THU, 16 AUG 2001 12:54:18 GMT
How to Break the Monopoly of State Officials
When Politicians Are Calling the Shots
The Government finally admitted that a combination of politics and
economy had been at work in Montenegro and announced its resolve to
restrict the right of state officials to be members of Management Boards
of numerous state enterprises.
AIM Podgorica, July 31, 2001
At the beginning of its work, the Government of Montenegro, which is for
the first time in the minority in Parliament, announced some changes in
its hitherto practice. And, indeed, the first move was made in late
July: “The Conclusion on the Conflict of Interests”. What is actually
hiding behind this mysterious title? The idea was initiated by
Rakcevic’s Social-Democratic Party (SDP), which is a member of the “The
Victory is Montenegro” which wanted to, at least, start revoking the
privileges of state officials.
On the basis of the adopted decision, Government members and officials
of administrative agencies will no longer be able to serve as Presidents
or members of Management Boards of enterprises. Only in case when that
is required for the sake of monitoring the realisation of public
interests, a person appointed by the Government may be the President or
member of only one Management Board.
To put it more precisely, if they abide by the Government’s “directive”,
numerous state officials will no longer be able to earn additional
salaries by just sitting on or presiding over various Management Boards
of Montenegrin enterprises. This is an old and well-established system
of monopolies. According to a survey of the Restructuring Agency, in mid
nineties numerous representatives of the ruling DPS were members of a
number of Management Boards in state firms (some of them in as many as
nine firms). Although, according to the Law on Enterprises a Government
appointed official could not sit on more than three Management Boards of
various enterprises with different type of economic activity and could
preside over only one such Board, that was obviously not the case.
However, time did not bring any changes. Today also, the authorities are
controlling major Montenegrin enterprises, state media, health care,
culture, and similar through Management Boards.
In other words, the ‘scheme” according to which more than half of the
management of transformed enterprises is in the hands of representatives
of three state funds (the Pension and Disability Fund, the Development
Fund and the Employment Fund) has been functioning perfectly for years.
The front men in these Funds are appointed by the Government, while
Presidents, as well as members of their Management Boards, are mostly
influential people from the authorities. Thus, the authorities have a
decisive say in the election of General Managers of most important
enterprises. In this way, thanks to unlimited privileges, Managers,
Management Board members and state officials are operating together.
This combination of authority and trust did not yield positive results.
But, the membership in Management Boards proved a solid source of
“During the past decade, many Ministers and state officials were members
of a number of Management Boards which brought them both direct and
indirect benefits. In some cases, certain officials earned three to four
wages with their membership in some seven to eight Management Boards”,
said Zarko Rakcevic, Vice-Premier and the SDP Vice President.
According to unofficial data, in individual enterprises compensations
paid to Presidents of Management Boards were equal to the General
Manager’s salary, while in some other they received “only” 75 percent of
his salary. These allowances were paid regularly, in contrast to
salaries for which workers waited in vain for months. This additionally
strained the relations between privatisation authorities, enterprise
managements and workers at everybody’s detriment. Sometimes, Managers
paid the price, but those who had appointed them – members of Management
Boards – remained beyond reach.
Despite thunderous announcements of reforms and democratic changes, the
three-member coalition “For A Better Life” was not willing to
voluntarily give up the inherited positions of power. Therefore, during
its rule members of the Main Boards of three coalition parties were in
top echelons of economic entities. It is interesting that it is
impossible to obtain data on either current members of Management Boards
or those who discharged that function during the times of the integral
DPS. Perhaps this could be explained by the fact that the Montenegrin
economy, and consequently economic power, is still mostly in the hands
of people who are running the DPS today. And all this despite the
evident conflict of interests.
“The situation in Montenegro is such that it requires some serious
actions with a view to restoring the full confidence between the
Government, political elite and citizens. During the past decade, in a
great number of cases political activity represented one of the most
secure, least risky and most profitable jobs,” said Zarko Rakcevic, Vice
President of the Government. He pointed out that “The Conclusion on the
Conflict of Interests” was provisional and that the Government decided
to adopt such a binding document “pending the adoption of the Law on
Conflict of Interests”.
The Director of the non-governmental Transition Centre, Nebojsa
Medojevic was also supportive of the legal regulation of this issue:
“Under the pressure of non-governmental organisations – the Transition
Centre and a group of its partners - conditions have been created for
the initiation of the adoption of the Law on the Conflict of Interests.
That law will regulate the conduct of state officials – Government
members, the Prime Minister, the President of the Republic, the Governor
of the National Bank, judges, General Managers of public enterprises, in
short all those who are appointed by the Government. It will also define
situations in which a conflict of interests – private and public ones -
might occur. We have finalised the draft and it is now being examined by
foreign experts. In September, we shall submit it to the State Agency
for Anti-Corruption Initiative”, said Medojevic.
Until this law is passed, there is the Government’s conclusion on the
conflict of interest, which has already given first “results”. On his
own initiative, Purko Ivancevic, a SDP member, left the position of the
Assistant Minister of Tourism because he was also a co-owner of a
touristic firm. After his resignation, Ivancevic said: “I expect that
others will follow suit with their resignations. To hell with this party
and the state if I am the only one to do it”.
Until now, there have been no other voluntary resignations. And, it
would be naive to expect people accustomed to monopoly to forego them of
their own volition. Very few are ready to believe that the Government of
Montenegro will manage to change anything substantially within a year of
its term. Nevertheless, these attempts are worth noting.
Predrag Nikolic (AIM)