Trade Secrets of Public Enterprises: Paradoxes of Practice in Montenegro

The 2017 Montenegrin Law on Free Access to Information introduced the concepts of trade and tax secret as the grounds for restricting access to information. Montenegrin legislation does not contain a single definition of trade secret, leaving room for the abuse of this concept. 

In an attempt to shed light on this issue, we focus on the state-owned enterprises (SOEs), which remain a neglected segment of public finance management, although one that accounts for a significant share of public spending and overall economy. Although there are no official aggregate data on the number of SOEs in Montenegro, the IA put together the list of 37 enterprises in which the state had majority ownership in 2015; while the latest Ministry of Finance data from 2019 include only 32. The 21 companies whose data were available on the Tax Administration portal had 5,286 employees in 2018 and paid more than EUR 70 million in wages. Almost one-half (9 out of 21) recorded losses totalling EUR 8 million in the previous year. 

Aiming to address the issue of the scope of trade secrets of public enterprises, we started by gathering the publicly available documents (articles of association, rulebooks on trade secret) and filing 24 additional requests for free access to information, in order to consult the otherwise unavailable Management Board decisions or other internal regulations governing trade secret. The first section of this document provides an overview of the categories of information that are most frequently declared trade secrets by the Montenegrin “public” enterprises. The next section contains the analysis of the collected data in the light of the international standards. In the final section, we highlight the need for more specific regulation of trade secret in the Montenegrin legal system, along with the need for detailed specification of exceptions i.e. the categories of information that the enterprises in which the state or local self-governments have majority ownership must not declare trade secrets. 

Curbing the executive bias in EU enlargement policy for a stronger democracy in the Western Balkans

Almost two decades have passed since the countries of the Western Balkans (WB) began their way on the European integration process. From today’s perspective, however, the region’s prospects of achieving EU membership in the foreseeable future appear rather grim.

This policy brief zooms precisely on this “executive bias” – the focus of the region’s EU integration process based largely on dialogue between elected governments, with insufficient involvement of parliaments and wider society. It contends that meeting membership criteria and securing the irreversibility of reforms post-accession is only possible if the ownership of reforms in aspirant countries is extended beyond the executive branch of power. It also offers recommendations towards building more substantive involvement of national parliaments and civil society in the EU integration process.

Special State Prosecutor Rutović rejects criminal charge against Judicial Council

The Special State Prosecutor, Mr. Veljko Rutović, rejected the criminal charge submitted by the three non-governmental organisations the Human Rights Action (HRA), Network for the Affirmation of the NGO Sector (MANS) and Institute Alternative (IA) on 13 September 2019 against members of the Judicial Council of Montenegro based on suspicions that, in July 2019, the Council’s members committed criminal offences by grossly violating regulations in the process of selecting candidates for judiciary positions in the basic courts of Montenegro by public contest (No. 01-2491/19-30). The NGOs believe the Council’s members committed the following criminal offences: Misuse of Office (Article 416 of the Criminal Code (CC)), Malpractice in Office (Art. 417 of the CC), Trading in Influence (Art. 422 of the CC), Counterfeiting Documents (Art. 412 of the CC) and Violation of Equality (Art. 159 of the CC).

The charge was rejected by a formalistic statement (“there is no reasonable doubt that the perpetrators have committed the alleged offenses or any other criminal offense that is prosecuted ex officio”) without further reasoning.

The Special State Prosecutor’s Office has not contacted the NGOs, nor the proposed witnesses, nor did it provide any information about taking any action in order to verify allegations from the criminal complaint.

It is worth noting that the complaint by NGOs highlighted gross violations of procedure for appointing judges, particularly regarding conducting and evaluating interviews, and preventing conflicts of interest especially regarding Vesna Medenica, the president of the Supreme Court, who evaluated the written test and interview of her counselor, of a daughter of her best friend – maid of honor, and of the son of her long-time deputy in three positions. The examination was conducted improperly and positive interview scores were arbitrarily assigned, thereby damaging the candidates who were not selected as well as the public interest for objective and lawful appointment of judges.

HRA, MANS and IA will file a complaint to the Supreme State Prosecutor for review of the decision by which the criminal charge was rejected. In spite of all the circumstances, we will nevertheless continue to take all necessary actions that should lead to adequate reactions of the state bodies administering the rule of law.

The announcement from the Special State Prosecution Office is available here.

Human Rights Action (HRA), Tea Gorjanc Prelević, Executive Director
Network for Affirmation of NGO Sector MANS, lawyer Veselin Radulović, legal representative
Institute Alternative, Stevo Muk, President of the Managing Board

Rule of law in the Western Balkans: Necessary steps ahead

Establishing the rule of law remains a key challenge in the Western Balkans and represents one of the greatest obstacles in the EU accession process of the six countries of the region (Albania, Montenegro, North Macedonia, Bosnia and Herzegovina, Kosovo and Serbia).

