life drawn up by the Committee on Standards in Public Life.[20]

Public procurement. In the 2013 Eurobarometer business survey, 18 % of companies that competed for public contracts in the last three years say that corruption prevented them from winning (EU average 32 %). A 2011 report by the National Fraud Authority on public procurement fraud highlighted the complex nature of the issue, and outlined case studies of supplier cartels, price fixing and false invoicing.[21] The report recommended a greater focus on prevention, centralisation and transparency, as well as a holistic risk management approach, training for public procurement officials, data analytics to detect anomalous behaviour, and the creation of a cross-government procurement fraud reporting service.

Whistleblowing. Whistleblowers are protected by the Public Interest Disclosure Act (1998) which covers both public and private sector employees. The Act sets out a ‘stepped’ approach and provides for three levels of disclosure, requiring under each step a higher threshold of conditions to be satisfied for the whistleblower to be protected.[22] The Public Interest Disclosure Act makes void any term in an agreement between a worker and his employer insofar as it purports to preclude the worker from making a disclosure in line with the Act. It also provides that a disclosure is not protected if the person making it commits a criminal offence by doing so. The exceptions are limited to the definition of official secrets now current in the UK which covers only disclosures that damage the national interest and relate to national security, international relations, or which would assist crime. Any whistleblower who makes a protected disclosure and suffers retaliation may claim compensation before an employment tribunal. The Public Interest Disclosure Act compensates for dismissal or any other detriment or retaliation including moral injury. Those who are dismissed can seek interim relief within seven days to continue in employment. Those found to have been unfairly dismissed for whistleblowing are compensated for their full financial losses (uncapped). The operation of the Public Interest Disclosure Act has been subject to an independent review, published at the end of November 2013, which recommends a number of further improvements.[23] The UNCAC review suggested raising public awareness about protection and mechanisms for reporting.[24]

Transparency of lobbying. A voluntary register of lobbyists is published by the UK Public Affairs Council.[25] In 2013, the government proposed a statutory register of lobbyists.[26] Under the Ministerial Code, former ministers are prohibited from lobbying government for two years after leaving office. They are also required to seek and abide by advice from the Independent Advisory Committee on Business Appointments (ACOBA) about any appointments within two years of leaving office. Senior civil servants must also seek ACOBA advice for outside appointments and lobbying tasks within two years of leaving office. GRECO has recommended a review of the codes of conduct applicable to MPs and Lords to improve guidance on managing contacts with lobbyists.[27]

2. Issues in focus

Foreign bribery

The UK’s record in prosecuting foreign bribery has evolved positively over time. The authorities published guidelines to help businesses adapt to the Bribery Act 2010. The Act largely addressed concerns raised by the OECD in 2008, in the absence of prosecutions for foreign bribery a decade after the UK ratified the OECD Convention.[28] In 2011, 23 foreign bribery cases were brought to the courts. The OECD commended the UK for efforts to raise awareness of the Bribery Act and the foreign bribery offence.[29]

The Act’s provisions on extra-territorial jurisdiction entitle the SFO to prosecute any company, or person associated with it, with a UK presence, even if the company is based overseas. The accompanying guidance to businesses includes practical advice on compliance, including case studies.[30] In line with a previous OECD recommendation, the guidance clarifies that facilitation payments are considered illegal bribes and provides criteria to distinguish hospitality from disguised forms of bribery.[31] Commercial organisations are exempted from criminal liability if they can show they had adequate procedures in place to prevent bribery on the basis of six guiding principles: proportionality, top-level commitment, risk assessment, due diligence, communication, and monitoring and review. 

Good practice: requiring companies to prevent bribery

The Bribery Act 2010 puts the UK among the countries with the strongest anti-bribery rules in the world. It introduces strict liability for a business that fails to prevent associated persons from bribing on its behalf in order to obtain or retain business or a related advantage. Commercial organisations thus commit the offence of failing to prevent bribery if employees or other associated persons commit offences of bribery. If the commercial organisation had adequate procedures in place, it can use this in its defence. In setting such strong incentives for companies to prevent bribery, the Act is considered to be an effective deterrent and has led companies to adopt comprehensive preventive procedures. UNCAC evaluators consider the measure a good practice that could be applied in other countries as well.[32]

