Attitudes and perceptions toward corruption in the Western Balkans by Koma Design Studio

Attitudes and perceptions toward corruption in the Western Balkans REGIONAL OVERVIEW

Attitudes and perceptions toward corruption in the Western Balkans

REGIONAL OVERVIEW

Written by: Munir Podumljak Quantitative and qualitative research for YES Foundation: Consulting- Macedonia Desk research and analysis: Ana Gajzer and PSD Research Team English editor: Lisa Suzanne Hammond, Irena Smiljanovska Design: www.koma.com.mk

Table of Contents BACKGROUND EXECUTIVE SUMMARY

4 8

Results of the research conducted by the Yes Foundation Young people’s view on corruption Policy recommendations that have emerged from the research

8 10 10

Introduction A. Regional Statistical Overview: Perceptions of Business Managers

12 12

1.Regional corruption trends

2.Corruption as an obstacle or a tool for doing business

3.Reasons for not reporting corruption (why we don’t report corruption)

4. Roots of corruption (who generates corruption and who should fight it)

5. Bribery in the last year

B. Regional Statistical Overview: Perceptions of Young People

1.Trends of corruption

2.Corruption as an obstacle or a tool for doing business

3.Reasons for not reporting corruption (why we don’t report corruption)

4.Roots of corruption (who generates corruption and who should fight it)

5.Bribery in the last year

C. In-Depth Interviews: Business Managers’ Views 1.Trends of corruption 1.1.What Is the Trend of Corruption? 1.2.The Balkans Compared to Europe?

2.Roots of Corruption (who generates corruption; who should fight it, and how)

56 56 57 59

2.1.Why Does Business Get Involved in Corruption?

2.2.Who Gets Most Involved in Corruption?

2.3.How to Fight Corruption?

3.Corruption: Tool or Obstacle to Doing Business?

3.1.To Pay or Not to Pay?

4.Can Corruption Be Good?

Note on Methodology

Background

hen addressing the issue of corruption in any kind of research it is important to bear in mind a first premise: is there interest among the targeted actors to fight corruption or do they actually benefit from it? As this research targets the business community, the results are even more interesting as it is not clear whether the business community benefits from corruption or considers corruption an obstacle. Numerous research papers and indicators on the global level (e.g. World Bank and IMF) have shown a correlation between economic growth, poverty and corruption. However none have precisely answered the question of which comes first (a ‘chicken-egg’ dilemma): does the fight against corruption initiate economic growth, or does economic growth itself address the issue of corruption? We have endeavored to answer some aspects of these questions within the scope of our research. The answers may have different meaning or lead to different solutions for different policy stakeholders. It is common knowledge that the global economic and financial crisis has challenged both developed and developing countries with a need to look for additional reserves in their economic and financial sectors, especially in the EU or in EU-related markets, as these remain fragile. Projected negative or slow economic growth rates, despite EU countries’ efforts to uphold positive economic trends, are expected to persist in 2010. At the same time, corruption and lack of control over the financial sector has officially been declared as one of the key issues aggravating the global economic crisis, and many countries, including the EU, have implemented policy actions to suppress corruption and prevent economic crises in the future. The World Bank estimates that corruption can cause a decrease in the economic growth rate by up to 1% annually. IMF research reports state that there is 5% less investment in corrupt countries than in relatively corruption-free zones. Especially in economically challenging times, when every Euro counts, these percentages should not be taken lightly.

While conducting research for this report the research team collected and analyzed data that indicates various correlations between increased levels of corruption and negative economic growth rates in the EU member states. As shown on the following table, those EU member states whose corruption levels show negative progress in excess of 5% – based on the Corruption Perception Index (CPI) conducted annually by Transparency International (TI) – also show negative GDP growth rate projections for 2010. State Great Britain Finland France Portugal Austria

Growth forecast 2010

CPI three-year trend (06-08)

-2,8% -1,2% -1,8% -1,6% -1,2%

-9% -6% -5% -5% -5%

At the same time, countries that have achieved improvements surpassing 4% on the TI CPI scale are corresponding facing positive GDP growth rate projections for 2010.

5 State

Poland Cyprus Romania Czech Republic

Background Growth forecast 2010 +2.0% +1.1% +1.8% +1.7%

In addition, over the past three years more than half of the EU member states (15 out of 27) have shown negative progress according to the TI CPI scale, which should send a clear warning signal that the efficacy of EU anti-corruption policies and strategies needs review and overhaul.

CPI three-year trend (06-08) +9% +8% +7% +4%

Source:

Three years trend

YES Foundation research

1 0,8 0,6

CPI trend

0,4 0,2 0 -0,2

Series1 1

-0,4 -0,6 -0,8 -1 Eu Country

Source: YES Foundation research

The Western Balkan region does not differ from the EU average. For the purpose of this research, World Bank indicators as well as IMF indicators have been used, as they cover ten-year trends that are the subject of this research. CHARTS 1.1. and 1.2. show that three-year regional average score trends indicate negative improvement or stagnation in The Western Balkan region does not differ from the EU average. For the purpose of th corruption reduction results, except in FYR Macedonia which shows a slightly positive trend. Concurrently, over the past World Bankshow indicators as well as IMFresults indicators beenBank used, as they cover three years, mostresearch, of the same countries stagnation or negative relatedhave to World democracy scores,ten-yea while concomitantly theirthat economies stagnating or research. in recession (except for1.1. FYRand Macedonia and that Kosovo). Countryregion trends are the are subject of this CHARTS 1.2. show three-year GDP trends are consistent with progress (negative or positive) related to corruption and overall democracy; all of the average scoreortrends indicate improvement or are stagnation in corruption reduction countries showing stagnation retrogression in negative the fight against corruption also in recession or stagnation in result terms of economic growth Kosovo whichwhich shows shows minor variations). sametrend. countries also show negative except in (except FYR Macedonia a slightlyThese positive Concurrently, over the pa improvement in democracy scores, indicating (with some reservations) that there exists a correlation between democracy, three years, most of the same countries show stagnation or negative results related to Worl corruption, and economic indicators, and most especially between corruption and economic growth. However, this Bankthedemocracy concomitantly economies stagnating or in recessio alone does not solve chicken-egg scores, dilemmawhile as to which comes first â&#x20AC;&#x201C; their economic growth orare a reduction in corruption. Simple logic tends to support the opinion that the fight against corruption is a precondition for economic growth, as it (except for FYR Macedonia and Kosovo). Country GDP trends are consistent with progres provides a framework for a favorable business environment and establishes transparent rules of the game. Legitimate

(negative or positive) related to corruption and overall democracy; all of the countries showin

stagnation or retrogression in the fight against corruption are also in recession or stagnation i

predictable environments without corruption, as this ensures a more predictable rubric through which to plan and develop strategies for operations. Such supportive conditions are not adequately maintained in corrupt societies. Based on research results, and with the goal of addressing issues that can help stakeholders to

business has been shown to prefer safe and predictable environments without corruption, as this ensures a more both fight corruption as an overall phenomenon while also creating a safe and supportive predictable rubric through which to plan and develop for strategies foreconomic operations. supportive conditions are picture not of environment business and growth,Such this report aims to provide an in-depth adequately maintained in corrupt societies. the status of corruption in the region, while also examining emerging attitudes of managers and people vis-à-vis corruption. Based on research results, and with the goalyoung of addressing issues that can help stakeholders to both fight corruption as an overall phenomenon while also creating a safe and supportive environment for business and economic growth, CHART 1.1. World Bank indicators – average of regional corruption ranking scores, 1999/2000– this report aims to provide an in-depth picture of the status of corruption in the region, while also examining emerging 2010: attitudes of managers and young people vis-à-vis corruption. Corruption Average Rankings

CHART 1.1.