Rule of law: stagnating or backsliding

While the EU’s membership conditions in this area have become stringer than in any previous enlargement round, and despite the EU’s employment of a more sophisticated monitoring mechanism, the actual performance of these countries on rule of law matters is rather modest. In fact, the countries are either stagnating or backsliding, a trend that has not only been confirmed by the reports from the European Commission, but also other independent indices like the Freedom House index.

This event will discuss the key challenges faced by countries in the Western Balkans in the area of rule of law and experiences in implementing relevant reforms especially in areas such as the fight against corruption and organised crime, the judiciary and freedom of speech.

It brings together experts from the Think for Europe Network – Institute Alternative (Podgorica, Montenegro) and European Policy Centre (Belgrade, Serbia), the Clingendael Institute (The Hague, Netherlands) and their networks, diplomats, politicians, policy and decision-makers rule of law in the western balkans: necessary steps ahead, and other practitioners. It is a public event, aimed at facilitating and encouraging public discussion.

Programme (17 OCT 2019 13:00 – 16:45)

13:00 – Registration and coffee (Hall)

13:30 – Developments in the Rule of Law in the Western Balkans

  • Anne Mulder (Member of Parliament and rapporteur Western Balkans for the Parliament)
  • Dina Bajramspahic (Research Director, Institute Alternative, Montenegro)
  • Wouter Zweers (Research Fellow, Clingendael Institute)

15:00 – Coffee Break

15:30 – Free Media and the Freedom of Expression

  • Dragana Bajic (Researcher, European Policy Centre, Serbia)
  • Janneke Fokkema (Netherlands Ministry of Foreign Affairs) 

16:45 – Informal reception            

The event will be moderated by Louise van Schaik (Head Europe in the World, Clingendael Institute)

The Clingendael Institute and the Think for Europe Network (TEN) are jointly organising this event.

Local authorities should not ignore citizens’ requests

The Coalition for Transparency and Fight against Corruption at the Local Level (KUM) supports the efforts of non-governmental activists and citizens of Ulcinj to protect the Pine forest area and urges the Ulcinj local authorities to respect the voice of its citizens, but also to act responsibly towards the resources of this municipality.

We recall that the citizens of Ulcinj did not have timely information on plans and attempts to repurpose the area of ​​the Pine forest by the municipality of Ulcinj. Spatial-urban development plans (SUDP) of Ulcinj, through non-transparent process, intended this area for tourism and drafted Detailed urban development plan (DUDP), but it received negative opinion from the Audit Committee (12/06/2019). Consequently, it was not adopted by the local parliament within the legal deadline. Also, during almost nine years of working on the SUDP and two public debates, the Pine Forest was not mentioned, but other areas such as Velika plaza, Salina, Ada Bojana, Valdanos, Sas and Liman/Maslinjak were in focus. Although the valorisation of the Pine Forest was envisaged, it was not clear to what extent it would develop, except the part related to the construction of the new Hotel Galeb (on the site of the old hotel), which was supported by the citizens because that hotel used to represent one of the symbols of tourism.

In April this year, one person from the region was building a “restaurant” in the only widening of the Pine forest, and another one even entered with a dredge as he claimed to “clean his property”. The response of the citizens of Ulcinj to this was organization of the protest with request for the municipal authorities to put permanent moratorium on the entire area of the Pine Forest. Protests were held on 7 and 23 May 2019, next to the Ulcinj Municipality building, and citizens on that occasion submitted a request to initiate the formal protection of the Pine Forest. Unfortunately, the municipal authorities did not even respond to their own citizens. Dissatisfaction of citizens, as well as non-governmental organizations, has become actualized after publication of the information that the Government of Montenegro has made the Decision on drawing up DUDP of “Pinjes – Pine Forest”, as well as the Decision on drawing up the DUDP of “High class hotels and villas “, also on Pinjes. It was a sign that the municipality of Ulcinj, contrary to the expressed attitude of citizens and the public interest, requested the Ministry of Sustainable Development and Tourism re-drafting of the Pine forest DUDP. The citizens of Ulcinj continued to express their dissatisfaction through social media, which was intensified upon the release of information that an agreement on ceding the land (8000m2) had been reached between the Government and the Municipality of Ulcinj for unblocking of municipal account. Then the new protest was initiated in front of the municipality and the request, signed by 300 citizens, was submitted through the municipal archive to protect the Pine forest. The municipality responded by publishing an unsigned press statement and attempt to discredit the prominent activist, Zenepa Lika. The attack was factually unfounded, which our colleague Lika proved, but it indicated that the civil protest had surprised and appears that, only for a while, scared the Ulcinj authorities. As a reminder, the municipality forbade citizens who protested to connect sound system in the municipal building, which these same citizens pay.

