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Corruption is a problem for businesses in Slovakia. Companies cite the lack of transparency and inefficient government bureaucracy as the largest impediments to business. The Slovak Penal Code, the Criminal Procedure Code and the Specialised Criminal Act provide for the criminalization of most forms of corruption, including active and passive bribery, bribery of foreign officials and extortion. However, insufficient law enforcement negatively affects foreign companies in Slovakia. Companies report the possibility of facilitation payments and bribes in the customs, public utilities, public procurement, and judicial sectors. Facilitation payments and gifts are illegal under Slovak law, but officials in some sectors expect to receive gifts and irregular payments.
Slovakia’s judicial system is corrupt and subject to high levels of political influence (BTI 2014). Businesses investing in Slovakia complain about the country’s malfunctioning judiciary (ICS 2015), and most citizens believe the judiciary is corrupt (GCB 2013). A lack of integrity and accountability, inefficiency and the intimidation of judges are the main factors undermining the institution, leading to low-levels of trust by businesses and the public (HRR 2014). Reportedly, businesses have complained about the private sector’s influence on judicial decisions and claim that court proceedings have become a contest between people with vested interests and those with judicial connections (HRR 2014).
Property and contractual rights are generally enforceable in the courts, but the process may take years, limiting the effectiveness of proper dispute resolution. Companies demonstrate a low-level of trust in the judiciary and do not perceive the legal framework to challenge government regulations or to settle disputes to be effective (GCR 2015-2016). Foreign companies have reported cases of USD multi-million losses suffered because of the inability of the judicial system to offer reliable legal protections (ICS 2015). Slovakia has ratified the International Centre for Settling International Disputes (ICSID), the World Bank’s Commercial Arbitration Tribunal and the New York Convention on the Recognition and Enforcement of Foreign Arbitrage Awards.
Slovakia’s police force carries a low corruption risk for business. Even though most Slovaks perceive the police to be corrupt (GCB 2013), the special anti-corruption unit within the police investigates corruption and effectively prosecutes corruption cases (HRR 2014). More than half of the surveyed firms pay for security in Slovakia (ES 2013); the police does not reliably protect companies from crime (GCR 2015-2016).
Corruption represents a high risk for businesses dealing with public services in Slovakia. An overwhelming majority of surveyed businesses believe that bribery and the use of connections to be the easiest way to obtain certain public services (European Commission, Dec. 2015). Almost two in ten companies expect to give gifts to public officials to ‘get things done’ (ES 2013), and the same number of households believe that abuse and bribery are widespread among officials issuing business permits (European Commission, Feb. 2014).
Businesses also complain of inefficient government bureaucracy in Slovakia (GCR 2015-2016). Starting a business is less costly but more time consuming than the OECD average (DB 2016). Nonetheless, Slovakia eased the process by introducing court registration of businesses at a one-stop shop (DB 2016).
Corruption represents a low risk for businesses dealing with Slovakia’s land administration. Businesses complain about burdensome procedures in the process of buying land and obtaining building permits (ICS 2015), but only a very small percentage of surveyed businesses report to have given gifts to obtain a building permit (ES 2013). Almost a third of households perceive that giving and taking bribes and abusing positions for personal gain are widespread among public officials issuing building permits (European Commission, Feb. 2014).
Property rights are well defined under Slovak law (BTI 2014), but companies demonstrate little trust in the protection of property rights (GCR 2015-2016). Registering property in Slovakia is less time-consuming and less costly than the regional average (DB 2016).
In 2013, nepotism and cronyism were revealed to be widespread within the Ministry of Agriculture as friends and relatives of the Minister of Agriculture were being recruited to senior positions (NiT 2014).
Companies face a moderate corruption risk when dealing with the tax administration in Slovakia. Almost half of businesses perceive tax fraud to be widespread, and almost a quarter of citizens believe abuse of office and bribery are widespread among tax officials (European Commission, Feb. 2014). Tax rates and regulations are among the most problematic factors to business (GCR 2015-2016). Dealing with tax payments in Slovakia is more time consuming than the OECD average (DB 2016). Nonetheless, the government recently introduced an electronic filing and payment system for VAT and reduced the corporate income tax rate (DB 2016).
