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Croatia

Commercial Regulations of Companies Owning Local Governments (HR0029)

Overview

At-a-Glance

Action Plan: Croatia Action Plan 2018-2020

Action Plan Cycle: 2018

Status: Active

Institutions

Lead Institution: Ministry of Justice

Support Institution(s): Information Commissioner, Commission for the Resolution of Conflicts of Interest, units of local and regional self-government

Policy Areas

Anti-Corruption, Anti-Corruption Institutions, Capacity Building, E-Government, Legislation & Regulation, Subnational

IRM Review

IRM Report: Croatia Design Report 2018-2020

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information , Public Accountability

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

STRENGTHENING TRANSPARENCY AND ACCOUNTABILITY AT THE LEVEL OF
COMMERCIAL COMPANIES IN MAJORITY OWNERSHIP OF UNITS OF LOCAL AND REGIONAL SELFGOVERNMENT
Implementation of the measure is under way and will be conducted until 31 December 2020
Leader of the measure MINISTRY OF JUSTICE
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GOVERNMENT OFFICE FOR COOPERATION WITH NGOs
Description of the measure
Which public issue does the measure address? A review of the current state of affairs in local level government has
detected the existence of real risks which may lead to corruption in work
and asset management, that is, commercial companies in the ownership
of units of local and regional self-government.
The application of the Anti-Corruption Programme for commercial
companies in the ownership of units of local and regional self-government
attempts to strengthen transparency and accountability, and to control
risks in managing the assets of units of local and regional self-government.
Among other things, in the reports on financing programmes and projects
by NGOs from public funds, which are prepared by the Government
Office for Cooperation with NGOs, there is information on financing
NGOs from the revenues of public commercial companies. In this regard,
the Government Office for Cooperation with NGOs has established the
need to conduct training which would cover public commercial
companies and ensure that the distribution of funds to NGOs is carried
out in accordance with positive regulations.
What does the measure include? The measure enables the further implementation of anti-corruption
mechanisms, with the aim of ensuring the more efficient management of
assets held by units of local and regional self-government.
The creation and publication of a unified list of commercial companies in
the ownership of units of local and regional self-government on the website
of the Ministry of Justice, with the publication of information on the
members of management and supervisory boards, has fulfilled one of the
prerequisites for improving the supervision of commercial companies in
majority ownership of units of local and regional self-government, with the
aim of increasing transparency and managing corruption risks in this area.
The creation of this list is a prerequisite for the creation and efficient
implementation of the Anti-Corruption Programme for commercial
companies in majority ownership of units of local and regional selfgovernment for 2019 to 2020. In cooperation with co-leaders, an AntiCorruption Programme for commercial companies in the ownership of
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local level authorities will be drawn up, and its application will attempt to
set up efficient mechanisms to suppress corruption in such companies,
with the aim of promoting a comprehensive policy of prevention, efficient
reporting mechanisms, and high standards of accountability.
In addition, the adoption of the Instructions for keeping and publishing the
List of commercial companies in majority ownership of units of local and
regional self-government means that all such units will be instructed to
publish regularly on their own websites all information on commercial
companies in which they have majority ownership, and any changes in
their work (for example, structures of ownership, members of management
and supervisory boards). This must be done in an easily searchable,
machine-readable form, with the emphasis on openness and suitability for
reuse (in accordance with the Act on the Right to Access Information). This
will enable constant updating to take place.
The measure also includes implementing a training programme for
commercial companies in the ownership of the Republic of Croatia or one
or more units of local and regional self-government on the criteria and
standards for awarding donations and sponsorships to NGOs.
How does the measure contribute to resolving the public
issue?
The adoption and implementation of the Anti-Corruption Programme for
commercial companies in the ownership of units of local and regional selfgovernment attempts to set up efficient mechanisms for suppressing
corruption in companies in the ownership of local authorities, with the aim
of promoting a comprehensive policy of prevention, efficient reporting
mechanisms and high standards of company accountability, thus
contributing to overall business efficiency.
The competent bodies of companies are instructed to work intensively on
developing appropriate management practices, abiding by the main
elements of the fight against corruption, and to be proactive in achieving
the priority goals of anti-corruption policies, particularly in relation to
achieving the goals of strengthening integrity, accountability and
transparency in their work.
It is expected that the implementation of training programmes for
commercial companies in the ownership of the Republic of Croatia or one
or more units of local and regional self-government on the criteria and
standards for awarding donations and sponsorships to NGOs will
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improve the transparency of these processes, and raise their quality in
general, aligning them with positive regulations in this area.
Why is this measure relevant to the values of the Open
Government Partnership?
The implementation of the measure contributes to strengthening
transparency and access to information held by public authorities at the
local level and to improving the quality of published information.
At the same time, implementation enables company accountability to be
strengthened, with the more efficient management of public resources
and the increased integrity of public services, that is, public and civil
servants.
Additional information No additional resources are required for the implementation of the
measure.
The measure is in accordance with the following documents:
- Action Plan for 2017 and 2018 accompanying the Anti-Corruption
Strategy 2015- 2020
- Anti-Corruption Strategy 2015-2020

