This chapter analyses Costa Rica’s legal and institutional framework for managing conflict of interest. In particular, it provides recommendations related to the fragmented legal framework, the need to improve co-ordination between stakeholders and the use of a risk-based approach in reviewing and analysing asset declarations. Furthermore, the country could establish an overarching definition for conflict of interest that can be mainstreamed by way of policies, guidance and training through the entire public sector. Finally, the chapter provides recommendations to improve its system for the prevention and management of conflict of interest.
OECD Integrity Review of Costa Rica
Safeguarding Democratic Achievements
OECD Public Governance Reviews
3. Strengthening conflict of interest management in Costa Rica
Abstract
A “conflict of interest” involves a conflict between the public duty and private interests of a public official (OECD, 2004[1]). When conflict of interest situations are not properly identified and managed, they can seriously endanger the integrity of organisations and may lead to corruption in the public sector and private sector alike.
Conflicts of interest have become a major matter of public concern worldwide. Furthermore, a public sector that increasingly works closely with the business and non-profit sectors gives rise to new forms of conflict between the private interests of public officials and their public duties. When prevention mechanisms fail and a conflict of interest becomes corruption, the reputation of democratic institutions are put to the test and trust in government undermined. In the private sector too, conflicts of interest have been identified as a major cause behind corporate governance shortcomings (OECD, 2004[1]). Therefore, having a strong and consolidated framework, where management and prevention of conflict of interest situations are effective, is key to safeguarding democratic achievements.
Of key importance is the understanding and recognition that everybody has interests; interests cannot be prohibited, but rather must be properly managed. The OECD Recommendation on Public Integrity (OECD, 2017[2]) has called for countries to set high standards of conduct for public officials, in particular through:
Setting clear and proportionate procedures to help prevent violations of public integrity standards and to manage actual or potential conflicts of interest.
Providing easily accessible formal and informal guidance and consultation mechanisms to help public officials apply public integrity standards in their daily work as well as to manage conflict-of-interest situations.
Averting the capture of public policies by narrow interest groups through managing conflict-of interest situations.
The legal framework for public ethics and managing conflict of interest in Costa Rica
Costa Rica could strengthen its integrity regulations as the backbone to managing conflict of interest, including the unification of the relevant legislation and standards into one cohesive and overarching regime
Managing conflict of interest is an inherent part of the wider ethics framework and is intrinsic to the integrity of government. A country’s ethics infrastructure has at its base a legal framework in which laws and regulations define the basic standards of behaviour for public servants and enforce them through systems of investigation and prosecution (OECD, 2017[3]). In all OECD member countries, conflict-of-interest policies and rules are stated in the country’s legal framework.
The descriptive and prescriptive approaches to managing conflict-of-interest situations are usually used simultaneously (OECD, 2017[3]):
Descriptive approach: General principles set out the regulations for managing conflict-of-interest situations for public officials, while complementary specific rules provide guidance exemplifying cases.
Prescriptive approach: Specific situations that are incompatible with the role and duties of public officials are described, and public officials are given detailed enforceable standards they should use to manage them.
Costa Rica, like many OECD countries, has established basic standards to manage and prevent conflict of interest, albeit in a fragmented manner. Law 8422 “Against Corruption and Illicit Enrichment in Public Service” (Ley contra la corrupción y el enriquecimiento ilícito, Articles 3, 14, 16, 18, 19 and 20) contains a few blank prohibitions, e.g. receiving gifts, donations or conducting private activities. The Law includes subsequent disciplinary sanctions, but fails to address, altogether, the issue of conflict of interest. Furthermore, neither the Law nor its regulations contain a clear overarching definition of a conflict of interest nor standards for the hiring of private sector employees joining the public sector (pre-public employment measures). Similarly, the Civil Service Statute (Articles 39 and 40) and the Civil Service Regulation (Articles 9, 50 and 51) include provisions on prohibitions and incompatibilities. Further prohibitions and sanctions are stated in the General Law on Internal Control (Law 8292, Ley General de Control Interno). Guideline D-2-2004 (Regulation of Law 8422) states a list of examples of what constitutes a conflict of interest, but it is unclear how far this is used in day-to-day practice.
