Public administration and business enviroment

2005

Serbia and Montenegro should devote particular attention to issues such as trafficking in human beings, illegal economic activities (‘inter alia’ corruption and illegal transactions involving goods such as counterfeit products, industrial waste and radioactive material), illicit arms trafficking and terrorism.[1]

Respect for market economy principles should form the basis for domestic and external policies of a country that wishes to enter a Stabilisation and Association Agreement with the EU. This entails a stable macroeconomic environment supported by a stable institutional framework, a comprehensive liberalisation of prices, trade and current account transactions, the creation of a strong private sector through de-monopolisation and privatisation and the establishment of a

prudently managed financial sector. These policies should be supported by a stable and transparent legal and regulatory framework.[2]

In Montenegro, a new privatisation framework was adopted in 1998/1999. This framework provided for a variety of methods, including mass voucher privatisations, through which some 200 medium-sized companies were sold by end-2001. The restructuring and privatisation of l6 large industrial enterprises which account for 45% of industrial assets, including KAP, the big aluminium plant, is only slowly approaching conclusion. Concerns have been raised in relation to irregularities and the transparency in the ongoing privatisation process.[3]

At the beginning of February 2005, the Anti-Corruption Council raised concerns on proposed amendments to the Law on Privatisation, which could inter alia give even broader discretionary powers to the director of the Privatisation Agency, thus creating additional conditions favouring corruption.  Accusations of corruption have also been made regarding the privatisation of the state-owned company Knjaz Milos; an investigative parliamentary commission was formed to enquire in this case.[4]

2006

The overall legal and administrative framework for the management of public assets contains loopholes which allow corrupt activities to take place. Privatisation, concessions, construction and spatial planning and public procurement are examples.[5]

During the last years, about 70 per cent of state owned property has been subject to privatisation. The procedure is almost completed. Privatisation processes always provide initiatives for corrupt activities, especially in economies in transition. The GET was also told that there is reason to believe that irregularities have occurred in this process.[6]

Among the priorities in this area are the modernisation of the police and the state prosecutor’s office and the monitoring of sectors dealing with the allocation of large portions of state property, such as privatisation, concessions and public procurement. [7]

At the time of the on-site visit, the Ministry of the Interior, in its capacity as co-ordinator, had developed and submitted for approval to the Government the Programme for Combating Corruption and Organised Crime. [8] The Programme does not provide for special anti-corruption training for civil servants.[9]

There are no provisions establishing a system of regular, periodical rotation of staff employed within areas of the public administration considered vulnerable to corruption.[10]

In this connection, the GET recommends to prepare and adopt special mandatory anti-corruption training programmes tailored to the needs of the various categories of civil servants.[11]

At the moment, there is no law which compiles regulations on the conditions for obtaining a license. The present system is complicated, e.g., in order to obtain a construction permit the necessary documents have to be collected at over 20 different offices and there are no guidelines for citizens on the procedure. According to the GET, this situation is conducive to corrupt practices and gives rise to serious doubts about the system’s reliability and impartiality.[12]

2007

However, a number of structural problems affect the performance of the public administration. These are due to significant gaps in the legal framework and weaknesses in the arrangements for implementing certain horizontal tasks relating, in particular, to financial and asset management (e.g. public procurement, financial control and concessions) and human resources and career management, including recruitment and conflict of interests. The continuing politicisation of the administration also plays a role in this regard. Much remains to be done, particularly in the areas of transparency and accountability, financial control, public procurement, budget management, management of public assets and licensing procedures.[13]

Overall, the process of strengthening the administrative and management capacity of the local authorities has been slow. The public administration remains weak and inefficient. Further efforts will be needed to ensure the impartiality of public administration and strengthen its capacity. Future work on decentralisation is expected to continue to strengthen local democracy, upgrade the administrative capacity of the municipalities and clarify sectoral responsibilities in a manner which permits oversight and transparency.[14]

Management of public assets raises serious concerns. There is considerable room for corruption, especially in the cases of construction and land-use planning, privatisation, concessions and public procurement.

