Western Balkans Competitiveness Outlook 2024: Bosnia and Herzegovina

7. Anti-corruption policy

Abstract

An effective anti-corruption policy is essential for promoting fair competition. This chapter, along with four sub-dimensions, explores the effectiveness of the prevention, investigation and prosecution of corruption cases. The first sub-dimension, anti-corruption policy and risk management, assesses the planning, coordination and monitoring of anti-corruption policies, including corruption risk assessments and corruption proofing of legislation. The second sub-dimension, prevention of corruption, focuses on anti-corruption public-awareness and the effectiveness of the legal framework regarding corruption prevention bodies, conflicts of interest, and whistleblower protection. The third sub-dimension, business integrity and corporate liability explores the robustness of the framework for business integrity and regulatory mechanisms, as well as the liability of legal persons. The fourth sub-dimension, investigation and prosecution, assesses the capacities of specialised anti-corruption investigative and prosecutorial bodies in investigating and prosecuting high-level corruption cases.

Key findings

In 2024, Bosnia and Herzegovina made strides by adopting the Law on Preventing Conflicts of Interest in Governmental Institutions. However, beyond this measure, the legal and institutional anti‑corruption framework has substantially deteriorated since the last CO assessment (Table 7.1), leaving significant gaps, such as the lack of a comprehensive and fully functional framework of asset and interest disclosure at the level of the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS). While the economy has made efforts in several sub-dimensions, notably in providing training and investigating corruption, the perceived level of corruption has worsened, and the track record of convictions for high-level corruption remains limited.

Table 7.1. Bosnia and Herzegovina’s scores for anti-corruption policy

Dimension	Sub-dimension	2018 score	2021 score	2024 score	2024 WB6 average
Anti-corruption	6.1: Anti-corruption policy and risk assessment			1.3	2.4
	6.2: Prevention of corruption			1.6	2.9
	6.3: Business integrity and corporate liability			1.6	1.9
	6.4: Investigation and prosecution			1.3	2.4
Bosnia and Herzegovina’s overall score		1.7	2.0	1.5	2.5

Notes: Scores for 2024 are not directly comparable to the 2021 scores due to changes in the scoring methodology for this dimension. Sub‑dimension 6.3 and several indicators in the other sub-dimensions is scored for the first time in this assessment. Therefore, changes in the scores may reflect the change in methodology more than actual changes to policy.

The key findings are:

• Anti-corruption strategies have expired at the state level and in the FBiH and RS. In March 2024, the state-level authorities held public consultations for the new draft strategy and action plan, intended to serve as the overarching policy framework for government entities at both state and entity levels. However, past strategies have often seen limited implementation.

• The adoption of the Law on Preventing Conflicts of Interest in Institutions at the level of Bosnia and Herzegovina in 2024 significantly strengthens the management of conflicts of interest and the oversight body – the Commission for Deciding on Conflicts of Interest. The law in RS lacks fundamental provisions for resolving conflicts of interest. Legislation on conflicts of interest in the FBiH has not been implemented since 2013.

• The new Law on Preventing Conflicts of Interest in Institutions also strengthens the disclosure of assets and interests at the state level. Still, generally, Bosnia and Herzegovina has yet to establish a comprehensive and fully operational disclosure that aligns with the recommendations of the Group of States against Corruption (GRECO). These include notable consolidation of the requirements of financial disclosure into one single declaration form, verification of the reports, and public accessibility to all declarations.

• The Agency for Prevention of Corruption and Co-ordination of the Fight against Corruption (APC) and the Civil Service Agency have carried out numerous training sessions, covering topics such as conflicts of interest, co-ordination of anti-corruption efforts, corruption in public procurement, ethics in public administration, and protection of whistleblowers. The APC offers digital training opportunities through its website, providing online modules on the code of ethics, integrity plans and protection of whistleblowers.

• The data concerning convictions for high-level corruption display inconsistency, with the government reporting fewer convictions in 2021-22 than the European Commission, which cites five final verdicts, including two acquittals in 2022 and three in 2021. Both accounts suggest a poor to modest track record in the fight against high-level corruption.

State of play and key developments

Bosnia and Herzegovina has consistently recorded a higher perceived level of corruption compared to the average across the Western Balkan 6 (WB6) economies (Table 7.2). On a scale from ‑2.5 (worst) to +2.5 (best), Bosnia and Herzegovina’s World Bank’s Control of Corruption Indicator score has deteriorated from -0.61 in 2018 to -0.68 in 2022. Transparency International’s Corruption Perceptions Index reflects a similar trend. Bosnia and Herzegovina scored 38  in 2018 on a scale from 0 (highly corrupt) to 100 (very clean), gradually declining to 34 in 2022 and slightly improving to 35 in 2023.

Table 7.2. Bosnia and Herzegovina’s and WB6 economies’ perceived anti-corruption policy performance, 2018-23

	2018	2019	2020	2021	2022	2023
Control of Corruption Indicator
BiH (percentile rank)	-0.61	-0.65	-0.64	-0.67	-0.68
BiH (score)	-0.41	-0.45	-0.44	-0.41	-0.38
WB6 (score)	-0.41	-0.45	-0.44	-0.41	-0.38
Corruption Perceptions Index
BiH (rank)	89/180	101/180	111/180	110/180	110/180	108/180
BiH (score)	38	36	35	35	34	35
WB6 (score)	38.67	37.67	37.5	38.67	38.67	39.50

Note: Percentile rank (0-100) indicates the rank of the economy among all economies in the world. (0 corresponds to the lowest rank, and 100 corresponds to the highest rank.)

