“Balkan Anti-Corruption Civic Initiative” Zagreb, May 16, 2011 Project financed by EU Commission within IPA Programme. Project implemented by Partnership.

“Balkan Anti-Corruption Civic Initiative”

Zagreb, May 16, 2011Project financed by EU Commission within IPA Programme.Project implemented by Partnership for Social Development Croatia, Open Society Fund Serbia, Centre for Development of Non-Profit Sector Serbia, Romanian Academic Society Serbia and Open Society Fund Bosnia and Herzegovina

BACCI BACCI Balkan Anti-Corruption Civic InitiativeBalkan Anti-Corruption Civic Initiative

Project financed by EU within IPA Programme Civil Society Facility: Support to Partnership Actions “Fight against Corruption, Organised Crime and Trafficking”

Conflict of Interest and Corruption:Conflict of Interest and Corruption:

Phenomenon and level of influence on Phenomenon and level of influence on public administration’s work and public public administration’s work and public

interest in Republic of Croatia.interest in Republic of Croatia.

Understanding corruption and conflict of interest is a pre-condition to fight against them.

Simplification of transfer of legal solutions, individual measures or organisational systems on corruption suppression, without prior defining of the state of affairs and national or local diagnostics of the phenomenon, leads to eternal frustration due to eternal fight without visible results.

EU Commission in its Progress Reports for Western Balkan countries continuously states that “conflict of interest is not understood on all levels”

What is it that we don’t understand?

Conflict of interest is conflict between one or more interest in a venture, where a less important interest(s) or a less principled interest(s) overcomes the most important or most principled interest(s) and in doing so venture suffers damage or its effectiveness is reduced.

Corruption is every activity which lies on misuse of public powers for private gain or use by official(s) or person deciding on public interest.

Conflict of interest, even though not representing corruption per se, it represents the basis of organised and systemic corruption.

By reducing corruption to bribery, we, by ourselves, are reducing potential impact of measures for suppression of corruption.

Efficient prevention of corruption and prevention of conflict of interest is based on transparency of public body’s work, availability of data and possibility of distribution of that data and

opinions on how the state works toward public so that public can form their opinion on the work

of public bodies and officials.

World Bank Indicators

World Bank – democracy scores, 1999/2000–2010

Last 10 Years of Fight against Corruption in Last 10 Years of Fight against Corruption in BalkansBalkans Period 2000-2003 coincides with big changes in Balkan

countries and adoption of the first package of basic laws for suppression of corruption (Freedom for Access to Information Act, improved public procurement laws, Law on Suppression of Conflict of Interest).

After the first uplift of reforms, all parameters measuring development of democracy, freedom, human rights and fight against corruption had been stagnating up to 2007/2008, when a negative trend started which continued even today.

Even a superficial data analysis shows that the money spent, work and resources haven’t produced expected results and that it is needed to seriously consider the reasons which are making fight against corruption stagnating.

Freedom for Access to Information Act (FOIA)Freedom for Access to Information Act (FOIA)

INSTITUTION / CITYNr. of

requests sent

Complete answers

Incomplete answers

Requests rejected

No answer

City of Zagreb 11 2 5 2 2

City of Split 11 7 3 0 1

City of Sisak 11 7 2 1 1

City of Osijek 11 2 1 0 8

City of Čakovec 11 6 2 0 3

Ministry of the Interior 9 2 2 1 4

Ministry of Administration 9 4 0 4 1

Ministry of Health and Social Welfare 9 5 4 0 0

Ministry of Finance 9 5 4 0 0

TOTAL 91 40 23 8 20

FOIA (in total 91 requests for information)FOIA (in total 91 requests for information)

44% 44% of answers to requests were incomplete

In 31% 31% of cases, access to information was not possible

25% 25% of answers to requests were incomplete, data requested for research was not delivered (e.g. names of members of committees for public procurement)

Law on Suppression of Conflict of InterestLaw on Suppression of Conflict of Interest

Law on Suppression of Conflict of Interest, with its new amendments, holds its focus on officials’ assets and not on detection and sanctioning of conflict of interest and as such, it will not bring relevant changes in relation to current state of affairs

Conflict of Interest and the New LawConflict of Interest and the New Law Committee, or political subjects via Committee, remain the

only parties empowered to start investigations on conflict of interest. Based on claims Committee can, but doesn’t have to start investigations.

