Corruption in Bosnia and Herzegovina - 2005: Options for Swedish development cooperation 2006-2010

CMI - Chr. Michelsen Institute

Volumn 2005, Issue 8 R, 2005, Pages 1-62

  Devine, Vera ^a   Mathisen, Harald ^a  

^a NONE

Author keywords

Anti corruption strategies; Balkan region; Bosnia and Herzegovina; Corruption; Democratisation; Post war reconstruction

Indexed keywords

CORRUPTION; CRIME; DEMOCRATIZATION; LAW ENFORCEMENT; POST-WAR;

BOSNIA AND HERZEGOVINA; EURASIA; EUROPE; SOUTHERN EUROPE;

EID: 30644467604     PISSN: 0805505X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (175)

1. This report exists in two versions. A short paper is produced for those who have less interest in the underlying causes of the corruption problem and its manifestations across sectors and institutions. The full range of recommendations is included in the short version. The extended version on the other hand gives a comprehensive picture of the corruption problem. Part one look into the specifics of corruption in the Bosnian context, including the background causes of the problem. It analyzes how these background factors shape current patterns and mechanisms of corruption in the most affected sectors. Part two map out the most important responses to the problem by the international community and national authorities to date. Part three provide recommendations to Sida on possible directions of how best to address corruption in its next Country Strategy for Development Cooperation 2006-2010.
2. International assistance to Bosnia and Herzegovina from 1996 to 2003 is estimated to have amounted to over US$ 5 billion See World Bank CAS 2004 at http://www.wds.worldbank.org/servlet/WDSContentServer/WDSP/ IB/2004/08/24/000012009_20040824095015/Rendered/PDF/291960BA.pdf
3. Ibid.
4. There is confusion on key concepts like gift giving - should it be included in a definition of corruption and is it damaging. BiH is identified as one of the countries with a strong tradition for gift-giving, and many Bosnians feel that giving gifts is not corruption. In such circumstances those involved and even some observers would point to the positive traits of this practice and its historical significance. We would strongly argue against such cultural relativism as it excuses corrupt practices. For further reading on perceptions studies see: http://ww.tiri.org/documents/boundaries.pdf
5. Sida, Sidas antikorruptionsregel, handledning Avdeling for Policy och Metod.
6. See for the Corruption Perception Index and the methodology used www.transparency.org/cpi/2004/cip2004.en.html
7. Corruption Perception Study Bosnia and Herzegovina 2004; Banja Luka 2004, p. 69.
8. PDHR Donald Hays at the 1st Anniversary of the Signing of the UN Convention against Corruption, see http://www.ti-bih.org/documents/ 16-12-2004/Oslobodenje-10.12.04jpg Nobody has precisely estimated the losses at entity and lower levels.
9. The biggest problem is unemployment. See Transparency International 2004 Corruption Perception Study.
10. Ibid.
11. See: Peter Andreas: The Clandestine Political Economy of War and Peace in Bosnia. In: International Studies Quarterly, 2004 No 48.
12. Ibid.
13. See Executive Order 13304 by the US President of 28 May 2003 at http:// www.ustreas.gov/offices/enforcement/ofac/actions/20030529.html
14. Information compiled on the basis of the following internet publications: http://www.tol.cz/look/BRR/ article.tpl?IdLanguage=1&IdPublication=9&NrIssue= 1&NrSection=1&NrArticle=l1490;
15. http://www.eudelyug.org/en/documents/ 08-03-2001-patten-jelavic-speeche.htm
16. See Executive Order 13304 by the US President of 28 May 2003 at http:// www.ustreas.gov/offices/enforcement/ofac/actions/20030529.html
17. http://www.beta.co.ya/korupcija/eng/cist2.asp?ci=l159920.
18. Estimate according to UNDP. See http://meero.worldvision.org/ issue_details.php?issueID=51.
19. See World Bank CAS 2004 at http://www.wds.worldbank.org/servlet/ WDSContentServer/WDSP/IB/2004/08/24/000012009_20040824095015/Rendered/ PDF/291960BA.pdf
