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MONEY and POLITICS the Links Between Public Procurement and Political Parties Authors Policy brief 61 / September 2017 MONEY AND POLITICS the links between public procurement and political parties Authors Romania Septimius Pârvu Cezara Grama Sorin Ioniță (editor) Prof. Dr. Dacian Dragoș Croatia Munir Podumljak Research assistants Vladimir Costache Ioana Ene Victor Rouă Databases Septimius Pârvu & Alexandru Popescu Cover graphics Sorina Vazelina Our thanks go to all the individuals and public institutions that helped us publish this report, either with advice or with technical assistance. We thank all the institutions that agreed to meet with us: Permanent Electoral Authority, Audit Authority, National Anticoruption Directorate, National Integrity Agency, Fight Against Fraud Department and National Agency for Public Procurement. Also, we thank termene.ro for their important contribution; without the data provided by the platform the research would be much poorer. Our gratitude also go to all the IT specialists who helped us work with the databases, to wholi.com for the database on political donations and to the journalists who provided information. © Expert Forum, 2017 The content of this report and other materials can be read on www.expertforum.ro B. Gathering votes for the second voting round in the CHAPTER I. ROMANIA ..............3 Presidential elections .............. 86 Introduction: “The first million” and C. Illegal financing of a what happens when e-government campaign involving a former Prime doesn’t really work .........................3 minister: Quality in Construction I. METHOLODOLOGY ...................4 Trophy .................................. 89 I.A. The data ..............................4 VI. RISKS AND VULNERABILITIES - I.B. Unusable data in procurement: CONCLUSIONS ............................ 92 by mistake or by design? ..............5 I.C. The institutional framework ....6 CHAPTER II. CROATIA ........... 98 I.D. The Transposition of the EU Procurement Directives in Romania 7 An overview of integrity eco-system in the area of political party financing I.E. The EU funds and the ................................................. 98 dimension of the procurement market ..................................... 14 The public procurement landscape ............................................... 100 II. ...... COMPANIES AND POLITICAL DONATIONS ................................ 17 Legal framework ..................... 101 III.THE EU FUNDS ..................... 33 Institutional framework ............ 102 III.A. The winners ..................... 34 Overview of key public procurement corruption risk indicators ......... 103 III.B. Irregularities and fraud in EU funds. ...................................... 46 Evidence of politicization, corruption and clientelism in Public Procurement III.C. The expertise pays well...... 53 tied to European financial assistance in Publicity and services .............. 53 Croatia ..................................... 106 Consultancy and expertise ....... 59 Cohesion and Structural funds in Croatia .................................. 107 III.D. Who got the EU funds for agriculture (PNDR)? ................... 63 EU funded public procurement .. 108 IV. ....... THE NATIONAL FUNDS FOR Detailed analysis of the top 10 INFRASTRUCTURE, AN EASY CATCH 74 Public Procurement contracts by value that derive from the EU Funds IV.A. National Investments 109 Company (CNI) ......................... 74 Conclusions and recommendations IV.B. The National Program for ............................................... 112 Local Development (PNDL) ......... 81 V.CASE STUDIES ...................... 83 1. Court decisions on fraud with EU Funds – art. 181 ................... 83 2. Using the influence or authority of a leadership position in a political party to gain benefits .. 85 A. Grilled chicken for the political campaign ................... 85 Policy Brief No. 61 Short list of relevant institutions Parties MFE - Ministerul Fondurilor Europene / DA – Dreptate si Adevar Alliance (PD Ministry of European Funds + PNL) MDRAP(FE) - Ministerul Dezvoltarii Regionale, Administratiei Publice si ALDE – Alliance of European Liberals Fondurilor Europene / Ministry of and Democrats Regional Development, Public Administration and European Funds PC – Conservative Party CE/EC - Comisia Europeană / PDL / PD – Democrat (Liberal) Party European Commission PMP – Popular Movement Party UE - Uniunea Europeană / European Union PNL – National Liberal Party AM - Autoritate de Management / PSD – Social Democrat Party Management Authority UDMR – Democratic Alliance of SMIS - Sistemul Unic de Management Hungarians in Romania al Informaţiei UNPR – National Union for Romania’s POS M - Programul Operaţional Progress Sectorial Mediu USL – Social Liberal Union (PSD+PNL) POR - Programul