Sources: World Bank (2023[1]); Transport Community (2023[2]); Kaufmann and Kraay (2023[3]).

According to the Balkan Barometer, only a minority in Bosnia and Herzegovina agrees that the government fights corruption successfully. Despite a notable increase to 20% in 2021 (RCC, 2021[4]) from 8% in 2020 (RCC, 2020[5]), this indicator continues to rank among the lowest in the WB6.

Sub-dimension 6.1: Anti-corruption policy and risk assessment

Bosnia and Herzegovina has a complex constitutional structure, resulting in a fragmented anti‑corruption policy framework. There are several anti-corruption policy planning documents at different government levels, with some currently in force while others have expired. While the FBiH and RS authorities have expressed intentions and preparatory actions to develop new strategies, no drafts were published in 2023. The state-level Anti-Corruption Strategy for 2015-19 and the Strategy for Countering Corruption in RS for 2018-22 have expired. An intergovernmental working group prepared the new Strategy for the Fight against Corruption of Bosnia and Herzegovina (2024-28) and its Action Plan, both submitted for public e-consultation in March 2024. The documents cover, at least along broad lines, the state and entity levels of government and aim to strengthen prevention and co-ordination, detection and prosecution as well as the inter-institutional, regional and international co-operation. In the FBiH, an Action Plan for the Fight against Corruption exists, effective from 2021 until the adoption of a new strategy. However, there is no budget for implementing the plan, which increases the risk of weak implementation.

The APC ensures the overall co-ordination of anti-corruption policy, provides support, and proposes new activities or changes in implementation. It has developed a digital application for reporting progress and monitoring the implementation of strategic anti-corruption documents, which has been installed in all FBiH and the Brčko District cantons. In 2021, the APC initiated the development of anti-corruption plans for 2022 for the state-level institutions based on the Guidelines for Strategic Planning of Anti‑Corruption Policies, developed and published by the APC, and required the appointment of contact points for co-operation with the APC (APIK, 2021[6]). According to the APC, most institutions have developed such plans. In the FBiH, the Anti-Corruption Team monitors the implementation of the Action Plan against Corruption. In contrast, no anti-corruption co-ordination body was active in RS as of the end of 2023.

Implementation levels of the anti-corruption policy framework are generally low. The most recent monitoring report from 2020 on the implementation of the state-level strategy and Action Plan reveals that 48% of measures have been implemented, 43% partially implemented, and 9% remain unimplemented (APIK, 2020[7]). According to the unpublished draft analysis of the Ministry of Justice of RS, 55% of the activities of RS’s strategy and Action Plan 2018-22 have been fully implemented, 28% have been partially implemented or are in progress, and 17% have not been implemented as of 2023. The FBiH has made efforts to implement the Action Plan, for example, by designating and training anti‑corruption focal points in federal institutions (Anti-Corruption Team of the Government of the Federation of Bosnia and Herzegovina, 2023[8]). However, there is a lack of comprehensive data regarding the current state of implementation.

Bosnia and Herzegovina has no explicit legislation on corruption risk assessment. The Law on APC stipulates the responsibility of the APC to prescribe a uniform methodology and guidelines for making integrity plans and helping all public institutions with their implementation. Still, institutions are not legally obliged to carry out corruption risk assessments. The APC has created and launched a digital system for developing integrity plans with the Regional Anti-corruption Initiative. The APC has also adopted rules for developing and implementing integrity plans. These rules outline the modalities of corruption risk assessment, considered an important stage in the preparation of integrity plans (APIK, 2018[9]). A similar document exists in RS based on the expired anti-corruption strategy 2013-17. In the FBiH, the Law on Financial Management and Control in the Public Sector mandates risk management. In 2022, the Ministry of Finance approved new Guidelines for Risk Management in the Public Sector, with one of the risk categories being ethics and integrity. Although the guidelines are generally well elaborated, they lack details regarding corruption risks (Federal Ministry of Finance, 2022[10]).

The levels of development and adoption of integrity plans vary at different levels of government. As of the end of 2023, among the 76 public institutions in Bosnia and Herzegovina, 55 had completed the development of integrity plans, 15 were developing plans, and six had not provided feedback. In the FBiH, 15 institutions had completed the development of integrity plans, and seven institutions had started the process as of 2023 (APIK, 2023[11]). According to the Anti-Corruption Team of the FBiH, the number is much higher. Up until 2022, 90 institutions had their integrity plans approved at some point, yet it appears that many of them have not been updated since their initial adoption (Anti-Corruption Team of the Government of the Federation of Bosnia and Herzegovina, 2023[8]). According to the government, approximately two-thirds of 1 092 institutions of RS adopted integrity plans in 2017-21. However, more recent data on RS are lacking.

