Posted on

Blog: One Hundred Days of the “Envelope Affair”

The envelope that contained EUR 97,000 is just the tip of the iceberg. The visible part. The part that was recorded. Others did not record similar instances. Or they are still not in the same position as DK. But we have seen plenty already in the audio and video recordings of NGOs and political parties, showing polling-day party headquarters where money is distributed, given and taken in exchange for the votes…

One hundred days have passed since the publication of the recording which showed Dusko Knezevic handing an envelope with EUR97,000 to his schoolmate Migo Stijepovic “as agreed with Milo Djukanovic”. It is time for reminders and some provisional reckoning.

What about accountability? The result of all the political, media, civil and other reactions, urges, appeals and demands is very modest – no political accountability, or criminal liability, or civil-service or ethical responsibility has been established in the course of an institutionalised process. How meaningful is the fine imposed by the Agency for Prevention of Corruption? Not really. Which political party would not go for winning the election with the help of an envelope, if the fine is equal to what the boss and his company spend on a night out?

Detail from the recording published by Duško Knežević

Where is the key protagonist? At the time, Migo Stijepovic was the Mayor of Podgorica; he was and still remains a member of the DPS Presidency, and is still Secretary General to the President of Montenegro, appointed by the President himself. He has not been dismissed (from either the party or the service), nor is he likely to be.

Everyone – apparat from the activists loyal to the regime, police officers, Anti-Corruption Agency staff or prosecutors – has been aware for decades that the money coming from tycoons and organised crime has been misused to fund DPS, mainly for vote buying.

 

The envelope that contained EUR97,000 is just the tip of the iceberg. The visible part. The part that was recorded. The others did not record similar instances.  Or they are still not in the same position as DK. But we have already seen plenty in the audio and video recordings of NGOs and political parties, showing polling-day party headquarters where money is distributed, given and taken in exchange for the votes…

That is why the whole point about the envelope case is that it is not an isolated incident, as has been suggested by Tarzan Milosevic, DPS Director, and Sreten Radonjic, Director of the Agency for Prevention of Corruption. Thus, Tarzan Milosevic, speaking in the Parliament on 21 February this year, said:” Our party President and leadership were not cognizant. This was not standard practice; this was an incident. If this proved to have been standard practice, I would leave this office the next day”.

Milo Djukanovic was much more open when he said:” This was done by many business people, including Mr. Knezevic. There is no dispute about it. It all arrived to the appropriate address at

the Democratic Party of Socialists, meaning at the DPS accounting department. It was duly recorded there, and the required reports were prepared for the purposes of the state authorities.”

Djukanovic’s statement gives rise to the conclusion that” our party President“ was quite cognizant of such transactions and that records existed of other donors and donations.

In particular given what Djukanovic said at the same press conference in February this year: “What I can tell you with certainty is that it is not true that the amount of money given was the one mentioned by Mr. Knezevic…”

This Djukanovic’s statement shows that he was well aware of the transaction. Common sense instructs us that one can either be aware of the transaction and certain of the amount agreed to be handed by Knezevic to Stijepovic, or unaware of the transaction, as Djukanovic claimed earlier, therefore also unaware of the amount.

Katnic says he has not interviewed Djukanovic ”since the facts that could be obtained by interviewing Djukanovic had been obtained otherwise”, meaning from the interview with Migo Stijepovic after he ”climbed down the chimney into the Special Prosecutor’s Office”, and the interviews conducted with his fellow party members from the DPS local committee of Zeta, and financial documents seized from the DPS local headquarters in Zeta. All that Djukanovic has said indicates that not just he, but the entire DPS party headquarters had to be interviewed  and documents seized from the very headquarters of DPS in order for the prosecution to arrive at the answer to the key question: who has been funding DPS and what amounts have been provided over the years, without any official disclosure?

Otherwise, it will be clear that the Special Prosecutor’s Office is toeing the line of DPS defence strategy, in order to establish that the “envelope” was an isolated instance, an incident or a mistake made by naïve or forgetful marginals from the party organisation who will ultimately (if at all) face sanctions which will be light, conditional and bearing no serious consequences.