Procedures for reporting conflicts of interest in privatisation have yet to be established. [15]

The Parliament has appointed a commission to monitor the transparency of privatization procedures.[16]

2008

In the light of the second Secretariat report on the Republic of Montenegro concerning compliance with obligations and commitments and the implementation of the post-accession co-operation programme (document SG/Inf(2008)9): encouraged the authorities of Montenegro to continue implementing the recommendations of GRECO and to give particular consideration to guaranteeing the transparency and accountability of public administration at both national and local levels.[17]

2005

Respect for market economy principles should form the basis for domestic and external policies of a country that wishes to enter a Stabilisation and Association Agreement with the EU. This entails a stable macroeconomic environment supported by a stable institutional framework, a comprehensive liberalisation of prices, trade and current account transactions, the creation of a strong private sector through de-monopolisation and privatisation and the establishment of a  prudently managed financial sector. These policies should be supported by a stable and transparent legal and regulatory framework.[18]

Serbia and Montenegro should devote particular attention to issues such as trafficking in human beings, illegal economic activities (‘inter alia’ corruption and illegal transactions involving goods such as counterfeit products, industrial waste and radioactive material), illicit arms trafficking and terrorism.[19]

As regards organised crime, in Serbia, the main threats appear to be related to drugs and economic organised crime, while corruption, privatisation fraud and money laundering of the proceeds of crime also cause concern.  [20]

2006

An extensive privatisation process was also ongoing in the Republic of Serbia. The GET is of the opinion that there are lacunas in the implementation phase of the privatisation.[21]

Secondly, state owned companies are numerous in the Republic of Serbia and extensive parts of the sector are under privatisation. The GET was told by some representatives of civil society met during the visit that the implementation of the privatisation process especially suffered from weaknesses. These weaknesses contribute to an uncertainty among the citizens and are conducive to corruption.[22]

2007

The legal framework that regulates public procurement, the privatisation process and large budgetary expenditures do not provide sufficient checks and balances to minimise the risk of misuse and corruption. A comprehensive audit system is not yet in place. This constitutes an obstacle to the establishment of a duly regulated public expenditure system, capable of preventing systemic corruption at its source.[23]

2005

Work towards a professional, non-political civil service with recruitment and promotion based on experience and merit has made progress as regards lower-level civil servants. However, at present, there are still insufficient safeguards against political interference in public administration when it comes to senior management positions, where ethnic identity and party membership continue to play a significant role.[24]

Formally, there is a liberal regime on the right of establishment.[25] However, informal obstacles to establishment continue to exist (for both national and international operators). Concerns over political stability, difficult access to finance, corruption, anti-competitive practices and cumbersome business registration act as deterrents to investment and enterprise. [26]

According to the Global Report on Corruption, published on 16 March by Transparency International (TI), BiH has marked a fall from 70^th to 82^nd place on the list of Global Index of Perception of Corruption, which discourages foreign investments in BiH, since foreign investors refuse to pay bribes. BiH remains thus a country with a 40% unemployment rate and grey economy which exceeds half of the gross domestic product (GDP). [27]

2006

A considerable amount of legislation has been passed by the new executive in recent months, mainly related to organised crime, privatisation and public administration.[28]

However, further efforts are indispensable. Bosnia and Herzegovina needs to accelerate reforms in this area in order to build a transparent, efficient and independent public administration, able to respond better to the needs of its citizens and the requirements of EU integration. [29]

Bosnia and Herzegovina has made some progress in this area. The National Strategy for the Reform of the Public Administration was finally adopted.[30]

However, further efforts are indispensable. Bosnia and Herzegovina needs to accelerate reforms in this area in order to build a transparent, efficient and independent public administration, able to respond better to the needs of its citizens and the requirements of EU integration. [31]

Work towards a professional and apolitical civil service with recruitment and promotion based on experience and merit has been limited. Insufficient safeguards against political interference in public administration continue to exist regarding senior management positions – where ethnic identity and party membership play a significant role. [32]

Not withstanding the liberal establishment regime, various informal factors continue to represent obstacles to establishment. These include cumbersome administrative procedures, corruption and poor enforcement of laws, mainly in respect of contracts and property rights.[33]

2007

Sustained action is necessary to establish a professional civil service with recruitment and promotion based on experience and merit. There are still insufficient safeguards against political interference in public administration, where ethnic identity and party membership play a significant role.[34]

Significant further efforts towards an efficient, professional, stable, accountable and transparent civil service at all level of government are necessary. [35]

