RESOURCE MATERIAL SERIES No.80

MONTENEGRIN RESPONSE TO CORRUPTION– INSTITUTIONAL AND POLICY REFORM –Marija Novkovic*

I. INTRODUCTORY REMARKSThis paper will elaborate on the approach that Montenegro has employed in fighting corruption, with aparticular emphasis on the legislative efforts regarding incriminations, in line with the leading internationalanti-corruption instruments, institutional setup for prevention, detection, investigation and adjudication ofcorruption offences, as well as the more recent proactive initiatives in the area of criminal justice. The focus
will be on measures to detect corruption, such as special investigative means, procedures for reporting
corruption and whistleblower protection, and the regime for confiscation of the proceeds of crime, to be
introduced by the upcoming adoption of the new Criminal Procedure Code (CPC). Throughout the paper,
reference will be made to the United Nations Convention against Corruption (UNCAC) and the mutual
evaluation conducted by the Group of States against Corruption (GRECO).

II. INCRIMINATION OF CORRUPTION OFFENCES
The inception of anti-corruption efforts in Montenegro can be traced back to 2001, when the Governmentof Montenegro established the Directorate for Anti-corruption Initiative (DACI). The DACI is inherently
a preventive body; therefore, it facilitated the adoption of a number of anti-corruption lex specialis, e.g. in
the areas of money laundering and conflict of interests. The forthcoming period has been marked with therounding up of the legislative framework and institutionalisation of the fight against corruption.
Following a public referendum, which resulted in the demise of previous federal structures, and asubsequent Parliamentary declaration of independence in June 2006, Montenegro has reconfirmed its
dedication to the goals and purposes of the UN. Montenegro deposited a notification of accession to the United
Nations Convention against Corruption (UNCAC), the first truly global anti-corruption treaty, in October 2006.
Efforts to implement the Convention effectively through the domestic legislation have been undertaken in theprevious years. The Directorate for Anti-corruption Initiative, joining efforts with the UNDP, conducted anassessment of compliance of the criminal legislation with the provisions and requirements of the Convention.
It was concluded that high level of compliance had been achieved inasmuch the offences of corruption had been
codified in the Criminal Code, with the exception of trading in influence (Article 18), illicit enrichment (Article20) and obstruction of justice (Article 25). This is not to say that these Convention offences are not consideredillegal behaviour in Montenegro; rather these are sanctioned through complementary measures of the criminal
justice system, e.g. through incriminating the abuse of official duty, through procedures for deprivation ofillegally acquired property and through provisions of criminal procedure.
When it comes to the perpetrator of the mentioned criminal offences, the Criminal Code gives broad
effect to the incriminations, as the Article 142(3) offers the definition of what is to be considered ‘a public
office holder’: a person who performs official duties with state authorities; elected, appointed or designatedperson in a state authority, a local self-government body or a person who performs on a permanent or
temporary basis official duties or official functions in these bodies; a person in an institution, company orother organization to whom the performance of public powers is assigned, who decides on rights, obligations
or interests of natural and legal persons or public interests. Additionally, these offences are not limited to aparticular setting, and may be committed in either public or private sector.

* Head of the Department for Preventive and Promotional Activities, Directorate for Anti-corruption Initiative, Montenegro.

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III. THE INSTITUTIONAL SETUP FOR PREVENTING AND SUPPRESSING CORRUPTION
The criminal justice system of Montenegro is largely inquisitorial in nature, with some recent reform
processes which introduce a flavour of the adversarial system, which will be elaborated in the next section.
The police are tasked with detection of criminal offences; the investigation is entrusted to the investigative
judge who must co-operate closely with the police. The criminal charges in the form of an indictment will be
brought forward by the State Prosecutors and courts will have the final say in the procedural cycle.

A. Detection of Corruption Offences
Police tasks and affairs are defined by Article 2 of the Law on Police (“Official Gazette”, No. 28/05)
comprising:(i) protection of citizens’ security and freedoms and rights guaranteed by the Constitution;(ii) protection of property;(iii) prevention and detection of criminal offences and misdemeanours;(iv) identifying and capturing offenders;(v) maintaining order and peace;(vi) surveillance and protection of the state border and performing border control;(vii) control of movement and stay of foreigners.
Substantial efforts have been deployed to specialize various segments of the criminal justice system foreffective suppression of corruption. The Department for Suppression of Organised Crime and Corruption
operates within the Criminal Police Sector of the Police Directorate.