In addition, the Bribery Act 2010 encourages whistleblowing. In the Government guidance accompanying the Bribery Act 2010 whistleblowing policies are recommended as part of the adequate procedures to prevent bribery.[33]

Furthermore, the Crime and Courts Act 2013 introduced a new tool, the Deferred Prosecution Agreement.[34] Under this voluntary agreement between a company and a prosecutor, the company is charged with a criminal offence but proceedings are suspended. The company agrees to conditions which may include payment of a financial penalty, payment of compensation, and cooperation with future prosecutions of individuals. If the conditions are not met, the prosecution may resume. This tool is expected to become available to prosecutors from February 2014.[35]

In certain circumstances, the SFO has discretion to consider civil recovery orders and settlements.[36] Self-reporting, if part of a genuinely proactive approach by corporate management, is taken into consideration but is no guarantee that prosecution will not follow.[37] The OECD report on the UK’s implementation of the Convention criticised the use of civil recovery orders as they require less judicial oversight and are less transparent than criminal plea agreements.[38] It also pointed to the lack of publicly available information on settlements, including confidentiality provisions in some, that makes it hard to assess whether the sanctions imposed are effective, proportionate and dissuasive, as required by the Convention. The UNCAC review also suggested that the SFO consider providing more detail on civil settlements, for example concerning guidance on what factors are taken into account in determining the recoverable amount.[39]

The OECD recommended that, whenever the UK authorities conclude a foreign bribery enforcement action with a criminal plea agreement, they make public as much information as possible to demonstrate that the sanctions imposed are effective, proportionate and dissuasive. In 2012, the SFO’s Director pledged to address OECD concerns regarding the transparency of civil settlements; the SFO’s new policy when using its powers under proceeds of crime legislation is to publish its reasons, the details of the illegal conduct and the details of the disposal.[40] The UNCAC review also recommended that the UK consider measures to ensure transparency and predictability in out-of-court settlements involving the SFO.[41]

According to the OECD, the designation of the SFO as the lead agency for foreign bribery cases has improved enforcement.[42] However, the OECD also expressed concern about the SFO’s resources and staff turnover.[43] The SFO’s budget is forecast to be GBP 31.3 million in 2014-15, which represents a decrease of over 40 % from 2008-09. UNCAC reviewers also advised against cuts in SFO resources and staff.[44]

The prosecution of foreign bribery poses particular challenges in the arms trade. In 2006, the SFO dropped an investigation into defence contracts with Saudi Arabia, citing reasons related to ‘national and international security’.[45] In 2008, a court ruled that the SFO had acted unlawfully in dropping the investigation,[46] a decision later reversed by the House of Lords upon appeal.[47] The OECD raised serious concerns about the dropping of the investigation.[48] More recently, the SFO started investigating payments to two companies based in the Cayman Islands, as part of a deal for communication and surveillance equipment for the Saudi National Guard.

The above cases highlight the vulnerability of the UK defence industry to foreign bribery. National security considerations may obstruct oversight and accountability for large contracts handled by small groups of brokers, dealers and officials. Balance can be achieved between ensuring secrecy for the purposes of national security and appropriate safeguards to prevent the abuse of such secrecy. To this end, stricter limits may be necessary on the transfer of senior personnel between the public and private sectors, which is widespread in the defence industry for reasons of security clearance.

Foreign bribery cases are by no means limited to the defence sector. In 2011, a UK publisher was fined over possible bribes to win contracts for education materials in Rwanda, Uganda and Zambia.[49] In 2010, a London-based insurance broker was sentenced to imprisonment and a fine in a plea bargain, after admitting corrupt payments to Costa Rican officials.[50] The Financial Services Authority (FSA) fined other insurance brokers for failings in their anti-bribery and corruption systems and controls.[51] To help prevent such cases, in 2013 the Financial Conduct Authority published a financial crime guide setting out regulatory expectations for firms and including a chapter on corruption with examples of good and poor practice.[52]

Financing of political parties and integrity of elected officials

There is a substantial degree of control of financing of political parties in the UK. The Political Parties Elections and Referendums Act 2000 (PPERA) governs the registration and finances of political parties.[53] The Electoral Administration Act 2006 (EAA) extended the controls to loans and other credit facilities while the Political Parties and Elections Act 2009 (PPE Act) made further changes and increased the threshold for permissible and reportable donations.[54] GRECO considers the UK system ‘generally of a high standard’.[55] However a number of issues raised concern. GRECO referred in 2007 to three separate independent reports within the UK which ‘show a remarkable coherence in how the present system of political financing needs to be further developed.’[56] Limits on donations and spending feature prominently in these discussions.

