Slovenia

Slovenia Corruption Report

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Snapshot

Slovenia_249x123.jpgCorruption is a risk for businesses operating in Slovenia. The overlap between business and politics has a particularly damaging effect on public procurement. Many public officials engage in corruption with impunity, and corruption scandals recently culminated in political instability and the eventual fall of the government. Slovenia's Criminal Code establishes a strong legal framework to mitigate corruption, criminalising extortion, passive and active briberyand money laundering, among other offences. However, enforcement is limited. Even though facilitation payments, gifts and hospitality (with the intent of gaining an advantage) are criminalised, businesses perceive bribery as an established way of doing business in Slovenia.

December 2015
GAN Integrity

Judicial System

European_Commission.svg.pngCorruption is a moderate risk for companies in the Slovenian judiciary. To obtain favourable judicial decisions, bribes and irregular payments sometimes occur (GCR 2015-2016). Public opinion finds that there are not enough successful prosecutions to deter people from corrupt practices (European Commission, Feb. 2014). Slovenia's judiciary is free from political interference but is inefficient, and court backlogs have resulted in lengthy trial delays (HRR 2014). Companies consider the legal framework unreliable in challenging regulations and settling disputes (GCR 2015-2016). Enforcing a contract takes around 1,160 days, which is twice the OECD average (DB 2016). One in ten firms identify the court systems as a major constraint to doing business in Slovenia (ES 2013).

In the face of growing public frustration with corruption, Slovenia is increasing its anti-corruption enforcement and has successfully convicted several high-profile business tycoons and associates during recent years (NiT 2015). Slovenia accepts the principle of international arbitration and is a party to the International Centre for Settlement of Investment Disputes (ICSID), the New York Convention 1958 (UNCITRAL) and the World Bank's Multilateral Investment Guarantee Agency (MIGA).

Police

Corruption in the Slovenian police is a low risk for companies. Civilian authorities maintain effective control over the police through procedures to investigate corruption, and there are no reports of police impunity (HRR 2014). Almost half of citizen respondents believe abuse and bribery are widespread among police officials, yet almost none report paying a bribe (European Commission, Feb. 2014). Companies report Slovenia's police to generally protect businesses from crime and enforce the rule of law (GCR 2015-2016).

Public Services

Corruption is a low risk when obtaining public services in Slovenia. Companies do not expect to pay bribes for the administration of licences and utilities (ES 2013). One in six companies expect to give gifts or informal payments to public officials to "get things done" (ES 2013). Almost all surveyed citizens consider bribery and the use of connections to be the easiest way to obtain a public service, despite very few reporting to have actually paid a bribe (European Commission, Feb. 2014). The regulatory system is transparent for foreign investors (ICS 2015), but businesses identify inefficient government bureaucracy and the burden of government regulations as competitive disadvantages to doing business in the country (GCR 2015-2016). The procedures and time required to start a business are lower than OECD averages (DB 2016). Due to a backlog in court cases it is likely to take longer in Ljubljana (ICS 2015).

Land Administration

Companies do not expect to pay bribes to obtain a construction permit (ES 2013). Property rights are well defined under Slovenian law, and companies report that property rights are generally protected (BTI 2014; GCR 2015-2016). The procedures and time required to register property are well above the OECD average, suggesting bureaucratic hurdles (DB 2016). 

Tax Administration

There is a low risk of corruption in the Slovenian tax administration. Companies report that irregular payments and bribes are not common in relation to annual tax payments and that they generally don't expect to give gifts in meetings with tax officials (GCR 2015-2016ES 2013). The corporate tax rate is lower than in most European countries, but the time required to deal with tax payments is almost twice the OECD average (DB 2016).

Customs Administration

Corruption in the customs administration is not a significant risk for companies operating in Slovenia. The customs administration is transparent and accountable, and irregular payments in imports and exports are rare (GETR 2014). Businesses report that customs procedures - formalities regulating the entry and exit of merchandise - are generally efficient (GCR 2015-2016). Nearly half of Slovenians feel active and passive bribery and abuse of power are common among customs authorities, but almost none report having paid a bribe to customs officials (European Commission, Feb. 2014). Companies do not expect to exchange bribes or gifts in order to obtain an import license (ES 2013).