B. Detection of Money Laundering and Terrorism Financing
The Directorate for the Prevention of Money Laundering and Terrorism Financing was established in
December 2003 as an autonomous public administration body, in order to enforce the Law on the Preventionof Money Laundering and Terrorism Financing (“Official Gazette”, no. 14/07, 4/08).
Specific competences derived from the Law caused the Directorate to be established as an administrative
financial intelligence unit. Apart from detection of money laundering and terrorism financing, the Directorate
is also in charge of initiating and conducting first instance misdemeanour proceedings, in the cases of breachesof the Law. It collects and analyses data needed for the detection of money laundering and terrorism financing
and creates the list of indicators of suspicious transactions which is shared with the reporting entities. The
scope of the law is wide inasmuch as the list of reporting entities includes all relevant actors in the financial andbusiness operations, i.e. banks, insurance companies, stock exchanges, broker companies, etc. The Directorate
for Prevention of Money Laundering and Terrorism Financing co-operates closely with the Police Directorate
and State Prosecution; however, there have only been a handful of money laundering cases which resulted in a
final judgement of the court.

C. Prosecution and Adjudication of Corruption Offences
Specialized departments have been established in the judiciary so as to take concerted action against
corruption. The Law on State Prosecutor (“Official Gazette”, no. 69/03, 40/08), adopted in 2003 and amended
in 2008, provided for the establishment of the Special Department for Suppression of Organised Crime,
Corruption, Terrorism and War Crimes. Corresponding chambers have been formed in two High Courts inMontenegro so as to achieve concentration of competences, higher levels of specialization and, eventually,
more effective adjudication of these offences.
According to the Criminal Procedure Code (“Official Gazette”, No. 71/03, 07/04, 47/06), the state prosecutor
is, regarding the criminal offences that are prosecuted ex officio, competent to:(i) conduct pre-trial proceedings;(ii) request that an investigation be carried out and direct the course of preliminary proceedings,(iii) issue and represent an indictment or indicting proposal before the competent Court, i.e. in the caseof organized crime before the Special Chamber of the High Court;(iv) file appeals against Court decisions that are not final and to seek extraordinary legal remedies
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RESOURCE MATERIAL SERIES No.80(v) undertake other actions determined by the Code.
The Special prosecutor is competent to prosecute criminal offences committed throughout the territoryof Montenegro.

D. Prevention of Corruption
The DACI is tasked with prevention of corruption. The DACI is not entrusted with detection andinvestigation of corruption related offences. Its operations relate predominantly to preventive activities such as:(i) Awareness raising, including researching the phenomenon of corruption, the form it takes, its
causes, etc;(ii) Co-operation with relevant state bodies aimed at drafting and implementing of the legislative andprogrammatic documents in the area of anti-corruption;(iii) Co-operation with non-government organizations and private sector towards combating corruption;(iv) Co-operation with state authorities related to the corruption reports that Directorate receives fromthe citizens and other subjects;(v) Proposing to Government the adoption and implementation of European and other anti-corruption
international standards and instruments;(vi) Monitoring the implementation of recommendations of GRECO (Group of States of the Council ofEurope against corruption);(vii) The co-ordination of activities that arise from the applying of UN Convention against corruption.
However, in the past period and, particularly, in the research of integrity and capacity of the judiciaryin Montenegro,1 it transpired that the citizens report corruption reluctantly. The DACI operates an anticorruption hotline where citizens may report suspicions of a criminal offence having taken place. Thus, the
DACI acts as a mediator between the citizenry and the law-enforcement authorities.

IV. FROM REACTION TO PRO-ACTION: THE MOST RECENTCRIMINAL JUSTICE INITIATIVES
A. Special Investigative Means
Montenegrin law-enforcement and judicial authorities have often stated that the lack of convictions in
corruption related offences was directly caused by the fact that corruption is a clandestine activity and thatthe police were hampered by legislative constraints from using special investigative means to detect andinvestigate corruption. Special investigative means were introduced in 2003 by the Criminal Procedure
Code (CPC);2 however, they can be brought into play in relation to offences committed within a criminalorganisation, as well as offences sanctioned by imprisonment of at least ten years or a more severe penalty.
These measures, inter alia , include:(i) secret surveillance and sound recording of telephone conversations;(ii) secret photographing and video recording in private premises;(iii) simulated purchase of objects and persons and simulated giving and taking of bribe;(iv) supervision of the transportation and delivery of instrumentalities of criminal offence;(v) use of an undercover investigator and witness.
This legislative arrangement has been addressed by the GRECO in the Joint First and Second Evaluation
Rounds, recommending for the scope of the provisions to be extended to cover all corruption-related
offences.3 Consequently, the Proposal CPC4 proposes the use of the special investigative techniques in
the pre-trial proceedings, as well as in the investigation stage. An amendment to the previous regime isintroduced and the list of criminal offences in relation to which the techniques may be employed is provided
1 Research was commissioned by the DACI. It was finalized and published in October 2008.
2 Criminal Procedure Code, Articles 237-242.

