This chapter assesses three key areas of Romania’s NAS: health, education and SOEs. It provides an overview of the context of corruption within each sector, particularly drawing on the main achievements and challenges of the 2021-2025 Romanian Anti-Corruption Strategy. Additionally, concrete recommendations are made to bolster integrity and anti-corruption efforts in each sector.
Strengthening Romania's Integrity and Anti-corruption Measures
OECD Public Governance Reviews
2. The 2021-2025 NAS through the horizontal lens: Effectiveness of measures to enhance integrity on strategic sectors in Romania
Abstract
This part of the report considers the measures proposed by the Romanian government to increase integrity in at risk-sector, specifically, the health, education and SOEs sectors. The aim of this chapter is not to assess each and every integrity safeguard through the sectors, but to provide an overlook of what has been prioritised in the 2021-2025 NAS and its effectiveness in enhancing the existing integrity frameworks. Furthermore, two general principles apply for the chapter. First, that even though the co-ordination of the NAS falls within the MoJ, the successful mainstreaming and implementation of the measures depends largely on policy leaders, such as the MoE, MoH and the MoF. Therefore, ownership by key institutional stakeholders is crucial. Furthermore, a compilation and simplification of existing integrity standards in each sector might provide useful in the implementation phase. Second, a system-wide strategic approach, such as the NAS, will also have primary strategic objectives aimed at mitigating integrity risks in sector strategies – for example health, education, housing, taxation, customs and infrastructure. The importance of such an approach relies on the fact that a strategic framework continues beyond the public sector and recognises the role of the private sector, civil society, and individuals in respecting public integrity values in their interactions with the public sector, as stated in the principle of whole-of-society (OECD, 2020[1]).
Therefore, this chapter provides an overview of the challenges in each sector, the actions proposed in the NAS to address them and tailor-made recommendations for each. This stocktaking takes int consideration the risk assessment analysis made by each sector as well as the procurement risk maps. It is worth noting, that both the 2016-2020 and the 2021-2025 NAS are dedicated to strengthening preventive measures in six “corruption-prone” sectors. Overall, the activities planned seem to have contributed to some positive outcomes. In particular, an improvement of the perception of bribery by citizens can be observed across the board between 2016 and 2021 (Table 2.1).
Table 2.1. Romania 2016-2021 Global Corruption Barometer Comparison
Stocktaking and recommendations for integrity measures in the health sector
Integrity issues in the Romanian health sector
The Romanian health sector has been affected by a serious and systemic corruption problem and it is in urgent need for leadership, incentives and external pressure to contribute to effective developments (OECD, 2022[3]). In the absence of a recent comprehensive national and/or health sector corruption diagnostic, a series of available international and national data sources indicate a rather serious situation of systemic corruption. In a 2020 study from the MoJ called “Causes and Determining Factors of Corruption”, 39% of the public officials questioned felt that corruption was widespread in the health system (Ministry of Justice of Romania, 2020[4]). In addition, although the Global Corruption Barometer shows that bribery in public health centres declined substantially (from 33% in 2016 to 22% in 2021), this is still the highest healthcare bribery rate in the EU and more than 3 times the EU average of 6% (Transparency International, 2021[5]). Similarly, the BTI 2022 identifies as the main risk for health sector performance political clientelism and corruption, with clientelism being the main reason of doctors and nurses to migrate to other European countries.
Furthermore, the virtual interviews conducted for this report pointed to a range of serious vulnerabilities to corruption, as well as actual corrupt practices in the health sector, specifically with regards to heath care funding. Amongst those, several stakeholders mentioned:
Meritocracy in higher-level appointment: non-transparent appointment of hospital managers and other key staff, with influence from political parties, is seen as an avenue for stealing from hospital budgets. This is done mainly through distorting procurement processes, extorting shares of the salaries of hospital employees, diverting patients to costly private sector practice (in particular for diagnostics), or extorting bribes for services.
Referral of patients where doctors may have received an informal payment in most health care settings. In general, this may include not only informal payments, but overprovision; overbilling; phantom care; misuse of resources; absenteeism and payroll fraud.
Budget control by health sector elites: Policy and institutional capture by a reportedly small and fairly closed health sector elite with close to the political and economic interests is a key challenged within the health sector. This in turn, provides room for non-transparent and relationship-based allocations of funds which are then subject to rent-seeking activities. Local politicians are considered as often unduly influencing hospital funding and management, in particular through the National Health Insurance House (NHIH), given that most public hospitals are “owned” by their local authorities (Romania Insider, 2019[6]).
Opacity: Interviewees with specialised knowledge in health sector financing observed that the lack of transparency in health care spending can hamper the monitoring and assessing of public spending. Additionally, opacity leads to overpriced procurement of medical drugs and devices as well as hospital construction (the latter being a big pending issue). In addition, the opacity in health care spending leads to a non-transparent budget allocations from central or local authorities to hospitals.
Fragmentation and asymmetric information: the sector is characterised by a high degree of fragmentation and decentralisation of responsibility among the various actors involved in the delivery of services, financing and regulation. The combination of uncertainty, asymmetric information and fragmentation makes it difficult to standardise services, monitor behaviour and ensure transparency in the health care system. These non-financial adverse impacts of integrity violations, have a notable impact on access and quality of healthcare (OECD, 2017[7]).
This overview on the context shows that addressing corruption and strengthening integrity in the Romanian health sector is a daunting challenge. In line with this, strong and high-level leadership in the health sector as well as a well-crafted strategic approach based on an in-depth understanding of the present problems is required.
Health sector challenges in the scope of the 2021-2025 NAS
Lack of cohesive public policy diagnosis and strength of problem analysis
The current 2021-2025 NAS contains vital elements of continuity from the prior NAS (2016-2020). Specifically, its approach and priority sectors, as well as a set of measures for the health sector. However, an assessment of strengths and weaknesses in the health sector has not yet been conducted. Nor at the central level nor in key health institutions or from the national perspective, to inform both the design and implementation of the current NAS. Therefore, the Ministry of Justice designed a supplementary co-ordination mechanism to push the integrity agenda in this sector (“Health Sector Working Group”).
Within the 2021-2025 NAS, a clear diagnostic of the corruption challenges, its dynamics, manifestations as well as structural and systemic aspects is missing in Romania’s health sector. The lack of a solid diagnosis of corruption and the absence of a more holistic approach to address certain priority problems undermines integrity efforts. Only a solid in-depth corruption and integrity risk diagnosis for the health sector would provide the basis for a strategic approach to address the identified problems, define the expected objectives and results. As evidenced during the interviews conducted for this report, this risks identification could be further improved. Integrity plans, which must be approved by the Heads of the Institutions, as well as the identification of integrity incidents, which represent management failures, could potentially be used as a pressure point for the health sector to address this exercise in a more meaningful way.
Moreover, the dedicated working group that monitors the implementation of the 2021-2025 NAS includes civil society, as a means to increase the peer-pressure momentum in the field. Therefore, a strategic approach which takes into consideration incentives for co-operation could be beneficial to strengthen integrity objectives in view of improving sector performance and health outcomes. Interviews conducted for this report showed that particular attention is required in the area of health care CSOs, which requires strong technical capacities. Most interviewees alerted to the need to ensure the existence and/or survival of specialised health CSOs in order to perform the watch dog function and promote/sustain demand for reform.
Weak co-ordination and institutional capacity
The NAS contains several integrity and corruption prevention measures relevant for the health sector. However, many of these measures seem to be disconnected and implemented in “silos”. Each integrity or anti-corruption institution performs its functions independently. There are no clear links, information sharing, joint monitoring of results, and analysis of trends or tendencies, between these specialised agencies, not at the national or at sector levels, including health. For example, ANI, ANAP and ADR do not seem to jointly analyse the relationships between managing of conflict of interest and procurement. The same applies for transparency and digitalisation initiatives. Similarly, lead institutions at sector level, like the Ministry of Health (MoH), the NHIH or the Ministry for Internal Affairs (Dept of Emergency Situations) do not seem to do this either. According to Romanian authorities, this may be partly a result of the limited involvement of the MoH in the drafting process of the strategic document. Additionally, integrity would ideally be linked to institutional performance, including the identification of a few relevant institutional and integrity performance indicators and its embedding on long term policy plans that measure performance. However, this is still not the case in Romania’s health sector. Finally, following up on recommendations considered in Chapter 1, the development of meaningful institutional integrity plans in health sector institutions requires a process with an initial injection of technical expert facilitation and a phased approach to work gradually through the large spending entities and those with regulatory and oversight functions.
Mainstreaming a differentiated approach through different levels
The NAS is applicable to all public institutions at all administrative levels in the country, including in the health sector. This follows general guidance from international organisations and under national law all public institutions are bound by the same legal obligations. However, taking into consideration the great differences in size, structure, dynamics, functions, etc. of public institutions (e.g. central level versus local level, large urban municipality versus smaller village administration, high-complexity hospital versus first-level rural hospital). When it comes to methodological support, the MoJ has developed several instruments that help institutions apply integrity standards (methodology for the assessment of corruption risks, a draft procedure regarding pantouflage and infographics regarding all the preventive measures from the NAS 2021-2025). However, Romania does not have methodological guidance with a differentiated sectorial approach to adapt existing instruments developed by the MoJ to varying degrees of institutional complexity and resource availability and thus, avoid an integrity “overkill” or simple “tick-the-box” exercises. Consequently, the various health public institutions will need an individualised approach instead of a general guidance to better suit the divergent needs and objectives through the different levels. According to Romanian authorities, line ministries could be well positioned to develop sectorial guidelines, when certain institutions lack the maturity level to apply the general methodological guides provided by the MoJ.
Lack of political engagement at the highest level
The 2021-2025 NAS has the potential to incrementally improve certain parts of public integrity at the institutional level. In its current form, it is unclear whether the NAS has the potential to strengthen the overall public integrity system or to achieve the prevention of corruption in the health sector in any meaningful way. This state of affairs seems to be largely due to the lack of political engagement in the health sector in the design and implementation of the healthcare specific NAS measures. Thus, without highest-level leadership in the health sector and a lack of resources for implementation and monitoring of NAS commitments, in particular in the MoH, NHIH, and large spending hospitals (both specialised and at regional level), the hope for change will be elusive.
Strengthening integrity measures in the health sector
To develop a “meaningful integrity compliance” approach at the institutional level integrity plans, anticorruption risk assessments and the anticorruption strategies need to be combined. The participatory development of these instruments could be the basis to define priority areas for action at institutional level (e.g. the budgeting, procurement, or human resource management process, part of these, or a combination of them) and the implementation of existing rules could have a special focus on generating desired change in these priority areas. As this chapter explains, this would require pulling together different internal and external sources of information and data, ensuring feedback and communication channels, as well as identifying or creating a simple but effective internal integrity co-ordination mechanism. Furthermore, co-ordination at the highest level becomes a prerequisite in the context of Romania’s health sector. In this sense, this stock-taking proposes measures that go from assigning a high-level integrity official to the establishment of an ethics co-ordination group within the sector’s institutions. The fundamental rationale behind it is that the fragmented integrity measures with no real “owner” in the sector will not prosper or lead to change unless there is a clear and well-located and well-respected driving force with enough political weight and power. As it relates the integrity advisor, such a person could even report to the highest sector level authority, ideally directly, and have amongst its tasks the: i) identifying priority areas for concrete action in the health sector; ii) suggesting concrete actions to the Minister; iii) co-ordinate or oversee co-ordination of integrity implementation at sector level; iv) develop regular monitoring reports; and v) create spaces for exchange between the integrity people at institutional level, the ethics counsellors, etc. This approach could be piloted, the methodology tested, and ideally good practice examples would emerge serving as reference for a phased scaling up. Pilots for this measure could include the MoH, NHIH, the National Agency of Medicines, two or three national level large, specialised hospitals as well as three or four large regional hospitals.
Romania could consider special integrity measures for the health sector, including the development of a coherent and all-encompassing health sector anticorruption policy, that takes into consideration sector-specific risks and procurement risk maps
The World Bank stated in its 2017 anti-corruption report on Romania: “one finding is that piecemeal interventions generally fail, while integrated approaches are much more likely to succeed. Another important finding is that these integrated approaches should aim to change the rules (alter the social norms) for sustainable and effective results.” (World Bank, 2017[8]). Likewise, the OECD assessment of the 2016-2020 NAS identified the need to move beyond institutional integrity and look at the public integrity system (OECD, 2022[3]).
