Rolling Back State Capture
in Southeast Europe

CSD would like to thank the R2G4P members and contributors from the public and civil society sectors in Southeast Europe for their valuable inputs and comments in the making of this report. The following public bodies, parties, and international organizations provided comments to earlier drafts of the report:

• Albania: The High Inspectorate for Declaration and Audit of Assets and Conflicts of Interest; Organization for Security and Co-operation in Europe (OSCE) in Albania; General Directorate for Money Laundering Prevention; Special Structure against Corruption and Organized Crime (SPAK);
• BiH: Organization for Security and Co-operation in Europe (OSCE) in BiH; EU Delegation in BiH; Agency for State Service of the Federation of BiH; Agency for the Prevention of Corruption and Coordination of the Fight against Corruption;
• Bulgaria: Inspectorate to the Supreme Judicial Council; State Agency “National Security”; Public Prosecutor’s Office;
• Croatia: Commission for the Resolution of Conflicts of Interest;
• Hungary: Momentum political party;
• Montenegro: Agency for Prevention of Corruption;
• North Macedonia: State Commission for the Prevention of Corruption (SCPC);
• Romania: National Integrity Agency (ANI); National Anticorruption Directorate (DNA); Ministry of Justice, Transparency International; Center Legal Resources;
• Serbia: Anti-Corruption Agency; Tax Administration; Public Prosecutor’s Office.

CSD would also like to thank the Bulgarian Ministry of Justice and the Basel Institute of Governance for initiating public-private cooperation for anti-corruption under the Summit for Democracy, taking on board R2G4P’s ideas, instruments and analyses.

We would like to note in particular the thorough work of CSD’s editing and background research team, including Dr. Alexander Gerganov, Director of the Sociological Program, Galina Sapundzhieva, Communications Officer, Connor O’Kelley, Analyst, and CSD’s interns Kaloyan Filipov, Lora Manolova, Matthew Doty, Sarah Hofmann, and Stefano D’Angelo.

R2G4P national contributors:

Dr. Zef Preci, Eliona Lloja, Albanian Center for Economic Research, Albania
Darko Brkan, Haris Karabegović, Zasto Ne, BiH 
Petar Terziev, Connor O’Kelley, Svetoslav Malinov, Center for the Study of Democracy, Bulgaria
Dr. Martina Pezer, Dr. Branko Stanić, Dr. Predrag Bejaković, Marko Tutek, Institute of Public Finance, Croatia
Daniel Kofran, Peter Horn, Government Transparency Institute, Hungary
Biljana Papovic, Center for Democratic Transition, Montenegro
Misha Popovikj, Martina Ilievska, Sara Janevska, Institute for Democracy Societas Civilis, North Macedonia
Simona Ernu, Andrei Macsut Academică din România, Romania
Andrija Mladenovic, Milos Pavkovic, Ana Milinkovic, European Policy Center, Serbia

R2G4P knowledge partners:

Chr. Michelsen Institute / U4 Anti-Corruption Resource Centre, Norway
Regional Anti-Corruption Initiative, BiH
State Commission for Prevention of Corruption, North Macedonia

EXECUTIVE SUMMARY

INTRODUCTION

ASSET DECLARATIONS AS A CORRUPTION PREVENTION AND RISK ASSESSMENT INSTRUMENT

— Longstanding loopholes and areas in need of improvement
— Verification and checking
— Imposing sanctions through cooperation with other authorities
— Typical schemes of non-compliance
— Data availability
— National focus: pressing issues in the SEE-9 countries
— Good practice examples

PUBLIC PROCUREMENT IRREGULARITIES AMONG POLITICALLY EXPOSED COMPANIES

— Contract volume share
— Contract value share
— Buyer type value share
— Procedure type value share
— Integrity indicators
— The effect of politically connected suppliers on procurement integrity
— Post COVID corruption risks in public procurement

THE WAY FORWARD: CONCLUSIONS AND POLICY RECOMMENDATIONS

Figure 1. Prerequisites for efficient checks of asset declarations

Figure 2. Long-standing loopholes in the verification and checking procedures

Figure 3. Example of a comprehensive list of risk indicators for checking asset declarations

Figure 4. Long-standing loopholes in the sanctioning of irregularities in the asset declarations

Figure 5. Contract volume share of politically connected companies in Bulgaria

Figure 6. Contract value share of politically connected companies in Croatia

Figure 7. Buyer type value share of politically connected companies’ contracts vs. other companies’ contracts (2015-2021) in North Macedonia

Figure 8. Procedure type value share of politically connected companies’ contracts (2015-2021) in Bulgaria

Figure 9. Integrity indicators for politically connected and non-connected companies (2015-2021) in Serbia

Figure 10. The effect of politically connected suppliers on procurement integrity in Croatia (2015-2021)

Figure 11. Three markets, quarterly integrity trends before and after the introduction of emergency periods in Bulgaria, Croatia, Hungary, North Macedonia and Romania (2017-2021)

Figure 12. Three markets quarterly corruption risk trends before and after the introduction of emergency period in Europe (2019-2021)

Table 1. When are PEPs and public servants required to submit asset declarations?

Table 2. Checking institutions and possibility for submitting signals about irregularities

Table 3. Legal limitations on the size and range of sanctions imposed by the checking institution

Table 4. Sactions imposed

Table 5. Submitted and checked asset declarations, and persons referred for penalties

Table 6. Which family members are declared and checked?

Table 7. Data availability, access and reliability

Table 8. Country-specific issues observed in the SEE-9 countries

Table 9. Integrity indicator description

Box 1. Who are “politically exposed persons (PEPs)” and “persons with high political power”?

Box 2. Other definitions used

Box 3. Need to investigate the lifestyle of PEPs, beyond the officially declared assets

Box 4. Failure to declare own commercial activities and/or assets

Box 5. Asset declarations inconsistent with market values

Box 6. International Treaty on Exchange of Data for the Verification of Asset Declaration

Box 7. Gaps in the legal restrictions to holding an office

Box 8.The Principle of opportunity: avoiding fines and prison by funding charity organizations

Box 9. Failure to declare family members’ commercial activities and/or assets