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FUNDS OF THE EUROPEAN UNION AN OPPORTUNITY FOR DEVELOPMENT... ... AND FOR CORRUPTION AND CLIENTELISM Painful experience of Slovakia in the period before and after joining the European Union. Ivan KUHN Konzervatívny inštitút M. R. Štefánika. 23 June 2011 BELGRADE / BEOGRAD / BELEHRAD.

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FUNDS OF THE EUROPEAN UNIONAN OPPORTUNITY FOR DEVELOPMENT...... AND FOR CORRUPTION AND CLIENTELISMPainful experience of Slovakia in the period beforeand after joining the European Union

Ivan KUHN

Konzervatívny inštitút M. R. Štefánika

23 June 2011 BELGRADE / BEOGRAD / BELEHRAD

slide2

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 1.1 PROBLEMS IN THE PRE-ACCESSION PERIOD
  • False Assumption / Myth – the funds of the European Union – a club of countries with long tradition and high standard of democracy and rule of law – they will be under the control by the EU and thus there is low or no risk that Slovak politicians or civil servants can mismanage and misuse the funds
  • Lack of transparency (not only in the area of the EU funds but in the whole public administration)
slide3

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 1.2 PROBLEMS IN THE PRE-ACCESSION PERIOD
  • No clear rules for administration and management of the EU funds at the national level (Phare program)
  • Almost no information easily available / accessible by the citizens (low level of development of the Internet in that period)
  • All information in English – language barrier
slide4

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 1.3 PROBLEMS IN THE PRE-ACCESSION PERIOD
  • Low level of understanding and low level of interest in the EU funds from the side of the elected politicians (also because the language barrier)
  • Strong power in the hands of a few civil servants
slide5

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 2.1 RESULT – SCANDAL IN 2001 (Roland Toth case)

The scandal

  • not result of the efficient controlling system at the level of the government/public administration (there was an audit in 2000 but no measures had been taken)
  • not result of the investigation by journalists
  • not result or of the active monitoring by non-governmental organisations
slide6

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 2.2 RESULT – SCANDAL IN 2001 (Roland Toth case)

The scandal

  • result of the letter written by former wife of the high ranking civil servant in charge of the pre-accession funds
slide7

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 2.3 SCANDAL IN 2001
  • misbehaviour – Deputy Prime Minister for European Integration – instead to start investigation, made agreement with the Director of the Department of the Foreign Assistance at the Office of the Government, that no investigation will be made if the person voluntarily leaves the office
  • misestimating – copy of the letter received the Prime Minister – fired the Deputy Prime Minister for not investigating the case and ordered investigation by the Supreme Audit Office
slide8

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 2.4 SCANDAL IN 2001 – Impact and Output
  • European Union stopped financing projects and programs in Slovakia for half a year until the end of investigation
  • Result of the investigation (quote of the Chairman of the Supreme Audit Office) – „Investigation did not find any breach of the rules dealing with the pre-accession funds at the Office of the Government, as far as there had not been any formal rules to deal with the pre-accession funds.“
slide9

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 3.1 SCANDAL IN 2001 – Findings of the investigation
  • Central Financing and Contracting Unit – responsibility for all tendering and contracting concerning the EU funds – was not included into the Organisational Order of the Office of the Government and thus without any written rules and control mechanisms
  • Financial proposals had been submitted to European Commission by Director General of the Section for European Affairs and Director of the Department of the Foreign Assistance without approval by the Government
slide10

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 3.2 SCANDAL IN 2001 – Findings of the investigation
  • All public procurement and call for proposals were published in English only (although there was not such an condition by the EU or EC)
  • Decentralisation Implementation System (DIS) manual had not been translated into Slovak
  • Both conditions limited opportunities of the Slovak subjects to apply for grants or participate in the tenders.
slide11

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 3.3 SCANDAL IN 2001

What investigation (Supreme Audit Office and Police) did not find

  • No concrete case of the corruption

However

  • because most information was not available
  • and if available only in English
  • a few (or one) civil servants could manipulate use of the funds
slide12

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 3.4 SCANDAL IN 2001 – How it worked

(almost impossible to prove – all information provided off record)

  • Applicant (mayor of town/village, private entrepreneur) looking for information how to get EU funds
  • finally comes to the Department of the Foreign Assistance at the Office of Government to ask how he/she can get some financial assistance from the EU
  • Civil Servant recommended him/her a private company, that will prepare application for a grant and “manage” the whole “complicated process” of approval of the grant
slide13

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 4.1 POSSITIVE OUTCOMES OF THE SCANDAL
  • Slovak politicians, media and NGO started to pay more attention to the use of EU funds
  • Set of rules to manage EU funds had been elaborated
  • More information had been published, especially on the Internet
slide14

