New civil society report on Serbia: Ineffective implementation, political influence and defamation of civil society representatives hinder anti-corruption efforts

20 July 2023 –

Click on the report to download it in English!

A new report by Transparency International Serbia finds that Serbia has put in place provisions for the prevention of corruption and asset recovery (Chapter II and Chapter V of the UN Convention against Corruption – UNCAC), but a lack of resources and political influence hinder their effective implementation in practice. The report is intended as a contribution to the UNCAC implementation review process in its second cycle, produced with technical and financial support from the UNCAC Coalition.

In general, Serbia has a broad and comprehensive legal and regulatory framework that covers most of the aspects addressed in Chapter II and Chapter V of the UNCAC, such as public sector employment, political financing, whistleblower protection, public procurement, access to information, private sector transparency, and asset recovery. However, the Agency for Prevention of Corruption as the main preventative body lacks resources and it has been criticized for being politically influenced. Further, there is no comprehensive national anti-corruption policy document in place. Corruption is mainly addressed with a focus on priority issues raised by the EU in the context of EU integration. While there is a need to improve regulations, the main challenge is posed by the ineffective implementation of existing rules, or their selective application. Monitoring mechanisms are inadequate and loopholes remain through which existing regulations can be bypassed. Advances have been made with regard to access to information, however, civil society representatives and journalists often become the target of smear campaigns in pro-governmental media for their activities to hold the government accountable.

The official second cycle UNCAC review process in Serbia was scheduled to begin in 2020 and is still ongoing. By the time of the finalization of this report, there was no published information about the UNCAC review process by the Serbian authorities. The self-assessment checklist was obtained through the Access to Information campaign. A country visit by peer-reviewing countries Latvia and the Netherlands is scheduled in 2023 (exact date unknown).

For all the detailed findings, read the full civil society parallel report in English.

Main findings

Preventive Anti-Corruption Policies and Practices

In Serbia, there is no comprehensive national anti-corruption policy document in place. The National Anti-Corruption Strategy has not been adopted yet, although it was supposed to enter into force in January 2023. Currently, the most important anti-corruption policy document is the Revised Action Plan for Chapter 23 of Serbia / EU negotiations, which contains a subchapter related to the fight against corruption. However, in this way, the issue of fighting corruption is assessed only in the context of EU integration, and focuses on specific priorities raised by the EU, although it is of much broader significance.

There is also ‘two-track reporting’ on the implementation of preventive anti-corruption policies in Serbia by both the Ministry of Justice and the Agency for Prevention of Corruption. However, these assessments are conducted with different methodologies, resulting in different evaluations of the same activities. At the same time, follow-up to both institutions’ reports proved to be inadequate, thus leaving identified problems unresolved. 

Preventive Anti-Corruption Bodies

The main preventive anti-corruption body in Serbia is the Agency for Prevention of Corruption (APC), which has a wide range of competences and powers. It is mandated to implement and oversee most policies which fall under in Article 5 of the UNCAC, but it is not solely in charge of coordination of these policies and activities. The Law on Prevention of Corruption provides the APC with a comparatively high level of independence, shielding it from external influence, but the selection of its management ultimately depends on parliamentary majority. The APC lacks the resources to fulfil all its tasks. Further, some decisions by the APC were publicly suspected to be the result of political influence. Follow-up on the Agency’s reports by the Parliament and other institutions is not adequate.

Public Sector Employment

When it comes to public sector employment, a system for recruitment, hiring, retention, promotion and retirement of civil servants has been established, mostly through the Law on Civil Servants. The Law on Civil Servants prescribes competitions and objective criteria for recruitment. The salaries of civil servants are regulated by a special law, and are competitive with the private sector, except for professionals in areas of high demand (e.g., IT). A duty to prepare integrity plans for public authorities with more than 30 employees is also foreseen in legislation through the Law on the Prevention of Corruption.

However, procedures for recruitment can be bypassed through hiring on fixed-term and temporary contracts, which opens the door to arbitrariness and employment based on political or other affiliations. There is also a large number of acting civil servants in top positions, in most instances appointed by the government, and contrary to the rules.