Corruption proofing of legislation is implicitly outlined in the duties assigned to the APC, which include monitoring the impacts of laws and bylaws to prevent corruption. The APC is also tasked with providing opinions and guidelines on their implementation and initiating activities to amend and/or harmonise existing legal frameworks. The Unified Rules for Legislative Drafting in the Institutions of Bosnia and Herzegovina prescribe the methodology for assessing the impact of regulations (including corruption and conflict of interest). The rules are mandatory for state-level institutions and recommendatory for other levels of authority. The APC is designated as one of the control bodies whose opinion must be obtained for impact assessments. The APC uses the Methodology for Assessment of Corruption Risk in Regulations of Bosnia and Herzegovina, which was developed by international experts and approved in 2017. According to the government, the APC prepared two opinions in 2020, seven in 2021, and nine in 2022, suggesting a modest performance record. An illustrative instance where the APC's input significantly influenced legislative development occurred during drafting the Law on Prevention and Suppression of Corruption in Sarajevo Canton in 2022. There is no proof of corruption in legislation at the RS and the FBiH levels.

Sub-dimension 6.2: Prevention of corruption

The APC is Bosnia and Herzegovina’s main corruption prevention body but has limited direct powers. Its mandate includes developing anti-corruption strategies and action plans, monitoring implementation, coordinating public institutions, overseeing anti-corruption legislation, addressing corruption-related acts, and developing educational programs. The Anti‑Corruption Team of the FBiH is a co-ordinating body comprising representatives of different authorities rather than a fully fledged agency. RS does not have any corruption prevention body.

The APC has safeguards of independence and accountability procedures. It reports to the parliamentary assembly (PA) of Bosnia and Herzegovina, which appoints the director of the APC and two deputies upon proposal of the Selection and Monitoring Committee of the Agency following open competition. The director’s term is five years, with a possibility of one renewal. The committee can submit a proposal to dismiss the director if there are grounds as stated in the law. According to the law, the committee comprises nine members, including two from the academic community and one from civil society. The committee may not interfere in the daily work of the APC or request information on individual cases. Meetings of the committee should be open to the public. The committee is mandated to review APC operations reports prepared by the APC at least twice a year. However, the reports on the APC's operations for 2020-21 and the first half of 2022 have not been published. In practice, the mandate of the committee expired in 2018, and it was inactive until 2021 when it reconvened in a new composition (Parliamentary Assembly Bosnia and Herzegovina, 2021[12]). The committee, in its current composition, convened first in 2023 and reviewed the report on APC’s operations of August 2022-June 2023, which is available on the website of the APC (APIK, 2023[11]). The director of the APC submits a budget proposal, but the APC does not have any guarantees of a certain level of funding. With 33 employees, the APC remains one of the smallest prevention agencies in the region. Given that many prevention tasks are carried out at the entity level, the institutionalisation of prevention of corruption and safeguards against undue interference in fulfilling this function are limited in Bosnia and Herzegovina.

Bosnia and Herzegovina’s policy regime to detect and enforce the management of conflicts of interest is not in line with international good practice. Still, adopting the new Law on Preventing Conflicts of Interest in Institutions at the level of Bosnia and Herzegovina in March 2024 is an important step forward. The economy has not fully implemented the GRECO recommendations to harmonise “the legislation on conflicts of interest throughout the national territory” and ensure the independence and timeliness of the corresponding advisory, supervisory and enforcement regime (GRECO, 2023[13]). There are laws for the prevention of conflicts of interest in the FBiH (however, not implemented since 2013) and in RS that differ significantly, resulting in a diversity of approaches. The new state-level law prohibits a public office holder from undertaking any official action, participating in a discussion, voting or deciding on an issue related to their personal and financial interest or that of a related person, and obliges them to inform the Commission for Deciding on Conflicts of Interest (CDCI) upon learning about a possible conflict of interest. However, the law provides limited guidance for resolving such conflicts of interest and requires that, by default, the public office holder assign the affected task to another person. It is worth noting that in most economies public officials typically do not themselves make decisions on how to resolve their own conflicts of interest. RS law lacks fundamental provisions for addressing conflicts of interest, including requirements for officials to disclose conflicts of interest and refrain from decision making until the conflict of interest is resolved. According to the new law, the state's oversight institution is the CDCI, which will comprise seven members appointed by the PA based on competence, reputation, and expertise. The Republican Commission for Determining Conflicts of Interest in Public Bodies is the oversight body in RS. At the state level, members of the PA have been sitting on the commission, but in the future, persons holding a public office and members of political parties will not be able to be CDCI members, which is a significant step towards strengthening the independence of the body. In RS, the commission members may not engage in political party activities, but there is no transparent, competitive, merit-based selection process. According to the government, the CDCI imposed six sanctions for violations of conflict of interest and related rules in 2021 and five in 2022. The sanctions are reportedly small fines insufficient as an effective deterrent (GRECO, 2023[14]). Effective and stable oversight in this area has been impeded by periods when the CDCI was not appointed (2018-20) or had an incomplete composition, as well as by infrequency of meetings (e.g. only one single session in 2022) and a lack of resources. The government has provided no data on the implementation of the conflict-of-interest law of RS.

