More attention should be given to the prevention of corruption in public undertakings

Toomas Mattson | 6/7/2017 | 11:35 AM

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TALLINN, 7 June 2017– The analysis carried out by the National Audit Office indicates that many undertakings belonging to the state do not deal with the prevention of corruption systematically. Above all, this shows deficiencies in the work of the supervisory boards of the undertakings, because it’s their duty to guarantee that public undertakings make every effort to prevent corruption.

The analysis that covered all public undertakings revealed that many undertakings have not established the internal guidelines required for the prevention of corruption and that the assessment of corruption risks and raising employees’ awareness of the prevention of corruption should be given more attention. Most undertakings have not made it possible for employees to report their suspicions of corruption anonymously or determined an action plan that explains how to behave in the case of suspicions of corruption or detected cases of corruption, including how to inform bodies of law enforcement and the general public. Many undertakings have not established the conditions on which giving and accepting gifts is permitted. However, public undertakings predominantly deem the measures for prevention of corruption to be necessary and many ministries that manage shareholdings as well as public undertakings apply the best practices upon the prevention of corruption which the others should follow as an example.

According to the good international management practice, the supervisory board of an undertaking is obliged to guarantee that functioning internal control, ethics and supervision measures are implemented in the undertaking. The responses of the undertakings to the National Audit Office indicate that the internal audit units of undertakings, which report to the supervisory board, do not assess the compliance of the management board with anti-corruption procedures in many cases. Less than half of all supervisory boards receive regular overviews of the results of corruption risk assessment. The supervisory boards of only a few public undertakings present reports of the implementation of anti-corruption measures to the governing minister.

The prevention of corruption in public undertakings is not systematic, because the state as the owner of the undertakings has not developed a common understanding (policy) or agreed on who coordinates anti-corruption activities centrally and how they do it. The Ministry of Finance as the developer of the state’s holding policy has proceeded from the assumption that the Ministry of Justice is responsible for anti-corruption activities. The Ministry of Justice, however, focuses mainly on the prevention of corruption among officials and less attention was given to undertakings until the beginning of this year.

The Ministry of Economic Affairs and Communications and the Ministry of Finance have provided the undertakings they manage with guidelines for the prevention of corruption. The Ministry of Social Affairs, the Ministry of Justice, the Ministry of the Environment and the Ministry of Rural Affairs have not provided the undertakings they manage with written guidelines for the prevention of corruption.

The National Audit Office finds that the possibilities for the prevention of corruption should be given more attention than before and it is necessary to agree on who will coordinate anti-corruption activities centrally and assess the success achieved in this. In addition to the prevention of corruption among officials, more attention should also be given to the prevention of corruption in public undertakings. It must also be acknowledged that in addition to the management board, the supervisory board of a public undertaking should also take responsibility for the development and implementation of anti-corruption measures. The manager of a shareholding must make sure that anti-corruption measures have been developed and they are also implemented, i.e. the supervisory board has done its work with the expected diligence.

Background

The National Audit Office prepared the overview on the basis of the responses given to the survey carried out among the 27 undertakings fully owned by the state and the State Forest Management Centre (SFMC) and the materials presented by the undertakings. The survey was developed on the basis of the recommendations/guidelines of international organisations (the OECD, the World Bank, the World Economic Forum) and in cooperation with the NGO Transparency International Estonia. The survey was carried out in summer 2016. All of the public undertakings and RMK had the opportunity to comment on the overview and present additional information in April 2017, before the publication of the overview. Some undertakings used this opportunity and the National Audit Office took their comments into account in the final version of the overview.

As at May 2017, the state has a holding in 32 undertakings and it owns 27 of them fully. The state is also the owner of the profit-making state agency State Forest Management Centre. Public undertakings comprised ca 6.4 billion euros or ca 22% of public sector assets as at 31 December 2016 and they employ thousands of people.

Many public undertakings and RMK use and manage resources that belong to the state and the general public (e.g. forests, oil shale, real property) and/or are engaged in the provision of services to the population.

 

Toomas Mattson
Communication Manager
+372 640 0777
+372 513 4900
toomas.mattson@riigikontroll.ee
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  • Posted: 6/7/2017 11:35 AM
  • Last Update: 6/7/2017 3:29 PM
  • Last Review: 6/7/2017 3:29 PM

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