REPORT

ON ANTI-CORRUPTION ISSUES IN THE REPUBLIC OF MACEDONIA

 

by Vanja Mihajlova

 

I. INTRODUCTION

Macedonia as other countries as well, is faced with a phenomenon of corruption as a global problem, which raises serious moral and political concern, undermines good governance, negative influences on the democratic process and economic development, and distorts the general competitive conditions. The Macedonian legal system does not recognize " corruption" as a legal expression in the Criminal Code to explain such illegal activity. The Criminal Code defines such activities as a receiving a bribe, giving a bribe and illegal intermediary.

The various pools in the last couple years indicate increasing of corruption as a result of lack of anti- corruption legislation and prevention instruments for combating this problem.

Although, the corruption as a phenomenon existed in the previous system as well, the level of corruption, especially in the last couple years, has increased significantly. According to the pools only unemployment and low income are ranking higher than corruption in terms of social significance. Other pools indicate that only state bureaucracy is ranked higher that corruption as an obstacle for foreign investments in Macedonia. The wide scope of corruption as a social phenomenon has extremely negative impact on the whole social life, development, and market economy. The assessment of corruption indicates these practices, as an accepted manner for doing business, obtaining some benefits, or to protect some personal interests and property. However, public disapproval and revolt due to such situation increases continuously. The public accuses the Government for tolerating the corruption. The erasure of the moral, the discrepancy between the declarations of the politicians for fight against corruption and their tolerance, or even more, the direct involvement of some of them in corruption, arises public disapproval and increase the pressure for changing of such situation.

The public administration is the sphere where the corruption persists. Public officials are the most corrupted persons, before doctors, judges, university professors and officials from public enterprises, performing some public duties.

In 1995 the Government has adopted an Anti-Corruption Program, to prevent corruption in the public administration and create manner of behavior of public officials. In this period several high officials were dismissed of their positions, but no one has been prosecuted.

The nepotism, appointment of members of the ruling party on all senior positions in public administration and public enterprises, no matter of their experience, capability and knowledge hinders the development of a human potential. There is no dough that this situation also, frustrates the process of public governance and negate the Constitution guaranteed right for equal conditions and competition for all positions. In addition, the absence of full control creates favorable conditions for increasing of the corruption.

- After several years of preparation for reform in the public administration, the Parliament enacted the administration reform legislation on July 2000.The-administration package concludes: Law on State Servants, Law on Government, and Law on Organization of the State Bodies.

- The non-transparent process of privatization of the state owned enterprises did not achieve its goal for fear competition and legal procedure. Under-evaluation of value of the assets of the company- being in privatization process, by the Privatization Agency in the last couple years, in order to be sold to the known buyer, practices paying so called " provision" for service, as an substitute for a bribe. This is especially case in the post privatization period, when shareholders- usually employees are forced to sell their shares to the new interested buyer, under non market conditions. The non- government organizations did not succeed to make some essential control on the privatization process. Some powerful authorities to stop the process of privatization or to reexamine the process of already privatized enterprises used a contrary, some of them, so called "independent workers unions". In spite the declaration for a market economy, the influence of the authorities in the private sector still exists trough various manners, even in the personal policy, which could have negative impact for foreign investors.

Corruption has highly connection with smuggling and other kind of organized crime.

The organized crime- smuggling of weapons, narcotic drugs and other kind of goods is increased in the last years. The events in Kosovo, and political instability in Albania few years ago, created an excellent opportunity for smugglers to operate in Macedonia. These events have exposed the country to an increase in trafficking of weapons, narcotic drugs, aliens, cigarettes, coffee and alcohol. The performance of all these illegal activities has large level of criminal interaction between smugglers and civil servants, especially customs officers, police and senior officials. The means obtained from illegal activities are " dirty money" which later on will be laundered in the country, or more often abroad. The recent events with Albanian terrorists in some parts of the country, discovered that enormous amount of weapons have been smuggled from Kosovo and Albania, in the last few years, as well as their connection with some ethnic Albanian being on high positions. The organized crime- smuggling of weapons, narcotics drug and other kind of goods is widespread in the region where the ethnic Albanian population prevails.

- The existence of growing number of independent media, are major factor for discovering of corruption cases, which involve high officers and political authorities. The media have extremely positive impact in voicing the public in combating the corruption and in making pressure on the authorities to undertake some measures to prevent and curb corruption.

- There are not essentially activities of the NGO regarding the corruption issues, so far. The international organizations, international financial institutions and foreign government and non-government organizations, should cooperate in this regard, trough providing a technical assistance for preparation of legislation, establishing the rules of transparency and market economy.

 

II. CREATING A FABORABLE INSTITUTIONAL AND LEGAL ENVIRONMENT FOR CURBING CORUPTION

The public administration is the most vulnerable sphere to corruption. Among public officials, according to the research of the Center for Strategic Research and Development, the inspection and customs officers are the highest corrupted officials -39% of foreign investors had to pay a bribe to the inspections and 37% to customs. Other research indicate the following of level of corrupted officials: custom officials- 72%; municipal councilors- 61,0%; ministers-60, 8%; judges-49%; officials from ministries-47, 5%; members of the Parliament- 45% and so on.