IRM Midterm Status Summary

4. Transparency and Accountability of Commercial Companies with Majority Ownership of Local and Regional Self-Government

Language of the commitment as it appears in the action plan:

"Measure 4. Strengthening Transparency and Accountability at the Level of Commercial Companies with Majority Ownership of Units of Local and Regional Self-Government" [27]

"The adoption and implementation of the Anti-Corruption Programme for commercial companies in the ownership of units of local and regional self-government attempts to set up efficient mechanisms for suppressing corruption in companies in the ownership of local authorities, with the aim of promoting a comprehensive policy of prevention, efficient reporting mechanisms and high standards of company accountability, thus contributing to overall business efficiency. (…) No additional resources are required for the implementation of the measure."

Milestones:

4.1. Production and implementation of the Anti-Corruption Programme for commercial companies in the ownership of units of local and regional self-government 2019-2020

  • Anti-Corruption Programme produced for commercial companies in ownership of local authorities
  • Results of the application of the Anti-Corruption Programme (reports on the implementation of the Anti-Corruption Programme)

4.2. Implementation of the training programme for commercial companies in the ownership of the Republic of Croatia or one or more units of local and regional self-government on the criteria and standards for awarding donations and sponsorships to NGOs

  • A minimum of two training workshops held annually

Start date: Underway

End date: 31 December 2020

Context and Objectives

Learning from drafting, adopting, and implementing the "Anti-Corruption Program for Commercial Companies with Majority Ownership by the State for 2010-2012," [28] as well as drafting the "Anti-Corruption Program for Commercial Companies with Majority Ownership of the State from 2019-2020" [29] the Ministry of Justice decided to expand its anticorruption activities to commercial companies which have majority ownership by local and regional self-government units (Milestone 4.1). The strategy planned in the commitment would adhere to recommendations of the EU Anti-Corruption Report from February 2014, [30] which highlighted the need to prevent corruption in public and publicly owned companies, particularly through effective action plans and reporting mechanisms.

Croatia’s Anti-Corruption Program for Commercial Companies with Majority Ownership of the State from 2019-2020 [31] consists of three broad goals:

  1. Increase integrity, accountability, and transparency in the operations of majority state-owned companies (stronger internal and external controls, clear rules on appointing management and supervisory board members, and stronger mechanisms for managing conflicts of interest);
  2. Strengthen anti-corruption mechanisms (proactive online publishing of information on operations of state-owned companies, a code of ethics for stronger employee integrity and management structures, appointing ethics commissioners to receive complaints from employees and citizens regarding unethical or corrupt employees, and promoting ethical treatment for employee relations and relations with citizens and service users); and
  3. Establish a system to protect persons reporting illegal or abnormal operations and strengthen employee competences.