What is the moral of the story? The moral is that (even the best) law on the financing of parties and campaigns is a weak instrument in tackling their cash financing. Nobody is a fool to publicly and officially admit to state institutions receiving any illicit funds. Moreover, it is certain that ”the most compliant of all the parties“, following the developments described above, will devise new mechanisms and methods to collect, distribute and conceal the “envelopes“.

This is why only a professional Special Prosecutor’s Office, applying its methods, including secret surveillance techniques and complex police-prosecutorial actions, can be successful in tackling the influence of the cash coming from (local and international) tycoons and (local and international) organised crime.

A number of people can attest that in the Spring of 2016 I personally suggested to Katnic and Ivica Stankovic an operation named ”Tape 2016“, acting on the hints that had been publicly available for years and decades and all led to the same place (DPS), in order to make sure that such practices were subject to prosecutorial investigation in the context of the 2016 election. Nothing happened in this regard, neither in the run-up nor in the aftermath of the election. This is why it is essential that the Prosecution Service is “aired”, so that the key positions can be assigned to people who are competent and ready to break the silence of the institutions and prevent the “envelopes” from impacting the 2020 election.

In the new circumstances, the Supreme State Prosecutor would prepare, on behalf of the State Prosecution Service, an Action Plan for tackling the criminal offences related to illicit financing of parties and campaigns, vote buying, which would serve as general guidance for the work of the Special Prosecutor’s Office. Anela Cekic’s forgotten diary from 2016 might serve as the basis for developing such a Plan. As part of the overall efforts towards establishing fair conditions for the election and independent Prosecution Service, the EU could provide a highly credible team of experts (from the EU member states recognised for excellence in the rule of law field) which would provide a kind of soft supervision and insight into the professionalism of the Special Prosecutor’s Office’s operation. The Supreme State Prosecutor would furnish appropriate reports on the undertaken prosecutorial actions and measures. NGOs could organise campaigns to highlight the social harm caused by the practice of vote buying, encourage resistance to such practices, support independent call centres for reporting vote buying and filing criminal complaints.

A long-term OSCE/ODIHR mission would monitor in particular the practices of illicit financing of parties/campaigns, vote buying, misuse of public funds and resources and the work of the institutions responsible for the fight against corruption and for the integrity of the electoral process.

The Agency for Prevention of Corruption, led by a new management, would implement, proactively and in a timely manner, a comprehensive range of measures and actions to identify any illicit practices, working in close cooperation with the Prosecution Service. Only such joint efforts would enable us to systematically tackle the practice that has been pushing the electoral process into lawlessness and violence and pushing the society into consecutive political crises.

Stevo Muk
President of the Managing Board

 

Posted on

Monitoring the Right to Free Assembly (2017-2018)

This study aims to present how the right to peaceful assembly is exercised and respected in Montenegro. The timeframe in this report is the year 2017, although the author is referring to the year 2018 in the cases of the direct observation of the public assemblies, as well as the case studies which are necessary to present the context as a whole.

During the 2017, 304 assemblies were notified to the police. Out of that number, 18 were “temporarily banned”. This is a significantly smaller number of temporarily banned assemblies in comparison to the previous reporting period. Spontaneous assemblies are generally policed although in practice the police officers have a rigid interpretation of the article regulating these assemblies, which leaves space for dispersing them and  ling misdemeanour charges against the citizens.

Although the Ministry of Interior has announced amendments to the legislation in the beginning of 2017, no steps have been taken to publish any proposed changes. The brutal beatings of citizens during October 2015 in Podgorica still have not been investigated effectively while the identities of police officers who have beaten the citizens remain a secret.

Of great importance was a landmark decision of the Constitutional Court of Montenegro, brought on October 24th 2018, which found that by upholding the ban of gay pride march in Nikšić, the Montenegrin Supreme Court violated freedom of peaceful assembly, as guaranteed by the Article 52 of the Constitution of Montenegro, Article 11 of the European Convention on Human Rights and Article 21 of the International Covenant on Civil and Political Rights.

Posted on

New report on the Public Finance Management Reform (PFM) Programme

We have prepared a report on on the implementation of Public Finance Management (PFM) Reform Programme, which cross-refers the official data and covers some of the less studied aspects of the PFM reform.