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 4.2 NEGATIVE OUTCOME OF THE SCANDAL
  • More politicians, civil servants and entrepreneurs had realised, that the EU funds are not only an opportunity for development of their country but also an opportunity for their own enrichment
slide15

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 5.1 LESSON LEARNED
  • Even if these are the fund of the EU, it does not automatically means that there is good control mechanism and low risk of corruption
  • The government might have controlling mechanisms but they either may not find problem or if they find a problem, the authorities may not adopt necessary measures
  • Even media may not be able to fulfil role of a watchdog
slide16

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 5.2 LESSON LEARNED
  • Independent monitoring of activities of the government and public administration from the side of the civil society is necessary
slide17

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 5.3 LESSON LEARNED
  • In 2000 Slovak Parliament adopted the Law on Free Access to Information (Serbian Parliament adopted The Law on Free Access to Information on November 2004)
  • Very good tool, that had been used many times by NGO to get information from the government about the use of the EU funds
  • But... this Law is useless, if one does not know what to ask for...
slide18

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 6. CHANGES AFTER SLOVAKIA JOINED THE EU
  • Slovakia got access to greater amount of the EU funds
  • Slovakia had become responsible for the decision-making on the distribution and use of the funds – EU only makes ex-post control on the sample of projects
  • EU funds had become the subject of even greater corruption but especially of clientelism
  • Result – another scandal related to the misuse of the EU funds
slide19

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 7.1 CORK-BOARD TENDER SCANDAL IN 2008
  • Ministry of Construction and Regional Development organised tender for Technical Assistance
  • Misused the black hole in the Public Procurement Act
  • Announcement about the tender published only on the cork-board at the corridor of the Ministry
  • Only one consortium applied... and won a contract of 97-120 mil. EUR
slide20

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 7.2 CORK-BOARD TENDER SCANDAL IN 2008
  • Tender was organised in autumn 2007
  • First information about the tender published in the media only in autumn 2008
  • Not the government controlling authorities nor investigative journalist but an NGO brought the issue to the media
slide21

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 7.3 CORK-BOARD TENDER SCANDAL IN 2008
  • Even the member of the Monitoring Committee for Operational Programme Technical Assistance was not able to receive information about the tender at the meeting of the Monitoring Committee
slide22

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 7.4 CORK-BOARD TENDER SCANDAL
  • Case logos
slide24

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

find one significant difference between the pictures
Find one significant difference between the pictures

2,569,805 Sk

85,302 EUR

50,000 Sk

1,660 EUR

slide26

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 7.4 CORK-BOARD TENDER SCANDAL
  • Case websites
slide27

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

7.5. PRICES OF MANAGING AUTHORITIES WEBSITES

slide28

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

7.6. POSSIBLE SAVING ON WEBSITES

slide29

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

7.7. ONE WEB SITE PAID TWICE WITHIN ONE YEAR

25.6.2007 contract with Creative Mind signed (32,530 EUR)

25.9.2007 web site finalised

8.11.2007 - 1.4.2008 invoices delivered to the Ministry

17,593 EUR without VAT for development of the web site

14,937 EUR without VAT for 6 months of operation

7.1.2008 order for ZAMEDIA company (Cork-Board tender)

30.4.2008 invoice No. 80119 (Cork-Board tender)

3,884 EUR without VAT for creativity

23,003 EUR without VAT for programming

14,937 EUR without VAT licence for publication system

41,824 EUR without VAT together for ZAMEDIA

74,354 EUR without VAT together for web site www.nsrr.sk

slide30

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 8.1 WHICH INFORMATION SHOULD BE PUBLISHED?
  • Grant schemes
  • Criteria to select evaluators
  • The list of internal and external evaluators
  • CVs of internal and external evaluators
  • List of applications for grants (projects)
  • List of applications for grants (projects), which did not meet administrative criteria (criteria of eligibility)
  • List of members of the selection committee
slide31

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

  • 8.2 WHICH INFORMATION SHOULD BE PUBLISHED?
  • Grant schemes
  • List of applications for grants which had been recommended by the selection committee (with reasoning)
  • Evaluation forms of all evaluated applications for grants (projects)
  • List of approved applications for grants (projects)
  • List of signed contract on EU grants
slide32

FUNDS OF THE EUROPEAN UNION

AN OPPORTUNITY FOR DEVELOPMENT...

... AND FOR CORRUPTION AND CLIENTELISM

8.3 HOW MINISTRIES PROVIDED INFORMATION

OP ZaSI / MPSVR SR

slide33

FUNDS OF THE EUROPEAN UNIONAN OPPORTUNITY FOR DEVELOPMENT...... AND FOR CORRUPTION AND CLIENTELISMPainful experience of Slovakia in the period beforeand after joining the European Union

Ivan KUHN

www.institute.sk

23 June 2011 BELGRADE / BEOGRAD / BELEHRAD