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Countries Differ Dramatically When It Comes to Corruption Levels

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Countries Differ Dramatically When It Comes to Corruption Levels Institutional Insulation of the Judiciary as an Obstacle in the Fight Against Corruption: Evidence from Bulgaria Maria Popova McGill University October 18, 2008 Countries differ dramatically when it comes to corruption levels. The reasons for this variation are multiple and complex. But, given that most countries have anticorruption laws on the books, it seems that the judiciary’s effectiveness at implementing these laws should be an important factor in any country’s fight against corruption. However, judicial anticorruption campaigns are an exceedingly rare occurrence. Why are so few judiciaries actively involved in curbing corruption? Many judiciaries in authoritarian and semi-authoritarian regimes probably lack the power and independence to stand up to politicians and bureaucrats and their economic actor cronies, who are often the main perpetrators of corruption. Judiciaries in some democracies may function within a legal tradition that frowns upon judicial activism and emphasizes the judiciary’s subservience to the democratically elected branches of government. Those judiciaries may simply be unwilling to take on the majority of corruption cases out of a belief that they are a fundamentally political problem. This paper, however, tries to explain why judiciaries that have both the means and the guts to challenge perpetrators of political and bureaucratic corruption would refrain from taking on the task. This paper advances an institutional argument, which posits that high insulation from the executive makes a judiciary reluctant to tackle corruption. When the other branches of government have minimized access to the judiciary, the judiciary focuses on maximizing its institutional self-interest at the expense of the public interest project of curbing corruption. Specifically, I advance two hypotheses about the detrimental effects of judicial insulation on anticorruption campaigns: 1) judicial insulation fosters judicial passivity vis-à-vis corruption, because it increases the costs of pursuing corruption cases for individual magistrates; and 2) judicial insulation reduces the need for the judiciary to solicit public support and thus it erases the main institutional benefit of a comprehensive anticorruption campaign. I generate the hypotheses on the basis of the structure and behavior of the Bulgarian judiciary, which, by all accounts, has failed miserably in the task of controlling political and bureaucratic corruption. The paper proceeds as follows. Section I discusses the level of corruption in Bulgaria and the judiciary’s ineffectiveness in addressing the problem. Sections II and III discount two potential explanations for the Bulgarian judiciary’s failure—an institutionally weak judiciary which cannot standup to powerful actors and a legal culture that emphasizes judges’ subservience to incumbent politicians. Section IV presents the theoretical contribution of the paper, namely the hypothesis that externally-insulated judiciaries do not fight corruption. Section V concludes and offers suggestions for future research, as well as discusses the policy implications of the theoretical proposal. I: Corruption in Bulgaria and the failure of the judiciary to curb it Bulgaria is not a terribly corrupt country on a world scale. Since the mid-1990s, both Transparency International’s Corruption Perception Index (CPI) and the World Bank’s Worldwide Governance Indicators (WGI) index have consistently placed Bulgaria towards the middle of worldwide corruption rankings. Bulgarian political discourse, however, identifies systemic corruption as, perhaps, the most serious challenge facing the country. Bulgarian media routinely uncover and discuss corruption scandals, the public routinely professes a conviction that most politicians and bureaucrats are thoroughly corrupt, and the politicians routinely promise to tackle the problem. The focus on corruption likely stems from Bulgaria’s enduring position as one of the most corrupt polities in Europe. Both the CPI and the WGI indices suggest that Bulgaria is at the bottom of the EU pack (Tables 1-2 in Appendix). The country is joined by other fellow post-Communist states, which are on average significantly more corrupt than their Western European neighbors and fellow EU members (Figures 1-2 in Appendix). More worrisome, however, is growing evidence that Bulgaria is unable (or unwilling) to curb the spread of corruption, while most of its fellow post-Communist EU members are slowly cleaning up their act. The CPI trend indicates that since joining the EU in 2004, all Central European and Baltic countries, except Lithuania, have made gains in their fight against corruption. The average CPI