Thus, in view of the results of this stock-taking exercise, the current approach of NAS could be used by the Ministry of Health, as a basis to develop a coherent health sector integrity and anticorruption strategy, which could be endorsed by the top leadership through the revised sectorial integrity plan. Reasonably, this would ideally be done once the before mentioned sector diagnosis is available. However, if the latter is not produced within a reasonable time frame or not at all, the present recommendation could still be pursued.
Such an exercise could draw on the comments and recommendations made above for each specific measure and put special emphasis on the following:
Develop a strong and explicit problem statement for the health sector based on available information and data, including reference to the well-known high-level structural issues.
Define the overall goals to achieve integrity and corruption prevention in the health sector.
Develop a theory of change applicable to integrity issues in the health sector and identify underlying assumptions.
Define the expected results and explain how the foreseen measures will contribute to their achievement, including the pursuit of external incentives or pressure points.
Develop the associated performance indicators following guidance for SMART criteria as indicated by the OECD (OECD, 2022[3]).
In line with the 2017 Integrity Recommendation such an integral health sector “strategy” could include a tangible, specific and publicly available action plan in which deadlines and level of implementation for the various actions are registered (OECD, 2017[9]). Furthermore, such an exercise would require the active participation of different stakeholders in the health sector, including public sector, civil society, academia and the private sector. For example, this could include the establishment of a cross-departmental or cross-institutional working group for integrity policies in the health sector. In addition, a small sub-working group of relevant public sector institutions of the central government could be established, including ANI, NAPP, the National Digitalisation Agency, among others, in order to define the necessary linkages for an integral approach.
Finally, the newly established “Health Sector Working Group” within the NAS’s platforms will play an important role. Similarly, as part of this strategy, special consideration should be given to newly establish international funds to support the sector. For example, the National Recovery and Resilience Plan of the EU, provides an opportunity to channel efforts and resources into integrity issues in the health sector, such as human resource management or digitalisation of sector processes (European Commission, 2022[10]). Another example is the envisaged investment of 2 billion Euros in hospital infrastructure by the EU that could potentially be linked to integrity indicators and public procurement milestones in these institutions. Finally, for a policy to develop successfully, it is crucial to identify incentives which would ensure high-level leadership. The frequent changes of the Minister of Health make this a challenge (Reuters, 2021[11]). Therefore, Romania could consider empowering the “health sector working group” in their overseeing of the NAS implementation as well as entrusting it with the monitoring of the integrity and anti-corruption policy for the for the health sector.
As mentioned previously, one of the main weaknesses of the healthcare integrity system, is the absence of a solid corruption and integrity risk assessment. The development of specific corruption risk strategies has been made mandatory since 2018 and a methodology was provided by the MoJ. Interviews conducted for this review point to a modest interest and participation of Romanian health sector institutions in NAS implementation and design, so it is to be considered that these have been implemented as “tick-the-box-exercises”. Furthermore, despite reiterated advocacy of the NAS secretariat to call for high-level leadership and tone at the top, in many key health entities this top leadership is missing. However, future plans seem encouraging. At the level of the Ministry of Health, an adequate analysis of the integrity risk assessment and its impact assessment is underway, and its activities will be carried out through the “Monitoring commission for the implementation of internal managerial control standards”. The MoH is developing a participatory methodology in order to be able to identify the specific types of integrity violations, the actors involved, the motivations, the probability of materialisation and the impact. The aim is to obtain feedback from all involved and capitalise on it in future preventive actions. However, this assessment seems to focus on analysing compliance with existing standards. It is crucial for Romania to first assess and diagnose how corruption manifests in the sector, alongside other forces, such as the political and economic dimensions and a network mapping. In doing so, integrity violations will become even more clear.
Thus, at the moment, integrity plans are likely to be “purely” compliance oriented instead of selecting from the menu of available measures those that are most likely to prevent and/or counteract in a mutually reinforcing way specific irregularities. Overall, besides the co-operation platforms, which have more general discussions and do not go into the detail of risk assessment plans, it is not clear to what extent and how internal and external stakeholders are involved in the crafting and regular evaluations of the institutional integrity plans in the health sector. This was confirmed by the interviews conducted for this report with civil society and academic representatives who states that the participation and feedback and their interaction with specific health sector entities would be a relevant element for this assessment.
In principle, the thematic evaluations in four health sector entities (MoH, National Agency for Medicines, National Public Health Institute, and Public Health Directorate of Bucharest) conducted by the NAS secretariat of the MoJ focused on reviewing the implementation of three priority measures (declaration of gifts; whistle-blowing protection, sensitive positions). According to the MoJ, the review team did not limit themselves to the three measures and several general recommendations were formulated. In any case, a holistic approach to evaluate integrity and anticorruption plans it is not present, nor there is clarity on whether or not the integrity plans have been developed in a meaningful way, if corruption risks have been adequately identified and if the measures to confront them are adequate. Even though the “working group on health” has the participation of internal as well as external stakeholders to assess and provide support for this exercise, the NAS rightly identifies the risk of this becoming a merely formal exercise. Finally, it is unclear how the monitoring of integrity incidents is used to make necessary adjustments to the institutional integrity system. While it is good that the NAS foresees an annual evaluation of integrity and anticorruption plans, it is not clear how and by whom this is done.
In the hope to improve in the implementation of this integrity plans, the current NAS envisions the implementation of strong integrity measures at the national level. In order to strengthen these exercises, Romania could consider a solid, explicit and frank problem diagnosis of integrity issues in the Romanian health sector. Such an exercise should assess integrity, corruption and opacity risks and identify actual practice of corruption and clientelistic capture. In this process, an independent analysis, by civil society or academia, could be consider as a complement, to ensure credibility and legitimacy, albeit in close co-ordination with the MoH and NHIH. As a matter of fact, an independent analysis is at the moment under consideration by the MoH.
Even though the Health Integrity Plan was submitted for consultation to some stakeholders, the process could be further enlarged, involving all relevant stakeholders from within the system and public entities as well as its providers and users. Furthermore, the assessment could be focused on a selection of priority areas of the Romanian health system to make it more manageable, and priorities could be collectively defined between actors from the public sector, civil society, academia, and the private sector. The purpose of such a health sector integrity, corruption and opacity assessment would be several-fold in laying the foundation for:
the selection of priority areas for action
the development of a theory of change as recommended by the OECD assessment of the prior NAS (OECD, 2022[3])
the definition of interventions needed to generate change, expected results, measurable indicators and the underlying assumptions to monitor progress
a shared understanding of the problem and pathway(s) for action
the generation of buy-in from the different health sector actors.
Moreover, Romania could consider a rapid review of the development and implementation of anticorruption strategies in a selection of key health sector institutions (e.g. MoH, NHIH, MDA, large spending hospitals (either specialised or regional hospitals). In this endeavour, issues of contents as well as process (involving internal and external stakeholders) could be reviewed. Based on the results and contrasting with good practice from elsewhere, improvement measures could be identified. Additionally, taking into consideration experience from other countries, the introduction of meaningful corruption risk assessments and the associated development of appropriate corruption strategies requires an initial injection of intermittent technical assistance or facilitation.
Thus, the NAS secretariat in co-ordination with the MoH, NHIH and local authorities would be well advised to develop a phased approach for this measure in health entities and linking this exercise with the development of integrity plans. Notwithstanding the 2015 protocol between ANI and the MoH, Romania could make further use of ANI to develop sector-focused lines of action, starting with the priority sectors of NAS and within them with certain key institutions. Following up on the experience of other OECD countries (Box 2.1) a conflict of interest analysis, the ex ante controls of procurement through PREVENT (ANI, 2016[12]) and an analysis of the declarations of interests could be oriented to identify and address some of the alleged misconduct and institutional capture in the health sector in a more systematic way.
Similarly, integrity strengthening should ideally be linked to institutional performance, including the identification of a few relevant institutional performance indicators. The development of meaningful institutional integrity plans in health sector institutions requires a process with an initial injection of technical expert facilitation based on a phased approach to work gradually through the large spending entities and those with regulatory and oversight functions.
Box 2.1. INVIMA/ACTUE in Colombia
In Colombia, the body which is responsible for integrity and transparency is the National Institute of Surveillance of Drugs and Food (Instituto Nacional de Vigilancia de Medicamentos y Alimentos; INVIMA). INVIMA had the responsibility of transforming the ‘Anti-corruption and Citizen Service Plan’ into a planning instrument with a focus on corruption prevention. Corruption risk identification and development of mitigating institutional measures and policies were highlighted as key commitments to institutional strengthening and consolidation of integrity and transparency. Consequently, four strategic areas are prioritised, namely:
Updating, validation and socialisation, in a participatory manner, of the risk map and the anti-corruption plan with actions and high standards in conflict-of-interest policy, transparency, access to public information and accountability.
Mapping of a new strategy for accountability based on a concept that makes this a permanent exercise, oriented to dialogue with stakeholders and citizens.
Design and implementation of a communications plan with the aim of bringing the entity closer to its stakeholders as well as the citizen for the purpose of transparency around undertaken actions to combat illegality, smuggling and corruption.
Development and implementation of a comprehensive transparency and integrity mechanism that collects and articulates the above activities. Through consolidation, a comprehensive management tool of institutional policies of transparency and integrity is being established for the promotion of a cultural change within the entity.
INVIMA’s efforts towards a transversal policy of ‘zero tolerance to corruption’ resulted in an increased awareness across civil servants on the existence and of corruption risks. Furthermore, exercises to identify risks and further prevent and control them, have been initiated.
Finally, Romania would benefit of meaningful institutional monitoring mechanism in some priority areas. According to the above-mentioned information about corruption in the Romanian health sector, priority areas for change could include:
evidence-based allocation of funds
transparent appointments and contracting of leading health sector staff as well as accountability for institutional performance
hospital recruitment of doctors
procurement of medical inputs and hospital infrastructure
integrity in service delivery.
Considering the vulnerabilities to corruption in health sector procurement, special attention could be paid to this issue. Overall, the NAS measures proposed for public procurement in the health sector are a list of relevant, but seemingly unconnected activities. They do not allow to deduce an underlying theory of change, and they do not seem to address complex schemes of corruption, rent seeking, and institutional capture. In view of the well-known allegations of corruption in health sector procurement, which have been exacerbated during the pandemic (Box 2.2), the NAS could have considered a stronger, more comprehensive and coherent approach to addressing systemic problems (Agerpres, 2015[16]). Initiatives to strengthen procurement safeguard in the health sector, such as increasing hospitals’ administrative capacity to navigate medical device procurements, have stalled despite private sector efforts to share and transfer best practices on value-based procurement.
Box 2.2. Health sector corruption typologies and measures during the COVID-19 pandemic
In 2021, the prosecutors specialised in preventing and combating corruption within the DNA conducted investigations and ordered the referral to court for the commission of acts of corruption against 25 people, including 4 hospital managers, a clinical institute director, 4 doctors, 6 nurses, an ambulance, 2 stretcher bearers, a head of the hospital procurement service, 6 veterinarians.
The facts were related to public procurement, human resources and pensions. This is why, the Ministry of Health approved the introduction of a performance indicator for hospitals to assess hospital managers on the issue of integrity. This included the measurements of performance on integrity in any of the fields of competence (acquisitions, human resources, medical activity) and its failure could lead to the dismissal of hospital managers.
Source: information provided by the Romanian MoH, 2022
It is unclear to what extend did the 2016-2020 NAS contributed to addressing the problem and whether the activities planned for such period were sufficient. In particular, the activity related to “evaluating the performance of the centralised procurement system of the Ministry of Health and the possibilities for its extension” seems to have missed the mark as it comes to achieving the desired impact. Additionally, it is unclear why this activity was not carried over to the current NAS as basically all other health sector measures were and why does the current NAS not include anymore a specific focus on corruption in health sector procurement.
Considering this, the foreseen development of a risk map of corruption in public procurement could be an important step and include sub-sections for priority sectors. Ideally, this could be done as pilots in the health and education sectors. Furthermore, these endeavours need to be closely co-ordinated with the current development of the new public procurement policy led by National Public Procurement Agency (ANAP) with the support of the World Bank (World Bank, 2020[17]).
Romania could strengthen its integrity management systems by creating a network of sector specific ethics counsellors, developing a more stringent meritocratic process thought the sector as well as innovative tools to detect integrity violations
Public entities have an obligation to implement a plethora of integrity rules from national legislation, regulations and guidelines, this includes codes of ethics and conflict of interest management, asset declarations, accountability, engaging civil society, and reporting channels (OECD, 2017[9]). As said above and identified by the 2021-2025 NAS, these measures can easily remain at the level of formal “tick-the-box” exercises for a variety of reasons, including outright resistance to reform and lack of practical value vis-à-vis many competing priorities and expectations. In order to address this mismatch between intended and perceived usefulness, the implementation of guidelines for ethics counsellors in the health sector could generate added value.
