Western Balkans Competitiveness Outlook 2024: North Macedonia

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, co-ordination 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 as well as 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

Since the CO 2021 assessment, North Macedonia has begun implementing the National Strategy for Prevention of Corruption and Conflict of Interest 2021-25, but its implementation levels remain limited (Table 7.1). The overall legal and institutional anti-corruption framework of North Macedonia has changed little except for amendments to certain legal sanctions. The economy has made significant efforts to improve practices to prevent corruption. However, shortcomings in institutional capacity have been a key obstacle hindering a stronger general performance in the area of anti‑corruption policy.

Table 7.1. North Macedonia’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			3.0	2.4
	6.2: Prevention of corruption			3.1	2.9
	6.3: Business integrity and corporate liability			2.3	1.9
	6.4: Investigation and prosecution			2.7	2.4
North Macedonia’s overall score		2.4	2.9	2.8	2.5

Notes: Scores for 2024 are not directly comparable to the 2021 scores due to changes in the scoring methodology of this indicator. Sub‑dimension 6.3 as well as several indicators in the other sub-dimensions are 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:

• In 2021, the parliament adopted the National Strategy for Prevention of Corruption and Conflict of Interest 2021-25. However, its low level of implementation is a challenge, as 89 out of 166 scheduled activities until 2023 were not completed in time.

• The State Commission for Prevention of Corruption (SCPC) is the main corruption prevention body and has multiple responsibilities, including developing an anti-corruption policy and overseeing conflicts of interest and declarations of public officials. While the SCPC’s annual budget and staff numbers have increased in recent years, staffing levels continue to fall substantially short of the intended target. Despite these shortcomings, the SCPC effectively contributes to countering corruption.

• The Law on Protection of Whistleblowers deviates from the (EU Directive 2019/1937 on protecting persons who report breaches of EU law. For example, external whistleblowing to the Ministry of Interior, the public prosecutor's office, the SCPC, the Ombudsman or other competent institutions in North Macedonia is subject to conditions rather than the whistleblower’s free choice. Moreover, the Law contains no waiver of liability for whistleblowers when breaching disclosure restrictions.

• The economy’s Corporate Governance Code covers certain ethics-related matters and applies to companies listed on the stock market. The Stock Exchange published a report on compliance with the Code in 2022, setting a good-practice example for encouraging business integrity.

• North Macedonia has a track record of investigating and prosecuting high-level corruption. However, numerous challenges prevail in this area, such as insufficient financial investigations and a limited track record of recovery of proceeds of corruption, especially from abroad. Criminal proceedings were also undermined by the softening of provisions of the Criminal Code in 2023, as well as lengthy trials that have sometimes led to the expiration of limitation periods.

State of play and key developments

The perceived level of corruption in North Macedonia has been fluctuating and improved in 2022-23. On a scale from -2.5 (worst) to +2.5 (best), North Macedonia’s score in the World Bank’s Control of Corruption indicator has slightly improved, from -0.39 in 2018 to -0.32 in 2022 (Table 7.2). The Transparency International Corruption Perceptions Index reflects a similar change. On a scale from 0 (highly corrupt) to 100 (very clean), North Macedonia scored 37 in 2018 and 42 in 2023. North Macedonia’s scores have risen above the Western Balkan regional average in 2021-23.

Table 7.2. North Macedonia’s perceived anti-corruption policy performance in 2018-23

	2018	2019	2020	2021	2022	2023
Control of Corruption Index
MKD (percentile rank)
MKD (score)	-0.39	-0.46	-0.49	-0.37	-0.32
WB6 (score)	-0.41	-0.45	-0.44	-0.41	-0.38
Corruption Perceptions index
MKD (rank)	93/180	106/180	111/180	87/180	85/180	76/180
MKD (score)	37	35	35	39	40	42
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]); Transparency International (2023[2]).

According to the Balkan Barometer, a minority of people in North Macedonia agree that the government fights corruption successfully. The share increased in 2021 when it reached 31% (RCC, 2021[3]), compared to 24% in 2020 (RCC, 2020[4]).

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

North Macedonia has a robust anti-corruption policy framework in place, but its implementation has been slow. The National Strategy for Prevention of Corruption and Conflict of Interest 2021-25, prepared by the SCPC and adopted by the Assembly, forms the basis of the economy’s anti-corruption policy. The strategy identifies two priority horizontal areas, public procurement and employment in the public sector, as well as 15 sectors, including the political system, the judiciary, law enforcement bodies, healthcare, and education. The accompanying Action Plan contains simple indicators of completion, so-called outputs, and simple yes-no remarks regarding whether the actions carry “financial implications”, which seemingly refer to the actions’ costs (SCPC, 2023[5]). The SCPC monitors and reports on the strategy’s implementation.