Bosnia and Herzegovina has not established comprehensive and fully functional asset and interest disclosure, with limited progress in implementing the GRECO recommendations since the previous CO assessment. Specifically, there is a need to consolidate financial disclosure requirements into a unified declaration form, enhance the verification process for submitted reports, and ensure transparent accessibility of all declarations to the public (GRECO, 2023[14]) (GRECO, 2023[13]). According to the new state-level law on conflict of interest, public office holders must submit regular reports of financial situation and assets to the Commission for Deciding on Conflicts of Interest (CDCI). The report is comprehensive and covers the personal data of officials and close relatives, information on immovable and movable property, deposits, shares and other securities, debts and claims, sources and amounts of income, data on other jobs, etc. The CDCI verifies the accuracy and completeness of the reports and holds the authority to impose sanctions. Notably, before the enactment of the new law, no penalties were established for failing to declare or for providing false declarations. The government has indicated that reports submitted under the previous legislation are accessible to the public upon request. However, the CDCI intends to disclose this data on its website proactively. In RS, officials should submit financial reports to the Republic Commission for Determining Conflicts of Interest, but the government has provided no evidence of implementing this obligation. Based on other sources, levels of compliance are low, with only 212 out of some 600 state-level officials and 129 out of some 4 000 officials of RS having submitted financial reports in 2022 (European Commission, 2023[15]). In the FBiH, there is no system for asset and interest disclosure. However, the Election Law of Bosnia and Herzegovina creates a disclosure system for the whole economy that obliges all candidates elected at all levels of authority to submit asset declarations to the Central Election Commission (CEC). Elected persons must also submit declarations after the termination of their tenure. The CEC makes the statements publicly available through a digital database and imposes fines for failure to submit declarations. Still, it has no competence to verify the accuracy of the data.

At the state level, the Law on Whistleblower Protection in the Institutions of Bosnia and Herzegovina (adopted in 2013) protects whistleblowers. Still, it falls short of fully meeting international standards. The law applies only to the reporting of corruption at the state level. If the APC establishes that a detrimental action has been taken against a whistleblower, it can instruct the institution's director to remove the consequences of the detrimental action. If the director claims that the action would have been taken even without whistleblowing having taken place, they must prove this is the case. The law does not provide many elements set out in the EU Directive 2019/1937 on protecting persons who report breaches of European Union law. For example, it does not apply to whistleblowing in the private sector, and it does not cover reporting persons who are no longer employees of the institution, or persons connected with whistleblowers. Furthermore, it imposes specific mandatory preconditions for external reporting and does not envisage public disclosure protection when the reported breach constitutes an imminent or manifest danger. The law also does not specifically stipulate the confidentiality of a whistleblower’s identity. Still, at least the rules issued by the APC require that whistleblower reports and identities be treated confidentially. Legally guaranteed support for whistleblowers is limited, as there are no explicitly envisaged channels of counselling, no access to free legal aid, etc. In contrast, the RS's 2017 Law on Protection of Persons Reporting Corruption is more comprehensive. It protects reporting persons in both the public and private sectors, envisages protection to persons connected with the whistleblower, does not set mandatory preconditions for external reporting, and provides the right to free legal assistance. However, the RS law also only covers whistleblowers’ reporting of corruption, per the narrow definition limited to instances of abuse of authority or official position. Moreover, the RS law stipulates a good-faith requirement for the whistleblower, which could be abused for undue denial of protection. Furthermore, the conditions for public disclosure lack clarity, and a whistleblower may have to demonstrate a causal connection between the report and alleged retaliation (Devine and Worth, 2021[16]). The FBiH still lacks legislation for the protection of whistleblowers.

The APC has supported the implementation of the law by developing unified regulations on internal reporting and whistleblower protection; supervising and co-ordinating the adoption of the respective internal acts in public institutions; preparing an instruction for the implementation of the law; establishing a toll-free number for reporting persons; preparing promotional materials; and conducting training and lectures. Nevertheless, the number of whistleblower reports has been modest, showing no indication of an upward trend (Table 7.3). The APC granted protection to whistleblowers in two cases in 2021 and one case in 2022. In RS, whistleblower protection was granted in response to at least one out of three requests in 2022 (European Commission, 2023[15]).

Table 7.3. Whistleblower reports in 2018-22 (state level)

	2018	2019	2020	2021	2022
Number of whistleblower reports	2	4	3	3	1

Source: Based on data provided by Bosnia and Herzegovina’s authorities in the context of the CO 2024 assessment.

Despite lacking an overarching government outreach strategy, the APC and certain other public bodies have been engaged in anti-corruption public awareness and education activities. The Anti‑Corruption Team of the FBiH developed in 2021 a model communication plan with the support of international experts. This plan contains model communication campaigns and recommendations for anti-corruption bodies on how to raise awareness and foster behavioural change among the public concerning corruption (Minic and Tunović Bećirović, 2022[17]). The APC has undertaken several outreach activities, for example, periodic invitations for school students to create artistic and literary works on anti‑corruption themes. The Ministry of Interior of RS has produced awareness-raising materials. The APC and the Civil Service Agency have conducted numerous training sessions, including conflict of interest, co-ordination of anti-corruption efforts, corruption in public procurement, ethics in public administration, and protection of whistleblowers. Through the APC website, digital training on the code of ethics, integrity plans, and protection of whistleblowers is available. According to the government, all staff members within the APC tasked with awareness-raising and education activities underwent comprehensive training in 2021-22. However, there is a lack of data concerning the total funding allocated for anti-corruption awareness-raising and education efforts.