Small number of officials are obliged to abide by the law on national and local level, which leaves a lot of space for manoeuvre for political and/or organised corruption via those deciding on public interest and those responsible for protection of public interest.

Example: one of crucial institutes responsible for protection of public interest on Croatian Radiotelevision (HRT) – almost completely out of the scope of the Law (HRT Management as executive body of HRT).

Amendments don’t follow Council of Europe recommendations regulating conflict of interest, i.e. difference between real, potential and spurious conflict of interest, and material and immaterial advantage deriving from them (the Law deals with property and ownership).

Conflict of Interest and the New Law - Conflict of Interest and the New Law - sanctionssanctions Annulment of legal acts deriving from conflict of

interest is possible only in public procurement procedures while employment, appointment or other legal acts adopted in conflict of interest remain in force.

Removal of or paying for damages deriving from conflict of interest is not defined by law.

Sanctioning of untrue data on property/assets in Declaration of Assets is possible, but sanctioning of untrue data tied to interests and potential immaterial advantage for officials is not possible.

Conflict of Interest and the New Law - Conflict of Interest and the New Law - sanctionssanctions Sanctions for breaking the Law tied to

property/assets, gifts, fees, other work, membership in managing bodies and committees, limitation of business activities for enterprises and obligations to inform about gaining assets are:

warning notice, suspension of one part of monthly salary (2.000 – 40.000 kuna) for a maximum time limit of 1 year, publishing of Committee’s decision

Conflict of Interest and the New Law - Conflict of Interest and the New Law - sanctionssanctions Only in cases when an official rejects to execute

Committee’s decision about correction of Declaration of Assets, the Committee can make a proposal to remove the official from his/her office.

Responsible body within which the official in question is working is not obliged to implement this proposal.

Possibilities for removal of an official in cases of conflict of interest don’t exist.

Request for removal of an official – Committee can ask for his/her removal only in cases tied to non-fulfilment of Committee’s requests related to data in Declaration of Assets. – Similar opportunities related to conflict of interest don’t exist.

Conflict of Interest and the New LawConflict of Interest and the New Law

Conflict of interest management mechanisms (what to do when a potential conflict of interest arises) cannot provide answers to real situations of officials.

Sole clear regulation of conflict of interest lies in public procurement procedures when they include direct conflict of interest, while the rest of procedure is more or less outside the scope of efficient legal acts.

Transfer of rights (owner’s share in enterprises) on someone else is only temporary and it doesn’t prevent the enterprise to get rich during the mandate, i.e. the official is not prevented to indirectly get rich during his/her mandate after he/she returns his/her share in the enterprise after his/her political mandate.

Limitation to conclude agreements only applies to enterprises in which officials gained share up to 2 years before his/her mandate.

In short, the Law is not based on practice and issues related to conflict of interest in Croatia, but on solutions taken from other countries which function within completely different legal framework.

Conflict of Interest and MediaConflict of Interest and Media Research in Croatia as well as in other countries in the region,

according to all analysed indexes and results of conflict interest analysis, point to media captured by political interests as well as by private capital interests and personal (immaterial) officials’ interests.

Affairs like FIMI media (and a lot more similar models of influence on media), state of affairs on HRT, prosecution, firing and attacks on investigator journalists as well as complex relationship between officials and private media groupings on national level disable the basic assumption of fight against corruption – distribution of information for the public and formation of adequate public judgement on officials’ morale.

Research showed that local media are financially, politically as well as by ownership depending on political establishment.

Conflict of interest related to media, media ownership, media financing as well as other relations, has been detected in all analysed cities.

Conflict of Interest and Civil SocietyConflict of Interest and Civil Society There are only few CSOs working in the field of fight

against corruption, they are often under capacitated and mainly operate on national level. In most local communities they don’t even exist.

Tendency of the state to “capture” even this small number of CSOs is visible in ministries (public procurement) as well as in public enterprises.

“Cooperation” between civil society and the state in fight against corruption gets down to “showing” CSOs on conferences and projects which don’t have any real effect on problem of corruption.

Voices criticising the work of the state and local administration are often not welcomed thus the fight against corruption is left outside the scope of public criticism and judgement (except in rare cases related to lower level of state management).

