Open Albanian Local Government Contracting

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Portal Through this portal, the Albanian Institute of Science (AIS) promotes and implements the Open Contracting Standard The information is extracted from closed and non-consistent formats published by Government authorities. Making such data open and user friendly, AIS provides an information mechanism about procurement procedures, and for such procedures to be monitored and scanned. Through a RedFlag algorithm , the portal helps with identifying and evaluating cases when competitiveness and equality in tenders are affected. The open contracting standard promotes competitiveness and contributes to deterring corruption.

Hearing session With the Ad Hoc Parliamentary Committee for Electoral Reform The Assembly of the Republic of Albania

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Albanian Institute of Science (AIS) is a non-Governmental organization advocating for transparency, good governance, and accountability. The organization is recognized as a promoter of open and transparent data (Open Data Albania). In addition to having published electoral spending and incomes using an open data format, AIS, through its Money Government and Politics and Za’Lart programs has published, analyzed, and raised awareness continuously about details and problems with the financing of the latest electoral campaigns.

In the electoral processes of 2013 and 2015, AIS was part of the initiative of the Electoral Room, a joint initiative of several organizations for monitoring and contributing to free and fair elections. Currently, AIS is also the claimant in a court process against the largest political parties in the country, asking the court to express itself on whether the political parties are obliged, as electoral parties, to respond to requests for information regarding their sources of electoral financing at any time, and in this case, in real time during the electoral campaign. The case is now with the High Court.

Our proposals focus only on the part of electoral financing, from Article 86 to Article 92 of the Electoral Code.

Thus, we come here with the 12 following proposals:


  1. Donations to be made only through bank accounts.

    The law should require all donations from the non-public sector to be made only through the banking system (and not in cash), and this should apply not only to donations exceeding 100 thousand Albanian lekë. This requires changes to Article 90, point 2 of the Electoral Code. In earlier campaigns, similar to the latest one, donations in cash represent up to 50% of the total nonpublic funds secured for campaigns.


  2. Real time information about monetary donations for campaigns.

    In fact, there is already a basis for such regulation in the Constitution, Article 9, paragraph 3, which clearly specifies that The financial sources of the parties, as well as their expenditures shall always be made public. This regulation has also been in the Code before, but it was removed with the changes made to Article 90 paragraph 1, which provided that The list of persons donating no less than 100 thousand lekë, and the respective amounts, shall always be made public. With the changes made to Law No. 74.2012, dated 19.07.2012, this sentence was removed, making thus regress with the right to public information about the supporters of political parties through donations even before the voting day.


  3. All relations of donations, subsidies, or crediting between media outlets and electoral subjects must be prevented through clear legal provisions.

    The article on the conflict of interest, i.e. Article 89, excludes subjects, who exercise media activities, or who are shareholders in such subjects, from the right of being donors of an electoral subject. This is right in terms of the principle of independence of the media and separation of the two powers. On the other hand, Article 84, paragraph 6 of the Electoral Code creates an additional financial source for the important political parties. Media is obliged by law to donate free time to the parties, which have already taken a certain air time of paid advertising. This article needs to be abrogated, because: 1. It creates contradictory donation relations to those foreseen by Article 98; 2. It creates difficulties with monitoring; 3. It is used in an arbitrary manner even in local government elections, although the law provides for that only for the parliamentary elections; 4. We are not in a situation, where the political parties have problems affording paid advertising, and the political advertising has become so massive in the media coverage of the electoral campaigns that it would be good for every electoral subject to rather focus on the quality of their message and advertising, and not its quantity.

    Besides, it is also time where audio-visual media does not consist of the licensed national media only. There are nowadays various forms of audio-visual broadcasting using new technology.

    The regulation of free advertising by the Law on Political Parties of May 2017, a law which is in contradiction with the current Code, is also equally wrong and contradictory.

    The new Electoral Code will have to make sure that media outlets are not allowed to donate to electoral campaigns. Media companies might, however, agree on commercial contracts with the political parties, which should, again, be accessible to the public, when it comes to electoral campaigns. Similarly, careful considerations should also be given to situations of unpaid bills or debts. Commercial companies may, certainly, ask for such bills and debts to be paid by the political parties, but when the latter is a political party in power, this could lead to intimidation and influence. In order for this nit to happen, and to avoid debts turning into donations, the electoral law must enable the CEC to intervene when allocating annual or electoral funds to the political parties, considering the payment of unpaid and recognized debts during the electoral campaign as a priority. The same should apply to other debts owed to non-media subjects by the political parties in allocation of public funds.