According to the official Government reports on the implementation of the Public Finance Management (PFM) Reform Programme, one-third of the planned activities were implemented in 2017 and 2018, however, the reports do not always explain the figures provided for some of the performance indicators.

The Government of Montenegro did not comply with the budget planning timeline, and the quality of the spending units’ requests for budget allocations, which we had analysed, is not satisfactory. Out of the 19 such requests for 2018 that we covered by our review, 10 did not include any explanatory notes concerning the requested funds.

Although the Ministry of Finance (MoF) produces monthly, quarterly, bi-annual and annual reports on budget execution, in-year reporting is deprived from detailed breakdown of expenditure per institutions, key functions and programmes.

The MoF did not use the statutory possibilities to organise public discussions on the budget. The improvement of programme budget development is lagging behind. The 2019 Budget Law does not include the set of indicators for the specific number of budgetary programmes, which should have constituted the first step towards establishing programme budgeting. Project, which was supposed to bring about improved programme budgeting started implementing in late 2018. However, initial progress was made with regard to the cost estimates of strategic documents. Comparing to less than 20 per cent of strategies, adopted in 2017, which contained the overall estimate of financial means for their implementation, in 2018 this percentage increased to 46% of new strategies providing the overall financial estimate. Still, most of the challenges remain in providing precise cost estimates for implementation of all activities envisaged by strategic documents.

In addition to the selective and insufficient reporting on the execution of the overall budget, the Capital Budget transparency was at a particularly low level. Key information on the cash flows in the construction of the Bar-Boljare highway were hidden from the public. On principle, the introduction of tax and trade secrets as the grounds for restricting access to information set back the transparency of public finance.

The harmonisation of the public procurement procedures with the EU regulations was undermined by the 2017 amendments to the Public Procurement Law. The Government showcased as a major success the increase in the tax and customs revenues. However, the State Audit Institution established that the tax arrears records in early 2017 were inaccurate and underestimated the total amount by more than €15 million.

The e-registry of state property has not been established to date. The results of the State Property Inspectorate were insufficient: during 2017 and in the first half of 2018, only 32 inspections were carried out, i.e. approximately 10 per inspector. The inspections, although infrequent, point to the alarming situation of some immovable property.

The legal framework for managerial accountability and internal financial controls was partly improved. The Law on management and internal financial controls in public sector was adopted and it entered into force in November 2018. This Law more clearly defines accountability of the heads of spending units and of persons exercising delegated authority. Still, ministers are reluctant to delegate the powers to manage funds. Only two ministries provided decisions delegating some powers to the heads of the authorities subordinate to them.

The State Audit Institution adopted its new Strategic Development Plan, Guidelines for the Final Budget Account audit and Guidelines for assessing the application of the fiscal responsibility criteria. The Strategic Development Plan, however, lacks measurable objectives and performance indicators. Our review showed a relatively low share of public administration authorities covered by the audits in 2017 and 2018.

The key steps forward in the implementation of the Reform Programme materialised with regard to the preparatory activities, mainly improvements to the regulatory and strategic frameworks.

Report on the Public Finance Management Reform in 2017 and 2018: “The other side of the coin” can be downloaded here.

Posted on

Report on the PFM Reform in 2017 and 2018: The other side of the coin

Public Finance Management (PFM) Reform is one of the umbrella processes intended to transform our public administration, help effective spending which would maximise the value-for-money, but also indirectly aid in the fight against corruption, as the areas most susceptible to corruption tend to be the ones where public funding intersects with private interests . The reform, as the backbone of good governance, is one of the key pillars of Montenegro’s accession to the European Union (EU).

According to the official Government reports on the implementation of the PFM Reform Programme, one-third of the planned activities were implemented in 2017 and 2018. However, the reports do not always explain the figures provided for some of the performance indicators; this Report, therefore, cross-refers the official data and covers some of the less studied aspects of the PFM reform.

The Report is divided into six key sections; with some exceptions, these largely match the key PFM reform areas. The Report covers 2017 and 2018, with the data available from the official reports of the responsible institutions mainly referring to 2017, and the indicators for the specific activities and decision-making of relevance for the PFM reform referring to both years.