Research Results in Croatia:Research Results in Croatia:Ministry of Finance, Ministry of Ministry of Finance, Ministry of

Administration, Ministry of the Interior and Administration, Ministry of the Interior and Ministry of Health and Social WelfareMinistry of Health and Social Welfare

Financial Management, Public Procurement Financial Management, Public Procurement and Conflict of Interestand Conflict of Interest

Ministries’ budgets: budget reporting – non Ministries’ budgets: budget reporting – non transparent itemstransparent items

Source: official website of State Audit Office and Ministry of Finance

In total - items "Other" from 2008-2009 budgets: Ministry of Finance, Ministry of Administration, Ministry of the Interior. Ministry of Health and Social Welfare

16,235,287,373.42 kn; 96.39%

608.144.946,73 kn; 3,61%

Items "Other"

Rest of theBudget


In total: Intelectual and Personal Services in 2008-2009 budgets: Ministry of Finance, Ministry of Administration, Ministry of the Interior, Ministry of Health and Social Welfare

16.595.641.194,20 kn; 98,53%

247.791.125,95 kn; 1,47%

Intelectual andPersonal Services

Rest of the budget



In total: Current donations in 2008-2009 budgets - Ministry of Finance, Ministry of Administration, Ministry of the Interior, Ministry of Health and Social Welfare

16.786.677.194,81kn; 99,66%

56.755.125,34 kn; 0,34%

Current donations

Rest of thebudget


Ministries: Potential conflict of Interest in Ministries: Potential conflict of Interest in Public Procurement ProceduresPublic Procurement Procedures

Concluded contracts per contractors in 2008-2009: Ministry of Finance, Ministry of Administration, Ministry of the Interior, Ministry of Health and Social Welfare

364,455,550.08 kn; 43.13%

480,497,361.86 kn; 56.87%

Contractors

Rest of PublicProcurement

Source: Quantitive – Ministry of Economy, Labour and Entrepreneurship; Qualitative – media analysis and interviews

Ministries: Differences in Published Contract Ministries: Differences in Published Contract Value – Credibility in ReportingValue – Credibility in Reporting

Source: Ministry of Economy, Labour and Entrepreneurship and official website of State Audit Office

271,124,467.13 kn

21,207,273.43 kn

0.00 kn

50,000,000.00 kn

100,000,000.00 kn

150,000,000.00 kn

200,000,000.00 kn

250,000,000.00 kn

300,000,000.00 kn

350,000,000.00 kn

400,000,000.00 kn

2008 2009

Difference in PP contracts value in 2008-2009 for: Ministry of Administration, Ministry of the Interior, Ministry of Health and Social Welfare

PP according to Ministry ofEconomy, Labour andEntrepreneurship data

PP according to the State AuditOffice

Difference in value

Ministries’ Budget ReportingMinistries’ Budget Reporting

In total, cca 900 million kuna or900 million kuna or 5,5%5,5% of the total budget resources are not available for the public in the reports.

Ministry of Finance: Budget Reporting – non Ministry of Finance: Budget Reporting – non transparent itemstransparent items


Items "Other", "Intellectual and Personal Services" and "Current Donations" in Ministry of Finance Budget for 2008-2009

3,933,720.29 kn; 1.17%39,117,797.27 kn; 11.64%

1,250,000.00 kn; 0.37%

291,641,439.25 kn; 86.81%

Other

Intellectual and PersonalServices

Current Donations

Rest of the Budget

Ministry of Finance: Officials and Conflict of Ministry of Finance: Officials and Conflict of InterestInterest Customs Director Mladen Barišić arrested and under investigation because

of “FIMI media” affair, however there has been no investigation and sanctions related to conflict of interest.

According to interviews and media articles – employments and appointments in Directorate Generals within Ministry of Finance were influenced by politics (political parties within the ruling coalition) and sometimes by personal interests of officials (e.g. appointment of Ante Šimunović in Financial Agency (FINA) under the influence of former minister Šuker)

Distribution and advertising of Personal Identification Number (OIB) (Ministry of Finance Project) via Croatian Post Office, without public procurement tender, with the contract with Croatian Post Office for media campaign of OIB, which included even the broadcasting via news even though the OIB Project was the project of Ministry of Finance.

Contract on adverstising was signed with MASSOL ltd. which is connected, according to the media, with Ratko Maček, former Spokesperson of the Government and one of leaders of pre-election campaigns for HDZ.

This kind of situations apparently successfully avoid the radar and, organs of criminal prosecution and Law for Suppression of Conflict of Interest, and also the public didn’t have a chance to be informed on affairs tied to Croatian Post Office. Even though available data with names of potential witnesses (insiders) were forwarded to USKOK, there is still no epilogue.