20. See recent report by the European Stability Initiative 'Governance and Democracy in Bosnia and Herzegovina: Post-Industrial Society and the Authoritarian Temptation', Berlin-Sarajevo 2004. www.esiweb.org
21. See, for example, the reaction of the Serb member of the Bosnian tripartite presidency, Borislav Paravac, to the restructuring of the Bosnian police in the beginning of 2005. Paravac in his statement predicted 'dissatisfaction from citizens' with the proposals, which aim at establishing a police force sub-ordinated to the State-, not the entity level. See Dnevni List, p. 4, 2 January 2005.
22. Corruption Perception Study Bosnia and Herzegovina 2004;
23. Banja Luka 2004, p. 20.
24. Fadil Šero: Managing Political Parties; UK South East Europe Forum, British Council year?
25. See Ashdown vs. the Bosnian Presidency, Beta newsagency, Sarajevo 18.12.2004
26. Internal Sida memo.
27. http://www.ohr.int/ohr-dept/presso/pressr/default.asp?content_id=29337
28. See: http://www.ohr.int/ohr-dept/presso/pressr/ default.asp?content_id=29337
29. http://www.ohr.int/ohr-dept/presso/pressr/default.asp?content_id=29337
30. Primarily by USAID.
31. See WB CAS 2004 at http://www.wds.worldbank.org/servlet/WDSContentServer/ WDSP/IB/2004/08/24/000012009_20040824095015/Rendered/PDF/291960BA.pdf
32. Quoted from the FBiH Privatization agency's English translation of the report at http://www.apfcom.ba/info/izvj/1/?cid=364,1,1
33. DANI magazine, 24 September 2004, p. 7
34. Such claims might have been originating in frozen foreign currency accounts, wage arrears etc.
35. In the Federation.
36. See Timothy Donais: The Politics of Privatization in Post-Dayton BiH. In: Southeast European Politics, June 2002, Vol. III, No. 1, pp. 3-19.
37. Both Donais (previous footnote) and other sources say for as little as 3% of their nominal value (see Mass Privatization in Bosnia and Herzegovina, AIM Sarajevo, 16 December 2000: http://www.aimpress.ch/dyn/ trae/archive/data/200012/01230-002-trae-sar.htm)
38. See: Timothy Donais: The Politics of Privatization in Post-Dayton Bosnia. In: Southeast European Politics, June 2002, Vol. III, No. 1, pp. 3-19.
39. and http://www.tiri.org/documents/press_releases/20_jan_05/ PWR_BosniaHerz_Devine.pdf
40. See http://www.beta.co.yu/korupcija/cist2.asp?ci=1139033: 'Sevda protiv Vjetrenjača' ('Sevda against Windmills')
41. See http://www.beta.co.yu/korupcija/cist2.asp?ci=1139033: 'Sevda protiv Vjetrenjača' ('Sevda against Windmills').
42. http://www.bosnia.org.uk/bosrep/ report_format.cfm?articleid=879&reportid=155
43. http://www.iwpr.net/index.pl?archive/bcr2/bcr2_20020614_2_eng.txt
44. See International Organization for Migration, 'Victims of Trafficking in the Balkans: A study of trafficking in women and children for sexual exploitation to, through and from the Balkan region', (2001);
45. and intervention by Javier Solana, EU High Representative for Common Foreign and Security Policy, at the London Conference on organized crime in South Eastern Europe, 25 November 2002.
46. IWPR. Balkan Crises Report, Investigation: Will Europe take on Bosnia's Mafia?
47. http://users.tyenet.com/kozlicb/iraqscan.htm
48. IWPR. Balkan Crises Report, Investigation: Will Europe take on Bosnia's Mafia?
49. See UNDP Early Warning System July - September 2004, http://www.undp.ba/ index.aspx?PID=14
50. See Corruption Perception Study Bosnia and Herzegovina 2004, Transparency International BiH, Banja Luka/Sarajevo 2004; p. 74.
51. Nezavisne Novine 12 November 2004, p.5.
52. Quoted at http://www.nato.int/sfor/media/2004/ms040207.htm
53. See Final Report of the Independent Judicial Commission (IJC), November 2004 p.4
54. Ibid.
55. Ibid.
56. The centralized health system in the RS is acting through eight branches which spent 235 million KM in 2003; the fully decentralized system in the Federation of BiH consisting of ten independent Canton services spent 712 million KM in the same period of time, whereas the Health Ministry of Brčko district spent 40 million KM. Nezavisne Novine 10 December 2004.