In 2023, upon the initiative of the Ministry of Justice, the government reactivated the inter-agency body for co-ordination of anti-corruption activities, chaired by the deputy prime minister and comprising 19 representatives of different state authorities, including the SCPC. Independent experts were commissioned to carry out a qualitative analysis of the vulnerable sectors identified by the strategy: health, education, sports, environment, agriculture, public enterprises and state-owned companies. The analysis found that the percentage of implemented activities was small, and in some sectors, none had been implemented (Gjorgievski, Mateski and Zafirov, 2022[6]). The low level of implementation remains a challenge, with 89 out of 166 activities remaining unimplemented at the end of 2023. The largest numbers of unimplemented activities were in the sectors of law enforcement authorities (13), education (12), and economy and business (11) (SCPC, 2024[7]).

The majority of central-level public bodies in North Macedonia carry out corruption risk assessments on a systematic basis, but the practice is not universally implemented. Corruption risk assessment and management generally take place within the framework of internal financial control. In 2017, the Ministry of Finance published Guidelines for Fraud and Corruption Risk Management (Ministry of Finance, 2017[8]), and other relevant guidelines and methodologies have been prepared since then. Moreover, in 2022, the government obliged all state administration bodies to develop and publish corruption risk assessment plans (Government of the Republic of North Macedonia, 2022[9]). According to the government, only 69.39% of central-level entities had adopted risk registers in 2022, compared to 70.59% in 2021, and 74.40% in 2020. At the local level, the share was much lower, with only 39.51% in 2022. The SCPC is competent in preparing sectoral corruption risk analyses. According to the government, one sectoral assessment was carried out in 2020, five in 2021 and none in 2022. However, the annual report of the SCPC for 2021 only mentions analyses carried out by NGOs, particularly regarding employment practices with a special focus on nepotism, cronyism and clientelism, as well as in the area of spatial planning, urbanism and construction (SCPC, 2022[10]). This suggests a deficiency in the SCPC’s capacity to carry out these sectoral assessments using its own resources.

The SCPC is also responsible for corruption proofing of legislation and has adopted the Methodology for Anti-Corruption Review of Legislation. The scope of anti-corruption reviews includes laws, bylaws and other general acts that are in the process of being drafted or that are already in force. As such, the SCPC reviews all draft laws that it identifies as priority, in addition to other acts listed in an annual plan for review (SCPC, 2015[11]). In 2022, the SCPC started using software to digitalise the anti-corruption review and expedite the identification of provisions that contain corruption risks. The SCPC has been increasing its activity of corruption proofing of laws, from 5 laws in 2019 to 19 and 18 in 2021 and 2022, respectively. In 2022, the SCPC’s recommendations were accepted regarding three laws, but in nine cases, no responses were received, or the recommendations were not implemented, suggesting that it could be useful to envisage a legal obligation for the competent legislative institutions to respond (SCPC, 2023[12]).

Sub-dimension 6.2: Prevention of corruption

The SCPC is North Macedonia’s main corruption prevention body. It is legally autonomous and, independent, and accountable to the Assembly. The SCPC operates based on the Law on Prevention of Corruption and Conflict of Interest (LPCCI) adopted in 2019. The agency has multiple responsibilities, such as developing anti-corruption policy, monitoring policy implementation and compliance with legal requirements, overseeing conflicts of interest and declarations of public officials, probing corruption-related acts, conducting misdemeanour procedures and instigating initiatives for determining the liability of officials as well as for criminal prosecution. Multiple elements of the legal framework are designed to safeguard the independence of the SCPC, including a transparent and competitive procedure for the selection and appointment of its president and six members. To do so, a seven-member selection committee, which includes two representatives of civil society, proposes the best-ranked candidates to the Assembly; they will be appointed for a period of five years without a right to reappointment. The annual budget of the SCPC has been steadily increasing: from MKD 27 million (EUR 438 676) in 2018 to MKD 55 million (EUR 897 170) in 2020 and MKD 66 million in 2023 (around EUR 1.07 million). The number of SCPC staff also rose significantly, more than doubling from 23 employees in 2020 to 48 in 2022. However, the number remained below the planned 64 positions in 2022 (SCPC, 2023[12]). Despite insufficient specialist staff, international assessments highlight the important role played by the SCPC in proactively providing public institutions in North Macedonia with guidance and showing leadership in the fight against corruption (European Commission, 2023[13]) (GRECO, 2023[14]).

There have been no major developments since the last CO assessment regarding conflicts of interest. The Law on Prevention of Corruption and Conflict of Interest (LPCCI) determines the rules for official persons, which are defined comprehensively as all elected or appointed persons and public sector employees. Other laws, regulations and codes of conduct contain rules on conflicts of interest specifically for members of parliament, members of the government, judges, public prosecutors and other public officials. The law defines an actual and potential conflict of interest, and clearly requires official persons to be cautious of potential conflicts of interest and take steps to avoid them. To clarify the application of the rules, the SCPC published, in 2020, a practical guide on ad hoc detection and management of conflicts of interest for government members (SPCP, 2020[15]), and guidance on the development of an internal act on the management of conflict of interest in 2016 (SCPC, 2016[16]). When the SCPC determines the existence of a conflict of interest, it shall request that the official in question resolve the conflict. If the request is not complied with, depending on the category of the official, the SCPC can demand that a disciplinary procedure be initiated or the official dismissed, or it can impose a public warning and start a misdemeanour procedure. The number of imposed misdemeanour sanctions used to be low but has increased significantly since 2020 (Table 7.3). This uptick is attributed to the LPCCI provisions from 2019, which made the SCPC Misdemeanour Commission the competent body to conduct misdemeanour procedures and impose sanctions for misdemeanours under the LPCCI. This has significantly improved the efficiency of imposing sanctions. Formerly, the SCPC submitted initiatives for conducting the misdemeanour procedure to the court.

