Damage of Corruption

Project funded by the European Union Projekat finansira Evropska unija

Project implemented byProjekat sprovode

EU aquis in the Anti-corruption: Overview of International Anti-Corruption Standards

Londa Esadze, PhDSenior Justice and Home Affairs Expert, PLAC Project

January 30, 2014Belgrade, Serbia

Damage of Corruption

Cost of corruption exceeds by far the damage caused by any other

single crime

• World Bank – More than 1 trillion US$ is paid in bribes a year

• Asian Development Bank – Cost of corruption = up to 17% of GDP

• The harm exceeds the proceeds – US$ 1 bribes = US$ 1.7 damage

Costs of Corruption“The economic costs incurred by corruption in the EU

possibly amount to EUR 120 billion per year. This is one percent of the EU GDP representing only a little

less than the annual budget of the EU”. European Commission

http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/index_en.htm



Project funded by the European UnionProjekat finansira Evropska unija


An EU policy against corruption

Combating and preventing corruption is an integral part of the European Union’s internal and external policies:

– Internal: priority in respect of the existing Member States and also representing a key aspect of the acquis for the accession countries;

– External: priority in respect of the European Union’s approach to international relations.

What is under scrutiny from an acquis point of view?• Chapter 23 – Judiciary and Fundamental Rights/Anti-

corruption policy

• Chapter 24 – Justice, Freedom and Security



Acquis anti-corruption package

The monitoring of governmental anti-corruption activities is only possible with measurable anti-corruption benchmarks.

Challenge: corruption is a horizontal issue and no direct “acquis” covers the fight against corruption

Solution: “acquis” is packaged with the EU and international anti-corruption standards



Acquis anti-corruption package for Serbia

• Convention of 26 May 1997 on the fight against corruption involving officials of the European Communities or officials of the Member States of the EU OJ C 195, 25.6.1997

• Convention of 26 July 1995 on the protection of the European Communities’ Financial Interests: JO C 316 of 27 November 1995

• Protocol drawn up on the basis of Article K.3 of the Treaty on European Union to the Convention on the protection of the European Communities' financial interests

• Second Protocol, drawn up on the basis of Article K.3 of the treaty on European Union, to the Convention on the protection of the European Communities' financial interests



• Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector OJ L 192, 31.7.2003, p.54

• Commission Decision of 6 June 2011 – Establishing an EU Anti-corruption reporting mechanism for periodic assessment ("EU Anti-corruption Report")

• Council Decision 2008/582/JHA of 24 October 2008 on a contact-point network against corruption

• Council Decision 2008/801/EC of 25 September 2008 on the conclusion, on behalf of the European Community, of the United Nations Convention against Corruption OJ L 287, 29.10.2008, p.1.

• Council Decision 2004/579/EC of 29 April 2004 on the conclusion, on behalf of the European Community, of the United Nations Convention against Transnational Organised Crime OJ L 261, 6.8.2004

• UN Convention against Corruption, Merida 2003 • OECD Convention on Combating Bribery of foreign public officials in

International Business Transactions, of 17 December 1997;



• Council of Europe Criminal Law convention on Corruption, opened to signature on 27 January 1999; (also relevant for judicial cooperation in penal matters)

• Council of Europe Civil Law convention on corruption, opened to signature on 4 November 1999

• UN Convention against Transnational Organized Crime, Palermo December 2000

• Council of Europe Resolution (97) 24 on the Twenty Guiding Principles for the Fight Against Corruption

• Council of Europe Recommendation on Codes of Conducts for public officials (recommendation no. R(2000)10)

• Council of Europe Recommendation on Common Rules against corruption in the funding of political parties and Electoral Campaigns (rec(2003)4)



Specific objectives of the assignment •Review the legislation and standards pertaining anti-corruption in notably chapters 23 and 24 of the acquis, and in other chapters as pertinent, and Serbian legislation in this field; •Assess the state of harmonisation between the Serbian legislation in the area of anticorruption and the standards and criteria identified in the acquis chapters; •Draft a report on legal gaps and state of harmonisation between these standards and criteria and Serbian current legal framework.



Outcomes of the assignmentFINAL REPORT• Overview of the acquis’ anti-corruption instruments (EU and

international standards)• Conformity of the Serbian national legal framework with the EU and

international anti-corruption standards: main gaps and findings • Assessment of the National Anticorruption Strategy and Action Plan vs

the acquis’ anti-corruption instruments: : main findings and recommendations

• Main conclusions and recommendationsAnnex 1 – Table of concordance on the conformity of the Serbian national

legal framework with the EU and international anti-corruption standards

Annex 2 – Table of cross-cutting issuesAnnex 3 - Table of Assessment of the National Anticorruption Strategy and Action Plan vs the EU acquis’ anti-corruption instruments.