The reasons could be found in the power of the public administration in the whole society, desecration right to issue various licenses to the private sector, especially in obtaining some privileges for doing business. The low salaries of the public officials also have impact for corruption practices.

- The public administration reform in Macedonia started a few years ago, mainly under suggestions of international financial organizations and EU, trough its PHARE program. The key task of the administration reform is to use the transparency and legality into essential characteristic of power of administration. It should provide easier and better access to public services and limit the opportunities for abuse of the power and corruption.

After several years of preparation, the Parliament adopted the package of laws on public administration reform.

Number of critics were addressed to the Government for a lack of clear Strategy before starting a reform in this sector, for establishing a modern, efficient administration- which will respond to the needs of the citizens. In stade of that, the nepotism, connections with the ruling parties represents a key factor for getting job in this sector, and especially of taking a senior position. At the beginning of this year, under suggestion of IMF, about 3.800 employees from the public sector were lay off, or send to earlier pension, as a part of public administration reform. Due to the lack of transparency during this first step, it is difficult to expect any efficient enforcement. The next step of the reform is transfer of some public functions into private and separation of some government agencies as independent institutions, financed out of the Budget. The transfer of some governmental functions to private sector strives to support the civil society and democratic process in the country, create competition mechanisms, and straighten anti- corruption measures.

The Law on State Servants and Law on the Government of the Republic of Macedonia were enacted on July 20, 2000(in effect from July 28), while the Law on Organization of State Bodies was enacted on July 21, 2000 (in effect from July 29, 2000).

The Law on State Servants is setting up the uniform classification of positions in public administration and same level of salaries for the same positions.

Under the Law, an Agency for State Servants has been established. The Agency proposes a new organization of the public administration, exercises a supervision for fulfillment of the ensuring unified obligations, coordinates the training and education activities of state servants, develops a policy regarding an employment, selects and evaluates the personnel, and prepares by-laws to ensure its implementation. The new organization and uniform classification is not completed yet in all ministries. The objective of the administration reform is to bring the legislation align with European standards for professionalism and de-politicization of the state servants, except the State Secretary, Deputy Minister and Minister. However, the public is not convinced in full implementation of these standards, having regarded the politicization of the state servants in the last couple years. The appointment of skilled professional public servants, no- politicized, should create conditions for efficient, modern and no corrupted administration, competent to respond the citizens needs.

There is not special law, or other regulation requiring of the senior officials in the public administration and public servants to declare their property.

The Central Register of state servants, as an obligation deriving from the Law on State Servants should be established. The preparation for this register is underway.

According to the amendments to the Law on State Servants, a Code on Conduct for civil servants, including rules anti-corruption should be adopted. The activities for drafting of this Code have not started yet.

 

The reform in the payment operations is envisaged by which the Payment Operations Service (known as "ZPP"), an independent professional service, exist since 1 January 1994 would be transformed into a clearinghouse for payments of small amounts, while the National bank would perform the final offsetting of the payment operations. The reform should be completed by the end of this year. The Central Register, will consist all data for companies and legal entities, and promote full access to all information, which should lift the opportunity for abuse in conducting business activities and other transactions.

The tax reform has been completed with the adoption of Value Added Tax on April 2000. The transparency of the value added tax procedure limits the opportunities for tax evasion as well for corruption of tax authorities. The Law is in compliance with Forth and Sixth Directive of the EU.

The state financial control is introduced by the State Audit Law and Public Audit Law, both enacted in 1998. The State Auditor is an independent institution in charge to carry out financial control on the expenditure of Budget funds. The inspection in the legal entities is combined by the internal inspection and external audit carried out by an independent audit institution. While the Public Audit carries out regularly its inspection, there is not any particular progress in the functioning of the State Auditor, so far. The State Auditor has not been involved in controlling a broad abuse of the Budget funds connected with some big scandals, until now. The influence of competent government institutions on the selection of persons as auditors does not indicate independent functioning of this institution. The professional and independent excising of the function by the State Auditor without influence by the competent government institutions should ensure regular control on the use of budget resources and prevent corruption practices.

Local self-government - The Local self-government Law was adopted in 1995. The Law has been criticized for high centralization of functions by the various ministries, narrowing the competence of municipalities, especially in the sectors being essential for citizens and for lack of own tax resources to cover the needs of municipality. The Law on amending and supplementing the Local Self-government Law is in drafting procedure. The amendments in the Law, should provide decentralization of the functions by making the municipalities more independent in performing their competence, especially in urban planing, environment protection and financing.

Law on Public Procurement -was enacted by the Parliament in 1998. The Law aimed to meet international standards regarding the procurement and biding procedure, openness, fair competition, and transparency. There is an obligation for open announcement when the denar value of the procurement exceeded DEM 100.000. The Committee which is established under the Law, is responsible to implement the legal procedure and criteria defined in the Law. However, the public procurement is exposed on the critic from the public especially of bidders, for abuse of the principles of equal participation and opportunities for biding for all bidders, by giving privileges to known bidders. The reactions coming from bidders from the private sector indicate no transparency and incompetent implementation of the Law by the Committee and abuse of power by the authorities, especially in the case of larger procurement-with indication for corruption. There are some unclear provisions in the Law, which create opportunities for abuse. The amending of the Law is in the procedure. Suggestions for amendments were also indicated by EU experts, in order to provide more transparency, efficiency, and rationality of the biding procedure, training of the Committee members and bidders, with aim to meet the European standards and limit the opportunities for corruption.