In 2012, GRECO noted that the UK had complied with recommendations for a common format for party accounts and returns, to ensure coherence and comparability. The UK also strengthened the functions of the Electoral Commission (the regulator of political party finances) and introduced more flexible sanctions for less serious violations of the political financing rules.[57] The Commission is no longer restricted to either referring a case for criminal prosecution or taking no action at all. The Electoral Commission published a guidance document on its use of new powers and sanctions.[58]

However, the UK had not yet complied with a recommendation to subject election candidates and third parties to transparency standards in respect of loans, comparable to those standards which apply to political parties. GRECO was also not satisfied that the UK had fully addressed allegations of a general reluctance on the part of the police to initiate investigations into political financing.[59]

The UK Committee on Standards in Public Life, in its 2011 report on the issue, insisted that political parties should obtain their funding in ways that do not raise suspicion that donors might receive favours or improper influence in return.[60] The Committee raised concerns about the reliance of some UK parties on funding from a relatively small number of individuals, trade unions or other organisations. The Committee made recommendations to restrict the amount an individual donor can give to one party, limit party expenditure, and increase public funding since it is a source which does not carry in its view a risk of improper influence. It proposed a limit on donations of GBP 10 000 and a cut of 15 % in allowed election campaign spending.

The UK addresses conflict of interest issues by imposing extensive disclosure obligations (for instance of financial interests) that are open to public scrutiny, rather than by placing restrictions on the activities that MPs can carry out outside their parliamentary duties.[61] However, according to GRECO the thresholds for the reporting of financial holdings are rather high at GBP 60 000. The same approach of favouring transparency over restrictions applies to gifts but while the reporting threshold is also rather high at 1 % of the current parliamentary salary (in 2012, 1 % amounted to about EUR 850), no guidance exists for MPs on what gifts are acceptable and at which point they could become a form of bribery.[62]

Police-media relations

The Leveson Inquiry set up in 2011 in response to allegations of phone hacking concluded that the presence of inappropriate links between the media and the police ‘was far more than a covert, secret activity, known to nobody save one or two practitioners’ but at the same time found no evidence to suggest that ‘corruption by the press in the police is a widespread problem.’ Recommendations by the Leveson Inquiry include clearer guidance to police officers, both junior and senior, on acceptable behaviour (including contacts with the press), and a 12 month ‘cooling off’ period, during which former senior police officers would not be allowed to work for the press.[63] Operation Elveden overseen by the Independent Police Complaints Commission to investigate inappropriate payments to the police or public officials by journalists, has thus far resulted in over 70 arrests of media employees and police officers suspected of making or receiving corrupt payments. In February 2013, the Home Secretary announced police integrity measures in response to recommendations by the Leveson Inquiry.[64]

Corruption within financial institutions

Recent controversy involving the financial sector, notably major banks accused of fixing interest rates has raised concern about the extent of regulation and enforcement of existing rules. In 2012, the FSA reported that investment banks had taken inadequate measures against bribery and corruption, and senior managers were not sufficiently knowledgeable about relevant laws.[65] The report highlighted further weaknesses relating to a lack of vigilance against potential corrupt practices.[66] In 2010, the Authority had come to similar conclusions regarding commercial insurance broking: it found weak governance of anti-corruption efforts and a poor understanding of corruption risk among senior managers.[67] A former Nigerian state governor was sentenced to 13 years in prison for funnelling Nigerian public funds through UK banks. None of the banks in question has yet been held to account for their role in allowing the transfers; the financial regulator must wait for criminal proceedings to be completed.