  4. Ensure more effective prevention of the conflict of interest on the side of the donors.

    More extensive legal provisions must be introduced to prevent, and to ensure the publication and control of donors’ conflicts of interest. Article 89 of the Electoral Code describes some situations when someone may not donate. This article needs to extend to more situations. Thus, the word ‘shareholder’ needs to be replaced by the word ‘owner’. In addition to the provisions on public contracts and funds, there must be other provisions on conflict of interest even in cases of benefits from programs of public subsidies; crediting guaranteed by public funds; benefits from privatization of public assets; benefits from legalizations; benefits from public programs in the interest of business, etc.


  5. The legal provision on the administrative verification of conflicts of interest.

    It would be appropriate for the CEC to have the power to initiate the administrative verification and investigation through requests for information addressed to public institutions on compliance with the prohibitive provisions on the conflict of interest. This could include verification with the tax authorities about debts, the Public Procurement Agency for public contracts, the Concessionary Register for public concessionary agreements, and so on. The Code must also contain sanctions in case of false declarations of conflict of interest by donor.


  6. More realistic timeframes for financial reporting on the electoral campaign.

    The current Code determines a 30-day period for electoral reporting and auditing. Changes in the law enabled, but did not force a longer period. Ideally, the timeframe must start earlier than 30 days before the electoral campaign.


  7. Limitation of the total electoral expenditures are not grounded and leads to parties not declaring their real expenditures.

    There is no reason for such limitations. Let us give the political parties and subjects to legalize their expenditures and be transparent in reporting the support they get in the form of legitimate financial instruments for the campaign. Fundraising by electoral subjects for their campaigns should be seen not only as a possibility, but also as a form of voter’s expression of trust through donations. Therefore, paragraph 3 of Article 90 must be abrogated.


  8. Preservation of the mixed public and nonpublic funds for the electoral subjects.

    AIS is not in favor of shifting to only one type of financing. We are against proposals of fully public financing, as this would identify parties with state bodies.


  9. Clear regulation of financing through loans and declarations of loan data on a special register.

    Article 87/1, point ç “Loans”. Loans will have to be declared and the types of data to be declared must be clearly described in the law, such as the guarantors, terms, conditions, form of application, and the identity of the crediting subject. The law must also clarify whether loans can be taken from institutions not licensed for financial activities, and whether foreign parties may give loans to, or guarantee loans taken from the Albanian electoral subjects.


  10. Considerations should be given to enabling financial reports at the level of local branches of political parties I the case of general elections, and candidates’ electoral staff office in the case of local elections.

    There is no such provision at the moment in the Electoral Code or Law on the Political Parties. It would be useful to further discipline financial reporting by electoral zones.


  11. The Electoral Code must clearly state whether donations from subjects registered as non-Governmental organizations are allowed.

    The current Code does not include any prohibitive provision. The law in NGOs, on the other hand, contains some non-exhaustive provisions. Some countries in the region are concerned about political parties being financed by foreigners through local NGOs. However, even though this is not actually the case for Albania, the lawmakers might consider either prohibiting or better regulating such financing.

  12. The law must require accurate reporting on expenditures and contractors, when the latter are foreign. Në secilin nga këto raste të kërkohet raportim me një format të veçantë të identitetit të kontraktorit; përkatësia e së drejtës tregtare që rregullon ekzistencën e këtij kontraktori; të dhënIn each case, reporting must be made using a special template, including the identity of the contractor, his legal status, and information about the contract(s) signed.

RedFlag – Number of tenders identified as problematic goes up to 10% of the total

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Ten per cent of the public tenders and public procurement processes carried out by municipalities in the country from July 2015 are marked as potentially involving incompliance with legal procedures, corrupt practices, unequal competition, or clientelism. Such evaluation is made by using an automatic scanning system based on an algorithm that identifies suspicious cases of corruption. The most frequent risks identified include lack of competition in the tendering process, or participation of only one economic operator in the process.