57. http://www.cin.ba/my-docs/?cid=136,2,1
58. ibid.
59. Nezavisne Novine 10 December 2004.
60. Also referred to as 'physician-patient-asymmetry' in the terminology used by the World Health Organisation (WHO).
61. Nezavisne Novine 10 December 2004
62. Nezavisne Novine 10 December 2004
63. One World, 14 December 2004 and Transparency International at http:// admin.corisweb.org/ index.php?fuseaction=news.view&id=116042&src=pub
64. http://www.forumtz.com/bos/dokumentizadown/Analiza.doc
65. Oslobodenje, 29 January 2005
66. http://www.forumtz.com/bos/dokumentizadown/Analiza.doc
67. http://www.delbih.cec.cu.int/en/worddocuments/word245.htm
68. http://www.wds.worldbank.org/servlet/WDSContentServer/VDSP/IB/2002/08/02/ 000094946_02071904030296/Rendered/PDF/multi0page.pdf, p. iii.
69. See interview with outgoing Resident representative of the WB J. Ingram, 6 August 2003 at http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ ECAEXT/BOSNIAHERZEXTN/ 0,,contentMDK:20199409~pagePK:141137~piPK:141127~theSitePK:362026,00.html
70. See 'Bosnia's High-Spending Leaders Blow Hole in Budget' by Renata Radić at http://www.tharwaproject.com/English/Aff-Sec/IWPR/ BCR%20511/Radic.htm
71. On 10 March 2005, the BiH Court confirmed the indictment of Ćović on charges of abuse of power, corruption and organized crime. The charges date back to Ćović's time as the Federation Finance minister (2000 - 2003), during which he allegedly accepted bribes from businessmen that had also been indicted for organized crime and corruption. See RFE/RL News, 11 March 2005.
72. http://www.bhdani.com/arhiva/163/t16315.htm
73. Dnevni Avaz also holds a monopoly on the printing of media by owning the only printing house - 'Oko' - in the Federation.
74. http://www.ohr.int/ohr-dept/media-d/med-recon/agreements/ default.asp?content_id=385.
75. According to a poll carried out by Mediaplan Sarajevo'
76. Slobodna Bosna and Dani both cost 3 KM, while Dnevni Avaz costs 0,70KM and Nezavisne Novine (the Banja Luka based and USAID funded Independent Newspaper) - 1 KM.
77. http://www.ti-bih.org/documents/16-12-2004/ Nezavisne%20novine%2010.12.04.jpg
78. The most frequent allegation against 60 Minuta is, for example, to be the SDP's mouthpiece.
79. See case study on BiH by V. Devine in 'Corruption in Post-war reconstruction - Confronting the vicious Cycle', Tiri and the Lebanese Transparency Organization with support from UNDP, January 2005 at www.tiri.org
80. Chris Hedges, 'Leaders in Bosnia Are Said to Steal Up to US $1 Billion', The New York Times, 17 August 1999. See www.cdsp.neu.edu/info/ students/marko/nythedges.
81. See Danilo Vuković, 'Corruption in Bosnia and Herzegovina', April 2001, on www.seldi.net/BiH.htm.
82. See Harold J. Johnson, testimony Statement at http://www1.oecd.org/daf/ spaicom/word/gaotestimony-1907-99.doc
83. One recent example of such an independent verification is the Audit of the Federation Ministry for Social Policy, Displaced Persons and Refugees, which disclosed serious irregularities in the management and use of funds of that Ministry. See www.ohr.int/other-doc/spec-audit-rep/ Pdf/FMSP-special-audit-report.pdf.
84. See Human Rights Watch, World Report 2003: Europe and Central Asia: Bosnia and Herzegovina. www.hrw.org/wr2k3/europe5
85. This situation has only remotely changed after the High Representative sacked a number of RS politicians and officials at the end of 2004 for their failure to cooperate with ICTY. In January 2005, Savo Todović was the first indictee to turn himself in to the ICTY.
86. See http://europa.eu.int/comm/external_relations/see/news/ip03_1563.htm
87. See Council of Europe report SG/Inf(2005)2 final 4 February 2005 - Bosnia and Herzegovina: Compliance with obligations and commitments and implementation of the post-accession co-operation programme at http:// www.coe.int/t/e/sg/Secretary-General/Information/Documents/Numerical/ 2005/SGInf(2005)2%20fmal%20Bosnia.asp#TopOfPage
