Fraud & Corruption situation in Slovenia

1. Fraud & Corruption situation in Slovenia Mladenovič Zoran Deputy president of the Court of Audit of Slovenia

2. Structure of the presentation • Description of the fraud and corruption situation in Slovenia (main trends, actors, measures against corruption etc.) • The most important elements (institutions, laws etc.) of the fight against fraud and corruption in our country • Special law and strategy against corruption and their main elements. • The role of the Court of Audit in the fight against fraud and corruption. • The latest events in the fight against fraud and corruption in Slovenia • What our country is planning to do in the next year in the field of the fight against fraud and corruption or integrity management?

3. Fraud and corruption situation in Slovenia-1

4. Fraud and corruption situation in Slovenia - 2 The latest information available is those from the survey requested by European Comission Directorate General for Justice, Freedom and Security and prepared by European Opinion Research Group EEIG.The three key findings from this survey are: • The majority of Europeans - 78% - agree that corruption is a major problem for their country. There is a large variation across Member States ranging from a high of 95% of respondents in Greece, to 22% of respondents in Denmark. • There is widespread agreement across Europe that corruption exists in local, regional, national and EU institutions. • More than half of all respondents hold the opinion that there is widespread corruption amongst national politicians and amongst officials responsible for awarding public tenders and building permits.

5. Fraud and corruption situation in Slovenia - 3 • What are results for Slovenia? While the majority of Europeans think that corruption is a major problem in their country the result for the newer European nations is 10 percentage points higher than the overall European average of 78%. • At least nine out of ten respondents in Greece, Bulgaria, Hungary, Malta, Cyprus, Slovenia, Portugal and Romania agree that corruption is a major national problem.

6. Actors, measures against corruption_1 • Thanks to proactive media campaigns, a general public in Slovenia is getting correct perception that system of national integrity consists of several pillars (which differ in their number depending of their definition) which namely are: • all three branches of government (legislative, executive and judicial branch), • wider public sector, • Prosecution organs (General Attorney - responsibility for public prosecutions,. • criminal police), • watchdogs (Election commission, Human rights ombudsman, Anticorruption commission, Court of Audit), • Political parties, • Media, • Civil society and • Private sector.

7. Actors, measures against corruption_2

8. Actors, measures against corruption_3 Sustainable Development Pilars of integrity National Integrity System The Judiciary Political Will Public Awareness The Media Administrative Reforms “Watchdog” Agencies Anti-corruption agencies; Ombudsman; Auditor General (SAI) Parliament Private Sector People 8

9. Actors, measures against corruption_4 • The measurement of quality of individual pillars on the basis of their contribution to preventive and corrective role in fighting against fraud and corruption is being caried out by "Integrity Society“ (slo. Društvo Integriteta)the partner of the Transparency International in Slovenia which currently is preparing a comprehensive report on quality of pillars. • Apart from the fact that all pillars play equally important role in preventing fraud and corruption there is direct responsibility of Commission for the Prevention of Corruption of the Republic of Slovenia (hereafter: CPC) to further promote prevention of corruption of the Republic of Slovenia

10. The most important elements (institutions, laws ) of the fight against fraud and corruption in Slovenia_1 • Slovenia has an eight years history of specialised anti-corruption body • The current Commission for the Prevention of Corruption of the Republic of Slovenia (hereafter: CPC) has been established with the adoption of the Integrity and prevention of corruption Act of 2010 • It meets the requirement of an independent anti-corruption body as required by the UN Convention against Corruption (UNCAC) which Slovenia ratified. • The CPC is an independent state body, like the human rights Ombudsman, Information Commissioner or the Court of Audit, with a broad mandate in the field of preventing and investigating corruption, breaches of ethics and integrity of public office.

11. The most important elements (institutions, laws ) of the fight against fraud and corruption in Slovenia_2 The CPC has a wide mandatein the field of preventing and investigating corruption, breaches of ethics and integrity of public office. Its tasks, among others, include: • conducting administrative investigations into allegations of corruption, conflict of interest and illegal lobbying; • protection of whistleblowers; • monitoring the financial status of high level public officials in the executive, legislature and judiciary through the assets declaration system; • maintaining the central register of lobbyists; • adopting and coordinating the implementation of the National Anti-corruption Action Plan; • assisting public institutions in development of integrity plans (methodology to identify and limit corruption risks) and monitoring their implementation; • designing and implementing different anti-corruption preventive measures (awareness raising, training, education, …); • serving as a national focal point for international anti-corruption cooperation on systemic level (GRECO, OECD, UN, EU, …).