On the implementation of the Project: Monitoring Conflict of Interest of Donors for the 2017 Electoral Campaign

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In the framework of its Monitoring Conflict of Interest of Donors for the 2017 Electoral Campaign Project, AIS has identified the donors of the electoral contestants for the 2017 general elections.

Identification was made taking into consideration their economic interests, benefits from public procurement, and incomes from payments received from the state budget (treasury transactions).

We have also compared the list of identified donors with that of the debtors to the tax authorities to see whether any of these donors owe money to state institutions.

It is a total of 66 private individuals and business companies declared as electoral donors in 2017 according to the financial reports published on the website of the Central Election Commission. This includes only donors, who have donated more than 100 000 lekë[1].

Online financial reporting is a new development for the electoral subjects. They have also been subject to financial auditing by independent certified accountants appointed by the Central Election Commission through a lot procedure. Significant differences are found between the self-declared financial reports, though, and the findings of the auditors[2]. This is an indication of two issues: a. Problems with the professional capacity of the political party finance officers, b. Fictitious reporting, i.e. data not reflected on the parties’ online financial reporting are found by the auditors during and after the electoral campaign.

 

Discrete Cases: Among the 66 identified donors, there are two in particular, who seem to be in a conflict of interest referring to Article 89 of the Electoral Code.

 

The Code provides that: Legal persons and any shareholder thereof shall not be allowed to donate funds if they meet in any of the following conditions: a) has benefitted public funds, public contracts, or concessions over the two last years by the amount of more than 10 million lekë; b) exercise an activity in the area of media; c) has been a partner in public funds in various projects; ç) has outstanding monetary debts to the state budget or any public institution. This obligation shall not apply when a shareholder owns his shares as a result of a public offer.

 

The law, however, does not provide for certain conflicts of interest regarding public funds, assets, or services. This includes donors, who have benefitted from programs of public subsidies, loans guaranteed by public funds, privatization of public assets, legalization, or public programs for business support.

 

In order to identify cases of conflicts of interest already foreseen by the law (Article 89, point 2 of the Electoral Code), the following steps, we took the following steps:

  • Identified business companies owned by individual donors (donor being the owner and shareholder at the same time). Source of information: National Business Center.
  • Checked whether these individual donors had benefitted from public contracts through public procurement. Source of verification: Open Procurement Albania Database and the website of the Public Procurement Agency.
  • Checked whether these donors are in the list of tax debtors. The list is publicly available online on the website of the General Tax Directorate.
  • Checked whether these donors have been partners in, or direct beneficiaries of, public funds. For that, we consulted the payments made by the state treasury. We only searched for direct beneficiaries, and not for co-contractors, where it is only the leading beneficiary, and not all the beneficiaries reflected as receivers of state money.

 

Difficulties and challenges with the verification process:

  • Information about donors owing money to public institutions. The list of tax debtors is the only source of verification available for this kind of information. There are no data about other forms of debts to the state, like contractual damages or outstanding payments of extra fees, which are not reflected on the list of taxes collected by the General Tax Directorate.
  • The information available about public tenders or treasure transactions refers only to the leading contractor in case of joint tenders (two or more business companies awarded a public contract). Therefore, even though not on the list of beneficiaries, co-contractors in this case still benefit under the name of the leading contractor.
  • The definition for ‘shareholder’ in the law leaves room for interpreting whether provisions on the conflicts of interest refer also to the company partners. Shareholders in our verification process include anyone, who owns a part of the capital of a legal and economic entity.

 

Our verification of direct donors includes:

