Privatization still under risk of corruption

On the occasion of Draft Law on Privatization

Transparency – Serbia (official chapter of Transparency International) is of the opinion that current Draft Privatization Law does not sufficiently resolve risks of corruption in that area besides proclaiming transparency and disabling corruption among base-ground principles and brings some great new solutions.

Transparency Serbia estimates extreme importance of leaving out most disputable provision from draft law – possibility to privatize under method of „direct negotiation“. However, on the same day public was informed that direct negotiations will still occur, but they will be implemented directly on the basis of intergovernmental agreements[1]. That presents continuation of dangerous practice of creating parallel legal regime in which state, from one side, prescribes strict rules of bidding, transparency and procedures of disposing with public property, and on the other hand easily renounces of these provisions when it comes to doing business with foreign partners from selected countries, whether it refers to selling of enterprises, public procurements or public-private partnerships.

Draft law contains model of „strategic partnership“, that will allow competition and transparency („method of public collecting of bids“), but the problem is in imprecise appointing of criteria for choosing of this model and for qualifications of investors, it is rather left to the Government to determined arbitrarily from case to case.

Action Plan for implementing Anticorruption Strategy[2] envisaged risk analysis of corruption before changes of this law (by March 2014), but the draft law does not state performing of such analysis and what measures are envisaged for curbing corruption[3].

Besides that, potentially disputable provisions are the ones that enable privatization of public enterprises[4], lack of measures determined in advance for implementation of measures for discharging of privatization subjects (e.g. debt conversion), absence of rules on method of criteria implementation when choosing privatization model, norm on primate of Privatization Law in regards to other laws without stating which laws are they, absence of precise determining of Privatization Agency status in the authority organs' system of the Republic of Serbia[5], as well as regulation of criminal act by special law instead through amendments to Criminal Code. Envisaging of control for preventing money laundering should certainly be supported, but explicit prohibitions for participation of enterprises from off-shore zones were not stated.

Although Ministry of Economy organized public debate on this draft law, results of considering submitted prepositions unfortunately weren't published on the Ministry's web-page[6], or in elaboration. Some of the loopholes in the law that we pointed out to, could have been removed if, for example, comments of Anticorruption Agency to draft law[7] were taken into consideration. Special curiosity is the fact that this draft contains some significantly different solutions compared to draft law adopted by the Government in 2013[8], although most Ministers remained the same.

Transparency – Serbia

Belgrade 30.7.2014.