The Foreign Exchange Operations Law was enacted in 1993 and amended in 2000. Under the current Law, the inflow of foreign currency in Macedonia in cash, is not limited, so the foreigners have an obligation only to report the currency at the border. The lack of control on these funds indicates that the foreign currency could be used for performing illegal activities such as purchase of weapons, drugs, corruption and etc. The new Draft-Foreign Exchange Operations Law is in the parliamentary procedure, and it is expected to be adopted by the end of April 2001. The new law regulates the balance of payment with abroad on current transactions and capital transfers on foreign exchange market and money operations. The adoption of the new law derives of necessity to bring the foreign exchange operations in line with legislation of European Union and OECD. The Law provides liberalization of transactions with abroad, free movement of capital and removing all limitations on capital operations, as well as control on all payments in foreign and domestic currency. The control on foreign currency operations performed by the National Bank and State Foreign Exchange Inspectorate should reduce the opportunities of use of the currency for illegal activities, including corruption.

The Money Laundering Prevention Law - The Republic of Macedonia has not adopted Money Laundering Prevention Law yet. The Draft- Law was prepared in 1998, and the first reading in the Parliament was in 1999. The Law has been considered by the Council of Europe experts as a solid legislative foundation for combating money laundering. The urgent adoption and implementation of the Draft- Law on Money Laundering is essential to remedy a situation where no specific anti- money laundering measures allow for the detection and prosecution of money laundering in the country. The necessity for adoption of this law derives from both Conventions- Vienna and Strasbourg Convention, which Macedonia has signed and ratified, as well from the Directive of the Council of European Community on prevention of use of the financial system for money laundering. Along with the adoption of the Law, it is necessary to establish an Office for Money Laundering Prevention, within the Ministry of Finance. Unfortunately, it seems that the Government does not consider this issue, as an important one, by postponing the adoption of the Law. This could have negative influence on attraction of foreign investment in the country, especially in the financial and banking sector, and could consider the country as non-cooperative with the international community on prevention of money laundering. In order to align national measures and international standards, and actively participate in international cooperation, the adoption of this Law should be as soon as possible.

Law on Political Parties was enacted on July 28 1994. According to the law, the political parties may derive resources for their activities from the membership fee, donations, revenues, their own property, credits, gifts, legacy, and from the Budget. The political parties may no derive resources from governments, international institutions, organs and organizations from foreign countries and other foreign persons, government's bodies, bodies of local self- government- out of budget resources. The broad and not clear definition of "own property", resulted in obtaining the property- number of companies by the ruling party, during the post-privatization process, in non-transparent manner and caring out the economic activities. The Constitutional Court has recently abolished the provision, which allows the political parties to derive resources from performing business activities, which create opportunities for abuse of power and corruption. The Government is obliged to align the provision of the Law with Constitution.

 

III. IMPLEMENTING REFORM IN THE JUDICIAL SYSTEM

According to the Constitution of the Republic of Macedonia, the judiciary is third independent authority, beside executive and legislative authority. Its fundamental goals and objectives are to promote full observance of the law and efficient sanctioning of criminal activities. The independence of the judiciary is precondition for its stability, professionalism and efficiently.

The reform of judiciary started later that the reform in other sectors. The reason is partly due to lack of financial funds, for modernization, education and training, depending of the State budget, but also due to slower adaptation to new conditions of this traditionally conservative branch.

Some measures for reform in judiciary were taken in 1995, when the Law on judiciary and certain additional laws, were adopted, corresponding to the needs of new political and economic conditions in the country. The judiciary reform was supported by UASID through ABA/CELLI, Council of Europe, Open Society Institute, and other NGO, which provide technical and financial assistance. The unsatisfaction and lack of confidence of the public in judiciary, as well as unfavorable status of the employees in whole judiciary, recognized the need of its reform in accordance with international standards.

The Criminal Code was adopted in 1996, and amended in 1999. The Criminal Code introduced the new criminal acts against financial sector, including money laundering, bribery, and abuse of power and others. The Criminal Code in its Articles 357, 358 and 359 regulates receiving a bribe, giving a bribe and illegal intermediary. The bribery is defined as an abuse of power of the public official on manner that he/she will receive promise for gift or other advantage, whether directly or through intermediators to perform official act which may not perform, or refrain from acting in relation to the performance of official duties, or to abuse its official authority and position to intermediate for performing, or refrain from performing the official act, in order to obtain gift or other advantage.

In order to align the criminal legislation with European standards and implement the international documents, especially the Recommendation no R (92) of the Committee of Ministers of the state members for European rules for alternative sanctions and measures implemented by the Community, and the recommendations of the Council of Europe, the need for amending the Criminal Code was recognized. The working version of the Law on amending and supplementing the Criminal Code is in procedure. The amendments propose expending of the criminal acts on prevention and control on economic and financial crime, introducing new criminal acts-smuggling of goods, through border and custom territory, confiscation of goods derived by exercising criminal activities, and other kinds of smuggling; participation in organized crime; trade with human, illegal use of goods imported with custom concession or privilege. The amendments will include also widening of sanctions against corruption.