  • 66 monetary or ‘in kind’ donors declared by the political parties on their online financial reports on the website of the Central Election Commission.
  • 64 individual donors and 2 legal persons (“K&H Law Firm shpk” as an ‘in kind’ donor of People’s Alliance for Justice Party and “Linda 80 shpk” as an ‘in kind’ donor of the Albanian Demo-Christian Union Party).
  • The legal person registered as “Linda 80 shpk” seems to be in a conflict of interest if we refer to Article 89, point 3(a) of the electoral law. There is no information whether this company has signed a declaration for preventing conflict of interest. The company is public tenders and contracts above the foreseen value over the last two years. Its passport[3] is awarded the following tenders with municipalities and the health sector: a total of 17 contracts with local government authorities, including 2 municipalities and 12 contracting authorities in the amount of 81 400 902 lekë (eighty one million four hundred thousand and nine hundred and two) Albanian Lekë; 5 contracts in the health sector with two contracting authorities in a total amount of 5 324 516 (five million three hundred twenty four thousand and five hundred and sixteen) Albanian Lekë. Our verification with the state treasury transactions show that the company is paid a total of 144 460 120 (one hundred forty for million four hundred sixty and one hundred twenty) Albanian Lekë for two years (June 2015 – June 2017). This company may, therefore, not be a donor in elections. It is worth noting that the information provided in the financial auditors’ reports by the independent certified accountants do not include any assessment of compliance with Article 89, point 3 of the electoral law. Such reports do not mention whether any declarations on conflicts of interest was signed by the donors, which is an obligation both for the donors and the political parties receiving donations. Auditors do provide, though, data on the ‘in kind’ donors on Table 2 “Incomes” of the report, confirming declarations made by the political parties themselves on their online financial reports.
  • The other company, K&H Law Firm shpk, does not seem to have received any payments from public funds, public contracts, or owe any money to the tax authorities.
  • None of the companies is on the list of tax debtors of the General Tax Directorate.

Verification of the individual donors registered as legal persons.

  • Out of the 64 individual donors (who have donated more than 100 thousand lekë) of the political parties in elections, 64 seem to be associated with 42 entities registered by a tax number.
  • Verifying whether a private individual corresponds with that of a donor on the list of donors was difficult, because the National Business center provides only a partial identification of entities registered by a tax number (number of passport or identity card).
  • However, individual donors registered with the tax authorities (by the same name and surname) did not seem to have benefitted from tenders or payments from the state treasury, so there was no need for any further investigations.
  • Regarding debts to the public institutions, one of the donors, E.S, is a shareholder (by 5% of the shares) in Royal Farma, a company registered by Tax Number  L01606005J, and a debtor in the March 2018 List of Debtors of the General Tax Directorate since 2014. Source of information: List of taxpayers with a mortgage burden as a guarantee for their outstanding taxes. The individual donor, therefore, falls under the prohibition provision of Article 89, point 3 of the electoral law.

 

Donations from media companies: Monitoring conflicts of interest as per Article 89, letter b, turned out to be a sensitive process following the legal amendments made prior to the 2017 electoral campaign, allowing for free air time. Such legal provision falls contrary to Article 89, point 3/b of the electoral law, which prohibits entities exercising activities in the area of media from donating funds for electoral purposes. Thus, several political parties have declared donations consisting of free airtime.

Airtime for electoral purposes is sometimes reported as a donation, sometimes as a bill to be paid.

Nevertheless, the funding of electoral subjects by media entities must be carefully seen from the perspective of legal amendments expected to be made.

Public officials as donors of electoral subject. The list of donors includes many high-ranking public officials, including the current President of the Republic, who was just voted as President at them time, but not yet under oath.

AIS has also prepared some draft amendments for more efficient regulation by the Electoral Code regarding transparency and monitoring of the conflict of interest of donors of the electoral subjects.

 

Some of our conclusions for a more efficient regulation by the electoral law include:

  1. Information in real time on donations for electoral purposes (monetary donations). This regulation is based on Article 9, paragraph 3 of the Constitution, which provides that “The financial sources of the political parties, as well as their expenditures, shall always be made public”. Such regulation has already been in the Electoral Code, but it was removed with the amendments made to Article 90, paragraph 1, which provided that: The list of persons who donate no less than 100 thousand lekë, and the corresponding amounts, shall always be made public. However, the changes made by Law No. 74, dated 19.07.2012, this sentence was removed, marking thus regress with the right to information about the supporters of a political party through donations even before the election day.
  2. The law must clearly prohibit any donation, subsidy, or loan relation between the electoral subjects and the media entities. The article on conflict of interest, i.e. Article 89 of the Electoral Code, excludes entities, which exercise media activities, or are shareholders in such entities, from being donors of electoral subjects. This is in line with the principle pf the independence of the media and separation of the two powers. Article 84, paragraph 6 of the Electoral Code, on the other hand, introduces an additional financial source for the important political parties. Media is thus obliged by law to donate airtime to the political parties, which have already used a certain part of paid advertising. This article must be abrogated, because: 1. it creates donation relations that fall contrary to the provisions under Article 98; 2. creates difficulties for monitoring; 3. is arbitrarily used even in local elections, even though it must only apply to the general elections; 4. It’s not a situation where political parties have problems paying for advertising. Political advertising has become quite massive in election media coverage and, ideally, all subjects must be rather focusing more on the quality, instead of the quantity of their message and advertising.