The 2021-2025 NAS aims at consolidating a national network of ethics counsellors. However, considering the number of stakeholders present in the health sector and the already consolidated practice of sharing good practices between ethics counsellors (lead by the Integrity Service of the MoH), Romania may also consider creating sector specific networks of ethics counsellors in the health sector. This would allow the bring together ethics counsellors from entities that pursue the same objectives (e.g. health sector performance, ensuring access to quality services, etc.) and that are likely to face similar integrity challenges (e.g. hospitals). Thus, a more specialised exchange and support between health sector ethics counsellors could be assured.
According to the interviews conducted for this report, Romania’s health sector has been permeated by a culture of “rewards” (in the form of gifts over the table or in the form of bribes under the table). A 2020 study by the Romanian MoJ “Causes and determining factors of corruption” assessed that one in five respondents (18%) who were interviewed for the study consider offering gifts or money for a doctor’ services as acceptable (Ministry of Justice of Romania, 2020[4]). Therefore, the activity to “increase the level of anti-corruption education of citizens and public officials” within the NAS acquires special relevance. Currently numerous public education campaigns seem to be implemented in parallel, for example, during the pandemic, the MoJ organised tailor-made trainings with the medical personnel (Box 2.3). These campaigns seem to lack a coherent messaging. Moreover, the problem does not seem to be lack of knowledge about anti-corruption measures and existing integrity frameworks, but rather in officials being confronted with ethical dilemmas.
Box 2.3. Public campaign to disseminate integrity measures in the health sector in Romania
According to the Ministry of Health of Romania, several activities have been part of the efforts to mainstream integrity in health institutions:
Mock-ups materials with anti-corruption messages are disseminated quarterly, to be displayed in easily visible places with heavy traffic.
Through the Ethics Councils within the hospital units, preventive anti-corruption messages are permanently transmitted.
The reports drawn up by the ethical councils are published on the website www.ms.ro, to ensure the transparency of anti-corruption activities.
Similarly, during the last meeting of the specialised “working group on health”, the representatives of the Ministry of Health launched an invitation to civil society to jointly work on a preventive campaign.
Source: Information provided by the MoH, 2022
Additionally, health sector institutions, as all other public entities, are also mandated to address the issue of “petty corruption”. In the case of hospitals, the patient feedback mechanism is one of the instruments used for this purpose. According to the interviews conducted, even though the MoJ requested the Ministry of Health information regarding the patient feedback mechanism to inform the 2021-2025 NAS, none was provided. Therefore, the NAS does not assess if adequate action has been taken to address the underlying problems of reported misconduct provided by this mechanism. However, in late 2021, the MoH started a project with the technical assistance of the World Bank to improve the capacity of the MoH to evaluate its institutional capacity to respond to patient needs. Monitoring of results and frank communication on progress and obstacles, including with the NAS Secretariat in the MoJ, will be key to generate trust. Furthermore, the indicators for the objective of the NAS covering meritocratic processes in the health sector are only numeric and do not allow to assess the quality of appraisals, whether or not these are done objectively, nor if recruitment procedures are free from political or other interference. Strengthening the professionalism of public sector staff through performance appraisal mechanisms and transparency of the recruitment procedures is crucial given the allegations of nepotism, clientelism and fraud in appointments and hiring processes in health sector institutions.
Therefore, Romania could consider methodologies for assessing individual and collective behavioural change of public officials in key decision points of the health sector institutions. It would also be worthwhile to co-ordinate with ANI’s existing handbook ethics guidance for the central public administration that could potentially be complemented with examples and specific cases from Romania’s health sector (National Integrity Agency (ANI), 2019[18]). Similarly, in order to ensure effective protection of citizens who report alleged integrity incidents, each institution needs to identify or develop its own reporting channels and assess internally what works or not and why. In any case, it would be useful for the health sector to assess the possibility and viability of a single “window” for receiving complaints and reports. Such a mechanisms could channel the complaints and reports of the relevant entity, oversee the effective handling of the allegations, analyse trends of misconducts, as well as the respective drivers and enablers for each institution.
The NAS also envisages “carrying out continuous methodological guidance activities on issues related to transparency, ethics and integrity, dedicated to the staff of the institutions in the public health system.” This is a new activity that seems come from the recognition that many of the general and health sector specific measures do not automatically flow down through the health system entities but require continuous guidance. The MoH asserts that these activities are part of the regular operation of the Integrity and Public Policy Service within the Ministry and that by the first semester of 2022, the service sent continues guidance to public hospitals. The quality or effectiveness of this guidance remains to be assessed.
Similarly, the issue of detecting and treating integrity violations requires a more proactive approach. Fraud detection activities can be more or less pro-active. They can rely on simple audits, controls and/or the investigation of complaints, and systems may or may not be in place to encourage the reporting of integrity violations – for instance through hotlines. Other countries use analytical tools to detect integrity violations, including data mining. For example, in Belgium, the INAMI (the National Institute for Health and Disability Insurance) uses data mining to detect integrity violations and a stepwise strategy to deal with integrity violations. Essentially, data mining can be used to: i) identify patterns and deviations from them; and ii) screen cases that need to be further scrutinised for fraud and abuse (OECD, 2017[7]).
To address suspicious patterns that could result from integrity violations, practitioners highlight the importance of an enforceable response. This response should incorporate measures to prevent future occurrences of similar problems and engage the community of providers in a constructive dialogue, when abuse is present, rather than fraud. For example, the Unites States has expanded the scope or magnitude of sentences and penalties for integrity violations in health service delivery and financing. Organising and even formalising co-operation between health and judicial authorities is also a key deterrent of integrity violations. In 2009, the United States created a joint task force for combatting fraud on Medicare between the Department of Health and Human Services (DHHS) and the Department of Justice (DOJ) that is a multi-agency team of federal, states and local investigators (OECD, 2017[7]).
Therefore, Romania could, as part of its integrity management system, undertake a more effective approach to detect integrity violations and consider identifying patterns that can then be detected through the use of data mining to identify integrity violations, including those identified in para. 42. Furthermore, Romania could develop deeper investigation of specific cases and outliers is warranted and make use of its already well-crafted enforcement system to impose deterrent and effective administrative sanctions and/or initiate civil or criminal legal proceedings.
Finally, amongst the issues that have been dropped from the previous strategy (2016-2020 NAS) is the implementation of the “Romanian Sunshine Act” (Box 2.4), particularly, in the area of education for health professionals and their dependence on and influence by the pharma industry. Even though Romania asserts that the legal provisions adopted are clear in combating the influence of pharmaceutical companies, their application and impact remain to be assessed.
Box 2.4. Romanian Sunshine Act
Reporting of payment legislation has become crucial to increase transparency and public trust by introducing regulations to publicly declare any financial relationship such as payments given to doctors to speak at conferences or research funding. Specifically, in the European Union, more cases of adoption of Sunshine Act-type legislation are apparent, with cases of country-specific as well as Eurozone-wide self-regulation (such as the EFPIA Code of Practice - formerly “Disclosure Code”, developed by the European Federation of Pharmaceutical Industries and Associations).
In Romania, there was a lack of clarity regarding how sponsoring activities in general and the reporting obligations around them were regulated and stipulated in the law. Consequently, there was an apparent high chance of undue influence and potential discrepancies in which provisions could have been applied by interest parties. As a result, regulation in Romania is being implemented since 2015, with some amendments having been executed in 2016 to reinforce the regulation. The regulation is governed by two ministerial orders: 874/2015 and 194/2015.
Under the regulation, the pharmaceutical and medical device sectors are obliged to publish information on the sponsorship and other benefits provided to HCPs and HCOs. In detail, the entities that fell under the regulation are manufacturers, marketing authorisation holders or their representatives to Romania, and wholesale and retail distributors of medicinal products, medical devices, and healthcare materials. The said entities are required to submit disclosures to the Ministry of Health and further report to the National Agency for Medicines and Medical Devices, until the 31st of March of each year. The disclosures are published on the Agency’s website with information on all sponsoring activities carried out in the previous year. Furthermore, member companies of the ‘Associatia Romana A Producatorilor Internationionali de Medicamente’ (ARPIM) disclose information under a self-regulatory process.
Order no. 194/2015 approved and regulated the Norms on evaluation and approval of advertising for medicinal products for human use. Sponsoring activities are being controlled by the Norm as a form of advertising for medicines for human use, particularly with regard to the following activities:
sponsoring promotional meetings with the participation of individuals qualified to prescribe or distribute drugs
sponsoring scientific conferences to which individuals who are qualified to prescribe or distribute drugs participate, especially by payment of transport and accommodation costs.
The form (provided as a template in the Norm) stipulates that the following information has to be reported to the Agency:
name of the reporting entity
name of the beneficiary (health care professional, institutions in the medical field, organisations, etc.)
specialty of the health care professional
principal professional address
nature of sponsorship
description of the activity (e.g. conference, consultancy, advisory board, expert opinion, training, etc.)
amount
date of the agreement
date of payment/ remittance of goods.
As an additional provision from the Norms, sponsoring activities intended for the general public are also being regulated. In detail, sponsoring activities cannot be linked to the name of the medicine (dispensed with or without a prescription) and further, cannot contain direct or indirect promotional messages for medicine, whether dispensed with or without a prescription. Moreover, a restriction on charity programmes requires that such programmes cannot be undertaken in the name of a medical product.
Fines connected to a failure to comply with the provisions related to medical products’ advertisement are being enforced by the Agency with a range between RON 5 000 – 10 000 (approx. EUR 1 200 – 2 400).
Stocktaking and recommendations for integrity measures in the Education sector
This part of the report provides context of corruption within the education sector in Romania, particularly drawing on the main achievements and challenges of the 2021-2025 NAS. Even though there was some progress in the implementation of the measures related to the education sector since the 2016-2021 NAS, there is varied degrees of involvement of institutions from the Romanian education system. Several recommendations are made for the school system, relating to school boards, the inspectorate, parent-teacher associations, and standardised testing. At the university level, the diversification of admission criteria and targeted anti-corruption activities are considered as means of strengthening integrity in this area.
Integrity issues in the Romanian Education sector
Corruption in education threatens the well-being of society because it erodes social trust and worsens inequality. It sabotages development by undermining the formation of educated, competent, and ethical individuals for future leadership and the labour force. Corruption in primary and secondary education affects teacher conduct and policymaking in planning, school management and procurement. Examples include cheating and other academic violations; bribery, nepotism and favouritism in school admissions, teacher appointments, and licensing of education facilities; bid-rigging in the procurement of textbooks and school supplies; diversion of funds and equipment; teacher absenteeism; and exploitation of schoolchildren for sex or unpaid labour (Kirya, 2019[21]). In Romania, integrity violations in the education sector remain problematic. For example, despite recent reforms to increase their autonomy, schools’ decision-making authority continues to be limited, there is frequent staff turnover and unstable funding limits capacity in central government. Furthermore, the politicisation of local and school leadership roles has limited their professional development (Kitchen et al., 2017[22]). Similarly, the profound shortage of resources for schools and very low teacher pay contribute to integrity breaches. Inspectorates have been given considerable power over teacher rewards and bonuses. The lack of quality education options and subsequent pressure for grade inflation is a response to the fact that good schools and universities are too few and therefore hard to get into. Finally, the publication of standardised data on education institutions’ revenue, expenditure, procurement processes and sponsorships is incomplete and not fully compliant with the standard on the publication of information of public interest as set out in former strategies (OECD, 2022[3]).
Progress was made in several areas related to integrity education. Good examples include the introduction of the civic and ethics education into school curricula, as well as establishing graduate programmes on ethics and integrity, including a master’s degree in Public Integrity and Anti-Corruption Policies. A Framework Code of Ethics was also adopted for secondary education, which clearly prohibits teachers from offering private tuition to their own pupils (OECD, 2022[3]). Similarly, one of the biggest problems in Romania remains the political interference in the appointment of county school inspectors and school heads, and through this, the placement and promotion of teachers. Therefore, attempts to make the recruitment of CSIs and principals more transparent and independent – notably through the introduction of centralised exams – is significant (Kitchen et al., 2017[22]).
