Public enterprises politicized, subject to corruption and abuses

The analysis performed by Transparency International in BiH indicated many irregularities within the legal framework, including the lack of internal mechanisms in public enterprises which would enable the transparency of their work, independence and accountability in business, and prevent corruption.

Sarajevo, 27th March 2018 – Transparency International in Bosnia and Herzegovina (TI BiH) organized a regional conference entitled How to strengthen good governance of public enterprises?, at which it presented findings and recommendations of the transparency, accountability and integrity of public enterprises analysis, conducted by TI BiH on a sample of 100 public enterprises in BiH.

TI BiH findings showed that the transparency of public enterprises in regard to organizational structure, information on overall business, and ownership and management structure is at very low level. On the other hand, the selection process of the members of supervisory boards and board of directors is highly politicized – there is almost no practice of appointing members who are not representatives of the state capital, i.e. who are not in direct or indirect connection with the political parties that „control“ public enterprise. It is similar with the selection and appointment of persons to executive positions in public enterprises, where the procedures are regulated by legal and sub-legal acts, but still violated by the „coalition agreements“ made between leaders of political parties.

The employment process within public enterprises is extremely non-transparent, so the survey conducted by TI BiH showed that more than 50% of surveyed public enterprises do not have internal acts that provide transparency and impartiality of the employment process, while the Law on Public Enterprises does not prescribe the obligation of conducting public competitions. Almost 70% of the surveyed public enterprises do not disclose information on employment, or the structure of employees.

Even though half of the surveyed enterprises indicated to have adopted the internal anti-corruption policies, i.e. integrity plans, nearly 80% of enterprises do not disclose information on their implementation, and more than half of enterprises do not monitor their implementation.

No other anti-corruption mechanisms have been ensured – legal framework and internal procedures on conflict of interest do not provide an adequate basis for their prevention, so 90% of the enterprises surveyed have no internal mechanisms for effective prevention of conflict of interest. Laws on political parties financing do not prescribe appropriate prohibitions for the misuse of public enterprise resources in order to finance parties or provide electoral support, and the enterprises themselves have not developed internal procedures that would prevent such practice.

TI BiH warned that the analysis indicated many irregularities within the legal framework, and the lack of internal mechanisms in public enterprises which would enable the transparency of their work, independence and accountability in business, and prevent corruption. Therefore, recommendations refer to the improvement of the laws on public enterprises, and other laws that would ensure the monitoring and transparency, including the internal procedures and practices, due to the lack of which the public enterprises remain subject to corruption, political influences and abuses.

The conference and survey were implemented within the project „Strengthening Good Governance in Public Enterprises in Bosnia and Herzegovina“, supported by the United Kingdom Government. The conference was also the opportunity to present the practice applied in the countries of the Western Balkans, Croatia and Turkey, and to exchange the experiences related to the possibilities of better implementation of transparency and accountability standards, and mechanisms for strengthening integrity and corporate governance of public enterprises.