The judicial system continues to suffer from slow court proceedings, poor case management and a large and growing backlog of unresolved cases. Political interference in the system has occasionally occurred. Overall, these circumstances impair the business environment by undermining effective enforcement of creditor and property rights.[36]

2005

Recent dismissals of several permanent secretaries have given rise to concerns about transparency and independence of public selection procedures and dismissals.[37]

Kosovo’s administrative capacity remains extremely weak. Its public administration is inefficient and subject to political interference, and does not always act equitably. Although a legal basis for the civil service and for public finance management is in place, there is a lack of transparency and accountability.[38]

The fight against organised crime and against financial crime must be stepped up and local capacities developed in view of any future further transfer of powers to local authorities.[39]

A comprehensive reform strategy is still missing in order to build a professional, inclusive and accountable administration, free from political interference.[40]

2006

Two institutions, an independent oversight board and a senior public appointments committee, have been established.[41]

The independent oversight board and the senior public appointments committee are not yet functioning effectively.[42]

Deficiencies in law enforcement and the judicial system, corruption, uncertainty over property rights and the status, as well as poor infrastructure and unreliable electricity supply, continue to impede investment and economic activity.[43]

2007

Civil servants are still vulnerable to political interference, corrupt practices and nepotism.[44]

The overt disregard of the 2004 law on construction, and widespread ignorance of building permits and urban planning, including by a number of high-profile politicians and civil servants, seriously puts at risk the confidence of Kosovo citizens in the rule of law. In particular, the inconsistent application of these laws by many municipalities is a cause for concern.[45]

Corruption and uncertainty over property rights remain a major impediment to economic activity, due partly to Kosovo’s final political status being unresolved and partly to disputed land registries or missing business cadastres. In general, the deficient rule of law is hampering business development.[46]

2005

Moreover, the Plan[47] has only limited reach beyond the central public administration.  Other levels of public authority should also be addressed in Albania’s fight against corruption, possibly by increasing the scope of the Plan so that it addresses regional and local corruption more effectively. Courses have been provided on a regular basis by the Training Institute of Public Administration in association the ACMG for the training of civil servants, both at central and at local level, on ethics and anticorruption.[48]

The civil service law should be fully implemented, with political appointments reduced to the appropriate minimum. [49]

There remain persistent allegations of the unlawful privatisation of properties where the restitution/compensation process has not yet been implemented.[50]

The absence of an administrative registration and licensing process, undertaken without court involvement and following transparent and simple procedures, inhibits enterprise creation.[51]

The lack of stable land rights hinders economic development and increases corrupt practices.[52]

More general problems relating to the business environment which Albania must urgently address include slow property registration, restitution and compensation, corruption and also poor infrastructure.[53]

Albania has a state anti-corruption policy that seems to work well. Through the Anti-Corruption Monitoring Group (ACMG) and the Anti-Corruption Unit (ACU) it is investing heavily in carrying out the Action Plan which is also regularly updated. However, during the visit, the GET was told that the Action Plan, as regards public administration and apart from the legislation that covers all public administration, has limited reach into the local/regional sphere/sector. Measures taken in this field depend largely on decisions made by the regional or local administration.[54]

Consequently, the GET recommends that the government promotes anti-corruption policies and measures at local and regional levels and monitors their implementation. [55]

2006

Political appointment of higher civil servants remains prevalent, restricting the growth of a professional senior civil service level.[56]

Steps have been taken to increase the transparency of the public administration: website publication of government orders, decisions and other public acts; public information units in ministries, free telephone lines and post-boxes for public comment in central institutions.[57]

The government has also sought to address corruption by reducing the role of the state in the economic and social life of the country, through reducing central administration staff and  simplifying administrative and licensing procedures.[58]

The business climate has continued to suffer from a weak legal environment such as a lack of clearly defined property rights, from poor infrastructure, unreliable power supply and widespread corruption. Overall, certain progress has been achieved in improving the business environment, however, despite determined government action, much still needs to be done in terms of combating corruption.[59]

2007

Political appointments to senior and mid-level positions continue, often without due attention to the Civil Service Law.[60]

In particular, recruitment and promotion need to be regulated by objective and merit based criteria, and a clear distinction between the political and administrative level needs to be observed. [61]