It is also the time, where media, including audio-visual media, is not limited to licensed national media only. There is a variety of audio-visual coverage nowadays base on the new technology.

The regulation of free advertising made through changes to the Law on Political parties in May 2017 is equally wrong and contradictory to the current Electoral Code.

The new Electoral Code shall have to be exhaustive in prohibiting donations by media to electoral subjects. Media entities must be only allowed to enter commercial agreements with electoral subjects, which should, ideally, be accessible to the public if such agreements are related with elections. Outstanding bills and taxes must also be carefully seen. Commercial entities do certainly have the right to claim payment of the invoices they have issued. However, when the debtor is a political party in power, this could be intimidating. In order to prevent situations, where debts are turned into donations, the electoral law must also enable the Central Election Commission to intervene when distributing the annual or electoral fund to the parties, giving priority to outstanding and recognized obligations during electoral campaigns. The same priority should also apply to public funds when such funds are allocated to parties to owe money to non-media entities.

  1. More effective regulation of cases foreseen as donors’ conflicts of interest. Legal provisions must be expanded to also include prevention, declaration, and conflict of interest for donors. Article 89 of the Electoral Code does include some prohibitions. This article also needs to be better regulated and expanded. Thus, the word ‘shareholder’ should be rather replaced by the word ‘owner’. In addition to public contracts and public funds, benefits from programs of public subsidies must also be foreseen as conflict of interest, as well as loans guaranteed by public funds, benefits from privatization of public assets, benefits from legalization; benefits from public programs supporting business, etc.
  2. Introduction of a legal provision on administrative verification of cases of conflict of interest. It would be useful to give the CEC the authority to make administrative verifications and investigation. This could be done through requests for information addressed to public institutions on compliance with the legal provisions on conflicts of interest. This could include verification with the tax authorities about tax debtors, Public Procurement Agency about public contracts, Concessionary Register about concessionary contracts, and so on. Sanctions on false declarations on conflict of interest could also be introduced in the Electoral Code.

 

[1] http://open.data.al/sq/lajme/lajm/id/2011/Lista-e-Donatoreve-per-fushaten-zgjedhore-2017-shume-mbi-100-mije-leke

[2] http://financial.cec.org.al/

[3] http://www.opencorporates.al/sq/nipt/k37513530u

Online publication soon to come. International expert ‘wanted’ to assist with overcoming the challenge of public oversight of asset declarations

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Following amendments to Law “On the declaration and control of assets and financial obligations of some elected officials and civil servants”, (Law No. 42/2017), Albania is expected to see a very important reforming moment in the process of high officials’ asset declaration and control. This law enables the public to access such declarations online. AIS is looking for an en expert for a cycle of training courses and workshops with various stakeholders on more advanced models in other countries, which have already applied online asset declaration earlier than Albania. The Money and Power has published the declarations of more than 650 Albanian politicians and judges so far. Public monitoring of such declarations is important, as citizens are thus in the best position to indicate cases of influence, conflict of interest, and problematic integrity of the high officials.

Learn about state-owned companies through Open Corporates Albania

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The Open Corporates Albania portal has updated its information on 220 state-owned (public) business companies in April. These companies are owned by municipalities and ministries. The information provided by the portal through an individual passport for each company includes the name of the owner, its legal form, equity, scope of activity, turnover of the company managers, its annual economic performance, etc. The information is provided on an open data format and may be extracted on JSON and CSV. Open Corporates Albania enables the public to monitor data regarding state owned enterprises and private contractors in public tenders of the municipalities. The Project is supported by Lëviz Albania .