The amendments of the Code should prove the declaration for sanctioning the organized crime, as a main obstacle for economic development of the country, and create a new policy against corruption.

The Criminal Procedure Code was adopted on 1996.

The amendments in this Code are also in the preparation. According to working version of the Draft- Criminal Procedure Law, the mandate of prosecutor's deputies will not be limited in stade of current mandate of 6 years. This solution aims to straighten the independence of the Prosecutor Deputies and remove the influence of the authorities. Some of current provisions of this Law, provide for joint action with police in criminal proceeding, in order to ensure efficiency, more transparency and openness in the criminal procedure, implementing the high developed standards in this domain.

However, number of critics by the public and media were addressed to the Public Prosecutor for its passive attitude towards "big" criminal cases, especially those involving corruption. Appointment of professional, no-party person as a Public Prosecutor should approve the independence of this institution in performing its duties.

Administrative procedure - There is several laws regulating administrative proceeding, such as: the Law on Administrative Procedure, the Law on Administrative Disputes, the Law on State Administrative Inspectorate, and the Law on Administrative Fees. However, general provisions of the Law on Administrative Procedure, apply during the tax, customs, urban planing procedure, land use procedure and etc. The current Law on Administrative Procedure inherited from Former Yugoslavia has been adapted to the new conditions and amended several times. However, in spite the long history of its functioning, there is an opinion by experts that the Law is complicated and does not correspond to market conditions.

The amendments of the Law are in the drafting procedure, as a part of judiciary reform. . A number of provisions will be amended in order to respond to the needs of citizens for simple, and more efficient proceeding, and to decrease the abuse of procedural rights of the officials. The amendments in this Law will require amending and supplementing of number of laws, which use the Law on Administrative Procedure, as a legal base for their proceeding. The Law on Administrative Disputes and Law on Misdemeanors Proceeding are also in amending procedure. The amendments in the Law on Administrative Disputes should ensure simple, efficient, transparent procedure, as a necessity for realization of citizen's rights. The amendments on the Law on Misdemeanors Proceeding, propose full reorganization and simplification, in order to provide a rapid proceeding and avoid non transparent delay of trial, which create an opportunity for corruption.

The Law on Judiciary was enacted in 1995, and enforced from June 1996. The current Law regulates the organization and operation of the courts, recruitment procedure of judges, prosecutors and other personal. The Supreme Court is in charge for organization of the courts. The Republic Judicial Council, as an independent institution, proposes election of the judges to the Parliament, after the opinion from the Supreme Court. However, the election, of judges lately did not correspond to defined criteria in the law, capability and professionalism, as well as with opinion issued by the Supreme Court and Republic Judicial Council. In spite of this, the influence and power of deputies often decide the election of judges, who will have of course, an obligation to pay back this privilege.

The amending of the Law on Judiciary is in drafting procedure. The amendments on the Law, should enhance the professional and social status of judges, and other personal, develop the organization and straighten the independence of the judiciary, as whole, regulates the recruitment of judges on transparent criteria based on skills, experience and professionalism, training and education, the modernization of the judiciary and higher responsibility in exercising their duty.

The introduction of an independent judiciary budget, which have been debated several years, should ensure full independence of the judiciary from the government institutions and lifting the possibility for influence on their work. The amendments should improve the social status of the court administration as well. The low salaries and unfavorable working conditions resulted with three months strike of the court administration in this year. Improvement of social status of court administration, and working conditions, including computerization, should remove the conditions for corruption of this staff. It is expected that the reform in judiciary will improve the public trust and respect in the judiciary.

Concerning the training, the Centar for Continuing Education (CCE) was formed in March 1999, as no government institution, under the umbrella of the Macedonian Judges Associations in continuity with its Education Committee. The Centar primarily focuses on continuing education and training of judges, law clerks and other personnel. The Centar program and operations targeted at enhancing the competence, professionalism, and ethnical behavior of judicial cadre, ultimately contributes to the promotion and straightening of judicial independence ad public trust and respect in the judiciary, and rule of law. The Centar also, strives towards ensuring high standards of professionalism, independent and impartial judiciary promotion the rule of law trough education and information. So far, the Centar is performing these tasks quite well; it has organized number of seminars, workshops and other kind of training. The activities of the Centar are financed by the Open Society Institute.

 

IV. CURBING CORRUPTION IN THE ECONOMY

The expectations are that the privatization of the economy and a large number of private companies (in Macedonia at the moment there are about 120.000 private companies) will create mechanisms to protect the private ownership from all kind of organized crime, including corruption. The transition period of the economy-transformation of the centralized economy into market, lack of transparency of the privatization process, and lack of legal instruments for prevention, have created various illegal activities, such as smuggling, tax evasion, "gray economy" organized crime, financial fraud which resulted with obtaining enormous funds by individuals in a short period of time. In spite of expectations, the transition period took longer, that it has been predicted, and during this period the Government institutions did not succeed to take effective control on the market, and especially in the privatization process by introducing mechanisms to prevent corruption.

