Abstract
This chapter explores corruption and attitudes towards it. It presents a quick overview of its origin and manifestation worldwide, as well as of the main international organisations dedicated to the fight against corruption. The core part of the chapter looks at corruption in public procurement and its most common occurrences in the various phases of the award process. Finally, the chapter comments on the specifics of this phenomenon in Bulgaria, as the example in this book of a Member State which has not yet satisfactorily dealt with this problem. The chapter offers a brief socio-historical analysis of the causes and the individual characteristics of the corruption in this country. This is crucial to the proper approach to and understanding of the substantial issues discussed here as well as to the quality of the comparison presented and the best practices highlighted in analysing the award systems and the level of corruption in the other two Member States focused on in this book (Germany and Austria).
‘Corruption and fraud are sometimes a matter of mentality.’
(Alessandro Buticce, OLAF, in an interview for the Bulgarian TV channel ‘BNT’)
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Notes
- 1.
eg K Pashev, A Dyulgerov and G Kaschiev, Corruption in Public Procurement – Risks and Reform Policies (Sofia: Center for the Study of Democracy, 2006 ); S Stoychev, Corruption Violations in Public Procurement in Bulgaria (Sofia: Transparency International Bulgaria, 2007 ); K Pashev, Controlling corruption in public procurement: Indicators for assessing policy impact (Sofia: Management Monitoring Association, 2009 ).
- 2.
eg M Farrales, What is Corruption?: A History of Corruption Studies and the Great Definitions Debate ( 2005 ) SSRN < http://ssrn.com/abstract=1739962> accessed 21 April 2016.
- 3.
Transparency International (Website FAQs) < http://archive.transparency.org/news_room/faq/corruption_faq> accessed 21 April 2016.
- 4.
R Klitgaard, R MacLean-Abaroa and HL Parris, ‘A practical approach to dealing with municipal malfeasance’ ( 1996 ) UNDP/UNCHS/World Bank-UMP Working paper No 7 < www.bezkorupce.cz/documents/studie/klitgaard-parris-strategie-pro-mesta.pdf> accessed 21 April 2016, 1.
- 5.
JG Lambsdorff, The Institutional Economics of Corruption and Reform: Theory Evidence and Policy (Cambridge: Cambridge University Press, 2007 ) 1.
- 6.
S Rose-Ackerman, International handbook on the economics of corruption (Cheltenham: Elgar, 2006 ) xvii.
- 7.
- 8.
R Klitgaard, International Cooperation against Corruption (Finance & Development, 1998 ) 3–6.
- 9.
Except in the case of ‘according to rule corruption’, as explained by TI.
- 10.
In 2004 the United Nations Office on Drugs and Crime (UNODC) presented the 2nd edition of its Anti-corruption toolkit (< www.unodc.org/pdf/crime/corruption/toolkit/AC_Toolkit_Edition2.pdf> accessed 21 April 2016). It is one of the most comprehensive elaborations of the different categories of corruption. The UNODC categories have been used in the summary above.
- 11.
Ibid.
- 12.
Ibid.
- 13.
The political, military, and ideological barriers erected by the Soviet Union after the Second World War to seal off itself and its dependent Eastern and Central European allies from open contact with the West and other non-communist areas.
- 14.
See above (n 10).
- 15.
G Boyadjiev, E Tsenkov and K Dobrev, Corruption in 100 answers (Sofia: Civil Connection Foundation, 2000 ) 1.
- 16.
One of the first rulers to dedicate a great deal of attention to fighting corruption was the ruler of the city of Lagash, Mesopotamia – Urukagina (c. 2380–2360 BC). The Code of Urukagina is known for its anticorruption provisions and stipulated penalties. However, historical evidence indicates that his policy met with limited success.
- 17.
Kautilya and Vishnugupta.
- 18.
This was one of the main goals of the ‘Progressive Era’ in the United States, during which the idea crystallised that exposure of the machinery of government and its heads can serve as a weapon to combat corruption. In Europe, the idea of stronger government policies and the role of the elite class in constitutional governments (influenced by the Japanese intellectual leader Yoshino 1878–1933) as a reaction against corruption attracted followers in the wake of the First World War.
