15.08.2009 Two years after the first Law on Conflicts of Interests started to apply, a procedure for changing and augmenting this law was instigated.  This procedure should be completed in the upcoming weeks by the adoption of the proposed changes and additions.  The objective is to have this task, related to the fifth EU accession benchmark, completed in time so that it can be included in the progress report of the Republic of Macedonia in the EU accession process in September 2009. The changes were initiated and supported by the State Commission for Prevention of Corruption as the sole institution responsible for the application of this law, which refers to conflicts of interest which are within the overall scope of corruptive activities. Namely, conflicts of interest are events that suggest a possible abuse of public positions and authorizations and thus it is dealt with as a precursor of corruption.  At the same time, a fact is that there is conflict of interest in every case of corruption, although not all conflicts of interest are corruption. The need to intervene in the Law arose from the practice that the law must become clearer and more practical and must contribute towards an efficient prevention and reduction of conflicts of interest in practice. In that context, the State Commission for Prevention of Corruption has undertaken continuous preparatory activities, involving the most relevant bodies of knowledge and experiences from the western countries, international institutions and experts from the USA, Great Britain and other countries.  In May 2008, as a result of the achievement of the benchmark for last year, the State Program for Prevention and Reduction of the Incidence of Conflicts of Interest was enacted.  This program envisaged the enactment of e guide for management of conflicts of interest, a series of trainings in multiple segments of the system and a plan for the preparation of a set of changes to the basic law.  According to the action plan stipulated in the State Program, the SCPC, at the beginning of June 2009, offered a complete proposal of all necessary interventions in the law and, as a participant in the working group, submitted the proposed changes to the Ministry of Justice.  The SCPC also participated in the public consultation held on the 31st of June 2009 in the Parliament of the Republic of Macedonia, of the National Committee for European Integrations, reviewing the proposed text by the government from the first version of its reading.  In order to fully contribute to the inclusion of its proposals in the Law, the SCPC holds these proposals open throughout the whole procedure of enacting the legislative changes.

According to the principle of transparency and in order to inform all interested institutions and individuals, below is a presentation of the proposals made by SCPC and explanations of those proposals:

The SCPC proposed that the definition of conflicts of interest be harmonized with the definition of this instrument used by the OECD, because this definition better explains the institution of conflicts of interest, it is developed and well accepted and it is mostly recognizable in the international structure and practice.  In fact, the norms stipulated in the law and procedures for the implementation of the law have been determined in the spirit of this definition where the private interest of an officer is determined and, at the same time, an assessment is made of whether this person neglected or could have neglected his/her duty, in each specific segment of his/her work, to put aside his/her private interest.

Line 2 changes to read:

•  “public duty” shall mean the exercise of rights and obligations in favor of the public interest under equal conditions in a material and immaterial sense.

In line 3, the words “matters of public interest” shall be replaced with the words “public duty”

Line 5 changes to read:

• “persons in close affiliation” shall be persons living in wedlock or out of wedlock with the official person, blood relatives up to the fourth degree, adopters and adopted persons, in-law relations up to the second degree, as well as any natural person or legal entity that has a private interest with the official person.

In the existing Law on Prevention of Conflicts of Interest, the people closely affiliated to the official person affected by the regime of the law, are the people in the officer’s family circle. This principle still remains considering the fact that here we talk about natural close affiliation of a person that could have an impact on the way this person performs his/her professional tasks.  The new proposal made by  SCPC, in line with suggestions from experts of the European Commission hired through TAIEX as well as from USA, expand the circle of closely affiliated persons to include people with whom the officer has business or any other material or immaterial interests which are not it’s the officer’s family circle.

Line 6 changes to read:

• “a gift” within the meaning of the law shall mean money, securities, objects, rights and other services provided to the officer in order to perform or fail to perform an official activity.”

Here we are talking about gifts that can be promised, offered, given to or received by the officer, before as well as after the performance or failure to perform the official activity in question.

After line 7, a new line 8 shall be added, which shall read:

• “statement of interest” within the meaning of this law shall mean a statement made by the officer, comprising information about his/her personal and private interests. 