3 The Report on Joint 1st and 2nd Evaluation Rounds was adopted by GRECO, at its 30th Plenary Session. Strasbourg, France,

9-13 October 2006. The Report is available at:www.coe.int/t/dg1/greco/evaluations/index_en.asp.
4 Adopted by the Government of Montenegro; currently awaiting parliamentary debate and adoption.

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for. The list specifically mentions the following corruption related offences:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)(xiv)

money laundering;violation of equality in the conduct of business activities;
abuse of monopolistic position;
causing false bankruptcy;
abuse of assessment;
disclosing a business secret;disclosing and abusing a stock-exchange secret;active bribery;passive bribery;
disclosure of official secrets;
illegal mediation;
abuse of authority in business activities;
abuse of official status; andfraud in service.

The expected adoption of the Proposal CPC will thus extend the scope of these penetrating investigating
techniques and provide leverage to the law-enforcement bodies. At this point, it would be useful to offer an
example of the procedure for the use of special investigative means. The case revolves around activities
of a financial inspector who attempted to induce a bribe. The owner of a private commercial company
turned to the Police Directorate, stating that a financial inspector has not discharges his duties in a lawfulmanner, since he requested a payment for which he offered to be more lenient in his control. The police
officers swiftly informed the competent state prosecutor who issued specific guidelines as regards thecourse of action. It was agreed that the owner of the company would simulate active bribery, with a set ofbills which have been marked. Preparatory actions were taken and the owner of the company called thefinancial inspector to come at a specific time, so as to give the bribe in exchange for a lenient treatment of
his company. The owner simulated giving of bribe and the financial inspector walked away with marked bills.
He was then apprehended by the police; he was searched and marked bills were found. A crime report for
passive bribery was submitted to the state prosecutor and the person was turned to the investigative judge
who ordered one month of detention, on account of charges for passive bribery.

B. Confiscation and Reversed Burden of Proof
Criminal offences of corruption are inherently profit-driven offences. Therefore, taking the ill-gotten
assets away from the offenders is one of the main pillars of the UNCAC. The proviso of Article 31 isformulated to that effect and contains a number of obligations for the Parties. The underlying obligation
is to enable confiscation of proceeds acquired by a criminal offence established by the UNCAC, including
its equivalent value; as well as instrumentalities used or planned to be used in a Convention offence.
Furthermore, States Parties are required to introduce measures directed at identification, tracing, freezingor seizure of all objects and property that would be subject to confiscation. States Parties are expected
to consider shifting the burden of proof to the offender in relation to origin of property which is liable for
confiscation.
Confiscation of the proceeds of crime, including but not specific to corruption, is regulated by Chapter
VII of the Criminal Code,5 as well as by Section 2 of Chapter XXXI of the Criminal Procedure Code.6
Confiscation of proceeds acquired by a criminal offence may be ordered in the framework of a sentencing act(a conviction; a warrant pronouncing a sentence issued without the trial; a ruling on a judicial admonition; ora ruling imposing a security or corrective measure).7 Therefore, confiscation of material gain is inextricably
linked to a conviction of the perpetrator. During the course of the criminal proceedings, it is the duty of thecourt to determine the extent to which the defendant has increased his property and possessions.
With regard to the confiscation of criminal proceeds, GRECO addressed a recommendation, calling for
guidelines to be issued addressing effective methodology for financial investigations that would enableseizure and confiscation in corruption cases. Moreover, it was highlighted that law enforcement and5 Criminal Code, Articles 112-114.