Table 7.3. Sanctions for conflicts of interest in North Macedonia in 2020-22 (all final and in force)

	2020	2021	2022
Disciplinary sanctions	4	1	2
Dismissals	1	0	2
Misdemeanour sanctions	15	28	29
Public reprimand	0	1	0

Source: Based on data provided by North Macedonia’s authorities in the context of the CO 2024 assessment.

The number of sanctions imposed for post-employment violations has been low: 1 in 2019, 1 in 2020 and 2 in 2022. Furthermore, there is no practice of invalidating decisions or contracts because of violating conflict-of-interest regulations, even though the LPCCI outlines such a possibility.

North Macedonia has a framework for asset and interest disclosure in place, but legal gaps persist. High-level officials, responsible persons in public enterprises or other entities with state capital, high civil servants, notaries, enforcement agents, and advisers in the cabinets of political office holders are subject to asset and interest disclosure. Officials have to provide data about themselves and their family members upon assuming an official position and after termination. They must also report increases in property as well as any changes of interests. The last CO noted the SCPC’s opinion that annual declarations for all declarants would be preferable, but no improvements have been made in this regard. The declaration does not explicitly require disclosing certain important assets, including cash savings outside financial institutions, virtual assets (e.g. cryptocurrencies), or beneficial ownership other than formal ownership (SCPC, 2023[17]). While these assets could be covered implicitly, for example, under the category of “other assets”, there is a risk that some declarants may not clearly understand the obligation to disclose these specific types of assets. As of the end of 2023, the SCPC was still testing a new digitalised system for declarations, which could allow the electronic submission of declarations in a standard format, feeding the data directly into the database, automating data entry and analysis, ensuring cross-checking with other databases, and improve transparency.

The law guarantees the SCPC access to data from financial institutions on request, as well as direct electronic access to the databases of 17 other institutions. Compared to the previous assessment, the SCPC has increased its capacity to carry out verifications of asset and interest declarations, as the number of dedicated employees for this workstream rose from three to five in mid-2023 (GRECO, 2023[14]). The number of verifications has been slightly increasing, with 54 officials included in the verification plan for 2022 compared to 42 in 2021 (SCPC, 2023[12]) (SCPC, 2022[10]). In 2022, the SCPC issued 367 misdemeanour payment orders for non-submission or late submission of declarations and 5 for failing to report asset increases. This is a steep increase compared to previous years, with 86 in 2021 and 73 in 2020, suggesting that the pilot digital system has enhanced efficiency in identifying such misdemeanours. Furthermore, the SCPC displayed heightened vigilance in identifying misdemeanours, likely motivated by strong public support in addressing potential corrupt activities involving public servants and members of parliament. The Criminal Code establishes liability for the provision of false or incomplete data regarding property or sources of revenue for its acquisition when those significantly exceed the legal income of the public official or their family members. In practice, the track record of detection of illicit enrichment or unjustified assets is weak, with only one case detected in 2021 and 2022.

Whistleblower protection in North Macedonia, following the Law on Protection of Whistleblowers adopted in 2015, extends to both the private and public sectors but falls short of fully meeting international good practice. The Law deviates from the EU Directive 2019/1937 on protecting persons who report breaches of European Union law. For example, while whistleblowers are not required to prove their good faith, they could face the risk of unfair and unnecessary deprivation of protection if implementers decide to probe their motives because good intention is still a required element of protected reporting. External whistleblowing to the Ministry of Interior, the public prosecutor’s office, the SCPC, the Ombudsman or other competent institution is subject to conditions rather than the free choice of the whistleblower. However, the authorities stated for this assessment that no whistleblower had been challenged based on the good faith requirement or denied protection in case of external whistleblowing for failure to meet conditions. The conditions for public disclosure do not encompass all circumstances envisaged in the EU Directive 2019/1937. North Macedonia’s law contains multiple provisions to protect whistleblowers, but there is no provision for waiving liability in cases of breaching restrictions on disclosure or acquiring/accessing the reported information. In any dispute regarding violating the rights of whistleblowers and people close to them, the burden of proof lies with the institution. However, the definition of close persons does not explicitly comprise facilitators of whistleblowing or legal entities connected with the whistleblower. Legally guaranteed support for whistleblowers is limited. There are no explicitly envisaged channels of counselling, no access to free legal aid apart from that based on the general rules regarding such aid, and no rules regarding provisional judicial protection before the review of the case is completed (Regional Anti-Corruption Initiative, 2021[18]). In 2020, North Macedonia lowered sanctions for violations of the Law on Protection of Whistleblowers, as part of changes in the general misdemeanour policy (Transparency International - North Macedonia, 2022[19]).