World Bank indicators – average of regional corruption ranking scores, 1999/2000–2010:

6 5 4 Corruption Average Rankings 3 2 1

19 99 -2 00 0 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10

CHART 1.2. World Bank indicators - regional overview by country, 1999/2000–2010: Corruption Ratings

CHART 1.2.

World Bank indicators - regional overview by country, 1999/2000–2010:

6 5 4

Page |

3 2 1 0 19992000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Croatia

Serbia

Bosnia&Herzegovina

Montenegro Kosovo

Albania

Macedonia

2010

CHART 1.3.

World Bank – democracy scores by country, 1999/2000–2010:

Background

CHART 1.3. World Bank – democracy scores by country, 1999/2000–2010:

Democracy Score

6 5 4 3 2 1 0 19992000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Croatia

Serbia

Bosnia and Herzegovina

Montenegro

Albania

Macedonia

Kosovo

The Democracy Score is an average of ratings for the categories tracked in a given year,

The Democracy Score is an average of ratings for the categories in aSociety, given Independent year, including Electoral Process, including Electoral tracked Process, Civil Media, Governance, National Democratic Democratic Governance, LocalGovernance, Democratic Governance, Judicial Framework and Independence, Civil Society, Independent Media, Governance, National Local Democratic Governance, CHART 1.4. World Bank – GDP by country in USD billions inflation adjusted based on current and Corruption. Judicial Framework and Independence, and Corruption. prices, 1999–2010:

CHART 1.4.

World Bank – GDP by country in USD billions inflation adjusted based on current prices, 1999–2010:

GDP, current prices (in billions U.S. Dollars) 80 70 60 50 40 30 20 Page |

10 0 1999

2000

2001

2002

2003

2004

2005

2006

CROATIA

SERBIA

BOSNIA AND HERZEGOVINA

MONTENEGRO

ALBANIA

MACEDONIA

KOSOVO

2007

2008

2009

Executive summary

Results of the research conducted by the Yes Foundation

lthough in the last 10 years governments of the region have invested significant efforts and resources in the fight against corruption, most managers working in the region (78.5%) believe that the level of corruption is either rising or stagnate. Such beliefs are in line with or correlate to the three-year corruption trends measured by the World Bank, which also show stagnation or regression in the results of the fight against corruption in the region. Results of the research indicate in general that corruption is on the rise or is stagnating, that it is and remains systemic, and that enterprises most affected are small and medium-sized enterprises (between 11 and 250 employees), generally from the construction sector, who aim to work on large deals funded and tendered by government or who participate in other public procurement processes. The least affected enterprises are micro enterprises working in the sector of financial mediation (intermediary fiscal services). Managers who believe that corruption is on the rise expressed as a reason that government actions against corruption are insufficient and that what government representatives purport is mere political marketing and not â&#x20AC;&#x153;real political willâ&#x20AC;? to suppress corruption. These managers attribute the rise in corruption to a lack of government responsibility and site the ineffectiveness of implemented policies, through which government and politics are both seen as generators rather than eradicators of corruption. Throughout the research, though managers were highly critical toward the government, when asked directly where the roots of corruption lie and who was responsible for the level of corruption in the region, most managers indicated that a fair share of responsibility could be doled out among sectors (public and private) as well as among the general population. Most managers (86.4% on a regional average) claimed they did not report corruption due to fear of possible consequences and repression, coupled with a lack of confidence in the judicial process and results. Fear of consequences appears to be the most pressing factor in lack of reporting among managers of medium-sized enterprises (50-250 employees); and within sectors, among bars and restaurants (51.6%) and construction (50.2%). Research indicates that women (51.3%) fear consequences more than men (43.5%). Percentages in this chapter are confirmed throughout the research, and indicate a high level of mistrust on the part of the business sector toward the legal and institutional framework for fighting corruption as represented by the policy actions of governments throughout the region.

Executive summary

One of the most worrying research results is that 18.8% of surveyed managers acknowledged that they had paid some form of bribe during the last year. Enterprises most exposed to bribery in the prior year were small and mediumsized enterprises, managed by men and in operation between 3 and 10 years. When asked about their reasons for succumbing to bribes, managers state that, if they reported corruption they would lose the opportunity to participate in public tenders, and thus their businesses might struggle to survive, their growth might decrease, and their operation in general might suffer. Managers believe that at the present time and given the present circumstances there is no alternative for business people except to pay bribes because: a) laws are not properly implemented, b) there is no â&#x20AC;&#x153;safe placeâ&#x20AC;? for reporting corruption, and c) few courts adequately function to address corruption. These three responses indicate mistrust toward the government while also attributing to the government major responsibility for the status of corruption in the societies of the region. Responses point to systemic corruption that significantly influences decisionmaking and operation of government and state administrations and should properly be addressed by policy makers. At the same time, approximately one quarter of the responding managers believed that a small degree of corruption could be useful for business, while an additional approximately 20% stated they neither agreed nor disagreed that a small degree of corruption enhanced business. This attitude needs to be addressed by policy makers as it may facilitate or generate corruption if left unchecked. Possible policy actions in this direction might include education and awareness-raising with managers, particularly noting the illegality of corruption and the harm that it perpetrates on the business sector as a whole. The research demonstrates and concludes overall that there is little disagreement within the business community about denouncing corruption. Even though nearly everyone agrees that corruption is widespread, and everyone without exception agrees that under present circumstances it is better to pay a bribe and move on, most entrepreneurs also agree that accelerated corruption can under no circumstances be advantageous to the business community. These seemingly contradictory assertions highlight a crucial insight as to the complexity of attitudes toward corruption found within the business community. Most of the managers contacted (78.5% as a regional average) believe that effective policies for identification and punishment of corruption are the best tools to prevent and fight against corruption. In elaborating their opinions, managers stated decisively that governments and political leadership should take the leading role in launching and implementing anti-corruption actions and that it is critical to success that law enforcement and the judiciary take an active role in such actions. Managers also believe that everyone should take part in anti-corruption efforts, and that efforts toward the general population should start with education and awareness-raising and lead to culture change through social marketing and awareness strategies. Some answers given by managers also indicate that administrative reforms and reduction of bureaucracy are critical components in addressing certain forms of corruption that affect the business sector.