score for the countries from the first post-Communist accession wave has risen from 4.3 to 5.3 between 2004 and 2008. Romania, who joined the EU in January 2007 together with Bulgaria, has also registered a significant improvement in its CPI score from 3.1 to 3.8. By contrast, Bulgaria’s CPI score has dropped from 4.1 to 3.6. The WGI index also registers a downward trend in Bulgaria’s “control of corruption” score (Fig. 3-4 in Appendix). One does not need to believe in the reliability of reputational indices, such as the CPI and the WGI, in order to conclude that Bulgaria’s corruption problem is, at best, unchecked, and, and worst, deepening. Investigations by the European Anti-Fraud Office (OLAF) into Bulgaria’s management of EU funds have uncovered, in the words of OLAF, multiple “serious allegations of irregularities” and “suspicions of fraud and conflicts of interest in the award of contracts.” Problems plagued each of the main financial assistance programmes that Bulgaria can benefit from as a new EU member: PHARE (the pre-accession support programme), SAPARD (the agriculture program) and ISPA (the infrastructure development programme). As a result, in July 2008, the European Commission decided to revoke the accreditation of two government agencies in charge of managing funds, temporarily suspend the appropriation of the PHARE funds, and freeze payments under SAPARD and ISPA (http://ec.europa.eu/dgs/secretariat_general/cvm/docs/bulgaria_report_funds_20080723_e n.pdf). In less euphemistic terms, the evidence of political and bureaucratic corruption was strong enough to convince the EU to punish Bulgaria by cutting off hundreds of millions of euros in aid (estimates vary between 365mln and 1bln)1. Moreover, the European Commission specifically and explicitly singled out the Bulgarian judiciary for criticism. With unprecedented candor, the European Commission accused the Bulgarian judiciary of failing to prosecute corruption in earnest. According to Commission spokesman, Johannes Laitenberger, “while there has been movement on a few cases, many alleged cases go unpunished.” The Commission’s official report bluntly states that: “there is a lack of commitment to act decisively, swiftly […] when fraud is identified.” OLAF is cited as complaining that its investigations have been frustrated by “instances of judicial proceedings which had been opened but, subsequently closed without justification.” The report even mentions a “strong suspicion of the involvement of organized crime” (Commission of the European Communities, 2008). 1 BBC, “EU suspends funding for Bulgaria,” July 23, 2008, http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/2/hi/europe/7520736.stm In the area of political corruption, the judiciary has opened many investigations against high-ranking Bulgarian politicians, both opposition and incumbent. However, few have gotten to trial, even fewer have resulted in conviction, and none have led to a serious sentence, even though the alleged crimes have been serious, namely abuse of office, illegal party financing, and fraudulent privatization deals. For example, former Prime Ministers Ivan Kostov and Simeon Saks-Coburg-Gotha, as well as former Deputy Prime Minister Milen Velchev, and half-a-dozen ministers from all both the Kostov and Saks-Coburg-Gotha government have been investigated, both while in office and while in opposition, for abuse of office. All have been interrogated by the prosecution numerous times, in Kostov’s case over the course of a decade, but have not been indicted. The few indictments that have made it to trial most often result in acquittal. Stefan Sofiyanski, caretaker Prime Minister in 1997, mayor of Sofia from 1995 to 2004, leader of the National Union party, and a current Euro-MP has been a defendant in five criminal cases. In all cases he was charged with abuse of office and the charges carried 3 to 10 year prison terms in case of conviction. The cases were filed by the Sofia City Prosecution Office between 2001 and 2004 and all alleged that the incumbent mayor had contracted real estate deals on behalf of Sofia municipality that he was not authorized to execute personally and that were clearly against the municipality’s financial interests. In one case, the mayor was alleged to have sold municipal property at a price 400 times lower than the market price at the time!2 Sofiyanski has been acquitted in one case and has invoked his immunity as a Euro MP to stop the other trials. One more case against him was dropped by the prosecution, coincidentally or not, after the appointment of the 2 Bulgarian National Radio, 9 August 2007 current prosecutor general. Former ministers Boyko Noev and Atanas Atanasov have also been acquitted by the courts. Only Aleksandur Bozhkov, the former deputy Prime Minister and Minister of Industry between 1997 and 1999 and the government’s
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