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TRANSPARENCY INTERNA-TIONAL SAYS IT HAS A PLAN TO RESTORE CONFIDENCE IN SLOVAK PRIVATISATION TENDERS

Corruption watchdog itches to help cabinet repair image

Transparency International, a German non-profit watchdog dedicated to curbing corruption around the world, is finding Slovakia a difficult nut to crack. Officials with Transparency's Slovak affiliate, which was launched in September 1998, say that the Slovak cabinet has shown little interest in using the group to monitor privatisation deals.
Emilia Sičaková, the president of Transparency International Slovakia (TIS), says that she has identified several ways in which corruption could be eliminated from public tenders on sales of state property. In the nine months that TIS has been active in Slovakia, however, the Slovak cabinet has called on their services only once - to oversee the sale of a stake in state telecom monopoly ST by the first quarter of 2000.

Transparency International, a German non-profit watchdog dedicated to curbing corruption around the world, is finding Slovakia a difficult nut to crack. Officials with Transparency's Slovak affiliate, which was launched in September 1998, say that the Slovak cabinet has shown little interest in using the group to monitor privatisation deals.

Emilia Sičaková, the president of Transparency International Slovakia (TIS), says that she has identified several ways in which corruption could be eliminated from public tenders on sales of state property. In the nine months that TIS has been active in Slovakia, however, the Slovak cabinet has called on their services only once - to oversee the sale of a stake in state telecom monopoly ST by the first quarter of 2000.

"We expected the government to show more initiative than it has shown so far," Sičaková said. "Many of the promises the government made in its programme [last October] have yet to be fulfilled. There still could be more transparency in the tender process."

Vladimír Zlacký, an advisor to Deputy Prime Minister for Economy Ivan Mikloš, said that his government should indeed have made more use of TIS's services to bolster its image. "It's up to each cabinet minister to invite TIS to monitor a tender," he said. "Maybe it was just a matter of ignorance, maybe they didn't know TIS existed or that their participation was a healthy thing, but they definitely should have been asked more often."

Slovakia finished in 48th position out of 85 countries on a "corruption perception index" compiled by Transparency International in 1998, well behind regional neighbours like the Czech Republic, Poland, Hungary and even Belarus. The index was assembled from the results of surveys conducted by the Wall Street Journal and the Centre for Economic Development.

After defeating the former government of Vladimír Mečiar in elections last September, the current cabinet made fighting corruption and restoring investor confidence in privatisation one of its main goals. However, the government's clean image has taken a beating over several recent deals, including the awarding of a mobile phone network license, the sale of a gas storage company and the selection of an advisor on the ST sale.

Zlacký said that Transparency International could help Slovakia improve its reputation for fairness. "Whenever investors see the Transparency stamp on a tender process, they are reassured that the process has been closely vetted. It builds confidence," he said.

Tools to be used

There are still many in Slovakia who believe that corruption is endemic to the country and the region. "In Slovakia, corruption is a part of good manners, part of everyday life," said Ernest Valko, a prominent Bratislava lawyer who represents the FNM privatisation agency. "In the United States, if a politician is found guilty of bribery he has to leave public life. But not in Slovakia, where corruption is as old as the oldest profession."

Such views do not impress TIS' Sičaková. "We must fight attitudes to corruption through the media, we must reach the common person," she said. "We must also use the media to put pressure on the government, to force politicians to take radical steps against corruption."

Perhaps the biggest change TIS hopes to encourage is the opening of the tender process to the public, something along the lines of the US 'Sunshine Act.'

"Through this tool - by giving the public access to all information regardiing a tender - we can control the civil service," Sičaková said, explaining that corrupt bureaucrats found it hard to operate in the public spotlight.

Sičaková added that the cabinet could increase public confidence in parliament by forcing politicians disclose their property assets and their business interests. She also recommended that cabinet ministers be made more accountable to the public - for how much they spent on business trips to whom they met while abroad.

"If [Economy Minister Ľudovít] Černák travels to France to talk with Gaz de France, or if [Telecom Minister Gabriel] Palacka holds negotiations with Deutsche Bank, they should give the public a schedule of these meetings, since taxpayers' money is being spent," she said.

The travel expenses being racked up by the cabinet have also been big news in the Slovak media recently. Reports surfaced at the end of June that Černák travelled to the High Tatras for a business meeting by helicopter, and that Agriculture Minister Pavol Koncoš authorised the purchase of five new cars (a BMW and four VW Passats) for his cash-strapped ministry.

"The main aim is to change the way the system works," Sičaková said.

Support building

Economic analysts generally applauded TIS' plans, and reserved especial praise for the idea of open tenders and media pressure on public figures. Some said, however, that fighting corruption in Slovakia called for even further-reaching reforms than TIS had envisaged.

Ján Tóth, a senior analyst at ING Barings investment bank, said that corruption was momentarily at a peak in Slovakia. Tóth described the cabinet's plan to sell off remaining state utilities and monopolies, currently making its way through parliament, as "an enormous lure for investors - it's a one-time deal that will not be repeated for another three generations. And that's why it opens so much room for corruption."

Ivan Chodák, an equity analyst with CA IB Securities, added on the other hand that 're-privatisation' - the government's programme of re-nationalising and then selling off properties that once belonged to the state, such as the Nafta Gbely gas storage site - had opened additional doors to corruption.

Much of the corruption problem, then, may simply disappear once state properties have been sold off, a view supported by the government's Zlacký. "The most important thing is to take these companies out of state hands," he said. "That will definitely cut down on corruption."

On the other hand, state employees will always be vulnerable to bribery and corruption as long as their salaries are low. "If specialists working at the ministries are paid poorly, then certain things happen," said Tóth.

And if political parties are restricted from public fund-raising, Tóth added, then politicians are forced to rely on "unclear and corrupt sources of financing for their parties."

Fighting corruption in Slovakia, then, may involve tools as various as open tenders, media pressure, improving civil service wages, reforming political party funding and increasing the public accountability of politicians. But while the right treatment may be in dispute, the diagnosis is certain - Slovakia's image is still poor.

"Some high officials have not been acting in accordance with the government's intentions," said Zlacký. "Some personal consequences should follow."

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