Table of Concordance

Standard Provision of the Standard

National legal provision related to the Standard

Conformity Existing gaps

Remarks



Issue STANDARD # 1

STANDARD #2

STANDARD #3

STANDARD #4

STANDARD #5

STANDARD #10

STANDARD #11

STANDARD #12

STANDARD #13

STANDARD #14

STANDARD #15

STANDARD #16

STANDARD #17

1 Definition of corruption

Article 2 (Passive corruption); Article 3 (Active corruption).

x Article 2 (Passive corruption); Article 3 (Active corruption).

Article 1 Article 2Active and passive corruption in the private sector

X(definitions of different corruption offences are provided, but no universal definition of corruption )

X (Article 1 – definition of bribery of foreign public official)

Article 2-13 contain components of definitions of active and passive briberies and trading in influence.

Article 2 (“Definition of corruption”)

Article 8.1 (definition of corruption offence)

x X x

2. Passive corruption\Passive bribery

Article 2 x Article 2 x Article 2 p. 1 b

Article 15 Article 1 (passive bribery of foreign public officials)

Article 3 x Article 8 x X x

3. Active corruption\Active bribery

Article 3 x Article 3 x Article 2 p. 1 a

Article 15 Article 1 (active bribery of foreign public officials)

Article 2 x Article 8 x X x

4. Bribery\corruption of foreign officials

Article 4 (“Assimilation”)

x Article 4 (“Assimilation”)

x x Article 16 Article 1 Article 5 (Bribery of foreign public officials);Article 6 (Bribery of foreign public assemblies); Article 9 (Bribery of officials of international organizations); Articles 10-11 (Bribery of members of international parliamentary assemblies and judges and officials of international courts).

x x x X x



The Development of International AC Standards before the UNCAC: Conventions

• 1996: The first regional convention, the Inter-American Convention against Corruption, is adopted.

• 1997: The European Union Convention on the fight against corruption involving officials of the European Communities or officials of Member States

• 1997: The OECD Convention against Bribery of Foreign Public Officials is adopted.• 1999: The Council of Europe produces two anti-corruption treaties, the Criminal

Law and the Civil Law Conventions on Corruption.• 2000: The UN Convention against Transnational Organized Crime is adopted.• 2000: recognizing the need for a global convention focused only on corruption,

the UN General Assembly authorizes an ad-hoc group to negotiate a “broad and effective” treaty that takes a “comprehensive and multidisciplinary” approach to the problem.

• 2003: The African Union Convention on Preventing and Combating Corruption is adopted in Maputo,Mozambique.



The Development of International AC Standards before the UNCAC: Soft Law

• United Nation Declaration against Corruption and Bribery in International Commercial Transactions (1996)

• UN International Code of Conduct for Public Officials (1996): principles concerning the prevention of conflicts of interest, the disclosure of assets, the acceptance of gifts, the handling of confidential information and involvement in political activity.

• Council of Europe’s Twenty Guiding Principles for the Fight against Corruption (1997)

• Council of Europe’s Model Code of Conduct for Public Officials (2000): address inter alia use of official information and public resources for private purposes and the rules to follow when leaving the public service, especially in relations with former public officials.

• Council of the European Union framework decision on combating corruption in the private sector (2003)



UN Convention against Corruption

• 2003: adopted.• 2005: comes into force after its

30th ratification in December.• Signatories : 140 • Ratifications/Accessions : 170



UNCAC Signature and Ratification Status as of 30 January 2014



Country that did not ratifyJapan, Germany (failing to address key questions such

as bribery of members of parliament and extra-parliamentary incomes), Burma, Sudan, North Korea, Syria, Côte d'Ivoire, Chad, Guinea, Somalia, Eritrea, New Zealand, Swaziland.

“The inactivity of the German government not only harms Germany’s international reputation and the reputation of the German parliament, but also the German export industry” - Peter von Blomberg, TI Germany.



Acquis Standards for Serbia: EU Convention 1997 on the fight against corruption involving officials of the

European Communities or officials of the Member States of the EU Key provisions:• Passive corruption; Active corruption; national and European public

officials; Criminal liability of heads of businesses; International cooperation, Extradition

• jurisdiction over the offences it has established in accordance with the obligations arising out of this Convention in the following cases:

- when the offence is committed in whole or in part within its territory; - when the offender is one of its nationals or one of its officials; - when the offence is committed against European or national officials or

against a member of the EU institutions who is also one of its nationals; - when the offender is a European official working for a European Community

institution, agency or body that has its headquarters in the Member State in question.