The key steps forward in the implementation of the Reform Programme materialised with regard to the preparatory activities, mainly improvements to the regulatory and strategic frameworks, but public finance transparency was not improved. The recommendations included in this report provide a more detailed overview of the possible avenues for improvement based on the findings pertaining to specific areas.

Posted on

Only two ministries announced public discussions planned in 2019

More than half of the ministries are violating the legal obligation to publish the work programme for the current year, while only two ministries have published a list of laws and strategies to be subject of public discussions in 2019.

Planning and preparation for public discussions and consultations are one of the important preconditions for effective public participation in public policy making, especially when it comes to complex issues. In order for citizens to make their contribution, first of all they must be aware of what authorities plan to do in the current year. In this regard the Law stipulated the legal obligation for the state administration authorities and public authorities to publish work programme for the current year at their official web presentation (Article 51 of the Law on State Administration, Information on Work).

Until 27 March 2019, only seven out of 17 ministries of the Government of Montenegro fulfilled this legal obligation. The following ministries published the 2019 Programme/Work Plan:

– Ministry of Labor and Social Welfare,
– Ministry of Health,
– Ministry of Agriculture and Rural Development,
– Ministry of Public Administration,
– Ministry of Justice,
– Ministry of Science,
– Ministry of Education.

The situation is even worse when it comes to the obligation of the ministries to propose to the public a list of laws and strategies to be discussed in the current year. Namely, the Decree on the Selection of the Representatives of NGOs in Working Groups and Implementation of Public Discussions on the Draft of the Laws and Strategies stipulates the obligation of the ministries to post on their websites lists of draft laws and strategies to be subject of public discussions at the latest 15 days after the adoption of the work programme.

On this day, only two ministries publish lists of laws to be subjects of public discussions during 2019:

– Ministry of Public Administration,
– Ministry of Justice.

Taking into account “determination” of ministries to create a space for public participation, results on the number of citizens commenting on the draft documents on the eGovernment is not surprising – only two comments posted by citizens in 2018, according to Government’s official data.

The upgraded electronic public discussion service, which was launched in early March, is not enough if the ministries are not willing to enable meaningful civic participation, through timely announcement of public discussions whose implementation is expected during this year.

Posted on

They don’t know what they own, and yet they pay the rent

Property Administration spent a record amount of 4,7 million EUR for lease of objects and business premises in 2018, while the public is still unaware of the number of state-owned real estates and of the revenue accumulated from their lease or sale.

According to a research conducted by the Centre for Investigative Journalism of Montenegro (CIN CG), only in 2018 the Property Administration signed lease agreements worth about 3.6 million EUR for the needs of state administration bodies, public institutions and political parties. On the other hand, the 2018 capital budget allocated approx. two million EUR for the construction and reconstruction of the administrative space for the work of state administration bodies. In two years, only five business premises have been leased out by the state.

Although the collection of the tax debt by taking over the debtor’s assets should have lead to budget savings and to a decrease in the amount of money allocated for the lease of business premises, this did not happened. On the contrary, the expenses for accommodation of the state authorities, public institutions and political parties increased significantly in 2018.

During 2016, when the Decree on the Collection of Tax Receivables by Taxpayer Property was adopted, 2 578 688 EUR was paid from the budget for lease of space. In the following year (2017), 2 423 688 EUR was paid for the same purpose while this amount increased to 4 725 700 EUR during 2018.

Asked whether it was more profitable for the money allocated for the lease to be used for the construction of new state-owned premises or for the reconstruction of the old ones, Property Administration replied that in the previous period it undertook all the necessary activities so that all state administration bodies are settled in the state-owned premises.

In 2009, the Law on State Property obliged public authorities, state owned enterprises and municipalities to undertake assessment and precise listing of real estates in their possession and to submit those data to the Property Administration within one year. On the other hand, the Property Administration was obliged to establish an integrated registry of state-owned real estates within 90 days after the required information was delivered to them.

In 2019, the Property Administration does not even have information on the total number of state administration bodies, municipalities and state owned enterprises, and not to mention which real estates they own and who is using them.

