Would anyone allow their residence representative to use the collectively raised money to paint his own apartment, repair the electrical installations in his own home and buy flowers for his own balcony? He would hardly get away with it, or at least without an argument, his dismissal and possible lawsuit. Citizens greatly care about their own money (even if it is just few hundred dinars per month) entrusted to their residence representatives and are willing to fight for it, sometimes “until the last drop of paint” in the hallway and “until the last socket” on the stairs.
In contrast to these concerns, these same citizens much less care about dozens (or hundreds) of thousands of dinars per month entrusted to the state and the politicians through taxes and contributions and pay no attention to where and how this money is used. And they even less care if anyone has control over the politicians in that spending.
Even when the media reveal some sort of mismanagement of taxpayers’ money that slightly reminds not of abuse, but of the election populist waste of money, politicians usually have a “ready-made” response – “it was all in the interest of citizens, they just don’t understand the wider context”. It is quite identical to the resident representative from the beginning of this text who may have planted flowers on his balcony “to make the entire building more beautiful,” or changed installations “not to burn down the whole building.”
According to the estimates of the European Commission Delegation, about 700 million euros is annually wasted in the public procurement system, systematic abuse or non-domestic operations. There are cases where this abuse was exposed (the police uniforms and the machinery in Kolubara), but many more cases reveal that the regulations were respected, no matter how bad they were and how much taxpayers’ money got wasted. If we tried to apply this to the text from the beginning, it would mean that the residence representative did not paint his own apartment with the tenants’ money, but he painted the basement for the price of fifteen instead of six euros per square meter.
How can a country lose so much money when Serbian control system seems perfect on the paper and can spot even the smallest sign of a corruption? For example, each user of the budget money has an internal financial control, ministries and funds need to have internal auditors who would point out to managers’ mistakes in the functioning of internal control mechanisms, and finally there is the external audit – or the State Audit Institution (DRI) or private auditing companies.
That seems to be the case in theory.
“In practice, we have an environment in which corruption is the host and justice is just a rare visitor”, descriptively explains Dragan Dobrasinovic from the Associations of NGO Coalition for Public Finance Oversight and adds: “The reason is that a society with demoralized citizens, lethargic community and controlled media cannot establish the rules based on the respect of democratic values, fairness and honesty. It is therefore possible that the Constitutional Court remains oblivious to the laws that directly trigger corruption (such as the Law on Stimulating the Construction Industry during the time of economic crisis), it is possible for the public to remain silent when the executive authorities obstruct and degrade the independent control institutions and the judiciary and prosecution turn the blind eye to the cases of non-existing landfills worth over one million euros in Prokuplje and bridges which final price multiply exceeds the budget intended by the project.
On the other hand, some areas are faced with the incomplete legal framework that allows the examples like making an international agreement with France to build Belgrade subway, instead of opening a tender in which the business worth billions of euros will be given to the one who makes the best offer.
The capacity
NGOs are not the only ones who notice irregular or at least suspicious cases by means of control. Only the Public Procurement Office, during the period of two years, has evidenced irregularities in the “emergency” negotiating procedures worth 50 million euros and informed the Ministry of Finance, Budget Inspection Sector and the National Audit Institution. What happened next remains unknown. However, the institutions in charge give a strange and indicative answer why they fail to respond to cases with a reasonable suspicion of abuse – “we do not have enough capacity.” An impressive case of the lack of capacities is the National Audit Institution from which the public and taxpayers had high expectations.
And DRI, for example, did not include the control of political parties in the control plan for the election year 2012. and announced that it will be implemented from 2013. For the same year the auditor announces the addressing of the issue of “economy, efficiency and effectiveness” (EEE) in the spending of the budget users’ money. These “three E” refer to the investigation of not only whether consumers had recorded their expenditures well and whether they had applied the law on public procurement, but also what is the point in spending money on all this. That is, if and to what extent they really needed the purchased goods, regardless of whether the law on public procurement was applied properly or not. Until then, DRI is only in charge of the control of the discrepancies in expenses and revenues and whether the appropriate regulations have been applied, and it is not interested in the ultimate result of the enforcement of regulations. Thus, it may happen that a budget user argues with an auditor stating that his actions are appropriate, but the legislation is not (the case of the City of Belgrade), and that no one remembered to propose a substitute for the bad legislation. After all, Serbia has a special government unit for the implementation of the Comprehensive Regulatory reform with a task to create the prerequisites for the “three E”.