Improved cooperation between the police and the judiciary is required for those responsible for corruption related to the drugs trade at all levels in the public administration.[62]

The establishment of a new joint investigative unit to fight economic crime and corruption in May 2007 is a positive development, although its operational capacity has so far been weak. The judicial system suffers from non-transparent and inefficient court proceedings. Political and other undue interference in the system occurred. While some progress has been made with enforcement of court rulings and establishment of property rights, the overall efficiency of the judicial system and the resulting implementation of law remain low.[63]

Nevertheless, the business environment remained very weak and calls for further significant improvements. Outstanding deficiencies of the judiciary, uncertainty about property rights, a high level of corruption, inadequate infrastructure and unreliable energy supply, in particular, continued to hinder economic development and investment.[64]

Arbitration and appeals facilities available to the business community are ineffective and open to corruption.[65]

GRECO notes that the authorities are in the process of preparing a strategy for decentralization and local governance comprising a number of anti-corruption measures at local and regional levels.[66]

2005

While the recently adopted Law on the Civil Service is important and addresses on paper a number of the critical deficiencies previously highlighted, it remains to be seen to what degree its implementation will lead to the professional, efficient, accountable, transparent and independent public administration Croatia needs, not least to provide an important basis for the successful implementation of the acquis.[67]

Also, Croatia should establish in every part of the public administration a body in charge of investigating corruption, working on the basis of accountable and transparent rules. Aside from investigation, there is also a need for a targeted approach towards corruption prevention in all parts of the administration.[68]

Generally, the business environment improved, but further efforts are needed in a number of areas notably with regard to increasing the transparency and legal certainty of the state administration and the judicial system. Moreover, business representatives remain sceptical of government reform efforts, a credibility gap which the government should more effectively start closing.[69]

The one-stop-shop (HITRO.HR) serves as a help desk for entrepreneurs as it takes charge of the various formal registration steps on their behalf. Whilst this does not imply that the steps and procedures themselves are rationalised, HITRO does accelerate the process and, moreover, contributes to reducing corruption and the grey economy.[70]

However, the effectiveness of corruption prevention policies in public administration could be increased, notably by assessing the functioning of the policy/legislative anti-corruption framework, by tackling the backlog in the administrative courts and by defining clearly the legal framework within which civil servants must exercise their functions.[71]

2006

The wide discretionary scope in legislation leads to inefficiency and legal uncertainty and facilitates corruption.[72]

Overall, the issue of public administration reform continues to represent a major challenge for Croatia. It will require sustained serious attention from the authorities if Croatia is to eventually enjoy the professional, efficient, accountable, transparent and independent public administration it needs at central and local level. Such efforts are also needed to provide an important basis for the successful implementation of the acquis.[73]

2007

Under the existing GAPA[74], there are numerous special administrative procedures regulated through sectoral legislation. The wide discretionary scope in legislation has lead to inefficiency and legal uncertainty and facilitates corruption.[75]

The promotion of integrity within the public administration needs to be further strengthened. [76]

A major corruption investigation led to the dismissal of the Fund’s[77] management in June 2007 which affected the pace of privatisation.[78]

The activities of the State Privatisation Fund continued but their pace was affected by the dismissal of the management following a major corruption investigation.[79]

USKOK has been involved in the investigation of some important cases of corruption. Of particular note is the “operation Maestro” case, which led in June 2007 to the arrest of 8 senior officials of the Croatian Privatisation Fund. [80]

2005

Establishing transparent accountable administrations at local level which are able to manage the new powers, and notably the new fiscal competences, will be a very challenging task.[81]

To prevent misuse of public funds at municipal level, but also to minimise the risk of fraud and corruption, it is essential that internal controls and audits are developed as soon as possible.[82]

The causes of corruption are manifold. They include the often arcane administrative procedures for various dealings of citizens and enterprises with the State administration, the lack of transparency and compliance with these procedures, the extensive and non-transparent system of issuing licences and permits for various activities, the discretionary rights of certain government officials, the lack of well-defined rules on conflicts of interest and the still opaque management of State assets (including State-owned land, concessions and public procurement). [83]

The decentralisation of public finance competences to lower levels of administration will be a considerable challenge in terms of maintaining control standards and fighting corruption.[84]