EU Convention on the protection of the European Communities' financial interests (1995)

Key provisions include:• Criminalization of fraud, criminal penalties, criminal liability of

heads of businesses and rules on jurisdiction. • Fraud affecting both expenditure “and revenue”, as well as

participating in, instigating, or attempting such conduct, must be punishable by effective, proportionate and dissuasive criminal penalties in every European Union (EU) country.

• Obstructing EU tender procedures; Favouritism; Abuse of power; Specific to EU financial interest.



Protocol to the Convention on the protection of the European Communities' financial interests

Entered into force on 17 October 2002;Key provisions:• Passive corruption actually or potentially damaging the

Communities' financial interests. • Active corruption of an official which actually or potentially

damages the Communities' financial interests. • Assimilation: national officials so as to cover similar conduct

by European Community officials



Second Protocol to the Convention on the protection of the European Communities' financial interests

This protocol entered into force on 19 May 2009.Key provisions:liability of legal persons, confiscation, money

laundering and cooperation between EU countries and the Commission for the purpose of protecting the European Communities' financial interests.



Council Framework Decision 2003 on combating corruption in the private sector

The Framework Decision calls on all EU member states to criminalize active and passive corruption in the private sector and to establish the liability of legal persons for corruption in the private sector.



OECD Convention on Combating Bribery of foreign public

officials in International Business Transactions, 1997 • The OECD Convention is exclusively focused on the supply side

of the bribery of foreign public officials and the sanctions for such activity. The Convention is an instrument which permits the OECD and its member countries to move in a co-ordinated manner to adopt national legislation to criminalise bribery of foreign officials.

• The monitoring of the Convention is carried out by the OECD Working Group on Bribery which is composed of members of all State Parties.



Council of Europe Criminal Law convention on Corruption 1999

Open to: All member states of Council of Europe and 6 non-member states (Belarus, Canada, the Holy See, Japan, Mexico, USA).

Key provisions: active and passive bribery of domestic public officials, bribery of members of domestic public assemblies, foreign public officials, members of foreign public assemblies, officials of international organisations, members of international parliamentary assemblies, of judges and officials of international courts; active and passive bribery in the private sector; Trading in influence; Money laundering; Account offences; Immunity; Corporate liability; Protection of collaborators of justice and witnesses; Confiscation, etc.

Convention is being monitored by the "Group of States against Corruption - GRECO".

Serbia: Ratified 18/12 2002. Entered into force 1 Apr. 2003.



Council of Europe Civil Law Convention on Corruption 1999

This Convention is the first attempt to define common international rules in the field of civil law and corruption.

• Requiring each Party to provide in its internal law for effective remedies for persons who have suffered damage as a result of corruption, in order to enable them to defend their rights and interests, including the possibility of obtaining compensation for damage.

• The Convention also deals with the definition of corruption, liability, contributory negligence, limitation periods, the validity of contracts, the protection of employees, accounts and audits, the acquisition of evidence, interim measures, international co-operation and monitoring.

Serbia: Ratified 09/01/2008.



Council of Europe Resolution (97) 24 on the Twenty Guiding

Principles for the Fight against Corruption General principles include:(a) raising public awareness and promoting ethical, behaviour;(b) ensuring a coordinated criminalization of national and

international corruption; (c) guaranteeing the appropriate independence and autonomy of

those in charge of the prevention, investigation, prosecution and adjudication of corruption offences;

(d) taking appropriate measures for the seizure and deprivation of the proceeds of corruption offences, as well as for preventing legal persons from being used to shield corruption offences; and

(e) limiting immunity from investigation, prosecution or adjudication of corruption offences to the degree necessary in a democratic society.



Council of Europe Recommendation on Codes of Conducts for public officials (recommendation no.

R(2000)10)The Council of Europe Committee of Ministers recommends that

governments of member states promote, subject to national law and the principles of public administration, the adoption of national codes of conduct for public officials. A model code of conduct is annexed to the declaration. Model Code address inter alia use of official information and public resources for private purposes and the rules to follow when leaving the public service, especially in relations with former public officials.



Council of Europe Recommendation on Common Rules against corruption in the funding of political parties and Electoral

Campaigns (2003)

Establishes the rules against corruption in the funding of political parties and electoral campaigns.

Common rules are reproduced in the appendix to this recommendation.



UN Convention against Transnational Organized Crime, Palermo December 2000

• The Convention deals with the fight against organised crime in general and some key activities in which transnational organised crime is generally involved, e.g. money-laundering, corruption and the obstruction of justice.

• The Convention address corruption in 2 articles: Article 8 - Criminalization of corruption and Article 9 - Measures against corruption.