When asked about the progress in creating registry of the state property, the Property Administration replied that the company Atos from Belgrade has completed a software solution, but for technical reasons it has not yet been released into ‘’productive work’’, and also that they expect a repair. The alleged malfunction, according to the official data of the Property Administration was also noted during the last year (2018), as well as in 2017.

Inspection of state property is insignificant. In the eighteen months, only 32 controls were carried out.

Croatia and Serbia are step ahead in registering their property

The lack of the quality registry of state property is also a problem for the countries in the region, although these countries have a property registry for years. There is an electronic property register on the website of the Property Directorate of the Republic of Serbia, which can be accessed by all its users, although it is not open for citizens as it is in Croatia. However, the Croatian register, which is on the website of the Ministry of the State Property, is not yet searchable nor it is complete.

The Property Directorate of the Republic of Serbia did not answer the questions regarding the state property records, and the amount of money that state gained from leasing its real estates.

Croatian Ministry of the State Property stated that the register was first time published on 15 January 2014: ‘’Data on non-financial (nine types of real estate) and financial (stocks and business shares) assets are currently included. The Ministry of State Property collects these data from taxpayers’’.

According to the Croatian Ministry of State Property, until October 2018 – 14 908 real estates were registered under the code of business premises. That number is not final because all taxpayers did not provide data. Croatian Ministry also stated that particular state-owned enterprise was founded in order to collect the revenues in the field. It manages 1 476 of office space units across the entire country. The 2017 Ministry’s data reveal that the state’s revenue from lease of its office space reached 50 million HRK, or 6,7 million EUR.

Montenegrin Property Administration did not provide answers to questions about how much office space is owned by the state, and how much money state earns from its lease. According to official data, during last year, the Property Administration has leased three real estates, and in 2017 only two, but it didn’t respond how much the state has earned on that basis.

Auditors warn, but with no results

In 2011, the State Audit Institution (SAI) found that state administration bodies and local self-government units failed to submit contracts they concluded for the acquisition of immovable and movable assets and of other higher-value property, although they were obliged to do so by the Law in order to keep records of their property. At that time, SAI gave a recommendation to the Ministry of Finance, as the competent body for monitoring the application of the law, to initiate misdemeanor procedures against them.

Branislav Radulović, senator who managed the audit, told CIN CG that SAI , due to the lack of an integrated registry of state property, can not confirm that the Property Administration which is obliged to keep the registry, has accurate and comprehensive data on property managed and used by the state authorities and local governments. Consequently, data on sale or lease of the property is also lacking.

‘’The SAI, through the audits of the state final budget account whose subjects were also Ministry of Finance and the Property Administration, found that the recommendations from the Report on the Audit of the Annual Financial Statement and audit of the effectiveness of the recording of the state assets of the Property Administration were not implemented. Even ten years since the adoption of the Law on State Property, the integrated registry is not established, although it was supposed to be functional by mid-2010’’, Radulović pointed out.

Property Administration has not yet implemented 11 SAI’s recommendations from the 2016 Performance Audit Report ‘’Efficiency of Collection of Tax Claims against the assets of the Taxpayer’’. Among other things, it was recommended that Property Administration should establish a database of state authorities, local self-government bodies and state owned enterprises; that it should collect multi-faceted data on state property (including legal, physical, financial and economic aspects), undertake all activities in order to register the state-owned real estates in a cadaster, with the ownership rights and powers in accordance with the law…

Radulović told CIN CG that, based on the written statement provided by the Property Administration, it can be concluded that these recommendations have not been implemented or that their realization is in progress. As a result of such situation, the state does not have complete and accurate data on the property in its possession.

He said that the SAI is currently conducting the audit ‘’Efficacy of Establishing, Keeping and Inspection of State Property Records by State Authorities’’ with the aim of determining the number of public authorities which have complied with their obligation in properly keeping and conducting adequate oversight of the registry.

‘’State auditors are now conducting field audits of the sample of entities (Ministry of Finance, Ministry of Transport and Maritime Affairs, Property Administration, Directorate for Food safety, Veterinary and Phytosanitary Affairs, Real Estate Administration and Railway Directorate). The audit will cover the period 2015 – 2018. According to the plan, the audit will be completed in the form of the final report by the end of June 2019’’, Radulović explained.