Slovakia’s border administration carries a low corruption risk for business. Trading across borders in Slovakia does not require any time and only one document (DB 2016). Few businesses report irregular payments in relation to exporting and importing being likely to occur (GETR 2014), while almost half of citizens believe abuse of power and bribery are widespread among customs officials (European Commission, Feb. 2014).
Corruption in public procurement is a serious challenge for companies operating in Slovakia. Almost half of business managers think it is common practice to use bribery to win contracts in their sector, while one quarter expect to give gifts to officials to secure a government contract (FS 2013; ES 2013). Likewise, more than half of businesses report losing contracts due to corruption (European Commission, Dec. 2015). Opaque tendering processes are an area of concern for foreign investors (ICS 2014). Other risks include tailor-made specifications for particular companies, collusive bidding, conflicts of interest and unclear selection or evaluation criteria (EUACRS 2014).
Slovakia’s Office for Public Procurement (PPO) is not sufficiently protected from political interference (NiT 2014); the Slovak Information Service (SIS) found that cronyism and nepotism are widespread among national, local and regional governments and state entities involved in procurement (EUACRS 2014). Indeed, companies believe favoritism is very widespread among procurement officials (GCR 2015-2016) and complain that local companies are often favored in public tenders (ICS 2015). All government contracts for public tenders are now published on the Central Registry of Contracts. Mandatory disclosure of contracts has been acknowledged to have contributed towards reduced levels of corruption, but public tendering still suffers from an overall lack of transparency and integrity (ICS 2015).
Several corruption cases relating to public procurement have surfaced in recent years (ICS 2015). Perhaps the most important of which is the case connected to the purchase of a greatly overpriced CT scanner for the Piešťany hospital won by a shell company. The case spurred public protests and resulted in the resignation of the Speaker of Parliament Pavol Paška, who is publicly perceived as the beneficiary of the shell company; the Deputy Speaker Renáta Zmajkovičová, serving also on the Piešťany hospital board; and the Minister of Health Care Zuzana Zvolenská (Tax Justice Network, Jan. 2015). To date, no prosecutions have been launched (NiT 2015). Companies are strongly advised to use a specialised public procurement due diligence tool to mitigate corruption risks associated with public procurement in Slovakia.
In one of the most important corruption cases in the natural resources sector in Slovakia, the Ministry of Environment sold Slovakia’s surplus carbon emissions at significantly below market price – at a loss of approximately EUR 47 million (HRR 2014). The quotas were sold to a US-based company, Interblue Group, which then sold the quotas to Japanese companies for EUR 8 per tonne (Slovak Spectator, Aug. 2013). The case eventually led to a closing of the Ministry of the Environment (HRR 2014). In June 2014, the prosecutor general claimed that the damages could not be connected to the sale and closed the investigation (HRR 2014).
Important anti-corruption legislation in Slovakia includes the Penal Code, the Criminal Procedure Code, and the Specialised Criminal Act, which criminalize attempted corruption, extortion, active and passive bribery, bribery of foreign officials, conflicts of interest, facilitation payments, giving and receiving gifts and money laundering. The government does not implement anti-corruption laws effectively (HRR 2014), and the number of prosecutions of corruption cases is low (EUACRS, Feb. 2014). The Conflict of Interest Law mandates public officials to annually disclose their assets and income. The punishment for receiving a bribe is up to eight years in prison and up to three years for giving a bribe (up to five years for bribery of a foreign public official), and companies face confiscation of property (GABCL, Feb. 2014). The Public Procurement Law provides for streamlined tender procedures, fair competition and transparency, and bans companies with unclear ownership or those owned by public officials from taking part in public procurements (Slovak Spectator, Mar. 2015). The compulsory disclosure of ownership does not apply to companies and subsidiaries listed on stock exchanges in the European Union, the European Economic Area or the OECD. Bidders providing false information on company ownership are subject to fines ranging from EUR 1000 to 10,000 (Tax Justice Network, Jan. 2015). The law has been criticised for violating European regulations as they ban companies residing in countries where laws do not require the disclosure of owners, and firms are not forced to reveal the ultimate recipient of profits (Slovak Spectator, Mar. 2015). The Whistleblowing Act provides for the protection of persons reporting on corruption. Access to information is provided for under the Act on Free Access to Information.