Sub-dimension 6.3: Business integrity and corporate liability

The formal framework for promoting business integrity remains limited, with no significant advances noted since the last CO assessment. Bosnia and Herzegovina still have no distinct policy for promoting business integrity. Company laws of the FBiH and RS do not define the responsibilities of boards to oversee the management of corruption risks. In RS, however, the board of an open joint-stock company must either adopt a code of conduct or accept the corporate governance standards adopted by the Securities Commission. These standards encompass various aspects, including the moral standards of conduct of the director and board members. The board must report to the shareholders' meeting annually on compliance with the code and provide explanations for any instances of noncompliance. The Law on Registration of Business Entities in RS requires submitting data on beneficial owners to the register of business entities. The definition of a beneficial owner (founder with a 20% or more share) is narrower than the one envisaged in EU anti-money laundering directives. Data from the register shall be available to all interested parties without proving a legal interest subject to rules on personal data protection. There is a lack of available data regarding the implementation of the registration of beneficial owners. In the FBiH, there is no register of beneficial owners. While the Central Bank is not a commercial entity, the government has highlighted its internal policies, including its Code of Ethics, Guidelines on Gifts and Hospitalities, Guidelines on Conflicts of Interest, and its digital system for reporting corruption and other irregularities, as exemplary practices in promoting business integrity.

Bosnia and Herzegovina has legal frameworks regarding the liability of legal persons at the state level in the FBiH and RS. However, insufficient data hampers the assessment of the corporate liability framework's efficacy in combating corruption. According to the Criminal Code of Bosnia and Herzegovina, for a criminal offence perpetrated in the name of, on account of, or for the benefit of a legal person, the legal person shall be liable when its managerial or supervisory bodies have been involved or have failed to act, or when the legal person disposes of illegally obtained property gain or uses objects acquired in the criminal offence. The liability of legal persons is general (liability possible for any criminal offence) and autonomous (the legal person shall be liable for a criminal offence even when the physical person is not guilty of the perpetrated criminal offence). However, the physical perpetrator has to be identified. Sanctions include fines, confiscation of property and dissolution of the legal person. Security measures include forfeiture, publication of judgment and a ban on performing a certain activity. Legal consequences following the conviction of a legal person include the prohibition of work based on a permit, authorisation or concession issued by an institution of Bosnia and Herzegovina or a foreign economy. The law does not allow a due diligence (compliance) defence to exempt legal persons from liability or mitigate sanctions. According to the government, two monetary fines were imposed on legal persons for corruption offences in 2021 and three in 2022.

Sub-dimension 6.4: Investigation and prosecution

Bosnia and Herzegovina has a limited track record regarding investigating and prosecuting high-level corruption. The government reports only one conviction for high-level corruption in 2022, and none from 2019 to 2021. Moreover, the government has indicated that the State Investigation and Protection Agency (SIPA) has conducted several investigations related to high-level corruption. Data published by the European Commission reflect a similar trend, with a notable number of indictments filed in recent years (18 in 2022 and 12 in 2021) but a relatively low rate of final verdicts rendered, including both convictions and acquittals. In 2023, a first-instance judgement was finally reached in a public procurement fraud case, resulting in prison sentences for three persons, including the former prime minister of the FBiH. Nevertheless, challenges persist in the fight against high-level corruption, including issues with effectively confiscating criminal proceeds and the infrequency of financial investigations (European Commission, 2023[15]). No evidence has been provided regarding the fight against high-level corruption by the law enforcement and prosecutorial authorities of the FBiH and RS.

Within the state-level Ministry of Security, the State Investigation and Protection Agency (SIPA) is the only institutionally separate specialised anti-corruption investigative body tasked with combating several categories of serious crime, including corruption, and protected by certain special guarantees of independence. The law defines SIPA as an operationally independent administrative organisation. The Council of Ministers appoints the director and deputy director, upon proposal of the Minister of Security who selects the candidate from a list submitted by an independent board. The Council of Ministers dismisses the director and deputy director under conditions and through procedures implemented by the independent board. The SIPA budget is adopted in a standard procedure, and it does not have specific guarantees of a certain level of funding. The director submits reports on the work of SIPA to the Minister of Security and, upon request, to the PA, the Council of Ministers and the Presidency of Bosnia and Herzegovina. In 2022, SIPA initiated 100 investigations of corruption cases, of which 52 were finalised. Moreover, SIPA sent 53 reports against 57 individuals to prosecutors’ offices (European Commission, 2023[15]). At first glance, the staffing level of SIPA, with 29 anti-corruption investigators as of mid-2023, seems to align with the caseload. However, the government has not disclosed any budgetary figures for the SIPA. In RS, several Ministry of Interior organisational units, such as the Department for Economic Crime and Corruption, are responsible for investigating corruption. They do not have special safeguards of independence and accountability mechanisms, except those applicable to all police units. The FBiH has not established specialised anti-corruption investigation units.