Political Financing

The Law on Financing Political Activities deals with political financing by regulating the sources and manner of financing, records and the monitoring of financial activities of political subjects in Serbia. The Law prescribes the duty to publish data on sources of financing, as well as to keep records about them. Anonymous donations and donations through third parties are prohibited, and the law also established an oversight system. These rules apply for both financing of regular work of political subjects as well as for financing of election campaign expenditures. Funding reports are published, but in many cases, they are not prepared in accordance with the rules, which significantly reduces the transparency of funding. Monitoring is applied, but in some cases, doubts remain about the credibility of reports. In several prominent cases, suspected or even identified violations of rules remained unpunished, due to the failure of the Agency for Prevention of Corruption to initiate the case in a timely manner for the public prosecutor to thoroughly investigate it.

Codes of Conduct, Conflicts of Interests and Asset Declarations

 There are prescribed rules for declarations of assets and interests, codes of conduct and conflicts of interest, as well as income and gifts, together with sanctions in case of violation of the rules. The authority in charge of supervising these rules is the Agency for Prevention of Corruption, which also maintains registers of public officials, property and income, as well as gifts. Public officials are obliged to submit reports to the Agency for Prevention of Corruption and to disclose their assets and incomes, as well as of their family members. However, these rules do not cover all important public officials. A relatively small number of cases are subject to checks on the accuracy of reported data, and data on imposed sanctions are not sufficiently promoted to the public, so any preventive effects through their publication is not fully achieved.

Reporting Mechanisms and Whistleblower Protection

The Law on Protection of Whistleblowers establishes the right to legal protection of whistleblowers and regulates whistleblowing procedures and types of whistleblowing. Judicial protection of whistleblowers is being enforced, but measures to promote whistleblowing are not sufficient, and monitoring of the Law on Protection of Whistleblowers is inadequate. Particularly problematic is protection in cases where whistleblowers have revealed some classified information directly to the public. Reporting channels are prescribed in relevant laws, but there is no follow-up data on the outcomes of the reported irregularities.

Public Procurement

The public procurement system has been founded on principles which are specified in Article 9 of the UNCAC. The Law on Public Procurement sets clear rules for types of procedures, criteria for selections of tenderers and contract award criteria that contracting authorities can use. It also provides an exhaustive list of exclusions from its application, and legal remedies that can be used. The Public Procurement Office performs professional activities in the public procurement field, such as monitoring of the application of the Law on Public Procurement and the education of stakeholders. However, the law has often been bypassed by the government through interstate agreements and tailor-made laws for particular projects, thus hindering transparency and seriously reducing competitiveness. The scope of oversight over the public procurement system is insufficient.

Management of public finances

There are laws and regulations on the management of public finances that establish procedures prescribed for the adoption of the national budget, its completeness, budget accounting, internal audit, as well as sanctions in case of violations. However, in practice, the publication of budget documents often is delayed. According to the findings of the State Audit Institution, internal audits have not been conducted among a large number of subjects which are obliged to establish internal monitoring. The public has no ability to influence the national budget.

Access to Information and the Participation of Society

The comprehensive Law on Free Access to Information of Public Importance (LFOI) applies to all public authorities. Procedures for obtaining information are simple and free and there is also a free legal remedy system, which operates by submitting a complaint to an independent institution: the Commissioner for Information of Public Importance and Personal Data Protection. However, the appeal procedure with the Commissioner takes too long due to a large number of pending cases, while the situation is even worse when it comes to administrative disputes before the Administrative Court. The LFOI does not contain absolute exceptions on the basis of which the information seeker can be refused, but the decision must always be justified based on the necessity to protect prevailing public interest. The LFOI and many other regulations mandate the proactive publication of many important data, primarily through Information Booklets: documents which are published by public authorities containing information about their work.

When it comes to the participation of civil society, there is an obligation to organize public hearings when adopting policy documents and laws, but there are no sanctions if they are not respected. Civil society representatives and journalists are often the target of smear campaigns in pro-governmental media, because of their activities which intend to hold the government accountable.

Judiciary and Prosecution Services

The judiciary and prosecution services and their independence were strengthened, at least in principle, by recent amendments to the Constitution, which have been transposed into legislation through a set of laws in February 2023. Constitutional amendments reduce possibilities for exerting direct political influence on judges and prosecutors, through electoral procedure, yet concerns remain over such influence being exerted indirectly. Judges and prosecutors are public officials, which makes them obligated to follow the provisions of the Law on Prevention of Corruption. They are obliged to submit reports on their assets and incomes, as well as those of their family members. In practice, courts and prosecutors are ineffective when it comes to cases of grand corruption. The fact that the prosecutor’s office does not take a proactive role, and often does not act even in cases when well-founded suspicions about corrupt acts are expressed in public, is particularly pronounced.

