Caught in a vicious circle: how corrosive capital perpetuates state capture in the Balkans

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In discussing the mutually reinforcing role of authoritarianism and ‘corrosive capital’, Tena Prelec argues that it is not enough to attract foreign investments to stimulate economic growth that will benefit the whole population; it is essential to guarantee the right environment for them to create real value.

For people studying, investigating and living corruption in the Western Balkans, the most frustrating aspect is its resilience. In spite of the great work done by investigative journalists and civil society in the region – and much of it is of top-notch quality, as the numerous international awards testify – it seems that nothing ever really changes at the top.

Look at Montenegro: its most recognisable political figure has been the very same for the past thirty years. The situation is not much different in neighbouring Serbia, whose president (before that, prime minister) forged his career as Slobodan Milošević’s Information Minister in the 1990s and then warmonger Vojislav Šešelj’s right-hand man – before rebranding his former mentor, and his own ex-party, as political opponents. North Macedonia has experienced some change in recent years (name included), but the EU’s recent failure to reward its efforts by opening EU accession talks puts a question mark against its future prospects.

Political elites in the Balkans have perfected a system of patronage and clientelism that facilitates their survival and perpetuation from one electoral cycle to the other. This is a composite picture that includes a well-oiled game to ensure dominance at elections, the abuse of state resources through politicised public procurement, a nepotistic hiring process, and several other angles. Path dependency plays a role: in the Balkans, the pitfalls of post-communist transition have been amplified by armed conflict and international sanctions, as brilliantly illustrated by Slobodan Georgijev’s account in this blog series. But the methodologies of state capture have also become more subtle and sophisticated than in the 1990s. Conflict is no longer raging on the streets, brazen embezzlement of customs money is no longer allowed – and yet, most of the region is experiencing a democratic involution towards autocratic practices.

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What we talk about when we talk about state capture: reflections from Serbia

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A life lived in Belgrade is a life lived in four countries. A lot has changed, but not much has changed for the better. Slobodan Georgiev (Balkan Investigative Reporting Network) reports with wry sarcasm on the realities of life as a journalist under an authoritarian regime.

Belgrade in the 1970s. Credits: ivanjankovic1.

I am Slobodan Georgiev, I am a journalist and I come from Belgrade, Republic of Serbia. I was born in Belgrade in 1976 and I have lived there my whole life. I have never moved, yet I have lived in four different countries.

The Republic of Serbia became an independent country in 2006 after the dissolution of the State Union of Serbia and Montenegro. The State Union of Serbia and Montenegro was formed after the dissolution of the Federal Republic of Yugoslavia. The Federal Republic of Yugoslavia was formed in 1992 after the dissolution of the Socialist Federal Republic of Yugoslavia.

In the 1990s we, citizens of former Yugoslavia, survived civil wars, and citizens of Serbia and Montenegro the NATO bombing campaign too.

The country was outside the UN from 1992 to the fall of 2000.

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Investigative journalists must show citizens the way: We can clean up government without resorting to rancour or nationalism

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In a reflection on the role of journalists worldwide, and in the Balkans in particular, Aida Cerkez and Rosemary Armao vent their frustration about one of the biggest challenges of investigative reporting: how to make people care.

Do citizens really want to know? Do exposes bring about reform? What’s the good of revealing corruption?

Any investigative journalist working the Balkans wonders about these questions eventually, usually after that laboriously reported story, which you spent months working on including by putting yourself in harm’s way, passes mostly unremarked upon. You want to believe the theory behind investigative reporting – that telling citizens the truth will turn them into agents for change – but does it?

Citizens are not idealists. They know that life is bad if you look it full in the face. So they don’t. They skip over or avoid altogether stories about nepotism, bribery, conflict of interest, theft and money laundering. What good is there in learning all the details of the dirty business they already know is just politics and big business as usual. Always was, always will be.

We journalists are the idealists, confident that shining a light on unfair and bad governance will result in fixes, sure that citizens will welcome and applaud our articles. Instead, they are more likely to hate the intrusion on their already stressed out daily lives.

Or worse, in some cases where reporting about corruption actually does fire up people – the result is uncontrolled anger that only leads to rising authoritarianism. For proof of this look no further than the protests that have filled the streets of Romania, Hungary and Brazil in recent years.

Citizens disgusted with greedy leaders have become increasingly willing to vote for extremists who promise to turn things around.

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Politicised institutions are key obstacle to fighting corruption in Montenegro

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Montenegro has on the face of it made good progress in adopting anti-corruption laws, but frequent political scandals suggest they are not being implemented. Jovana Marović, Executive Director of the Politikon Network, a think tank based in Podgorica, and a member of the Balkans in Europe Policy Advisory Group (BiEPAG), argues that – in the absence of effective law enforcement – public officials and politicians feel they can act with impunity.