Combatting corruption in public procurement within the education sector has a different relevance as compared to other sectors. Unlike ports, highways, state-owned industries or public administration facilities, the dominant purpose of finance in the education sector is recurrent and not capital expenditures. Typically, only 10-15% of total education expenditures are allocated to construction. Textbooks, cleaning services and security might represent an even lower percentage. This suggests that problems of procurement, while present in the education sector, are a minor problem and one well within the bounds of procurement legislation and legal sanctions which apply to all public sectors.
Generally speaking, in the education sector, most corruption activities do not involve procurement related issues, but relate more to trading in influence or political interference. It is common for students to pay bribes for better grades or to gain access to selective programmes, student housing or library resources. Class grades may be raised based on personal relationships; favouritism may be shown toward students of the same ethnic groups as the teacher; sexual and other personal favours may be offered or extorted; employment may be available to faculty from specific graduate institutions; some universities may even require that new faculty be graduates of the same institution where employment is being sought (Heyneman, 2004[23]).
These are examples of an abrogation of professional conduct which are often not covered by legal statutes and rarely solvable through law enforcement mechanisms. Furthermore, as instruments of control, law enforcement mechanisms can be even counterproductive. With many competing issues to solve, the process is long and expensive. In combatting education corruption, effective action must be quick, certain and managed by the profession itself. In Romania mechanisms of control other than courts may create the necessary incentives so that educational institutions, will want to collaborate autonomously.
Education sector challenges in the scope of the 2021-2025 NAS
In Romania, the education system has several integrity mechanisms and standards set out in the legislation and in practice. Moreover, several of these have been put in place to strengthen its integrity system. For example, each higher education institution in Romania has an Ethics Commission (UEC) that includes teaching staff and students. Similarly, at the national level, the University Ethics and Management Council (CEMU) was established in 2016.
In turn, the NAS prioritises interventions and also foresees modifications of existing standards or the creation of new ones. Of high priority is the reduction of criminal behaviour. This includes promoting organisational integrity as well as interrupting the role of corrupt officials as a facilitator of organised crime groups (Government of Romania, 2021[24]). The success of Romania’s efforts has been noted in reports of the European Commission’s Cooperation and Verification Mechanism, though sustainability has yet to be firmly established (Council of Europe, 2022[25]). The current strategy emphasises continuity with previously successful initiatives for the prevention and combating corruption by mobilising the resources of the state in a coherent manner so that those who have been found to have participated in corrupt activities can be held accountable. The strategy also includes training activities for public officials who need to understand anti-corruption rules and their consequences. It includes efforts in a national framework to criminalise acts of corruption, the public’s right of access to information, the transparency in decision-making, and the effects of small and large corruption acts. Furthermore, the 2021-205 NAS has placed heavy emphasis on the problem of monetary corruption and the frequency of bribing. Public procurement, contracting, and the execution of contracts have received frequent attention with respect to new contracting data standards and opening the data for public inspection consistent with the Open Contracting Data Standard of the OECD (Open Contracting Partnership, 2016[26]).
Complementary to sector standards and rules, the 2021-2025 NAS lays out the strategic vision of Romania’s plans for integrity in the education sector. In detail, the NAS has stimulated five initiatives within the education sector:
Under the auspices of the Collaborative Protocol on Legal Education in Schools, legal professionals visited schools to give lectures on legal education and introduce new curricula on ethics with the intention of raising the importance of ethical behaviour.
A draft code of ethics for pre-university teachers was adopted.
An additional Code of Ethics and Deontology (the study of duty and obligations) introduced by county school inspectorates was added to the Strategy.
Attention has also been directed to the ‘flash points’ in the implementation of high stakes examinations and standardised testing. Video and audio monitoring has been added to the places where baccalaureate examinations and teacher tenure examinations are administered. Places of administration of the eighth-grade assessment have been randomly assigned to reduce the potential for compromise.
Out of 13 objectives in the NAS - four are related to teaching about ethics, two are related to the use of antiplagiarism and other technology solutions, and seven are related to transparency, assessing impact, and ensuring the correctness of teacher’ assessments in accordance with curricular objectives. However, on these latest issue, there is no mention of the sources or definitions of standards, the mechanisms of control, the sanctions needed, or the frequency and coverage of reporting results to the public. According to the interviews conducted, even though the sector itself has a plethora of integrity mechanism, many of them are not functional nor made their way into the NAS. Therefore, Romania could consider strengthening integrity measures within the sector by assigning proper resources within the MoE for the implementation and monitoring of NAS. Furthermore, the MoE could conduct an analysis of needs in the sector, including guidance and training needed in the area of integrity and work alongside the MoJ to provide sector institutions with these.
Romania has also conducted additional efforts to increase integrity in the education system. The Ministry of Education, Research, Youth and Sports (Ministerul Educaţiei Cercetării Tineretului şi Sportului, MoE) has circulated an extensive list of actions taken to combat corruption. This list includes indicators of performance and risks involved if adherence is deficient. Amongst those, there are efforts to address victimisation and discrimination, the rule of law, the management of aggression and the prevention of corruption in the curricula of disciplines which target the development and diversification of social and civic competencies in pre-college education (Government of Romania, 2021[24]).
Strengthening integrity measures in the education sector
Integrity measures in Romania could be enhanced in the following three areas: (i) mandatory education, (ii) examinations and standardised testing, (iii) higher education and (iv) politicisation of local and school leadership roles. The suggestions and recommendations for improving Romania’s anti-corruption policies could therefore follow the reforms already underway in term of the structures of authority and organisational responsibilities.
This chapter will dwell into existing action contained within the NAS and analyse them against international benchmarks. In any case, the following recommendation follow the premise that corruption in the education system gets controlled not by national legislatures or courts, but by universities and professors themselves. For this, further engagement by key stakeholders and increased ownership by the MoE and other institutions within the sector is key for the success of the implementation period. In this sense, the role of the MoE as a co-ordinator needs to be strengthened, as well as its co-ordination capacity with other institutions within the sector. Ownership and commitment to implementing the wide range of integrity measures within the sector, not only those contain in the NAS, is key to the success of both the NAS and the enlarged integrity system in Romania.
Romania could develop a culture of integrity at the education system by developing an all-encompassing integrity strategy and working alongside School Boards, Inspectorates, and Associations to mainstream through the sector
Over the past years, Romania has introduced a number of regulations aimed at fostering a culture of integrity in the education system. In particular, Order 4183 of 2022 forbid practices such as fundraising for exams, amongst other measures. However, Corruption in Romanian schools is a reality and both parents and children are forced to face it daily. An “Eurofound” survey on the perception Europeans have on the quality of life in their countries, shows, among others, that Romania ranks first on perception of corruption across school units (Eurofound, 2017[27]). This may often be the case with small gifts or money given as bribe to teachers, and it even encompasses the private lessons taken by pupils with their own teachers to ensure better grades (RomaniaJournal, 2018[28]) (Romania Insider, 2014[29]).
Sector-specific approaches to anti-corruption reform enable stakeholders to target specific instances of corrupt behaviour and the incentives underlying them (Kirya, 2019[21]). For this, assessing corruption risks is a key feature of any anti-corruption strategy. Stakeholders should engage in dialogue and consensus building to agree on which problems to prioritise, taking into account their urgency and the political feasibility of different anti-corruption strategies. Monitoring, evaluation, and learning should be built into anti-corruption reforms so that measures can adapt to changing contextual realities.
In Romania, School Boards, the Inspectorate, Parent-Teacher Associations and the Romanian Agency for Quality Assurance in School Education (Agenția Română de Asigurare a Calității în Învățământul Preuniversitar, ARACIP) could engage in a dialogue with the MoE to build consensus on which problems to prioritise, considering their political feasibility. Furthermore, they can use as a starting point the objectives set forth in the 2021-2025 NAS and develop a bottom-up approach to develop this sectorial strategy. Similarly, anti-corruption strategies in the education can make use of different policy tools to build up momentum. Amongst those: transparency-promoting tools, participatory budgeting, and public expenditure tracking surveys. Moreover, accountability-promoting tools, such as performance-based contracting, teacher codes of conduct, community monitoring, complaints mechanisms, salary reform, procurement reform, and public financial management reforms may be use in the development of this strategic approach (Kirya, 2019[21]).
School boards also need to be strengthened to fulfil their role as mainstreamers of integrity policies. They are composed of school principals and their deputies; teaching and administrative staff; and representatives of the mayor, local council and parents. Under the 2011 law they acquired responsibilities previously held by Inspectorates, such as the recruitment of the school principal and deputy principal, and disciplinary sanctions of teaching staff. However, this has not happened in practice. In part, this reflects school boards’ limited capacity to take on these responsibilities – half of their members have no expertise or experience in education and they receive limited training on their role. Amendments to the 2011 Education Law subsequently transferred responsibility for human resource decisions back to the Inspectorates (Kitchen et al., 2017[22]).
In any case, School Boards, are strategically located to mainstream an integrity culture through the sector, by way of developing Codes of Conduct for teachers, students, and administrators, or leading investigation when infractions are identified. They might be empowered to render decisions like dismissal of the accusation in cases where no infraction occurred, suspension of duties for a fixed period of time in cases where the infraction was judged to be serious, and termination of employment in cases in which the infraction is repetitive or significantly serious to not be able to welcome the accused back to full employment.
According to Government Decision 994 of 2020, in Romania, there is a minimum requirement for each school regarding ethical behaviours. The requirement states that staff must promote and comply with all legal requirements with respect to ethics, integrity, conflicts of interest, fraud prevention and fraud reporting. The system includes a monitoring procedure for those schools that do not implement the envisaged measures. Similarly, the Inspectorate in Romania also has a major role as it comes to mainstreaming integrity through the education system. It has been described as the “most strategic tool in the hands of the Ministry of Education, Research, Youth and Sports” (World Bank, 2011[30]). It has two, quite divergent functions, both relevant to the management of integrity. One function is to provide support to schools and school boards in the better implementation of their responsibilities. Nowhere is this more important than the implementation of the codes of conduct and the adjudication of the instances in which those codes have not been followed. The second function, is to monitor and control the information over which it has responsibility and to report accurately and timely both to the public and to MoE.
Following up on other OECD countries practice, Romania could consider strengthening the reports of the Inspectorate by including statistics, highlight trends and encouraging ethical behaviours. For example, in the United Kingdom one of the responsibilities of the Inspectorate is to annually draw up a listing of performance results by each school (Box 2.5). Those results include tests of academic achievement but also instances of behavioural problems. Consequently, schools in Romania could be assessed by a value-added index, to signal schools that are improving or are doing well despite context. As a result, schools with the most problems may have the greatest opportunity for a high ranking in terms of improvement. Since the scores are available to the public, they act as incentives for the parents and families to utilise when they approach the school boards to demand improvements. This system helps provide the needed incentives for schools to work autonomously to higher academic performance, and an environment free of corruption (Heyneman, 2009[31]).
Box 2.5. The Independent Schools Inspectorate in the United Kingdom
The Independent Schools Inspectorate (ISI) is a government-approved agency under section 106 of the Education and Skills Act 2008, responsible for the inspection of independent schools in England and overseas. After conducting the relevant inspections, the ISI communicates the results to the English Department of Education (DE) while assessing the extent to which schools meet the relevant Standards for British Schools Overseas and the /SI Framework requirements. Additionally, the ISI is conducting inspections of schools in membership of the Associations of the Independent Schools Council (ISC).
The ISI mandate includes the following responsibilities:
Conducting reliable and objective inspection reports to assist schools to better recognise and build on their strengths and to further identify and tackle any weaknesses.
Supporting schools to ameliorate the effectiveness and quality of pupils’ education and welfare.
Publishing reports to the public domain to raise awareness of the quality of British schools overseas and increase transparency.
Providing timely reports to the DE to check compliance with the established Standards.
Where applicable, assure ISC Associations that their member schools maintain the expected quality of provisions.
More than 1 200 schools are being inspected which account for around half a million children each year. The regular inspections include two routine inspections over a six-year inspection cycle: regulatory compliance; and an inspection of educational quality with a focus on compliance. Additionally, the ISI conducts non-routine inspections in cases of: a request for material change; at a request of the DE; or to follow up on previously unmet standards. Generally, boarding schools are under inspection more frequently than day schools. The ISI reports are public and accessible to governments, parents, and the wider community. The reports are being published on both the school and ISI’s website. Following the next inspection cycle in September 2023, it is expected that the ISI will introduce a new inspection framework.
While undertaking inspections for British schools overseas, the ISI follows closely the framework and guidance for independent school inspection in England. However, regular compliance with the 2014 Education Regulations (Independent School Standards) are not legally applicable to schools outside the United Kingdom. Nevertheless, local requirements are taken under consideration where possible together with an extensive assessment of the British Government's Standards for British Schools Overseas. In detail, the Standards evaluate the following:
The quality of education provided by the school (Curriculum, Teaching and Assessment).