- 19.
Authors and seminal works from this period include: E Banfield, The Moral Basis of Backward Society (New York: New York Free Press, 1958 ); E Banfield, Corruption as a Feature of Governmental Organisation ( 1975 ) 18(3) Journal of Law and Economics 587–605; SH Alatas, The Sociology of Corruption: The Nature, Function, Causes and Prevention of Corruption ( 1968 ) 1(2) Journal of Southeast Asian Studies 142–143; M McMullan, A Theory of Corruption ( 1961 ) 9(2) Sociological Review ix; J Nye, Corruption and Political Development: A Cost-Benefit Analysis ( 1967 ) 61(2) American Political Science Review 417–427.
- 20.
See the OECD Working Group on Bribery methodology.
- 21.
‘It is the deep conviction of the authors of the corruption index that in an area as complex and contradictory as corruption there may exist a single source or survey method, to provide the ideal framework model with a sufficiently wide coverage of countries and fully convincing methodology for comparative study. That is why the corruption index is designed based on the generalised index method. That is, it is composed of reliable studies that use different methodologies and framework models and is statistically the most convincing means of recording subjective perceptions of corruption’, Center for the Study of Democracy ‘Corruption and Anticorruption’ (Sofia: Center for the Study of Democracy, 2003) < http://www.sliven.bg/doc/Announ/01.pdf> accessed 21 April 2016, 238.
- 22.
Other frequently used sources are also the EU Commission’s Special Eurobarometer Surveys, the Business Environment and Enterprise Performance Survey of the EBRD and the World Bank, the Nations in Transit survey of Freedom House etc.
- 23.
Transparency International, ‘Frequently Asked Questions’ (Transparency International Corruption Perception Index 2009) < www.transparency.ch/de/PDF_files/CPI/CPI2009_FAQ.pdf> accessed 21 April 2016.
- 24.
168 countries for 2015.
- 25.
As an international barometer of corruption, along with the Global Corruption Barometer.
- 26.
Despite the fact that the initial CPI was later supplemented by the Global Corruption Barometer based on their own sociological polls, reflecting not only the perceptions of the respondents, but also their experience of involvement in corrupt acts.
- 27.
In this sense it is completely superfluous to assessing corruption schemes in public procurement.
- 28.
In this connection see also: F Galtung, Measuring the Immeasurable: Boundaries and Functions of (Macro) Corruption Indices in C Sampford, Measuring corruption (Aldershot: Ashgate, 2006 ).
- 29.
Based on total estimated value of tenders published in the Tenders Electronic Daily (TED), according to Council (EU), ‘Annual Public Procurement Implementation Review 2013’ SWD(2014) 262 final, 1 August 2014, 5.
- 30.
Ibid.
- 31.
W Wensink and J Maarten de Vet, Identifying and Reducing Corruption in Public Procurement in the EU – Development of a methodology to estimate the direct costs of corruption and other elements for an EU-evaluation mechanism in the area of anti-corruption (prepared for the European Commission by PwC and Ecorys, with support of Utrecht University, 2013).
- 32.
Ibid, 174.
- 33.
A Grødeland, Bulgaria, Czech Republic, Romania and Slovenia: The Use of Contracts and Informal Networks in Public Procurement in Fighting Corruption and Promoting Integrity in Public Procurement (Paris: OECD Publishing, 2000 ) ch 7, 60.
- 34.
See T Søreide, Corruption in Public Procurement: Causes, Consequences and Cures (Bergen, Norway: Chr. Michelsen Institute, Development Studies and Human Rights, 2002 ) 4.
- 35.
In this respect it would be interesting to track practice following the transposition of the New Procurement Directives and (at least theoretically) the elimination of the lowest price criteria. This point is discussed in relation to corrupt intent during the award process in the following chapters of this book.
- 36.
In this context see also OECD, ‘Bribery in Public Procurement: Methods, Actors and Counter-Measures’ (OECD online publication 2007) < www.oecd.org/daf/anti-bribery/anti-briberyconvention/44956834.pdf> accessed on 21 April 2016, 19–22.