Moreover, small-scale corruption appears to be a serious problem, especially at the lower levels of administration.[85]

Nonetheless, considerable and sustained efforts will be necessary to consolidate the rule of law, to fight against corruption and to make further progress in the areas of public administration reform and respect for human rights.[86]

Public administration has been described by the authorities themselves as non-transparent, politicised and with a large degree of in-built nepotism. Moreover, the services provided have been described as unprofessional and of a low quality. Consequently, the fight against corruption has been and remains one of the top priorities of the Government. To what extent the situation is changing is difficult to assess in the absence of regular studies of the phenomenon of corruption.[87]

As noted above, a general lack of transparency – as a result of a lack of relevant legislation – in public administration was an important shortcoming described in the Matrix.[88]

Corruption has for a long period of time been considered a serious problem in public administration in “the former Yugoslav Republic of Macedonia”.[89]

The GET recommends to include anti-corruption measures concerning local authorities as a specific subject of the State Programme against Corruption and to see to it that they are implemented in practice. This could serve the purpose of addressing problems in an area which in most European countries is considered as particularly vulnerable to corruption.[90]

2006

Steps have been undertaken to increase transparency in public administration. A new Law on Free Access to Public Information, enacted in January, entered into force in September. [91]

Further progress in fiscal decentralisation will require the development of financial and internal control mechanisms to allow appropriate planning and to minimise the risk of fraud and corruption. [92]

The lack of good governance, of transparency and accountability in public administration, as well as of well defined rules on conflict of interest facilitate corruption. Considering the challenges the country has to meet, very strong political commitment is required.[93]

2007

However, there have been limited results, in particular due to lack of a strong commitment to meet the announced objective of a more transparent, professional and depoliticised public administration and better organised public services.[94]

Decisions made in the public administration are not sufficiently transparent and the anti-corruption legal framework is not being fully implemented.[95]

The code of ethics for civil servants was amended to include an obligation for civil servants to report all illegal acts carried out by other civil servants in the performance of their duties. [96]

The authorities report that on 21 June 2005 the State Commission for Prevention of corruption adopted an Annex to the State Programme for the Prevention and Suppression of corruption in the field of local authorities. The Annex is specifically intended for situations where state functions are transferred from the central administration to the local level, in particular in respect of legitimacy, transparency, professional skills, effectiveness, decentralization, transformation and privatization.[97]

2004

The success of the amended law[98] in providing for an accountable, efficient and independent civil service, including at regional and municipal level, will need to be assessed after its first year in force. [99]

Corruption pressure remains important for the business sector where recent surveys point out corruption situations in the granting of permits and credits, and relating to tax evasion and public procurement. [100]

The law introducing a code of ethics for members of the Parliament has not been adopted. [101]

A code of conduct was adopted for the civil service in June 2004. A code for the business sector is under preparation. [102]

The authorities of Bulgaria have reported that the year 2003 had seen the widespread introduction of ethics/guidelines: in May, the Minister of Public Administration approved “Guidelines concerning the Conduct of Civil Servants in order to avoid Conflict of Interest and Corruption”; in October, the National Assembly adopted amendments to the Law on Civil Service which contains new conflicts of interest regulations; in May, the Minister of Finance approved a Code of Conduct for Customs Officials; in February, the National Association of Court Officers adopted a Code of Ethics for Court Officers; in November, the Supreme Judicial Council approved a Code of Ethics for Investigating Magistrates; in December, a Code of Ethics for Judges was adopted by the General Assembly of Judges; in October, a Code of Conduct for Police Officers was approved by the Minister of the Interior.[103]

2005

Further efforts are required in terms of making the public service more resistant towards corruption, including preventive measures.[104]

There is a positive downward trend as far as administrative corruption is concerned, but the overall enforcement record in the field of corruption remains very weak. [105]

The existing specialised anti-corruption structures in all parts of the administration and the judiciary should be assessed and adapted where necessary to improve efficiency. During 2004, the Public Prosecutor’s Office investigated 6 535 cases, compared with 6 785 in 2003, related to corruption (of which 2 275 were opened during 2004).