And when an excuse such as “lack of capacities” is used as an argument, the circle is closed and nobody is responsible for the fact that DRI, which was established in 2007, is still unable to function as a system and employ people. Neither the authority (if obstructing the DRI), nor the DRI Council President (if unable to organize himself) is not responsible. And when there is no accountability for the public spending, then it may be too much to seek the accountability for the poor control over it.
My songs, your money
When there is no accountability and no rendering of accounts it becomes a practice that politicians behave as if their citizens-taxpayers donated (not entrusted) them both the state and money to manage. For example, it is absolutely impossible that any country would consider as normal the media and authorities months long estimations on the possible expenses of the bridge near Beska after the construction had already been completed. But the millions of estimated euros, as in the case of the bridge, were at least noted. Equal amounts of money, if not even bigger, are abundantly spent in smaller businesses.
There is an interesting case of a journalist who sold a music record over the Internet for one hundred dinars to a state official. It was a mayor who did not know he was dealing with the journalist and who then wanted to send an official car with a driver to take his order. For this private purchase the official car and the driver would have to exceed 50 kilometers. Finally, the mayor and a music lover lost his record, a Serbia saved a few thousand dinars.
A senior party official says for Novi Magazin that such use of official vehicles is the most widespread form of abuse. They usually issue an order for a business trip, schedule a non-existing meeting and then finish their private or party businesses. Sometimes an order just says “a scheduled visit to the ministry in Belgrade”, and afterwards no one checks to see if that visit really took place, said the source of Novi Magazin. Representation is used in a similar way. There is always an alleged delegation to set up a lunch with and usually in a restaurant that won the right to host officials for one entire year with taxpayers’ money, and all this was arranged on the low value non-transparent public procurement (up to 30 million RSD per year).
“The more complex form of abuse is implemented through public works contracts. In this case, the bidder gets the job, and in addition builds a house or a cottage for an official. All the money overflow into private pockets – from office supplies to construction work,” says our source.
In many cases of investigation of state money spending controllers established that the regulations had not been violated. When Anti-Corruption Agency investigated the case of misuse of public resources for political purposes, it received the response that the members of the Central Committee of one of the ruling parties had to come to a convention by official cars (owned by municipalities and other bodies), because the convention was characterized as a meeting of an increased security risk, due to the presence of high state officials (and also parties’ leaders). Therefore, their argument is that “they would never willingly spend budget money, but they are forced to do it in order to obey the regulations.”
How to set things right
The current situation in both public finances and their control is a main reason why Serbia has not made any progress on the list of the Corruption Perception Index for years. In addition, this Index is an indicator that investors recognize the corruption and inefficiency of the system.
What do we need to do to move up that ladder?
Dragan Dobrasinovic says that “the revival of hope” requires to:
1. Strengthen the independent control institutions and allow them the possibility to directly sanction any law breaches and misuse of the public finance system,
2. Enable a transparent insight into the real ownership structure of media and ban the holders of political functions and their associated from being the owners of media.
3. Form a separate office for the fight against corruption which would be in charge of the high political corruption cases worth over 100,000 euros,
4. Strengthen the civil controls of public finances and promote the refusal of corruption as the basic model of socially acceptable behavior, modeled after Scandinavian societies in which this phenomenon is reduced into a statistical error.
Nemanja Nenadic believes the most important step is that the phenomena which currently require great strength and public pressure become a regular practice of state authorities:
1. It is a matter of political culture to determine the number of budget controllers in proportion to a controlled subject
2. The minister should listen to his internal auditor, instead of intimidating him
– The director of a public company and the president of a municipality should present their way of public spending on the internet
3. The first reaction to auditors’ reports should be the correction of one’s own mistakes, instead of searching for the errors of auditors
4. The Assembly should not allow for the same remarks to be repeated next year, but it should change the Law and urge the Government to take actions within one year.