Fighting corruption

1
Fighting corruption improving quality and
reducing the costs of public services

• Boris Divjak
• Transparency International BiH
• Sarajevo, 05. 03. 2003.g.

2
Problems in BiH
Source Transparency International BiH Survey,
March-April 2002, sample1200 respondents from
whole BiH
3
Where and how much?
Involvement in corruption of officials at
various levels of government in BiH, by
regions. Percentages relate to high and very
high involvement. Source Survey TI-BiH, 2002
4
State Capture
How many officials are involved in
corruption? Source Research TI-BiH, 2002
5
Harmfulness of Corruption
Source Survey TI BiH, 2002.
6
Corruption and economic development
Counter-proportional relation between the GDP per
capita and CPI Source IMF working papers, 2001.
7
Economic costsof corruption

• Negative effects on investment and growth
• Negative effects on private sector development
• Increase in administrative expenditures
• Negative effect on public sector
• Reduced quality of goods and services
• Increased poverty rate
• Organized crime
• Reduced credibility of the state

8
Corrupt privatization
Who benefited most from the privatization
(Source TI BiH, 2002)
9
Corrupt public procurement
What is, in your opinion, the extent of
corruption in public procurement by Entity
Governments (Source TI BiH, 2002)
10
Corrupt business environment

• Example supervisory agencies (inspection, tax
  officials)
• FBiH inspections visited companies 2,26 times
  with 2,5 inspectors per visit, during 3,41 days
  (Source FIAS)
• RS inspections visited companies 2,55 times
  with 2,77 inspectors per visit, during 4,72
  days (Source FIAS)
• Average bribe
• 120 KM (Source SB, 2000.)
• 421 KM in RS and 278 KM in FBiH (Source FIAS,
  2002.)
• 188 KM (Source TI BiH, 2002.)
• Frequency of bribe 23,6 private entrepreneurs
  were asked bribe in the last year (TI BiH)
• 39,5 private entrepreneurs find that almost all
  employees in the supervisory agencies are engaged
  in bribe

11
Basic measures

• Increased accountability and transparency in
  public sector operations public finance
  management, public budgets, prohibition of
  conflict of interest, depolitization of
  administration
• Increased competitiveness of private sector
  through reduction of administrative procedures,
  de-monopolization, termination of individual
  privileges
• Civic involvement associations for controlling
  and fighting corruption, organizing political
  parties, influence on the leaders
• Comprehensive legal reform must lead to
  rationalization of courts and prosecution, and
  adoption of all laws that would contribute to
  their professionalization and improved
  efficiency. The work of the police must be
  subject to ongoing reforms, and in FBiH also
  needs to improve coordination between the
  different levels

12
Economic measures

• harmonized or even reduced tax rates, with
  transparent and rational public revenues
  administration
• smaller, faster and less expensive administrative
  and bureaucratic apparatus, client oriented
• regulatory, not repressive control system,
  professional and coordinated
• independent and efficient commercial judiciary
• legal regulations reduced to minimum, its
  optimization and functionality inexistence of
  trade barriers in the country or region
• reduced state monopoly, improvement and reduction
  of costs of utility services, including the
  infrastructure
• urgent completion of the privatization process,
  with continuous restructuring of large economic
  entities, and speedy liquidation where necessary
• equalization of rules for private sector and
  immediate termination of protecting state sector,
  as well as leaving the politics and appointments
  along the party lines from the the companies

13
Public sector management

• Increased public sector responsibility and
  transparency management of public finances,
  transparent and foreseeable budgets and fiscal
  policy, preventing conflict of interest and
  establishing a professional administration
• Treasuries established at all levels
• Supreme audit institutions established and
  regularly report to the parliaments and public
• Reforms of tax and customs administrations
  institutional and legal
• Preventing conflict of interest implementation
  of the new law at all levels (with more
  effective implementation of the Law on Free
  Access to Information)
• Professinalization and depolitization of
  administration setting up public administration
  institute for staff training and strategic
  planning leaving behind the principle of
  national quotas

14
Competitiveness and private sector development

• Increased competitiveness of private sector
  through removal of administrative barriers,
  de-monopolization and creating identical
  conditions of doing business for all 
• FIASs Administrative Barriers Study a Working
  Group established and Action Plan of
  privatization of the remaining state owned
  capital adopted
• Privatization of state capital in companies and
  banks ongoing
• It is necessary to ensure continuous work of the
  Work Group and to update the Action Plan by
  increasing the ownership of the BiH agencies, not
  international community (e.i. Bulldozer
  Commission), established internal and external
  domestic mechanisms to monitor the implementation
• Unnatural monopolies must be eliminated, or the
  price ceilings must be set for services (for
  instance, telephone and electric energy)
• Privatization of the remaining capital must be
  done quickly and through the stock exchanges. It
  is necessary to urgently implement the law on
  bankruptcy and liquidation
• All internal trade barriers and privileged
  treatment must be terminated

15
Anti-corruption partnerships

• Civil involvement anti-corruption NGO and
  watchdogs, independent institutions of state
  integrity, partnership with governments and
  public pressure
• Established ombudspersons
• TI BiH is the only BiH anti-corruption NGO
• OHRs Anti-Fraud Department is active in
  investigating large scale corruption and
  strategy development
• Independent media young sector that develops
  quickly
• OSCE has developed the rules of transparent
  political party financing continuous role of
  the Election Commission in supervision
• Insufficiently defined and inexistent mechanisms
  of conflict of interest supervision
• Law on Public Services is necessary, which would
  cover as wide as possible range of services

16
State integrity system
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