Although the corruption excises in all sectors, the risk is highest in the privatization process, especially in the case of large profitable companies and state owned companies. The process of privatization in Macedonia went faster that in the other countries. The first privatization actually began by the end of 1980-th and beginning of 1990-th, when Macedonia was part of Former Yugoslavia. In that period, a number of the companies went through transformation of ownership, according to so called " Markovic Law". The management and employees have obtained the ownership on enterprises, becoming shareholders. Macedonia adopted a new Law on Privatization and Restructuring of the Enterprises with Social Capital, on 1993. Since then, the Law was amended and supplemented several times. Special Law for privatization of the agro- kombinats carried out the privatization of the agriculture companies (kombinats), was adopted. According to Government program, the largest 25 enterprises-loss making were put in the bankruptcy procedure, or separated in smaller enterprises and later privatized. The share of the state ownership was limited in the so called public enterprises- railways, energy sector, telecommunication, water supply, urban planing, health system.

Although the Privatization Agency id defined as an independent institution, the Government has direct influence on its work by appointment the Director and other senior officials in the Agency and its Managing board. The Government has delegated its officials in all managing boards in public enterprises and in joint-stock companies with private majority ownership where the Government has partly ownership.

Post privatization process - the influence of the state on the economy, is still strong especially in the post-privatized period. The Law has been amended and supplemented several times, in order to accelerate the privatization process. The Constitutional Court has abolished some of its provisions not been into accord with market conditions- privatization trough direct sale, which does not provide equal opportunities for all subjects. However, several privatization transactions with government share, have been accomplished with no transparency, lack of public tender and direct sale, under-estimation, which decreases the value of the companies even up to 80 per cent. The sale of the largest profitable state companies, such as Refinery in no transparent tender procedure has indicated an involvement of the highest government officials, but not one was investigated. The defined criteria and procedure and estimation of the value of company's assets being in privatization process do not apply very often. Number of disputable privatization procedure confirms this abuse.

The completion of the post-privatization process, and changing the structure of ownership-their transfer to private ownership, should limit the obstacles for abuse of power and reduce opportunities for corruption practices. The private owners will be more interested to protect their ownership from criminal activities, including corruption. However, the too fast post-privatization indicates non-transparency - for example; in the period less than four months of 2001, 37 stock- companies with Government share were privatized in procedure estimated by the public as non- transparent. The sale of the monopoly- public enterprises, in which the Government influences though various manners, should remove the barriers for functioning of market mechanisms, fair completion, and give a chance to the Government to get rid of the corruption practices.

Licenses and regimes - The power and discretion right of the Ministry of Economy to bring down a number of licenses and other import- export statements, has been connected with non transparency, violence of the described procedure and abuse of power. In spite the limitation of bureaucratic barriers for obtaining various licenses from the government institutions, and some progress in removing the obstacles for business, the private sector is still faced with difficulties and non transparent procedure for obtaining such licenses. The Ministry of Economy has full competence and discretion right to issue number of regimes. Several cases of non-transparency during issuing licenses for import of certain goods indicate suspicion for abuse of power of the top officials in the Ministry of Economy.

Macedonia has an obligation to further reduce, or abolish number of regimes, under the Stabilization and Association Agreement signed with the EU. This should limit the opportunities for corruption practices and improve the climate for business.

The corruption is one of the major obstacles for foreign investment in spites the favorable conditions and tax and customs benefits for foreigners.

In the framework of tax reform, the new Law on proceeding and collecting of taxes was enacted on March 2001. The objectives of the law are to improve the organization and functioning of the tax administration and to straighten the authorization of tax inspection in respect to tax control and tax collection. The competent implementation of the Law should decrease the tax evasion, improve the responsibility of tax officials and narrow the opportunities for corruption.

At the beginning of 2001, the tax Personal Income Tax Law, Profit Tax Law, Value Tax Law and Excises Law were amended, as a part of further tax reform. Taxes and excises were reduced for several products, in order to decrease so called "gray economy" The personal income taxes have been reduced from 23%, 27% and 35%, to 15% and 18%, in order to support the private sector. The certain tax and customs allowances were reduced in order to limit the opportunities for abuse of power, during tax and customs deduction procedure.

The interaction of the private business and the state institutions is still weak. The relations between these entities mainly are connected with issuing of various licenses and statement by the government institutions. The private business is not involved in the preparation of the legislation. The relations with the Chamber of Commerce are even weaker. Therefore, it is essential to set up and promote correct relations with the private business, to adopt strict regulations and rules with participation of the private sector, which should provide transparency, free of abuse of the power.

Anti-monopoly legislation - In order to implement the market conditions for fair competition, the Law against restriction of competition and the Law against unfair competition were enacted in 1999. The Laws were harmonized with the European principles and standards. The main objective of anti- monopoly legislation is to prohibit the coordination activity by competitors, to control the abusive practices by market dominating enterprises and to prohibit the discrimination by market dominating enterprises. According to the Law against the restriction of competition, an Anti-Monopoly Office has been established within the Ministry of Economy, in charge to implement the competition policy. The first results of these practices are positive. However, the further improvement of market conditions and climate, should reduce the opportunities for discrimination and abuse of power by the competent authorities.

