New law targets shell firms

Anti-corruption advocates argue that new measures don’t go far enough.

Justice Minister Lucia ŽitňanskáJustice Minister Lucia Žitňanská (Source: TASR)

A more effective law that would prevent shell companies from earning money from public resources was what the junior coalition members Most-Híd and Sieť set out as their condition for entering the government with Smer and the Slovak National Party (SNS).

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Justice Minister Lucia Žitňanská of Most-Híd pledged to prepare the law within the first 100 days of the government. That deadline passed on July 1, and the law, officially known as the law on the register of partners of public sector, made it to the interdepartmental review on that day.

Read also: New anti-shell law is a priority Read more 

Shell companies have played a role in most of the country’s major corruption scandals and allegations, most recently the Medical Group in 2014 that was involved in the overpriced purchase of a CT device in the Piešťany hospital.

Read also: CT scandal rocks politics Read more 

While the ministry pledges the involvement of attorneys and auditors, higher fines, and the threat of being permanently excluded from any business with the state could sufficiently guarantee the law will be more effective than the current legislation, some observers are sceptical and point to ways the proposed provisions could be circumvented or rendered irrelevant.

“The proposal to widen the current register of owners of companies who do business with the state, and doubling the check of data through attorneys or tax advisers is welcomed, but in the Slovak circumstances it is really just a small step in the fight against shell companies,” Transparency International Slovensko non-governmental watchdog commented on the draft law on July 13.

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