ANTI-CORRUPTION COUNCIL OF THE GOVERNMENTOF THE REPUBLIC OF SERBIA CORRUPTION, POWER, STATE PART III Editor Verica Barać Belgrade 2011 ANTI-CORRUPTION COUNCIL OF THE GOVERNMENT OF THE REPUBLIC OF SERBIA CORRUPTION, POWER, STATE PART III CORRUPTION, POWER, STATE PART III Publisher Savet za borbu protiv korupcije Edited by Verica Barać Translated by Marija Franjić Sanja Vejzović Layout and printing Dosije, Belgrade Copies 700 ISBN 978-86-87467-01-9 CIP – Каталогизација у публикацији Народна библиотека Србије, Београд 061.1:[343.85:343.352(497.11)”2007/2011”(062) 343.85:343.352(082) КОРУПЦИЈА, власт и држава. Део 3 / приредила Верица Бараћ ; [превод Марија Фрањић, Сања Вејзовић]. – Београд : Савет за борбу против корупције, 2011 (Београд : Досије). – 275, 272 стр. : илустр. ; 24 cm Насл. стр. приштампаног енгл. превода: Corruption, Power, State. – Оба рада штампана у међусобно обрнутим смеровима. – Тираж 700. – Стр. 9-10: Предговор / Верица Бараћ. – Напомене и библиографске референце уз текст. ISBN 978-86-87467-01-9 1. Бараћ, Верица [уредник] [аутор додатног текста] a) Србија. Влада. Савет за борбу против корупције – 2007–2011 – Документи b) Корупција – Сузбијање – Зборници COBISS.SR-ID 187981836 ANTI-CORRUPTION COUNCIL OF THE GOVERNMENT OF THE REPUBLIC OF SERBIA CORRUPTION, POWER, STATE PART III Editor Verica Barać Belgrade 2011 TABLE OF CONTENTS Foreword. 9 Conclusions and Recommendations from the Conference Belgrade Transparency Days 2007 . 11 BELGRADE TRANSPARENCY DAYS 2007 LECTURES Yvan LENGWILER Th e Political Economy of Controlling Corruption. 19 Ian HAWKESWORTH Transparency of Budget as Basic Condition . 24 Igor ŠOLTES Systems and Institutions to Ensure the Independence of Auditors in Slovenia . 32 Kurt GRÜTER Conditions for a Successful Audit: Avoiding Overlapping Tasks Between Control Organs, Cooperation with the National Parliament . 40 Pierre-Christian SOCCOJA Tipology of Corruption in Public Procurement . 48 Predrag JOVANOVIĆ Transparency in and External Control over Public Procurement Processes in Serbia . 56 Saša VARINAC Typologies of Corruption in Public Procurement in Serbia . 62 6 Anti-corruption Council of the Government of the Republic of Serbia Yvan LENGWILER Th e Rationale of Transparent Public fi nances – Impacts on Economic Growth . 69 Alenka PODBEVŠEK Keeping the Books Clean in the Private Sector – Preventing Corruption in Public Licensing. 75 Kata ŠKARIĆ – JOVANOVIĆ Keeping the Books Clean in the Private Sector. 82 Gusztav BAGER State’s audit and Privatization . 88 Vladimir RADIĆ Transparency at the Public-Private Interface . 96 Milić MILOVANOVIĆ Национални инвестициони план као узрок урушавања буџетског система . 102 REPORTS / INITIATIVES Report on the Horgoš-Požega Highway Concession. 109 Pismo Saveta Vladi Republike Srbije u vezi sa preuzimanjem preduzeća „C –market“ i autentičan tekst Memoranduma o razumevanju, koji predstavlja kartelski sporazum o izbegavanju konkurencije . 114 Report on the Company „C Market“. 118 Comments on the Law on Protection of Competition and Proposed Amendments . 124 Pismo Saveta Vladi povodom pritisaka kompanije Delta M i pojedinih ministara u Vladi na rad Komisije za zaštitu konkurencije iSaveta za borbu protiv korupcije. 138 Port of Belgrade Ownership Concentration Report . 143 Analysis of the Regulation on Criteria and Procedure for Calculation of Compensation for Conversion of Rights for Persons Entitled to Conversion against Compensation . 156 Corruption, Power, State – Part III 7 Initiative to assess the constitutionality and legality of Article 4, Paragraph 1, of the Regulation on Criteria and the Procedure for the Calculation of the Level of Compensation for Conversion of Rights for Persons Who Are Entitled to the Conversion against Compensation . 160 Report on Privatization of the Company Novosti . 166 Report on Pressures on & Control of Media in Serbia. 188 Report On Th e Sale Of Th e Company Delta Maxi . 245 FOREWORD Th is is the third book issued by the Anti-Corruption Council of the Government of the Republic of Serbia, published at the end of the tenth jubilee anniversary of the Council’s operation. Like the previous two books, Corruption, Power, State III does not include all the activi- ties of the Anti-Corruption Council, but rather a selection of key anal- yses and recommendations made by the Council from 2007 to 2011. Part I of the book includes the most signifi cant papers presented at the Belgrade Transparency Days 2007 conference, organized by the Council in cooperation with the Swiss Embassy in Belgrade and the Basel Institute on Governance, which secured the participation of the most eminent European experts in transparency of public fi nance. Th e aim of the conference was to point out the importance of an independ- ent state audit institution. Th e Law on the State Audit Institution was adopted on 14 No- vember 2005, and its application was to begin within a period of six months from its adoption. However, by March 2007, when the Council organized the Belgrade Transparency Days 2007, the