Bosnia and Herzegovina has no organisationally independent specialised anti-corruption prosecutorial and judicial bodies. Anti-corruption specialisation is ensured through internal sections and departments of the prosecutor’s offices at the state level, in the FBiH (envisaged in law but not established in practice) and RS. At the state level, corruption cases are assigned to prosecutors in the Section for Corruption within the Special Department for Organised Crime, Economic Crime and Corruption. The Section has five prosecutors and two non-legal experts. In the FBiH and RS, laws on the suppression of corruption and organised crime define key aspects of the specialised departments. The Special Department of the Prosecutor’s Office for Combating Corruption, Organised and the Most Serious Forms of Economic Crime of RS is competent for 36 crime categories, including corruption-related offences. As of December 2022, seven public prosecutors served at the Special Department of RS, suggesting insufficient staffing considering the department's extensive responsibilities. In 2022, the government of the FBiH adopted an Action Plan for the implementation of the Law on Suppression of Corruption and Organised Crime in the FBiH, but the relevant specialised prosecution unit was not established as of end-2023 (Vlada FBiH, 2022[18]) (Istraga, 2023[19]). The European Commission’s assessment highlights that the specialised anti-corruption departments have yet to effectively handle high-level corruption cases, emphasising the need for greater independence. The assessment also expresses concerns over reported instances of selective unwillingness from the police to co-operate with prosecutor’s offices in high-level corruption cases. Additionally, it highlights the adverse effect of controversies regarding the authority of state-level prosecutor’s offices to issue instructions to entity-level offices (European Commission, 2023[15]). In RS, the Special Department for Combating Corruption, Organised and the most Serious Forms of Economic Crime operates in the District Court of Banja Luka.

Overview of implementation of Competitiveness Outlook 2021 recommendations

Bosnia and Herzegovina has made little progress in implementing the past CO Recommendations (Table 7.4). At the state level and in RS, systems for managing conflicts of interest, disclosure of assets, whistleblower protection, and registration of beneficial ownership still fall short of international standards. In the FBiH, several anti-corruption measures are enshrined in law but have not been effectively implemented, such as rules on conflict-of-interest, asset disclosure and specialised investigative and prosecutorial bodies. Furthermore, the entity's legislative framework has not included certain critical elements, such as whistleblower protection and the registration of beneficial ownership data.

Table 7.4. Bosnia and Herzegovina’s progress on past recommendations for anti-corruption policy

Competitiveness Outlook 2021 recommendations	Progress status	Level of progress
Ensure effective and impartial implementation of rules and oversight in the areas of conflict of interest and asset disclosure	The new Law on Preventing Conflicts of Interest in Institutions at the State Level was adopted in 2024. There is no evidence of progress in the FBiH and RS.	Limited
Develop and adopt new whistleblower protection laws at the state and FBiH levels. Take measures to encourage and support the sustained practice of whistleblowing	No legislative changes. Some information activities were conducted.	Limited
Ensure the registration and disclosure of the beneficial ownership of legal entities in line with international standards	No evidence of progress.	None
Strengthen the capacity to investigate and prosecute high‑level corruption and consider setting up independent specialised anti-corruption prosecutorial bodies. Set up the specialised bodies in the FBiH	No evidence of progress.	None

The way forward for anti-corruption policy

Considering the low level of implementation of the previous recommendations, Bosnia and Herzegovina may wish to further strengthen its anti-corruption framework and practice by continuing to follow the policy advice of CO 2021, adjusting as appropriate in the context of recent developments. Additionally, Bosnia and Herzegovina may wish to consider one new recommendation concerning the development of anti-corruption strategies and action plans:

• Develop comprehensive anti-corruption strategies and action plans for the state level, the FBiH and RS through inclusive and consultative processes. Bosnia and Herzegovina's policymakers should allocate sufficient budgetary resources to facilitate implementation and incentivise public bodies to uphold rigorous implementation standards. Aligning with the United Nations Convention against Corruption, these strategies and action plans should facilitate effective, co-ordinated anti-corruption policies that promote the participation of society and reflect the principles of the rule of law, as well as effective management of public affairs and public assets, integrity, transparency and accountability (United Nations, 2004[20]). The effective fight against corruption necessitates more than the enactment of strategic laws and the establishment of key institutions; it requires concerted efforts spanning the entire public sector. To strengthen incentives for public bodies, the government could publish data on the implementation progress, embed the progress of anti-corruption actions in the key performance indicators of the public bodies and performance appraisal of the managers, and introduce a legal guarantee that all planned anti-corruption actions are secured with adequate state budget funding.

• Ensure effective and impartial implementation of rules and oversight in conflict of interest and asset disclosure at all levels of governance. The OECD Guidelines for Managing Conflict of Interest in the Public Service recommend establishing procedures for identifying, managing and resolving conflict of interest situations. The Guidelines define several strategies for resolving or managing a conflict of interest, such as the divestment or liquidation of the interest by the public official or the transfer of the public official to duty in a non-conflicting function (OECD, 2022[21]). Latvia could offer useful inspiration for managing conflicts of interest (Box 7.1). Moreover, Bosnia and Herzegovina should amend rules on asset disclosure to comply with the Western Balkan Recommendation on Disclosure of Finances and Interests by Public Officials. According to the Recommendation, declarations ought to be subject to control by an oversight mechanism, which includes compliance with declaration obligations, the accuracy of submitted information, and signalling the possibility of conflicts of interest or undeclared cash flows (Ethics and Integrity Network of ReSPA, 2014[22]).

Box 7.1. Basic rules for action in case of conflict of interest in Latvia

Latvia’s Law on Prevention of Conflict of Interest in Activities of Public Officials represents an example of minimum rules that should be in place for managing ad hoc conflicts of interest (i.e. conflicts that arise in particular situations rather than exist permanently, for example, a private company being owned by a public official). It includes the following provisions:

Prohibition from acting in a conflict-of-interest situation:

• A public official is prohibited, in the performance of their duties, to prepare or issue administrative acts, perform any supervision, control, investigatory, or punitive functions, or enter into contracts or perform other activities in which such public official, their relatives or transaction counterparties are personally or financially interested.