6 CPC, Articles 538 – 545 (Proceedings for confiscation of property gain).
7 Ibid , Article 542.

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prosecutorial services must benefit from training programmes, tailored to enable, promote and encourage
better use of the means available for identifying, tracing and seizing the proceeds of crime, including
corruption.8 It was further recommended to encourage seizing of the proceeds of corruption offences inthe earliest stages of the preliminary investigation, in order to secure possible confiscations.9 Clearly, aproactive approach is called for; one that would look ahead and secure the property for the more advanced
stages of the proceedings that could eventually result in a confiscation order.
The timely and efficient disposal of criminal proceedings has been one of the most highly regarded goals
in the reform process of the criminal justice system in Montenegro. This objective is to be realized by, interalia, consolidating the role of the prosecution in the initiation and conduct of the investigation. The Proposal
CPC stipulates that an investigation is instituted by an order of the State Prosecutor. The order is final andis not subject to appeal. The course of the criminal justice reform in Montenegro is that of combining thefeatures of both adversarial and inquisitorial systems. A useful case in point could well be the reversal of
the burden of proof in the section 283 of Chapter VII which deals with evidence. Articles 85 to 89 regulate
provisional measures, i.e. seizure of objects that are likely to be confiscated or could be used as evidence inthe court proceedings. However, Article 90 deals specifically with seizure of objects or property suspected
to originate from a criminal offence.
In order to set in motion seizure of ill-gotten property, the prosecution must apply to the court, providing
a summary of the criminal offence; the specifics of the objects, property or profits; the personal data of thesuspect; as well as the grounds of suspicion that have been acquired by a criminal act. More importantly, theprosecution must submit compelling evidence pointing to the fact that, by the end of the trial, the seizure/confiscation of the ill-acquired profits will be significantly more difficult or even impossible. The provision
may be invoked in the early stages of the proceedings and the person affected by the order of seizure may
challenge the decision of the court. The court will be obliged to annul the order only in the event thatthe defendant manages to demonstrate, by means of documentary evidence or in any other manner, thatproperty comes from a legitimate source.10
Thus, the departure from the traditional rules of evidence, when the prosecution bore the onus of proving
beyond reasonable doubt all elements of a criminal offence, is signalled by the shift of the burden of proof in
relation to seizure. However, certain concerns remain as to the compatibility of the proposed regime withthe exigencies of the European Convention on Human Rights, particularly Article 6 on the right to a fairtrial. It could be argued that the proposed reversal of the burden of proof in the pre-trial proceedings runs
counter to the presumption of innocence (Article 6(2)). Presumption of innocence is a building block of theright to a fair trial, and as such safeguarded in the Constitution of Montenegro and the Criminal Procedure
Code. Moreover, the jurisprudence of the European Court of Human Rights is prolific when it comes to
Article 6. The right to a fair trial is of paramount importance; therefore, any activity with potential impact
on the fair and impartial administration of justice must be vigorously scrutinized. “It was held in Kostovski
v. Netherlands that ‘the right to a fair administration of justice holds so prominent a place in a democraticsociety that it cannot be sacrificed to expediency’”.11
The Strasbourg Court has already dealt with the reversed onus of proof in relation to the confiscation
orders. However, in Phillips v. The United Kingdom12 confiscation procedure was preceded by a conviction
for involvement in the importation of a large amount of drugs. During the confiscation procedure, the burdenof proof was placed on the offender, and the standard was on the balance of probabilities. The Court took aholistic stance in ascertaining the nature of the confiscation proceedings under the relevant UK legislation.
The Court pointed out that confiscation orders follow through the conviction of the defendant and do notentail bringing new charges against the convicted offender. Thus, the confiscation proceedings were equatedwith the sentencing process inherent to criminal proceedings resulting in a conviction. It is due to thisconclusion that the Court found the presumption of innocence does not apply to the confiscation proceedings
8 See n3 above, 17.
9 Ibid , 18.

10 Proposal CPC, Article 93(3).

11 S. Greer, The European Convention on Human Rights: Achievements, Problems and Prospects, Cambridge

University Press New York 2006, 252.

12 Phillips v. The United Kingdom , 41087/98, 5 July 2001, 11 B.H.R.C. 280.

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instituted against Mr. Phillips.13 The House of Lords reached much the same conclusion in two later cases on
confiscation of proceeds from drug offences.14
These cases bring to the fore features of the UK’s criminal confiscation – it is dependent upon theconviction, triggering the process of deprivation of the ill-gotten assets. And in the ensuing phase of theprocedure, the one aimed at ascertaining the property which shall he confiscated, there is an express
reversal of the onus of proof, calling for the defendant to rebut the assumptions that it originates from an
offence. Thus, it would follow from the reasoning of the European Court of Human Rights and the House ofLords that the presumption of innocence is not violated in confiscation proceedings, provided that there is avalid conviction to set in motion the determination of the amount to be confiscated. It is established that thestatutory assumptions on the origin of property do not amount to a fresh criminal charge, which effectively
renders Article 6(2) inapplicable. It is for the prosecution to initiate the confiscation proceedings. In any
event, the court is obliged to reverse its assumption if the defendant discharges a persuasive burden of
proof; in much the same vein, the court must refrain from any action that would create serious injustice forthe defendant.