12. The most important elements (institutions, laws ) of the fight against fraud and corruption in Slovenia_3 • The CPC is not part of the law enforcement or prosecution system of Slovenia and its employees do not have typical police powers. • They do, however, have broad legal powers to access and subpoena financial and other documents (notwithstanding the confidentiality level), • question public servants and officials, • conduct administrative investigations and proceedings and instruct different law enforcement bodies (e.g. Anti-money laundering Office, Tax Administration, …) to gather additional information and evidence within the limits of their authority. • The CPC can also issue fines for different violations (sanctions can be appealed to the Court).

13. Special law and strategy against corruption and their main elements_1 As stated in previous slides the Integrity and prevention of corruption Act of 2010 is the main legal act establishing CPC which is responsible to prepare country strategy against corruption. The main elements of the strategy are: • Prevention and Integrity • Oversight and investigation of Alleged Corruptive Practices • Regulation of lobbying processes, • Increasing transparency of functioning of state and local government institutions,

14. Special law and strategy against corruption and their main elements_2 Prevention and Integrity • Integrity plan • Integrity plan is a tool for establishing and verifying the integrity of the organization. • Integrity plan is devoted to: • identifying relevant corruption risks in different working fields of an individual organization; • assessment, what danger corruption risks may pose to individual organization; • determining measures to reduce or eliminate corruption risks;

15. Special law and strategy against corruption and their main elements_3 Oversight and investigation of Alleged Corruptive Practices CPC tasks, among others, include: • conducting administrative investigations into allegations of corruption, conflict of interest, illegal lobbying and other violations under the jurisdiction of the CPC; • protection of whistleblowers; • collecting and monitoring the financial status of high level public officials in the executive, legislature and judiciary through the assets declaration system; • maintaining the central register of lobbyists; • operational cooperation with law enforcement and prosecutorial bodies (police, public prosecutors, courts and other state authorities) • enforcing the conflict of interest rules;

16. Special law and strategy against corruption and their main elements_4 Regulation of lobbying processes On 5th of December 2010, when the statutory provision came into force on lobbying for the first time in Slovenia (governing minimum requirements for transparency and monitoring of lobbying activities), the CPC established aregister of lobbyists.

17. Special law and strategy against corruption and their main elements_5 Increasing transparency of functioning of state and local government institutions. • Public accessibility to information facilitates debate on matters of public concern in a more argumentative way, decreases risks for illicit management, abuse of functions, and above all, limits systemic corruption, unfair competitiveness and clientelism • SUPERVIZOROnline application for monitoring expenses of public bodies

18. Special law and strategy against corruption and their main elements_6 • SUPERVIZORSupervizor is an online application that provides information to users on business transactions of the public sector bodies – direct and indirect budget users (bodies of the legislative, judicial and executive branch, autonomous and independent state bodies, local communities and their parts with legal personality, public institutes, public funds, public agencies etc.). • The application indicates contracting parties, the largest recipients of funds, related legal entities, date and amount of transactions and also purpose of money transfers

19. Special law and strategy against corruption and their main elements_7 • SUPERVIZOR"The Supervizor" can be accessed here • http://supervizor.kpk-rs.si/ • Some comments regarding the launch of the Supervizor are available at: • http://techcrunch.com/2011/08/23/slovenia-launches-supervizor-an-official-public-web-app-for-monitoring-public-spending/ • http://www.sloveniatimes.com/insight-in-public-expenditure-for-everyone

20. Special law and strategy against corruption and their main elements_8 CONTACTS WITH LOBBYISTSThe legislation requires that all functionaries, high officials and civil servants must report about EACH LOBBING CONTACT with lobbyist as well as EACH ATTEMPT OF ILLEGAL LOBBYING. REGISTER OF LOBBYISTS • A list of registered lobbyists is available on the following web site. • https://www.kpk-rs.si/en/lobbying/register-of-lobbyists

21. The role of the Court of Audit in the fight against fraud and corruption_1 FC (Fraud & Corruption) = M (Monopoly Power) + D (Discretion) – A (Accountability) In other words, the extent of corruption depends on the amount of monopoly power and discretionary power that an official exercises. Monopoly power can be large in highly regulated economies; discretionary power is often large in developing countries and transition economies where administrative rules and regulations are often poorly defined. And finally, accountability may also be weak, either as a result of poorly defined ethical standards of public service, weak administrative and financial systems and ineffective Watchdog agencies (including SAI’s)

