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Serbia - Corruption

Although difficult to quantify, corruption in Serbia is believed to be pervasive. Serbia ranked 80 of 174 countries in the 2012 Corruption Perception Index survey compiled by Transparency International, an international, anti-corruption watchdog organization. Serbia's ranking improved compared to 2011 (86th place).

In an effort to combat corruption, the Serbian National Assembly in 2008 approved the creation of an Anti-Corruption Agency (ACA). The ACA began functioning on January 1, 2010 as an independent governmental body accountable to the Serbian National Assembly. The ACA is charged with unifying current anti-corruption activities, including: enforcing the National Strategy to Fight Corruption; monitoring conflicts of interest; tracking politicians' property and assets; monitoring political party financing; and facilitating international anti-corruption cooperation.

During 2012, the ACA continued filling vacancies and hired a number of highly qualified experts. The ACA suffered a setback in November 2012, however, when its first Director, Zorana Markovic, was dismissed in the wake of allegations of abuse of authority arising from the purported misuse of state-owned apartments. The ACA managing board selected a new Director, Tatjana Babic, in January 2013. Babic had served as the ACA's Acting Director since the dismissal of her predecessor.

The ACA played a significant role in Serbia's 2012 parliamentary and presidential elections. For the first time, the ACA verified asset disclosure forms of both former and new public officials, reviewed new public officials for conflicts of interest, and examined election financing. During the summer of 2012, the ACA compiled a series of reports on former members of the government who had failed to disclose all of their assets. The ACA also uncovered several conflict of interest cases involving Serbian public officials and referred a number of them to appropriate investigative authorities. The ACA's evaluation of election financing, however, encountered delays, and as of the end of 2012, the ACA had not produced complete results of political party financing during the 2012 elections.

Since its formation in the summer of 2012, the new Government of Serbia has made the fight against corruption a priority. The anti-corruption campaign has resulted in a number of highly-publicized arrests of prominent political figures and businessmen. In October 2012, Serbian authorities charged the minister of environment and spatial planning in the previous government and two of his associates with corruption and abuse of office in connection with construction deals in 2009 and 2010.

In November 2012, authorities arrested the former minister of agriculture and eight others on charges of corruption and suspected fraud arising out of the issuance of state grants to selected companies and the bankruptcy of a state-controlled bank, Agrobanka. An additional 19 persons were also arrested in connection with the Agrobanka case, including Agrobanka's executive board chairman. (Agrobanka allegedly issued large loans to politically connected enterprises without appropriate collateral or guarantees. The loans were never repaid, resulting in USD 369 million in losses.)

In December, authorities arrested one of Serbia's wealthiest and most powerful businessmen and his son for alleged abuses in the privatization of a road construction and maintenance company. In addition, the new government initiated an investigation of 24 allegedly suspicious privatization transactions, as recommended by the EU.

Serbia is a signatory to the Council of Europe Civil Law Convention on Corruption and has ratified the Council's Criminal Law Convention on Corruption, the United Nations Convention Against Transnational Organized Crime, and the United Nations Convention Against Corruption. Serbia is also a member of the Group of States against Corruption (GRECO), a peer-monitoring organization that provides peer-based assessments of members' anti-corruption efforts on a continuing basis.

Both giving and receiving a bribe is a crime in Serbia. Bribes by local companies to foreign officials are also criminal acts punishable by law. Corruption offenses are handled by higher courts and prosecutors' offices. On January 1, 2010, the Organized Crime Prosecutor's Office assumed jurisdiction over corruption-related offenses involving high-level public officials and cases involving more than USD 2.7 million in illicit proceeds.

The Criminal Code was amended at the end of 2012 to introduce a new corruption offense abuse of authority in relation to public procurements in response to the significant number of corruption cases in this area. The 2012 amendments also establish a distinction between abuse of public authority and abuse of private authority, making the latter a separate offense subject to criminal prosecution if it resulted in an unlawful benefit or significant damage. Serbian government officials indicate that drafting legislation to address corruption-related offenses by the private sector will be a priority in 2013.