Young people’s view on corruption In general, research shows that young people are more pessimistic than managers in their views related to corruption trends, especially young women (68.9% on a regional average) who believe that corruption has grown worse over the past decade. A regional average of 87.2% of young people believe that corruption has stagnated or gotten worse, which is consistent with overall regional trends during the last three to four years which similarly indicate declining impact from anti-corruption policies and implementation efforts. This result is important in navigating future anticorruption and youth policies since actions of young people frustrated by corruption may differ – from a desire to emigrate and flee to other countries to becoming co-opted by corruption and thereby accelerating corruption. Such diverging and myriad influences and responses can significantly impact the future of the region. Another significant result of the research demonstrates that a large number of young people – in Bosnia and Herzegovina 47.1%, in Montenegro 43.5%, in Serbia 32.7%, with an overall regional average of 21.8% – do not know how to report corruption, indicating a necessity to address issues of corruption through school or university curriculum. Another troubling result of the research is that 40.3% of young people would pay a bribe if asked to do so. This attitude, as represented by a significant proportion of youth, indicates a lack of general knowledge about corruption among young people, and if not properly addressed is likely to generate another cycle of corruption when these young people mature into managers. In total, 70% of young respondents at the regional level stated that their chief reasons for not reporting corruption include fear of possible consequences and lack of confidence in the outcome. This result is in line with the view of managers responding to the same question and thus indicates that a majority of respondents do not trust existing mechanisms and state actors they deem responsible for the fight against corruption. The numbers are especially high in Kosovo (91.6%), Albania (89.4%), Croatia (88.7%) and Macedonia (83.3%). As this lack of confidence is shared by a predominance of both managers and youth, it may also be consistent with the views of the general public, a supposition that should be further explored and addressed by policy makers. Young people concur with managers that the responsibility for corruption may be fairly shared among all sectors and the general population, and agree that government should spearhead the fight against corruption while also involving all sectors and each individual citizen.

Policy recommendations that have emerged from the research It is obvious from the research that the business community and surveyed young people expect the vanguard anticorruption initiatives to come from the government. The expected first step is that governments demonstrate authentic political will to fight corruption, meaning that governments must fully establish the rule of law, including an efficient legal and institutional framework for fighting corruption that will address cases and problems equally based on legality and not on favoritism. Expectations of the private sector include increased transparency, accountability and integrity on the part of the public sector, especially in public procurement that has been identified as a ‘hot spot’ for corruption

Executive summary

according to research presented herein and numerous other researches. The business sector has firmly stated that only after they see ’real‘ action on the government side will they join the overall efforts; until then the environment does not support a fight against corruption by individuals – as ‘whistleblowers’ are effectively penalized rather than thanked. Aside from prosecuting cases of corruption, deemed by business people to be a significant prevention measure, it is also necessary to review the legal and policy framework for combating corruption and to find solutions to address current ineffectiveness in implementing anti-corruption laws and policies. Policy makers should consider administrative reforms as well as judicial reform and increased efficiency in adjudicating cases, as these reforms are essential to address and eradicate corruption. Education and information campaigns should target both business managers and young people, but should differ from and improve upon campaigns implemented to date. Public awareness and education campaigns should emphasize the illegality of corruption and the real harm and damage that corruption exacts on citizens, and they should cover all forms of corruption including methods and instruments to employ in rejecting participation in corruption and safely reporting incidents. It is critical to note that the large majority of respondents believe that awareness campaigns alone cannot solve corruption issues unless they are accompanied by decisive and effective government action in order to secure a framework for anti-corruption efforts and rebuild eroded trust in the government and its institutions. Such government action can eliminate the insecurities expressed by both business and youth stakeholders, thereby restoring trust and enabling unified ongoing participation in anti-corruption efforts.

Attitudes toward and perceptions of corruption REGIONAL OVERVIEW WORKING DOCUMENT

Introduction Research on attitudes toward and perceptions of corruption in the seven countries of the Western Balkans was conducted during the period Februaryâ&#x20AC;&#x201C;June, 2010. This research consists of a quantitative and qualitative component. The quantitative component consisted of a phone survey (see Note on Methodology at end of document) of 1,848 business owners and managers, and separately, a mixed-method survey of 1,340 young people from the region. The qualitative component consisted of 133 candid in-depth interviews with entrepreneurs (see Note on Methodology) from all seven countries in the region: Albania, Bosnia and Herzegovina (BiH), Croatia, Kosovo, FYR Macedonia, Montenegro, and Serbia. The first part of the research provides quantifiable indicators on attitudes toward and perceptions of corruption in the private sector of each country in the region. The second part allows for in-depth exploration into views held by entrepreneurs concerning corruption and related issues and challenges.

A. Regional Statistical Overview: Perceptions of Business Managers 1. Regional corruption trends Although in the last ten years governments of the region have invested significant efforts and resources in the fight against corruption, most managers in the region (78.5% average) definitively believe that the level of corruption is either on the rise or stagnate and not improving. Depending on the breakdown of disaggregating criteria used (company size, sector, gender), the most pessimistic views come from medium-sized enterprises (50-250 employees), from the â&#x20AC;&#x2DC;other servicesâ&#x20AC;&#x2122; sector, and from women managers. Such findings indicate that anti-corruption policies in the last decade, especially in the last three years, have not met the expectations of managers in the region and that the efficacy and impact of implemented policies should be evaluated and policy goals and objectives reviewed.

Trends noted in the results of this research are shown by category in the text that follows. CHART 1 below delineates responses by business managers to the basic question of whether they perceive as a trend that corruption has increased or declined over the past decade. A majority of the entrepreneurs surveyed in the region (43.8%) believe that corruption has been rising over the past decade; a smaller but significant number (34.7%) feel that corruption has been stagnate and that corruption levels have remained unchanged; only 15.1% of company owners and managers surveyed in the Western Balkans feel that corruption has actually been declining. Entrepreneurs in Bosnia and Herzegovina (BiH) and Kosovo are the most pessimistic about the increase in corruption over the last decade; in BiH 64.7% were convinced corruption was accelerating, while 66.7% in Kosovo shared this view. The most optimistic outlook was found in Montenegro where only 31.3% of surveyed managers felt corruption was on the rise. Those who believed that corruption had decreased over the past decade were fewer, but notably in Albania 31.8% perceived a drop in corruption levels, followed by Montenegro with 21.5%. Overall the regional average revealed that 78.5% of stakeholders surveyed perceive a trend that corruption levels were stagnate or increasing despite alleged and actual efforts to reduce corruption. This finding is in line with World Bank indicators for the same countries in the region as World Bank data also shows regional stagnation or “recession” in the fight against corruption (refer below to Charts 1.1. and 1.2. World Bank indicators). CHART 1: RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY COUNTRY Surveyed business managers were asked, “Do you think corruption in your country in the past decade has [multiple choice response]”. The chart below shows response percentages by country.

CHART 1: RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY COUNTRY Surveyed business managers were asked, “Do you think corruption in your country in the past decade has [multiple choice response]”. The chart below shows response percentages by country.

