TALLINN, 5 January 2010 - According to the National Audit Office (NAO), local governments do not engage in systematic shaping of the organisation of work that would prevent corruption; several local governments have violated the restrictions established for officials, resulting in the risk of corruption.

Prevention of corruption calls for transparent and open government but according to the NAO most of the audited local governments did not engage in monitoring the activities of officials with the purpose of preventing corruption. They often justified this with the conviction that corruptive actions could be prevented if officials had a clear overview of each other’s activities. The situation identified in the course of the audit did not corroborate these justifications. Audit sample comprised 15 local governments of different size and location, and this enables to make generalizations regarding systematic problems.

Many audited entities had not substantially evaluated which officials are affected by the duties imposed on them by the Anti-corruption Act. The NAO found that six local governments had violated the ban on participating in a transaction with a company or other business related to them. An official of every third audited local government had violated the ban on engaging in ancillary activities beyond the scope of his position. Two thirds of local governments did not adhere to the rules of procedure established to prevent the conflict of officials’ interests. However, there are many positive examples where the abandonment of such decisions by the official was recorded in the local government’s protocol.

Inspection possibilities directed at the public by disclosing information were not ensured in the required manner in 4/5 of audited entities. However, it is worth mentioning that all audited local governments had concluded transactions with companies which the members of the local government council or the government were related to.

The NAO’s analysis revealed that among the members and officials of the local government councils and governments there are a great number of people who are related to the activities of a private company, being a member of its management board or supervisory board, or its shareholder. Such relation existed between ca 2800 people engaged in local governments and ca 4500 companies. Although the analysis was carried out before the municipal elections of 2009, the NAO is of the opinion that this number remains the same after the elections held in October, as the persons related to local governments are largely the same. NAO analysis included all members and officials of councils and rural municipality/city governments of that time, i.e. nearly 8500 people.

The NAO is extremely happy that people engage actively in business but at the same time would like to draw attention to the fact that ancillary activities of local government leaders and officials as well as their frequent participation in the activities of private companies is something that cannot be ignored upon preventing corruption in local governments.
The relations of an official with the activities of a private company are not a problem per se but it can become one if the officials’ duty to avoid banned transactions is not recognized. The risk of it happening is bigger when such a company is local government’s partner through its economic activities. Because of this, according to the NAO, local government employees must be well acquainted with the risks accompanying ancillary activities, and the measures taken to prevent corruption.

Draft Anti-corruption Act and draft Public Service Act, in the legislative proceeding of the Riigikogu at the time the audit report was prepared, focus largely on strengthening control of the public and official’s self-control. To do this, many officials and heads of agencies must significantly improve their awareness. Unlike now when heads of agencies are required to establish an organization of work that would prevent corruption, the planned Act does not impose any duties related to anti-corruption activities on the management of an agency. However, the NAO recommended that the Constitutional Committee of the Riigikogu and the Minister of Justice consider the amendment of draft Anti-corruption Act currently in the legislative proceeding of the Riigikogu, imposing on the head of the agency the duty of implementing control measures. The Minister of Justice and the Constitutional Committee concurred with this recommendation.

According to the NAO, the Minister of Regional Affairs has not paid enough attention in the scope of his functions to the development of anti-corruption control environment in local governments, and a good example of this is the fact that the execution of the 2008–2012 anti-corruption strategy has been delayed.

Background information:

According to international surveys, when it comes to corruption perception in the society Estonia’s position is not bad in comparison with other countries. In the respective assessment, Estonia is ahead of several long-term EU member states as well as our constant reference points - Latvia and Lithuania - and this implies that corruption is not an acute problem in Estonia, at least from an international perspective. However, this gives no reason for satisfaction as information on the cases of corruption or similar suspicions in state and local government agencies, often disclosed to the public, consistently reminds us that the problem exists in Estonia too.

In 2009 the corruption perception index calculated by Transparency International was 6.6 for Estonia, meaning that Estonia held the 27th place among other countries. According to the survey several older EU member states such as Spain, Portugal, Italy and Greece were behind Estonia in this list. Lithuania was 52th and Latvia 56th. New Zealand and Denmark were at the top of the list with respective indexes of 9.4 and 9.3. (Source: http://www.transparency.ee/?s=1103).

The NAO audited whether local governments use means provided by law to prevent corruption and whether local government officials have performed their duty to avoid actions and relations that could lead to the risk of corruption.

Toomas Mattson
Communication Manager of National Audit Office
640 0777
513 4900
[email protected]
 

• Posted: 1/5/2010 3:16 PM
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