By Friends of the Earth – Slovakia
November 2001
I. CAUSES OF THE PROBLEMS IN THE SYSTEM OF MANAGEMENT OF PHARE FUNDS IN SLOVAKIA
The main problem of the system of management of EU pre-accession assistance in Slovakia resulted from the decision-making process itself. Projects and their suppliers were often selected in a non-transparent way, based upon the personal preferences of a limited group of people, and not upon generally accepted criteria reflecting the priorities of society as a whole as well as the official priorities of the donor.
With regard to the effects on Slovakia, therefore, there are several pertinent questions:
- How much more effectively could funds from the PHARE programme have been utilised up to this time if the decisions regarding them had been made in a standard way - transparently and democratically, respecting the priorities of society?
- How much will it cost the state to transform the currently non-transparent system into one which is open and democratic?
- How great will be the losses incurred due to the fact that up to now funds have not been used to construct the institutional structure prepared for the accession of the Slovak Republic to the EU and able to effectively utilise the future structural funds which will be significantly larger in comparison to the current pre-accession funds?
The questions facing the European Commission (EC) are even more serious. The EC has generously financed the current system in Slovakia over a long period. By which it de facto accepted the wasting of public funds, in most cases even without reprisal. There has been little success in bringing Slovakia closer to fulfilling the original aim of pre-accession assistance - to prepare the country for accession to the EU. If the principal suspicions of corruption and nepotism are confirmed, it will be even possible to state that Slovakia is moving further away from unification with the assistance of EU funds. Therefore, a fear exists that money from the taxpayers of 15 EU member states has, to a still unknown extent, been squandered in contradiction to its aims. The fundamental question for the EU remains as to how it will ensure that the present questionable system will be replaced by a new, transparent and democratic system capable of effectively and properly administrating pre-accession and the subsequent structural funds. Current analysis of the system of management of PHARE funds reveals ever more clearly the causes and seriousness of the problems which became public only after the corruption scandal erupted in March 2001.
The most notable problems are:
1. the alarming state of professional capabili-ties of a part of the employees at the perti-nent institutions in Slovakia and the EU;
2. a poor administrative structure, chaotic in regard to competencies, enabling the inter-connection of competencies that are mu-tually incompatible, or allowing overlap-ping authorities;
3. the absence of clear, unambiguous rules for using pre-accession assistance, and an adequate system for informing the public;
4. the absence of transparency and public involvement in decision-making processes concerning the usage of EU funds;
5. weak EU monitoring and supervision, both at the Delegation of the EC in Bratislava and in Brussels;
6. the absence of political and legal responsibility in Slovakia for using pre-accession assistance.
II. PROPOSALS AND RECOMMENDATIONS
Summary Friends of the Earth - Slovakia cannot substitute the state agencies in designing the reforms for the system of management of pre-accession aid. However, we can provide a set of recommendations which can help reform the system. The intention of the activities of Friends of the Earth - Slovakia is not to replace people in the administration of the pre-accession assistance but to achieve significant increase in the coherency and quality of the system's outputs.
Sources: There are a number existing documents with regular updates being prepared within the European and Slovak Governmental services. These documents include many useful recommendations and conclusions which could lead towards an increase in quality of the EU assistance as well as provide the basis for future programme design and implementation. Instead of keeping these documents internal and confidential, they should be disclosed for all interested subjects involved in the respective EU and related SR policies and used as policy formulation and assessment tools.
Based on recent assessments and analysis the following may be stated:
- The transformation of society has not become a real Government priority. Therefore, neither adequate support in technical nor political terms has been provided for this purpose. Additionally the EU was also incapable of creating effective mechanisms to ensure that Slovakia fulfils the basic goals of the pre-accession aid.
- Active involvement of the citizens during the transformation process is the foremost duty of the Government, not an additional or side task. Not only active and effective disclosure of full and timely information and its publicity has to be enhanced, but even more so training and education has to be provided to opinion leaders in media, economy and politics to improve their understanding of this aspect of the transformation process.
- Based on the newly established Civil Service Law, technical staff in administration and the public authorities managing pre-accession assistance have to be recruited, managed, trained and paid in a transparent way and according to standards comparable with EU levels.