The commitment’s envisioned training program (Milestone 4.2) is already being implemented for state-owned commercial companies and this commitment will expand it to companies owned by local and regional authorities. The government will conduct two annual trainings for companies on ethical donations to NGOs. According to government representatives, [32] it is important that the Ministry of Justice, as the lead institution, has sufficient assistance from its co-leaders as the Information Commissioner’s Office noticed a serious problem with commercial companies concealing important information from local governments, despite being publicly owned.

As the anti-corruption program has already been applied to nationally-owned companies, Milestone 4.1 should be easily implemented. Although agreeing to this, a CSO representative [33] noted the entire commitment is "soft" and not especially important to leading government institutions. For greater impact, both national and subnational state-owned companies must have effective accountability and integrity mechanisms (e.g., codes of conduct, whistleblower and complaint policies, internal and external audits, and a robust disciplinary regime).

Next steps

The IRM researcher believes the responsible authorities should consider the following:

  • During implementation, the Ministry of Justice should include all stakeholders in drafting the envisaged strategic document (e.g., representatives of local and regional governments, public companies, the Croatian Chamber of Commerce, unions, anti-corruption CSOs, and experts);
  • Increase the number of trainings to adequately cover the numerous local governments and publicly owned companies;
  • Consider more impactful activities and broaden government intervention in companies owned by regional governments (e.g., legislative changes that introduce codes of conduct, whistleblower policies and complaints mechanisms, internal and external audits, and a robust disciplinary regime); and
  • Ensure interventions follow international standards such as the OECD’sAnti-Corruption and Integrity Guidelines for State-Owned Enterprises or Transparency International’s Anti-Corruption Principles for State-Owned Enterprises (2017).
[27] Editorial note: The text contained herein is the abridged version of the commitment. The full text is available at: Action Plan for Implementation of the Open Government Partnership Initiative in the Republic of Croatia up to 2020 (OGP, Dec. 2018) 33−39, https://www.opengovpartnership.org/sites/default/files/Croatia_Action-Plan_2018-2020_EN.pdf. [28] "Anti-Corruption Program for Commercial Companies with Majority Ownership of the State from 2010-2012" (2009), http://vjesnik.hr/files/antikorupcijski/Antikorupcijski_program_za_trgovacka_drustva_2010_2012.pdf. [29] "Anti-Corruption Program for Commercial Companies with Majority Ownership of the State from 2018-2020" https://pravosudje.gov.hr/UserDocsImages//dokumenti/Antikorupcija//Antikorupcijski%20program%20za%20trgova%C4%8Dka%20dru%C5%A1tva%20u%20ve%C4%87inskom%20dr%C5%BEavnom%20vlasni%C5%A1tvu%20za%20razdoblje%202019%20do%202020.pdf. [30] Report From the Commission to the Council and the European Parliament: EU Anti-Corruption Report (Brussels: European Commission, 3 Feb. 2014), https://ec.europa.eu/home-affairs/sites/homeaffairs/files/e-library/documents/policies/organized-crime-and-human-trafficking/corruption/docs/acr_2014_en.pdf. [31] The program acknowledged OECD’s 2015 recommendations for corporate governance within state-owned companies. OECD emphasized the need for transparent and responsible management; the role of competent supervisory boards and boards of directors; responsible oversight of board members and executive directors in order to prevent corruption; and developing and implementing compliance programs. [32] Zoran Pičuljan (Information Commissioner) and Iva Volmut and Lucija Jadrijević (Office of the Information Commissioner), interview by IRM researcher, 21 Feb. 2019. [33] Jelena Tešija (GONG), interview by IRM researcher, 21 Feb. 2019. [34] Action Plan for Implementation of the Open Government Partnership Initiative in the Republic of Croatia up to 2020 (OGP, Dec. 2018) 34, https://www.opengovpartnership.org/sites/default/files/Croatia_Action-Plan_2018-2020_EN.pdf.