Some areas of public administration remain particularly vulnerable to corruption. This is the case for those engaged in public works contracting, including the health sector.[106]

Judicial reform made some progress but improving the functioning of the judicial system remains crucial for providing a transparent, stable and reliable legal framework for doing business and enforcing property rights.[107]

The Bulgarian authorities have made a concerted effort to limit the occurrence of petty corruption within the state administration as a whole but the main problem remains the poor track record in investigating and prosecuting corruption cases, including in law enforcement bodies and in particular among magistrates.[108]

However, the measures taken to segregate standardisation, certification, market surveillance and accreditation could sometimes be a formality, as the state organisations concerned are all under the budget of the Ministry of Economy. This could give rise to a conflict of interests.[109]

As regards the horizontal measures, conflict of interest should be avoided through further segregation of standardisation, certification, market surveillance and accreditation functions.[110]

Notwithstanding the above, the GET noted that to date anti-corruption reforms in Bulgaria have been directed almost exclusively at national level to the effect that the need for reforms at regional and municipal levels remained somewhat neglected.[111]

The GET recommends, therefore, to establish anti-corruption programmes for public administration at local and regional levels, as a complement to programmes/reforms implemented at national level. [112]

The GET, therefore, recommends to raise the awareness of anti-corruption reforms in public administration in so far as it affects ordinary citizens. [113]

The GET further noted that rotation of certain staff particularly exposed to opportunities for corruption has not been considered by the Bulgarian authorities. A possibility of periodic rotation, however, would appear appropriate in sectors of public administration particularly vulnerable to corruption, such as in the customs. Consequently, the GET recommends to consider the possibility of introducing the principle of rotation of staff who are most exposed to risks of corruption. [114]

The GET understood that the present commercial register is widely considered ineffective, unreliable, lacking in transparency, as well as a possible source of corruption within the judiciary.[115]

Bulgaria has implemented adequate reforms to prevent corruption within public administration at central level. Similar efforts should now be pursued at regional and municipal level.[116]

2006

Since October 2005, convictions subject to further appeals have occurred against former members of government, five magistrates and a bailiff. In the same period, three final convictions can be reported as regards medium level corruption, involving civil servants.[117]

Based on the findings of this report, the benchmarks to be addressed are as follows: … Take further measures to prevent and fight corruption, in particular at the borders and within local government. [118]

The privatisation process is still not sufficiently transparent, and problems with postprivatisation control persist.[119]

In accordance with the Law on the Administration, inspectorates directly subordinated to the Minister have been established in all ministries and most state agencies. These inspectorates may propose disciplinary or legal measures against staff in case of misconduct. A ‘Chief Inspectorate’ has been established in the Council of Ministers which reports to the Prime Minister. It is in charge of coordinating and assisting the activities of the ministerial inspectorates. The Chief Inspectorate is the secretariat of the Anti-Corruption Commission. The Commission’s staff has now been increased. Contact points for receiving reports of corruption have been established in many state bodies. A plan for conducting anti-corruption training for about 50 000 officials at all levels of the administration has been drawn up. Various other preventive measures have been taken. These include hotlines and complaint boxes as well as simplified procedures for the citizen to address local authorities. [120]

The inspectorates within the public administration are not yet sufficiently independent and their institutional competences need to be strenghened. In addition, the anonymity of messages cannot always be ensured as phone numbers can be registered. Regarding disciplinary sanctions due to allegations of corrupt activity, no complete and reliable statistics have been provided as to the nature of the offences and the punishments. [121]

2004

In its 2003 Regular Report, the Commission found that: “The Romanian civil service remains characterised by cumbersome procedures, limited transparency and a limited capacity for policy execution.”[122]

The reform of the civil service is aimed at its professionalisation: recruitment and promotion based on merit and decided by open competition, adequate remuneration levels, a transparent and predictable salary scheme, improved management of human resources and better training. [123]

The principle of promotion through open competition has been established and implementing legislation exists. At the same time, implementing procedures need to be clarified and made more transparent. [124]

In the area of remuneration, a two-step pay reform has been agreed by the Government: a short-term interim reform, which provides for a salary increase as from 2005, and a medium-term comprehensive review of the pay and grading structure, aimed at ensuring a transparent, equitable and reliable remuneration system, which should be in place by 2006. [125]

Most importantly, the Romanian authorities have made considerable efforts to develop a strategy for managing the process of decentralisation in a transparent and stable manner. [126]