In Costa Rica, further laws and regulations making reference to conflict of interest situations are:
The National Constitution (Constitución Nacional) Articles 109, 111, 112, 132, 143, 160 and 161)
Law 7494 on Administrative Procurement (Ley de Contratación Administrativa) (Articles 22, 22bis and 24)
Regulations of the Law on Procurement 33411 (Reglamento a la Ley de Contratación Administrativa) (Articles 19 and following)
The General Law of the Public Administration, Law 6227 (Ley General de la Administración Pública) (Articles 230 to 238)
Executive Decree 33146 of 2016 “Ethical Principles for Public Officials” (Principios Éticos de los Funcionarios Públicos)
Several issues arise from this fragmented legal framework. First, it is difficult for public officials to know what measures or legal regime applies to them. Second, as previously stated, the legal framework mainly lists prohibitions and sanctions, but officials in Costa Rica lacks guidance on what constitutes a conflict of interest.
In the legislative branch, Legislative Assembly Staff Act No. 4556 includes provisions on obligations, prohibitions and disciplinary sanctions. The Code of Ethics and Conduct of the Legislative Assembly (Standing Order No. 200, 2013) includes the obligation to avoid conflicts of interest situations for members of the personnel of the Legislative Assembly. Neither the Act nor the Code provide a definition of a conflict of interest. The only regulation in the legislative branch to provide such as definition is the Autonomous Regulation of Services of the Legislative Assembly (No. 40), which covers public servants providing services to the Legislative Assembly on a subordinate basis. In Article 38, conflict of interest is understood as “any situation or event in which the direct or indirect personal interests of associates, administrators or civil servants of an organisation or institution are in opposition to those of the entity; interfere with the duties that correspond to it, or lead them to act in their performance for reasons other than the correct and actual fulfilment of their responsibilities”.
Notwithstanding challenges in the executive branch and the legislative branch, Costa Rica’s judiciary has moved forward in establishing specific and well-defined conflict-of-interest regulations and in providing guidance. The Regulation for the “Prevention, Identification and Management of conflict of interest in the Judiciary” seeks to allow judicial operators to prevent, identify and manage possible conflicts of interest. It also provides a definition of a conflict of interest in the judicial branch and the types of private interests with the ability to generate conflicts of interest. The Regulation contains guidance on steps to formally report a possible conflict of interest (to its hierarchical superior) and recusals when handling cases related to their former private practice. More interestingly, it contains a specific set of measures and obligations directed to managers. In those, it stresses the key role of management in identifying possible conflict of interest in their offices, sending reminders to staff about the importance of reporting conflict of interest situations and the scope of the applicable obligations. It also encourages management to create open spaces and an environment of confidence so that their teams can formulate questions and reveal situations that may place them in a potential conflict of interest. Furthermore, it states that providing an appropriate solution to situations is key to prevent a bigger negative impact on judicial management, affecting the image and credibility of the Judiciary.
Amongst other building on this successful experience in the Judiciary, Costa Rica could consider setting additional standards and regulations, which will be cover in more detail through this chapter, including regulations for pre and post-public employment situations (i.e. cooling off periods) and the proper management of conflict of interest. Similarly, Costa Rica could consider other relevant conflict-of-interest measures, beyond the purely legal reforms, such as guidance and specific sector regulations. These may include bans and restrictions for a limited period and for certain categories of public officials, interest disclosure prior to or upon entry into functions, the development of a unified ethic code, specific sectorial codes of ethics based on integrity risk management and defining general principles and values as recommended in Chapter 1. In short, Costa Rica could work towards strengthening its legal and ethical framework to be able to identify and manage conflicts of interest, whilst aiming at ensuring effective control, monitoring and evaluation, including through the system of asset disclosure forms.
Costa Rica could consider enacting specific legislation for the identification and management of conflict-of-interest situations in pre and post public employment
One of the main risks and concerns related to conflict of interest is the revolving door. Movements between the private and public sectors result in many positive outcomes, notably the transfer of knowledge and experience. However, it can also be a vehicle for undue or unfair advantage to influence government policies if not properly regulated.
Currently, Costa Rica lacks the appropriate legal provisions to regulate the interaction with the private sector in pre and post public employment situations. Besides the legal vacuum, more concerning is the fact that Costa Rica lacks a policy or procedure for detecting and timely addressing such situations. Several cases have emerged in the media recently regarding questions of impropriety in senior public officials that have opened a public debate on the need to screen candidates to senior positions with much greater care (pre-employment screening integrity checks or reference checks) (Barahona Krüger, 2020[4]). Similarly, a “cooling-off” period is lacking in the current integrity framework, which may raise questions of impropriety. This situation is no different from other OECD countries, where public officials who leave the public sector, move beyond administrative government control (Table 3.1) (OECD, 2022[5]).