Ministry of Administration: Budget Reporting – Ministry of Administration: Budget Reporting – non transparent itemsnon transparent items

Items "Other" and "Intellectual and Personal Services" in Ministry of Administration Budget in 2008-2009

1,024,661.34 kn; 2.85%

2,571,302.31 kn; 7.16%

32,314,419.36 kn; 89.99%

Other

Intellectual and Personal Services

Rest of the Budget


Ministry of Administration: Differences in Ministry of Administration: Differences in Published Contract Value – Credibility in Published Contract Value – Credibility in ReportingReporting

3,883,974.92 kn

0.00 kn

2,000,000.00 kn

4,000,000.00 kn

6,000,000.00 kn

8,000,000.00 kn

10,000,000.00 kn

12,000,000.00 kn

2009

Ministry of Administration: difference in published contracts in 2009


PP according to the State AuditOffice data

Difference in published PPcontracts

Ministry of Administration: Officials and Ministry of Administration: Officials and Conflict of InterestConflict of Interest

According to research methodology, researchers weren’t able to detect conflict of interest of Ministry’s officials


Ministry of Interior: Budget Reporting – non Ministry of Interior: Budget Reporting – non transparent itemstransparent items

Items "Other", Intellectual and Personal Services" and "Current Donations" in Ministry of the Interior budget for 2008-2009

7,994,601,192.62 kn; 93.57%

3,460,000.00 kn; 0.04%

56,264,669.21 kn; 0.66%489,572,416.30 kn; 5.73%

Other


Current Donations

Rest of the budget


Ministry of Interior: Public Procurement – Ministry of Interior: Public Procurement – credibility in reportingcredibility in reporting

139,390,437.07 kn

0.00 kn

50,000,000.00 kn

100,000,000.00 kn

150,000,000.00 kn

200,000,000.00 kn

250,000,000.00 kn

Ministry of the Interior: difference in published contracts in 2008



Difference in published PP contracts

Ministry of Interior: Officials and Conflict of Ministry of Interior: Officials and Conflict of InterestInterest During project implementation, Minister tried to

make a direct pressure on this research by sending answers to offical requests for information to private address of M.P. via Foreigners Office instead to PSD address which is a legal carrier of the research!

Also, the Ministry has completely answered to only 2 out of 9 requests

Manifestations and Impact of Conflict of Manifestations and Impact of Conflict of Interest in Managing Public GoodsInterest in Managing Public Goods During research, we have connected Minister Tomislav

Karamarko with ownership of 4 enterprises: STABILIS CONSULTUM d.o.o., DORON NET d.o.o., IPPON SECURITY d.o.o., SOBOLI d.o.o.

As these enterprises are not listed in Minister’s Declaration of Assets, we went to Court Register to search for legal acts on transfer of rights (management rights), but nothing was there, except documents stating that Minister is no longer the owner of these enterprises.

When asking Court Register clerks about missing documents they told us that they didn’t know but that those documents should have been there and they asked us to come back the next day.

Next day, clerks told us that those acts are missing but everything is “in accordance with the law”.

MinistMinisteer Karamarko r Karamarko is also the Vice president of Basketball Club Zagrebis also the Vice president of Basketball Club Zagreb. . In its assembly there are also:In its assembly there are also: Davor Jelavić (Davor Jelavić (City ofCity of Zagreb Zagreb), ), suspect in affair related to changes of documents of urban planning Željko Čović (Pliva); Josip Petrović (Agrokor Željko Čović (Pliva); Josip Petrović (Agrokor && Ina) Ina) – participants in “Verona” affair, together with Ivo Sanader

related to selling of Pliva to American Barr Marijan Hanžeković Marijan Hanžeković – the wealthiest Croatian lawyer with large contracts for state companies and institutes Branko Vojnović; Geoprojekt Branko Vojnović; Geoprojekt andand Zagrebgradnja Zagrebgradnja, under USKOKUSKOK investigation due to malversations with

properties in Zagreb Ninoslav Pavić, Ninoslav Pavić, co-owner ofco-owner of EPH EPH and one of the biggest media owners in Croatia. Suspect in GRUPO GRUPO && HYPO HYPO

affairsaffairs. Tomislav Karamarko, while not in the Office, was in close business relations with Ninoslav PavićNinoslav Pavić. Ivica Toljan, HEPIvica Toljan, HEP, suspected by Regional Attorney’s Office for “Flats” affair for damages to HEPHEP amounting over 8 amounting over 8

million kunamillion kuna..