88. See facts and figures at: http://europa.eu.int/comm/external_relations/ see/bosnie_herze/index.htm#5
89. The 8 vertical sectors are agriculture, justice, police and border service, health, economy, education, return and environment. The horizontal review is looking at legislative processes and the IT sector.
90. OSCE equally had concerns about the reappointment process. While questioning (internally) the reappointment of certain judges, OSCE nevertheless decided that the independence of the reappointment body would be negatively affected if an international organization vetoed its decisions.
91. See http://www.eupm.org/stories/PPIOreview2003.pdf
92. Ibid.
93. Ibid.
94. Ibid.
95. http://www.delbih.cec.eu.int/en/worddocuments/word262.htm
96. http://www.eupm.org/stories/Article15.htm
97. http://europa.eu.int/comm/external_relations/see/actions/customs.pdf
98. See OHR Economic Newsletter Vol. 8, Issue 1 January 2005.
99. http://europa.eu.int/comm/external_relations/see/docs/com03_692_en.pff
100. http://www.ohr.int/ohr-dept/presso/pressr/default.asp?content_id=33994
101. http://www.ohr.int/decisions/econdec/default.asp?content_id=29240
102. http://www.walter.ba/arhiva/br109/interviewcausevic.html
103. Oslobodenje, 3 February 2005, p. 8 'Tužilaštvima prijavljene utaje od sto miliona maraka' ('Evasions of 100 million marks have been reported to the prosecution')
104. http://www.oslobodjenje.com.ba/asp/showart.asp?art_id=43266
105. Quoted from comments on the Inter-Agency Rule of Law reform matrix, provided by OSCE during January 2005 field trip.
106. Oslobodenje, 3 February 2005, p. 8 'Tužilaštvima prijavljene utaje od sto miliona maraka' ('Evasions of 100 million marks have been reported to the prosecution')
107. Information given during interview with informant in BiH.
108. 'Plea bargaining - the process whereby the accused and the prosecutor in a criminal case work out a mutually satisfactory disposition of the case subject to court approval. It usually involves the defendant's pleading guilty to a lesser offense or to only one or some of the counts of a multi-count indictment in return for a lighter sentence than that possible for the graver charge.' Quoted from: http:// www.the3rdjudicialdistrict.com/glossary.htm
109. The Laws on Witness Protection and Judicial Police of BiH.
110. Amendments to the existing Law on the Prosecutor's Office and the Law on the Court of BiH.
111. See http://www.ohr.int/decisions/statemattersdec/ default.asp?content_id=8568
112. See http://www.ohr.int/ohr-dept/legal/oth-legist/doc/ LAW-ON-CONFLICT-OF-INTEREST.doc
113. Information about the state of implementation of the Conflict of Interest Law for Elected Officials at www.izbori.ba
114. See http://www.ti-bih.org/en-GB/Default.aspx?TabID=19
115. See http://www.ads.gov.ba/en/laws/ June%202002%20-%20Law%20on%20Civil%20Service.pdf
116. See SIGMA, Public Administration Profile Bosnian and Herzegovina/State Level, Paris 2004, at http://www.sigmaweb.org/PDF/PAPROFILES/Balkans_04/ SIGMAPAPROF_BiH_State-04E.pdf
117. See TI BiH 2004 Activity Report at http://www.ekaan.com/tibih/ Izvještaj%20%20TI%20BiH-a%20za%202004.%20godinu.pdf
118. Technical assistance to the establishment of a Public Procurement Framework in Bosnia and Herzegovina/Phase II' by the European Union's Public Procurement Program for Bosnia and Herzegovina (EUPPP)
119. The IJC was primarily funded by the EC and the US; Norway also contributed substantial funds. A number of bi-lateral donors - including Sida - provided funding for various specific projects.
120. See Final Report of the Independent Judicial Commission, November 2004, p. 49
121. See also http://www.hjpc.ba/intro/?cid=246,1,1
122. Ibid. p. 116
123. Funding for the establishment of the State Court and the Prosecutor's office, including reconstruction work on their permanent premises, were provided by the US, Spain and the EC.