The spiritual, moral, social and cultural development of pupils.
The welfare, health and safety of the pupils.
The suitability of the proprietor and staff.
The premises and accommodation.
The provision of information for parents, carers and others.
The school's procedures for handling complaints.
The quality of provision for boarding.
Leadership and management of the school.
Source: (ISI, 2016[32])
Parent-Teacher Associations are often useful in the reduction of corruption, for two reasons. They help maintain a community consensus with respect to the perception that the schools are fair to all categories of children and these associations can help set the rules in which teacher support (which is to be encouraged) can be distinguished from bribery. Overall, professional committees on ethics within the educational structures, can be utilised by School Boards and teacher associations to consider local cases of ethical infractions and could even act to deter integrity violations because of their ability to withdraw the license to practice of any professional within their ranks who has committed a breach of ethics.
Access to elite training and other educational awards is a highly valued and scarce opportunity. In no country can these opportunities be available to everyone hence all countries need to select from among those who are most qualified. The key to having a fair system of student assessment is to make certain of three things:
the items on selection tests are unbiased
the test is administered in a way to guarantee that it is free of corruption
there is a variety of important relevant non-academic information available on the applicant.
According to Romanian authorities, methods to avoid fraud in test takers are provided for in regulations at each higher education institution. The baccalaureate in Romania is regulated by clear methodologies and procedures whose aim, among other objectives, is to prevent corruption. Similarly, changes have been made to the administration of tests to reduce the chances of corruption. The testing site is chosen so that students may not be able use a known facility for purposes of cheating. Proctors may be chosen at random so that students may not know the supervisors. All these developments are considered as a good beginning to reduce cheating and ensure equality.
However, the interviews conducted for this report showed that their use varies and is in some cases non-existent. Therefore, Romania could also consider using a specific “Test Security Plan”1 such as one suggested by the Guidelines on Test Security distributed by the International Test Commission. These guidelines detail the categories of both cheating threats and test theft threats. In details, such categories are using test content pre-knowledge, receiving expert help while taking the test, using unauthorised test aids, using a proxy test taker, tampering with answer sheets, or scored test results or copying answers from another test taker. In terms of test theft, they include stealing: actual test files or booklets, questions in tests through digital photography or copying devices, questions by recording test content electronically, memorising test content, transcribing questions verbally, or obtaining material from a programme insider. Overall, they ensure a fair and standardised testing and examination through the entire education system.
Romania could consider reforms to strengthen the role of key integrity actors in the education system and tackle the issue of politicisation of school leadership
At local and school levels, many roles have been historically politicised in Romania. Inspectors and school principals are often appointed mainly based on their political affiliation or connections to local officials. This raises concerns about schools’ independence and integrity and the quality of leadership while increasing instability, as key school actors may change with the government. Romania has recognised the importance of improving transparency and professionalism at the local level and in 2011 introduced merit-based open contests to appoint school leaders and school inspectors. Implementation was initially mixed, but in 2016 candidates for the principal, general inspector and deputy positions did compete in open competitions in all counties. Romania also adopted the Anti-corruption Strategy in Education to consolidate anti-corruption monitoring processes and raise awareness of the importance of tackling corruption in the education system (Kitchen et al., 2017[22]).
However, further reform is required to address the depoliticising of the approach to teacher pay, placement and reward which contributes to integrity breaches. Developing fairer and more equitable ways to recognise and reward teachers had been recommended by a previous OECD review. In particular, that Romania considers ending its current merit grade salary bonus, and recognise and reward teachers in other ways instead, notably by developing a teacher career path where additional roles and responsibilities lead to higher remuneration. Using an appraisal process for career advancement into new roles, such as the one outlined above, would be a fairer and more equitable way to give teachers incentives to build competencies in many different areas associated with effective teaching (Kitchen et al., 2017[22]). Romania could also consider the reform of Inspectorates, envisaged under new legislation, to address the issue of its politisation. The inspectorates have historically been influenced by politics, which has implications for their ability to fulfil their tasks fairly and consistently. Political changes at the national level have resulted in high turnover in these roles; turnover for political reasons is also an issue among inspectors who work below the management level. several steps have already been taken to address this situation, the 2011 Education Law established new transparent hiring procedures for inspectors and in 2016, open contests were held in all counties for the first time (Kitchen et al., 2017[22]). However, further reforms should include modifying their role in school inspection and in principal and teacher placement and reward. Linked to these reforms is the need to professionalise these core functions, so that the individuals involved are hired on the basis of competence.
Romania could promote more targeted integrity initiatives at universities and increase its efforts to advertise such initiatives
Multiple reports have provided evidence that university corruption is best reduced by actions within the university itself. Because universities have individual reputations, the incentives are in place for them to protect themselves and broadly advertise what they are doing. Both domestic and international students, incoming faculty, and potential business partners all look for a university with a stellar reputation. The level of tuition and the likelihood of contractual business opportunities are correlated with universities with reputations for having controlled the possibility of corruption. The implication for a university which controls corruption is that it can charge higher tuition and expect the business opportunities of its graduates to be higher (Heyneman and Anderson, 2008[33]). Virtually all the world’s highly ranked universities advertise on their websites what they are doing to combat corruption, with many of them publicly noting the details of corruption infractions and what was done about them (Heyneman, 2014[34]). Nations in which universities ignore the issue of corruption tend to be lower in ranking and perceived to be of lower quality. The issue is how these activities are organised and what incentives there are to ensure that universities are aggressive about anti-corruption activities.
Evidently, universities differ in their anti-corruption approach. The University of Tokyo, London School of Economics, and Brandeis may attack corruption in divergent ways. They all do this, and they advertise what they are doing to attack corruption because their reputation depends on the public’s confidence that their university is free of corruption. In the United States all universities, both public and private, must be accredited, and accrediting organisations pay careful attention to issues of ethics and honesty. A university which did not pass accreditation would be forced to cease operations. If this were the case in Romania, then the role of the Romanian Agency for Quality Assurance in Higher Education may be the appropriate organisation to perform the function of assessing a university’s anti-corruption activities alongside other elements of university procedures which they normally include.
Therefore, Romania could consider establishing university’s anti-corruption activities and organisational structures, which might include the following:
Within each faculty (Education, Law, Medicine, Business etc.) a student committee elected by other students to hear cases of plagiarism. With a faculty advisor, this committee would be free to declare the student innocent of the charge, guilty but with a modest punishment, guilty with a significant punishment (e.g. expulsion for a year), or permanent expulsion.
Within each faculty a committee to hear cases of faculty professional misconduct with a boarder spectrum of sanction options.
Codes of conduct for members of faculty, students, and administrators published on the university website and signed each year.
A university-wide committee on integrity which oversees and reports on the activities of each of these other committees, circulates the results, and encourages discussions about them.
Similarly, higher education systems could consider analysing admission criteria for universities as a way of mainstreaming integrity policies through the education system. For example, universities that use only a single criterion to determine entry struggle with both legitimacy and quality. Examples of multiple criteria to be considered could vary from artistic talent, athletic talent, charity activities, underrepresented category of applicant subgroup, amongst others. In general, having a sole criterion or faculties separately designing and administering entry tests have been known to create inefficiencies and raise the chances of corruption.
Similarly, scores on standardised tests generate continuing inequality problems of gender, ethnicity, social class, and other categories. One way to achieve diversity is to emphasise criteria other than scores on high stakes tests. Romania has traditionally employed class grades. The problem with class grades is that they are interpreted as being an alternative to standardised tests. However, class grades are more subjective than test scores, may vary in application, and may not correlate highly with test score performance. If grades in mathematics do not correlate highly with test scores in mathematics, it usually is a sign of inflation where grades are assigned for reasons of social norms instead of academic accomplishment. This problem can be modified in some instances by using grades which do correlate highly with test scores. Other criteria used in may be more effective in generating diversity among university students and, depending on the emphases, encourage students who may exhibit higher qualities of ethical behaviour.
Stocktaking and recommendations for integrity measures in State Owned Enterprises (SOE)
This part of the report outlines the threats of corruption in the state-owned sector in Romania, including the main achievements that have been made in this area, as well as some of the remaining challenges. State capture of public enterprises has been reported as one of Romania’s main governance problems throughout its transition to a market economy, with cases of extensive political interventions and use of public assets for personal gains (State capture, 2018[35]). This is likely to affect SOEs’ economic performance as a going concern, and in the case of SOEs that are slated for privatisation it may negatively affect the sale conditions. Notwithstanding concluded cases of corruption involving SOEs, the mere perception of interference in SOEs can provide disincentive for investment. Overall, recommendations emphasise the need to establish high integrity expectations for SOEs, considering ownership arrangements, framework for accountability of SOE boards, and enhancing appropriate legal provisions and reporting channels. Attention is also drawn to the risk-management system in SOEs, and sanction provisions aimed to promote accountability.
Integrity issues in Romania’s State-Owned Enterprises
The state-owned sector is substantial in Romania. As of end 2020, central government institutions owned stakes (between 1%-100%) in 860 enterprises, and 1 238 public enterprises were held at the sub-national level (Ministry of Finance of Romania, 2021[36]). While this makes for a relatively larger SOE sector than the OECD average, this is nonetheless in line with trends found in post-transition economies which tend to have large SOE portfolios, such as in Hungary where the central government owned 370 SOEs as of 2016, Bulgaria (350), the Czech Republic (133), Lithuania (128), Poland (126), and the Slovak Republic (113) (OECD, 2017[37]; OECD, 2019[38]).
SOEs play an important role in the Romanian economy – both in terms of their overall volume, and in particular because of their role in systemically important sectors such as energy and transportation, which concentrate most of the state-owned economy. While the transport sector represents close to a third of the overall SOE employment, the energy sector includes the most valuable companies, many of which are listed in stock markets, which tends to raise corporate valuation. Overall, the total central SOE sector is valued at approximately USD 19 billion and employs around 183 000 people (OECD, forthcoming[39]).
Overall, Romanian SOEs are characterised by relatively weak economic and financial performance, which may be attributed to a weak governance of the Romanian state-owned sector (European Commission, 2020[40]). A comparison of the respective size and indicators of financial performance of Romanian companies illustrates that while the median SOE is slightly larger than the median non-SOE in terms of asset size, SOEs underperform significantly both in terms of sales and profitability (Figure 2.1). While this is not necessarily a cause for concern as SOEs provide services that the private sector will not, or is not suited to, due to an inherently low profitability in the specific industry, in Romania the gap between SOEs and non-SOEs is very pronounced (OECD, 2022[41]).
Figure 2.1. Financial indicators for large SOEs and private companies (not traded in stock markets)
Source: (OECD, 2022[41]), based on data from the OECD-ORBIS Corporate Finance dataset.
Although corruption can take many different forms, several criminal investigations of corruption cases involving SOEs were initiated by the National Anticorruption Directorate in recent years (Table 2.2). Some of these cases relate to ongoing court proceedings; they are reported here without prejudice to the question of guilt and eventual outcomes of the cases. All the same, it is worth noting that several former Ministers and Secretaries of State are involved – mainly for influence peddling offences. When executive managers of state-owned enterprises have been indicted, it is mainly for taking bribes, abuse of office and money laundering.
Table 2.2. Selected criminal investigations involving SOEs over the past five years
Integrity challenges for SOEs in the scope of the 2021-2025 NAS
In recent years, strategies have included provisions directly aimed at strengthening integrity in the business environment – including in the state-owned enterprise sector, which was identified as one of the “priority sectors” particularly prone to corruption risks. The development of integrity plans by SOEs was first recommended by the 2012-2015 NAS and reiterated by the following the 2016-2020 NAS due to implementation shortcomings. Provisions related to procurement and disclosure were also included the 2012-2015 NAS and 2016-2020 NAS, respectively (Government of Romania, 2016[42]).
Building on these measures, the 2021-2025 NAS, which was formally approved by government decision No. 1 269 in December 2021, mainly aims to further strengthen i) the use of integrity plans as managerial tools to promote organisational integrity in SOEs, as well as ii) disclosure requirements by SOEs. It also includes iii) compliance functions to be introduced by law in SOEs, along with a national compliance monitoring system at SOE-level, as well as iv) provisions to strengthen integrity in public procurement, through open contracting data standards and the uptake of anti-corruption contract clauses (Government of Romania, 2021[43]). The NAS also reiterates Romania’s ambition to become an OECD member, and in particular to adhere to the OECD Working Group on Anti-bribery, which also implies accession to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. These objectives, along with their associated KPIs and identified risks, are described below (Table 2.3).
