Centar za proucavanje altern
ativa
Braće
Jugovica 21/II
11000 Beograd
Tel./Fax: ++381 11 3220 253
E-mail:
office@cpa-cps.org.yu
Ivana
Aleksic
CORRUPTION
IN SERBIA
March 2001
The
beginning of the 90s and the disintegration of the former Yugoslavia hailed
a period marked by a series of wars, long-lasting and counterproductive sanctions
imposed by the UN Security Council, EU and the USA, the so-called "outer wall"
of sanctions and the NATO bombing. Within the country, things deteriorated
with a fall in the real GDP, periods of high inflation which culminated in
the hyperinflation crisis of 1993, frequent devaluation of the dinar, an increase
in unemployment, a decline in overall living standards with the population's
material status being more and more equalised so that it was "equality in
poverty", and a widening of the gap between the few who were well-off and
the great majority of the ever-poorer citizens. The state institutions became
progressively criminalised. The imposition of sanctions contributed to this
situation the most.
At
present, there are three centres of power in Serbian society: representatives
of former regime, organised crime and new Serbian Government. Although behind
the scene after October events, members of the Milosevic regime are still
active and, to certain extent, powerful. By transferring the capital and goods
from state to private hands, they hope to preserve at least the economic advantages
acquired in the past. Those involved in organised crime, including the people
coming from the police and military forces and close to the previous regime,
represent a real treat to building democracy. New Serbian Government has no
financial resources, there is a lack of institutional channels for the reform
implementation, etc. It can count on neither police nor the army, given that
those were the pillars of the Milosevic regime.
New
political class in Belgrade is faced with a truly formidable set of challenges.
The legacy of the past they have to deal with is a burden that is hardly comparable
with any case in the region or in the whole post-communist reconstruction:
a decade of gross mismanagement and international sanctions has brought economy
to ruins, and foundations for democratisation are very week after an equally
long period of authoritarianism and national populism.
Moreover,
there are enormous unsolved problems regarding the basic issues, such as country
borders: the unclear status of Kosovo, armed conflict on the South of Serbia
as well as the fact that the Montenegrin authorities do not recognise federal
government as legitimate, preparing the referendum on independence for April
2001.
In
these unfortunate circumstances Serbian government enters the process of very
much needed reforms.
CREATING
A FAVORABLE INSTITUTIONAL AND LEGAL ENVIRONMENT FOR CURBING CORRUPTION
The
state of the state institutions is quite dissatisfactory. Most institutions
inherited from the previous regime, at all levels – from the federal (Yugoslav)
to the Serbian to the local level – were paralysed, dysfunctional, and did
not undergone serious change since the end of January 2001.
The
new Serbian Government has given a promise to start its work with fighting
against corruption. One of the first statements issued by the Serbian Prime
Minister Zoran Djindjic was that Serbia will ask for the membership in various
international organisations in order to deal with corruption and organised
crime successfully. By addressing the Stability Pact for South Eastern Europe
and its program for curbing corruption and civil control of power, the Government
will demonstrate its commitment to this critical area.
The
financially transparent and government which will not be corrupt are the primary
goals of the new Serbian Government. Moreover, set as a priority, fighting
against corruption is seen as a general strategy of a process of building
the confidence in the state institutions.
Three
significant steps has been taken so far:
1.
Draft
Amendments to the Criminal Code of Serbia
have been made by the Working group of the Serbian Ministry
of Justice and Local Government in March 2001.
There
are three main directions in changing the Criminal Code of Serbia as it was
proposed. Apart from introducing more severe punishments for a great number
of criminal offences, one of the biggest changes represents the proposal for
introduction of institution of the protected witness. Having in mind the ties
between the organised crime and the former republic government, this measure
is directed towards the investigation and prosecution of those who have been
abusing power for more than a decade.
However,
the most significant part of the Draft is a part on “Special Criminal Offences
of Corruption”. This part includes: Mismanagement of the state budget, Corruption
related to public procurement, Corruption in exercising the medical profession,
Unnecessary medical treatment, Abuse of the power of attorney, Corruption
in the educational system, Corruption in the process of privatisation, and
Restriction of the freedom of information for personal benefit. The perpetrators
of these crimes will also be sanctioned by dispossession of all the goods
gained in an illegal way.
2.