Along with the list of concrete measures detailed in the next section, the following points serve to identify the three major priorities which are to be addressed in improving the described situation:
- Integrate Member States experiences in policy design and implementation in sectoral policies in Slovakia in order to ensure coherency with EU procedures and structures;
- Establish monitoring and assessment mechanisms as an integrated part of all policy programmes and instruments of the EU and Slovakia to provide quality control and feedback for future funding allocation;
- Delegate the implementation of EU pre-accession funds to Slovak institutions after approving the structures and procedures.
The following institutions are to be reformed and involved in future policy design and implementation, based on their respective mission and competencies:
- The post of National Aid Coordinator must be replaced by the collective body (National Aid Coordination Committee, see next part).
- The post of Executive National Aid Coordinator should be abolished and integrated into the secretariat of the National Aid Coordination Committee and in respective Ministries and Agencies.
- Ministry of Finance / National Fund should be strengthened in its general co-ordination role of co-financing and disbursement of funds.
- CFCU should be abolished and integrated into the respective Government bodies.
- Program Implementation Units should be abolished and integrated into the respective Ministries and agencies so their staff is subject to the Civil Service Law.
- Office for State Service should be in charge of all staffing issues (recruitment, training and remuneration).
- Supreme Audit Office should be responsible for external audit and supervision of the institutions managing pre-accession assistance.
- Control sections in the respective Ministries should take responsibility for internal audit.
- State Aid Office should redefine its role and rebuild its structure so it will be able to effectively and flexibly fulfil its mission.
- Public Procurement Office should be involved in tenders related to EU funding where appropriate.
- OLAF / Court of Auditors should establish its branch office alongside EC Delegation.
- An independent watch dog council involving all relevant actors (including NGOs) should be established to regularly monitor the institutions managing the EU assistance and should publish its findings on a regular basis.
PROPOSALS AND RECOMMENDATIONS
Through analysis of the quality of the structure, operations and results of pre-accesion aid in Slovakia, there is evidence of a need for:
- better administrative structure on the Slovak side that would manage the aid in accountable, transparent and effective ways;
- better supervision on both the Bratislava and EU side;
- disclosure of information;
- democratization of the program cycle;
- involvement of public into the preparation of strategic documents Friends of the Earth – Slovakia can not substitute the state agencies in re-developing the entire system of use of pre-accession aid. Rather, we provide general recommendations which must be further developed including comments from other agencies and organizations and implemented in a timely manner.
HUMAN RESOURCES
Proffessional capacities within the agencies that manage pre-accession assistance must be significantly increased, especially on side of Slovakia. An independent assessment of the quality of work of the current staff is highly needed and must be done. In this term it is necessary to take into account also reasons for changes in posts of individual persons within different institutions. Those who clearly participated in bad management of the EU funds should be dissmissed from their posts in public institutions. Considering the need to prevent an interruption of ongoing processes it is needed to keep high quality old staff members, on one hand, and on the other hand to hire new proffessionals who have not had any previous ties to the system of management of pre-accession asssitance. Further, there should be a sufficient training of newly hired staff and sufficient resources for such training must be alocated.
STRUCTURE
National Aid Coodination Committee As already proposed by a number of Slovak NGOs, the post of Vice Prime Minister for European Integration (which currently also represents the National Aid Coordinator) should be cancelled and replaced by a representative and non-partisan National Aid Coordination Committee to act as the supervising body to the National Aid Coordinator (NAC). The NAC Committee should respect the partnership principle and consist of representatives of the Government (preferably also Parliament), municipalities, NGOs, and bussinesses, and should also include fair participation from the regions. The NAC Committee should assess the effectiveness of the information campaign and make sure that the public is adequately and timely informed about procedures, time frameworks, and structures involved in managing pre-accession aid. Along to this, the committee should check, if all public reports, evaluations, assessment, and other aid-related documents are made easily available to the citizens. The committee should also make sure that any complaint related to the pre-accession aid reaches appropriate Slovak agency. The NAC Committee should be responsible for coordination of a de-centralized CFCU. National Aid Coordinator The NAC should be an expert and not a political nominee, be responsible to the NAC Committee and fulfil the tasks defined by the NAC Committee. The NAC should be selected through an open tender by the NAC Commitee. The