This is a statement where the officer reports his/her interests in order to form a database which can be jointly and severally used to detect possible conflicts of interest regarding employment, signing of contracts, various dispositions within the framework of the public authorization, various dispositions with goods and other rights within the framework of the public authorizations, appointments etc. This helps strengthen the preventive capacity for implementing the Law, which is one of the main goals of the anticorruption policy.

Precisely because of this reason, this statement cannot be a “statement of conflicts of interest”, because the official person does not know and does not have to know whether he/she has conflicting interests, rather this has to be assessed by a competent body, the SCPC according to the Law, and not by the official person himself/herself.  This statement is similar to the asset declaration list which is used to report the assets and not illegally acquired assets.  This statement shall be subject to the same regime as for the asset declarations, in particular with respect to the prescription of the form, filling of the form, submitting of the statements and reporting of the changed interests.

Paragraph (2) changes to read:

“(2) Official persons, within the meaning of this law shall be:

• the President of the  Republic of Macedonia, the appointed ambassadors envoys of the Republic of Macedonia abroad, persons appointed by the president of the Republic of Macedonia; 
• elected or appointed officials in or from: the Parliament of the Republic of Macedonia, the Government of the Republic of Macedonia, the state administration authorities, the judicial authorities, the public enterprises and institutions, other authorities and organizations that perform technical, administrative or other activities within the framework of the rights and obligations of the Republic of Macedonia, the municipalities and the city of Skopje;
• civil servants and persons with special authorizations and duties specified in special laws.”

The proposal in this paragraph is to provide an itemized list of the persons affected by this law, since, during practical implementation of this law there is often a dilemma as to who exactly is affected by the law.
In the proposal and in accordance with the suggestions provided by the SIGMA mission, the regime of the Law also includes the civil servants as well as those persons that work in public institutions, and the systemic law for them is still under preparation.  The core reason is that these people could find themselves in a state of conflict of interest while performing their regular tasks, as well as the fact that this issue is not regulated with the substantive law that specifies the status, the rights and responsibilities of this category of people, i.e. people employed in the State Administration – the Law on Civil Servants.  It is proposed that these people, like the elected and appointed officials should file a statement of interests. Since these people are full time employees, they should submit their statement to the authority where they are employed.

In article 9, paragraph (1) shall change to read:
“(1) The official person who, before assuming the office, was the owned and the manager of a company or an institution, shall, while in office, relinquish the management of that company or institution to a third party or to special body.”
Paragraphs 2 and 3 shall be deleted.

This proposal enables the prevention of conflicts of interests and makes a clear distinction between the right to own, which, as a constitutionally guaranteed right is undisputable, and the right to manage a company or an institution, which is limited for the official person in order for the official person not to abuse the public office for private interests.  This means that the official person who is the owner shall have to transfer the management to a different person or a special body.

Article 15 shall change to read:

“(1) An official person shall not receive gifts while in office.”

The substance of the proposal is based on the fact that the motive for promising, offering, giving or receiving of gifts is to perform or fail to perform an official activity.  At the same time, one must make the distinction that the gift in an anticorruption sense does not have the same meaning as the gift specified in the Law on Using and Disposing of State Owned Items where gifts are allowed in explicitly specified situations, occasions, value and procedure.

In article 17, after paragraph 3, new paragraphs 4, 5 and 6 shall be added, which shall read:

“(4) The official person who, within two years after leaving office shall find employment in a private sector legal entity shall be obligated, within 30 days to inform the State Commission for Prevention of Corruption thereof.

(5) An official person shall not, during the term of office as well as during the period of three years after the expiration of the term of office, acquire in any way or form, shareholding rights in the legal entity that he/she personally or the authority where he/she worked, supervises or supervised.

(6) If the official person, during the period stipulated in paragraph 5 of this article, acquired shareholding rights by way of inheritance, shall be obligated to report this to the State Commission for Prevention of Corruption.”