124. Sida has funded one Swedish prosecutor to the State Prosecutors Office
125. The OHR's Anti-Crime and Corruption Unit (ACCU), which is part of the Rule of Law Pillar, provides the support and liaison between OHR and the Prosecutor's Office. ACCU is expected to be phased out by the end of 2005, but it is planned to continue the presence of International Prosecutors in the short- and medium-term. Sida is currently funding two investigators to this unit.
126. It has to be added that the international staff faces substantial threats to their security, too, and is provided with special security arrangements at all times.
127. See, for example http://www.css.ba/en/ izbor.asp?kat=news&godina=2004#90 on threats to international and local prosecutors.
128. Information given during interview with informant in BiH.
129. The Civil Service Law, the BiH Law on Administration, the Law on the Council of Ministers and the BiH Law on Ministries
130. There is also a RS Civil Service Agency, which started its operations in 2002; the establishment of a Federation Civil Service Agency is underway;
131. see http://www.sigmaweb.org/PDF/PAPROFILES/Balkans_04/ SIGMAPAPROF_BiH_Fed_04E.pdf
132. Information given during interview with informant in BiH.
133. See SIGMA, Public Administration Profile Bosnian and Herzegovina/State Level, Paris 2004, at http://www.sigmaweb.org/PDF/PAPROFILES/Balkans_04/ SIGMAPAPROF_BiH_State_04E.pdf
134. Ibid.
135. This is a situation that can be observed in other transitional countries, too, for example in Poland.
136. The measures aim at establishing a system based on four prime principles: 1) independence and integrity of the accounting and auditing profession; 2) self-regulation, according to internationally accepted and enforced standards; 3) protection of the public; and 4) continuous improvement of standards. See OHR Economic Newsletter Vol. 8, Issue 1 January 2005.
137. For the text of the Law on Public Enterprises in the Federation BiH, see Official Gazette of FBiH, Number 8, page 299, 9 February 2005.
138. Activities in support of this reform are funded by the UK Department for International Development (DfID).
139. See OHR Economic Newsletter. Vol. 8, Issue 1 January 2005.
140. See OHR Press Release http://www.ohr.int/ohr-dept/econ/ bulldozer-initiative/default.asp?content_id=28712
141. See OHR Economic Newsletter Vol. 8, Issue 1 January 2005.
142. Information leaflet by USAID 'Bosnia-Herzegovina Anti-Corruption efforts', www-usaid.ba www-usaid.ba
143. Aggregate figures are difficult to come by; the estimate results from an approximated US$ 20 Million that has gone into the establishment and support of OBN and another US$ 20 Million into the restructuring of public service broadcasting, including the establishment of the Independent Media Commission (IMC) and the creation of the Communications Regulatory Agency (CRA) as well as initial support to RTRS, Radio FERN and Mreža. The figure does not include funding that has gone into training of journalists, as no such data has been available.
144. http://www.cia.gov/cia/publications/factbook/geos/bk.html#People
145. For comparison, the United Kingdom has ca. 950 media for a population of ca. 70 Million.
146. See http://www.wrx.zen.co.uk/britnews.htm
147. and http://www.wrx.zen.co.uk/firomhere.htm
148. Such as the Banja Luka based Nezavisne Novine (Independent Newspaper), with a circulation of just 15.000 (weekdays) and 20.000 (Saturdays), or the Sarajevo-based TV station Studio 99.
149. Such as the Banja Luka based ATV or the Travnik regional radio station TNT that have made a successful transition to become commercial broadcasters.
150. Sida, together with other donors, has supported the work of the Press Council, a self-regulatory body established in 2000, consisting ofjournalists, the public and the international community to oversee the application of the Press Code