Basketball ClubBasketball Club Zagreb Zagreb is one of the wealthiest clubs in Croatia, for which often Minister Karamarko takes is one of the wealthiest clubs in Croatia, for which often Minister Karamarko takes credit stating how this is due to private, not public money. Sponsorship list is long, and some of sponsors credit stating how this is due to private, not public money. Sponsorship list is long, and some of sponsors areare::

Pavo Zubak, PZ auto Pavo Zubak, PZ auto – media questioned acquisition of cars for Ministry of the Interior corresponding to PZ Ministry of the Interior corresponding to PZ auto (Škoda cars)auto (Škoda cars)..

DALEKOVODDALEKOVOD, under investigation due to construction of electric power stations for HAC (Croatian under investigation due to construction of electric power stations for HAC (Croatian Highways) amounting over 1 billion kuna.Highways) amounting over 1 billion kuna.

HEP – HEP – under investigation for damaging contracts on electricity selling - under investigation for damaging contracts on electricity selling - TLM, Stanova, DIOKITLM, Stanova, DIOKI and other and other smaller affairssmaller affairs..

Croatia Osiguranje Croatia Osiguranje && Hrvatska Lutrija, Hrvatska Lutrija, under investigation for under investigation for FIMI MediaFIMI Media affair and lots of other affairs affair and lots of other affairs.. City ofCity of Zagreb, Zagreb, under constant suspicion and criminal claims without epilogue. According to media, over under constant suspicion and criminal claims without epilogue. According to media, over

250 claims are currently in State Attorney’s Office.250 claims are currently in State Attorney’s Office. INA – INA – under investigation because of privatisationunder investigation because of privatisation (Ina (Ina && Podravka Podravka affairs affairs) ) where Ivo Sanader and Damir where Ivo Sanader and Damir

Polančec are suspectsPolančec are suspects Jamnica, Ivica Todorić (Jamnica, Ivica Todorić (ownerowner))-- suspect in HYPO credit affairsuspect in HYPO credit affair KAMGRADKAMGRAD These data are also nowhere to be found in Minister’s Declaration of Assets

Public Procurement and joint interestsPublic Procurement and joint interests Just prior to “Podravka” affair (Spice affair) , PODRAVKA transfered over 3 million

kuna to SOBOLI, for consultancy services! Research detected that during the time of “HAC” affair, SOBOLI produced an Safety

Estimate for HAC. According to that Safety Estimate, later the same enterprise won a public

procurement tender for works (services) of several million kuna, which is forbidden by the Public Procurement Act.

One of owners of DORON NET is Luka Gašpar, former Executive Board member in Ericsson Nikola Tesla, and today the President of the Executive Board in Emerson.

Emerson is often a sub-contractor for Nikola Tesla. Nikola Tesla is one of the biggest contractors for ministries. Relationships between DORON NET and other enterprises formerly owned by Tomislav Karamarko and enterprise Emerson and Nikola Tesla was not possible to determine within the methodology of this research.

INA and HEP are sponsoring Basketball Club Zagreb, but are also main clients of Emerson (Luka Gašpar).

KAMGRAD is one of sponsors as well. KAMGRAD worked on construction of new building for Central Intelligence Agency. Tomislav Karamarko, before becoming a minister acted as the Director of this Agency.

However, as stated earlier, it was not possible to determine the relationship between minister Karamarko and enterprises which he had co-owned prior to his minster duties.

All these situations pass under the radare of Law on Suppression of Conflict of Interest and are not subject of investigation or other actions by relevant bodies, discipline ones or penal ones.

New Law on PoliceNew Law on Police New Law wants to hold appointed individuals on

their positions for at least 5 years under the slogan of depolitisation and harmonisation with EU benchmarks.

However, it is important to point out that according to the new Law, current minister completely controles employment and appointment procedures (minister appoints the commission which for its work answers to the minister), without influence or insight of the public in procedures which are marked with the official secret status!

With this kind of system for appointment of management structure, minister will completely control the Police for 5 years!