The SCPC insists on these changes because activities that were performed or things that were promised while an official person was in office (issuing of licenses, concessions etc.), can become effective after the official person leaves the office and goes over to the private sector, thereby gaining profit from a corruptive activity. The insistence is consistent to the anticorruption postulates which require that corruption cannot be profitable.

Article 18 shall change to read: 

“(1) The official person stipulated in article 3, paragraph 1, lines 1 and 2, shall not be a member of a management or supervisory authority of a company. 

(2) The official person stipulated in article 3, paragraph 2, line 3 may be a member of only one management or supervisory authority.”

According to the categorization of official persons stipulated in article 3, paragraph 2, the SCPC proposes changes in this article as well.  The changes propose that, in paragraph 1 of this article the regime shall remain the same, i.e. those official persons shall not be members of any such bodies.

Paragraph 2 regulates the issue of civil servants being members of such bodies, which is presently a possibility provided in special laws from the public sphere in regard to management and supervisory authorities, but with a qualification related to the de-accumulation of functions of one person, considering that the accumulation of multiple function in one person is one of the starting forms of conflicts of interest. 

After article 20, a new chapter shall be added, as follows:

“CHAPTER IV-а. STATEMENT OF INTERESTS”

“Article 20-а

 (1) The official person shall, when assuming the office and no later than 30 days after assuming office, file a statement of interests to the State Commission for Prevention of Corruption.

(2) The official person shall, within a time period of 30 days, inform the State Commission for Prevention of Corruption, about any changes in his/her interests.

Article 20-b

(1) The civil servants and persons with special authorizations and duties specified in special laws shall, after getting employment and no later than 30 days after the employment, file a statement of interests to the authority where they are employed.

(2) The persons stipulated in paragraph 1 of this article shall, within 30 days, inform the authority where they are employed, about any changes in their interests.

Article 20-c

(1) The content and the form of the statement of interests shall be prescribed the State Commission for Prevention of Corruption.”

With respect to this chapter, which is a new chapter added in the proposed law on changes and additions to the law on prevention of conflicts of interest, the SCPC seeks to have it included in the final version of the Law because this proposal is harmonized with the regime of asset declarations which functions very well in practice, which means that it is practical and at the same time is an element providing consistency to the regulation regarding the obligations of the official person to provide statements and information about his/her status issue.

In article 21, paragraph (1), line 7 changes to read:
“– imposes the measures specified in this Law.”

This proposal makes a significant step forward by having the SCPC impose the measures specified in the law. Namely, the provision in the present law, whereby the measures of warning or initiative to dismiss, were imposed by the authority where the official person was employed, was shown to be ineffective in practice.  For example, one asks the question who is the superior authority of the Mayor, a council member, the president etc.  This proposal helps overcome the existing legal vacuum where there is no one who can impose the measure proposed by the SCPC. Another point of concern is the retention of the measure – initiative to dismiss, because the SCPC does not elect nor does it appoint officials, and therefore cannot dismiss them.  This has caused difficulties in applying the law.  The proposal changes the focus of the law and now the law focuses to the person that has the legal obligation, i.e. the official person, and therefore the SCPC proposes the innovation of the measure by introducing the initiative for withdrawal from office or the service. 

Article 22 changes to read:
“(1) The procedure for determining whether a conflict of interest exists shall be implemented by the State Commission for Prevention of Corruption on the basis of the principles of legality, confidentiality, objectivity and impartiality.
(2) The procedure for determining whether a conflict of interest exists shall also be instigated and implemented by the State Commission for Prevention of Corruption:

•  on its own findings, 
• upon a request from the official person,
• on the basis of reports by a third person,
• on the basis of an anonymous report,
• upon the request from the official person managing the authority.

(3) For the purposes of the procedure and in order to determine the factual situation, the State Commission for Prevention of Corruption shall collect data and information from natural persons and legal entities, as well as from the official person in question and all of them shall be obligated to respond to the request within 15 days”.