Commitments

  1. Implementing Right to Information

    HR0026, 2018, Capacity Building

  2. Fiscal Transparency

    HR0027, 2018, E-Government

  3. Political Finance Transparency

    HR0028, 2018, Capacity Building

  4. Commercial Regulations of Companies Owning Local Governments

    HR0029, 2018, Anti-Corruption

  5. Transparency in NGO Project Finance

    HR0030, 2018, Capacity Building

  6. Protection of Persons Reporting Corruption

    HR0031, 2018, Anti-Corruption

  7. Parliamentary Transparency

    HR0032, 2018, E-Government

  8. Media Regulations Framework

    HR0033, 2018, Civic Space

  9. Data Opening

    HR0034, 2018, E-Government

  10. Raising Awareness About Open Data

    HR0035, 2018, Capacity Building

  11. Central State Portal

    HR0036, 2018, E-Government

  12. Public Consultations

    HR0037, 2018, Capacity Building

  13. Implementation of Anti-Corruption Policies by NGOs

    HR0038, 2018, Anti-Corruption

  14. Local and Regional Open Government

    HR0039, 2018, E-Government

  15. OGP Sustainability

    HR0040, 2018, Capacity Building

  16. Right to Access Information Legislative Framework

    HR0010, 2014, Anti-Corruption

  17. Improving the Implementation of the Right of Access to Information Act

    HR0011, 2014, Capacity Building

  18. Starred commitment Proactive Release of Information and Opening Data

    HR0012, 2014, Capacity Building

  19. Fiscal Transparency

    HR0013, 2014, Capacity Building

  20. Starred commitment Improvements of Transparency and Efficiency in Public Administration Work

    HR0014, 2014, Capacity Building

  21. Improvement of Transparency of Election and Referendum Campaigns

    HR0015, 2014, E-Government

  22. Transparency in the Area of Youth Policy

    HR0016, 2014, E-Government

  23. Media Transparency

    HR0017, 2014, Anti-Corruption

  24. Improving Transparency of Information on Members of Parliament and Their Work

    HR0018, 2014, Anti-Corruption

  25. Improving Transparency of Data on Assets of Officials

    HR0019, 2014, Anti-Corruption

  26. Starred commitment Improving the Consultation Process with the Interested Public in Legislative Procedures

    HR0020, 2014, Capacity Building

  27. Ensuring the Sustainability of Values and Content of the OGP Initiative

    HR0021, 2014, Capacity Building

  28. Starred commitment Participation in Drafting the New Anti-Corruption Strategy

    HR0022, 2014, Anti-Corruption

  29. Regulation of Lobbying

    HR0023, 2014, Capacity Building

  30. Improving Efficiency of the Ministry of Interior's Complaints Commission

    HR0024, 2014, Justice

  31. Promoting Civil Participation in the Work of Civil Society Organizations

    HR0025, 2014, Civic Space

  32. Improving the Content and Transparency of Budgetary Documents: Publish and Update the State Budget Proposal

    HR0001, 2012, Fiscal Openness

  33. Improving Transparency of Business Activity of the Companies of Special State Interest

    HR0002, 2012, Private Sector

  34. Making the Contents of All Budgetary Documents Understandable and Accessible to Citizens

    HR0003, 2012, Fiscal Openness

  35. Improving Accessibility of Local Budget Contents to the Citizens and the Public: Give Recommendations to Local Units to Publish Budget Documents

    HR0004, 2012, Fiscal Openness

  36. Starred commitment Improving the Legislative Framework for Exercising the Right of Access to Information: Amend the Act on the Right of Access to Information

    HR0005, 2012, Legislation & Regulation

  37. Starred commitment Improving Access to Information on Expending Public Resources and Contents of Relevant Registers: Implementation of Acts on Political Activity and Campaign Financing

    HR0006, 2012, Anti-Corruption

  38. Ensuring Transparent Work of Public Authority Bodies in the Service of Exercising Citizen Rights: Enhancement of Web Portal with Info on Exercising Rights

    HR0007, 2012, E-Government

  39. Starred commitment Setting up a System of Participatory Drafting and Monitoring of State and Local Budget Implementation: Public Discussions on Budget Allocation

    HR0008, 2012, Fiscal Openness

  40. Starred commitment Improving the Practice of Consulting the Interested Public in Procedures of Adopting New Laws: Amend Procedural Rules

    HR0009, 2012, E-Government

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