State Audit Insti- tution had not started its work. Th at is why the Council organized this conference, where it was pointed out how an independent state audit institution is important for fi ghting corruption. Th e papers of the for- eign and domestic experts presented at this conference are still topi- cal today, as the State Audit Institution still does not perform its basic function. We also want to take this opportunity to express our special grat- itude to his excellence, Swiss ambassador Mr. Wilhelm Meier as, if it had not been for his eff ort and travail, the Belgrade Transparency Days 2007 conference would not have been held at all. Th e conference was the result of continuous help provided to the Anti-Corruption Council by the Swiss Embassy and Mr. Meier, and their help in the creation of the environment for the establishment and work of anti-corruption in- stitutions in Serbia. A year before, in 2006, the Anti-Corruption Coun- 10 Anti-corruption Council of the Government of the Republic of Serbia cil and the Swiss Embassy, also in cooperation with the Basel Institute on Governance, had organized the international conference, Belgrade Anti-Corruption Days. Part II of the book includes several of the most signifi cant re- ports in which, aft er months-long comprehensive research, the Coun- cil revealed drastic phenomena of the systemic corruption in Serbia. Th ese are the reports on the Horgosh – Pozega highway concession, C- Market privatization, Luka Beograd ownership concentration, Novosti privatization, pressures on and control of the media in Serbia, the sale of Delta Maxi, and the analyses of the Law on Protection of Competi- tion and the Regulation on the Criteria and Procedure for Calculation of Compensation for Conversion of the Rights for Persons Entitled to the Conversion against Compensation. Th e steps that must be taken in order to establish an independ- ent state audit institution, which have not yet been taken even six years aft er the adoption of the Law on the State Audit Institution, together with the analysis of the phenomena of the systemic corruption and its serious negative consequences, provide an answer to the question why and to what extent Serbia is still, in this year, 2011, engulfed in corrup- tion. In order that the problem of corruption in Serbia be presented vividly, Predrag Koraksic Corax has, in his own distinctive and master- ful way, illustrated the book, and we sincerely thank him for that. Verica Barac Anti-Corruption Council President Република Србија ВЛАДА РЕПУБЛИКЕ СРБИЈЕ САВЕТ ЗА БОРБУ ПРОТИВ КОРУПЦИЈЕ 72 Број: 06-1537/2007 Београд, 12. марта 2007. године CONCLUSIONS AND RECOMMENDATIONS FROM THE CONFERENCE BELGRADE TRANSPARENCY DAYS 2007 Serbia is one of the few countries in the world still without the external state audit of the public fi nances. Th e Law on the State Audit Institution was adopted on November 14, 2005. In accordance with the Law the Institution should have been established within six months from the date of its entering into eff ect. Th e Law on the State Audit In- stitution, however, has not yet been implemented. Due to such circum- stances, the Anti-Corruption Council in cooperation with the Swiss Embassy in Belgrade, and the Basel Institute on Governance organized a Conference Belgrade Transparency Days on March 6 and 7, 2007, discussing the issues of the budget transparency and the state audit. Th e Supreme Audit Institutions are designed to enable the tran- sparency and the integrity of the reports on public fi nances, repre- senting a crucial link in the chain of institutions destined to create conditions for curbing corruption in the public fi nances. Two-day’s Conference Belgrade Transparency Days 2007, tried to consolidate the principles for the establishment of the effi cient and sustainable State Audit Institution in Serbia. Conclusions Th e potential impact of the State Audit Institution on the fi ght against corruption is manifold: 12 Anti-corruption Council of the Government of the Republic of Serbia – Th e chief task of the State Audit Institution (SAI) is to raise the transparency level as well as the integrity of the reports on public fi nances, which represents a key element of anticorrup- tion initiatives, above all in the fi eld of prevention of corrup- tion and detection of the corruptive mechanisms; – Th e professional quality of the SAI could enhance the profes- sional level of other public institutions; – If SAI is to be established in a corruption free fashion, and governed by laws and the Constitution of the Republic of Ser- bia, it may, in that sense, serve as an example for other state establishments; – Th e results of the SAI’s work may off er a signifi cant backup for the judiciary and the National Assembly in control of the work of the executive power; – Creating conditions for the transparency of public institutions, being one of the most important SAI’s tasks should strengthen the role of the public in the control of the authorities and the fi ght against corruption.