Private sector transparency

There are significant laws regulating this sector: the Law on the Serbian Business Registers Agency, the Law on the Central Records of Beneficial Owners, the Law on Accounting and the Law on Auditing, among others. A public registry containing data about companies and all other legal entities is available online and can be accessed by anyone for free. Companies and all other legal entities also must report their beneficial owners, and the register of beneficial owners is also available to the public. However, ultimate owners sometimes remain unknown and companies’ legal representatives are listed in the register instead.

Companies in Serbia are required to maintain accurate books and records that properly document all their financial transactions, as well as effective systems of internal financial monitoring. External oversight works when it comes to submitting financial statements and sanctions are imposed in case of failure to do so, but it is not strong enough when it comes to non-compliance with other provisions.

Measures to prevent money laundering

 Regarding measures to prevent money laundering, Serbia has improved its legal framework in recent years. The range of obliged entities under the has been expanded to include lawyers and notaries while performing some activities, and obliged entities are also required to establish and verify the identity of the beneficial owner when a customer is a natural person. Customer due diligence actions and measures are applied not only when establishing a business relationship with a customer, but in other situations as well. The Administration for the Prevention of Money Laundering operates under the Financial Intelligence Unit in Serbia and is mandated to receive, analyse and disseminate reports on suspicious financial transactions. The Administration for the Prevention of Money Laundering is not fully independent, and its actions have been challenged due to the alleged misuse of its data for smear campaigns against watchdog NGOs and other individuals.

Asset recovery

Serbia has a lex specialis law in the area of asset recovery since 2009, the Law on the Confiscation of Proceeds from Crime. This law enabled temporary and permanent confiscation of property which does not have to be related to the criminal offense itself, but the law can only be applied for a list of most serious criminal offenses. Cooperation at the international level has been established by international conventions, and trainings are constantly held with the aim of improving the knowledge of judges and prosecutors in this area. There is a special unit (the Directorate for the Management of Confiscated Assets) within the Ministry of Justice that is in charge of managing confiscated property, but not all information about confiscated property and how it is managed is presented to the public.

Key recommendations

In its report, Transparency International Serbia makes several recommendations to the authorities to ensure the full implementation of the UNCAC in the country, among them:

  1. Adopt the National Anti-Corruption Strategy, which will be a comprehensive strategic document containing preventive anti-corruption measures which are not limited only to certain areas, as soon as possible.
  2. Strengthen the Agency for Prevention of Corruption’s staff capacity so that it can perform all assigned tasks and specify some of its responsibilities.
  3. Stop the widespread practice of employment on temporary and fixed-term contracts in the public sector, thus avoiding public competition.
  4. Include individuals with potential high influence (advisors to the president, prime-minister and minister, heads of cabinets) in designing government policies in the public officials’ category, so that they become subject to conflict of interest and asset reporting rules.
  5. Amend the Law on Whistleblower Protection in order to appropriately penalize all forms of retaliation and to place one authority in charge of general and comprehensive oversight of the law’s implementation.
  6. Introduce election campaign expenditure limits and address the ever-increasing spending of public funds for elections.
  7. Abandon the practice of contracting the most valuable projects through interstate agreements and special laws, thereby avoiding the application of the Law on Public Procurement.
  8. Increase transparency within the process of preparation of the national budget and organize public hearings about the budget.
  9. Ensure the enforcement of the decisions of the Commissioner for Information of Public Importance and Personal Data Protection decisions.
  10. Enhance participation of society in decision-making processes and stop targeting civil society activists and journalists reporting about corruption.
  11. Be proactive about corrupt criminal acts, especially when there is information in the media that indicates potential corrupt actions.
  12. Introduce the obligation for institutions in charge of overseeing the application of accounting and auditing rules to provide information about their findings, which should significantly increase transparency levels.
  13. Provide the Administration for the Prevention of Money Laundering (APML) with the necessary level of independence, so that it can perform its duties without political influence.
  14. Enable better international cooperation for the purpose of confiscation and return of stolen assets.
  15. Organize training for judges and prosecutors on the topics of asset recovery and confiscation of proceeds of crime.
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