The pedestrian street Knez Mihailova in central Belgrade. Belgrade’s city administration reduced its costs for procurements by 62 per cent in just three years.
Photo: Vasenka Photography CC BY 2.0
Greater control of procurements reduces corruption in Serbia
Public procurement was previously an area of widespread corruption in Serbia. New audit institutions and a Sida-financed UN investment in education has reduced the opportunities for people to line their own pockets.
The public sector is a major purchaser of goods and services. A purchase is almost always better if more than one supplier is given opportunity to submit a tender and the buyer can compare price and quality.
But in Serbia it has long been common practice among officials to circumvent the law on public procurement. By dividing every purchase into smaller elements, they avoid the requirement to request tenders from multiple suppliers and can instead favour companies run by friends and acquaintances. The state audit institution has seen how purchases of goods and services have often been divided up in an illogical way.
“In several cases, the media have been able to reveal that officials and suppliers were relatives or friends. They did business with company owners they knew and lined their own pockets with some of the profits,” says Snezana Vojcic, programme officer at the Embassy of Sweden in Belgrade.
This kind of corruption is a major waste of public funds and is also inefficient since the authorities are forced to manage a large number of small procurements instead of a small number of large ones. An industry that the general public considers to be particularly corrupt is the health sector.
“This not only affects public resources but also the quality of the healthcare received by citizens. There are examples on how inferior suture thread was broken down too quickly, which had an adverse effect on the healing process after an operation,” says Snezana Vojcic.
Great will to put a stop to corruption
But in recent years, Serbia has created several new institutions for procurement and audit as part of the country's rapprochement with the EU. Employees at the new institutions and the Serbian public share a great will to put a stop to the widespread corruption. The Ministry of Finance and entrepreneurs’ organisations are also requesting fair competition for public contracts.
“The newly formed institutions do not only want to be a mere product on paper, but they are fighting to become respected institutions, both by authorities and by the general public. At the same time, the general public is extremely tired of the situation, and several opinion polls indicate that corruption is seen as the biggest problem in society.
This led to the creation of Advancing Accountability Mechanisms in Public Finances, a project run by UNDP in 2014 and 2015 with financing from Sida.
An important part of the project was to change the attitude of officials so that they understood the responsibility that came with their position. They also needed better knowledge of what the law on public procurement requires of them. In addition to training more than 1000 procurement officials, training was also given to employees at the state procurement authority and the national audit authority. Besides this, 60 new auditors were certified. 170 judges and prosecutors were also trained.
The audit authority also gained access to new software that made it possible to analyse data up to 50 times faster than before, and conducted workshops for public employees in almost all Serbian municipalities. The project also included support for investigative journalists digging into corruption cases.
Costs reduced when more companies can submit tenders
The investment yielded quick and clear results. In 2013, only 66 per cent of all public purchases were exposed to competition. In 2015, the proportion was 89 per cent. The capital Belgrade’s city administration reduced its costs for procurements by 62 per cent.
“The corrupt became aware that there were guard dogs, both auditors and journalists. Two mayors resigned as a result of publicised corruption cases,” says Snezana Vojcic.
In a newspaper interview, the Auditor-General has also stated that neither he nor his auditors have been subjected to pressure or negative comments due to their work.