Perspectives | Corruption

Who defends the citizens of a corrupt state?

By - 05.10.2016

Lack of accountability costs Kosovars millions of euros.

Viktor Marku is a civil servant in the Municipality of Klina. In late June 2010, contrary to the laws in place at the time, he was dismissed by order of the mayor of the municipality. For two and a half years, Viktor filed complaints at the Independent Oversight Board for the Civil Service of Kosovo, the Municipal Court and even the Constitutional Court. They all ruled in his favor and ordered the municipality to re-hire Viktor and compensate all pay for the period during which he did not work. Eventually, Viktor returned to his position in November 2012. The municipality was forced to compensate 28 salaries, at a total value of 8,100 euros.

Viktor is not the only person to have suffered from arbitrary and political decisions in Kosovo’s public institutions, and the Municipality of Klina is not the only municipality to have committed such violations. In the last five years, Kosovo’s budget has lost a total of 30.8 million euros as a result of judicial decisions. These decisions include cases in which public institutions breached workers’ rights and were forced to compensate, and cases in which companies were treated unjustly in procurement processes or through late payments.

In most cases the courts side with the damaged side and against public institutions. This happens for two reasons: first, that the judges feel more sympathy for the social condition of individuals and companies than they feel for the state budget; second, the defense of public institutions in judicial processes is conducted by public lawyers who are not adequately prepared, and lack the motivation, to defend the public’s interests. For example, a lawyer in the Municipality of Prizren was accused by the prosecution of failing to appeal two decisions that had caused material damage to the municipality.

Lately, a new threat to public funds has emerged in the form of decisions by international arbitration courts. In late July 2016, the International Court of Arbitration in Paris decided that the Ministry of Internal Affairs (MIA) must pay compensation of 5 million euros to the Austrian printing house to which it had given a contract to manufacture passports. The MIA had illegally terminated the contract with the Austrian firm in 2013.

On the other hand, the public enterprise, Post and Telecom of Kosovo (PTK), is facing two judicial processes. This year, virtual mobile phone operator Z-Mobile sued PTK for breach of agreement and is seeking 44 million euros in compensation; meanwhile the company AXOS, which competed in the process of privatizing PTK last year, is seeking 50 million euros in compensation following the annulment of the process.

No one has been held accountable for the 36 million euros that have been lost in the last five years.

No one has been held accountable for the 36 million euros that have been lost in the last five years, and for the risk of losing a further 94 million euros. In Viktor’s case, when the municipality was damaged to the sum of over 8,000 euros, no one was held accountable.

Similarly, in the passport case, no-one was sued or held accountable, and no reasons were given for the termination of the agreement with the Austrian company despite the fact that the decision resulted in a loss of 5 million euros to Kosovo’s budget. No one has yet been held accountable for the agreement between PTK and Z-Mobile, which caused the loss of millions of euros for the public company, and no one has been held accountable for the two failed attempts to privatize PTK, during which millions of euros were spent on transaction advisers alone.

So in a poor and corrupt state, with courts that grant amnesty to abusers, who defends the interests of citizens and taxpayers — the only people who effectively lose out in these processes? Currently there are no international mechanisms to defend the citizens of a corrupt state against companies that sue the state in international courts.

In a 2009 TED Talk, Peter Eigen, founder of anti-corruption NGO Transparency International, spoke of his experience as director of the World Bank (WB) in Nairobi, Kenya. On seeing that Kenya’s government was corrupt, and working to the detriment of its citizens, as director of the WB Eigen attempted to build mechanisms that would defend citizens from their government. However, he was immediately halted by the legal office of the WB on the grounds that “these are internal affairs of the state and WB officials must not be involved in them.”

After leaving the WB, Eigen found out that governments of Western countries, including his native country, Germany, allowed their companies to be involved in corruption cases in other countries. He even told of the way in which the German government applied tax breaks if a company was able to prove that it had given bribes to foreign governments in order to win public contracts. With the advocacy of Transparency International, Germany and other members of the Organization for Economic Cooperation and Development (OECD) signed an agreement to draft laws that also criminalize the act of giving bribes in other countries.

Austria is one of the signatories of this agreement. Additionally, from 1997, the European Union has approved policies that prohibit the involvement of companies from EU member states in corruption cases, including cases outside of the EU. In the passport case, at least eight people were convicted from the Natali Veliaj group, which was found guilty of distributing 1.4 million euros, or 10 percent of the passport tender. The MIA’s defense lawyer in the arbitration process should have questioned whether the Austrian company was also involved in the bribe case, as this is punishable under EU regulations. However, it is unlikely that this issue was raised as it would have implicated MIA officials further — despite the fact that 5 million euros might have been saved.

Public officials who make damaging decisions are not being harmed, and neither are the municipalities or ministries of public institutions. Rather, the harm falls upon Kosovar citizens.

In the Penal Code of the Republic of Kosovo, any damage in value of over 50,000 euros is considered “large scale destruction” and is punishable by at least three years imprisonment. However, for the 36 million euros which have been lost so far, no one has been held accountable. Every year, reports by the National Audit Office include dozens of cases in which the budgets of institutions are hurt in judicial processes; these reports even highlight the people who are mainly responsible. These should be worrisome facts for every prosecutor and judge, and for every citizen of Kosovo.

In all of these judicial processes, public officials who make damaging decisions are not being harmed, and neither are the municipalities or ministries of public institutions. Rather, the harm falls upon Kosovar citizens — the people who contribute to the state budget through taxes.

Therefore, the state prosecution must defend the interests of taxpayers, and not side with the corrupt. Also, regarding the two cases of judicial processes against PTK, the Government must not let PTK organize its own defense; instead they must recruit a credible international company that would prevent the loss of approximately 100 million euros.

Otherwise, cases like these lose the trust of businesses and citizens in the state of Kosovo, and clearly endanger the prospect of foreign investments. How can I ask for a fiscal coupon from a burektore (bakery), knowing that those cents I contribute to the state will be misused by someone, without consequence? How can businesses act responsibly when companies are subjected to discrimination by the state? And how can Kosovo attract international investors at a time when Austria is threatening to campaign against investment in Kosovo if the Austrian printing house is not paid soon?