Benchmarking Corruption in the EU: The Bulgarian Experience Brussels, 14 February 2007 Center for the Study of Democracy

The need for benchmarking The background of corruption monitoring in Europe From monitoring to benchmarking Two main reasons for benchmarking: credibility and effectiveness

System of indicators: components Implementation progress of specific measures Assessing impact of anti-corruption strategy, including through: - evaluation of public service delivery; - corruption measurement.

Measurement indicators Corruption victimization (experience); Corruption pressure (experience); Attitudes towards corruption (perception); Spread of corruption (perception); Intolerance of corruption; Assessment of government policies.

Experience indicators Experience based indicators (level of corruption victimization) Involvement (personal) in corruption transactions. Includes a set of questions measuring the incidence of transfers to public officials in order to receive: (a) better service or (b) violate law Corruption pressure (personal). Includes a set of questions measuring the incidence of officials directly asking or hinting that a transfer is expected. Transfer = gift, favor, money

Perception indicators Tolerance/acceptability of corruption practices. Set of questions asking respondent to identify whether specific practices (bribe, conflict of interest, trading in influence, etc.) should be allowed for certain types of officials; Perceived spread and practical effectiveness of corruption practices. Set of questions directly asking about the perceived level of corruption in society, institutions, socio-professional groups and about the perceived effectiveness of corruption as problem solving tool. Assessment/expectations of possibilities of the government to cope with the problem of corruption. Set of questions directly measuring the perceptions about the ability of the government to cope with corruption among lower and higher level officials.

What indicators measure Administrative corruption Incidence of corrupt practices in the interaction between citizens and businesses with the administration and in public services Type of corruption measured - Corruption among lower and middle level officials; - The most widespread forms of petty corruption associated with gifts, favors and money Excluded: grand (political) corruption, state capture

Spread of corruption in Bulgaria – overview of the business sector Corruption acceptability and susceptibility Actual spread of corruption Perceived spread of corruption Corruption-related expectations on public policy Conclusions The data presented in this part shows only a fraction (1/6th) of the System of Indicators presented by my colleague Boyko Todorov. Through a number of indices it assesses the impact of anti-corruption policies through measuring administrative corruption in the business sector, i.e. between public administration and the business sector. It gives a taste of what has been achieved and what lies ahead of Bulgaria’s anti-corruption policy is only part of a much more sophisticated system for overall evaluation and policy advice just presented by my colleague. Main point: Administrative corruption in the business sector (i.e. between the business and the public administration) in Bulgaria as of January 2007 has declined for the first time since 2000. Both the overall spread of corruption and corruption across the most vulnerable administrative services has fallen down. However, a sustainable reduction in corruption to average EU levels requires more efforts: (i) in certain areas of administrative but in particular in the area of political corruption; (ii) concerted action on national and European level is needed. The data clearly signals improvement in the country’s corruption environment but still contains a number of warning signs, which we will comment briefly in the presentation.

Acceptability of and susceptibility to corruption (best=0, worst=10) There is a positive tendency in corruption susceptibility. Bulgarian businesses have emancipated from administrative corrupt pressure, which probably has a direct bearing to improved business prospects, the country’s positive economic record in recent years and the pull of the Internal Market, which allows more private sector business and less reliance on government contracts. Bulgarian business has also matured in the past 2-3 years. But – note the negative change in corruption acceptability. It seems that businesses operating in Bulgaria find some corrupt practices more acceptable in jan 2007 than earlier. This is worrying and it generally reflects a lack of business ethics legislation or best practice but it might also be reminiscent of what businesses see as business as usual and of recent corruption scandals in large European companies. The latter revealed that the general shareholder attitude of some big European companies is that in some places you have to bribe officials to do business and that is ok if you are gaining precious competitive advantage.

Actual spread of corruption (best=0, worst=10) This is the picture with the core good news. As of Jan 2007 both corruption pressure from the public administration on businesses in Bulgaria and the prevalence of corruption have declined by almost 50%. The more important news is that this decline is the first such drop registered after a long-standing plateau – since 2000.

Share of companies which made informal payments for the following services (%) Even better news is that unlike previous releases of the indexes the spread of actual corruption declines across all fields of monitored, high-risk corruption areas of public service though in some areas e.g. obtaining of permits the downfall is more pronounced than in others (e.g. court proceedings)

Perceived spread of corruption (best=0 worst=10) Unlike the real spread of corruption though, the decline in perceived spread of corruption by businesses in Bulgaria is more modest and the index itself remains high. Even more important is the change in the composition of the perceived corruption.

Perceived spread of corruption by professional group While perceived corruption among administrative offices declines (e.g. customs officers, police officers, tax officials) it stays flat with political offices (politicians, MPs, prosecutors). What the businesses imply is that it is time for more active measures at higher, political offices.

Expectations on curbing corruption (most optimistic=0, most pessimistic=10) Businesses are more confident and optimistic in January 2007 that Bulgarian can cope with corruption compared to the past 5 years.

Assessment of the impact of government policies (share of companies who believe gov’t does nothing to curb corruption) Still, their assessment of the capacity of the government to cope with corruption among different groups, especially high-ranking officials is negative. This might be interpreted as a clear sign that a wide, European approach might be welcomed by the business community in Bulgaria.

Conclusions – what do indexes show? The actual spread of corruption in the business – administration relations declines as of January 2007. Business susceptibility to corruption also falls. The perceived spread of corruption by businesses remains high though its composition/addressees change: from administrative to political level Expectations on curbing corruption improve but the business doubts the government’s ability to tackle corruption, particularly among higher ranking officials Actual corruption in the business – administration relations declines in th beginning of 2007. Business susceptibility to corruption also falls. Business attitudes towards the spread of corruption remain high though their composition/addressee changes The spread of corruption among the administration falls (customs, police, tax officials) Corruption rises/stays flat among the political elite (politicians, MPs, prosecutors) Corruption-related expectations stay at bay but the business doubts the government’s ability to tackle corruption, particularly political corruption

Conclusions – what do indexes suggest? EU accession bonus: it is possible that the current decline in the spread of corruption be temporary – due to one-off factors But there is a window of opportunity for a breakthrough in good governance – measures should be targeted towards the higher political level What gets measured – gets done: the System of Indicators is a powerful tool for self-discipline, which can be used as a pilot model for an EU wide instrument It is possible that the current decline in actual corruption be temporary/seasonal – due to one-off factors. Acceptability of corruption remains high and rising among the business Now is the time for a breakthrough in good governance – measures should be targeted towards the higher political level and should encompass more complex schemes of corruption not just bribery (conflicts of interest, abuse of power, etc.) What gets measured – gets done: the System of Indicators is a powerful too for self-discipline, which can be used as a pilot model for an EU wide instrument. Main point: Administrative corruption in the business sector (i.e. between the business and the public administration) in Bulgaria as of January 2007 has declined for the first time since 2000. Both the overall spread of corruption and corruption across the most vulnerable administrative services has fallen down. However, a sustainable reduction in corruption to average EU levels requires more efforts: (i) in certain areas of administrative but in particular in the area of political corruption; (ii) concerted action on national and European level is needed

Upcoming CSD reports Corruption assessment report 2006 – April 2007 Corruption in public procurement in Bulgaria: policy assessment – April 2007 Corruption in the Bulgarian Healthcare

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