Slovakia has ratified the OECD Convention (see here for the 2014 OECD Phase 3 report on Slovakia), the Criminal Law Convention of Corruption, the Civil Law Convention on Corruption of the Council of Europe, and the United Nations Convention against Corruption (UNCAC).
In 2014, and as a response to several unfolding corruption cases, the government adopted a Rule of Law initiative. The initiative has been launched by a broad coalition of fourteen business associations and chambers of commerce, which have produced a white paper addressing the main challenges facing Slovakia: an inefficient judiciary, weak enforcement of the law and high corruption levels (White Paper: Rule of Law Initiative).
Freedoms of speech and press are protected by the Constitution, and the government generally respects these rights (HRR 2014). In some cases, the government imposed restrictions on speech and criticism it considered extremist (HRR 2014). Journalists face libel suits and verbal abuse, and judicial and government officials have been criticised for the lawsuits and the compensations sought (FotP 2015). Media restrictions in the name of privacy protection are reportedly imposed only in favor of politicians and business tycoons (BTI 2014). Journalists have revealed significant cases of corruption (BTI 2014). Slovakia’s media environment is described as ‘free’ (FotP 2015).
Freedoms of assembly and association are guaranteed by the Constitution and are respected in practice (HRR 2014). NGOs play an important role in the state administration: Transparency International drafted the Open Municipal project, which was designed to detect and compare levels of transparency, the quality of anti-corruption mechanisms, and municipalities’ openness towards citizens (BTI 2014). Another NGO initiative was the establishment of the White Crow award, which is dedicated to individuals involved in the fight against corruption (BTI 2014). Despite some successes, civil society leaders are skeptical of the government’s willingness to cooperate, particularly when it comes to drafting legislation (NiT 2015). A lack of financial funding is a concern for NGOs in the country (NiT 2015).
- World Economic Forum: Global Competitiveness Report 2015-2016.
- World Bank & IFC: Doing Business 2016.
- US Department of State: Investment Climate Statement – Slovakia 2015.
- European Commission: Business Attitudes Towards Corruption in the EU, December 2015.
- The Slovak Spectator: ‘New procurement law lacks teeth’, 30 March 2015.
- Tax Justice Network: ‘Slovak govt. to enact new anti-shell company law after scandal’, 14 January 2015.
- US Department of State: Country Report on Human Rights Practices – Slovakia 2014.
- CMS: CMS Guide to Anti-Bribery and Corruption Laws 2014.
- Bertelsmann Foundation: Transformation Index – Slovakia 2014.
- US Department of State: Investment Climate Statement – Slovakia 2014.
- Eurobarometer: Special Eurobarometer 397 – Corruption Report, 2014.
- Freedom House: Freedom of the Press – Slovakia 2014.
- Freedom House: Nations in Transit – Slovakia 2014.
- World Economic Forum: The Global Enabling Trade Report 2014.
- European Commission: EU Anti-Corruption Report: Annex 25, Slovakia 2014.
- American Chamber of Commerce in the Slovak Republic: ‘The Rule of Law Initiative’, December 2014.
- Transparency International: Global Corruption Barometer 2013.
- World Bank Group: Enterprise Surveys 2013.
- US Department of State: Country Report on Human Rights Practices – Slovakia 2013.
- EY: Navigating Today’s Complex Business risks: Europe, Middle East, India and Africa Fraud Survey 2013.
- The Slovak Spectator: ‘Slovakia to sell fewer greenhouse-emission credits to Spain’, 22 August 2013.
- Webnoviny: ‘Polícia pre korupciu zadržala šéfa daňového úradu’, 28 May 2013 (in Slovak).
- Transparency International: National Integrity System Assessment – Slovakia 2012.
- Bertelsmann Foundation: Transformation Index – Slovakia 2012.
- Credit-to-Cash Advisor: Slovakia Country Report 2012.
- Transparency International’s National Integrity System Assessment 2012.
- The Financial Times: ‘Slovaks protest over corruption claims’, 10 February 2012.