Any evaluation of Montenegro’s anti-corruption efforts to date should start with the changes in the law. A whole set of new legal solutions saw the light of day under the auspices of the European Union’s conditionality policy and the country’s aspiration to get closer to this supranational community. However, more than seven years after the start of accession negotiations and with the membership perspective still uncertain, Montenegrin institutions have stopped even simulating reforms. The new legal solutions have produced no significant results, and some laws have even been changed for the worse.

The most recent example is announced amendments to the law on free access to information which introduce the so-called abuse of the right of access to information. The proposed provision allows an institution to deny an interested party’s request and refuse to make a document or information available on the grounds that the request is “unfounded or unreasonable”. The proposed changes also introduce the possibility for institutions to determine whether or not information is of public importance, and accordingly whether or not it is necessary to publish it. If these amendments pass, it will not only (again) call into question the country’s commitment to reform, but will also spoil civil society’s efforts to control the government and help combat corruption.

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Cricket and corruption: The strange case of Shakib Al Hasan

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It had been a stellar year for Shakib Al Hasan, the captain of the Bangladeshi cricket team, until on 29 October he was banned from cricket for a year for failing to report inappropriate discussions with an alleged bookmaker. CSC Professor Dan Hough puzzles over why people who know the rules still sometimes break them.

Shakib Al Hasan, the captain of the Bangladeshi cricket team and doyen of Bangladeshi cricket, had a very good summer. He scored 606 runs in cricket’s World Cup, ending as the tournament’s third highest run scorer. He was the jewel in the Bangladeshi cricketing crown.

His Autumn has been altogether different. On 29 October he was banned from all cricket for a year (with a further year suspended) on account of failing to report inappropriate discussions with an alleged bookmaker. He’d fallen foul of the International Cricket Council’s (ICC) rules on how to nip potentially corrupt behaviour in the bud.

Shakib has scored in excess of 11,000 international runs and has taken more than 500 international wickets. He’s had a distinguished career. That career won’t be expunged from the record books. His name will nonetheless be added to the more than 40 players who have been banned for an array of corruption offences. A sorry end to what should have been a year that Shakib could look back on with real pride.

How did it come to this?
Players with Shakib’s experience should not find themselves in this position. As was widely noted in the press, he’ll have attended numerous briefings on how to deal with people asking for information on games that he was playing in. He will have known the warning signs; people whom he didn’t really know asking about team selections, people whom he had never met asking him for his bank account details. When those sorts of issues come up in conversation, you report them to the ICC’s Anti-Corruption Unit (ACU). This really isn’t rocket science, and Shakib will have known it.

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Civil society needs support to fight corruption and organised crime in the Western Balkans

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Civil society organisations (CSOs) and investigative journalists in the Western Balkans are critical to raising awareness about fighting corruption and organised crime, as well as supporting state authorities to develop effective strategies. But they lack capacity and resources to address these complex issues, while activists are often harassed and intimidated by the authorities and other powerful individuals. As Andi Hoxhaj (Teaching Fellow in Law, University of Warwick) explains, support from international organisations – both funding and security – is critical.

A rally in Belgrade, Serbia. Credits: Ne Davimo Beograd.

Corruption levels in the Western Balkans are stagnating. Albania, Kosovo, Montenegro and Serbia saw perceived corruption levels rise in the past year, while Bosnia and Herzegovina remained on the same level, and only North Macedonia witnessed a slight improvement, according to the Corruption Perception Index (CPI) 2018 of Transparency International. Notwithstanding the CPI’s limitations, it gives a useful snapshot of the situation.

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Montenegro: Captured by Corruption

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In the first of a series of posts by investigative journalists and civil society activists working on exposing corruption in the Balkans, Milka Tadić Mijović (President, Centre for Investigative Journalism of Montenegro) discusses impunity in Montenegro and the complicity of the West.

Montenegro. Photo credits: Jarek Jarosz, via a CC BY-NC 2.0 licence.

Last spring, a woman in Podgorica, the capital of Montenegro, was shot in the leg in front of her apartment. Had the bullet hit the artery an inch further, she could have died. That woman, Olivera Lakic, an investigative journalist who has revealed links between top officials and cigarette smugglers, is still on sick leave. Montenegro is globally known for cigarette and heavy drugs smuggling.

Around Christmas a few years ago, a strong explosion erupted at midnight. The bomb exploded outside the office of the Editor-in-Chief of the daily Vijesti, the most influential newspaper in the country. Just a minute earlier, the editor had left the office. Had he stayed, he might have not been alive anymore. Nobody was held responsible for that crime either.