Many of these measures are difficult to implement, however, as countries may risk discouraging talented individuals from accepting public sector positions. In devising its revolving door regime, a country should keep in mind that revolving door restrictions should protect governmental processes from abuse but should not be so onerous that the public sector can no longer attract the highly talented individuals needed for certain positions. This requires a balance of competing public interests (Zimmermann et al., 2020[6]). Therefore, countries should be mindful of identifying the right balance between restrictions and incentives. In particular, Costa Rica could develop a risk-based approach and appropriate oversight to ensure implementation of these measures.
Table 3.1. Provisions on cooling-off periods (post-public employment) in OECD countries
Source: OECD Product Market Regulation Indicators (2018) and additional research by the OECD Secretariat.
Box 3.1. Post-employment measures in Canada and the Application Guide
In Canada, post-employment measures are included in the Policy on People Management and the Directive on Conflict of Interest to reinforce the integrity of the public service by preventing public servants from improperly benefiting themselves or others after they leave their positions with the government.
As a general principle, all public servants have a responsibility to minimise the possibility of real, apparent or potential conflict of interest between their responsibilities within the federal public service and their subsequent employment outside the public service. Before leaving their employment with the public service, all public servants are requested to disclose their intentions regarding any future outside employment or activities that may pose a risk of real, apparent or potential conflict of interest with their current responsibilities and discuss potential conflicts with their manager or seek guidance from their designated senior official. If a post-employment risk is determined, public servants must report the risk to their deputy head in accordance with their organisation’s procedures.
Public servants may be subject to limitations if the employment outside the public service may constitute a conflict of interest with their public service duties. A “cooling-off” period of one year may be applied in order to limit contacts between the former public servant and private sector organisations with which that person had business dealings.
The online Application Guide for Post-Employment provides detailed information about the policy measures, the risk-based approach and the responsibilities and duties of staff and managers. Furthermore, the Guide provides direction on enforcement and sanctions and contains a number of case studies.
Regarding restrictions on private-sector employees being hired to fill a government post, practical measures such as bans and restrictions for a limited period, interest disclosure prior to or upon entry into functions, ethical guidance for upcoming officials or pre-screening integrity checks have not been implemented in Costa Rica. Such measures exist in France and the United States, for example (Box 3.2).
Box 3.2. Restrictions on private-sector employees being hired to fill a government post
France
In France, Article 432 of the Penal Code places restrictions on private-sector employees appointed to fill a post in the public administration. For a period of three years after the termination of their functions in their previous employment, they may not be entrusted with the supervision or control of a private undertaking, with concluding contracts of any kind with a private undertaking or with giving an opinion on such contracts. They are also not permitted to propose decisions on the operations of a private undertaking or to formulate opinions on such decisions. They must not receive advice from or acquire any capital in such an enterprise. Any breach of this provision is punished by two years’ imprisonment and a fine of EUR 30 000.
The public service transformation Act of 6 August 2019 also tasks the High Authority for Transparency in Public Life (Haute Autorité pour la transparence de la vie publique, HATVP) with a “prenomination” control for certain high-ranking positions. A preventive control is carried out before an appointment to one of the following positions, if an individual has held positions in the private sector in the three years prior to the appointment:
Director of a central administration and head of a public entity whose appointment is subject to a decree by the Council of Ministers.
Director-general of services of regions, departments or municipalities of more than 40 000 inhabitants and public establishments of inter-municipal co-operation with their own tax system with more than 40 000 inhabitants.
Director of a public hospital with a budget of more than EUR 200 million.
Member of a ministerial cabinet.
Collaborator of the President of the Republic.
United States
Once they have taken office, former private-sector employees and lobbyists are subject to a one-year cooling-off period in situations where their former employer is a party or represents a party in a particular government matter. This restriction applies not only to former private-sector employees and lobbyists, but also to any executive branch employee who has, in the past year, served as an officer, director, trustee, general partner, agent, attorney, consultant, contractor or employee of an individual, organisation or other entity.
In the case of an employee who has received an extraordinary payment exceeding USD 10 000 from their former employer before entering government service, the employee is subject to a two-year cooling-off period with respect to that employer.
Source: (OECD, 2021[7]).
Considering the existing legal void to address conflict-of-interest situations in pre and post public employment and the lack of other available management tools, Costa Rica could consider the following actions:
Strengthen pre and post-public employment restrictions in legislation by establishing the scope of officials and activities covered and the length of the cooling-off period, considering a risk-based approach and an appropriate balance between restrictions and incentives for future public sector officials (e.g. bans on lobbying may be appropriate for a specific period of time (Chapter 4), while restrictions related to certain insider information could be applied until the sensitive information becomes public).
Allow for provisions on pre and post-public employment to advisors and senior civil servants, as well as public officials who have regular contact with the private sector, including officials working in public procurement, regulatory policy, inspections, tax and customs.
