REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT EU ANTI-CORRUPTION REPORT 
Date: 2014-02-03
Institutions: European Commission
Subjects: EU Member State, EU statistics, corruption, fraud, fraud against the EU, invitation to tender, organised crime, political parties, supervisory body













EUR-Lex - 52014DC0038 - EN











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52014DC0038

REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT EU ANTI-CORRUPTION REPORT /* COM/2014/038 final */









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.