Article 23 shall change to read:
“(1) When the State Commission for Prevention of Corruption shall determine that there exists a conflict of interest, it shall be obligated to inform the official person and to request that the official person should get out of the conflict of interest situation within 15 days.
(2) If the official person follows up on the suggestion, the State Commission for Prevention of Corruption shall stop the procedure and shall inform the official person and the petitioner about that.

(3) If the official person fails to act in accordance with paragraph (1) of this article, the State Commission for Prevention of Corruption shall enact a decision imposing the measure of public warning, which decision shall be submitted to the official person and the SCPC shall inform the public thereof.
(4) If the official person against whom a measure of public warning was imposed, fails to undertake actions, within 15 days after receiving the warning to remove the conflict of interest and fails to inform the State Commission for Prevention of Corruption about such actions, the State Commission for Prevention of Corruption shall start an initiative for withdrawal from office or the service.
(5) If the conflict of interest has caused legal consequences, the State Commission for Prevention of Corruption shall request that all such consequences be removed”.

The procedure proposed by the SCPC further develops its implementing principles in a way that enables swift and efficient application of the law, on the basis of an analysis of the practical experiences of the SCPC as the competent institution. It is obvious that, during the implementation of this procedure the integrity of the official person is protected if there are no bases to undertake any procedural activities and measures envisaged by the law, which in turn relieves the procedure from the burden of excessive administration and duration.
The SCPC especially draws the attention to paragraph 5 that has a strong anticorruption dimension and affirms the principle of legality, that violations of the law cannot produce regular and legitimate consequences. In this way, i.e. without this provision, no punishment will be imposed in the cases where corruptive behavior shall produce profit, which defeats the purpose of the law, thus legitimizing corruption as a profitable behavior.

In article 25, paragraph (1) shall change to read: 
”(1) One of the following measures shall be imposed against the official person

• public warning
• initiative for withdrawal from the office or the service.”

Paragraph 2 shall change to read
“(2) The measures imposed by the State Commission for Prevention of Corruption shall be disclosed to the public.”

The proposal is to have two instead of three measured imposed by the SCPC, namely: public warning being the first measure for all official persons and a second measure, i.e. the initiative for withdrawal from the office – for elected or appointed officials and initiative for withdrawal from the service – for civil servants.

It is important that this fully opens the possibility for the SCPC to publicly announce its standpoint also in cases where the existence of a conflict of interest has not been determined, because the practice showed that frequently somebody’s name appears in the public with allegations of a conflict of interest, this person suffers the public consequences, and afterwards it is determined that these allegations are not true. 

The SCPC propose a second measure, namely initiative for withdrawal from the office (for appointed and elected officials), and initiative for withdrawal from the service (for the civil servants).

The SCPC insists that the focus of the law shifts to the official person, because the existing law also had the initiative to dismiss the official person from office or service, but this provision could not be enforced against some official persons (mayors, council members, the president etc.). That solution contests the competence of the SCPC to dismiss anyone, which is a viable point.  The retention of the existing solution, i.e. the initiative to dismiss the official person, enables the official person to continue to hide behind the manager of the authority. The SCPC if of the opinion that the law appeals directly to the official person that is bound by the provisions of the law, and asks for appropriate ethical capacities and personal confirmation of a positive attitude towards the law. Therefore, the SCPC should impose the measure involving the initiative for withdrawal from the office or the service, which basically means that this initiative seeks the resignation or withdrawal from the service as a personal act. This resolves the legal gap mentioned above, and also, where there is a superior authority, does not interfere with this authority’s right to dismiss someone since this authority also proposes, appoints or employs that someone, and therefore the failure, on the part of the official person to act in accordance with the measure imposed by the SCPC would give the superior authority yet another argument to dismiss the official person.

The State Commission for Prevention of Corruption is of the opinion that the propose changes should be incorporated in the Law on Prevention of Conflict of Interest, and that this will provide the Republic of Macedonia a comparative advantage with respect to many countries and will bring Macedonia among the countries which define, regulate and apply this institute on the highest appropriate level. This will contribute to strengthen the normative and ethical capacity of the institutions and of the official persons in the Republic of Macedonia.