The corruption is tightly linked with smuggling. The transition period and transformation of the former state owned company, usually is accomplished with lay off and increasing of the poverty. Smuggling of all kind of goods, not reported to the tax administration and not taxed is one of the manners for making funds for living. The officials estimate that the "gray economy" is about 30 per cent. The tax evasion in the last years is also increasing sharply, especially in the western part of the country, where the ethnic Albanians prevails. According to some data, the tax collection in this part of the country is extremely low. The tax administration and the Government- in coalition with Albanian political party do not take efficient measures to improve such situation, which indicate their tolerance.

 

V. ENHANCING CIVIC CONTROL IN THE FIHHT AGAINST CORRUPTION

The Law on Citizens Associations and Foundations was enacted on June 25 1998. According to the Law, the citizens may found associations and foundations in order to derive and protect economic, social, cultural, scientific, ethnical, humanitarian, educational, sports and other rights, interests and believes, in accordance with the Constitution. Number of non-government organizations, both domestic and foreign, has been established, after adoption of the law.

In spite of the number of NGO present in Macedonia and their permanent increasing role to initiate the problems the society is faced with, only some of NGO have been engaged in researching and debating the problem of corruption. In the course of 2000 and 2001 the public role and efforts in affirming the importance of prevention and combating corruption is increasing. Institutional forms mobilized the public action for locating the roots for corruption and initiate public support for making pressure on the Government to fight against this problem, are also growing. The research of the Centar for Strategic Research and Development on barriers for foreign investment in Macedonia, indicate corruption is one of top obstacles for foreign investors. Non-government organizations with support of foreign donations have organized public debate and round tables to discuss this problem, and to develop an interaction with government institutions to improve the transparency on this matter.

However, in spite of important role of the NGO in initiating and analyzing the consequences due the corruption practices, some of them were criticized by the public and especially by the media for nepotism, being in close relation with ruling party's structures, for providing donations from private business by racket, and using the NGO for money-laundering transactions. The lack of non- transparent established standards, and full control on the use of the donations funds, and obstinacy of competent officers from NGO, create suspicious in the public for abusing of donations.

The role of the professional organizations is increasing. Macedonian Business Lawyers Association has initiated this problem for discussion between the businessmen, due to the fact that the economy is the domain where the most corruption practices prevail. The Association is preparing a project, regarding the aspects of negative influence of corruption on the whole economy, and on attraction of foreign investment.

The businessmen organized in their branch unions within the Chamber of Commerce have indicate the corruption as one of the obstacles for competion and providing equal opportunities for all subject to perform business activities. The nepotism, benefits and privileges provided to certain companies being in close relations with ruling coalition, and non-transparency, are the most addressed issues as barriers for functioning of the market mechanisms. The private business strives to improve the relations with Government in developing the instruments against corruption through strict respect of the regulations, prescribed rules and procedure, and abolish of bureaucratic obstacles. The Code of ethics adopted by the Chamber of Commerce prescribes the business behavior and respect of legality and fair competition.

Regional approach - Considering the corruption as a global problem, which can not be combated efficiently in the framework of the individual country, the necessity of joint efforts of the neighbor countries and regional approach to the problem, has been arised. Non governmental organizations and institutions in the region have agreed for mutual action. Thus, anti- corruption monitoring was launched between Macedonia, Bulgaria and Albania. Having regarded the widespread corruption in the Baknan countries, a further mutual action will be necessary for successful prevention and fight against this problem.

Media - The number independent media in Macedonia play key role in discovering the scandals on political level with involvement of top government officials, (certain ministry's and deputes were involved), as well in mobilizing the public against such illegal activities. Media have discovered almost all scandals connected with abuse of power by the high officials, nepotism, non-transparent privatization process, and not transparent public procurement. The corruption scandals cover the newspaper and TV the last couple years. The journalists in Macedonia from independent media have showed high level of professionalism (except some sensationalism), and courage to discover and present to the public the corruption scandals, to mobilize the public and making pressure for sanctioning such practices.

In the number of coverage pages, corruption was indicate as a stoppage of democracy, barrier for economic development and approaching to the European Community. There were broad coverage of public dialogue, interviews with various experts, studies, deep analyzes, predictions and suggestions regarding corruption. The journalists have showed courage in investigations of the involvement of the government high officials in corruption scandals. The independent media enjoy high public confidence and respect. Thus, the citizens or some government officials, regarding the abuse of the power and corruption practices, often furnish the reporters with data and evidence. The journalists stand against adoption of the Draft-Law on Public Information, proposed by the Government. The Draft- Law has been criticized for limiting the access to information, limiting the freedom of speech, controlling the independent media by the state trough issuing a acreditivs by the Agency of Information- as a state body. Under the critics from the media, supported by the public, the Government had to withdraw the Draft- Law from procedure.

The national media such as Macedonian Radio, Macedonian TV and newspapers "Nova Makedonija" and "Vecer" are financed and controlled by the state. The state influences on these media which claim to represent national interest, by appointing the general menager, its deputy and editorial board, usually being a member of ruling parties. Representing only official Government policy, without having own attitude and comment, the national media have a small audience.