The
Government of Serbia formed a special Commission
for Fighting against Corruption which task is to investigate the most
severe economic crimes of the past decade. It will look into financial irregularities
carried out during the period of hyperinflation and international sanctions
as well as the legality of privatisation of the biggest companies. It will
also check whether residential and business premises were legally allocated
and who is responsible for the loss of citizens’ hard currency savings accounts,
the setting up of the phantom Jugoskandik and Dafiment bank, etc. The Commission
has no authority to prosecute, but co-operates with the state organs. The
first results of its work are expected by the April 15.
3.
A
special governmental body, Working
Group for Preparation of the Law on Local Government, was established.
The Working Group consists of the governmental and independent experts as
well as a representative of the PALGO Center (Public Administration and Local
Government Center, Belgrade), a local NGO, which has already completed the
first Draft Law on Local Government. However, it will have to go a long way
through political and expert polishing before it could undertake parliamentary
processing.
It
needless to say that the previous regime’s laws are discarded as not useful
and undemocratic but they remain in power until the new ones are accepted
by the parliament.
What
is most needed now is education for the new people at all levels: from local
to the highest state functions. They have had no chance so far, except in
several opposition-ruled cities, to acquire experience in running local communities,
not to mention running the state. In this aspect all kind of expertise is
lacking, including managerial and communication skills. Above all, knowledge
about how to prevent and fight corruption is needed. At the moment, PALGO
Center, G17 Plus and several other NGOs are preparing a broad educational
campaign to be organised for 60 local governments throughout Serbia. Foreign
expertise is very much needed here and the Stability Pact could play a very
useful role in the process as well.
IMPLEMENTING
REFORM OF THE JUDICIAL SYSTEM
The
key problem within the judicial sphere is an unresolved problem of jurisdiction
between the federal and the republic levels. Serbian Constitution from 1990
has not been harmonized with the Federal Constitution since 1992 when the
latter was adopted. The same confusion exists as far as relevant legislation
is concerned. This problem is even bigger having in mind the huge task ahead
of this Ministry which will have to engage in the harmonization of the entire
legislation with the European standards, both as far as the Council of Europe
and the European Union are concerned.
During
the last decade the Serbian Ministry of Justice has played a more prominent
role than the Federal Ministry of Justice, marginalised due to the unclear
status of the federation. The Serbian Ministry of Justice covers the organization
of judiciary and penitentiary administration at the republican level. It was
also heavily involved in the preparation of numerous laws (such as the infamous
Public Information Act or the University Law) which stand in contrast to the
existing European standards in the respective fields.
Within
weeks after the change of the Federal Government some reforms at the federal
level have been launched, but serious problems in hiring top officials become
obvious. New persons are needed both for their professional capabilities but
also to clarify further organizational issues within the ministries and to
decide who should do what. At the moment, in many federal ministries, Serbia
has a very active cabinet at the top and a silent majority within the Ministry,
without a solid link between them. The main problem is that highly qualified
and experienced lawyers and other professionals with knowledge of the public
administration have left the government for better paid jobs and they are
not willing to come back.
The
international community might help in various ways, especially when it comes
to the training and expertise in the field of the harmonization of the Yugoslav
legislation with the European standards. It might be useful creating certain
financial or other incentives for the best-qualified candidates to join both
the Federal and the Serbian government.
Non-governmental
organizations have been active in creating the environment for better functioning
of the judicial system as well. The Center for the Advancement of Legal Studies
(CUPS), a NGO from Belgrade, has been working on the establishment of the
Institute for Additional Education of the Employed in the Judiciary System
as a national institution. The project goal is to predict, plan and organize
permanent institutional education of jurists working in the judiciary system.
The main activities within the project are: a. Carrying out a survey on the
sample of judges on the state of judiciary; b. To analyze the present state
of the judiciary system with recommendations; c. To analyze the models and
experiences of the referent countries. As a part of this project, the Fund
for an Open Society, along with the CUPS, initiated the action of supplying
the courts in the Republic of Serbia with literature, which is to contribute
to the better working conditions of judges.
CURBING
CORRUPTION IN THE ECONOMY
Revitalisation
of Serbian and Yugoslav economy is tied to the necessary changes in several
major fields. Among
the most important are the issue of privatisation as well as the problem of
grey economy and the black market.
a.