In recent years, the SCPC has received increasing numbers of whistleblower reports, rising from six in 2020 to ten in 2022. Yet only a few of these reports have led to the detection of corrupt activity. In most instances, the investigations could not confirm the allegations (SCPC, 2023[12]). In 2021, the SCPC launched an online application for whistleblower reports and follow-up communication, reporting that no whistleblower protection measures were applied between 2020 and 2022. The sentiment in  Macedonian society mirrors this trend, with 50% of survey respondents in 2020 expressing the belief that whistleblowers were either inadequately protected or not protected at all, while only 19% felt that they were sufficiently safeguarded by law (SCPC, 2020[20]).

The SCPC and other institutions conduct various anti-corruption public awareness and education activities. The SCPC has organised several campaigns, including the campaign “Be Heroes of Honesty” in 2023, which aimed to educate students about the consequences of corruption and lack of personal and common integrity. Public events have also been prominent, such as a yearly conference for the presentation and discussion of the annual report on the implementation of the National Strategy 2021-25, last held in April 2023. Furthermore, a roundtable on the topic “Public Sector Integrity Standards by the United Nations Convention against Corruption (Articles 7, 8 and 10)” was held in October 2022, organised by the Ministry of Justice with the support of the United Nations Development Programme (UNDP). Moreover, a public debate on “Discretionary power in adopting secondary legislation as a corruption risk in urban planning” was conducted on line in June 2022, arranged by the SCPC. Additionally, since 2022, the SCPC has provided various training activities in a modern training centre on its premises and engages in developing digital training resources. In 2022, the Ministry of Education and Science asked higher education institutions to consider developing public education programmes to promote a culture of integrity in North Macedonia. Several higher education institutions reported their involvement in such activities, including presentations and lectures to students and employees on preventing and reporting corruption. The national budget allocates funds for anti-corruption awareness-raising and education activities, but data on the exact amounts are unavailable. Furthermore, there has been no evaluation or measurement of the effectiveness of public information and education measures.

Sub-dimension 6.3: Business integrity and corporate liability

The formal framework for promoting business integrity remains limited, with no significant advancements noted since the last CO assessment. The Corporate Governance Code, which covers ethics-related matters, is applicable only to companies whose shares are listed on the official market of the Macedonian Stock Exchange (Macedonian Stock Exchange, Securities and Exchange Commission, 2021[21]). The Stock Exchange published a report on compliance with the Code in 2022. The report found that 17 companies fully complied, five complied partially and five did not comply with the requirement to adopt and publish a company code of ethics. More encouragingly, 67% of companies fully complied with the requirement to publish a whistleblowing procedure (Macedonian Stock Exchange, 2023[22]). The Company Law mandates that the supervisory body of a joint-stock company is obliged to organise an independent internal audit service, which should among other things assess the adequacy and efficiency of internal control systems as well as the implementation of risk management policies; however, there are no specific requirements regarding corruption risks.

In accordance with the Law on Prevention of Money Laundering and Financing of Terrorism, the Central Registry shall establish, maintain and manage a register of beneficial owners; it became operational in 2021. The definition of beneficial owner is generally in line with EU anti-money laundering directives. The name, date of birth, citizenship and country of residence of a beneficial owner, as well as their ownership share or other form and type of ownership or control, is available to any legal or natural person. Both financial institutions and designated non-financial businesses and professions must identify beneficial owners as part of their customer due diligence. Information provided by the government indicates 182 inspections were carried out in 2021-23 to check the fulfilment of duties to provide and keep data on beneficial owners, but no violations have been detected. On the other hand, MONEYVAL has raised concerns with regard to the trustworthiness of the recorded beneficial ownership information and insufficient verification of the submitted data (Council of Europe, 2023[23]).

The government named several institutions that may assist businesses in resolving concerns, potentially including corruption-related challenges. These institutions include the National Coordinating Body on Corporate Social Responsibility, the Invest North Macedonia Agency, the Single Entry Point – Aftercare System of the Directorate for Technological Industrial Development Zones, and the Cabinet of the Deputy Prime-Minister in Charge of Good Governance Policy.

The Criminal Code of North Macedonia prescribes criminal liability of legal persons for all offences. A legal entity shall be liable for a crime committed by a responsible person within the legal entity or on behalf of the account and for the benefit of the legal entity. Under certain conditions, an entity shall also be liable for a crime committed by its employee or representative where a significant property benefit has been acquired, or significant damage has been caused to a third person. The element of significant benefit or damage limits the application of liability in corruption cases where no such benefit or damage is found – for example, if a bribe has only been offered.

