Банкеръ Weekly

Briefs

CORRUPTION - THE NEW TAX

Exactly 1,002 days remain until the beginning of 2007, but corruption - the curse for Bulgaria - expands and already affects to the same extent both the public and the private sector. This is evident from the research of Coalition 2002 and the Center for the Study of Democracy (a research institute in Sofia), presented by them at the roundtable, held on Tuesday (March 30). Things have gone so far that the business already considers the bribe a new kind of a tax. According to the authors of the research, the problem became popular with regard to the international financial crises and the privatisation of the Bulgarian Telecommunications Company (BTC). This is probably only part of the truth, because everyone knows that the sale of big state-owned enterprises do not start and end up with the telecom. Something more - each year the number of firms that flatly deny to pay bribes becomes smaller and smaller. If their share was 23% in 2002, it dropped to 18.1% in 2003, and now they are only 13 per cent. Ten per cent of the companies gave money under the table in order to get a credit, another 7.4% paid to the right persons in order to win a public procurement tender or in order to close contracts with big enterprises. In the notions of private business in Bulgaria doctors are the most corrupt profession, followed by journalists and bankers. Lawyers are also included in that company. As a rule, corruption in the public sector settles secret financial relations between officials and natural or juristic persons, but it has quite curious forms in the private business. It is generally accepted as means of survival there. I can understand if an employee of a firm asks for a bribe, but I was really astounded when a co-owner did that, says Georgi Vassilev, representative of the Bulgarian Association of Information Technologies (BAIT). In his opinion, the essence of the problem is in asking for bribes, than in paying them. Nobody would be grafting if not asked to do so, he sais. The businessman attributes those practices to certain characteristics of the Balkan mentality, which additionally aggravates the problem. An impressive number of firms have declared they face problems in their relations with the next partner in the chain. 36.3% complain of disclosure of the trade secret and another 25% claim they have been asked to pay a bribe. The business as a whole shares the opinion that corruption in the private sector leads to ineffective distribution of the country's economic resources and hence, smaller economic growth. This results in lower competitiveness, unstable business environment and repulsion of investors with more strict moral principles. Therefore, the society is inclined to look negatively on entrepreneurship which forms a vicious business culture in it. Where shall we look for the reasons?, the authors of the research ask. Their answers are quite generalized. In the first place they point to the strong market concentration and the lack of efficiently applied rules for protection of free competition. The considerable corruption potential and corruption practices in the public sphere and the big grey sector in the economy come in the second place. The lack of ethic business codes has been also pointed out among the reasons. Bulgarian business, however, hopes that ethic codes would be more efficient in the conditions of private firms, than in public administration. This could be realized through strong business associations. Entrepreneurs rely also on the improvement of corporate management, on the introduction of higher standards for financial accountancy and transparency. As one of the participants in the forum put it: corruption in Bulgaria should be also be harmonized with that of Europe.

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