Table 2.3. Specific objective no. 4.5 of the 2021-2025 NAS: “Increasing integrity, reducing vulnerabilities and the risk of corruption in the business environment”
Source: Author, based on (Government of Romania, 2021[43]).
While the NAS currently includes some relevant provisions to prevent corruption and promote integrity in SOEs, evidence suggests that it could be strengthened with provisions to tackle corruption at both the state ownership and SOE level. Indeed, the concluded criminal investigations involving SOEs highlight that corruption involving SOEs can stem both from governance fallacies and inadequate mechanisms at SOE-level: while corruption at the state level can lead to exploitation of SOEs, lack of effective internal controls at enterprise level can also be detrimental to prevent corruption.
Overall, the assessment of the Romanian framework for anti-corruption and integrity in SOEs reveals two sets of issues. On one hand, some shortcomings seem to exist with regard to ownership arrangements, which, as currently established, may not be conducive to integrity in SOEs. On the other hand, weaknesses seem to exist with regard to the implementation of anti-corruption and integrity mechanisms at enterprise level. A detailed description of these issues is provided below under associated recommendations, along with selected examples of how countries have attempted to address similar challenges.
Strengthening the exercise of state ownership for integrity
In order to reduce opportunities for corrupt behaviour, good practice calls for the state to provide a strong legal framework, robust ownership arrangements, clear expectations around integrity, as well as to safeguard the autonomy of SOEs’ decision-making bodies. This would help prevent “state capture” and excessive political intervention in SOEs, whereby SOEs may be used, inter alia, as a conduit for private gain or in pursuit of political goals. While Romania has made substantial progress with regard to its ownership framework over the past decade, some weaknesses remain that continue to threaten the integrity of the SOE sector.
Romania could strengthen ownership arrangements through clearly identifying ownership rights and ensuring adequate resourcing
Romania has undergone significant reform since 2010 to strengthen its ownership arrangements, first through the adoption of Government Emergency Ordinance (GEO) no. 109/2011, which was amended and formally approved through Law no. 111/2016. In particular, while the law attributes a monitoring role to the Ministry of Finance, line ministries and other central government institutions responsible for SOE ownership are now each required to set up a “corporate governance structure” comprised of competent professionals to exercise the ownership function. Where effectively insulated, the existence of corporate governance structures could reduce the likelihood that regulatory processes are influenced by interests in SOEs, thereby increasing the likelihood that SOEs are not disadvantaged or advantaged compared to private firms.
However, while it seems that these corporate governance structures are not always established. In detail, as of 2020, two of the 16 central government institutions with a state ownership role reported not having put in place this dedicated structure (Ministry of Finance of Romania, 2021[36]). Evidence also suggests some disparities with regard to their composition across line ministries, which can range from including three (e.g. Ministry of Economy) to 11 people (e.g. Ministry of Transport). While this may be due to variations in the size of their respective portfolios, consideration could be given to ensure that these structures are properly staffed with independent and competent professionals and have an adequate budget. Indeed, while the risk of corruption increases if the state intervenes directly in the management of SOEs (i.e. through influence peddling), it can also increase if the state acts too passively as an enterprise owner (i.e. through weak state oversight). Overall, adequate resourcing underpins the active and informed exercise of their ownership responsibilities, which include those that are important to reducing the risk of influence in SOE operations – such as the board selection process, setting objectives and monitoring performance, monitoring conflicts of interest and approving related party transactions.
For ownership arrangements to be conducive to integrity, good practice calls for clearly identifying the exercise of ownership rights within state administration as centralised in a single ownership entity or, if impossible, by a co-ordinating body that has the capacities and competencies to effectively carry out its duties. This would help ensure that the ownership function is effectively insulated from other conflicting roles of the state with regard to regulating markets and setting industrial policies, thus reducing the likelihood that regulatory policies be influenced by state interests in SOEs. Good practice also calls for individuals exercising ownership on behalf of the state to be held accountable for their conduct and be subject to anti-corruption and integrity mechanisms, including those addressing conflicts of interest and insider trading (Recommendations II.5 and II.2) (OECD, 2019[44]).
Romania could revise and enforce the framework for accountability of SOE boards to promote board autonomy and integrity
One of the main responsibilities of the state is to ensure that boards be composed in such a manner that enables them to carry out their function autonomously and with integrity. In order to address widespread concerns of politicised boards in Romanian SOEs, GEO no. 109/2011 introduced provisions regarding the selection and appointment of SOE board members and executive managers, in an effort to ensure that they have the appropriate qualifications for the position, and that they are independent enough to discern and promote the interests of the company. In particular, the Ordinance provides detailed rules and criteria-based procedures for the selection of directors and executive managers, which are to be applied by independent committees or human resources recruitment specialists, depending on the legal form and size of SOEs. Law no. 111/2016 also provides clear criteria for the nomination of independent board members (Box 2.6). Overall, these provisions seek to effectively limit political intervention with regard to board and executive appointments.
Box 2.6. Independence requirements for board members
The nomination of independent board members should take into account the following criteria:
a. that he/she is not a manager of the enterprise or of a company controlled by it and he/she has not held such a position in the last 5 years;
b. that he/she is not an employee of the enterprise or of a company controlled by it and he/she has not had such a work relationship in the last 5 years;
c. he/she should not receive or have received from the enterprise or from a company controlled by it an additional remuneration or other advantages, other than those corresponding to his/her capacity of non-executive administrator;
d. he/she should not be a significant shareholder of the enterprise;
e. he/she should not have or have had in the last year business relationships with the enterprise or a company controlled by it, either personally, or as shareholder, administrator, director or employee of a company which has such relationships with the company if, due to their significant nature, they could affect his/her objectivity
f. he/she should not be or have been in the last 3 years a financial auditor or an employed shareholder of the current financial auditor of the enterprise or of a company controlled by the enterprise;
g. he/she should not be a director in another company where a director of the enterprise is non-executive administrator;
h. he/she should not have been a non-executive director of the company for more than 3 mandates;
i. he/she should not have family relationships with a person who is in one of the situations provided under letter a) and d).
Source: (Government of Romania, 2016[45]).
While these provisions can be considered robust in theory in the aim of promoting autonomous boards, evidence suggests that they remain widely unimplemented in practice. This appears to be mainly due to a loophole in Law no. 111/2016 (which amended and approved GEO no. 109/2011), which allows for interim appointments of board members and executive managers in SOEs for a period not exceeding six months. It is also worth noting that these interim appointments can be directly proposed by the state. While this provision was aiming to create a transitory arrangement at the time of the promulgation of the law in addition to a stop-gap in case a board is hit by sudden resignations, it appears that many ownership entities continue to avail themselves of this provision, appointing directors without due procedure (OECD, forthcoming[39]).
According to data provided by the Romanian authorities, in 2021, out of the 271 board positions across the 50 largest SOE (in equity value and number of employees), 194 board members were temporary appointments, while only 76 appointments were definitive, following due process. As for executive managers, 48 were temporary appointments and 31 were definitive (Figure 2.2). As these interim appointments can bypass independence requirements, this practice raises concerns regarding the operational autonomy of boards.
Figure 2.2. Status of board and executive appointments in the 50 largest SOEs as of 2021
Source: Author, based on data provided by the Romanian authorities.
Overall, it is crucial to take into account several considerations regarding board selection, composition and conduct. Board members should be selected based on a set of clear criteria and subject to transparent procedures. Politicians who are in a position to influence materially the operating conditions of SOEs should not serve on their boards, and former politicians may only serve on SOE boards after the completion of a “cooling-off” period. Boards should be comprised of an adequate number of independent members (i.e. non-state and non-executive members), and apply high standard for hiring and conduct of top management and other executive members, who should also be appointed based on professional criteria (Recommendations IV.9.i-vii) (OECD, 2019[44]).
Romania could set up high integrity expectations for SOEs and their management through appropriate legislative provisions and the establishment of reporting channels
It is necessary for the state to clearly set and consistently communicate high expectations regarding anti-corruption and integrity for SOEs (Recommendation III.4) (OECD, 2019[44]). This can be done in various ways, including through laws, regulations and policies pertaining to SOEs on high-risk areas, such as conflicts of interest management, due diligence in procurement of goods and services, nepotism, accepting gifts, charitable donations and sponsorships. While there is no one-size-fits-all regarding the format and explicitness of the state’s expectations for anti-corruption and integrity, at a minimum, good practice calls for the adoption of laws criminalising bribery of public officials applying equally the representatives of SOE governance bodies, management and employees (Recommendation II.4.i) (OECD, 2019[44]).
While Romania is not signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“Anti-Bribery Convention”), its Criminal Code and Law no. 78/2000 on preventing, discovering and sanctioning of corruption acts contain provisions criminalising corruption and bribery of domestic and foreign public officials. Romania has also made progress to strengthen integrity in procurement, notably through the adoption of Law 98/2016 on Public Procurement and Law 99/2016 on Sectoral Public Procurement, as well as the implementation of the computerised PREVENT system developed by the ANI designed to monitor and prevent conflict of interest in procurement at the national level.
Besides this, it is unclear how the state communicates expectations for integrity to SOEs other than what appears in seemingly fragmented legislation for the public sector more broadly. For example, it is unclear whether the ACI legal framework applicable to the public sector as a whole is also applicable to all SOEs equally, and applicable to all individuals within SOEs (as opposed to only those considered as civil servants). While provisions exist for public institutions and authorities regarding conflicts of interest, declaration of assets and gifts, incompatibility, revolving doors and whistleblowing, it is unclear whether these provisions apply to all SOEs equally, or concern only selected public enterprises (i.e. wholly, majority or partially owned) (Table 1.1). It is also unclear which individuals within SOEs are concerned (i.e. those in high-risk positions, only those considered public officials, or all board members and executive management equally). At a minimum, good practice calls for six policies to be considered which would address conflicts of interest, mitigate the risks of insider trading, and facilitate reporting about irregular practices (Box 2.7).
Box 2.7. OECD best practices on exercising ownership for integrity
1. Restrict public officials exercising state ownership from holding shares in an SOE or in privately-owned companies in the same sectors of SOEs’ operations (e.g. competitors or suppliers).
In Chile, the ownership entity’s (SEP) Information Management Manual establishes ‘locking’ periods where SEP officials cannot acquire securities linked to SEP companies or goods whose value can be influenced by the information that is taken from a SEP company. In France, representatives of the French ownership entity (APE) are prohibited from taking interest in a company under APE’s control, directly or through other individuals, which could compromise their independence. In Switzerland, according to the a Federal Administration Code of Conduct, if federal employees are aware of information regarding SOEs that is not public knowledge and which is likely to influence the value of shares, these employees are not allowed to enter into transactions with such shares (Art. 94c).
2. Restrict public officials from becoming involved in the corporate governance of private sector enterprises (e.g. to work in or provide services).
3. Implement confidential channels for public officials to report suspected instances of corruption or rule-breaking, involving SOEs, to responsible authorities that have the mandate and capacity to conduct investigations free from undue influence (e.g. specialised anti-corruption agencies and integrity institutions, law enforcement bodies, Court of Accounts).
In Chile, the Ethics Code covering representatives of the ownership entity (SEP) establishes investigation procedures for complaints, which can be made anonymously through a form available on the SEP intranet that initiates an investigation procedure. In Switzerland, Article 22a of the Federal Personnel Act provides that all employees be obliged to report all crimes or misdemeanours to be prosecuted ex officio, which they have discovered in the course of their official duties or which have been reported to them, to the criminal prosecution authorities, their superiors or the Swiss Federal Audit Office (SFAO). Employees are entitled to report to the SFAO (e.g. via an online whistleblowing platform) other irregularities that they have discovered in the course of their official duties or that have been reported to them. Anyone who reports or reports in good faith or who has given evidence as a witness must not be disadvantaged in his professional position as a result. The Federal Office of Personnel has published a guide. The whistleblowing platform is open and accessible for everybody.
4. Protect whistle-blowers from all types of unjustified treatments when reporting suspected instances of corruption or irregular practice.
In the United Kingdom, the Public Interest Disclosure Act 1998, which protects whistle-blowers who make certain protected disclosures from detrimental treatment by their employer, is equally applicable to staff at the state level as it is to those working within SOEs. It is best practice in the UK for organisations in the public and private sector to have their own internal whistleblowing policies. For example, UK Government Investments (UKGI, which performs an ownership function) has its own whistleblowing policy applicable to its staff and expects the Board of its SOEs to regularly update their own whistleblowing policies. In addition, the UK Government has produced guidance (Whistleblowing: guidance for employers and code of practice) for employers to understand the law relating to whistleblowing, how to implement a whistleblowing policy and to recognise the benefits whistleblowing can bring to an organisation.