The liability of legal persons is autonomous, i.e. an entity shall be liable for a crime even when there are obstacles to determining the criminal liability of the natural person as an offender. Fines are the main sanctions for legal entities. The general upper limit of fines is MKD 30 million (around EUR 488 000), with the possibility of increasing the number of crimes committed out of covetousness and crimes that lead to greater benefit or damage. Provisions on the calculation of fines link the maximum amounts of fines to ranges of prison sanctions. For offences that would lead to imprisonment of less than five years, fines would be much lower (up to MKD 1 million or around EUR 16 000). For many corruption offences, the maximum prison sanction is five years or more. The amendment to the Criminal Code in February 2023 heightened prison penalties for active bribery, which also led to an indirect increase in the maximum sanctions applicable to legal entities involved in bribery. However, for certain offences, such as the less severe form of active trading in influence, the maximum sanction is three years. The law does not explicitly envisage due diligence, compliance, internal control, or other internal anti-corruption policies as mitigating circumstances, nor is it possible to defer the application of sanctions due to such circumstances. Thus, there is scope for introducing new incentives for compliance with criminal law. Authorities do not publish detailed statistics on prosecution, trial and sentencing of legal persons. According to the government, the number of monetary fines imposed on legal persons for corruption offences was 1 in 2018, 2 in 2019, 0 in 2020, 11 in 2021 and 2 in 2022. In all cases of 2021-22, confiscation of proceeds has been applied.

Sub-dimension 6.4: Investigation and prosecution

North Macedonia has established a certain track record of investigation and prosecution of high-level corruption. According to the government, the number of convictions (subject to appeal and final) for high-level corruption was 4 in 2020, 6 in 2021, and 18 in 2022. During the same period, the number of final sanctions for such corruption that entailed imprisonment without conditional or other release was 4. In 2018-22, there were no high-level corruption cases where proceeds located abroad have been recovered. Parallel financial investigations still do not accompany corruption investigations in all relevant cases. The government provided information on two cases where proceedings were terminated due to the expiry of the periods of limitation. The European Commission also expresses concern regarding the increasing number of delays and trial reversals, which in some cases have resulted in the expiry of limitation periods (European Commission, 2023[13]). Important proceedings against high-level corruption have been negatively affected by the softening of sanctions for some corruption offences adopted in September 2023. These amendments removed, among others, the heightened sanction for abuse of official position if performed during execution of public procurement or resulting in harm to public funds (Magleshov and Marusic, 2023[24]).

North Macedonia has some institutional capacity for anti-corruption investigation, with several entities operating as specialised anti-corruption investigative bodies. There are three entities within the Ministry of Interior:

• the Economic Crime and Corruption Department (Unit for Fight against Corruption, with a staff target number of 6 employees for the Criminal Police Division)

• the Unit for Corruption (staff target: 18 employees) in the Organised and Serious Crime Division

• the Unit for Corruption and Counterfeits (staff target: 12 employees) in the Skopje Regional Department of Interior Affairs.

Furthermore, there are two anti-corruption units within the Financial Police under the Ministry of Finance:

• the Unit for Detection of Abuse of Official Position (staff target: 6 employees)

• the Unit for Detection of Corruption in Public Procurement (staff target: 4 employees).

These specialised units have no special safeguards of their autonomy and are subject to the general oversight mechanisms of their sectors, such as professional integrity tests (in the Ministry of Interior) and oversight by public prosecutors. The CO 2021 noted that the selection of unit heads of the Ministry of Interior took place following internal announcements. Despite the government's claim in 2023 that vacancies in all mentioned entities within both ministries are advertised on line by default, independent verification of this statement is challenging. Although the ministries' websites feature dedicated “careers sections”, it cannot be ruled out that informal recruitment methods are employed alongside regular online recruitment practices. The government has reported fluctuations in staffing levels within specialised units, noting a slight increase in the Ministry of Interior to 29 staff in 2022. However, there has been a decrease in the Financial Police, with staffing reduced to 9 employees in 2022 from 13 in 2019. The units’ budgets are not provided as separate budget lines, which does not allow for a granular assessment of their capacities.

North Macedonia has a specialised anti-corruption prosecutorial body in place, which, however, suffers from limited capacity and resources. The Prosecutor’s Office for Organized Crime and Corruption (POOCC) serves as a specialised anti-corruption prosecutorial body for certain corruption offences as defined in the Law on Public Prosecution. The POOCC has several special safeguards of its autonomy. For instance, the Chief Public Prosecutor of the POOCC is appointed by the Council of Public Prosecutors following a vote by all public prosecutors. This appointment procedure was applied in 2022 but faced public scrutiny due to the initial lack of qualifying criteria and concerns regarding undue influences (Ristovska et al., 2023[25]) (European Commission, 2023[13]). Without the consent of the Chief Public Prosecutor of the POOCC, the Public Prosecutor of the Republic cannot undertake criminal prosecution or perform certain activities for which the POOCC is competent, nor can the Public Prosecutor authorise another prosecutor’s office to conduct proceedings or to perform activities within the competence of the POOCC, except when the function has not been performed within legal deadlines. Public prosecutors of the POOCC are dismissed by a two-thirds majority of members of the Council of Public Prosecutors. The annual budget of the POOCC increased yearly in 2019-22 and was around MKD 64 million in 2023 (approximately EUR 1.05 million). The POOCC had 10 public prosecutors until 2021 when the number increased to 14. Nevertheless, the POOCC remains a small institution with limited capacity and lacks, among others, financial experts or analysts (European Commission, 2023[13]).