The Coalition KUM expresses concern over the fact that municipal authorities in Ulcinj persist in completing this process, despite clearly expressed citizens’ opposition, as indicated by today’s statement of the President of the Municipality, who announced upcoming payment of funds to the Municipality of Ulcinj by the Government, and for which the Municipality of Ulcinj will sacrifice even the Pine Forest – its only green area in the heart of the city and kind of “open treatment centre ” for the citizens of Ulcinj.

Local authorities should listen to the voice of their citizens and not grossly ignore citizens’ initiatives, especially not those that are aimed at protecting the resources of the municipality itself and which are in the public interest.

The Coalition for Transparency and Fight against Corruption at the Local Level (KUM) consists of 18 CSOs as follows: Centre for Civic Education (CCE), Center for Monitoring and Research (CeMI), UL-Info from Ulcinj, Institute Alternative (IA), Za Druga from Petrovac, Center for Development of Non-Governmental Organisations (CDNGO), Juventas, Bonum from Pljevlja, Active Zone from Cetinje, Democratic Centre of Bijelo Polje, Centre for Investigative Journalism of Montenegro (CIJ MNE), Union of Doctors of Medicine of Montenegro, Centre for Security, Sociological and Criminological Research “Defendology” from Niksic, Monitoring Group Ulcinj – MogUL, Centre for Political Education from Niksic, NGO Da zazivi selo from Pljevlja, Monitor’s Centre for Democracy and Media (MCDM) and Association Dr Martin Schneider-Jacoby from Ulcinj NGO.

The Coalition was formed within the framework of the project “Let’s Put Corruption into Museum!” implemented by the CCE in cooperation with partners and with the support of the EU Delegation to Montenegro and the Ministry of Public Administration of the Government of Montenegro. The views expressed in this announcement are the sole responsibility of the Coalition KUM and do not necessarily reflect the views of the EU and the Ministry of Public Administration.

Agency will not act against Bošković: Law does not apply when money comes from abroad

Agency rejected a IA’s request to initiate the procedure against the Minister of Defence Predrag Bošković, suspecting that he had an illegal income of at least 62 000 euro as an official of international handball organisations.

Agency rejected the request as unfounded, claiming that the Law on Prevention of Corruption does not apply to international bodies.

Because of this decision, IA announced it will file a lawsuit to the Administrative Court as well as and ask the Council of the Agency to get acquainted with the case and request that its director initiates the procedure in accordance with the Law.

IA points out that minister has been illegally making money over last three years as Vice President of the Executive Board of European Handball Federation (EHF) and member of the Executive Board of International Handball Federation (IHF).

Article 12 of the Law of Prevention of Corruption says that a public official shall not be a president or member of the management body or supervisory board, executive director, member of management of public companies, public institutions or other legal entities. On the basis of membership in the managing or supervisory bodies, public official cannot legally generate income or other compensation.

In the last regular annual asset declaration, Bošković reported receiving 25.000 euro as vice president of EHF, and just over 8.700 euro as a member of the IHF in the last year.

IA claims that the legal norm does not allow different interpretations and that the Law does not distinguish between domestic, foreign and international sports associations.

However, the decision signed by Agency’s Assistant Director Savo Milašinović states that was the reason for rejecting the Institute’s request.

Milašinović also explained that IHF is a non-profit association whose headquarters is in Basel and is therefore a subject to Swiss law.

IA’s Stevo Muk said its unclear how Agency made the conclusion that Article 12 does not apply to these organisations because the Law did not specify any exceptions that would apply to a foreign, international, non-profit organisation.

“If the Agency’s legal position was lawful and justified, it would be a lesson to public officials that through the establishment of non-profits with headquarters outside Montenegro, they could generate additional income, without the Agency opening any conflict of interest proceedings and without breaching the law ”, warned Muk.

He added that the case is clear, but the Agency’s decision is a continuation of its illegal practice of protecting public officials.

Agency rejected the case, although by the Law it could only do so if the initiative was incomplete, in which case it was legally obliged to call upon IA to amend, which the Agency did not do.

On the other hand, it is clear from the content of the ruling that the Agency has engaged in the assessment of the facts or the merits of the legal issue, Muk said.

“It’s obvious that Agency was directly acquainted with the internal acts of the EHF. Otherwise, why did it have to prepare official translation of its acts, determine by legal analysis the meaning of the relevant provisions as well as to become acquainted with the legislation of Switzerland (for example the Civil Law which it mentions in the decision. It is clear that the Agency engaged in an assessment of the facts of the case in question without having opened proceedings under the Law on Prevention of Corruption. Such conduct is not in accordance with the Law, and does not have a basis in Law on Administrative Procedure”, Muk said.

“When already engaged in the collection of data and facts relevant for decision-making, Agency had to formally open the procedure and invite Bošković to make his statement, which it “may have done, but there is no information about that in the decision”, Muk said.

Author: Miloš Rudović, Vijesti
Article originally published in daily newspaper Vijesti, as well on its web portal.