Complement legislation with criteria and guidance for situations where a senior public official moves from or to a sector covered by their portfolio or where they had previous influence over government decisions. This will also help address risks related to undue lobbying or misuse of insider information.
Establish rules regarding exemptions to the restrictions, including by determining who decides on the application of post-public employment restrictions and the criteria used to inform decisions on exemptions. Particularly, the MIDEPLAN, PEP and CGR could address the issue of pre and post public employment in their guidelines and regulations by establishing co-ordinated standards for incoming and outgoing public officials.
To allow for more clarity for companies hiring of former public officials covered by post-employment regulations, the MIDEPLAN could consider compiling a list of public officials subject to the cooling-off periods regulations, as well as establishing a channel for private sector consultations on the matter.
Costa Rica should reinforce administrative and disciplinary sanctions in their legislation to cover situations when flagrant violations of conflict of interest arise
In Costa Rica, criminal and disciplinary sanctions for the materialisation of a conflict of interest are limited to general previsions, in accordance with LCCEI (Art. 38 and 39). Currently, there are no specific sanctions for wilful violations of the conflict-of-interest regime and there is no legal standard to determine whether the conflict-of-interest situation is the product of mismanagement or a dolus act. The situation becomes more confusing when public officials are accepting or holding prohibited assets (e.g. gifts or outside employments) and may face both criminal and administrative (disciplinary) sanctions, because the law currently does not envisage such situations.
Additionally, statistical information on the number of public officials sanctioned for existing conflict-of-interest regulations within the disciplinary regime is not available. As emphasised in Chapter 5, this may be the consequence of disciplinary sanctions currently not being under the responsibility of a single centralised body, but the competence of the respective public entity in which the violation took place. Regardless, information regarding such breaches is neither specifically recorded nor centralised.
Therefore, Costa Rica could move towards by:
Establishing legislation to reinforce specific disciplinary sanctions for violations of conflict-of-interest regulations and considering wilful acts as opposed to slight negligence or mismanagement. This may be reinforced by the inclusion of conflict-of-interest standards in ethics codes as well as the development of internal regulations in public institutions to address specific sectorial situations.
Clarifying, by means of legislation, the situations when both criminal and administrative sanctions apply.
Keeping statistical information on the number of public officials with disciplinary sanctions for violations of conflict-of-interest regulations.
The institutional framework for public ethics: a pillar for managing conflict of interest
Leveraging on its ethical management model and the experience of the judiciary, Costa Rica could develop a single policy framework for promoting integrity and managing conflict of interest
The Management Capacity Index (Índice de Capacidad de Gestión, ICG; see Box 2.3 in Chapter 2) of the CGR, implemented for the first time in 2021, shows that there are still challenges when it comes to the prevention and management of conflict of interest in Costa Rica. Indeed, 31.5% of public sector institutions are not providing training nor guidance on the issue (CGR, 2019[8]; CGR, 2021[9]).
Two bodies play a key role in framing conflict-of-interest policies at the central level, the PEP and the CGR. The PEP is responsible for the tasks specified under Art. 3(h) of the Organic Law of the Attorney General’s Office (Ley Orgánica de la Procuraduría General de la República), including the prevention of corruption and promotion of public ethics. As such, the PEP takes administrative complaints regarding conflict of interest and provides trainings and guidance to public officials (OECD, 2017[10]). In turn, the CGR handles administrative complaints and solves legal enquiries with respect to the scope of the obligations of public officials only in administrative procurement procedures. Similarly, by way of Law 10159 of 2022, the MIDEPLAN has been assigned the role of overseer of the public employment system of Costa Rica (Chapter 1 and 5). This law assigns a special role to the MIDEPLAN in the prevention and management of conflict of interest at a strategic level, including by assigning it the co-ordination with HR Offices and the PEP on ethics and integrity.
As it is the case with the legal provisions, a lack of clarity also exists in the responsibilities and actors for the proper management and prevention of conflict of interest. This can result in either fragmentation and/or uneven action. Combined, the legal and institutional fragmentation, along with the lack of a clear definition on conflict of interest, makes implementation and compliance challenging.
A single policy framework, covering the different branches of power and addressing public ethics could serve several purposes, including improving co-ordination, strengthening the ethics infrastructure of the country and providing clarity to public officials and the private sector. Box 3.3 provides some examples.
Box 3.3. Definitions of conflict of interest in France, Poland, Portugal and Slovenia
In its 2003 Guidelines for Managing Conflict of Interest in the Public Service, the OECD proposes to define a conflict of interest as a “conflict between the public duty and private interests of a public official, in which the public official has private-capacity interests, which could improperly influence the performance of their official duties and responsibilities” (OECD, 2004[1]).