Progress has been made in establishing the legal framework and institutions for a market economy, but complex procedures and uncertainty in the application of law by the public administration and the judiciary continued to impede an enabling business environment.[127]

Postprivatisation disputes have been common, which prompted numerous enterprises to bounce back to state ownership. This was partly caused by less than fully transparent privatisation methods, such as the recurrent use of debt-rescheduling schemes at often unclear terms.[128]

With regard to investment promotion, the positive performance over the last year is a welcome development and relations between the government and investors are generally good. Nevertheless, when assessed on a per capita basis, levels of FDI in Romania are still low compared to other countries in the region. To remedy this situation it will be necessary to look beyond investment promotion per se and address the structural obstacles to investment that include corruption, excessive bureaucracy and an unstable legislative climate.[129]

However, in a number of high-profile privatisations concluded during the year, the privatisation process has not been fully transparent.[130]

Further efforts are needed to conclude the privatisation process in a fully transparent way.[131]

Petty corruption is a constraint in the business environment.[132]

In March 2004 codes of ethics and deontology for police officers were approved. A new Anti-Corruption and Professional Standards Directorate was created within the Ministry of Administration and Interior’s General Directorate of Intelligence and Internal Protection and should be functional by the end of September 2004. [133]

The responsibilities, activities and resources allocated to the General Directorate of Intelligence and Internal Protection within the Ministry of Administration and Interior remain in need of review and the impact of the newly established Anti-Corruption and Professional Standards Directorate will be monitored in this context.[134]

Transparency of the privatisation process should be fully ensured.[135]

Transparency of the privatisation process should be fully ensured.[136]

Substantial progress in the functioning of the judiciary and the public administration, including an even and predictable application of law, is required to create an enabling business environment with a level playing field. [137]

Weekly progress reports are submitted to the Government on the implementation of the National Anti-Corruption Strategy, of Act No. 161/2003 on certain measures to ensure openness in public administration, the civil service and business, and the prevention and punishment of corruption, and of the Plan setting out priority measures for accession to the European Union.[138]

2005

Increased emphasis is being given to the implementation of legislative acts once they have been adopted. This is important, although the norms for implementing legislation are not always published. In practice this tends to provide civil servants and public servants with the power to interpret regulations as they see fit, in particular concerning legal requirements and administrative procedures for licenses and permits as well as in the area of taxation, creating greater opportunity for bribery and corruption.[139]

Limited progress can be observed, in practice, with regard to the reform of civil service, including with regard to remuneration or its ability to prevent and resist corruption. [140]

The basic principles of the February 2004 Code of Ethics for Civil Servants (priority of the public interest over personal or private ones and loyalty to the public authority, professionalism, openness and transparency in all public activities), while excellent, are not fully observed, and monitoring of their implementation remains weak. In spite of legal improvements, and provisions of the public administration strategy on the separation of political and administrative roles, on open recruitment, on occupational development and on increased mobility, the civil service has some way to go before it can be described as apolitical and professional. [141]

No progress can be noted as concerns career structure, promotion and assessment procedures: while procedures, guides and legislation do exist, there is still a lack of clarity and transparency regarding safeguards for reducing the discretionary nature of the entire process and it remains an area of concern. [142]

The PNA’s April 2005 activity report shows a significant increase in the number of cases dealt with. Some successful prosecutions are occurring against low-to-medium ranking public officials from, for example, law enforcement agencies or the judiciary. Very few cases were reported, however, against civil servants from the state ministries and in most such cases defendants held only middle management positions. The majority of those prosecuted by PNA were instead private business people and in most cases only isolated acts of bribery have been identified rather than complex networks of institutionalised corruption involving high-ranking public officials at national and local level.[143]

In this context, a Law was adopted in May 2005 on the creation of a new anti-corruption structure within the Ministry of Administration and Interior called the Directorate General for Anti-Corruption (DGA). DGA will report exclusively and directly to the Minister of Interior and Administration and ambitious plans foresee over 400 DGA staff working in central and regional structures to replace the existing internal affairs units in the Ministry, notably within the police, border police and gendarmerie. A large part of DGA’s work will consist in testing the integrity of law enforcement personnel. DGA will also be able to investigate cases, which represents a potential duplication of investigative powers as the DNA’s judicial police are also competent in such cases. DGA is still in the process of recruiting its staff and cannot be expected to deliver concrete results in the fight against corruption before the beginning of 2006 at the earliest. This is a cause for concern as the integrity of law enforcement agencies is a key factor both in enabling Romania to reach a sufficiently high standard in the fighting corruption and in building public confidence in state institutions. [144]