Corruption-related controversies in the finance sector have resulted in fines, including the Libor rigging case which dates back to 2005.[68] Two UK banks played central roles in the controversy regarding the Libor interest rate benchmark, which underpinned trillions of pounds worth of loans, mortgages and financial contracts in Europe and the US. Both banks were fined.[69] A March 2013 report by the FSA into Libor rigging concluded that the Authority had been too narrowly focused in its handling of related information.[70]

In June 2013, the Government announced its intention to introduce a central registry of beneficial owners of companies (information on who owns and controls a company). This information is to be held by Companies House, a governmental agency responsible for maintaining the existing companies register. The information about the beneficial owners will be accessible to the public. This measure, in the opinion of the government, would help to overcome the current lack of clarity about who really owns, controls and benefits from companies and consequently make it harder to launder money, evade and avoid tax, finance terrorism, bribe officials, hide stolen assets and evade financial sanctions. In 2011, a third of banks sampled by the FSA did not take adequate measures to understand and verify their customers’ ownership and control structure, and address money laundering risks in cases of ‘politically exposed’ clients.[71]

3.         Future steps

Petty corruption does not appear to pose a challenge within the United Kingdom. Moreover, the UK has made strides in encouraging its companies to refrain from bribing officials abroad, through stringent legislation and detailed guidelines. Traditionally, the UK promotes high ethical standards in public service. To ensure continued success, further efforts are necessary to address foreign bribery risks in vulnerable industries, and ensure that out-of-court settlements and the financing of political parties are fully transparent. The integrity of elected officials, police-media relations and corruption within financial institutions also merit additional attention.

The following points require further attention:

· Taking further preventive measures to effectively address risks of foreign bribery and providing sector-specific guidelines to companies in areas which may be at increased risk, such as defence. Ensuring transparent and dissuasive sanctions in out-of-court settlements.

· Further strengthening accountability in the governance of banks, including stricter enforcement and ensuring that the beneficial owners of UK-registered companies are declared.

· Capping donations to political parties, imposing limits on electoral campaign spending and ensuring proactive monitoring and prosecution of potential violations. Considering lower thresholds for the reporting of financial holdings and for the registration of received gifts, and providing clear guidance on acceptable gifts for Members of Parliament. Addressing issues identified by the Leveson Inquiry regarding the legitimate interaction between the press and the police, such as time limits on the employment of former police officers by the media.

[1]      http://www.civilservice.gov.uk/about/resources/civil-service-management-code.

[2]      https://www.gov.uk/government/policies/transforming-government-services-to-make-them-more-efficient-and-effective-for-users

[3]      http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/41515077.pdf

[4]      Fraud Act at http://www.legislation.gov.uk/ukpga/2006/35/contents; Bribery Act at http://www.legislation.gov.uk/ukpga/2010/23/contents.

[5]      The offence is committed when a public officer acting as such wilfully neglects to perform his duty and/or wilfully misconducts himself to such a degree as to amount to an abuse of the public’s trust in the office holder, without reasonable excuse or justification. ‘The failure to meet standards must occur without justification or excuse, a further requirement, though not one which has been the subject of detailed submissions’ Attorney General’s Reference No. 3 of 2003 [2004] EWCA Crim 868, §60.

[6]      The creation of the National Criminal Agency in October 2013 could improve the collection and availability of data.

[7]      See http://www.publications.parliament.uk/pa/cm201012/cmselect/cmpubadm/c1762-i/c176201.htm, Q79.

[8]      http://www.sfo.gov.uk/bribery--corruption/where-should-i-report-corruption.aspx

[9]      The information is then passed on to the National Fraud Intelligence Bureau http://www.actionfraud.police.uk/home

[10]    http://www.reportnhsfraud.nhs.uk

[11]    http://www.hmrc.gov.uk/reportingfraud/

[12]    See, for example, http://www.reigate-banstead.gov.uk/council_and_democracy/about_the_council/fraud_and_corruption/

[13]    2013 Special Eurobarometer 397.

[14]    2013 Flash Eurobarometer 374.

[15]    http://www.unodc.org/documents/treaties/UNCAC/CountryVisitFinalReports/UK_Final_country_review_report _18.3.2013.pdf.

[16]    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/97823/organised-crime-strategy.pdf.

[17]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4%282012%292_UnitedKingdom_EN.pdf.

[18]    http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/41515077.pdf.

[19]    www.unodc.org/documents/treaties/UNCAC/CountryVisitFinalReports/UK_Final_country_review_report_18.3.2013.pdf

[20]    See Civil Service Code (http://resources.civilservice.gov.uk/wp-content/uploads/2011/09/civil-service-code-2010.pdf), and Seven Principles of Public Life (http://www.public-standards.gov.uk/About/The_7_Principles.html).