5. Subject public officials to conflict of interests rules.
In Chile, the ownership entity (SEP) has an Ethics Code for its advisers, officials, and directors. The Code reminds representatives that their job is to serve the state, putting general interest before that of individuals, performing work honestly and to the best of their abilities including being objective and transparent in decision-making. It disavows acceptance of any benefits that requires illegal or inappropriate behaviour, or non-compliance with established procedures, providing the explicit example of bribery. SEP representatives are obliged to note, and refuse to act on, any situation that could reduce their objectivity. In France, representatives of the French ownership entity (APE) must sign a Code of Ethics upon taking their duty, which includes provisions relating to the management of conflicts of interest, gifts and invitations offered by companies and the management of their financial instruments. They are moreover required to fill in a declaration of interest and, in certain cases, an asset declaration (art. 25 of ‘Loi Le Pors’). Declarations of interest are transmitted to the relevant authorities in the nomination process. In cases of doubt regarding potential conflict of interest, the declaration can be transferred to the High Authority for Transparency in Public Life (“HATVP”) to pronounce itself on the conflict.
6. Subject public officials to provisions on handling sensitive information to mitigate risks of insider trading.
Source: (OECD, 2020[46])
In order to further limit the likelihood of undue influence on SOEs’ operations, good practice also calls for the state to:
clearly set SOE objectives and avoid redefining these objectives in a non-transparent manner, and
provide SOEs with channels to seek advice or report when government representatives give instructions that appear irregular.
While the Romanian framework for setting SOE objectives was substantially improved in 2016 with Law no. 111/2016 and Government Decision (GD) no. 722/2016 which introduced provisions to align expectations from ownership entities and SOEs, it should be noted that this framework is intrinsically linked to the board and executive appointment process, which is itself often bypassed. As KPIs are not set for interim appointees, this makes the monitoring of specific objectives difficult, which can have implications for integrity.
As such, consideration could be given to establishing reporting channels through which SOEs would be able to seek advice or to report instructions given by representatives of government, including those of the ownership entity, which appear to be irregular (Recommendation III.3) (OECD, 2019[44]). For instance, in Chile, the Comptroller General has a unit for public enterprises through which they can make inquiries. There is also a complaints channel available for SOEs to use as needed (OECD, 2020[46]). In the same vein, consideration could also be given to setting a transparent communication framework that would include maintaining accurate records of communication between the ownership entity and SOEs. This could entail setting rules mandating to keep copies of the written correspondence, minutes of telephone discussions and meetings between the ownership entity and the SOE by both the ownership entity and the SOE and make them available to the competent authorities on request. This would help deter illicit activities and facilitate investigations if the case arises (OECD, 2020[46]) (Box 2.8).
Box 2.8. Selected approaches setting and communicating high expectations regarding corruption and integrity in SOEs
In Finland, the state ownership entity considers corruption and integrity matters to be the responsibility of companies and management. The state ownership entity considers it favourable that SOEs use internationally recognised guidelines and principles for corporate social responsibility in their activities, including for example, the OECD Guidelines for Multinational Enterprises, the UN Global Compact initiative, the ISO 26000 Social Responsibility Guidance Standard and the UN Guiding Principles on Business and Human Rights. A dialogue about the state’s anti-corruption and integrity ownership expectations between the representatives of the state ownership entity and the Chairs of the boards takes place on a company-by-company basis at least once a year.
In Italy, the Ministry of Economy and Finance and anti-corruption authority (ANAC) set up a dedicated working group to create guidelines for partly or wholly owned SOEs, at the central and local level. Upon completion in 2015, the Ministry released a directive addressed to the companies controlled or partly owned by the Ministry itself. The directive illustrates the basic contents of the measures that should be adopted: introduction of codes of conduct or the integration of ethical codes already in force and establishment of a sanctions system; transparency; mechanisms to verify incompatibility and/or ineligibility for management; measures to protect whistleblower protection and avoid “revolving doors”; bans for employees who cease their positions, and; employee training and job rotations.
In New Zealand, Shareholding Ministries expect Crown Company boards to adhere to the ‘no surprise policy’ and be informed well in advance of everything considered potentially contentious in the public arena, whether the issue is inside or outside the relevant legislation and/or ownership policy. Examples of information that fall within the “no surprise” policy include: changes in CEOs; potential or actual conflicts of interest; potential or actual litigation by or against the company or its directors or employees; fraudulent acts; breaches of corporate social responsibility obligations; the release of significant information under the Official Information Act, and; imminent media coverage of activities that could raise criticism and beg for a response from shareholding ministries.
Source: (OECD, 2020[46])
Strengthening integrity and prevention of corruption at enterprise level
Several tools exist for ownership entities to promote integrity and prevent corruption in SOEs. These include the promotion of effective internal and external controls, ethics and compliance measures, and disclosure requirements that can prevent, detect and mitigate corruption-related risks (OECD, 2020[46]). While Romania has made progress on this front with the adoption of relevant laws, regulations and standards in recent years, some lags in implementation exist.
Romania could develop an integrated risk-management system in SOEs and review the adequacy of mechanisms for internal control and audit
The risk management framework of a company is the cornerstone of corporate governance from which all internal controls could be derived, and ineffective internal control and risk management can stand as an impediment to integrity (OECD, 2020[46]).
In Romania, internal management control systems, risk management policies and risk monitoring are required to be implemented in SOEs as part of the “corporate governance indicators” set for individual board members and executive managers upon their appointment, as part of the objective-setting process. According to GD no. 722/2016, the degree of compliance with these corporate governance KPIs should determine between 50-75% of the variable remuneration of board members, and between 10-25% of the variable remuneration of executive managers. However, again, as this is linked to the appointment process which is itself often bypassed, KPIs – including corporate governance indicators – remain widely unused for individual SOE board and executive members (see section above). As such, it is unclear whether adequate risk management frameworks are actually established in SOEs.
In spite of this, all SOEs are subject to Law no. 672/2002 on internal public audit, which requires internal auditors to independently assess risk management, control and governance processes, and to report directly to the board. According to Law 162/2017, SOEs are also required to have an external audit under the co-ordination of the audit committee, which is responsible for selecting the external auditor, for ensuring his/her independence and objectivity, and for monitoring the external audit of financial statements. While this stands in line with good practice, some issues may exist with regard to the independence of the audit committee in some SOEs. Indeed, while SOEs are also required to establish an audit committee comprised of a minimum of three non-executive and independent members, for SOE boards with a majority interim appointees bypassing independence criteria, it may be inferred that the composition of the audit committee may not fully comply with independence requirements.
In addition, it is also worth noting that while all SOEs are required to submit their annual financial statements, and the consolidated statements with the auditor’s report, to the Ministry of Finance and their ownership entities and publish them on their website, as of 2020 only 67% had published their annual financial statements, and 62% had published the audit report.
In line with good practice, according to Law no. 94/1992, the Court of Accounts also carries out performance and compliance audits of majority owned SOEs (with more than 50% of state shareholding), using internal audit report to delve deeper into any issues that may be identified internally. If irregularities are found, a notice is sent to SOE’s management, as well as to the ownership entity, who are then required to take measures to address the issues identified according to a set deadline. The auditee can also challenge the decision before the court.
Romania could further encourage the adoption of integrated risk management systems in SOEs, which should be treated as integral to achieving SOE’s objectives and its strategy, instead of simply mitigating possible sanctions for non-compliance with laws (Recommendation IV.1.i) (OECD, 2019[44]). The government could review the adequacy of SOE mechanisms for internal control, risk management and internal audit, to ensure that controls envisioned by existing state legislation are implemented and, as would be called for by good practice, are tailored to the specific risks of each company. Consideration could also be given to ensure that there are processes and individuals or groups within the company that have sufficient autonomy to assess the adequacy of risk management processes more broadly, and well as related controls, and to raise concerns to the board. Anti-corruption related rules and controls within the company (e.g. integrity plans) could also be integrated into the overall system for internal controls and risk management (as detailed below). Of note, this is in line with one of the objectives set by NAS 2021-2025, namely: “develop[ping] a national compliance monitoring system from the perspective of integrity, at the level of public enterprises”.
Romanian could better monitor the implementation of integrity measures and mechanisms at SOE-level
While corruption or irregular practices may signal and absence of or weak internal controls, where internal controls exist, their relevance and effectiveness may need to be improved. This goes hand in hand with disseminating a culture of integrity across the company. Indeed, SOEs consider one of their greatest obstacles to integrity is a lack of awareness of SOE officials to the importance of integrity (OECD, 2020[46]).
Good practice calls for the state to encourage integrity mechanisms to be made applicable to all levels of corporate hierarchy and all entities over which a company has effective control, including subsidiaries (Recommendation IV.3) (OECD, 2019[44]). In Romania, the board of each SOE is required to establish a policy related to conflicts of interest and its implementation plan. In that aim, the board adopts, within 90 days of its appointment, a code of ethics, which should be revised annually, and be approved by the internal auditor. The code of ethics should be published by the chair of the board on the SOE’s webpage within 48 hours of its adoption and, in case of revision, on 31 May of the current year. However, as of 2020, only 61% of centrally owned SOEs subject to this requirement had published the code of conduct and professional ethics (Ministry of Finance of Romania, 2021[36]). This may be due to the fact that its adoption is linked to the board appointment process, which is itself often bypassed.
Good practice also calls for SOE board and executive members to make declarations to relevant bodies regarding their investments, activities, employment and benefits from which a potential conflict of interest could arise (Recommendation III.9.iv) (Box 2.9) (OECD, 2019[44]). In Romania, board members and executive managers of SOEs are required to disclose declarations of assets and interests, which can be completed and submitted through the e-DAI platform administered by the National Integrity Agency. While SOEs are also required to disclose the CVs of each board member and executive manager, as of 2020, only around 70% of centrally owned SOEs had complied (Ministry of Finance of Romania, 2021[36]).
Box 2.9. Croatia’s anti-corruption programme
In Croatia, the Anti-Corruption Programme 2019-2020 for majority-owned companies requires that all majority state-owned enterprises adopt a Code of Ethics, which requires companies to define the procedures for implementing ethical policies, including rules and procedures for reporting corruption and other integrity violations. In particular, the Code should define procedures for implementing these ethical policies, as well as disciplinary actions to be taken in the case of their violation. One of the key requirements is that management board members, executives of the company and all other employees of the company at all levels and positions must adhere to this Code in the performance of their duties. Its primary purpose should be to integrate these principles within the company’s business processes and work environment, so that these principles become regular behaviour for all employees of the company, in line with ethical and professional standards and the generally accepted societal values.
Source: (OECD, 2020[46])
While elements for ensuring integrity and fighting corruption include codes of conduct, compliance function, integrated risk management, and internal and external controls, and are usually integrated into SOEs’ corporate governance structure, they may also be integrated into specific “integrity programmes” (OECD, 2016[47]). In Romania, SOEs which adhere to the National Anti-Corruption Strategy (NAS) commit to developing “integrity plans” which contain, amongst others, measures identified by the company’s management as remedies for the risks and institutional vulnerabilities to corruption. While these plans are actively recommended by the NAS, evidence suggests that their uptake remains the exception rather than the rule (and may be restricted to the largest SOEs only), as they are developed on a voluntary basis. Further, as stated through the text, while the NAS provides for a comprehensive definition of integrity plans and what they should include, for SOEs that do not disclose their annual reports (as required by law), it is unclear if and how integrity plans are actually implemented (see Box 2.11 below).
As the NAS 2021-2025 seeks to further promote the use of integrity plans and the implementation of a compliance function in SOEs to oversee their implementation, it is important to note that good practice calls for risk management and control activities to not be siloed in stand-alone programmes, but truly integrated into company strategy and processes. In addition, it is important that those responsible for overseeing implementation of integrity programmes have, inter alia, adequate qualifications and autonomy, and take into consideration the questions outlined in Box 2.10 below.