He said that the goal is to formulate recommendations based on the established facts aimed at improvement of the system of registry, control and oversight of state property.

Radulović pointed out that a pre-study research, conducted between October and December 2018, resulted in a series of information on the records of assets held by state authorities, which prompted the SAI to conduct a comprehensive audit.

According to preliminary findings, the Property Administration does not have the information on the exact number of state bodies, local self-government bodies and state-owned or municipality-owned enterprises, which are obliged by the Law on State Property to provide data on their movable and immovable assets.

‘’The authorities mainly submitted to Property Administration a tabular overview of the records of funds, while not completing the forms prescribed in the Decree on the manner of Keeping Record on Movable and Immovable Assets and the Inventory of State-owned Property. Also, the data on the records of the funds were submitted after the legal deadline. In September 2014, the Government of Montenegro established a working group for the amendments of the Decree on the Manner of Keeping Record on Movable and Immovable Assets and the Inventory of State-owned Property, in order to establish integrated registry of state property. Pre-study research of the SAI showed that Decree has not yet been amended”, Radulović concluded.

Inspection notes only minor usurpations

Milena Muk, policy researcher in the non-governmental organization Institute Alternative, said for the CIN CG that minutes of the Inspectorate within the Ministry of Finance stand as an evidence on the management of state propery.

In its report on the public finance management (PFM) reform, the IA underlined unsatisfactory performance of the inspectorate – during 2017 and the first half of 2018, inspectors were on their assignments only 32 times.

According to the report, most of these inspections (18) relate to the promptness of branch offices of Real Estate Administration, and not directly to the condition of the state property.

‘’During 2017, this inspection conducted a significant part of the inspections based on the reports of usurpation of state property. At least in seven cases, it has been noted that citizens are illegally using part of the state property, that there are unresolved property disputes, or that the buildings are ruined to that extent that, as in one case in Berane, they pose a threat to the citizens. On the other hand, it should be emphasized that there were only approx. thirty inspections for 18 months. This makes less than one control per inspector on monthly basis, which is unacceptably low compared to the value of state property’’, Muk said.

The Ministry of Finance for more than a half a year failed to answer why inspection controls are not performed more often, how it sees the findings on the neglected real estates, what it did about the inspection reports and how often inspectors control implementation of their orders. Inspection minutes, obtained by the IA, show that, for example, in Tivat citizen usurped three square meters of state land, building a storage on a parcel purchased form the Municipality, which would later be found to be state-owned. The next example shows that the inspection controlled usurped state property by a man from Nikšić municipality, by planting potatoes without knowing that the land was state-owned. In one cadastral municipality, it has been noted that the state-owned building was ruined, with cracks in the walls, and that two women use one of the state’s premises in Kotor as a garage…

Nine months last one year

Asked how she sees the fact that electronic registry of state property is not yet established, Milena Muk said that ‘’it is concerning that the job, for which the contract worth 200 000 EUR was signed in 2014 and which was supposed to be done in maximum 9 months, is not yet completed’’.

‘’Experience with other electronic public registries shows that, despite the technical preconditions, they are still not up to date due to two key failures: the lack of discipline of the users who should provide data, and the policy of no sanctions for such behavior’’, Muk said.

According to the report of Institute Alternative, only 32 bodies (14 administrative authorities, three agencies and funds, 12 independent and public institutions and three ministries submitted data on their assets to the Property Administration. However, due to the subsequent reorganization of the state administration, those data lost credibility, since some of the authorities that submitted the data ceased to exist, such as the Directorate of Youth and Sport or the Ministry for Information Society and Telecommunications.

Ana Komatina

This report was published within the project “Money Watch: Civil Society, Guarding the Budget!”, implemented by the Institute Alternative in cooperation with NGO New Horizon and the Institute for Public Finances, with the support of the European Union and co-financing by the Ministry of Public Administration. The content of this report is the sole responsibility of the author and in no way reflects the views of the European Union or the Ministry of Public Administration.