43,8

REG

35,4

ALB

34,7

31 ,8 7,3

44,1

CRO

1 2,0

31 ,3

MON

20,1

Been growing

40%

Been declining

1 1 ,8

43,2 60%

Remained unchanged

Source: YES Foundation phone survey

2,5 7,9

35,4

1 3,5 20%

25,2 36,2

21 ,5

32,4

SER

2,8 5,6

5,7

35,8

MAC

2,5

25,3 38,3

66,7

KOS

6,4

30,3

64,7

BiH

Source: YES Foundation phone survey

1 5,1

1 0,8 80%

1 00%

DK/NA

CHART 1.1. World Bank indicators – average of regional corruption ranking scores, 1999/2000– 2010:

CHART 1.1.

Corruption Average Rankings

World Bank indicators – average of regional corruption ranking scores, 1999/2000–2010:

7 6 5 4 Corruption Average Rankings 3 2 1

19 99 -2

00 0 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10

CHART 1.2.World Bank indicators –regional overview by country, 1999/2000–2010:

CHART 1.2. World Bank indicators – regional overview by country, 1999/2000–2010:

Corruption Ratings

7 6 5 4 3 2 1 0 19992000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Croatia

Serbia

Bosnia&Herzegovina

Montenegro Kosovo

Albania

Macedonia

2010

Although the overall regional rankings show some positive trends over the last 10Page years, | 17 primarily during the earlier years, overall in every country there is a negative trend or at best stagnation in perceived corruption levels over the 10-year period from 2000 to 2010. This World

Although the overall regional rankings show some positive trends over the last 10 years, primarily during the earlier Bank data aligns with the research results shown in CHART 1 above, and shows that trends are years, overall in every country there is a negative trend or at best stagnation in perceived corruption levels over the 10clearly not improving or are without significant improvement over the past three to six years. year period from 2000 to 2010. This World Bank data aligns thethat research results shown in CHART 1 above,show and The World Bank indicators furtherwith show aside from Albania most of the countries shows that trends are clearly not improving or are without significant improvement the past six years. stagnation or negative trends related to corruption over the over last three years.three Suchto trends shouldThe be World Bank indicators further show that from Albania most of actions the countries stagnation or trends viewed as aaside warning that anti-corruption launchedshow and implemented in negative the countries of the region have not succeeded producing the desired impact. related to corruption over the last three years. Such trendsinshould be viewed as a warning that anti-corruption actions launched and implemented in the countries of the region have not succeeded in producing the desired impact. When, as part of our research, results in the business sector were disaggregated by respondent age, there was no major difference in perception (refer to CHART 2 below) and results continued to correlate to the World Bank findings. Both managers over 40 years of age and below 40 have

significant factor in shaping entrepreneurs’ views on corruption trends. The same consistency across age categories held true for older and younger managers who feel that corruption levels are stagnating or dropping. CHART 2: RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY RESPONDENT

When, as part of our research,AGE results in the business sector were disaggregated by respondent age, there was no major difference in perception (refer to CHART 2 below) and results continued to correlate to the World Bank findings. Surveyed business were asked, think corruption in your in the past Both managers over 40 years of age and below managers 40 have similar views“Do on you corruption trends: 44.7 % ofcountry managers decade has below [multiple choice The been chart rising. belowThus shows response percentages by above 40 years old, and 42.3% of those 40 feel that response]”. corruption has it may be concluded that age is not a significant factor in shaping respondent age.entrepreneurs’ views on corruption trends. The same consistency across age categories held true for older and younger managers who feel that corruption levels are stagnating or dropping

CHART 2: RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY RESPONDENT AGE

43,8

REG

Surveyed business managers were asked, “Do you think corruption in your country in the past decade has [multiple choice response]”. The chart below shows response

42,3

less than 40yo

1 5,2

44,7

41 yo and more 0%

percentages by respondent age.

1 5,1

1 0%

1 5,1

20%

30%

Been growing

40%

50%

Been declining

34,7

6,4

37,2

5,3

32,3 60%

70%

7,9 80%

Remained unchanged

90%

1 00%

DK/NA

CHART 3: RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY GENDER Source: YES Foundation phone survey Source: YES Foundation phone survey

Surveyed business managers were asked, “Do you think corruption in your country in the pa When research results were disaggregated by gender, women tended to be more pessimistic about corruption trends When research were disaggregated gender, be more pessimisticb decade has results [multiple choice response]”.byThe chartwomen below tended shows to response percentages than their male counterparts (refer to CHART 3). A total of 50.5% of all female managers surveyed felt that corruption about corruption trends than their male counterparts (refer to CHART 3). A total of 50.5% of all respondent gender. had increased over the past decade, while only 40.2% of male managers perceived an increase.

female managers surveyed felt that corruption had increased over the past decade, while only

CHART 3:

40.2% of male managers perceived an increase.

RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY

43,8

REG

1 5,1

34,7

6,4

GENDER Surveyed business managers were asked, “Do you think corruption in your country in the past decade has [multiple choice response]”. The chart below shows response percentages by

Male

40,2

50,5

Female 0%

20%

Been growing

respondent gender.

Source: YES Foundation phone survey

1 5,8

36,6

1 3,7 40%

Been declining

7,3

31 ,1

60%

Remained unchanged

4,7

80%

1 00%

DK/NA

Page | 19

Source: YES Foundation phone survey

Respondents’ answers concerning corruption trends show no particular difference in perceptio

according to the number of years the company has been in operation (refer to CHART 4 below

Young enterprises (less than 3 years in operation), older ones (3-10 years), and matur

Respondents’ answers concerning corruption trends show no particular difference in perception according to the number of years the company has been in operation (refer to CHART 4 below). Young enterprises (less than 3 years in operation), older ones (3-10 years), and mature enterprises (over 10 years) have similar views on corruption trends over the past 10 years: 42.4 % of fledgling enterprises (less than 3 years in operation), 45.8% of established enterprises (operating between 3-10 years), and 42.6% of experienced enterprises (older than 10 years) think that CHART 4: RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY NUMBER O corruption has been on the rise over the past 10 years. The situation is identical with respect to opinions that show a YEARS INofBUSINESS decline in corruption: 34.1% entrepreneurs from fledgling enterprises; 33% from established enterprises; and 35.9% from experienced enterprises think that corruption has stayed the same. Views expressing a perceived stagnation in Surveyed business managers were asked,enterprises. “Do you Based think on corruption in yournocountry corruption levels are similarly consistent across new to mature research findings, materialin the pa distinction can be discerned the choice views of response]”. enterprises operating different lengths of time. decade has between [multiple The chart below shows response percentages accordin

to the length of time each respondent’s company has been in operation. CHART 4: RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY NUMBER OF YEARS IN BUSINESS

REG

more than 1 0 years 3-1 0 years

43,8

42,6 45,8

1 5,1

1 4,4 1 5,6

34,7

35,9 33,0

6,4

7,1 5,6

Surveyed business 42,4 1 7,6 34,1 5,9 less than 3 years managers were 0% 1 0% 20% 30% 40% 50% 60% 70% 80% 90% 1 00% asked, “Do you think Been growing Been declining Remained unchanged DK/NA corruption in your Source: YES Foundation phone survey country in the past decade has [multiple choice response]”. The chart below shows response percentages according to the length of time each respondent’s