In France, the law of 11 October 2013 on transparency in public life defined the notion of conflict of interest as “a situation in which a private or public interest interferes with a public interest in such a way that it influences or appears to influence the independent, impartial and objective performance of a duty”. Taking into account the fact that the concepts of “conflict of interest” and illegal taking of interest can be difficult to assess, the High Authority for transparency in public life published two comprehensive guides on conflicts of interests for public organisations and public officials. The guides present the High Authority's doctrine on the risks of conflict of interest, particularly between public interests, and offers a summary of the ethical procedures that mark the career of a public official or civil servant.
The Code of Administration Procedure in Poland covers both forms of conflicts; a situation of actual conflict of interest arises when an administrative employee has a family or personal relationship with an applicant. A perceived conflict exists where doubts concerning the objectivity of the employee exist.
Portugal has a brief and explanatory definition of conflict of interest in the law. A conflict of interest is defined as an opposition stemming from the discharge of duties where public and personal interests converge, involving financial or patrimonial interests of a direct or indirect nature.
In Slovenia, the Integrity and Prevention of Corruption Act of 2010 defines conflicts of interests as circumstances in which the private interest of an official person (a pecuniary or non-pecuniary benefit which is either to his advantage or to the advantage of his family members or other natural or legal persons with whom he maintains or has maintained personal, business or political relations) influences or appears to influence the impar1al and objec1ve performance of his public duties;
Source: OECD (2004[1]), Managing Conflict of Interest in the Public Service: OECD Guidelines and Country Experiences, OECD Publishing, Paris, additional research by the OECD Secretariat; HATVP, Guide déontologique, Contrôle et prévention des conflits d’intérêts, https://www.hatvp.fr/wordpress/wp-content/uploads/2021/02/HATVP_GuideDeontologie_2021_A-Imprimer.pdf
At the same time, the interviews conducted for this review have highlighted that the term conflict of interest has a strong negative connotation in Costa Rica, despite the fact that a conflict of interest is not necessarily corruption. On the contrary, conflicts between private interests and public duties of public officials must be correctly identified, appropriately managed and effectively resolved in order to avoid corrupt practices to thrive (OECD, 2005[11]). In light of all the above, any definition of conflict of interest within the single policy framework should emphasise this approach.
Therefore, ideally in the process of developing the National Anti-corruption (Integrity) Policy that grounds Costa Rica’s National Strategy for Integrity and Prevention of Corruption (Estrategia Nacional de Integridad y Prevención de la Corrupción, ENIPC), Costa Rica could establish an all-encompassing definition of conflict of interest properly aligned with its legal framework and consider different types of existing conflict-of-interest situations (actual, potential and perceived). Moreover, based on the all-encompassing definition, the policy could seek to strengthen the MIDEPLAN and PEP’s role of providing general guidelines and advice on managing conflict of interest, in co-ordination with the HR offices in each institution. Furthermore, as stated in Chapter 1, Costa Rica could further build on some successful experiences in mainstreaming integrity policies into public organisations, in particular by including more explicitly conflict-of-interest management in its ethics management model (Modelo de Gestión Ética, MGE).
Preventing and managing conflict of interest should be mainstreamed across the public sector by MIDEPLAN, in close co-ordination with the PEP, Human Resources Offices, the Institutional Commissions on Ethics and Values (CIEV) and the CNEV
Preventing and managing conflicts of interest is a central feature of standards on public integrity. When conflict of interest situations are not identified and managed, they can seriously endanger the integrity of organisations. Preventing and managing conflicts of interest helps level the playing field and ensure stakeholders’ fair and adequate access to policy makers and policy-making processes (OECD, 2005[11]).
Costa Rica could move towards establishing an all-embracing system for the proper management of conflict of interest that builds on a previously established definition as recommended above whilst providing practical tools for the identification and management of particular situations. Indeed, as is the case with the regulatory framework, Costa Rica does not have a system or institutional infrastructure to manage conflict of interest situations. Furthermore, the fragmented regulatory framework on public ethics and conflict of interest in Costa Rica is mirrored in a lack of clarity with respect to the public agencies responsible for managing conflict of interest in the public sector. The General Law of Public Administration Art. 230, states that public officials must inform their superiors about possible contraventions to the law, so that they can assess the situations and act on it (e.g. remove the official from a specific matter). According to Costa Rican authorities, this procedure (abstention or recusal in administrative procedures) is a rule of general applicability. Art. 231 states that the official in charge will have to motivate its decision within three (3) days of the initial consultation (Figure 3.1).