Obligation to report:

• A public official shall, without delay, provide information in writing to a higher public official or collegial authority regarding their financial or other personal interest and also the financial or other personal interest of their relatives or transaction counterparties regarding the performance of any action, including in the duties of their office.

Actions by a higher official or authority:

• A higher public official or collegial authority shall assign the performance of the functions or tasks of the relevant public official to another public official after receipt of the information.

• A public official shall, upon request of the head of the public authority or their authorised person, provide information to them in writing, which is necessary upon taking internal control measures to prevent the risk of corruption and conflict of interest.

• The head of a public authority has an obligation, in conformity with their competency, not to allow the public officials working in such authority to be in a conflict-of-interest situation and, in such a situation, to implement the powers of office.

• The head of a public authority must inform the Corruption Prevention and Combating Bureau without delay of the violations of this law that the public officials of the relevant authority have committed.

Administrative sanctions:

• For the performance of a public official's functions in a conflict of interest, a fine from EUR 70 to EUR 700 shall be imposed, with or without determining a prohibition of exercising the rights of the public official for up to two years.

• For the non-performance of the obligations specified in this law in relation to the prevention of a conflict of interest, a fine of up to EUR 350 shall be imposed, with or without determining a prohibition of exercising the rights of the public official for up to two years.

Criminal sanctions:

• For a person who violates the restrictions or prohibitions imposed on a public official in the law if substantial harm has been caused thereby, the applicable punishment is the deprivation of liberty for a period of up to three years, temporary deprivation of liberty, probationary supervision, community service, or fine.

• For a public official holding a responsible position, the applicable punishment is the deprivation of liberty for a period of up to five years or temporary deprivation of liberty, probationary supervision, community service, or fine, with or without confiscation of property and with deprivation of the right to engage in specific employment or to take up a specific office for a period of up to five years.

Sources: Republic of Latvia (2023[23]; 2023[24]).

• Amend (state-level, RS) or adopt (FBiH) whistleblower protection laws in line with international standards. Bosnia and Herzegovina has made certain efforts in this area, but the progress is uneven and overall limited. The economy should maintain measures to encourage and support the sustained practice of whistleblowing. The EU Directive 2019/937 envisages the protection of whistleblowers in both public and private sectors and applies protection measures to whistleblowers, their facilitators, and physical and legal persons connected with them. In line with the directive, state and entity levels in Bosnia and Herzegovina should provide information and legal advice on procedures and available remedies easily accessible to the public and free of charge; effective assistance from competent authorities before any relevant authority involved in their protection against retaliation; and financial assistance and support measures, including psychological support, for reporting persons in the framework of legal proceedings.

• Ensure the registration and disclosure of the beneficial ownership of legal entities. In the FBiH, the authorities have not implemented measures to ensure the registration of beneficial ownership data. In RS, a register is envisaged, but certain elements, such as the definition of a beneficial owner, are not fully in line with international standards. The EU Anti-Money Laundering Directives envisage beneficial ownership information in a central register. It is also required that the information held in the central register of beneficial ownership information is adequate, accurate, and current and that states put mechanisms in place to this effect.

• Strengthen capacity to effectively investigate, prosecute and adjudicate high-level corruption cases and consider establishing independent specialised anti-corruption prosecutorial bodies that focus on serious offences and are adequately protected from outside interference. The United Nations Convention against Corruption sets the standard that a body or bodies or persons specialised in combating corruption through law enforcement shall be granted the necessary independence, by the fundamental principles of the legal system of the State Party, to be able to carry out their functions effectively and without any undue influence (United Nations, 2004[20]). The CO assessment did not evaluate in-depth the work of SIPA, the specialised organisational units of the Ministry of Interior of RS, or internal sections and departments of the prosecutor’s offices, and therefore does not argue whether any undue influence on their activities has taken place. However, Bosnia and Herzegovina should introduce additional means to safeguard the independence of the institutions as appropriate to their status through the more public and competitive selection of management, strengthened protection against arbitrary dismissal, and guarantees of dedicated budget funding. The FBiH should accelerate efforts to set up the specialised bodies as envisaged in the law.

References

[8] Anti-Corruption Team of the Government of the Federation of Bosnia and Herzegovina (2023), Report on the work of the Anti-Corruption Team of the Government of the Federation of Bosnia and Herzegovina for the year 2022, https://fbihvlada.gov.ba/uploads/documents/izvjestaj-o-radu-antikorupcionog-tima_1679470485.pdf.

[11] APIK (2023), Report on the Work of the Agency for Prevention of Corruption and Coordination of the Fight against Corruption for the period from August 1, 2022, to June 30, 2023., Agencija za prevenciju korpucije i koordinaciju borbe protiv korupcije, http://www.apik.ba/izvjestaji/izvjestaji-agencije/default.aspx?id=2941&langTag=en-US.

[6] APIK (2021), Guidelines for Strategic Planning of Anti-Corruption Policies in Bosnia and Herzegovina., Agencija za prevenciju korupcije i koordinaciju borbe protiv korupcije, http://www.apik.ba/zakoni-i-drugi-akti/ostali-akti/smjernice-i-preporuke/default.aspx?id=2321&langTag=bs-BA.