[21]    NFA (2011) Procurement Fraud in the Public Sector http://www.homeoffice.gov.uk/publications/agencies-public-bodies/nfa/our-work/procurement-fraud-public-sector?view=Binary

[22]    www.opsi.gov.uk/acts/acts1998/ukpga_19980023_en_1.

[23]    Public Concern at Work, Report on the effectiveness of existing arrangements for workplace whistleblowing in the UK: http://www.pcaw.org.uk/whistleblowing-commission-public-consultation .

[24]    www.unodc.org/documents/treaties/UNCAC/CountryVisitFinalReports/UK_Final_country_review_report_18.3.2013.pdf

[25]    The Bond Anti-Corruption Group report on the UK’s compliance with UNCAC, prepared in parallel to the UK government’s self-assessment, recommended that: ‘Stronger regulations be enforced on private consultancies and lobbying of government and parliament. Legislation to require mandatory registration of lobbyists should be given a higher priority in parliament’s legislative programme’.

[26]    The Political and Constitutional Reform Committee raised concerns about the government’s response to their report into the introduction of a statutory register of lobbyists. UK Parliament, Introducing a statutory register of lobbyists: Government Response to the Committee's Second Report of Session 2012-13 - Public Administration Committee, http://www.publications.parliament.uk/pa/cm201314/cmselect/cmpolcon/593/59303.htm §9-10. http://services.parliament.uk/bills/2013-14/transparencyoflobbyingnonpartycampaigningandtradeunionadministration.html

[27]    See footnote 3, p. 18 para 53 of the Report.

[28]    OECD Working Group on Bribery, 16 October 2008, Phase 2bis Report on the application of the convention on combating bribery of public officials in international business transactions and the 197 recommendation on combating bribery in international business transactions.

[29]    http://www.oecd.org/daf/anti-bribery/UnitedKingdomphase3reportEN.pdf.

[30]    https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf.

[31]    The OECD Phase 3 Report of March 2012 recommended that the UK clarify, in relation to hospitality and promotional expenditures, the significance of ‘reasonable and proportionate’, including the reference to industry norms.

[32]    www.unodc.org/documents/treaties/UNCAC/CountryVisitFinalReports/UK_Final_country_review_report_18.3.2013.pdf

[33]    Guidance about commercial organisations preventing bribery: https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf.

[34]    http://www.legislation.gov.uk/ukpga/2013/22/contents/enacted.

[35]    http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2013/deferred-prosecution-agreements-consultation-on-draft-code-of-practice.aspx.

[36]    According to the Asset recovery powers for prosecutors: guidance and background note 2009, ‘Civil recovery is a form of non-conviction-based asset forfeiture which allows for the recovery in civil proceedings before the High Court of property which is, or represents, property obtained through unlawful conduct. Importantly, the proceedings are against the property itself (in rem) rather than against an individual (in person)’ https://www.gov.uk/asset-recovery-powers-for-prosecutors-guidance-and-background-note-2009.

[37]    http://www.sfo.gov.uk/bribery--corruption/corporate-self-reporting.aspx.

[38]    http://www.oecd.org/investment/briberyininternationalbusiness/anti-briberyconvention/50026751.pdf.

[39]    www.unodc.org/documents/treaties/UNCAC/CountryVisitFinalReports/UK_Final_country_review_report_18.3.2013.pdf.

[40]    http://www.sfo.gov.uk/about-us/our-views/director%27s-speeches/speeches-2012/6th-annual-european-forum-on-anti-corruption-on-26-june-2012.aspx   http://www.sfo.gov.uk/bribery--corruption/corporate-self-reporting.aspx

[41]    www.unodc.org/documents/treaties/UNCAC/CountryVisitFinalReports/UK_Final_country_review_report_18.3.2013.pdf.

[42]    The Serious Fraud Office is one of several bodies involved in foreign bribery prosecutions.

[43]   http://www.oecd.org/daf/anti-bribery/UnitedKingdomphase3reportEN.pdf.

[44]    www.unodc.org/documents/treaties/UNCAC/CountryVisitFinalReports/UK_Final_country_review_report_18.3.2013.pdf.

[45]    http://www.sfo.gov.uk/press-room/press-release-archive/press-releases-2006/bae-systems-plcsaudi-arabia.aspx

[46]    [2008] EWHC 714 (Admin).