Figure 3.1. Current process to report and assess conflict of interest situations in Costa Rica
This process entails several problems in Costa Rica. First, the only instance for reporting a conflict of interest seems to be the immediate superior. In the interviews conducted for this review it became clear that this line of reporting, although valid by OECD standards (OECD, 2017[2]), could create additional problems in the Costa Rican context. First, a perception remains of a co-relation between conflict of interest and corruption. In this sense, many public officials may seem less inclined to disclose a conflict of interest, whether it is real, perceived or potential, as they may fear being seen as “corrupt”. Second, a hierarchical relationship may sometimes be permeated by distrust, tensions and wariness. This in turn, may create a situation of fear for a public official who faces a conflict of interest situation. Third, neither public officials nor their superiors receive regular training to guide their decisions. To alleviate these challenges, Costa Rica could consider including as an option reporting to HR offices or to the Institutional Commissions on Ethics and Values (Comisiones Institucionales de Ética y Valores, CIEV). Costa Rica could also consider targeted training on conflict of interest, how to disclose such situations, to whom and when.
Similarly, there is no compilation of case law or practical guidance establishing the standard of its application in the past, thus allowing each manager to make decisions based on its own criteria. As informed during the virtual fact-finding mission, this lack of guidance to both public officials seeking advice and the superior taking a decision is quite concerning to Costa Rican authorities. In sum, beyond basic considerations, no indication is given to public officials on considerations to be taken into account when deciding if the person must abstain or recuse. To address this issue, Costa Rica could consider providing public officials in the executive branch with practical examples of concrete steps to be taken for identifying and managing conflict-of-interest situations. In addition, clear guidelines could be provided on how public managers should exercise judgment in individual cases to determine the most appropriate solution to manage the actual conflict-of-interest situation.
Additionally, Costa Rica has taken some, albeit not successful, steps to consider addressing the issue of institutional co-ordination. First, it has been considering a legislative reform to address not only legal loopholes, but also institutional weaknesses. In particular, the role of HR offices are being considered as an alternative for providing advice, guidance and training in the management of conflict of interest through the public service. Unfortunately, similar steps had been taken in 2012, with the Institutional Operational Plan of the General Directorate of Civil Service (DGSC), without success (OAS, 2013[12]). This ambitious agenda demonstrates both the commitment of the Government of Costa Rica with multiple stakeholders involved (CIEV, CNEV, DGSC, PEP and the CGR) and multiple dimensions (legislative process, institutional design, training, etc.).
Considering this, Costa Rica could consider the following actions to improve its conflict-of-interest management system:
Consider amending the procedure to report conflict-of-interest situations, to allow HR offices and/or the CIEV be considered as alternatives for reporting and providing advice on conflict of interest situations. This may include the report of concrete and more general circumstances that may lead to a potential conflict of interest.
The MIDEPLAN, alongside the PEP, could consider moving forward on the design of a framework or policy guidelines for identifying and managing of conflicts of interest to be mainstreamed through the entire public administration. This would provide consistency on the advice and guidance provided to senior managers and HR Offices.
Similarly, the PEP and CGR could consider enacting a set of guidelines for public officials to manage different kinds of conflict-of-interest situation that go beyond “prohibitions” and “incompatibilities” and provide practical examples on how to resolve a specific conflict.
The PEP could consider an increased coordination with CNEV to promote awareness raising on conflict of interest. In particular, the CNEV may contribute to changing the negative connotation attributed to conflict of interest as an equal of corruption.
The MIDEPLAN, with the help of the PEP, could consider developing other mechanisms to identify or detect emerging conflict-of-interest situations, including using the new “Integrated Public Employment Platform” to annually register conflicting interests or activities. The operation of the system could be located in HR offices. Furthermore, Costa Rica could consider making use of Law 10159 (appointment and dismissal policies) and include this declaration as a pre-requisite before the appointment of certain categories of public officials using a risk-based approach.
Provide training to public officials on regulations and expectations to ensure a realistic, contextually appropriate and proportional response to each case
Legal provisions and policies remain words on paper if they are not adequately communicated and inculcated. Socialisation mechanisms are the processes by which public servants learn and adopt ethical norms, standards of conduct and public service values (OECD, 2018[13]). In Costa Rica, no orientation is given to public officials on the appropriate behaviour for management of conflict-of-interest situations. The PEP does provide some training on public ethics, however. In these sessions, the PEP mainly answers questions from participants. In other instances, the PEP organises events with public officials as a way to engage peers in thematic discussions. Costa Rican authorities’ states that staffing limitations is the main obstacle to engage in a more fruitful discussion with public officials.