North Macedonia also has specialised courts for corruption cases. A specialised court department within the Criminal Court of First Instance in Skopje handles cases of organised crime and corruption across the whole territory of North Macedonia.

Overview of implementation of Competitiveness Outlook 2021 recommendations

North Macedonia’s progress in implementing past CO Recommendations has been modest, with the most significant efforts directed at strengthening the SCPC. In certain areas, like the registration of beneficial ownership data and liability of legal persons for corruption, there have been some advances, yet these achievements still fall short of good practice. Table 7.4 below illustrates the economy’s progress in implementing past recommendations for anti-corruption policy.

Table 7.4. North Macedonia’s progress on past recommendations for anti-corruption policy

Competitiveness Outlook 2021 recommendations	Progress status	Level of progress
Ensure full staffing of the SCPC with qualified personnel	The SCPC’s financial and human resources have been strengthened. However, the staff number still remains below the intended target for 2022.	Moderate
Develop and launch the electronic system for asset and interest disclosure	As of mid-2023, a digital system for asset and interest declarations was developed, but the SCPC is still testing the system.	Moderate
Continue to disseminate information for potential whistleblowers	The SCPC has made efforts to disseminate information to promote whistleblowing and facilitated whistleblowing with a digital application. However, data show that few whistleblowing reports lead to the detection of corrupt activity. Support measures for whistleblowers have not been expanded.	Limited
Implement the registration of beneficial owners of legal entities	The register of beneficial owners became operational in 2021. No evidence of sanctions for failure to collect beneficiary ownership data or to enter the data in the register. No independent evaluation of the accuracy of the registered information.	Limited
Strengthen corporate liability	While the corporate liability framework has not been amended, the amendment to the Criminal Code in February 2023, which heightened prison penalties for active bribery, also resulted in an indirect increase in the maximum sanctions applicable to legal entities involved in bribery.	Limited
Strengthen the practice of financial probes alongside corruption investigations	No evidence of progress.	None
Consider how to strengthen the independence of specialised anti-corruption law enforcement units	No evidence of progress.	None

The way forward for anti-corruption policy

Considering the varied levels of implementation of the previous recommendations, North Macedonia may wish to further strengthen its anti-corruption framework and practice by continuing to follow the policy advice of the CO 2021, while adapting its approach as appropriate in the context of recent developments. In addition, North Macedonia should also consider several recommendations:

• Incentivise public bodies to improve the overall implementation of national anti‑corruption policy documents. The national anti-corruption Strategy and Action Plan implementation rate has been strikingly low. Effectively combating corruption requires the successful functioning of strategic laws and institutions and a comprehensive effort across the entire public sector. Possible further incentives for public bodies could be the publication of data on implementation progress in an easily accessible visualised manner reflecting the degree of accomplishment of each public body. Furthermore, the progress of anti-corruption actions could be embedded in the key performance indicators of public bodies and managers' performance appraisals. Moreover, introducing a legal guarantee that all planned anti-corruption actions are secured with adequate state budget funding would enable sustainable efforts in the combat against corruption.

• Further enhance the declaration system of assets and interests by eliminating remaining gaps and ambiguities in the declarations and launching the new digital system for asset and interest declarations. Additionally, the introduction of an annual declaration submission, regardless of changes in property or interests, should be considered, and analysis should be strengthened to detect possible inexplicable wealth. The Western Balkan Recommendation on Disclosure of Finances and Interests by Public Officials recommends that income and asset declarations show the fullest picture possible of incoming and outgoing cash and asset flows during the time in office (Ethics and Integrity Network of ReSPA, 2014[26]). Moreover, the verification process should not be limited to comparing data but should aim at detecting undeclared cash flows and their possible illicit origin (Ethics and Integrity Network of ReSPA, 2014[26]).

• Strengthen oversight of compliance with the obligation to provide correct beneficial ownership data. The EU Anti-Money Laundering Directive requires that the information in the central register of beneficial ownership information is adequate, accurate and current. EU Member States shall put in place mechanisms to this effect, e.g. the requirement that obliged entities and competent authorities report any discrepancies they find between the beneficial ownership information available in the central registers and the beneficial ownership information available to them. The authority that supervises the central register should have the legal and institutional capacity to monitor and enforce the reporting obligations (OECD, Inter‑American Development Bank, 2021[27]). Croatia could serve as inspiration for strengthening the role of the Central Registry in North Macedonia (Box 7.1).

Box 7.1. Supervision of registration of beneficiary ownership information in Croatia

In Croatia, all relevant legal persons and arrangements must register their beneficial owners in the Register of Beneficial Owners (RBO). The Financial Agency (FINA) maintains the register on behalf of the Ministry of Finance and is in charge of the technical maintenance of the digital database. The legal persons and arrangements are responsible for entering and updating their beneficiary ownership information in the register.

