I am honored to address all of you at the opening session of this important conference. The theme of the conference is fraud awareness, but all of us are already aware of how pervasive fraud and corruption is in Bosnia and Herzegovina. Fortunately, the conference panels go well beyond awareness to talk about preventing, combatting, and investigating corruption, as well as protecting whistleblowers. The future of this country is tied closely to how well government officials, business leaders, and individual citizens move beyond awareness to actually reining in corruption. As the U.S. Ambassador, I see everyday how corruption drives emigration, discourages international investment, undermines entrepreneurs, distorts justice, saps government institutions of integrity and prevents Bosnia and Herzegovina and its citizens from reaching their full potential.
International Investment Suffers Due to Corruption
In the 2018 Transparency International Corruption Perception Index, Bosnia and Herzegovina ranked 89th out of 180 countries. One of the worst scores in Europe is due to relevant institutions lacking the will to actively fight corruption and fraud; law enforcement agencies and the judiciary not prosecuting corruption cases effectively as they are overwhelmed by partisan political pressures; and prosecutors complaining that citizens generally do not report instances of corruption and do not want to testify in these cases. One thing citizens need is a strong whistleblower protection law which would legally protect those who report corruption in government institutions.
Just last month, the World Bank “Ease of Doing Business” report was released and regrettably Bosnia and Herzegovina dropped one spot to 90th out of 190 countries. The report notes the challenges businesses face operating here. How difficult? Well, out of 190 countries Bosnia and Herzegovina ranked 184th in “Starting a Business”, 173rd in “Dealing with Construction Permits”, and 141st in “Paying Taxes”. Bureaucratic hurdles to doing business open the door for more rent-seeking. Rent seeking is the corrupt extortion required by someone to NOT do their job or look the other way, but to do their job at all and do it right.
American Companies and American Solutions
I am frequently asked why more U.S. companies are not coming to Bosnia and Herzegovina. Yes, U.S. companies are always on the lookout for new locations to expand their business, but there is a world-wide competition for their investment. Corruption, non-transparent public procurement procedures, and unpredictable fees, make investment riskier here than elsewhere. However, when American companies see BiH taking serious steps to tackle its corruption problem, I am confident they’ll be much more likely to invest.
It is also important to recognize that the U.S. holds its companies to a high standard. One example is the Foreign Corrupt Practices Act (FCPA). This U.S. law makes it illegal for Americans, American companies, and certain foreign issuers of securities to pay anything of value to a foreign official to assist in obtaining or retaining business. In plain language, it is illegal for Americans or American companies to pay bribes.
The United States government also uses financial sanctions and visa restrictions to crack down on political impunity and send a message that corruption should not be tolerated. For instance, when the Secretary of State has credible information that a foreign official has been involved in significant corruption, that person and their immediate family members may be banned from entry into the United States. These are the sanctions The United States imposed on Nikola Spiric last year for his involvement in significant corruption. A student recently asked me when I spoke in her town why the US doesn’t punish MORE BiH officials for corruption. I answered her with a question: Why don’t BiH citizens punish more corrupt officials, including but not only at the ballot box? I hope your discussions this week will generate some answers.
The US embassy has funded OSCE monitoring of corruption trials for three years now. The OSCE tracking shows that the prosecutor’s offices in Sarajevo and Tuzla are more productive in terms of bringing to trial high and medium level cases of corruption. The BiH State Prosecutor’s Office and the Special Department for Suppression of Corruption within the RS Prosecutor’s Office are among the least productive. Bihac, Zenica, Brcko and Livno have also shown some encouraging results in prosecuting corruption. The US will continue to work with the invaluable, courageous prosecutors, judges and investigators who are working to combat corruption, and with governments working to reduce it.
One important way to reduce corruption is to use technology to digitalize government services, increasing transparency on the operations of government and public enterprises. That’s why USAID will be launching a new e-governance program to automate procedures and reduce the personal interaction between officials and the general public, as well as to provide tools for monitoring, oversight, and scrutiny over government-led processes.
One hears that politicians are increasingly corrupt; the justice sector is increasingly captured; and people are increasingly concerned about these developments but have no hope that anything will change. That’s why the U.S. Embassy is working to strengthen the rule of law in BiH, working with all levels of government to strengthen laws and training of judges and prosecutors, improve enforcement, and increase transparency. Strengthening rule of law is vital to BiH’s security, prosperity, and progress.
Each of you will be thinking more deeply this week about how corruption and fraud affect you, your businesses, your family, friends, colleagues, and your country. Think about how you can be a force for change, and about how even small steps towards reform and improving the business climate can change the dynamic in Bosnia and Herzegovina. Step by step we can all be part of this positive change.
The U.S. Embassy will continue to partner with those working to help reduce corruption and fraud, and make Bosnia and Herzegovina a better place to do business and a better place for all citizens to live and thrive.
Thank you to Deloitte and the Embassy of Sweden for supporting this conference. I wish you all much success.