CHART 5 (below) presents the breakdown of responses about trends in corruption based on th

company has been in operation.

size of the company, measured in terms of number of employees. Managers from medium-size

Source: YES Foundation phone survey employees) are most inclined (52%) to think that corruption has bee enterprises (50-250

increasing in recent years; managers from large enterprises with over 250 employees follow wi

CHART 5 (below) presents the breakdown responses about trendsbe in noted corruption on the size the company, 48% sharing this view.ofHowever, it should thatbased consistent withof business reality, larg measured in terms of number of employees. Managers from medium-sized enterprises (50-250 employees) are most enterprises represent a very small share of the sample. A somewhat smaller percentage (43.7% inclined (52%) to think that corruption has been increasing in recent years; managers from large enterprises with over of managers of micro enterprises (less than 10 employees) think corruption has been growin 250 employees follow with 48% sharing this view. However, it should be noted that consistent with business reality, whereas of of small company managers (11-50 employees) corruption leve large enterprises representonly a very40.5% small share the sample. A somewhat smaller percentage (43.7%) ofsaw managers of micro enterprises (less than 10 employees) think corruption has been growing, whereas only 40.5% of small company climbing. managers (11-50 employees) saw corruption levels climbing.

Managers of large enterprises were less inclined than their counterparts in smaller enterprises

believe that corruption might be decreasing. While 15.6% of managers from micro enterpris

Managers of large enterprisesmay werebe lessmore inclined than theiraffected counterparts in smaller enterprises believe that as corruption enterprises negatively by corruption than largetobusinesses, respondents might be decreasing. While 15.6% of managers from micro enterprises and from 14.9% of managers from small firms from these businesses have indicated that they perceive a high level of corruption. saw some improvement, only 8% of large enterprises noticed improvement. The results also seem to indicate that small and medium-sized enterprises be more negatively affected by corruption than large businesses, CHART 5: may RESPONSES ON PERCEIVED CORRUPTION TRENDS as – respondents BY SIZE OF from these businesses have indicated that they perceive a high level of corruption.

COMPANY

Surveyed business managers were asked, “Do you think corruption in your country in the past

CHART 5: RESPONSES ONdecade has [multiple choice response]”. The chart below shows response percentages according to the number of employees in each respondent’s company. PERCEIVED CORRUPTION TRENDS – BY SIZE OF COMPANY Surveyed business managers were asked, “Do you think corruption in your country in the past decade has [multiple choice response]”. The chart below shows

REG

43,8

250 and more employees 50-250 employees 1 1 -50 employees less than 1 0 employees 0%

Been growing

1 5,1

8 1 4,2

40,5

1 4,9

43,7

Been declining

4 28,3

36,6

1 5,6 40%

6,4

52,0

20%

34,7

8,0

34,6 60%

Remained unchanged

5,5

6,1 80%

1 00%

DK/NA

Source: YES Foundation phone survey response percentages according to the number of employees in each respondent’s company. Source: YES Foundation phone survey

CHART 6 examines the breakdown of managers’ views on corruption trends according to the sectors in which enterprises operate. The processing industry shows the smallest share of

CHART 6 examines the breakdown of managers’ views on corruption trends according to the sectors in which managers (39%) who believe corruption has been increasing. Other sectors surveyed show enterprises operate. The processing industry shows the smallest share of managers (39%) who believe corruption similar percentages, ranging between 42.3 % for ranging wholesale and retail to 44.8%and for the has been increasing. Other sectors surveyed show similar percentages, between 42.3 %trade for wholesale ‘financial (intermediary services)services) sector. The ‘other services’ sector (likely to include retail trade to 44.8% for themediation’ ‘financial mediation’ (intermediary sector. The ‘other services’ sector (likely to include less common or smalleror industries service providers) stands out with stands 55.3% of respondents believing that less common smallerand industries and service providers) out with 55.3% of respondents corruption has continued to increase over the past decade.

believing that corruption has continued to increase over the past decade.

The view that corruption has been declining is most strongly expressed by managers in the sector of traffic, storage, The view corruption been declining is most strongly expressed by managers in the and communications, wherethat 19.5% of thosehas surveyed have selected this response. 17.2% of respondents in the realsector estate sector andof in financial services believed that corruption waswhere improving. Again, the ‘other services’have sectorselected was the this traffic, storage, and communications, 19.5% of those surveyed most pessimistic,response. with only 11.9% of of respondents believing corruption was diminishing. 17.2% respondents in thethat real estate sector and in financial services believed that

corruption was improving. Again, the ‘other services’ sector was the most pessimistic, with only 11.9% of respondents believing that corruption was diminishing. Page | 22

CHART 6: RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY BUSINESS SECTOR Surveyed business managers were asked, “Do you think corruption in your country in the past decade has [multiple choice response]”. The chart below shows response percentages according to the business sector.

CHART 6:

RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY BUSINESS SECTOR Surveyed business managers were asked, “Do you think corruption in your country in the past decade has [multiple choice response]”. The chart below shows response percentages according

43,8

REG

39,0

Processing Industry Construction

42,8

Wholesale and retail trade...

42,3

Traffic, storage, and communications

43,0

Hotels, restaurants, and bars

43,0

1 0%

20%

8,6

31 ,0

1 7,2

Been declining

7,4

35,2

1 7,2

25,8 1 1 ,9

50%

6,2

30,2

1 3,3

40%

6,0

36,1

1 9,5

30%

6,0

34,8

1 5,4

55,3

Other services

6,4

41 ,8 1 6,4

44,1

Real estate, leasing...

34,7

1 3,1

44,8

Financial mediation

Been growing

1 5,1

60%

6,9 1 2,9

29,2 70%

Remained unchanged

80%

3,5 90%

1 00%

DK/NA

Source: YES Foundation phone survey

to the business sector.

Source: YES Foundation phone survey

2. Corruption as an obstacle or a tool for doing business According to research results, a regional average of 42.2% of managers consider corruption an

2. Corruption as an obstacle or a tool for doing business enormous or important obstacle to successfully doing business in the region, though results by

According to research results, a regional average offrom 42.2% of managers corruption or important country vary substantially, a high of 86.8% consider in Kosovo to 23.6%an in enormous BiH and 24% in obstacle to successfully doing businessResults in theindicate region,that though results by country from a high of 86.8% Montenegro. the least affected are largevary and substantially, micro enterprises (over 250 and in Kosovo to 23.6% in BiH and in Montenegro. Results theThis leastleads affected large and under 10 24% employees), and managers over indicate 40 years that of age. to theare conclusion that micro enterprises (over 250 andyounger undermanagers 10 employees), over 40 years of age. leads to the conclusion and smalland and managers medium-sized enterprises (between 11This and 250 employees) are that younger managers and small and medium-sized enterprises (between 11 and 250 employees) are most affected. most affected. By sectors, results of the research indicate that the most affected sectors are construction, (52.6%) and traffic, storage and communication (44.3%). The financial mediation sector appears to be least affected (31%). Page | 23

When asked if a small degree of corruption could be beneficial, regional managers’ responses varied between 22.5% (BiH) and 28.3% (Albania) and a portion of managers from every region agreed that a small degree of corruption is useful for business. Approximately 20% of respondents neither agreed nor disagreed with the premise that corruption might be useful. This indicates that there is still space for improvement in anti-corruption efforts in terms of education and awareness of managers in order to demonstrate the harm that corruption can have on the market and directly or indirectly on every single company. When disaggregated by length of company operation or gender of respondents, these respective elements did not appear to be factors in shaping the views of managers concerning the potential of corruption to harm or facilitate business. Results of the research on corruption as an obstacle, harm or benefit are presented by categories in the text that follows.