Box 2.10. US Department of Justice – Evaluation of Corporate Governance Programmes
a. Autonomy – Have the compliance and relevant control functions had direct reporting lines to anyone on the board of directors? How often do they meet with the board of directors? Are members of the senior management present for these meetings? Who reviewed the performance of the compliance function and what was the review process? Who determines the compensation, bonuses, pay rises, hiring, or termination of compliance officers? Do the compliance and relevant control personnel in the field have reporting lines to headquarters? If not, how has the company ensured their independence?
b. Empowerment – Have there been specific instances where compliance raised concerns or objections in the area in which the wrongdoing occurred? How has the company responded to such compliance concerns? Have there been specific transactions or deals that were stopped, modified, or more closely examined as a result of compliance concerns?
c. Stature – How has the compliance function compared with other strategic functions in the company in terms of stature, compensation levels, rank/title, reporting line, resources, and access to key decision makers? What has been the turnover rate for compliance and relevant control function personnel? What role has compliance played in the company’s strategic and operational decisions?
d. Experience and qualifications – Have the compliance and control personnel had the appropriate experience and qualifications for their roles and responsibilities?
e. Funding and resources – How have decisions been made about the allocation of personnel and resources for the compliance and relevant control functions in light of the company’s risk profile? Have there been times when requests for resources by the compliance and relevant control functions have been denied? If so, how have those decisions been made?
f. Outsourced compliance functions – Has the company outsourced all or parts of its compliance functions to an external firm or consultant? What has been the rationale for doing so? Who has been involved in the decision to outsource? How has that process been managed (including who oversaw and/or liaised with the external firm/consultant)? What level of access does the external firm or consultant have to company information? How has the effectiveness of the outsourced process been assessed?
Source: (US DoJ, 2017[48])
Good practice also calls for the state to consider promoting the importance of internal controls, ethics and compliance measures in the SOEs through educational campaigns, including by organising joint training activities (Recommendation IV.4) (OECD, 2019[44]). In Romania, this is already the case as the state has set up a platform for exchange of information and good practice between the private sector and SOEs. In addition, the American Chamber of Commerce in Romania (“AmCham”) has developed guidelines in recent years to share good practices on a number of integrity issues, including risk control, compliance officers, conflicts of interest, and third parties’ anti-corruption due diligence. It is also worth noting that all AmCham members – including both public and private companies – are required to adhere to AmCham Romania Code of Corporate Governance (AmCham, 2010[49]) and AmCham Romania Anti-Corruption Guidelines (AmCham, 2012[50]).
Romania could revise sanctions to better implement disclosure requirements to promote accountability of SOEs
Disclosure and transparency play a critical role in promoting integrity in the SOE sector. Good practice calls for the state to require SOEs to publish annual reports on their performance with audited financial statements (Recommendation V.1) (OECD, 2019[44]). In Romania, in order to ensure access to information by all shareholders in an equal manner, as well as the general public, Law no. 111/2016 requires SOE boards to publish the following documents: board resolutions, annual financial statements, quarterly accounting reports, annual audit reports, a list of executive managers and members of the board, and their code of conduct. However, in 2020, only around three-fifth of SOEs complied with these requirements on average (Box 2.11).
Although the Ministry of Finance has sanctioning powers in case of non-compliance, these sanctions are generally very limited, involving mostly monetary fines that appear puny in the larger context of ministerial budgets, and which may not be sufficient to deter bad behaviour. As such, consideration could be given to revising the sanctioning system in order to secure greater compliance – for instance by increasing the amounts of fines or revising penalties altogether in order to implement a “gradual” enforcement system.
Box 2.11. Compliance with transparency requirements as provided by Law no. 111/2016
According to the Ministry of Finance, in 2020, out of the 151 SOEs required to abide by these obligations:
85% had their own website
67% had published their annual financial statements
62% had published the audit report
64% had published the half-yearly accounting reports
62% had published the report of directors
61% had published the code of conduct and professional ethics
69% had published the CVs of board members and executive managers
47% published information on board and executive remuneration
62% published the decisions of the general meeting of shareholders.
Good practice also calls for the state owner to develop its practice of aggregate reporting. In Romania, based on the information collected from SOEs, the Ministry of Finance prepares an annual report on central and local SOEs reporting on their activities during the previous fiscal year. The report notably includes information on subsidies granted to both central and local SOEs from the state budget, dividends and payments distribution and transferred by SOEs, outstanding payments of SOEs, as well as economic and financial indicators of SOEs grouped by sector of activity. The report is submitted to government and made publicly available on the Ministry of Finance’s website. In line with good practice, this effectively ensures highly accessible and transparent information about the evolution, size, value and performance of the state-owned sector.
Proposals for action
The recommendations detailed in this chapter provide input on ways through which Romania could develop and improve in strategic sectors (health, education and SOEs). These recommendations can inform current and ongoing reforms and strengthen Romania’s capacity to respond to corruption. Romania could consider taking steps to further strengthen its integrity system by:
Strengthening integrity measures in the health sector
Romania could consider special integrity measures for the health sector, including the development of a coherent and all-encompassing health sector anticorruption policy, that takes into consideration sector-specific risks and procurement risk maps
Developing a coherent health sector integrity and anticorruption strategy, which could be endorsed by the top leadership through the revised sectorial integrity plan.
Establishing a cross-departmental or cross-institutional working group for integrity policies in the health sector.
Developing a small sub-working group of relevant health sector institutions, including ANI, NAPP, the National Digitalisation Agency and consider creating the role of a high-level integrity adviser within the MoH.
Empowering the “health sector working group” in their overseeing of the NAS implementation as well as entrusting it with the monitoring of the integrity and anti-corruption policy for the for the health sector.
Developing a solid, explicit and frank problem diagnosis of integrity issues in the Romanian health sector. Such an exercise should assess integrity, corruption and opacity risks and identify actual practice of corruption and clientelistic capture. An independent analysis, by civil society or academia, could be consider as a complement, to ensure credibility and legitimacy.
Involving all relevant stakeholders from within the system and public entities as well as its providers and users in the diagnosis and monitoring of integrity policies. Furthermore, the assessment could be focused on a selection of priority areas of the Romanian health system to make it more manageable, and priorities could be collectively defined between actors from the public sector, civil society, academia, and the private sector.
Conducting a rapid review of the development and implementation of anticorruption strategies in a selection of key health sector institutions (e.g. MoH, NHIH, MDA, large spending hospitals (either specialised or regional hospitals) and linked with the development of integrity plans.
Developing sectorial guidelines on integrity plans, considering that certain institutions lack the maturity level to apply the general methodological guides provided by the MoJ.
Developing sector-focused lines of action, including a conflict-of-interest analysis, the ex ante controls of procurement through PREVENT and an analysis of the declarations of interests to identify and address some of the alleged misconduct and institutional capture in the health sector in a more systematic way.
Linking institutional and integrity performance, including in the identification of a few relevant institutional performance indicators as well as the development of meaningful institutional integrity plans in health sector institutions.
Developing meaningful institutional monitoring mechanism in priority areas such as evidence-based allocation of funds, transparent appointments and contracting of leading health sector staff as well as accountability for institutional performance, hospital recruitment of doctors, procurement of medical inputs and hospital infrastructure and integrity in service delivery.
Developing a risk map of corruption in public procurement and include sub-sections for priority sectors.
Romania could strengthen its integrity management systems and integrity culture in health institutions by creating a network of sector specific ethics counsellors and developing a more stringent meritocratic process thought the sector
Creating a sector specific networks of ethics counsellors in the health sector.
Developing methodologies for assessing individual and collective behavioural change of public officials in key decision points of the health sector institutions.
Make use of ANI’s existing handbook for ethics guidance to be complemented with examples and specific cases from Romania’s health sector.
In order to ensure effective protection of citizens who report alleged integrity incidents, each health institution could identify or develop its own reporting channels and assess internally what works or not and why.
Assessing the possibility and viability of a single “window” for receiving complaints and reports in the health sector. Such a mechanisms could channel the complaints and reports of the relevant entity, oversee the effective handling of the allegations, analyse trends of misconducts, as well as the respective drivers and enablers for each institution.
Considering strengthening the implementation of the “Romanian Sunshine Act”, particularly, in the area of education for health professionals and their dependence on and influence by the pharma industry.
Strengthening integrity measures in the education sector
Strengthening integrity measures by assigning proper resources within the MoE for the implementation and monitoring of NAS activities in their sector.
Conducting an analysis of needs in the sector, including guidance and training needed in the area of integrity and work alongside the MoJ to provide sector institutions with the necessary tools to effectively implement them.
Increasing ownership and commitment to implementing the wide range of integrity measures within the sector, not only those contain in the NAS but the enlarged integrity system in the education sector.
Romania could develop a culture of integrity at the education system by developing an all-encompassing integrity strategy and working alongside School Boards, Inspectorates, and Associations to mainstream through the sector
Developing a bottom-up approach to an integrity policy in the education sector by engaging School Boards, the Inspectorate, and the Parent-Teacher Associations to build consensus on which problems to prioritise, taking into account their political feasibility.
Making use of different policy tools to build up momentum on integrity policies in the education system. Amongst those: transparency-promoting tools, participatory budgeting, and public expenditure tracking surveys. Moreover, accountability-promoting tools, such as performance-based contracting, teacher codes of conduct, community monitoring, complaints mechanisms, salary reform, procurement reform, and public financial management reforms.
Strengthening the reports of the Inspectorate by including statistics, highlight trends and encouraging ethical behaviours.
Assessing schools in Romania by ranking them along several criteria.
School Boards and teacher associations could consider local cases of ethical infractions and act to deter integrity violations.
Developing and incentivising the use of “Test Security Plans” to ensure a fair and standardised testing and examination through the entire education system.
Romania could promote more targeted integrity initiatives at universities and increase its efforts to advertise such initiatives
Establishing university’s anti-corruption activities and organisational structures with the following:
Within each faculty (Education, Law, Medicine, Business etc.) a student committee elected by other students to hear cases of plagiarism. With a faculty advisor, this committee would be free to declare the student innocent of the charge, guilty but with a modest punishment, guilty with a significant punishment (e.g. expulsion for a year), or permanent expulsion.
Within each faculty a committee to hear cases of faculty professional misconduct with a boarder spectrum of sanction options.
Codes of conduct for members of faculty, students, and administrators published on the university website and signed each year.
A university-wide committee on integrity which oversees and reports on the activities of each of these other committees, circulates the results, and encourages discussions about them.
Analysing admission criteria for universities as a way of mainstreaming integrity policies through the education system.
Strengthening integrity measures in state-owned enterprises (SOEs)
Romania could strengthen the exercise of state ownership for integrity by setting up robust ownership arrangements, establishing clear expectations around integrity, and safeguarding the autonomy of SOEs’ decision-making bodies
Strengthening ownership arrangements through clearly identifying ownership rights and ensuring adequate resourcing. This could either entail better equipping the “corporate governance structures” established within line ministries to ensure that they are properly resourced – both in terms of budget and staff, or further centralising the state ownership function. Consideration could also be given to mandating that these structures, or central state ownership agency, include an ethics advisor or officer.
Revising and enforcing the framework for accountability of SOE boards to promote board autonomy and integrity. In particular, board members should be selected based on a set of clear criteria and subject to transparent procedures, the majority of whom should be independent (i.e. non-state and non-executive members).
Setting high integrity expectations for SOEs and their management through appropriate legislative provisions and the establishment of reporting channels. At a minimum, the state should have clear processes for communication between state representatives and SOEs so that illicit instructions cannot bypass proper channels of communication with board members or executive management.
Romania could strengthen integrity and prevention of corruption at enterprise level, including through the promotion of effective internal and external controls, ethics and compliance measures, and disclosure requirements that can prevent, detect and mitigate corruption-related risks
Developing an integrated risk-management system in SOEs and review the adequacy of mechanisms for internal control and audit. This would ensure that controls envisioned by existing state legislation are implemented and tailored to the specific risks of each company.
Consideration should also be given to ensure that there are processes and individuals or groups within the company that have sufficient autonomy to assess the adequacy of risk management processes more broadly, and well as related controls, and to raise concerns to the board.
Monitoring the implementation of integrity measures and mechanisms at SOE-level, in particular for those SOEs which do not abide by disclosure requirements, and where it is unclear if and how integrity plans are actually implemented. Anti-corruption related rules and controls within the company (e.g. integrity plans) should also be integrated into the overall system for internal controls and risk management.
Revising sanctions to better implement disclosure requirements to promote accountability of SOEs. While the Ministry of Finance currently has sanctioning powers in cases of non-compliance by both ownership entities and SOEs – including disclosure requirements – evidence suggests that they are insufficient to deter illicit behaviour. At a minimum, efforts could be made to ensure that sanctions are effective, proportionate and dissuasive. Consideration could also be given to revising the system altogether to implement “gradual” sanctions that would require monitoring to ensure effective enforcement and improved compliance over time.
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