Macedonia: Corruption destroys business relations and decreases economic growth

Presentation of the Macedonian version of TI’s Business Principles for Countering Bribery

The main recommendations from the conference “Corporative Business Principles and Challenges of Global Corruption”, organised by Transparency-Zero Corruption (TZC) were:

• There is a relapse among the activities for raising awareness on the effects of corruption in the business sector.
• The culture promoting public information amongst Macedonian companies is still low, thus appearing as a limiting factor that prevents progress towards stronger corporate integrity.
• The business sector needs to realize that corruption related risks exist at all levels, starting with the smallest bribe.
• Corruption is a global phenomenon that harms business and needs to be addresses by everyone, starting from the small entrepreneurs and all the way up to the multinational corporations.

According to Gro Skaaren Fystro, special advisor of Transparency International Norway, corruption is a threat for companies and society in every country. “Corruption damages both companies and employees. It destroys business relations and decreases economic growth. Companies that face problems related to corruption have difficulties in attracting foreign investments” stated Fystro. She is of the opinion that the main problem is a lack of business culture, insufficient transparency of companies, and lack of programs and trainings for employees to be able to deal with corruption.

“Many companies lack business culture. Thus, they see bribery as a unique instrument and opportunity for a successful business. The more serious the business is, the higher the bribe is, too”, Fystro points out. She suggests companies produce detailed programs, which besides trainings for their employees will include sanctions for employees that have received bribery. "Fighting corruption needs to start at the top of the company", she says.

Cvetan Mojsov, member of the State Commission for Prevention of Corruption (SCPC), locates the problem with corruption in the limited legislative framework. “Within the Law for Prevention of Corruption only two articles refer to private companies”, Mojsov points out. “SCPC does not have insight into the final accounts, as these reports are being delivered by companies only to the Central Register and Public Revenue Office“, adds Mojsov. Non-transparency, according to Mojsov, is another large problem in the private sector. “According to the conclusions of the SCPC insufficient transparency has been noticed when appointing concessions on the central and local level, thus resulting in unfavorable business environment and a high percentage of grey economy”, says Mojsov. Thus, a lot has to be done with regard to business moral, “as it means first of all respect of the legal provisions”.

Besides corruption, according to Slagjana Taseva, president of TZC, nepotism is another issue that needs to be addressed with special attention. “Nepotism and corruption undermine competition, objective prices and efficiency of the private sector on the global level”, Taseva pointed out.

TI's Corruption Perceptions Index 2009 places Macedonia on the 71th place in the world. According to studies cited in TI's Global Corruption Report 2009, the levels of bribery in the business sector are shocking. Two out of five directors have been asked for a bribe when contacting public institutions. Half of them have made estimations that bribes increase the price of their projects by at least 10 per cent. One out of every five directors has made a claim that their company has noticed losses as a result of paid bribery by their competition. Corrupted politicians and state servants in developing countries accept bribery between 20-40 billions dollars per annum, a sum that equals 20-40 per cent of the total official aid for development.