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Britain, Saudi Arabia and corporate bribery: another Brexit conundrum

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Anti-corruption NGOs have recently written to the Attorney General, concerned that the UK government may be tempted to drop its investigation into alleged bribery by Airbus subsidiary GPT in Saudi Arabia. Robert Barrington, Professor of Anti-Corruption Practice at the Centre for the Study of Corruption in Sussex University, argues that this would be a mistake – and not in the interests of either the UK or Saudi Arabia.

Some day soon, we should expect the next chapter in the GPT story. To re-cap, GPT is a defence-related subsidiary of French aerospace giant Airbus. It had a £2billion contract in Saudi Arabia, but a British whistleblower came forward with detailed and documented allegations of bribery. The Serious Fraud Office investigated.

Having investigated, the next stage for the SFO – if it wants to prosecute – is to gain approval from the Attorney General. Where there is sufficient evidence to merit prosecution, there are very few circumstances in which such permission can be legitimately withheld – and inevitably, one of them is that old get-out for cornered governments, ‘national security’ (see paras 49-52 of the Framework agreement between the Law Officers and the Director of the Serious Fraud Office of January 2019).

Could prosecuting some GPT executives, and possibly some colluding Ministry of Defence officials, genuinely threaten national security? It is unlikely. But it might well embarrass the Saudi government, a strategically important relationship for the UK, particularly post-Brexit.

This has echoes of the BAE Systems case fifteen years ago, in which the then Attorney General apparently pressurised the Director of the SFO to drop its investigation into BAE’s (alleged) bribery in Saudi Arabia – on grounds of national security. The sense of unease was compounded when the UK Ambassador to Saudi Arabia – who had advised the Attorney General and SFO Director – retired and became the international business development director at BAE Systems. In the end, the US authorities got fed up with the British approach, and launched the prosecution themselves. It is worth noting that the ‘national security’ defence was heavily contested at the time, though it was much closer to the post-9/11 paranoia and concerns about withdrawl of Saudi security cooperation. The legal challenges were taken right up as far as the House of Lords. In today’s parlance, that means the Attorney General could be heading for a showdown in the Supreme Court – perhaps not a great look for the UK Government at this moment.

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Posted in Business

Holidays bring warning messages: a Chinese approach to stopping graft

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In the holiday season in China, public officials receive messages from the anti-graft watchdog warning them that “gift-giving is not allowed during the holidays”. Yang Wu, a PhD researcher at the CSC, explains the logic behind the messages

With the holiday season coming to an end (the Mid-Autumn Festival on 13-15 September and the National Day holidays on 1-7 October), the top anti-corruption department has been focused on investigating public officials who violate the Party’s discipline, the eight-point frugality code. Party members and public officials have received text messages to remind them to avoid corruption during the holidays. The forbidden acts are detailed as, “any forms of gift-giving is forbidden, including mooncakes, mooncake vouchers, gift cards, banquets etc.” “To secure a clean atmosphere to celebrate the 70th anniversary of the founding of the People’s Republic of China”, as the Central Discipline Inspection Commission (CDIC) puts it, the warnings will get more intense as the holidays near.

These messages of warning are not new to Chinese public officials. The Chinese anti-graft department works very hard on education to prevent (or protect) public officials from violating the Party’s disciplines or even laws. And warnings are considered to be one of the most effective precautionary approaches to curb officials’ luxurious lifestyles and excess bureaucracy. Since late 2012 when the anti-corruption campaign started, these warning messages from the anti-graft department have provided regular reminders for officials about being self-cautious and consciously keeping away from any graft acts.

As an anti-corruption strategy, the warning messages have four aspects.

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Posted in Regions

Corruption in Public Procurement: What happens after the contract is awarded?

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A lot of research about corruption in public procurement builds on the availability of data about the contracting process. But what happens after the contract is awarded? Irasema Guzmán, one of the Centre’s PhD researchers, argues that corruption in this phase has unique power dynamics, which she will explore in her work on Mexico

Governments spend large amounts of money in building roads, implementing social programmes, and acquiring equipment for hospitals as part of their responsibilities to deliver public goods, works and services. According to the World Economic Forum (2018), countries around the world spend an estimated 15% of global GDP on public procurement – governments contract firms to supply their needs. However, procurement is also a risky area for corruption, reflecting the extensive public budget involved and the potential for interactions between private and public actors’ interests to distort the original aims.

We know that there are many ways to corrupt the procurement process in order to benefit specific actors via rent-seeking. Research has stressed how actors may take discretionary decisions over procurement to manipulate the process (from planning to tender, award and implementation phases). Since corruption is very difficult to observe and measure, academic efforts also identify corruption risks in all the procurement phases as a proxy to objectively measure corruption, providing a toolkit of indicators (red flags) of possible corruption patterns.

Although there has been great progress in research on corruption and anti-corruption, some gaps remain. We know very little about corruption schemes and risks during the monitoring of a contract and the delivery of the goods, works and services. Why is it important to analyse this last phase?

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