The FINA and the Tax Administration (TA) supervise the RBO. The FINA verifies whether the information has been entered into the register following the requirements and deadlines prescribed by law. The TA carries out supervision in the form of on-site investigations and audits to make sure that the information entered into the register is accurate and up to date. When conducting tax supervision of legal persons, the TA checks all the beneficiary ownership data provided and whether there are secret society arrangements (a contractual arrangement for one party to obtain the economic benefit of another person’s business). Beneficiary ownership information can also be checked upon notification provided by a reporting entity. If information on irregularities in the beneficiary ownership database is submitted to the TA, an inspection of the legal person is initiated.

Croatia has established fines for legal persons who do not record appropriate, accurate and up‑to‑date information in the register in the prescribed manner and within the designated deadlines. The fines can also be imposed on management board members, trustees and other responsible persons within the legal entity. Both the FINA and the TA can start misdemeanour proceedings. The fines range from EUR 670 to EUR 100 000 for the most severe misdemeanours.

Note: Arrangement in this context means an agreement between several persons to work for some business purpose without creating a new separate legal personality.

Sources: Adapted from OECD and IDB (2021[28]); MONEYVAL (2021[29]).

• Strengthen corporate liability by ensuring that the applicable fines for all corruption offences conform with the standard of effective, proportionate and dissuasive sanctions, and by introducing incentives for compliance in criminal law, such as treating the due diligence and anti‑corruption policies of companies as mitigating circumstances. Monetary sanctions should be sufficiently severe to affect large corporations that may engage in corrupt acts that, if accomplished undetected, would yield millions of euros in profits. In certain economies, the OECD Working Group on Bribery in International Business Transactions found statutory sanction ceilings of several million euros were still insufficient. The Working Group has encouraged setting maximum fines as a share of a company’s turnover (OECD, 2022[30]). While such high fines may not appear relevant for an average company, North Macedonia’s law should provide the option of applying adequate sanctions if a large business player engages in corruption.

• Strengthen the practice of financial probes alongside corruption investigations to increase the amount of corruption proceeds detected and confiscated, especially those located abroad. This Recommendation from the CO 2021 remains relevant and echoes the recommendation of the European Commission to improve repression of high-level corruption, including through the “confiscation of criminal assets, value-based confiscation, extended confiscation and third-party confiscation” (European Commission, 2023[13]). Corruption crime is mostly perpetrated to obtain pecuniary benefit, and its recovery for the public is presumably one of the most effective remedies. Therefore, North Macedonia’s authorities should make the maximum effort to ensure that these benefits are identified, seized and confiscated when law enforcement bodies detect large-scale corruption and that the judiciary convicts the involved persons.

• Consider how to strengthen the independence of specialised anti-corruption law enforcement units. The Recommendation remains unchanged from the CO 2021. 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, following 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 (Article 36) (United Nations, 2004[31]). North Macedonia should consider introducing additional means to safeguard the independence of these bodies, such as strengthened guarantees and transparency of dedicated budget funding and stronger barriers against arbitrary transfer or dismissal of managers.

References

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[26] 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.

[13] European Commission (2023), North Macedonia 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/SWD_2023_693%20North%20Macedonia%20report.pdf.

[6] Gjorgievski, J., S. Mateski and Z. Zafirov (2022), Qualitative Analysis of the Vulnerable Sectors Determined by the National Strategy for the Prevention of Corruption and Conflict of Interest 2021-2025, https://dksk.mk/wp-content/uploads/2022/06/%D0%90%D0%9D%D0%90%D0%9B%D0%98%D0%97%D0%90_%D0%94%D0%9A%D0%A1%D0%9A.pdf.

[9] Government of the Republic of North Macedonia (2022), Minutes of the Fifty-Fifth Session of the Government of the Republic of North Macedonia, Held on June 28, 2022, https://vlada.mk/file/70019/download?token=mUa2tcxy.

[14] GRECO (2023), Second Compliance Report: North Macedonia, https://rm.coe.int/fifth-evaluation-round-second-compliance-report-north-macedonia-/1680acf53f.

[22] Macedonian Stock Exchange (2023), Report on Compliance of the Listed Companies with Corporate Governance Code in 2022, https://www.mse.mk/Repository/%D0%9A%D0%BE%D0%B4%D0%B5%D0%BA%D1%81/Godisen%20izvestaj/Finalen%20Izvestaj%20angliski.pdf.

[21] Macedonian Stock Exchange, Securities and Exchange Commission (2021), Corporate Governance Code for Companies Listed on the Macedonian Stock Exchange, https://www.mse.mk/Repository/%D0%9A%D0%BE%D0%B4%D0%B5%D0%BA%D1%81/KKU%20na%20angliski%20final.pdf.

[24] Magleshov, V. and S. Marusic (2023), North Macedonia’s President Urged to Block Sudden Criminal Law Changes, https://balkaninsight.com/2023/09/07/north-macedonias-president-urged-to-block-sudden-criminal-law-changes/.

