1. Boris Divjak Transparency International BiH Sarajevo, 05. 03. 2003.g.
Fighting corruption – improving quality and reducing the costs of public services
Boris Divjak
Transparency International BiH
Sarajevo, g.

2. Problems in BiH Problem BiH RS (%) FBiH (%) Unemployment 25,8 25,6
25,4
Corruption
20,3
17,0
21,9
Political instability
14,0
12,3
14,9
Poverty, low standards
12,6
12,5
Crime
10,9
12,0
10,4
Economic basis
7,3
11,0
5,5
Bad inter-ethnic relations
3,3
2,3
3,9
Return of refugees
1,8
2,6
Unsatisfactory health care
1,7
1,4
Trials of war criminals
1,2
0,8
Something else
0,4
1,3
0,0
Refuses
0,3
0,5
0,1
Source: Transparency International BiH Survey, March-April 2002, sample–1200 respondents from whole BiH

3. Where and how much? Involvement in corruption of officials at various
levels of government
in BiH, by regions.
Percentages relate to
“high” and “very high”
involvement.
Source: Survey
TI-BiH, 2002

4. State Capture How many officials are involved in corruption?
Source: Research TI-BiH, 2002

5. Harmfulness of Corruption
Source:
Survey
TI BiH,
2002.

6. Corruption and economic development
Counter-proportional relation between the GDP per capita and CPI
Source: IMF working papers, 2001.

7. Economic costs of corruption
Negative effects on investment and growth
Negative effects on private sector development
Increase in administrative expenditures
Negative effect on public sector
Reduced quality of goods and services
Increased poverty rate
Organized crime
Reduced credibility of the state

8. Corrupt privatization
Who benefited most from the privatization (Source: TI BiH, 2002)

9. Corrupt public procurement
What is, in your opinion, the extent of corruption in public procurement by Entity Governments (Source: TI BiH, 2002)

10. Corrupt business environment
Example: supervisory agencies (inspection, tax officials)
FBiH – inspections visited companies 2,26 times with 2,5 inspectors per visit, during 3,41 days (Source: FIAS)
RS – inspections visited companies 2,55 times with 2,77 inspectors per visit, during 4,72 days (Source: FIAS)
Average bribe:
120 KM (Source: SB, 2000.)
421 KM in RS and 278 KM in FBiH (Source: FIAS, 2002.)
188 KM (Source: TI BiH, 2002.)
Frequency of bribe: 23,6% private entrepreneurs were asked bribe in the last year (TI BiH)
39,5% private entrepreneurs find that almost all employees in the supervisory agencies are engaged in bribe

11. Basic measures
Increased accountability and transparency in public sector operations: public finance management, public budgets, prohibition of conflict of interest, depolitization of administration
Increased competitiveness of private sector through reduction of administrative procedures, de-monopolization, termination of individual privileges
Civic involvement: associations for controlling and fighting corruption, organizing political parties, influence on the leaders
Comprehensive legal reform must lead to rationalization of courts and prosecution, and adoption of all laws that would contribute to their professionalization and improved efficiency. The work of the police must be subject to ongoing reforms, and in FBiH also needs to improve coordination between the different levels

12. Economic measures
harmonized or even reduced tax rates, with transparent and rational public revenues administration
smaller, faster and less expensive administrative and bureaucratic apparatus, client oriented
regulatory, not repressive control system, professional and coordinated
independent and efficient commercial judiciary
legal regulations reduced to minimum, its optimization and functionality inexistence of trade barriers in the country or region
reduced state monopoly, improvement and reduction of costs of utility services, including the infrastructure
urgent completion of the privatization process, with continuous restructuring of large economic entities, and speedy liquidation where necessary
equalization of rules for private sector and immediate termination of protecting state sector, as well as leaving the politics and appointments along the party lines from the the companies

13. Public sector management
Increased public sector responsibility and transparency: management of public finances, transparent and foreseeable budgets and fiscal policy, preventing conflict of interest and establishing a professional administration
Treasuries established at all levels
Supreme audit institutions established and regularly report to the parliaments and public
Reforms of tax and customs administrations: institutional and legal
Preventing conflict of interest – implementation of the new law at all levels (with more effective implementation of the Law on Free Access to Information)
Professinalization and depolitization of administration – setting up public administration + institute for staff training and strategic planning; leaving behind the principle of national quotas

14. Competitiveness and private sector development
Increased competitiveness of private sector through removal of administrative barriers, de-monopolization and creating identical conditions of doing business for all 
FIAS’s Administrative Barriers Study: a Working Group established and Action Plan of privatization of the remaining state owned capital adopted
Privatization of state capital in companies and banks ongoing
It is necessary to ensure continuous work of the Work Group and to update the Action Plan by increasing the ownership of the BiH agencies, not international community (e.i. Bulldozer Commission), established internal and external domestic mechanisms to monitor the implementation
Unnatural monopolies must be eliminated, or the price ceilings must be set for services (for instance, telephone and electric energy)
Privatization of the remaining capital must be done quickly and through the stock exchanges. It is necessary to urgently implement the law on bankruptcy and liquidation
All internal trade barriers and privileged treatment must be terminated

15. Anti-corruption partnerships
Civil involvement: anti-corruption NGO and “watchdogs”, independent institutions of state integrity, partnership with governments and public pressure
Established ombudspersons
TI BiH is the only BiH anti-corruption NGO
OHR’s Anti-Fraud Department is active in investigating “large scale” corruption and strategy development
Independent media – young sector that develops quickly
OSCE has developed the rules of transparent political party financing – continuous role of the Election Commission in supervision
Insufficiently defined and inexistent mechanisms of conflict of interest supervision
Law on Public Services is necessary, which would cover as wide as possible range of services

16. State integrity system
Sustainable development
Rule of Law
Quality of Life
STATE INTEGRITY
Parliament
Executive power
Judiciary
Supreme auditors
Ombudspersons
Monitoring
agencies
Public services
Media
Civic association
Private sector
International community
PUBLIC KNOWLEDGE (PUBLICITY IN WORK)
SOCIAL VALUES