Public Procurement

There is a risk of corruption in Slovenian public procurement. Corruption has also been attributed to the small size of the country’s political and business elite, a lack of transparency and widespread cronyism and conflicts of interest (ICS 2015). Around four in ten companies believe to have lost a tender due to corruption (BATCEU, Dec. 2015). Ninety percent of businesses believe that close links between politicians and businesses represent a problem and eighty percent agree that favouritism and corruption hamper business competition (BATCEU, Dec. 2015)Irregularities in public procurement frequently involve tailor-made specifications for some companies, conflict of interest in the evaluation of bids, and collusive bidding (BATCEU, DEC. 2015). Businesses claim that public funds are sometimes diverted to companies, individuals or groups due to corruption, and that there is a high-degree of favouritism in the awarding of contracts (GCR 2015-2016). Investors considering bidding on public tenders are advised to use a specialised due diligence tool on public procurement.

Slovenia is working to address issues of corruption and non-transparent procedures in public procurement (ICS 2015). Slovenia established a government-wide Public Procurement Agency to carry out all public procurements over established EU thresholds (ICS 2015). Many political figures are currently charged with corruption in public procurement (ICS 2015). The mayor of Ljubljana, Zoran Janković, reportedly abused his power in office by benefiting his sons' businesses (NiT 2015). Slovenia’s anti-corruption commission revealed numerous financial chain-transactions had taken place between companies doing multi-million business in Ljubljana and the companies of Janković’s sons (NiT 2015). To this date there has been no conviction (NiT 2015). Following these high-profile scandals, mass protests led to the eventual dissolution of the government (NiT 2015).

Legislation

Slovenia has a strong legal framework to address corruption, but enforcement is inconsistent. Slovenia's Criminal Code criminalises attempted corruption, extortion, blackmail, active and passive bribery (including of foreign officials), facilitation payments and money laundering. If the offender is an individual, penalties for giving or receiving unjustified gifts and bribery are punishable by up to five years in prison and forfeiture of the bribe value (CMS, Sept. 2014). Companies may be fined up to 200 times the value of the damage caused or benefit obtained, confiscation, winding up of the company, debarment from participating in public procurement for up to ten years and prohibition on trading in financial instruments for up to eight years (CMS, Sept. 2014). The Integrity and Prevention of Corruption Act prohibits the receipt of gifts, bribes and facilitation payments by public officials as well as the supply of gifts, bribes or facilitation payments to government and local bodies and holders of public authorisation (CMS, Sept. 2014). The penalties for breaching the provisions include financial fines and imprisonment of up to eight years.

The government is not effective in enforcing anti-corruption laws, and public officials engage in corruption with impunity (HRR 2014). Slovenia has ratified a number of international conventions, such as the Council of Europe Civil Law Convention on Corruption, Criminal Law Convention on Corruption and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which is poorly enforced (EC 2015). It has furthermore ratified the United Nations Convention against Corruption (UNCAC). Slovenia participates in several anti-corruption initiatives, such as the Group of States against Corruption (GRECO) of the Council of Europe, the European Partners Against Corruption (EPAC) and the European contact-point network against corruption (EACN). A series of corruption scandals involving Slovenia’s former prime minister Jansa and Positive Slovenia leader Zoran Janković, coupled with the general lack of political will to tackle the mounting levels of corruption, led to the resignation of the leadership of the country’s Commission for the Prevention of Corruption of the Republic of Slovenia (CPC) in 2013 (NiT 2015). 

Civil Society

Freedoms of speech and of the press are guaranteed by Slovenia's constitution and are respected by the government (FotP 2015). Defamation is a criminal offence and news outlets and reporters can legally be compelled to give up their sources (FitW 2015). Journalists are generally free from direct political interference (FoP 2015), but exceptions have been reported: media outlets and investigative journalists can at times face punishments and threats for reporting on corruption cases involving political figures (NiT 2015). The Slovenian government respects freedoms of assembly and association. Many non-governmental organisations (NGOs) operate freely and play a role in policymaking (FitW 2015). In recent years, the government further encouraged the participation of the civil society in political processes through the publication of policy proposals on the websites of different ministries and government offices (BTI 2014). Increased public frustration and several protests have resulted in an increased effort to curb corruption (BTI 2014).

Sources

Topics: Europe & Central Asia