Efforts to enhance the public administration continued, for instance by simplifying company registration and by applying the new Fiscal Procedures Code, which is a step forward towards more transparency and accountability.[145]

In the area of privatisation and restructuring, despite some progress, the privatization needs to be further actively pursued. Full transparency of the process needs to be continuously ensured.[146]

In addition there should be a fully transparent, accountable and strict implementation of all relevant ethical codes for public servants, and pursuit of criminal sanctions to send a strong deterrent message.[147]

Lastly, GD No. 699/2004 updated the 2001 Strategy for expediting the reform of public administration. The revised Strategy is designed to reorganise central and local administration, reinforce transparency in civil service recruitment, assessment and promotion procedures, improve the quality of administrative services and increase information exchange with the general public.[148]

There is no specific, general or systematic training in matters of personal integrity or risks of corruption. Romanian legislation comprises no general provisions on periodical staff rotation, in particular for staff holding posts liable to be more vulnerable to corruption. Nevertheless, the rotation principle does apply to representatives of the National Agency of Civil Servants on examining boards for the recruitment of civil servants..[149]

At the time of the GET’s visit the implementation of the first National Anti-Corruption Strategy (NACS I) had not yet been properly assessed, and no satisfactory analyses had been conducted of vulnerable sectors and corruption risks within the administration. [150]

Romanian authorities have identified shortcomings and omissions in numerous areas regarding the fight against corruption, and have undertaken to adopt the necessary measures to remedy these problems. Accordingly, the GET cannot but encourage the ministries and other public or semi-public bodies which have not yet done so to conduct analyses of vulnerable sectors and specific risks in matters of corruption, to publish them and, in accordance with measures 1.15 and 1.16 of the Anti-Corruption Action Plan, to devise anti-corruption strategies and sectoral action plans, accompanied by practical measures and training courses, embracing the customs services, police, the tax authorities, the health sector, transport, and for subsidies, privatization and public contracts. [151]

Consequently, the GET recommends complementing the existing codes of conduct, where necessary (eg. regarding reactions to gifts and reporting of corruption) and ensuring that all public officials receive appropriate training.[152]

At the same time, Romania must obtain immediate tangible results in transforming its administration and ensuring its efficient and transparent functioning if it is to combat corruption effectively.[153]

2006

At the end of 2005, the government adopted by Emergency Ordinance a reform of the institution of the prefect. The post of prefect is now reserved for high-level civil servants instead of political appointees. They may not pursue a parallel career in party politics.[154]

Since October 2005, DNA has indicted 89 other individuals, including judges, lawyers, police officers, a number of public officials with executive positions in national and regional administrations as well as directors in private enterprises.[155]

Corruption remains a concern in particular within the local government. [156]

The law on the Civil Servants Statute was pending adoption by parliament in May. It clarifies the status, rights and obligations of civil servants and decentralises recruiting procedures to local authorities and to individual ministries. It also contributes to depoliticising the civil service by making a panel responsible for the appointment of high-level civil servants.[157]

An important step forward was taken with the signature of the privatisation contract for the largest commercial bank (BCR) after a fair and transparent process.[158]

Full transparency of the privatisation process needs to be ensured.[159]

Take further measures to prevent and fight against corruption, in particular within the local government. [160]

The Directorate General for Anti-Corruption (DGA) within the Ministry of Administration and Interior now has 298 staff working at national and local levels. Since May DGA has conducted preliminary investigations into 615 persons and passed all these files to the competent prosecution service, which resulted in 157 indictments. DGA also conducted integrity tests that uncovered corruption within the Ministry. [161]

Two national campaigns have been started to increase awareness among the public and civil servants including the judiciary of the negative consequences of corruption. [162]

The amended law on civil servants aims for administrative decentralisation. It also improves the recruitment procedure and defines the rights and responsibilities of civil servants. In addition, it intends to define career structures and procedures for recruiting high-level civil servants, and to de-politicise the service.[163]