[47]    UKHL 60, 30 July 2008, http://www.publications.parliament.uk/pa/ld200708/ldjudgmt/jd080730/corner.pdf.

[48]    http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/41515077.pdf.

[49]    http://cymraeg.sfo.gov.uk/press-room/press-release-archive/press-releases-2011/action-on-macmillan-publishers-limited.aspx.

[50]    http://www.sfo.gov.uk/press-room/press-release-archive/press-releases-2010/insurance-broker-jailed-for-bribing-costa-rican-officials.aspx.

[51]    http://www.fsa.gov.uk/pubs/final/willis_ltd.pdf http://www.fsa.gov.uk/pubs/final/aon.pdf.

[52]    Financial Conduct Authority, Financial crime: A guide for firms, April 2013 http://fshandbook.info/FS/html/handbook/FC/link/PDF.

[53]    http://www.legislation.gov.uk/ukpga/2000/41/contents.

[54]    http://www.legislation.gov.uk/ukpga/2006/22/contents http://www.legislation.gov.uk/ukpga/2009/12/contents.

[55]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282007%293_UnitedKingdom_Two_EN.pdf

[56]    Report of the Constitutional Affairs Committee (December 2006), the Report of the Committee of Standards in Public Life (CSPL January 2007) and the Hayden Philips report (March 2007).

[57]    Apart from fines of between £200 and £20 000, it can impose compliance and restoration notices, stop notices (to stop a particular action), enforcement undertakings (whereby a party may report an offence voluntarily) and propose remedial actions.

[58]    http://www.electoralcommission.org.uk/__data/assets/pdf_file/0003/106743/Enforcement-Policy-30March11.pdf.

[59]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%297_Second_UnitedKingdom_EN.pdf.

[60]    Political Party Finance, Ending the big donor culture, see: http://www.public-standards.org.uk/Library/13th_Report___Political_party_finance_FINAL_PDF_VERSION_18_11_11.pdf.

[61]    MPs and Members of the Lords must declare any financial or non-financial benefit received which might reasonably be thought by others to influence their actions, speeches or votes in Parliament or influence their actions taken in their capacity as a Member. Register of Members’ Financial Interests: http://www.publications.parliament.uk/pa/cm/cmregmem/contents1314.htm  Register of Lords’ Interests: http://www.parliament.uk/mps-lords-and-offices/standards-and-interests/register-of-lords-interests/  In addition, the Independent Parliamentary Standards Authority regularly publishes online individual expense claims submitted by every MP, as well as annual totals. (Claims relating to security and disability assistance are published only in aggregate form). http://www.parliamentary-standards.org.uk/.

[62]    http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/GrecoEval4%282012%292_UnitedKingdom_EN.pdf.

[63]    Paragraphs 85-101 of the Executive Summary, An Inquiry into the Culture, Practices and Ethics of the Press, November 2012, http://www.official-documents.gov.uk/document/hc1213/hc07/0779/0779.pdf.

[64]    Home Secretary Theresa May speaks about police integrity on 12 February 2013, https://www.gov.uk/government/speeches/speech-by-the-home-secretary-on-police-integrity.

[65]    http://www.fsa.gov.uk/pubs/other/anti-bribery-investment-banks.pdf.

[66]    These included insufficient consideration of FSA rules covering bribery and corruption; inadequate and incomplete risk assessment; lack of senior management oversight; and insufficient visibility and monitoring of gifts, hospitality and expenses

[67]    Financial Services Authority, Anti-bribery and corruption in commercial insurance broking, May 2010, http://www.fsa.gov.uk/pubs/anti_bribery.pdf.

[68]    http://www.fsa.gov.uk/library/communication/pr/2011/066.shtml In March 2012, the FSA fined the private bank Coutts GBP 8.75 million for failing to follow standards intended to prevent money laundering. In December 2013, the European Commission fined eight banks a total of EUR 1.7 billion for forming illegal cartels to rig interest rates. http://europa.eu/rapid/press-release_IP-13-1208_en.htm

[69]    http://www.cftc.gov/PressRoom/PressReleases/pr6289-12.

[70]    http://www.fsa.gov.uk/static/pubs/other/ia-libor.pdf.

[71]    FSA, Banks’ management of high money laundering risk situations, June 2011, pp. 2-25, http://www.fsa.gov.uk/pubs/other/aml_final_report.pdf.