22. The role of the Court of Audit in the fight against fraud and corruption_2 FC (Fraud & Corruption) = M (Monopoly Power) + D (Discretion) – A (Accountability) C = M + D – A(T) We believe that the currency of accountability is information, and that transparency allows accountability to work effectively; it focuses on public reporting and availability of information, with the objective of making what governments do more visible. Formula highlight that accountability itself is a function of Transparency.

23. The role of the Court of Audit in the fight against fraud and corruption_3 Responsible internal financial management is crucialto national integrity, but Court of Audit should be the linchpin of a Slovenia’s integrity system. We are responsible for auditing governmentincome and expenditure, act as a watchdog over financialintegrity and the credibility of reported information

24. The role of the Court of Audit in the fight against fraud and corruption_4 The Court is “Watching over public money” by: • Adding to financial accountability and transparency in the context of good governance for sustainable growth and equity • Promoting factors that facilitate or impede financial accountability and transparency • Enhancing the understanding of accountability and transparency as a key to good governance

25. The role of the Court of Audit in the fight against fraud and corruption_5 • Factors of SAI (CARS) Success in fighting fraud and corruption • CLEAR MANDATE • OUR INDEPENDENCE • ADEQUATE FUNDING AND STAFF • SHARING OF KNOWLEDGE AND EXPERIENCE

26. The role of the Court of Audit in the fight against fraud and corruption_6 • Factors contributing to prevention of fraud and corruption • As it is more cost effective to deter and prevent rather than to detect and investigate corruption. Prevention can only be effective if: • We consider it of high importance that our audit reports are made readily available to the public in a timely fashion. • aggressive follow-ups on recommendationsmust be effective, • recognition of fact that some programmes have more inherent control weaknesses than others (risk based approach), • Fraud indicators are usually difficult to identify, therefore higher focus on training, 26 26

27. The role of the Court of Audit in the fight against fraud and corruption_7 • Court of Audit activities to act preventively • Sound financial management and internal controls • Reliability of financial management systems is essential in preventing corruption • Focusing audit planning on high risk areas • Recommendation to legislature • Expertise in preventing corruption(exchange of information and experiences with prosecution, police authorities and parliamentary task forces) • Improving public awareness(strengthen their ties with the media) • Create a preventive environment(strengthening financial management systems, evaluating internal control systems to identify and correct weaknesses and heightening the awareness of the public to our findings)

28. 1 1 3 3 2 2 4 4 The role of the Court of Audit in the fight against fraud and corruption_8 Steps that auditor should take when increased risk Audit programs should be designed so to include audit tests for each risk indicators identified Revizijske programe sestaviti tako, da vsebujejo postopke kot odziv na prepoznane indikatorje ali izpostavljenost Prepoznatitveganapodročja Identify risk areas Test whether indicators actually confirms the existence of fraud Identify relevant risk indicators for every risk area/exposure Prepoznatiindikatorje prevarza vsako izpostavljeno področje Preiskati ali indikatorji potrjujejo obstoj prevar

29. The latest events in the fight against fraud and corruption in Slovenia_1 • CPC which has developed online web based computer application called "Supervizor" • Preparation integrity plans that are obligatory for every direct and indirect budget users and are to be produced by latest June the 5th 2012 • Slovenia has established new body for dealing with serious crimes - National Bureau of Investigation - department of Criminal Police • The Court of Audit recently successfully completed an audit where we tightly cooperated with CPC (minister of Interior stepped down) • according to GRECO report Slovenia should further strengthen transparency of political party funding

30. What Slovenia is planning to do in the next year in the field of the fight against fraud and corruption or integrity management?_1 • To strengthen the area of integrity planning, • Enhancing the operations of CPC • upgrade the "Supervizor" to provide even more intelligence information to professional users, • protection of whistleblowers, • tighter reporting on lobbying • further strengthen transparency of political party funding (Adoption of the new law is foreseen)

31. General principle in fighting fraud and corruption…. If you want NO Fraud…

32. General principle in fighting fraud and corruption …. Then you have to KNOW FRAUD!!!

33. Appreciate your attention