At any rate, the role of the CGR in providing guidance to public officials has been fundamental, but could be further improved. The Guidance D-2-2004-CO contains ethical principles and examples of what may constitute a conflict of interest, but focuses on specific “prohibitions” and “incompatibilities”, rather than ethical principles or conflict-of-interest situations that do not entail a prohibition. In 2015, the PEP designed a training course on “conflicts of interest of a public nature” and included it in its training programmes that can be delivered on demand. The PEP can also provide ad-hoc guidance on issues related to the management of conflicts of interests. Furthermore, according to Costa Rican authorities, in case of doubts, public officials can report the issues to the legal office of the institution in order to get a non-binding opinion (OECD, 2017[10]).
To institutionalise integrity standards and duly integrate them as part of the organisational culture, a number of communication, awareness raising and guidance instruments can be used. Well-designed guidance and training equip public officials with the knowledge and skills to manage integrity issues appropriately (OECD, 2022[14]). Given the lack of regular training for both public officials and senior management (currently tasked with advising on conflict-of-interest regulations), Costa Rica should consider the following actions:
Considering the provisions set up in Law 10159, Art.7, the MIDEPLAN, in co-ordination with PEP, could conduct regular training activities for managers with the role of providing advice on conflict-of-interest situations and on the current legal framework and prohibitions. In particular, the training should cover practical examples and promote decision-making processes. Furthermore, the training should be co-ordinated, when necessary, with relevant stakeholders (e.g. the Training and Development Center (Centro de Capacitación y Desarrollo - CECADES), the Judicial School or the Training Center of the CGR).
The CNEV could provide public officials with clear and up-to-date information about the organisation’s policies, rules and administrative procedures relevant to maintaining high standards of public integrity, including in conflict-of-interest situations. Furthermore, the CIEVs could help mainstream these guidelines through the entire public administration.
The CIEVs, with the support and guidance of CNEV, the PEP and HR Offices, may offer induction and on-the-job integrity training to public officials in order to raise awareness and develop essential skills for the analysis of ethical dilemmas, and to make public integrity standards applicable and meaningful in their own personal contexts.
The CNEV, with the help of HR offices, could provide informal guidance and consultation mechanisms to help public officials apply public integrity standards in their daily work as well as to manage conflict-of-interest situations.
The MIDEPLAN, with the support of the PEP, could set up virtual training alternatives to improve the coverage and frequency of training for public officials, in particular with the aim of reaching municipalities.
Based on risk assessments carried out by public institutions, the PEP could elaborate a national mapping of conflict-of-interest risks by sectors and conduct activities to raise awareness of these with relevant public officials. This risk mapping should be available for civil society organisations as well as the private sector.
Costa Rica could strengthen the institutional capacity to process, verify and audit asset declarations whilst making it a useful tool to identify and guide a public official on possible conflicts of interest
An effective financial and interest disclosure system can play a significant role in promoting integrity, transparency and accountability (OECD, 2015[15]). Depending on their design, disclosure forms can serve to detect illicit enrichment or to determine whether a public official’s decision has been compromised by a private interest, such as former or outside employment, board membership or similar.
In Costa Rica, Law 8422 and its regulation contain the general rules for asset declarations. Art. 22 states the three types of declarations that must be filled: initial, annually and upon departure. In particular, the law requires all political and senior level officials to submit an asset declaration within 30 days of taking office and following that, on an annual basis. The final declaration must be presented 30 days after leaving public office. Furthermore, for the Comptroller General and the Deputy Comptroller General, a copy of their declarations must be send to the Legislative Assembly.
The information to be declared is comprehensive. Art. 29 states that assets, income, participation in companies, bonds and other 20 categories must be reported. Assets must be reported when hold in Costa Rica or abroad. Unfortunately, there is no obligation to report about previous employment, a requirement that could prove useful to identify and guide a public official on possible pre-employment conflicts of interest.
The review of asset declarations by the CGR consist of two phases. A first phase crosses databases to review false statements and contrast the declarations against other registries. A second phase reviews increases of income (salaries and assets). According to Costa Rican authorities, the CGR will soon start a third phase consisting of triangulation between tax information and other omitted information. However, according to the interviews conducted, the administrative capacity to check and verify the completeness of asset declarations is low and insufficient to process all declarations in a timely manner. Furthermore, other institutions (FAPTA and PEP) consider that more should be done to improve the way the CGR shares information with them, both in terms of process and of a timely response. Similarly, according to Costa Rican authorities, there have been no reported cases in which illicit enrichment has been detected through asset declarations.