Operaţional Regional POS T - Programul Operaţional Sectorial Transport DLAF - Departamentul pentru lupta antifrauda /The Fight against Fraud Department DNA – Direcția Națională Anticorupție / National Anticorruption Directorate ANAP - Autoritatea Naţională pentru Achiziţii Publice ANI - Agenţia Naţională de Integritate / National Integrity Agency AEP – Autoritatea Electorală www.expertforum.ro www.expertforum.ro Permenantă / Permanent Electoral Authority CNI – National Investments Company 2 Money and politics: the links between public procurement and political parties CHAPTER I. ROMANIA databases are poorly designed, incomplete and do not match each Introduction: “The first million” other. Contracting authorities, in and what happens when e- particular local governments, do not government doesn’t really work report all their transactions online, or at least they do not follow consistently This report has a twofold goal: to all the stages of the procurement explore with data if there are indeed cycle. consistent connections between the beneficiaries of public funds on one Monitoring authorities have largely hand, and the political parties and failed to ensure the discipline in electoral campaigns on the other reporting and, as it turned out in this hand; and to show how much this research, cannot respond to our legal phenomenon, if real, has in impact on request for public information simply the procurement system in Romania, because they themselves do not have especially as far as the EU funds are it, or not in meaningful format. Where concerned. in principle everything should be available at the click, weeks of Such connections have often been forensic work were needed to compile postulated in mass media or during data about the same public contract, political disputes over the years, but which may appear under different producing robust statistics to back the titles, or with a different spelling of the allegations is another matter. The contracting authority’s name, or with task is difficult because, naturally, the missing county to which a rural when illicit collusions or clientelism do commune belongs which has a very indeed occur, the perpetrators do common name, and so on. their utmost to keep things hidden from public view. Social network All these remind one of a conclusion analysis on company ownerships anticipated by many others before us: requires diligence, access to e-government works well if there is a information and instruments which reasonably clean and functional public sometimes resemble the techniques of administration to start with, operating big data analysis. What is more, the with traditional instruments. If learning process has worked as well: government was disorganized before actors engaging in clientelistic computers, all you have is offline transactions have grown more dysfunctions and partiality are sophisticated over time. Gone is the transferred online. gilded age of the beginnings, when company founders made their And still, once such obstacles were proverbial first million by crudely overcome, patterns and trends did bullying or buying their way into emerge which confirmed our initial business, leaving a lot of traces assumptions: clientelism is around. Today more attention is widespread, sometimes benefiting needed to detect trends and patterns party organizations, other times trans- of action of economic actors who partisan local networks. Probably the already have a foothold in the disorganization in the system is not www.expertforum.r industry. entirely unintended, but encouraged in order to make things harder to Second, e-government in Romania is monitor. Otherwise it is hard to more of a myth – and a costly one, for explain such the gaps and flaws in the that matter – than reality, at least in reporting systems as those presented o the area of public procurement: in detail in the Methodology section 3 Policy Brief No. 61 below and which, had we not been within the report. All the restricted by space, would read like a shareholders schemes and visual policier. procurement calculations are taken from the same website One final note: our research is not www.data.gov.ro – procurement meant to investigate and document data – contracts and direct criminal cases, but rather to show procurement exported from the how political connected companies official procurement platform, create the circumstances to win www.e-licitatie.ro – procurement procurement procedures. We do this starting from public data, interviews procedures and coverage in mass media. We only www.fonduri-ue.ro - projects and followed existing criminal cases contracts exported from MYSMIS related to illegal financing of political for the programming period 2007- parties and frauds related to EU 2013 funding in order to illustrate and wholi.com/who/ro-contributors
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