So far, there is not any case of corruption involving the media. The media should continue to play the major role in mobilizing the public to fight and sanction the corruption.

As a part of civil control on government institutions, Consumers Council, has been introduced, in accordance with the Law on Consumers, adopted in 2000. The Law was drafted under PHARE program and with participation of NGO and aims to protect the consumers from abuse. Is spite of some positive results, the general public opinion indicates that the Law does not correspond to the current conditions in the country, and therefore it requires higher logistic support and different approach of the public administration on this matter.

The Ombudsman as a new institution has been introduced in Macedonia a few years ago. Law on Ombudsman was enacted on 20 February 1997. Ombudsman as a state organ protects the constitutional and legal rights of the citizens, by states organs and other public organizations. So far, Ombudsman has performed its function quite independent and successful and attracted the public confidence and support. It was engaged in several cases when the rights of citizens have been violenced.

 

VI. CHANGING PUBLIC PERCEPTION OF CORRUPTION

In the course of 1999 and 2000, and beginning of this year, the public was faced with big corruption scandals involving the politicians. The number of corruption practices and their covering by the state authorities have changed the public attitude and action against such cases.

The "common" corruption, involving lower public officials in tax administration, customs, health system, does not attract the public interest any more. The broad scope of corruption scandals, connected by non transparent privatization of the Refinery in 1999; establishing diplomatic relations with Taiwan, in the same year and indications for receiving a "provision" of several million dollars for such deal; several cases of import of medicaments; privatization of other large profitable enterprises; nepotism in procurement of goods involving millions of DEM in some ministries without public tender; abuse of budget funds and etc. have generate civil disagreement with such practices and arises a public pressure, requiring responsibility of the politicians engaged in the corruption and their sanctioning.

The dissatisfaction of the public is increasing due to discrepancy between the declaration for rule of the law and tolerating the "big" political scandals by the Government and other competent authorities, to investigate the corruption cases and prosecute the actors. Thus, the moral inadmissibility of corruption practices by the public is increasing which is showed by the various pools and coverage in the media in 2000, and especially in this year. However, in spite of general inadmissibility of corruption and its conviction, the public attitude hasn't been changed so much in manner to report the persons asking a bribe. There is limit number of cases reported by the citizens for bribery, usually lower public officials. This could be explained as a lack of confidence in the competent institutions, some negative consequences that could arise, but also due to the fact that corruption (especially "small") is still considered as a most effective way for obtaining some benefits. The public disappointment in the public institutions for no considering the corruption as one of main obstacle for functioning of the rule of law is increasing along with the broadening of corruption practices in the last couple years. The public is not optimist for positive progress in decreasing a corruption in a near future. Number of unsolved cases of corruption proves such conclusion. According to some researches the main factors for corruption are the following:

- Those in power striving for making fast money;

- Low salaries of the officials in the public sector;

- Inefficiency of the juridical system;

- Office duties interfering with the personal interests of the officials;

- Crises of morals in the period of transition.

The lack of anti-corruption legislation and mechanisms for prevention, as well as appointment of high officials based only on membership in ruling coalition parties, are also considered as a factors for large level of corruption.

On the other hand, the attitudes of the businessman, is spite their disapproval with corruption practices, indicate the various established links between the managers and powerful public officials and politicians. The connections are even stronger, having in mind the joint business of same politicians with the private sector.

Having regard the negative impact of corruption on the whole society and strategic interest of the country, the public expects from the competent state institutions to introduce anti- corruption measures, adopt the necessary legislation, as soon as possible, and express a political will and power to confront and fight the problem of corruption, no matter who is involved in corruption cases.

The public attitudes against this problem has past several stages:

The problem of corruption was publicly discussed in 1998, when anti-corruption legislation was proposed and debated among broad number of experts, public and media;

In 1999 the country was faced with the so called" Taiwan case" with indication and public recognition for receiving a" provision", and nontransparent and secret privatization of the Refinery;

In the course of 2000 and the beginning of 2001, there were serious of discloses of big corruption scandals, involving the top officials- import of medicaments, sugar, and goods for army.

Except several cases of lower officials, investigated and prosecuted, there is not initiative for resolving the " big" corruption, so far.

Appointment of honest public officials and politicians and clear legislation, should prevent and reduce corruption. The public expects the competent institutions to take the necessary measures and practical steps, for prevention and enforcement of corruption practices.

Finally, the direct public control on state authorities and other subjects (monopoly -public enterprises) is necessary to implement the rule of the law and prevent abuse of power. The joint action with media- as the most powerful means should contribute in changing the public attitude against non-acceptable practices of the competent institutions. One of the most popular independent media (TV A1) is introducing these days, 24 hours direct contact with citizens, called as " In the name of people- the citizens have a word"-inviting the public to express its attitude against all abuse of power. This should increase the public influence on competent institutions for legality, responsibility and discovering of corruption practices.