As most OECD countries, Costa Rica applies a risk-based approach. The scope of the Costa Rican financial and interest disclosure system applies to all three branches, including state-owned enterprises, armed services, judges and police. It has a risk-based approach as far as it does not require all public officials to declare their assets, but only obliges those that face a higher risk of corruption due to their position. Furthermore, Costa Rica has clearly defined the list of persons required to provide an asset declaration, based on risk criteria and decision-making capacity (e.g. officials working in public procurement or managing public funds). Costa Rica also has a comprehensive system to identify the natural persons occupying these positions. Art. 28 states that the director, head or person in charge of the human resources unit or the personnel office of each public body or entity, must inform to the CGR, within 8 business days of the appointment, the name, qualifications and exact address of the public official.
Finally, information of the declarations is confidential (Art. 24) and only accessible to the CGR or in special cases to the special investigation commissions of the Legislative Assembly, the Public Ministry and Courts. However, asset declaration systems could benefit from some kind of social control. Furthermore, legal sanctions are not a necessarily an element of all declarations systems. Indeed, if public disclosure is ensured, active media and civil society and their reactions can be sufficiently disciplining factors (OECD, 2011[16]). Furthermore, there are strong reasons for disclosing, at least partially, data of political officials who should be prepared to provide explanations regarding the disclosed information. While there is a global trend towards greater disclosure, Costa Rica could benefit from considering some degree of disclosure of asset declarations of high-level and elected officials, while striking the right balance between public disclosure and protection of privacy and could therefore amend Art. 24 of law 8422 to allow the publication of assets declarations of certain categories of public officials.
In sum, Costa Rica should consider the following actions:
Analyse the administrative needs and capacities of the CGR to check and verify the completeness of asset declarations and provide the CGR with enough resources to comply with this obligation.
Costa Rica could consider modifying the confidentiality obligation of Law 8422 to allow the sharing of assets declarations. Furthermore, the CGR should engage more frequently with other institutions (FAPTA and PEP) on assets declaration information relevant for criminal or administrative cases.
The CGR could strengthen its investigation capacity on asset declarations disparities, by increasing the cross reference of information with other datasets (such as tax declaration) with the aim of making asset declarations a useful tool for the identification of illicit enrichment.
Costa Rica should amend Law 8422 to allow the public disclosure of asset declarations based on a careful weighing of various considerations, such as domestic traditions, perceptions of corruption and others.
Proposals for action
The recommendations provided in this chapter are an input on how Costa Rica could improve its conflict-of-interest system. As such, these proposals may inform on-going legal and institutional reforms and help address the current fragmentation of its legal and institutional system.
First, Costa Rica should consider taking steps to strengthen its conflict-of-interest legislation and standards by:
Strengthening its laws and regulations and providing a clear overarching definition of conflict of interest.
Strengthening pre and post-public employment restrictions in legislation by establishing the scope of officials and activities covered and the length of the cooling-off period, considering a risk-based approach and an appropriate balance between restrictions and incentives for future public sector officials.
Complement legislation with criteria and guidance for situations where a senior public official moves from or to a sector covered by their portfolio or where they had previous influence over government decisions.
Establish rules regarding exemptions to the restrictions, including by determining who decides on the application of post-public employment restrictions and the criteria used to inform decisions on exemptions.
Compiling a list of public officials subject to the cooling-off period’s regulations, as well as establishing a channel for private sector consultations on the matter.
Establishing legislation to reinforce specific disciplinary sanctions for violations of conflict-of-interest regulations and consider wilful acts as opposed to slight negligence or mismanagement.
Second, while the PEP has been a vital stakeholder in providing support and guidance on conflict of interest, the country should consider ways to ensure an effective and coherent system for the proper management and prevention of conflict of interest. This could be achieved by:
Providing a single policy framework, covering the different branches of power and leveraging the public ethics framework.
Move towards establishing an all-embracing system for the proper management of conflict of interest that builds on a previously established definition whilst providing practical tools for the identification and management of particular situations.
Consider amending the procedure to report conflict-of-interest situations, allowing HR offices to be considered as an alternative for reporting and providing advice on conflict of interest. This may include the report of concrete and more general circumstances that may lead to a potential conflict of interest.
Consider enacting a set of guidelines for public officials to manage different kinds of conflict-of-interest situations that go beyond “prohibitions” and “incompatibilities” and provide practical examples on how to resolve a specific conflict.
Consider using the new “Integrated Public Employment Platform” to annually register conflicting interests or activities.
References
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