CMIREPORT Corruption in Montenegro 2007: Overview over Main Problems and Status of Reforms Marijana Trivunovic Vera Devine Harald Mathisen R 2007: 9 Corruption in Montenegro 2007: Overview over Main Problems and Status of Reforms Marijana Trivunovic Vera Devine Harald Mathisen R 2007: 9 CMI Reports This series can be ordered from: Chr. Michelsen Institute P.O. Box 6033 Postterminalen, N-5892 Bergen, Norway Tel: + 47 55 57 40 00 Fax: + 47 55 57 41 66 E-mail: [email protected] www.cmi.no Price: NOK 90 ISSN 0805-505X ISBN 978-82-8062-208-2 This report is also available at: www.cmi.no/publications Indexing terms Corruption Montenegro Project number 27072 Project title Sida: Study of Corruption in Montenegro Contents 1. EXECUTIVE SUMMARY .......................................................................................................................... 5 2. INTRODUCTION ...................................................................................................................................... 10 3. OVERVIEW AND CONTEXT ................................................................................................................. 13 3. 1 DATA, PERCEPTIONS, AND EXPERIENCE OF CORRUPTION....................................................................... 13 3.2 HISTORIC AND STRUCTURAL FACTORS.................................................................................................... 14 4. POLITICAL CORRUPTION.................................................................................................................... 18 4.1 CONFLICT OF INTEREST ........................................................................................................................... 18 4.2 FINANCING OF POLITICAL PARTIES AND ELECTORAL CAMPAIGNS .......................................................... 21 4.2.1 Misuse of state resources ................................................................................................................ 22 4.2.2 Vote buying ..................................................................................................................................... 23 4.3 LOCAL SELF-GOVERNMENT .................................................................................................................... 24 4.4 PARLIAMENT ........................................................................................................................................... 26 5. CORRUPTION IN THE PROCESS OF DOING BUSINESS................................................................ 29 5.1 PRIVATISATION ....................................................................................................................................... 29 5.2 TAXATION AND TAX COLLECTION .......................................................................................................... 33 5.3 CUSTOMS ADMINISTRATION.................................................................................................................... 37 5.4 LICENSING............................................................................................................................................... 39 5.5 PUBLIC PROCUREMENT SYSTEM.............................................................................................................. 42 5.6 DEVELOPMENT POLICIES ......................................................................................................................... 44 5.6.1 Spatial Planning.............................................................................................................................. 44 5.6.2 Energy sector .................................................................................................................................. 45 5.7 CORRUPTION AND THE INTERNATIONAL PRESENCE................................................................................. 46 6. PUBLIC FINANCIAL MANAGEMENT................................................................................................. 47 6.1 BUDGET PREPARATION AND EXECUTION ................................................................................................ 47 6.2 INTERNAL AUDIT..................................................................................................................................... 48 6.3 EXTERNAL AUDIT: STATE AUDIT INSTITUTION (SAI) ............................................................................. 49 7. SERVICE DELIVERY............................................................................................................................... 52 7.1 HEALTH................................................................................................................................................... 52 7.2 EDUCATION ............................................................................................................................................. 52 8. JUSTICE SYSTEM .................................................................................................................................... 53 8.1 COURTS ................................................................................................................................................... 53 8.2 PROSECUTION.......................................................................................................................................... 56 8.3 POLICE .................................................................................................................................................... 58 8.4 CAPACITIES TO COMBAT ORGANISED CRIME AND CORRUPTION:............................................................ 60 8.4.1 Legal Framework............................................................................................................................ 61 8.4.2 Anti-Money Laundering Regime ..................................................................................................... 61 8.4.3 Police .............................................................................................................................................. 62 8.4.4 Prosecution ..................................................................................................................................... 62 8.4.5 Courts.............................................................................................................................................. 62 8.4.6 Inter-Agency Cooperation............................................................................................................... 63 8.4.7 International Cooperation .............................................................................................................. 63 9. TRANSPARENCY AND WATCHDOGS ................................................................................................ 64 9.1 TRANSPARENCY AND ACCESS TO INFORMATION ..................................................................................... 64 9.2 MEDIA ..................................................................................................................................................... 65 9.3 CIVIL SOCIETY ........................................................................................................................................ 67 iii 10. DEDICATED ANTI-CORRUPTION PROGRAMME......................................................................... 70 10.1 INTERNATIONAL OBLIGATIONS ............................................................................................................. 70 United Nations ......................................................................................................................................... 70 Council of Europe.................................................................................................................................... 70 Stability Pact Anti-Corruption Initiative (SPAI)...................................................................................... 70 10.2 PROGRAMME FOR THE FIGHT AGAINST CORRUPTION AND ORGANISED CRIME...................................... 71 10.3 ACTION PLAN FOR THE IMPLEMENTATION OF THE PROGRAMME FOR THE FIGHT AGAINST CORRUPTION AND ORGANISED CRIME................................................................................................................................73 10.4 NATIONAL COMMISSION FOR MONITORING THE IMPLEMENTATION OF THE PROGRAMME FOR THE FIGHT AGAINST CORRUPTION AND ORGANISED CRIME ........................................................................................... 73 10.5 DIRECTORATE FOR ANTI-CORRUPTION INITIATIVE ............................................................................... 76 11. OBSERVATIONS AND RECOMMENDATIONS: .............................................................................. 79 iv 1. Executive Summary Despite the impressive figures that point to a booming economy (with real GDP growth unofficially projected by the EBRD at 7% in 2007), not all is well in Montenegro. The World Bank, and other international observers, have pointed out that two of the “key challenges” that Montenegro needs to confront on its way to EU membership are “weak governance and the perceived wide prevalence of corruption.” Having gained independence in 2006, Montenegro has nearly completed the state-building processes that have monopolised the public agenda and the attention of its decision makers for the past decade. Citizens’ and media attention is increasingly turning to governance issues, and given that reform efforts in a number of crucial areas