Privatisation
In
early February the new Serbian Government agreed on proposals regarding the
Law changes and amendments to the Law on ownership transformation. Serbian
Privatisation Minister said recently that it was important for the privatisation
process to be transparent, especially that involving large infrastructure
systems such as national oil industries and National Power Grid.
However,
transparency was not exactly the word to describe the process of privatisation,
which has been going on for the past decade, i.e. in Milosevic regime.
Serbian
example represents the case of slow, reversible and discontinuous privatisation.
It is hard to say that much was done during the 1990s. State property was
only partially transformed and that was done in a completely non-transparent
way. A good illustration is the fact that in 1998 only 5% of all private enterprises
recorded 47% of the profit. This means not only that private sector worked
more efficiently, but also that it was a direct consequence of the invisible
process of "privatisation" of the state and so-called "social"
property. Cases of ministers simultaneously acting as managers of the biggest
state firms are to be investigated in months to come.
b. Grey
economy and black market
The
informal sector is thought to have been small in Yugoslavia during the 1980s
when social guarantees were high and unemployment was relatively low. During
the 1990s, the combined effect of law salaries among those employed, high
unemployment, and impediments to normal trade during sanctions created both
a need and opportunity for informal sector activity. It is estimated that
20-30% of the population became involved in petty trades and services or small-scale
agriculture (around 10%).
Assessments
of the grey economy in FRY indicate that GDP was considerably higher than
that recorded by official statistics - in 1991 31.6% higher, in 1993 54.4%,
in 1995 40.8%, and in 1997 34.5%. In other words, the contribution of the
grey economy in those economic activities which play a part in creating GDP
(registered and unregistered) - in 1991, it amounted to 24%, in 1993 35.2%,
in 1995 29%, and in 1997 25.7%. The greatest relative importance of the grey
economy was at the time of hyperinflation in 1993 when it was greater than
half the registered social product (54.4%) and more than one third of the
total income activity (35.2%). There are estimations that grey economy makes
up to 70% of total economic activity, but given its partial "illegality"
cannot be registered.
On
the other hand, large-scale trade, particularly in scarce goods subjected
to sanctions, created a nepotistic class of the newly affluent. The number
of firms permitted to trade grew smaller and smaller and were ever more closely
associated with the government and the ruling parties through the 1990s. This
reached its apex with the EU's white list. One side prohibited almost all
firms or the other to engage in trade; almost all goods entering or leaving
the country then became grey or black market goods. The monopolistic nature
of trade under crony arrangements raised the price of goods, reduced the access
of a wide array of basic goods, and left imported luxury predominantly accessible
through private markets for affluent clients. Having this in mind, it was
expected that the present government would be interested in extending the
tax base and lowering the tax rates in an attempt to legalise present economic
activities that are not criminal.
It
has been estimated that government measures on internal trade and transactions
would return about two billion DEM annually to the budget by eliminating the
grey economy and illicit trading in oil derivatives and cigarettes. Taking
that into account, the Serbian government has recently announced temporary
monopoly on oil imports. The Serbian Prime Minister stated that the decree
introducing monopoly was necessary to stem organised crime.
However,
without a regional approach in dealing with cross-border smuggling and trafficking
it will not be possible to resolve all the problems emerged mainly from the
imposition of economic sanctions against Serbia and FRY, which affected both
Serbia/FRY and all the neighbouring countries.
MEDIA
REGULATIONS
On
Oct. 20, 1998 Serbia’s notorious Public Information Act was passed. It was
the Milosevic regime’s principal instrument for repression of independent
media. Since then, the media in Serbia, mostly independent ones, have been
fined on 67 occasions. Fines ruled to them amounted to over 30 million dinars
or 2.5 million DEM. The “Evropljanin” weekly, owned by the killed journalist
Slavko Curuvija, paid the highest fine of 2.4 million dinars. That was the
first fine decided on the PIA, ruled just 4 days after its adoption.
Public
Information Act was annulled in February 2001 although, after Serbia’s turn
to democracy, the PIA had not been practically applied, while the Federal
Constitutional Court proclaimed its key provisions unconstitutional.
The
provision contained in Article 1 of the former law (PIA) will be applied till
a new law is passed. This provision stipulates “free public information” and
“inviolability of free information”, and details that no one is allowed to
illegally restrict or forcefully influence the work of the public media.