CHART 7 below presents respondents’ answers, grouped by country, to the question of the extent to which corruption is or is not an obstacle to their business. As evident from the chart, respondents have primarily chosen to answer that corruption is either a “small obstacle” or a “big obstacle” to their work. The notable exception to this is Kosovo, where 47.2% of respondents said that corruption represents an enormous obstacle to their work. At the regional level, most managers (35.7%) said that corruption is a small obstacle to their business, while 26.9% declared it a big obstacle. 22.1% said that corruption is not an obstacle at all, and 15.3% said that it is an enormous obstacle. The largest share of managers who alleged that corruption is not an obstacle at all was found in Montenegro (29.2%), followed by BiH with 27.3%. At the opposite end, after Kosovo (which evidently represents a special case in this regard), the largest percent of managers saying corruption is an enormous obstacle is in Albania (18.7%), followed 77.9% of respondents consider corruption be some kind of obstacle big,average or by Macedonia where 14% of respondents selected this answer. It istoindicative for this analysis (either that a small, regional enormous) to their business, which leads to the conclusion that corruption has a serious impact of 77.9% of respondents consider corruption to be some kind of obstacle (either small, big, or enormous) to their the business sector in the region and in each of the targeted countries. business, which leads to theonconclusion that corruption has a serious impact on the business sector in the region and in each of the targeted countries. CHART 7: RESPONSES ON CORRUPTION AS AN OBSTACLE TO BUSINESS – BY COUNTRY

CHART 7: RESPONSES ON CORRUPTION AS AN OBSTACLE TO BUSINESS – BY COUNTRY Surveyed business managers were asked, “In your opinion, is corruption an obstacle to your business?” The chart below shows response percentages of business managers by country.

Surveyed business managers were asked, “In your opinion, is corruption an obstacle to your business?” The chart below shows response percentages of business managers by country.

REG

2 2 .1

3 5 .7

AL B

2 2 .2

3 0.8

5 .0

K OS

8.2

1 0%

30%

40%

It is a s ma ll o bs ta c le

1 4.0

2 2 .2

40.0

It is n o t an o b s ta c le a t a ll

Source: YES Foundation phone survey

2 5 .8 3 6.8

20%

1 2.2

47 .2

3 8.0

2 2 .4

SER

1 1 .1

2 5 .1

3 9.6

2 9.2

MO N

2 2 .5

40.5

2 2 .2

MA C

1 8.7

3 9.1

2 2 .2

CRO

1 5.3

2 8.3

2 7 .3

B iH

2 6.9

1 1 .8

2 8.6 5 0%

60%

7 0%

It is a b ig ob s ta c le

80%

It is

8.9 90%

1 00%

a n en o rmo u s o bs ta c le

Source: YES Foundation phone survey

There is a slight difference in views on corruption as an obstacle based on respondents’ age (refer to CHART 8). Older managers (over 40 years) are more inclined (24.9%) than younger

There is a slight difference in views on corruption as an obstacle based on respondents’ age (refer to CHART 8). Older managers (19.6%) to say that corruption is not an obstacle to their business at all. Views are managers (over 40 years) are more grouped inclinedaround (24.9%) younger to say that corruption is not an inversely thethan statement thatmanagers corruption (19.6%) is a small obstacle: 33.8% of older obstacle to their business atmanagers all. Views are with inversely groupedasaround statement corruption is a small obstacle: agreed this statement opposedthe to 37.4% of thethat younger entrepreneurs. Younger are also inclinedas to opposed think that corruption big obstacle: of respondents 33.8% of older managers managers agreed with thismore statement to 37.4% isofa the younger 28.8% entrepreneurs. Younger under thetoage of 40 have opted for is this as opposed to 24.7% of managers under over 40. managers are also more inclined think that corruption a answer big obstacle: 28.8% of respondents theThe age of 40 have opted for this answer as opposed to 24.7% of managers over 40. The difference in responses by age may Page | 25

indicate that younger managers are more exposed to the negative impact of corruption, or that it has more negative impact on them than on older managers, or that younger managers are more aware of the impact of corruption. It would be worth exploring to determine specific reasons for these differences (i.e. does it mean that older managers have more experience on how to do business in a corrupt environment and/or more connections to interest groups that may compensate the negative impact of corruption on their businesses, or are older managers simply more used to corruption and no longer recognize all its ramifications?). There is no major difference in views about corruption as an obstacle when examined by gender. Female managers (24.1%) are slightly more inclined than male managers (21.1%) to say that corruption is no obstacle at all (refer to CHART 9). Similarly, gender perceptions on corruption as a small, big, or enormous obstacle are also rather consistent. The conclusion is that both male and female managers have the same perception of corruption as an obstacle to business. Views grouped according to years the company has been in operation (CHART 10) are also fairly convergent, which 8: RESPONSES CORRUPTION AS managers’ AN OBSTACLE TO corruption. BUSINESSInstead, – BY AGE indicates that the seniority CHART of the company is not a ON factor which influences views on differentiating factors are related to the size of the company and age of managers. Most of the managers who stated Surveyed managers wereyoung asked,enterprises “In your opinion, corruption an Most obstacle to your that corruption is not an obstacle at business all (23.4%) come from operatingisunder 3 years. of the business?” Theenormous chart below showsinresponse of business managers by respondents’ managers who feel that corruption is an obstacle running percentages a business (17.8%) come from enterprises in operation between 3-10 years. Despite minor variances, overall the views are consistent. age.

CHART 8: RESPONSES ON CORRUPTION AS AN OBSTACLE TO BUSINESS – BY AGE Surveyed business managers were asked, “In your opinion, is corruption an obstacle to your business?” The chart below shows response percentages of business managers by respondents’ age.