- 37.
This outcome is initially uncertain, as the contracting authority may decide to award the contract to none of the bidders. Such an outcome rarely involves corrupt practices and is therefore not discussed further.
- 38.
An inexhaustive list provided for the comprehensiveness of this section, as this topic will be the object of analysis of the next few chapters.
- 39.
Established in 681 CE.
- 40.
In this context see, for example I Bojilov and V Gyuzelov, History of Bulgaria in Three Volumes (Sofia: Anubis Publishing, 1999 ) vol 1, ch 6.
- 41.
I Elenkov, Corruption in Contemporary Bulgaria: Analytical Overview , 1998 , ch V, 2, which contains section III, entitled ‘On Bribery’ from the Ottoman Penal Code of 1857. ‘A bribe is everything which is taken and given under any name in order to reach a goal: Gifts, small or big, given under any name or pretext, are regarded as a bribe…’; ‘Where officials, appointed to offer state revenue for sale, are shown to take money from someone, or to sell state revenue at a lower price in order to fulfil personal interest although other buyers were also available, such officials shall be punished as embezzlers of state property’.
- 42.
Ibid.
- 43.
Ibid.
- 44.
ie the so called informal ‘percentage agreement’ made during the Moscow Conference in October 1944, right after the end of the Second World War.
- 45.
I Krastev, ‘How to Control Corruption in Southeastern Europe: The Case of Bulgaria in Southeast European and Black Sea Studies Sofia’ ( 2002 ) 2(1) Southeast European and Black Sea Studies 119–125.
- 46.
The policy of governmental and economic reform instituted by M. Gorbachev in the Soviet Union during the mid-1980s.
- 47.
See J Linarelli, ‘Corruption in developing countries and countries in transition legal and economic perspectives’ in S Arrowsmith and A Davies (eds) Public Procurement: Global Revolution (Alphen aan den Rijn: Kluwer Law International, 1998 ) 125–128.
- 48.
B Ellison, ‘Public Administration Reform in Eastern Europe: A Research Note and a Look at Bulgaria’ ( 2007 ) 39(2) Administration & Society 221–232.
- 49.
As described by Krastev ( 2002 ) – See above n 44.
- 50.
Completing the picture, Pashev (2006) notes as follows: ‘In the early 1990’s, when democracy and the rule of law were quite fragile, political corruption was mainly in the form of pumping resources out of the state-owned enterprises and their preparation for cheap privatisation. The newly established private businesses stood at the input and output of state-owned enterprises with the participation of the management of the latter. Against the backdrop of the underdeveloped market economy and the price liberalisation, they got the opportunity to bleed state-owned enterprises out and the state budget thanks to the soft budget constraints prior to the introduction of the currency board arrangements. Thus, the economic shock-therapy and financial liberalisation of the early 1990’s, together with the delayed structural reforms and the soft budget constraints, created opportunities for channelling assets of the public sector to privileged private groups. After the [ political and financial ] crisis in 1996–7 and the introduction of the currency board, those structures which were the main factor for the delay of the reform processes turned into major participants in the privatisation.’; K Pashev, A Dyulgerov and G Kaschiev, Corruption in public procurement – risks and reform policies (Sofia: Center for the Study of Democracy, 2006 ) 12.
- 51.
Ibid, 13.
- 52.
Promulgated in SG 26/2.4.1968, effective as of 1 May 1968, as amended.
- 53.
Art 301 Criminal Code.
- 54.
ie Art 304 et seq Criminal Code. Other examples of the Criminal Code incriminating corrupt behaviour in the wider sense are Art 282 Criminal Code ‘An official who violates or fails to fulfil his official duties, or exceeds his powers or rights for the purpose of acquiring a benefit for himself or for another, or to cause damage to another’; Art. 283 Criminal Code ‘An official who uses his official position to acquire unlawful benefit for himself or for another’; Art 224 Criminal Code ‘A person who receives a gift or other material benefit in order to give, or because he has given, to a foreign country, foreign organisation or company, or to a foreign citizen, information from which considerable damage has ensued or may ensue for the economy’ etc.