NAC and its office should regularly report about its activities to the NAC Committee. The NAC should technically coordinate the activities of the respective Slovak agencies and the ECD and EC. In this respect, however, the NAC should not be more than „post office“ and it should conduct just a formal, technical check on documentation to ensure compliance with the guidelines. Vice versa, the NAC should make sure that instructions and documents from Brussels are delivered to the relevant agencies. Under the NAC, there should be working one unit in charge of the awareness/information campaign. Executive NAC The position of the executive NAC must be cancelled and the entire staff of the NAC office must be evaluated. The current competencies of the Executive NAC should be transferred to the NAC. The current staff of the Department of Foriegn Aid should not be automatically transfered to the new structure, hovewer, they may apply for the positions in open tender. CFCU The CFCU should be decentralized to where it makes sense. This means to move it to the ministries/agencies where different components should be or to the Ministry of Finance. (In member states, there is one central unit that has the first and final approval of funds. Then it is divided by sectors, but is all basically under the same ministry.) Decentralization of CFCU must be accompanied by strengthened monitoring, evaluation, and supervision by both the Slovak Government and the EC Delegation. Sectoral Agencies Programming must be strictly separated from implementation. This means that financial and contracting units which will take responsibilities of the CFCU must be divided from agencies responsible for programming, even if they would be included within the same ministry. These units must be directly subordinated to respective ministers. Programming decisions should be made by respective ministries / agencies and respect the partnership principle. The sectoral agencies must have independence of funds and personnel. These agencies should be regularly audited internally and externally (e.g. by Supreme Audit Office). The State Procurement Office should participate in implementation. The State Aid Office should participate in programming. EC Delegation The Delegation should also conduct an independent assessment of the work of its personnel. Given the fact that there were repeated problems with transparency and good management on the Slovak side, the EC Delegation should take a more pro-active approach in terms of supervision and minitoring.
SUPERVISION, MONITORING, AND EVALUATION
Complaint Mechanism In both Slovakia and the EC Delegation an effective complaint/appeal mechanism must be created (e.g. compliance hotline, “whistle-blowers hotline”, ombudsman, or the like ). It must have a clear structure and any citizen should be aware of where and how to complain or send comments or appeals. This should become top priority. There should be regular reporting regarding complaints and the reports must be public and listed in a web page. Detailed documentation of tenderring processes is needed. The tenderring processes should be more transparent. Since the fund and projects involved are public, the members of evaluating committees should not keep the results confidential and corporate bids must be disclosed. Monitoring and Evaluation There should be clear, transparent, and participatory mechanisms for project monitoring and post-project evaluation. Individual programs and projects must be regularly evaluated not only in terms of quantity but especially quality (e.g. how they contribute to implementation of the overal goals of the pre-accession funds, how they assisted in developing capacities and structures to get ready to manage structural funds, how they reflect societal priorities, if they do not pose a risk in terms of channeling public funds towards private corporate lobbies, etc.). All reports must be disclosed. The results of monitoring and evaluation must become a basis for on-going assessment of future projects and programs (i.e. they must become effective feed-backs for re-shaping the character of the future programs). Strict and clear measures against abuses of power Since there is no Civil Service Law in Slovakia (which creates many problems, e.g. regarding recruitment mechanisms, control of conflict of interests, etc.) there should be a clear Code of Conduct for all those involved in the management of pre-accession aid that must be followed. Employees should have to pledge to such Code and this mechanism should include effective enforcement (including penalties, criminal charges, etc.). Also, proper laws and measures against corruption and abuse of power must be soon implemented. Both the NAC and the EC Delegation should regulary check if there are any vested interests within their staff and the staff of all agencies involved in both programming and implementation. Those entities (companies) and individuals who violate the regulation on conflict of interests must be disqualified from future eligibility to receive pre-accession funds. Also employees who clearly participated in manipulation of decision-making should not have an opportunity to get jobs in institutions managing the pre-accession funds. The new structure will not automatically change the current culture of making decisions. There is a need to develop and make public all procedures that clearly define competencies and responsibilities of individual elements of the structure as well as sanctions for their violation. Only then it will be possible to assess effectiveness of individual processes and elements in a transparent way.