22.1

REG

24.9

more than 40yo

les s than 40yo

Source: YES Foundation phone survey

35.7

33.8

1 9.6 0%

1 0%

26.9

1 5.3

24.7

1 6.5

37 .4 20%

It is not an obs tac le at all

30%

40%

It is a s mall obs tac le

28.8 50%

60%

70%

It is a big obs tac le

Source: YES Foundation phone survey

1 4.2 80%

90%

1 00%

It is an enormous obs tac le

business?” The chart below shows response percentages of business managers by gend

CHART 9:

RESPONSES ON CORRUPTION AS AN OBSTACLE TO BUSINESS –

REG

22.1

35.7

26.9

1 5.3

BY GENDER

Surveyed business Male 21 .1 35.6 27 .0 1 6.4 managers were asked, “In your opinion, is F emale 24.1 36.0 26.7 1 3.2 corruption an obstacle to 0% 20% 40% 60% 80% 1 00% your business?” The chart below shows response CHART 10: RESPONSES ON CORRUPTION AS AN OBSTACLE TO BUSINESS – B not an obs tac le at all It is a s mall obs tac le It is a big obs tac le It is an enormous obs tac le percentages of business managers Itbyis gender.

YEARS IN OPERATION

Source: YES Foundation phone survey

Surveyed business managers were asked, “In your opinion, is corruption an obstacle to yo CHART 10:

business?” The chart below shows response percentages of business managers by the number

RESPONSES ON years the respondents’ company has been in operation. CORRUPTION AS AN OBSTACLE TO BUSINESS – BY YEARS IN OPERATION Surveyed business managers were asked, “In your opinion, is corruption an obstacle to your business?” The chart below shows response percentages of business managers by the number of years the respondents’ company has been in

REG

22.1

35.7

26.9

1 5.3

more than 1 0 years

22.5

34.8

28.3

1 4.3

3-1 0 years

20.9

les s than 3 years

23.4 0%

operation.

36.3 39.0

1 0%

20%

It is not an obs tac le at all

Source: YES Foundation phone survey

24.9

30%

40%

It is a s mall obs tac le

1 7 .8 25.4

50%

60%

70%

It is a big obs tac le

1 2.2 80%

90%

1 00%

It is an enormous obs tac le

Source: YES Foundation phone survey

CHART 11 explores responses to the same question grouped according to company siz

CHART 11 explores responses to the same question grouped according to company size, expressed in terms of number expressed in terms of number of employees. The largest share of managers who feel th of employees. The largest share of managers who feel that corruption is not an obstacle at all comes from large not an followed obstacle by at all comes large from enterprises over 250 enterprises with over 250corruption employeesis (24%), 22.9% of from managers micro with enterprises (lessemployees than 10 (24% employees). followed by 22.9% of managers from micro enterprises (less than 10 employees).

Surveyed business managers were asked, “In your opinion, is corruption an obstacle to your business?” The chart below shows response percentages of business managers by size of company.

CHART 11:

RESPONSES ON CORRUPTION AS AN OBSTACLE TO BUSINESS – BY SIZE OF COMPANY

REG

22.1

250 and more employees

Surveyed business managers were asked, “In your opinion, is corruption an obstacle to your business?” The chart below shows response percentages of business

24.0

50-250 employees

1 9.7

1 1 -50 employees

20.1

les s than 1 0 employees 0%

1 0%

26.9

36.0

1 3.4

29.9 37.1

30%

1 2.0

31 .5

32.3

20%

1 5.3

28.0

35.4

22.9

It is not an obs tac le at all

managers by size of company.

35.7

40%

It is a s mall obs tac le

1 7 .7 25.3

50%

60%

70%

It is a big obs tac le

1 4.7 80%

90%

1 00%

It is an enormous obs tac le

Source: YES Foundation phone survey

Managers from medium-sized enterprises (50-250 employees) are most inclined (31.5%) to see corruption as a big obstacle, as opposed to managers from micro enterprises (less than 10

Managers from medium-sized enterprises (50-250 employees) most inclined (31.5%) to see from corruption a big employees) who are least inclined are to this view (25.3%). Managers small as enterprises and obstacle, as opposed to managers from micro enterprises (less than 10 employees) who are least inclined to this from large enterprises are in the middle, with 29.9% and 28% respectively. If the views from the view (25.3%). Managers from small enterprises and from large enterprises are in the middle, with 29.9% and 28% theofchart (stating that that corruption is a isbig or enormous obstacle) werewere combined, respectively. If the views fromright the side right of side the chart (stating corruption a big or enormous obstacle) employees) haveof the largest who sharebelieve of managers who believe that combined, small enterprises small (11-50enterprises employees)(11-50 have the largest share managers that corruption is a big or an enormous hindrance. corruption is a big or an enormous hindrance. Finally, some differences on the corruption as ‘obstacle’ spectrum are discernible according to the sector in which Finally, some differences on the areisdiscernible according to managers operate (CHART 12). Managers in construction arecorruption least likelyasto‘obstacle’ agree thatspectrum corruption not an obstacle at all (10.9%). They also lead the view that corruption a big (CHART (33.8%) or12). an Managers enormous in (18.4%) obstacle. theinsector in which managers isoperate construction are This leastislikely to strongly consistent with results fromthat thecorruption qualitativeisinterviews (refer to C). On thealso opposite in agree not an obstacle at Section all (10.9%). They lead inend, the managers view that corruption hotels, restaurants, and bars (31.3%), financial mediation (31%), and real estate (30.1%) are most inclined to say that is a big (33.8%) or an enormous (18.4%) obstacle. This is strongly consistent with results from corruption is not an obstacle at all.

the qualitative interviews (refer to Section C). On the opposite end, managers in hotels,

Page | 30

CHART 12: RESPONSES ON CORRUPTION AS AN OBSTACLE TO BUSINESS – BY SECTOR Surveyed business managers were asked, “In your opinion, is corruption an obstacle to your business?” The chart below shows response percentages of business managers by sector.

CHART 12:

RESPONSES ON CORRUPTION AS AN OBSTACLE TO BUSINESS

22.1

REG

23.9

P ro c es s in g In d u s try

– BY SECTOR

T raffic , s to rag e, an d c o mmu n ic atio n s

managers by sector.

20%

It is n o t an o b s tac le at all

30%

6.9

22.6

36.3

1 0%

1 7 .2 24.1

30.1

22.1 0%

1 6.8

25 .0 3 7 .9

30.1

O th er s ervic es

1 4.5

27 .5 26.6

31 .0

F in an c ial med iatio n

1 8.4 27 .4

36.9 31 .3

R eal es tate, leas in g ...

1 2.7

33.8 35 .9

1 8.8

H o tels , res tau ran ts , an d b ars

1 5 .3

23.9

36.8 22.2

Wh o les ale an d retail trad e...