C. Whistleblower Protection
The most recent initiative in the anti-corruption area has been the protection of whistleblowers. This wasachieved through the amendments of the Law on Civil Servants and State Employees. Article 54 prescribesthat the employment of civil servant and state employee, who report criminal offence of corruption to the headof a state authority or an authorized person, cannot be terminated on this basis. These persons are guaranteedthat their identity will not be disclosed to unauthorized personnel, as well as the protection from abuse, denial
or limitation of rights, set forth in the Law. Should there be reasonable fear that life, health, physical integrity,
freedom or properties of a civil servant and state employee are endangered; whistleblowers are protectedpursuant to the special provisions on witness protection.
In order to effectively implement provisions of the law and to encourage citizens to report cases ofcorruption, the Director of the Police Directorate adopted the Professional Directive on procedures forreporting corruption offences and protection of persons who report these crimes to the Police Directorate
in October 2008. This Directive stipulates in detail the procedures for reporting corruption offences to
the Police Directorate, the actions of authorized police officers upon corruption reports, the protection of
citizens reporting corruption, as well as the means and methods of promoting the procedures and guaranteed
protection. Designated police officer is obliged:(i) to protect the identity of the person reporting corruption, as well as the contents of the report;(ii) to undertake all necessary measures for protection of this person;(iii) to undertake immediate security assessment of threats made to the person;(iv) to protect the person reporting corruption or disclosing such information from abuse and humiliating
treatment; and(v) to undertake measures for protection of this person in accordance with the law, and should the threats
prove to be reasonable, to undertake measures of protection in accordance with the Law on Witness
Protection.
The DACI and the Police Directorate are currently conducting a promotional campaign aiming to informthe citizens that, in case when reporting corruption, they will be granted adequate protection. Since theadoption of the Professional Directive (October 2008 to February 2009), the Police Directorate received 20
criminal charges related to corruption, 18 of which are now in the investigation phase while two have alreadybeen forwarded to the State Prosecutor. Despite these efforts, the European Commission has stated that theprotection of whistleblowers remains insufficient in practice.15

13 Ibid, paragraph 36.

14 R v Benjafield, R v Rezvi , House of Lords, 24 January 2002, [2002] UKHL 2, [2002] UKHL 1, [2003] 1 A.C. 1099

15 Montenegro 2008 Progress Report, available at: http://ec.europa.eu/enlargement/pdf/press_corner/key-documents/reports_

nov_2008/montenegro_progress_report_en.pdf.

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V. CONCLUDING REMARKS
An examination of the more recent steps undertaken in the process of the criminal justice reform indicatesthat Montenegrin legislators are determined to design a system for effective seizure and confiscation of
criminal proceeds. However, much will depend on investing in human capital. Montenegrin law-enforcement
and judicial authorities are in dire need of capacity-building and training programmes. The complexities thatgo hand-in-hand with corruption cases, i.e. its clandestine nature, the lack of a victim to report a crime, thesubsequent laundering of criminal proceeds, might act as a deterrent and actually reduce the number of initiatedproceedings. Specialization of investigators and prosecutors for corruption related offences should be considered
as a way forward, as it enhances the likelihood of a positive outcome in the struggle against corruption.
The advancements in the criminal reform will be tested come implementation time. Notwithstanding thepositive feedback of international actors on the Proposal Criminal Procedure Code, significant efforts willneed to be effectuated so as to enable its effective enforcement. The revised concept of investigation will
require an increase in human resources, particularly within the State Prosecution, who will be in charge ofconduction the pre-trial and investigation proceedings. The provisions on reversed burden of proof might betested against the backdrop of the exigencies of the European Convention on Human Rights. The protectionof whistleblowers, introduced through legislative amendments, is yet to contribute to the increase in thenumber of reported and adjudicated cases of corruption. The use of special investigative means will aim toprovide a level-playing field for the law-enforcement authorities, however further training needs be provided
in order to boost financial investigations. Finally, these repressive measures need to be assessed in termsof their proportionality, as the need for a more effective criminal justice system should not override theframework for protection of the fundamental rights and freedoms.

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