[7] APIK (2020), The Fourth Monitoring Report on the Implementation of the Anti-Corruption Strategy 2015-2019 and Action Plan for the Implementation of the Anti-Corruption Strategy 2015-2019., Agencija za prevenciju korupcije i koordinaciju borbe protiv korupcije, http://www.apik.ba/izvjestaji/izvjestaji-agencije/default.aspx?id=2352&langTag=bs-BA.

[9] APIK (2018), Rules for the Preparation and Implementation of Integrity Plans in Institutions in Bosnia and Herzegovina., Agencija za prevenciju korupcije i koordinaciju borbe protiv korupcije, http://www.apik.ba/zakoni-i-drugi-akti/Plan_integriteta/?id=1742.

[16] Devine, T. and M. Worth (2021), Gap Analysis of Whistleblower Protection Laws in the Western Balkans and Moldova, Regional Anti-Corruption Initiative, https://rai-see.org/php_sets/uploads/2021/10/RAI-GAP-Analysis-English.pdf.

[22] Ethics and Integrity Network of ReSPA (2014), Western Balkan Recommendation on Disclosure of Finances and Interests by Public Officials, https://www.respaweb.eu/download/doc/02+Policy+Recommendations+on+Income+and+Asset+Declarations.pdf/5d3ea91ed1b5ebcaeeaf5bbb97463ec1.pdf.

[15] European Commission (2023), Bosnia and Herzegovina 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/SWD_2023_691%20Bosnia%20and%20Herzegovina%20report.pdf.

[10] Federal Ministry of Finance (2022), Guidelines for Risk Management in the Public Sector in the Federation of Bosnia and Herzegovina., http://fotoart.ba/1_fmf/juli2022/Smjernice%20za%20upravljanje%20rizicima%20u%20javnom%20sektoru%20FBiH%2042_22-BOS.pdf.

[14] GRECO (2023), Evaluation Report: Bosnia and Herzegovina, https://rm.coe.int/fifth-evaluation-round-preventing-corruption-and-promoting-integrity-i/1680aa76dc.

[13] GRECO (2023), Second Interim Compliance Report: Bosnia and Herzegovina, https://rm.coe.int/fourth-evaluation-round-corruption-prevention-in-respect-of-members-of/1680ab84bd.

[19] Istraga (2023), The Amended Budget Document Proves: Prime Minister Nikšić Announced the Fight Against Corruption but then Cut Funds for the Construction of the Building Intended to House the ’Federal USKOK’., https://istraga.ba/dokument-izmijenjenog-budzeta-dokazuje-premijer-niksic-najavio-borbu-protiv-korupcije-pa-ukinuo-novac-za-izgradnju-zgrade-u-kojoj-bi-trebao-biti-smjesten-federalni-uskok/.

[3] Kaufmann, D. and A. Kraay (2023), Worldwide Governance Indicators, https://www.worldbank.org/en/publication/worldwide-governance-indicators.

[17] Minic, Z. and S. Tunović Bećirović (2022), Model Communication Strategy for Anti-Corruption Bodies in BiH, https://aktbih.ba/documents/Model_Communication_Strategy15679545831623539672.pdf.

[21] OECD (2022), Recommendation of the Council on OECD Guidelines for Managing Conflict of Interest in the Public Service, OECD Publishing, Paris, https://legalinstruments.oecd.org/public/doc/130/130.en.pdf.

[12] Parliamentary Assembly Bosnia and Herzegovina (2021), Panel for Election and Monitoring of the Work of the Agency for Prevention of Corruption and Coordination of the Fight Against Corruption, https://www.parlament.ba/committee/read/19?mandateId=8&commiteeMandate=218.

[4] RCC (2021), Balkan Barometer, Regional Cooperation Council, https://www.rcc.int/balkanbarometer/publications.

[5] RCC (2020), Balkan Barometer, Regional Cooperation Council, https://www.rcc.int/balkanbarometer/publications.

[24] Republic of Latvia (2023), Criminal Law, Article 325, https://likumi.lv/ta/en/en/id/88966-criminal-law. (accessed on 13 June 2024).

[23] Republic of Latvia (2023), Law on Prevention of Conflict of Interest in Activities of Public Officials, Articles 11, 20, 21, 32, https://likumi.lv/ta/en/en/id/61913-on-prevention-of-conflict-of-interest-in-activities-of-public-officials (accessed on 13 June 2024).

[2] Transport Community (2023), Action Plans and the EU Acquis Progress Report 2023, https://www.transport-community.org/wp-content/uploads/2023/12/Action-Plans-and-EU-Acquis-Progress-Report-2023-WEB.pdf.

[20] United Nations (2004), United Nations Convention Against Corruption, https://www.unodc.org/documents/treaties/UNCAC/Publications/Convention/08-50026_E.pdf.

[18] Vlada FBiH (2022), Adopted Action Plan for the Implementation of the Law on Combating Corruption and Organised Crime in the Federation of Bosnia and Herzegovina., https://fbihvlada.gov.ba/hr/usvojen-akcioni-plan-za-implementaciju-zakona-o-suzbijanju-korupcije-i-organiziranog-kriminala-u-fbih.

[1] World Bank (2023), Worldwide Governance Indicators - Control of Corruption, https://www.worldbank.org/en/publication/worldwide-governance-indicators (accessed on 1 March 2024).