Corruption hurts; transparency heals

CONCERNS over corruption and transparency are rarely just an internal issue for one particular country, at least according to the signal broadcast by transparency watchdogs, business leaders and diplomats over the past decade. Foreign investors have made huge investments in Slovakia in that time and, while they rarely comment, they are sensitive to large-scale corruption cases, transparency concerns or tainted public procurement procedures. However, it is not just investors that have detected enduring problems in the area of Slovak government transparency. The recently published United States Department of State report on the state of human rights worldwide notes, in its survey of Slovakia, that among several widely reported cases of large-scale corruption and lack of transparency in public procurement, three resulted in the replacement of high-level government officials.

CONCERNS over corruption and transparency are rarely just an internal issue for one particular country, at least according to the signal broadcast by transparency watchdogs, business leaders and diplomats over the past decade. Foreign investors have made huge investments in Slovakia in that time and, while they rarely comment, they are sensitive to large-scale corruption cases, transparency concerns or tainted public procurement procedures. However, it is not just investors that have detected enduring problems in the area of Slovak government transparency. The recently published United States Department of State report on the state of human rights worldwide notes, in its survey of Slovakia, that among several widely reported cases of large-scale corruption and lack of transparency in public procurement, three resulted in the replacement of high-level government officials.

“The law provides criminal penalties for official corruption; however, the government did not always implement the law effectively, and some officials engaged in corrupt practices with impunity,” reads the report. “There were also concerns, particularly in the business sector, about the privatisation of justice. Some reported that court proceedings have become a contest of vested interests and connections to the judicial powers.”

According to the report, while the country has some financial disclosure laws, compliance was the exception rather than the rule. The World Bank's Worldwide Governance Indicators also reflected that corruption remained a problem, the report noted.

Thus the two largest scandals generated by the government of Robert Fico have made it into one of the most-closely watched reports released into the international arena.

The so-called bulletin-board tender ended the ministerial careers of Slovak National Party (SNS) nominees Marian Janušek and, earlier this month, Igor Štefanov, at the Construction Ministry after a tender worth €119 million was published only on a bulletin board in a part of the ministry not normally accessible to the general public. The resulting contract was then awarded to the sole bidder, a consortium including two companies, Zamedia and Avocat, believed to be close to SNS leader Ján Slota.

The second mega-scandal is the sale of tens of millions of euros-worth of carbon dioxide emissions quotas to a US-based company, Interblue Group, back in 2008. This company, whose registered address was revealed to be a lock-up garage in Washington State, has since morphed into Interblue Group Europe, a company that has asserted – but not yet provided documents to prove – that it is the legal successor to the original firm. SNS nominee Ján Chrbet and then his short-lived successor as environment minister, Viliam Turský, were sacked for their role in the controversial deal, in which Slovakia sold its quotas for much less than the prices obtained by its neighbours for their own emissions quotas.

The report also notes that Fico, after sacking Turský, then stripped his party, the SNS, of control over the Environment Ministry due to a “continuous lack of expert capacity to lead the ministry”. The report goes on to say that “despite the removal of key players at the ministry for suspected corruption, authorities undertook no criminal investigation” by the time the report was completed.

The December 2008 recall of the head of the telecommunications regulatory authority Branislav Máčaj also made it into the pages of the report. He was sacked by parliament at the request of Transport Minister Ľubomír Vážny for what Vážny called a failure to adopt digital television standards in a timely fashion.

“Máčaj subsequently charged that financial interests behind two domestic television networks unduly influenced the digital television strategy favoured by the coalition's leading party, and that high-ranking government officials threatened to fire him if he insisted on continuing with an open tender based on technical selection criteria,” reads the report. “That strategy aimed to preserve existing market shares for broadcasters, whereas Máčaj’s plan was to admit more competition as a condition for broadcasters to participate in new market offerings.”


According to the report, NGOs cited a need for greater public awareness of the government’s responsibility to provide information.

“During the year both the Constitutional Court and the Judicial Council restricted access to information,” reads the report. “The government often declined to provide information, reacted with extreme delay to requests, or released only heavily redacted information.”

The issue of the worsening perception of corruption in the Slovak business environment was raised during a recent American Chamber of Commerce survey as well. AmCham conducted a survey among foreign investors during March and June 2009 to which more than 100 companies representing foreign investors from 22 different countries responded. It covered, among other areas, the issue of better regulation.

“Based on our survey, foreign investors strongly encourage the Slovak government to decrease the administrative burden on businesses, reduce rapid and non-systematic changes of legislation and allow greater discussion and involvement of various stakeholders in preparation of new legislation,” AmCham executive director Jake Slegers told The Slovak Spectator. “The survey revealed that transparency and corruption present an important issue directly impacting foreign investors in Slovakia.”

Slegers has also said that public procurement is frequently at the centre of AmCham policy activities in Slovakia, and has been for some time.

“AmCham Slovakia has a special public procurement task force which has dealt with such issues as the introduction of e-procurement in the Slovak Republic, preparation of new public procurement law, establishment of the Centralised Public Procurement Agency, and others,” Slegers said. “We have cooperated frequently with the Public Procurement Office in Slovakia. We do not have an AmCham position on concrete objections to the legislation yet, but will certainly prepare a more concrete position on the public procurement situation in Slovakia in due time.”

Respondents to the AmCham survey suggested, that rapid and non-systematic changes of legislation should be eliminated while various stakeholders should be openly invited and encouraged to take part in preparation of new legislation, according to Slegers. He also suggested that e-government should be prioritised, while the rules of public tenders, licensing and incentives should be more transparent and more in line with EU standards.

“An online procurement system would significantly increase both transparency and efficiency,” said Slegers, adding that anti-corruption efforts should begin with the education of young people.

According to Markus Halt, the spokesman of the German-Slovak Chamber of Industry and Commerce, a survey among German, Austrian and French investors last year showed that the perception of corruption had worsened, especially concerning the transparency of public tenders. Halt told The Slovak Spectator that his chamber has conducted a new survey this year the results of which are currently being evaluated.

The AmCham survey also revealed that transparency and corruption are important issues directly affecting foreign investors in Slovakia.

“Approximately 72 percent of the respondents consider the allocation of public tenders and financial resources as non-transparent, and feel that the state has not created and does not apply transparent procedures for allocation of incentives and EU funds,” Slegers said. “Furthermore, 81 percent perceive corruption as a barrier to doing business.”


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