Workshop with High State Audit officials on Data Usability and Red Flags Algorithm: Instruments for Transparency and Anti-Corruption

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Within the framework of the “Transparency in Health Engagement Project” funded by the U.S. Agency for International Development (USAID), and implemented by University Research Company, LLC (URC), a two 2-day workshop was delivered by Project partner Albanian Institute of Science (AIS) for the staff of the Albanian Supreme Audit Institution (ALSAI) on Data Usability and Red Flags Algorithm: Instruments for Transparency and Anti-Corruption. The 26 participants included auditors from several departments, as well as IT and communications specialists. The workshop enhanced the capacities of the staff about the use of Open Data standards in preparing auditing reports and publications in order to increase transparency of public information, and in fighting corruption. The Red Flags algorithm is a mechanism that can signal the need for an audit and investigation in the tendering and public contracting process through the flagging of actions that have a higher risk for abuse, inequality, or lack of competition. In this regard, the participants were introduced to guidelines explaining in detail the main indicators for risk evaluation in the tendering process. As a result of the Transparency in Health Engagement Project, ALSAI will implement a red flags algorithm for public procurement procedures in the health sector.

The training materials can be accessed in the following links:

  • Training Curricula (PDF)
  • Data Usability – Part I (PDF)
  • Data Usability – Part II (PDF)
  • Red Flags Algorithm – An Instrument for Transparency and Anti-Corruption (PDF)
  • Guide to the Identification of Red Flags in Public Procurement in the Health Sector (PDF)
  • Topics for Discussion (PDF)

Transparency in Health Engagement project is made possible by the generous support of the American people through the United States Agency for International Development (USAID) under the terms of its Contract.

Agreement Number: Contract Number: AID-182-C-17-00001 (USAID/ Transparency in Health Engagement Project held by prime recipient University Research Company, LLC (URC) and by sub-recipient Albania Institute of Science (AIS), Tetra Tech, and Boston University.

The Transparency in Health Engagement project is funded and managed by the USAID/Albania.

Raportet Gjinore në drejtimin e Shoqërive Publike

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Open Data Albania prezantoi sot në eventin Leviz Albania për Barazinë Gjinore, Raportet Gjinore në drejtimin e shoqërive publike duke veçuar ato që zotërohen nga Bashkitë. Shoqëri Tregtare, aksione apo kuota të të cilave zotërohen nga një institucion publik dhe buxhetor njihen si shoqëri me zotërim publik, në kontekstin e këtij artikulli shoqëri publike. Në Republikën e Shqipërisë janë të regjistruara në QKB (Qendra Kombëtare e Biznesit) dyqind e njëzetë shoqëri publike, nga të cilat njëqind e trembëdhjetë zotërohen nga Bashkitë. Nga këto 113 shoqëri aksionare vetëm gjashtë kanë një administrator të gjinisë femërore. Pra, raporti gjinor i administratorëve të shoqërive publike që zotërohen nga bashki është 5.3% administrator femra dhe 94.7% administrator meshkuj. Nga përditësimi i ndryshimeve kryer nga këto shoqëri pranë QKB në periudhën 2016-2017 rezulton se kanë ndryshuar administrator 21 shoqëri. Nga këto vetëm një shoqëri ka emëruar një administrator të gjinisë femërore.

AIS organized a MasterClass with Dutch writer, Joris Luyendijk, for Balkans journalists

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The Albanian Institute of Science (AIS) organized on March 12 a MasterClass with journalists from Albania, Kosovo, Macedonia and Montenegro over media role in reporting money, government and politics. The special guest was the Dutch journalist Joris Luyendijk, author of the book “Swimming with the sharks: My journey into the world of the bankers.” In the Masterclass, Luyendijk spoke about his career, starting from the Middle East to the financial heart of London, where for three years he interviewed hundreds of bankers while writing his financial blog for The Guardian. This event was organized as part of AIS Money, Government and Politics Project supported by the Embassy of Netherland and a special speech was held by the Dutch Ambassador in Albania, Dewi Van De Weerd.

AIS organizon një MasterClass për gazetarët e rajonit me shkrimtarin Hollandez, Joris Luyendijk

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The Albanian Institute of Science (AIS) organized on March 12 a MasterClass with journalists from Albania, Kosovo, Macedonia and Montenegro over media role in reporting money, government and politics. The special guest was the Dutch journalist Joris Luyendijk, author of the book “Swimming with the sharks: My journey into the world of the bankers.” In the Masterclass, Luyendijk spoke about his career, starting from the Middle East to the financial heart of London, where for three years he interviewed hundreds of bankers while writing his financial blog for The Guardian. This event was organized as part of AIS Money, Government and Politics Project supported by the Embassy of Netherland and a special speech was held by the Dutch Ambassador in Albania, Dewi Van De Weerd.