A
new Information Bill is expected to enter the Parliament by the end of this
year. At present, there are a couple of Draft Public Information Bills, one
of which was prepared by a Working group of the Belgrade Center for Human
Rights in May 1998.
However,
the lack of legislation in this field is obvious. In early March the Yugoslav
telecommunications minister announced that numerous TV and radio stations
are to be closed with immediate effect. The stations affected will be those
that began broadcasting after the change of government on October 5, or after
the subsequent introduction of a moratorium on the issuing of new frequencies.
Many of these are independent. The sweeping measure is necessary to regulate
the broadcasting situation. There have been three complaints by the airlines
in the past two months because of interference from illegal stations in Yugoslavia.
Strictly speaking, no station in Yugoslavia has a valid licence, not even
the state-run “Radio Television Serbia” or “Radio B92”. The moratorium, which
is in place after the old laws have been annulled, will remain until the new
broadcasting laws are passed and new tenders offered for frequencies. Some
95 per cent of the media, or 700 radio and 300 TV stations are currently unlicensed.
The Ministry of Telecommunications has also started the action of returning
money and equipment confiscated by the former regime.
PUBLIC
ATTITUDES TOWARDS CORRUPTION
The
first survey on public attitudes towards corruption in Serbia was carried
out in the first half of March 2000 by the Center for Policy Studies (CPA/CPS)
from Belgrade. The sample of adult population of Serbia without Kosovo was
drawn from 82 local communities in 60 municipalities. The survey was divided
in several areas: a. locating the problem of corruption among other social
problems (nepotism, “rackets”, etc.); b. locating corruption in a broader
spectrum of indicators of moral disintegration; c. spread and scope of corrupt
practice and its relation to various activities/institutions and professions;
d. attitudes towards corruption; e. personal experience of corruption and
the form of corrupt practices involving the individual.
In
the fall of the year 2000, CPA/CPS entered the regional project within the
SELDI initiative, Regional Corruption Monitoring System, co-ordinated by the
Center for the Study of Democracy from Sofia, Bulgaria. This was the first
attempt to approach the problem of corruption perception regionally by using
the same methodology in all the countries involved. The CPA/CPS was additionally
motivated by the results issued during the same year by the internationally
recognised non-governmental organisation, Transparency International, which
placed FRY on the bottom of Europe, not to mention the 89th out of 90 ranges
according to the extremely high value of the Index of Corruption in FRY, detected
by the TI. The sample for the RCMS covers both Serbia and Montenegro.
Public
perception of corruption in Yugoslavia
INTERNATIONAL
COOPERATION AND DOMESTIC NVOs
Serbia
and FRY have just entered the process of regulating the status of the country
in international organisations. The country has been accepted in the SPSEE,
OSCE, started negotiations with IMF, WB and EBRD, acquired the observer status
at WTO, etc. The first 11 European Conventions have just been signed.
The
Government of the Republic of Serbia and UNDP have signed the Agreement on
the Formation of the Fund for the Support of Institutional Reforms in the
Republic of Serbia in March 2001. Both parties called upon the donors to jointly
support successful implementation of the reforms initiated by the Serbian
Government.
At
the same time, the Ministry of Justice and Local Government of the Republic
of Serbia appointed two permanent representatives of the Ministry to act as
members in the Office of the National Co-ordinator of the Stability Pact of
the SEE on the corruption related issues.
At
the end of February 2001 the TI Chapter was formed in Serbia. Its primary
tasks would be to submit a proposal for fighting against corruption to the
Serbian Government. They will be working on the harmonisation of the domestic
legal instruments with the EU standards as well.
The Center for Policy Studies/Centar za proucavanje alternativa has been working on the translation of the Transparency International Source Book to be published by the summer 2001. CPA/CPS has been working on the projects on corruption for the past two years.
INSTEAD OF CONCLUSION
According
to the latest public opinion poll carried out by the CPA/CPS, this is how
the citizens of Serbia estimate the successes of the present government in
fighting corruption. When asked “What is the field in which the present government
was the most successful in dealing with?”: 54% of the respondents said that
the government was the most successful on the field of foreign policy and,
right after that, in fighting against corruption and criminal, 24%.[1]