Quality of the policy response – SOEs in Romania, Bulgaria, Czech Republic and Italy. Public policies addressing issues such as preventing and combating corruption, or inefficient governing of state-owned enterprises (SOEs), differ significantly among EU member states, even though the economic results of these enterprises are reflected, at national level, in each country’s macroeconomic indicators.

The pilot research carried out as part of this report was aimed at conducting a first assessment of the quality of the public policy response in four EU member states – Romania, Bulgaria, the Czech Republic and Italy – based on the instruments used by these states to address phenomena such as the fight against corruption and prevention of corruption and state capture in SOEs.

Corporate governance in Romania, Bulgaria, Czech Repbulic and Italy

The first and most important step is adopting an ambitious corporate governance framework, which can provide constant monitoring, in addition to professional, independent management. This is what Bulgaria and the Czech Republic are lacking.

Romania, on the other hand, adopted an ambitious model, under the pressure of the IMF and the World Bank, created enforcement guidelines for this framework, and had started good practice in the region. But even when there is a legal framework for corporate governance, major political influence will be exerted – including business interest groups and corruption – attempting to considerably limit the enforcement of this framework.

This pilot assessment also reveals why corporate governance alone – in the absence of control, preventive measures, and of imposed, dissuasive sanctions – will not result in performance, transparency or more responsible management.

The last resort – that of criminal investigations to discourage corruption and clientelism from within or in relation to the activity of SOEs in EU member states – is also very much indispensable. However, the experience of the countries in our analysis differs greatly, and the same applies to the rest of the EU. In states where criminal prosecution showed results, it is necessary to further outline control mechanisms, depending on the risks identified during criminal investigations, but prevention is also essential.

SOEs inefficiency and poor application of corporate governance

The report includes documented case studies indicating that public policies based on repressive measures must be doubled by other measures. In the case of Posta Romana (Romanian Post Office), for instance, the anti-corruption prosecutors completed no less than seven corruption cases – most related to overvalued public procurement and influence peddling – but they all describe an almost identical pattern. Anti-corruption prosecutors concluded, based on this investigation, that more efficient control and internal instruments are required in order for the company to be able to identify irregularities itself in a timely manner and to be able to address them. These instruments are not yet efficient in Romania.

The Czech Republic is faced with an entirely different situation: there are dozens of journalistic investigations and suspicions featured in the Czech media during the past years, but there are very few criminal investigations that were finalised to reach circles of influence or politicians.

National SOEs operate on a European market, and, in the absence of concrete results in reforming or cutting off networks of influence or capture, a consolidated EU approach is needed. This report provides key policy recommendations both at national and at EU level, meant to properly address the corporate governance and additional tools targeting SOEs.

Authors:

Bianca Toma is Programme Director at the Romanian Center for European Policies and is involved in projects related to the judicial system, anti-corruption and state capture. She has over 15 years of experience as a journalist, including as a Brussels-based correspondent for Romanian media.

Alexandru Damian has a solid background in good governance, public administration and civic activism. He hopes that citizens’ participation in the public decision and data-driven public policies will be strengthened. Alexandru holds a Bachelor’s Degree in Political Science, University of Bucharest, and a MA Degree in Political Science, Free University of Brussels.