[8] Ministry of Finance (2017), Guidelines for Risk Management of Fraud and Corruption, https://finance.gov.mk/wp-content/uploads/2009/07/Guidelines-for-risk-management-of-fraud-and-corruption.doc.

[29] MONEYVAL (2021), Anti-Money Laundering and Counter-Terrorist Financing Measures – Croatia: Fifth Round Mutual Evaluation Report, https://rm.coe.int/moneyval-2021-24-mer-hr-en/1680a56562. (accessed on 5 June 2024).

[30] OECD (2022), Implementing the OECD Anti-Bribery Convention. Phase 4 Report: Portugal, OECD Publishing Paris, https://www.oecd.org/daf/anti-bribery/portugal-phase-4-report.pdf.

[28] OECD and IDB (2021), Building Effective Beneficial Ownership Frameworks: A Joint Global Forum and IDB Toolkit, OECD and Inter American Development Bank, https://www.oecd.org/tax/transparency/documents/effective-beneficial-ownership-frameworks-toolkit_en.pdf (accessed on 5 June 2024).

[27] OECD, Inter‑American Development Bank (2021), Building Effective Beneficial Ownership Frameworks: A Joint Global Forum and IDB Toolkit, OECD Publishing Paris, https://www.oecd.org/tax/transparency/documents/effective-beneficial-ownership-frameworks-toolkit_en.pdf.

[3] RCC (2021), Balkan Barometer, Regional Cooperation Council, http://www.balkaninnovation.com/docs/20/balkan-barometer-2022--public-opinion.

[4] RCC (2020), Balkan Barometer, Regional Cooperation Council, http://www.rcc.int/pubs/95/balkan-barometer-2020-public-opinion-survey.

[18] Regional Anti-Corruption Initiative (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.

[25] Ristovska, J. et al. (2023), Report on the Assessment of Corruption in North Macedonia 2023, Macedonian Center for International Cooperation (MCMS), https://mcms.mk/images/docs/2023/MCMS_nacionalen_izvestaj_2023.pdf.

[7] SCPC (2024), Annual Report on the Implementation of the National Strategy for the Prevention of Corruption and Conflict of Interest 2021-2025 for the Period 01.01.2023-31.12.2023, https://dksk.mk/wp-content/uploads/2023/03/%D0%93%D0%BE%D0%B4%D0%B8%D1%88%D0%B5%D0%BD-%D0%B8%D0%B7%D0%B2%D0%B5%D1%88%D1%82%D0%B0%D1%98-%D0%9D%D0%A1%D0%A1%D0%9A%D0%A1%D0%98_%D1%84%D0%B8%D0%BD%D0%B0%D0%BB%D0%B5%D0%BD.pdf.

[12] SCPC (2023), Annual Report on the Work of the State Commission for Prevention of Corruption for 2022, https://dksk.mk/wp-content/uploads/2023/09/GI-2022-ENG-celosen.pdf.

[5] SCPC (2023), National Strategy for Prevention of Corruption and Conflict of Interest 2021-2025, https://dksk.mk/wp-content/uploads/2021/09/NACS-2021_25-and-Action-Plan-EN-final.pdf.

[17] SCPC (2023), Regulation on the Format and Content of the Declaration form for Property Status and Interests and Reporting Changes in Property Status and Interests, https://ldbis.pravda.gov.mk/PregledNaZakon.aspx?id=62650.

[10] SCPC (2022), Annual Report on the Work of the State Commission for Prevention of Corruption for 2021, https://dksk.mk/wp-content/uploads/2023/05/%D0%93%D0%98-2021-29.03.pdf.

[20] SCPC (2020), Report on Quantitative Research on Citizens’ Perceptions and Attitudes to Whistleblowers in North Macedonia 2020, https://dksk.mk/wp-content/uploads/2022/01/Report-whistleblowers-perception-survey-converted.pdf.

[16] SCPC (2016), Instructions for Drafting an Internal Act for Managing the Conflict of Interests, https://www.dksk.mk/fileadmin/user_upload/3_Guidelines_Conflicts_of_interest.pdf.

[11] SCPC (2015), Methodology for Anti-Corruption Review of Legislation, https://dksk.mk/wp-content/uploads/2021/04/Metodologija-za-APL-ENG.pdf.

[15] SPCP (2020), Managing Conflict of Interest: Practical Guide to the Rules for Ad-Hoc Detection and Management of Cases of Conflict of Interest for the Members of the Government of the Republic of North Macedonia, https://dksk.mk/wp-content/uploads/2020/12/Managing-conflict-of-interest.pdf.

[19] Transparency International - North Macedonia (2022), Report on the First Five Years of Implementing the Whistleblower Protection Law. The Significance of this Law in the Fight Against Corruption., https://transparency.mk/wp-content/uploads/2022/10/izveshta%D1%98-za-prvite-pet-godini-od-implementaczi%D1%98ata-na-zakonot-za-zashtita-na-ukazhuvachi.pdf.

[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.

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

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