• The key points of the Convention are comprehensive regulations covering mutual extradition of suspects as well as international legal assistance in the prosecution of criminals. Further individual regulations cover such matters as victim and witness protection, police collaboration (exchange of information, training, technical assistance) as well as prevention measures.



The United Nations Convention against Corruption 2003UNCAC highlights:• covers all regions;• tackles the responsibilities of developed, as well as developing countries;• focuses on the prevention of corruption, not just its criminalisation;• covers private as well as public sector corruption: bribe-payers and bribe-

takers; • outlaws the payment of bribes to foreign public officials, going beyond a

similar prohibition in the OECD Convention and covering new trading powers such as India and China;

• identifies as a priority the return of stolen assets to their country of origin and requires the prevention and punishment of corruption-related money laundering;

• strengthens transparency, accountability and participation in public decision-making;

• calls for financial and technical assistance to developing countries for UNCAC implementation.



Structure of UNCAC: consists of 8 chapters and 71 provisions



The UNCAC “language”• Many of the UNCAC provisions are not self-executing, but require

implementation through the national laws; This is generally true with respect to criminalization. In contrast, the international cooperation chapter -- as is the case with other conventions -- is predominately self-executing.

• The UNCAC is a mixture of mandatory and non-mandatory (discretionary) provisions and its language is often notably vague in many areas - gaps analyses is needed to prevent arbitrary interpretation of the Convention.

• Mandatory requirements (obligation to take legislative or other measures) – “each State party shall adopt”

• Optional requirements (obligation to consider) – “each State party shall consider adopting” or “shall endeavour to”→ States parties are urged to consider adopting a certain measure and to make a genuine effort to check its compatibility with domestic legal system

• Optional measures (measures that States parties may wish to consider) – “each State party may adopt/consider”



UNCAC: Some Weaknesses and Fears

• A mixture of mandatory and discretionary provisions.• The language is often notably vague in many areas

and the parties are often given great discretion in how (and whether) to apply particular provisions. Treat of arbitrary interpretation by the state parties.

• The UNCAC does not cover political corruption, one of the major concerns of citizens around the world. Transparency in political financing is a mere recommendation.



Chapter III: Criminalization and Law Enforcement

Mandatory Offences

Bribery of National Public Officials (Art. 15)Active Bribery of Foreign Public Officials (Art.16, para.1)Embezzlement, Misappropriation or Other Diversion of Property (Art. 17)Laundering of proceeds of crime (Art. 23)Obstruction of Justice (Art. 25)Participation in such offences (Art. 27, para. 1)

Optional Offences Passive Bribery of Foreign Public Official (Art.16) Trading in Influence (Art. 18) Abuse of Functions (Art. 19) Illicit Enrichment (Art. 20) Bribery in Private Sector (Art. 21) Embezzlement of Property in Private Sector (Art. 22) Concealment (Art. 24) Attempt / preparation of UNCAC offences (Art.27, paras. 2-3)



The return of assets is a fundamental principle of the Convention. Not only does the Convention devote a separate chapter to asset recovery, but it addresses comprehensively the impediments to effective preventive, investigative and remedial action on a global level.

There is little discretion left to States parties about this chapter. Therefore Serbian authorities are required to implement these provisions and introduce legislation or amend their law as necessary.



Recovering Stolen Assets


Project implemented byProjekat sprovode 37

10 TOP HIGH POLITICAL LEADERS AND THEIR STOLED ASSETS ($billion)

1.Ferdinand Marcos (1972–86) - Philippines: more than 55 billion2.Mohamed Suharto (1967–98) - Indonesia: 15 to 35 $billion3.Sani Abacha (1993–98) - Nigeria: more than 5 $billion4.Mobutu Sese Seko (1965–97) - Zaire: 5 $billion5.Slobodan Milosevic (1989–2000 - ) - Serbia/Yugoslavia: 1 $billion6.Jean-Claude Duvalier (1971–86) - Haiti: 0.3 to 0.8 $billion7.Alberto Fujimori (1990–2000) - Peru 0.6 $billion8.Pavlo Lazarenko (1996–97) - Ukraine: 0.114 to 0.2 $billion9. Arnoldo Alemán (1997–2002) _Nicaragua: 0.1 $billion10. Joseph Estrada (1998–2001) _Philippines: 0.07 to 0.08 $billion



ZERO TOLERANCE ON CORRUPTION!Otherwise:

Corruption is dead, Long Live Corruption!(?)

Questions, Comments, Suggestions?www.euinfo.rs/plac

http://www.euinfo.rs/plac

Damage of Corruption

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