151. (See: http://www.ejc.nl/jr/emland/ text%20versions%Special%20files%20bosnia/PressCode.doc), which stresses ethical standards in journalistic work. No evaluations of the work of the Press Council were available to the authors of this paper. The website of the Press Council is http://www.vzs.ba
152. Before this, arrests of journalists were frequent. See for example the arrests in 1999 of Senad Pećanin and Senad Avdić at http:// www.ddh.nl/org/poo/bsh/media/history.htm#0999, or http:// www.mediaonline.ba/en/arhiva/arhiva/pdF2000/mnbr58en.pdf. The respective RS and FBiH Laws can be found at http://www.ti-bih.org/documents/zakoni/
153. http://www.media.ba/SarajevoBN/News/2004/11/23/News1541/
154. http://www.ohr.int/ohr-dept/afd/ac-cor-strat/default.asp?content_id=5240
155. The interim report is available in the local language version at http:// www.eppu.ba.
156. The campaign title has never been translated into English; roughly, it could be translated as 'The one here, and the one over there'.
157. Bulgaria is a good example for a counterproductive anti-corruption awareness campaign. When in 2001, such a campaign was launched, the perceived level of corruption in Bulgaria soared. The public believed that once there was a campaign, the problem must have had dramatically worsened, otherwise there would not have been a campaign in the first place.
158. A detailed discussion on anti-corruption public awareness campaigns and their impact can be found in: 'From the Ground Up - Assessing the Record of Anticorruption Assistance in Southeastern Europe' by Martin Tisné and Daniel Smilov, Center for Policy Studies, Central European University, The Soros Foundations Network, Budapest, 2004.
159. For more information on TI BiH's activities, see its 2004 Annual Activity Report at http://www.ekaan.com/tibih/ Izvještaj%20%20TI%20BiH-a%20za%202004.%20godinu.pdf
160. This concerns, for example, the conflict between TI and the then High Representative Wolfgang Petritsch in 2001.
161. Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Moldova, Montenegro, Romania and Serbia are participating in the SPAI.
162. GRECO evaluations are looking at the implementation of a selected number of the 'Guiding Principles'. The first round evaluation report of BiH was adopted at the GRECO Plenary Meeting in Strasbourg in July 2003 and can be found at http://www.greco.coe.int/evaluations/Default.htm.
163. The project covers Albania, BiH and Herzegovina, Croatia, Macedonia, Serbia and Montenegro including Kosovo. SIDA contribution to the project is € 1, 5 Million.
164. The project's duration is planned to be from 2004 to 2006. It is funded with € 4,4 million.
165. http://www.coe.int/T/E/Legal_Affairs/Legal_cooperation/ Combating_economic_crime/Regional_project_CARDS_Police/
166. See http://www.coe.int/T/E/Legal%5Faffairs/Legal%5Fco%2Doperation/ Combating%5Feconomic%5Fcrime/Money%5Flaundering/
167. See also http://www.coe.int/T/E/Legal%5Faffairs/Legal%5Fco%2Doperation/ Combating%5Feconomic%5Fcrime/Money%5Flaundering/Evaluations/ Reports_summaries.asp#TopOfpage
168. See http://conventions.coe.int/Treaty/Commun/ ChercheSig.asp?NT=141&CM=3&DF=2/18/05&CL=ENG
169. Information provided by interviewee.
170. Mutual Legal Assistance (assistance in drafting legislation and training) is covered by two EC CARDS projects implemented by the Council of Europe. Regional countries indicate to finding it difficult to make progress with BiH on this matter.
171. http://www.interpol.org/
172. See, for example Franklin Steves and Alan Rousso: Anti-Corruption programmes in post-communist transition countries and changes in the business environment, 1999-2002, EBRD Working Paper No. 85, p. 7
173. Which relies almost exclusively on 2002 data compiled by the Bosnian chapter of Transparency International.
174. This is already being done through support of the Regional Development agencies.
175. The USAID funded Centre for International Private Enterprise have done projects along these lines.