INFORMATION DISCLOSURE
The government’s information campaign (conducted by the NAC at the Office of Government) should be assessed and restarted. There is a need for regular independent reviews of the information campaign and release of the coming aid tranches should be conditioned on the good results of such a review. The past information campaign in the Office of Government must be assessed by independent external experts. The information campaign should include monthly reporting (provided at a special web page) and a monthly press conference. The publishing of reports of the ECD, EC and the government related to pre-accession aid (e.g. the finding of various EC or EP missions, various kinds of evaluation reports, audit reports, OMAS evaluation reports, etc.) should be added to the competencies of the NAC information campaign and listed in the web page. The EC Delegation should disclose all relevant documents and should provide information as to where at the EC one can obtain certant document/decission/minutes. Also, the NAC should be responsible for publishing a complete Slovak manual on how to apply for support (from all pre-accession funds), procedures, decision-making, eligibility criteria, etc. must be developed and advertised. This manual should also include a list of common Slovak terminology with clear definitions that are used in all documents in all agencies and ministries. This is already partly done by different actors, yet central coordination is missing and information is often publish on the web but is difficult to find. As already stated, the NAC could serve as the point of first contact when looking for certain information. All structure and all relevant procedures, quidelines and codes must be publicly available. Every entity which obtains support from pre-accession aid must complete a form that indicates who they are and what they’re doing with the money. This information must be easily available to public. The NAC should provide infomation on the flow of funds for co-financing and all public money in which co-financing was used for pre-accession aid supported projects . This infomation must be listed on the web. Publicity of proposed projects is crucial from very early stages in the program cycle.
PROJECT CYCLE
Review of Strategic Documents Regional and sectoral plans should be re-evaluated in a democratic and transparent way. The regions should be involved in the decision making. This means a transfer of competencies to regions. Considering the manner in which the current plans were developed, there should be a comprehensive process for the ammendment of these plans which should respect the partnership principle. The process should not be under a time stress and all involved parties must be fully and timely informed about the goals, methods, structure and procedures of this process, and the clear division of responsibilities among respective agencies. The regional monitoring committee is already established and must be utilized to assist with the development of strategic documents. There must be prioritisation in the program documents. This means clear and defined priorities for individual projects with approval based on publicly discussed program documents, pre-investement studies, regional consideration and development plans to avoid ad hoc projects. Aid must not be focussed on specific type of projects (e.g. sewege treatment plants) just because there are consulting companies with know-how on these types of projects. Slovakia should define its short-term, mid-term, and long-term priorities regarding the adoption of acquis. Project Identification The involvement of representatives from citizen and regional organizations in this phase of decision making should be strengthened. Criteria for project selection must be clearly based on program documents that went through the process of public evaluation (strategic environmental assessment - SEA). Project selection and the EIA process should follow only after SEAs are completed on program documents. In this manner, project selection is not based on the environmental assessment of small projects which do not include the overall picture of development (e.g. constructing a few kilometers of a highway, but not in line with the transport corridor or regional transport proirities). For investment projects (e.g. large infrastructure projects), the EC should require that project promoters develop cost-benefit analysis, opportunity cost analysis, and a least cost study for every project. In this way, alternative options must be considered before a project is approved. For instance, a plan to build a combustion plant to manage waste in a region should explore other than end-of-the-pipe solutions (e.g. recycling) and only then, after assesment of the best option, build a combustion plan but with real and needed capacity. The EC should consider a change in the requirement for a minimum limit for projects (e.g. limit of €5 million for ISPA projects) since such a limit also represent a direct incentive for developing overestimated projects for which capacities far exceed the real needs. Formulation / Implementation EC should re-consider its policy of providing technical assistance (TA) for individual projects. Currently, TA is provided by EU-based framework contractors. These contractors consume around 10 per cent of the project costs while usually do not transfer any know-how and experiences to the experts in accession countries. Projects designed by foreign companies do not always reflect local conditions while responsibility for its quality is fully taken by the accession country. EC should create incentives for local experts to be more active in project development and encourage EU-based framework contractors to train local experts in the project planning phase. In the project cycle there are long periods during which the EC approves TA for the projects. During such periods accession countries can not procede with the projects and when the TA is finally approved they find themselves under time pressure. The EC, therefore should delegate more competencies to their respective delegations in this respect. There must be open and transparent tenders (e.g., list of all involved consulting companies with names of the experts). Members of the tenderring commission should receive complete infomation, in their native language, about the tenders and the procedures for tenderring in a timely manner before the commission meets. The members of the tenderring commission should receive training if requested on the procedures and background of the project.