- 55.
- 56.
G Ganev, ‘Corruption and economic development in Bulgaria’ in Transparency International, Corruption in contemporary Bulgaria: Analytical overview (Sofia: Transparency International, 1998 ) 56.
- 57.
Ibid, 56 .
- 58.
Ibid, 57.
- 59.
Commission (EU), ‘Report from the Commission to the European Parliament and the Council on Progress in Bulgaria under the Co-operation and Verification mechanism’ SWD (2016) 15 final, 7.
- 60.
As a domestic complex of indexes measuring the level of corruption in Bulgaria.
- 61.
A particular example of the evaluation of Bulgaria as a country with increasing corruption in 2008 was the ‘shattering’ report from OLAF of July 2008, which mysteriously leaked to the media and was made publicly available. In this report OLAF described Bulgaria as a country which tolerated fraud, money laundering, and forgery etc. In particular it exposed the criminal activities of one organisation in Bulgaria, which was under investigation for SAPARD projects fraudulently funded with EUR 7.5 mln in cash. The report also noted that Bulgaria had injured the EU’s financial interests to a cost of over EUR 32 mln due to fraudulent and corrupt actions concerning SAPARD projects.
- 62.
The assessment scale used until (and incl. 2011) was of 0 (highly corrupt) to 10 (very clean).
- 63.
The now applicable assessment system (from 2012 on) uses a scale of 0 (highly corrupt) to 100 (very clean).
- 64.
Source: TheGlobalEconomy.com , ‘Global economy, world economy’ (2015) < www.theglobaleconomy.com > accessed 21 April 2016; and Transparency International.
- 65.
In 2011 CSD joined the UNCAC Coalition, also known as The Coalition of Civil Society Friends of the UN Convention against Corruption.
- 66.
The methodology adopted by the CMS is detailed in Center for the Study of Democracy ‘Corruption and Anticorruption’ (Sofia: Center for the Study of Democracy, 2003) < http://www.sliven.bg/doc/Announ/01.pdf> accessed 21 April 2016, 229–237.
- 67.
As of mid-2015 the Center for the Study of Democracy launched a new and additional index system for mapping of anticorruption enforcement instruments – the Monitoring Anti-corruption Policy Implementation (MACPI) tool which is ‘intended to evaluate the anti-corruption preparedness of public organisations by identifying areas of corruption vulnerability’ and actually supplements the achievements of CMS, as explained in Center for the Study of Democracy, ‘Mapping Anti-Corruption Enforcement Instruments’, Policy Brief 51 (Sofia: Center for the Study of Democracy, 2015) 1.
- 68.
Center for the Study of Democracy ‘Corruption and Anticorruption (2012–2013)’, Policy Brief 43 (Sofia: Center for the Study of Democracy, 2013) 5.
- 69.
In its Annual Corruption Assessment Report ‘Anti-Corruption Policies against State Capture’, the Center for the Study of Democracy provides an overview of the state of corruption and anticorruption in Bulgaria for the period of 2013–2014. The report is produced within the framework of the Southeast Europe Leadership for Development and Integrity (SELDI).
- 70.
‘System for monitoring of anti-corruption politics’ < http://www.csd.bg/fileSrc.php?id=22602 (2015)> accessed 21 April 2016 3
- 71.
eg JH Anderson and CW Grey, Anti-Corruption in transition 3: Who is succeeding… and Why? (The International Bank for Reconstruction and Development/The World Bank, 2006 ).
- 72.
Based on reports by Transparency International Bulgaria, the Center for Study of Democracy, the Bulgarian Public Financial Inspection Agency etc.
- 73.
See above (n 47).
- 74.
In this context see also above (n 15) 34–35.
- 75.
See above (n 1), 29–30.
- 76.
Though the study was published eight years ago and current figures will probably be slightly different, this in no way affects the conclusions drawn.
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Georgieva, I. (2017). Corruption – Definition and Characteristics. In: Using Transparency Against Corruption in Public Procurement. Studies in European Economic Law and Regulation, vol 11. Springer, Cham. https://doi.org/10.1007/978-3-319-51304-1_3
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