Stronger Anti-Corruption Body to Handle Shadow Economy
20 December, 2012
Stronger Anti-Corruption Body to Handle Shadow Economy
Only fully independent anti-corruption service with investigation and persecution rights may deal with shadow economic deals practiced by ex-powers that be in several directions, including non-transparent privatization and state procurements, property rights infringement and the misuse with the state budget-based funds.
The anti-corruption body of Shevardnadze’s regime had only monitoring and recommendation function. The Inter-Structural Coordination Council (ISCC) established in December of 2008 by the presidential decree of rose-government as an anti-corruption body has only preventive functions. Both turned out
ineffective as the results show.
Rose-government achieved a success to fight the petty corruption since 2004. Services which justice houses provide to the citizens, the creation of a database of civil servants’ property declarations, and the introduction of an innovative electronic system of state procurement and online governance mechanisms have enhanced the transparency of the government’s activities in some areas. But the elite corruption flourished on the other hands and risks that high rank officials may abuse power to enjoy economic benefits remain high due to legislative flaws.
The reason is lack of political will and power imbalance: strong executive and law-enforcing bodes against the backdrop of the weak parliament and court – this was the message Georgian non-governmental sector sent on December 14, 2012 at the conference closing the Anti-Corruption Week.
“Over the past years, there have been many examples of alleged cases of elite corruption privatization, licensing, etc,” Eka Gigauri, Executive Director of Transparency International Georgia, said in the interview to Georgian Journal. “I agree that the ex-power eliminated petty corruption but we had plenty of facts of power abuse that also is a corruption. Meantime law-enforcers turned a blind eye to them and practiced a selective justice - this is kind of corruption too. In the pre-election period state structures were very politicized and treated different actors differently, that also is a big problem. Therefore we find it important to adopt the balanced legal system that legal power should monitor executive power; police, control chamber and regulatory bodies should be independent and there must be an independent anti-corruption body accountable to either the parliament or primer and that will have investigation function too.”
The currently active Council embodies high-ranks officials of all units of the executive, legislative and court powers, and is headed by the Minister of Justice. The key task of the Council is to outline the anti-corruption policy and national anti-corruption strategy together with the action plan, also coordination of inter-structural activity and insurance of the recommendations provided by international organizations.
Although the Council is not an independent anti-corruption body as far as it has no own budget and personnel. Analytical Department of the Ministry of Justice incorporates the secretarial function of the Council next to the department’s other responsibilities. According to Rusudan Mikhelidze, Director of Analytical Department, Georgian anti-corruption body model is in line with the UN recommendations requiring both investigative and preventive anti-corruption bodies to operate in the country.
“There should be two [anti-corruption] bodies: one with the investigative and persecution rights that is at our Prosecutors’ office, and the second with preventive function as our Council does,” she said presuming the reason this mechanism was not effective was perhaps the political will.
Tamar Chugoshvili, Chairperson of Georgian Young Lawyers’ Association, believes the reason was the legislative loopholes enabling top officials elude accountability while they were mishandling with the state money and assets. There was a general practice of the state property divesture and the state budget mishandle through the self-governance bodies: municipalities of Tbilisi, Kutaisi and Batumi for example set up several non-commercial funds of public law entity and handed the municipality-owned [or the state-owned] property at their disposal without any privatization related procedures. These funds were involved in sundry infrastructure development projects. However to implement their task funds were implementing procurements without transparent electronic procurement system and hired operator companies without call for tenders that would be obligatory if the questioned funds’ assets would have been into the state ownership. Moreover, these funds did not disclose information how they attracted or used their financial resources.
An explicit sample of this scheme is how Tbilisi Old City Rehabilitation and Development Fund [founded by Tbilisi City Hall] misused with over GEL 288 million [allocated by Tbilisi budget in the fund] bypassing the law on state procurements. And the public is still unaware of exact disposal of the questioned sums.
Ultimately the government-affiliated businesses have been winning tenders and flourished on the expense of deteriorated competition climate and impoverishment of population.
“As a result although economy of Georgia has been growing all the time the benefits of the growth were not redistributed on the entire population. And one of the hampering reasons was high level of elite corruption, favouritism in the country. There were state- favorite funds, favorite businesses that won tenders. As a result sum and fiscal imbalance was so huge that baffled to the country’s development, to insurance competitive climate to private sector that creates jobs,” Nino Evgenidze, Executive Director of the Economic Policy and Research Center, said.
On the other hand, the presidential and governmental funds with about GEL100 million totally and created to finance emergency needs have been spending twice and trice more than the officially declared budget on entertainment activities and needs that still remain unclear to publicity. Under the excuse to manage with the state property more effectively government used to hand valuable assets to private investors for symbolic price of GEL 1 but did not monitor the further implementation of the contracts that also smells by elite corruption, experts presume.
To make anti-corruption fight effective in Georgia non-governmental watchdogs recommend transforming the currently active Council into completely independent body with the extended rights on investigation and persecution as the best world practice suggests as the most relevant model to countries with transitional economy and fledgling democracy.
Aleksandre Baramidze, Deputy Minister of Justice, agrees with the trumpeted shortcomings in the anti-corruption mechanism and swears new government is intent to solve the problem. However he reminds that most changes aimed to make anti-corruption body independent require constitutional amendments that cannot be done too soon. Meantime, he finds apt to work with the currently active Council to make it more effective and go ahead with open discussion over the suggested independent anti-corruption model.
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