Ministry of Health and Social Welfare: Budget Ministry of Health and Social Welfare: Budget Reporting – non transparent itemsReporting – non transparent items

Items "Other", "Intellectual and Personal Services" and "Current Donations" in Ministry of Health and Social Welfare Budget for 2008-2009

7,612,184,070.90 kn; 96.02%

52,045,125.34 kn; 0.66%149,837,357.16 kn; 1.89%

113,614,148.80 kn; 1.43%

Other

Intellectual andPersonal Services

Current Donations

Rest of the Budget


Ministry of Health and Social WelfareMinistry of Health and Social Welfare: Public : Public Procurement – credibility in reportingProcurement – credibility in reporting

131,734,030.06 kn

17,323,298.51 kn

0.00 kn

20,000,000.00 kn

40,000,000.00 kn

60,000,000.00 kn

80,000,000.00 kn

100,000,000.00 kn

120,000,000.00 kn

140,000,000.00 kn

160,000,000.00 kn

2008 2009

Ministry of Health and Social Welfare: difference in published contracts in 2008-2009

PP according to Ministry of Economy,Labour and Entrepreneurship data

PP according to the State Audit Officedata

Difference in published PP contracts

Ministry of Health and Social WelfareMinistry of Health and Social Welfare : Officials : Officials and Conflict of Interestand Conflict of Interest Journalist Nataša Škaričić wrote about minster’s call to all media

editors in Croatia in order to agree on “the strategy” how to report on the health care reform. Afterwards, she was fired from the EPH.

During his duties as Vice Head of the County, he was parallely acting as the Director of Gospić Hospital thus receiving both salaries (together with his hospital attendances) (in total around 45.000 kuna)

Media wrote about minister’s “stalling of public procurement process for purchase of 128 ER vehicles”, i.e. not respecting the criteria of the lowest price but asking for additional reports.

Also, there are articles about the minister and his ministry’s “donation” amounting 20.000 kuna to association Youth Sings, organiser of a music festival on which minister’s daughter won.

Independant Traffic Union (NCS) is asking for investigation on legality of enforcement of local rates payments by HAC, one of these enforcements is started by community Gospić. According to NCS, ministers Milinović and Kalmeta are “buying votes in their counties and communities”.

Part of interviewed people thinks that appointments and employments within the ministry are done exlusively according to politics or private interests.

Committee for Supression of Conflict of Interest has rejected claims against minister Milinović. However, the question arises, will the Committee check in detail minister’s assets according to the new Law. Picture: newly built house of minister Milinović in Gosppić

Research Results in Croatia:Research Results in Croatia:Zagreb, Čakovec, Split, Osijek, SisakZagreb, Čakovec, Split, Osijek, Sisak


City Budgets: Budget Reporting – non City Budgets: Budget Reporting – non transparent itemstransparent items


In total items "Other" in 2008-2009 budgets - Zagreb, Čakovec, Split, Osijek and Sisak

15,670,677,550.27 kn; 83.71%

3,050,070,697.96 kn; 16.29%

Item "Other"

Rest of the budget


In total items "Intellectual and Personal Services" in 2008-2009 budgets - Zagreb, Čakovec, Split, Osijek and Sisak

18,438,484,857.76 kn; 98.49%

282,263,390.47 kn; 1.51%


Rest of the budget




In total items "Current Donations" in 2008-2009 budgets - Zagreb, Čakovec, Split, Osijek and Sisak

17,328,694,731.28 kn; 92.56%

1,392,053,516.95 kn; 7.44%

Current Donations

Rest of the budget

City Budget ReportingCity Budget Reporting

In total 4.724.387.6054.724.387.605 kunakuna or in average 25,24%25,24% of total budget resources is not available to the public in the reports of analysed cities in Croatia.

These items are most often used for corrupt, political or private purposes within the work of public administration.

Cities: Public ProcurementCities: Public Procurement- credibility in - credibility in reportingreporting

369,176,766.28 kn

60,455,559.40 kn

0.00 kn

200,000,000.00 kn

400,000,000.00 kn

600,000,000.00 kn

800,000,000.00 kn

1,000,000,000.00 kn

1,200,000,000.00 kn

1,400,000,000.00 kn

1,600,000,000.00 kn

1,800,000,000.00 kn

2008 2009

Difference in value of published contracts for 2008-2009 - Zagreb, Čakovec, Osijek


PP according to the StateAudit Office

Difference in value


Cities: Public procurement- potential conflict Cities: Public procurement- potential conflict of interest in proceduresof interest in procedures

Source: Quantitive-Ministry of Economy, Labour and Entrepreneurship, Qualitative- media articles analysis and interviews