In November 2010, the National Assembly passed amendments and addenda to the Anti-Money Laundering and Counter-Terrorism Law. Among other provisions, these amendments require banks and other financial institutions to gather data about legal and natural persons that electronically transfer money and to monitor unusual transactions. The amendments also expand the role of the Anti-Money Laundering Unit of the Ministry of Finance and Economy by vesting it with supervisory authority over a number of institutions and business, including money transmitters and factoring and forfeiting entities.

Serbia's record on transparency of the regulatory system is mixed. Many government procedures that affect investors are opaque, with limited opportunities for investors to consult with government regulators on measures affecting their businesses. For example, the Ministry of Energy, Development and Environmental Protection developed a new regulatory regime for investments in renewable energy in late 2012-early 2013 without adequate consultations with major renewable energy investors.

Recent Serbian governments have treated State-Owned Enterprises (SOEs) as political prizes to be divvied up among political parties in the ruling government coalition. SOE managers often are politicians or party activists appointed because of their political connections rather than their management skills or substantive expertise. In an effort to reverse the politicization of public enterprises and put them under more professional management, the National Assembly adopted a new Law on Public Companies in December 2012 that requires all SOE directors to be selected through a public tender process by mid-2013. The law permits an SOE director to maintain a political party membership, but bars him or her from exercising political party functions while serving as director. The new law also abolishes SOE Managing Boards, relics of the socialist period that served primarily as a means of rewarding political party members.

Following the assassination of Serbia's prime minister in the spring of 2003 by a criminal group, the Serbian government launched a crackdown on organized crime. Starting in 2008, the government passed and began implementing new legislation to strengthen the tools available to law enforcement and prosecutors to combat organized crime. The previous government increased law enforcement cooperation with other governments in the region. The government elected in 2012 has pledged to continue these efforts, and has already registered some high-profile arrests and investigations.

In September 2011, the National Assembly adopted a new Criminal Procedure Code. The Code is intended to make the criminal justice system more effective and efficient by, among other reforms, introducing prosecutor-led investigations and expanding the use of cooperating witnesses and guilty pleas. The new Code took effect in January 2012 for the specialized courts for organized crime and high-level corruption and for war-crimes cases. It is scheduled to take effect nationwide in October 2013, although it is currently undergoing some significant revisions in consultation with U.S. government experts. In November 2012, the National Assembly passed an amnesty law reducing the sentences of thousands of convicts, including many convicted of involvement in organized criminal activities.

It is impossible to understand organized crime in Serbia without being aware of it as an integral part of economical and political structures of Serbian state created during 1990s. Those who were suspected for aiding criminals in different ways are also corrupted prosecutors and judges, military personnel, as well as defence lawyers suspect that they were members of the same criminal groups as their clients. Among those accused for inciting for the cruelest political murders are former Serbian president Slobodan Milosevic and high rank intelligence officers who were on duty during Milosevics regime. Many of police and intelligence service members as well as many of criminals working for the police during Milosevics rule also have long criminal history and were participating in the wars in the former Yugoslavia.

Organized crime in Serbia is frequently linked to sports hooliganism. In 2009, sports hooligans in Serbia attacked and killed a visiting French national. The government responded with a renewed crackdown on organized crime and sports clubs promoting hooliganism. In October 2010, Serbian ultra-nationalist soccer hooligans clashed with Italian police in the northern Italian city of Genoa during the two countries' Euro 2012 qualifying game. At least sixteen people were hospitalized and 17 Serbian fans were arrested after violent riots caused a 40-minute delay in the match, and then forced the game to be abandoned after six minutes of play. Serbian officials expressed concern afterwards about a right-wing extremist plot against Serbia's entry into the European Union. Security forces increased their presence substantially at all ensuing international soccer matches in Serbia. In January 2012, hooligans attacked visiting Croatian fans in Novi Sad and Ruma, resulting in several injuries, and set fire to visitors' cars in Novi Sad during the Euro 2012 handball championships held in Serbia.

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Page last modified: 20-09-2013 19:03:31 ZULU