 

VI. INTERNATIONAL COOPERATION

Having regarded the globalization of this problem, the international community continues to straighten its efforts for curbing corruption. It has been realized that the effects of combating corruption taken by each country separately will not be efficient without international cooperation between the competent bodies. The international organizations have taken number of activities and adopted international documents, which obliged the member-states to implement in their domestic legislation. Considering corruption as a most serious threat for good governance and economic development in general, specially for countries in transition, Macedonia actively participates in all international activities against corruption. Macedonian participants are present in various committees of the international organizations, such as Council of Europe. As a member of United Nations and Council of Europe, Macedonia introduces the international accepted standards and legal instruments on sanctions imposed against acts of corruption in its own legislation.

As a part of international cooperation and participation in the global fight against corruption, Macedonia has signed and ratified the following Conventions:

· Penal Convention on Corruption of the Council of Europe (signed and ratified);

· The Civil Law Convention on Corruption of the Council of Europe and the UN Convention on Combating Trans- Border Organized Crime with Protocols (signed);

· After several years of active participation in GRECO (Group of European Countries Against Corruption), Macedonia has submitted its instruments for acceptation in this organization;

· Macedonia has accepted the Recommendation 10 of the Committee of Ministers of the Council of Europe to the Code of Conduct of the Public Officials, to the member states;

· Macedonia is an active participant in the Octopus program-designed for Southeast Europe on the organized crime, including corruption. The representatives from various ministries participate in the activities of this organization.

As an obligation from the abovementioned conventions is bringing the internal legislation in align with international principles and standards. The Criminal Code of the Republic of Macedonia consists several articles in respect to corruption- or bribe.

However, in spite the acceptation of the international documents against corruption and its sanctioning in the Criminal Law, there is no legislation adopted regarding prevention of corruption. The Octopus program should be implemented in the internal criminal legislation, during its current amending.

According to the Law on amending and supplementing the Law on State Servants, on January 2001, a Code of Conduct of the Public Officials should be adopted, corresponding to the Recommendation 10 of the Committee of Ministers of the Council of Europe, to the member-states for the codes of conduct of public officials.

As a conclusion, should be indicate that Macedonia has accepted, or is in procedure of accession the international conventions and other documents considering corruption issue, bringing its legislation with these standards. It is expected this process to be accelerated in this year, after the signing of the Stabilization and Association Agreement with the EU. As a next step should be the ratification of the Civil Law Convention on Corruption of the Council of Europe and accession of the OECD Convention on Combating Bribery of Foreign Public Officials and bringing the Criminal Code in line with these provisions.

Corruption was the most addressed issue in the last several years in Macedonia. It has been top issue in media and public in general. The Government has not adopted a National Strategy for combating corruption. The fight against corruption as a priority tool has been included only in the political party's program during their campaign. This problem of corruption is also included in the Yearly Governmental Program.

The Draft- Law on combating corruption, was drafted in 1997. The first reading in the Parliament and public discussion took place in 1999. Until now, there is no progress in adoption of this Law and its implementation. The Draft-Law consist provisions regulating prevention of corruption of the public officials, senior officials and political authorities, property disclose when somebody takes position and report of property when lives the position. The public critics indicate the involvement of top officers and politicians in the corruption, as a main obstacle, for delay of adoption of anti-corruption legislation.

On April 9, 2001, Macedonia has signed Stabilization and Association Agreement with the European Union. Certain provisions from this Agreement address the necessity of combating the organized crime, including corruption and implementing international standards. Therefore, the Government is obliged to implement anti-corruption legislation. as soon as possible, as an obligation derives from the Agreement. The adoption of the international practices in combating corruption should be considered as a long-term strategy for political confidence and attraction of investment. The Government has the public and institutional support to fight corruption. The problem, which is wide speeded, should be resolved by straitening the relations between governmental institutions and civil society. The international organizations and western governments should be more active in supporting the Government through technical support and cooperation. The project should include the non- government organizations as well as participants and experts beside the governmental institutions. It should be indicate that so far, there is not any essential support of these institutions or development agencies - such as USAID, OBSE, and PHARE program for supporting projects to fight corruption. The project should encourage all interested institutions and experts to participate in the process of developing anti- corruption measures. The European Union and European Commission should provide assistance in implementing of international instruments and experience in Macedonian legislation.

A positive example of international cooperation and assistance to implement international standards to fight corruption is the Unit for combating organized crime- established within the Ministry of Internal Affairs. The founding of this Unit has been supported by the UN, which provide and financial resources, for which an Agreement between UN and the Government of Macedonia has been signed. This approach should be followed by other international organizations.

The regional approach to fight corruption and mutual cooperation on this matter is essential, due to the globalization of this problem. Thus, especially of the unfavorable political situation in the region, which was faced with sharply increasing of the organized crime, in the last several years. For these purposes, the Stability Pact for Southeast Europe was established, in order to coordinate these efforts and provide financial resources for these proposes. The Anti-corruption initiative of the Stability Pact includes an obligation for submitting a report by the various ministries on undertaken measures for combating corruption. So far, there is no any special progress in implementation of this initiative. Since recently, non- government organizations are invited to participate in the Stability Pact Anti-corruption initiative. Progressing of the Stability Pact Anti- corruption initiative is expecting in the coming period.

The World Bank in 2000 has approved the Trade Facilitation Project - as a regional project, which aims is to prevent the corruption, trough straitening the control over the border, modernization of customs, training the customs officials, regional cooperation with neighbor countries on this matter and etc.