Contractors in relation to Public Procurement in Zagreb, Čakovec, Split, Osijek and Sisak for 2008-2009

1,452,853,865.89 kn; 56.59%

1,114,254,158.04 kn; 43.41%

Rest of PP

Contractors

Research Results in Croatia:Research Results in Croatia:City of Zagreb City of Zagreb


Freedom for Access to Information Act – Freedom for Access to Information Act – City of ZagrebCity of Zagreb

CITYNr. of

requests sent

Complete answers

Incomplete answers

Requests rejected

No answer

City of Zagreb 11 2 5 2 2

Zagreb: Budget reporting- non transparent Zagreb: Budget reporting- non transparent itemsitems


Items "Current Donations" (in blue), "Other" (in red) and Intellectual and Personal Services (in green) in Zagreb budget (rest of the budget in purple) for 2008-2009

11.249.762.888,93 kn; 74%

229.097.304,08 kn; 2%

2.578.426.754,05 kn; 17%

1.047.720.771,16 kn; 7%

Zagreb: Public ProcurementZagreb: Public Procurement

Source: Quantitive-Ministry of Economy, Labour and Entrepreneurship, Qualitative- media articles analysis and interviews

104.666.290,88 kn 4,69%

4.640.000,00 kn 0,21%

76.544.319,76 kn

3,43%7.823.748,15 kn 0,35%

624.849.620,60 kn 28,00%

47.696.006,28 kn 2,14%

13.194.772,68 kn 0,59%

4.843.800,00 kn 0,22%

59.997.678,00 kn 2,69%

2.273.143,70 kn 0,10%

1.284.878.657,20 kn 57,58%

Concluded contracts with Zagreb in 2008/ -2009 per contractors

GEORAD

CAPITAL ING

OSIJEK KOTEKS

TIGRA

ZG HOLDING

MEŠIĆ COM

NEVING

AKING

GAMONT

GIM

OSTALO

Zagreb: Public Procurement- credibility in Zagreb: Public Procurement- credibility in reportingreporting


328,425,299.00 kn

55,185,901.98 kn

0.00 kn

200,000,000.00 kn

400,000,000.00 kn

600,000,000.00 kn

800,000,000.00 kn

1,000,000,000.00 kn

1,200,000,000.00 kn

1,400,000,000.00 kn

1,600,000,000.00 kn

2008 2009

Zagreb - difference in published contracts value in 2008-2009



Difference in published PPcontracts

Zagreb: EmploymentZagreb: Employment

The so called networking mentality – significant epidemic phenomenon for which it is impossible to say that appears as a coincidence (from one of the interviews)

One of examples for networking employment is employment of former construction inspector on the position of public procurement clerk for Zagreb, right after she filed the act for demolition of houses of those accusing her for criminal behaviour.

Zagreb: Poor management of city’s assetsZagreb: Poor management of city’s assets

Unpaid bills of Zagreb amount around 4 billion 4 billion kuna!

There is NO reporting on Zagreb’s assets management

Problem of Zagreb’s unregistered assets (around 6.000.000.000,00 knaround 6.000.000.000,00 kn)

Administrative inertion, administrative incompetence, negligence, low administrative capacities... individual interests (from interviews)

Zagreb: Public ProcurementZagreb: Public Procurement

In construction sector - most conflict of interest Highlighted disorder and corruption in urban

planning as well in 50 documents (of available documentation)

there are 248 248 technical alterations, mostly to increase construction capacities of properties.

Bandić has become a prisoner of the system and people with who he had all kind of deals. - Member of the City Council.

Zagreb: Public Procurement and Conflict of Zagreb: Public Procurement and Conflict of InterestInterest Enterprise “V grupa zaštita” has signed two

contracts in 2009 with Zagreb Holding, worth 10.886.662,5010.886.662,50 kuna. Main person in “V grupa” is Darko Vrbanac who is allegedly in close relations with Milan Bandić.

Enterprise “Dija graditeljstvo” has signed in 2009 4 public procurement contracts with Zagreb Holding, worth around 17 million 17 million kuna. Owner of this construction company is Darko Turopoljac, close friend of Milan Bandić.

Zagreb- Public Procurement and Conflict of Zagreb- Public Procurement and Conflict of InterestInterest Enterprise “Vodotehnika” has signed 8 public

procurement contracts in 2008 and 2009 with Zagreb Holding, worth 7.583.754,93 kuna, and with the City of Zagreb, in 2009, 2 contracts worth 8.400.507,93 kuna.Frequent business partner of the City of Zagreb when it comes to water supply and sewage, enterprise “Vodotehnika” donated 100.000100.000 kuna to Milan Bandić for his presidential campaign, according to the media

Public policies for suppression of conflict of interest in Croatia, even after the last amendments don’t correspond to real

manifestation of the problem, i.e. do not do not suppresssuppress that private interests prevail over

the public ones.

Conclusion:Conclusion: Indicators for measuring conflict of interest, as well as concrete

examples in Croatia imply that most of public functions of the state can be considered to be imprisoned by private interests, i.e. financial, economical, political, or personal ones.

Situation on local level is quite worse than situation on national level, and adopted policies for suppression of conflict of interest and fight against corruption do not have the solution for this growing problem.

Access to information is still not ensured, and the possibility to disseminate information and opening the public debate on political responsibility of officials is on its lowest level in the last 10 years.

Except for the shift toward limitation of officials’ influence in public procurement, other real progress in the Law for Suppression of Conflict of Interest does not exist.

Conflict of interest is still in the grey zone of the systemic corruption, for which there is still no adequate solution.

Recommendations:Recommendations:Media and Civil Society:

Necessity to ensure respect of media liberties and independence of media from political influence. Introduction of censorship as a criminal act as well as system for protection of journalists’ integrity.

It is necessary to protect the public service HRT from influence and repression of politics and HRT management on journalists.

Creating obligation to finance and establish independent non-profit media.

Rigorous application of the Law on Media, and its part defining publication of media owners and public media financing.

Creating fair and transparent market for civil society projects in the area of fight against corruption.

Allocation of funding to civil society only via public tenders and respect of perscribed code for all public bodies.

Implementation of special instruments of protection including claim for damages for investigator journalists, civil society activists and all citizens that report corruption in good faith.

Recommendations:Recommendations:

Freedom for Access to Information Act: Strengthen individual responsibility in

implementation, including the obligation of starting a procedure in front of the Civil Servants Court for those civil servants that infringe the Act.

Secure implementation of legal court decisions related to the Act by introducing criminal prosecution for officials not respecting court decisions or by introducing high penalties for those not respecting court decisions.

Law on Suppression of Conflict of InterestLaw on Suppression of Conflict of Interest Declaration of Assets form should be improved in order to ensure declaration of officials’

interests before his/her coming to the office, instead of only properties’ declaration (sports clubs, associations, artistic projects, membership in secret societies).

All items in the form should be available to the public. Obligation to declare interests should be applied to all those deciding on public interest

issues, especially on local level, and not only to officials as described in the current law. Form should be declared as a public document, and in case an official represents his

properties and interests falsely, the law should introduce a provision for criminal prosecution instead of just disciplinary sanctions.

The public should be able to start a procedure in front of the Committee in order to protect the public interest.

There should be an obligation for the Committee to start a procedure based on a claim, with an obligation to response to the individual making this claim and ndividual’s right to appeal to the Committee’s decision.

Possiblity to ban from the office those officials for who conflict of interest is detected should be introduced, and not only for those who don’t comply to Committee’s decision about Declaration of Assets.

Introduce an obligation to annul all administrative/legal acts created within conflict of interests situation instead of only public procurement contracts.

Introduce a possibility to start a procedure to claim damages created by conflict of interest for private and legal entities who consciously and purposely participate in conflict of interest.

Introduction of Integrity Audit Agency which would investigate potential conflict of interest on lower levels with jurisdiction of State Audit Office related to finances and an obligation to start an investigation in cases when a public body neglects Agency’s recommendation.

Ensure that Agency’s decisions and findings are public. Ensure with the Public Procurement Act that public procurement contracts are able to be

monitored from planning (budget) to contract execution.

Thank youThank you!!

Partnership for Social Development, Lomnicka 1, 10 000 Zagreb, tel.: 00 385 1 60 55 668, e-mail: [email protected], web: www.psd.hr

“Balkan Anti-Corruption Civic Initiative” Zagreb, May 16, 2011 Project financed by EU Commission within IPA Programme. Project implemented by Partnership.

Documents

corruption suppression

corruption stagnating

understanding corruption

systemic corruption

suppression of conflict

public administrations

work of public bodies

prevention of conflict