26.9

39.4

1 0.9

C o n s tru c tio n

Surveyed business managers were asked, “In your opinion, is corruption an obstacle to your business?” The chart below shows response percentages of business

35 .7

1 7 .2

25 .2

40%

50%

It is a s mall o b s tac le

60%

1 6.4

7 0%

It is a b ig o b s tac le

80%

90%

1 00%

It is an en o rmo u s o b s tac le

Source: YES Foundation phone survey

CHART 13 explores managers’ views concerning the statement that “a small degree of

CHART 13 explores managers’ views concerning the statement that “a small degree of corruption” can actually be corruption” can actually be good for business. This line of inquiry was pursued in both the good for business. This line quantitative of inquiry was pursued in bothbethe quantitative survey wellinas during in-depth interviews, corruption can actually good. Responses range fromas 62.3% Kosovo, 46.5% in Montenegro, survey as well as during in-depth interviews, and the results are fairly consistent, and 45.3% in BiH, to only 39.7% in Serbia,which is the country with the lowest percentage of and the results are fairly consistent, though the research team was left with the impression that during in-depth though the reasearch team was left with the impression that during in-depth interviews managers who completely disagree. interviews respondents articulated evenarticulated stronger even disagreement with the idea any degree corruption could be respondents stronger disagreement withthat the idea that any of degree of corruption good for business. As evident from chart, most ofAs theevident respondents all seven countries surveyed areseven inclined CHART 13: RESPONSES ON WHETHER CORRUPTION IS USEFUL TO could be the good for business. from theacross chart,MINIMAL most of the respondents across all BUSINESS –small BY COUNTRY to generally disagree with the notion that some level of corruption can actually be good. Responses range countries surveyed are inclined to generally disagree with the notion that some small level offrom 62.3% in Kosovo, 46.5% in Montenegro, and 45.3% BiH, towere onlyasked, 39.7% Serbia,which is the country the lowest Surveyed businessinmanagers “Ain small degree of corruption is useful with for business percentage of managers who completely disagree. [multiple choice response]”. The chart below shows response percentages of business Page managers | 31

CHART 13:

by country.

RESPONSES ON WHETHER MINIMAL CORRUPTION IS USEFUL TO BUSINESS – BY

REG

COUNTRY

ALB

Surveyed business managers were asked, “A small degree of corruption is useful for business [multiple choice response]”. The chart below shows response percentages of business managers by country.

Source: YES Foundation phone survey

44,2

1 4,5

42,4

1 6,7

45,3

BiH

46,5

MON

Completely disagree (0-1 )

1 8,8

1 5,4

20%

40%

Disagree (2-4)

1 0,1

1 7,6

7,6

39,7

SER

6,9

3,8

8,8 1 3,3

20,1 1 1 ,1

60%

Source: YES Foundation phone survey

1 3,4

9,3

1 8,9

Neither agree nor disagree (5)

1 5,2

9,8

1 5,1 1 5,4

1 3,1

7,3

1 9,3

62,3 44,4

MAC

1 4,1

1 5,2

21 ,8

1 7,3

KOS

9,4

1 2,6

1 0,4

40,2

CRO

1 7,8

1 4,9

80%

Agree (6-8)

Completely agree (9-1 0)

1 00%

3. Reasons for not reporting corruption (why we don’t report corruption) One of the most important conclusions of this research is that managers do not report corruption because of their fear of consequences and their doubt that there will be concrete result. On a regional average 86.4% of managers cited fear and doubt rather than a lack of knowledge about where or how to report corruption. Such results indicate that managers do not trust state actors to fight against corruption and that there is a large space for improved policy and implementation in this direction. At the same time, consistent results from all of the countries in the region seem to indicate that anti-corruption policies that largely rely on public information materials and campaigns that advise where and how to report corruption, even offering free hotline numbers, may be an ineffective response to the problem, at least in the case of the business sector. For managers of medium-sized enterprises (50-250 employees) and among the bars and restaurants and construction sectors, fear of consequences tends to be the most compelling reason not to report corruption. Percentages show 51.9%, 51.6%, and 50.2% respectively. Women (51.3%) expressed the fear of possible consequences as the reason for not reporting more that men did (43.5%). Inquiry into the reasons for not reporting corruption has produced interesting findings (refer to CHARTS 14 through 19). The most important one is that not reporting corruption does not result from not knowing how or where to report it. This is clear from all response breakdowns presented in CHARTS 14-19, where consistently a very small share of respondents indicated that not knowing how to report corruption was the reason they failed to report. On the other hand, what most respondents across the seven countries surveyed selected as a reason for not reporting bribery was their fear of possible consequences. This is absolutely predominant in the managers’ answers from Albania, where 58.6% indicated that the fear of possible consequences was the reason for non- reporting; second are managers from Montenegro with 49.3%, and then Macedonia with 48.4%. The rest of the countries follow closely behind with the smallest share of managers fearing consequences in BiH (40.8%). The other major reason cited for not reporting corruption is doubt that reporting will lead to a result – a response selected on average by 40.2% of all respondents. Managers from Serbia were most inclined to pick this reason (48.4%), though it was also cited by 43.7% from Croatia, 40.5 % from BiH, and 39.1% from FYR Macedonia. Only a few managers, with BiH being to some extent an exception, have chosen “other” reasons for not reporting corruption; hence the fear of possible consequences and the doubt there will be any results are effectively the major reasons for not reporting bribery. The fact that “not knowing how to report corruption” did not come forward as a compelling factor, while “fear” and “doubt” were strong negative motivators can and should be considered in developing strategies for policy action.

25 CHART 14:

RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY COUNTRY

CHART 14: RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY COUNTRY Surveyed business managers were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages of business managers by country.

46.2

REG

5 .8

40.2

5 8.6

AL B

40.8

B iH

1 1 .1 2 .8

7 .8

2 5 .3

5 .1

40.5

1 5 .9

Surveyed business CRO 43 .4 3 .2 43 .7 9.8 managers were asked, “In K OS 47 .2 8.2 3 7 .1 7 .5 MA C 48.4 8.6 3 9.1 3 .9 your opinion, what is the MO N 49.3 7 .6 3 4.7 8.3 most important reason SER 43 .5 4.3 48.4 3 .8 not to report corruption?” are quite consistent among managers of all ages. The same consistency is seen in other The chart below shows F eacategories r o f p o s s ib le c oas n s ewell. quenc es No t k n o win g h o w to re p o rt it D o u b t th e re will b e a re s u lt O th e r disaggregated response percentages of Source: YES Foundation phone survey business managers by country. 0%

20%

40%

60%

80%

1 00%

CHART 15: RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY

CHART 15 examines differences in views based on the age of responding managers. It shows RESPONDENTS’ AGE Source: YES Foundation phone survey that 46.3% of older managers as opposed to 45.9% of younger managers claim that fear of

CHART 15 examines differences in views based on the age of responding managers. It shows that 46.3% of older possible business consequences is the reason not reporting that views reason not Surveyed managers werefor asked, “In yourcorruption, opinion,which what demonstrates is the most important managers as opposed to 45.9% of younger managers claim that fear of possible consequences is the reason for not to report corruption?” The chart below shows response percentages of ages. business by reporting corruption, which demonstrates that views are quite consistent among managers of all The managers same consistency is seen in other disaggregated categories as well. their age. Page | 34

CHART 15: RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY REG

46.2

5.8

les s than 40yo

45.9

6.6

RESPONDENTS’ AGE Surveyed business managers were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages of business

more than 40yo

managers by their age.

46.3 20%

F ear of pos s ible c ons equenc es

40.2

41 .2

4.8 40%

Not knowing how to report it

7 .8

6.3

39.2 60%

9.7 80%

Doubt there will be a res ult

1 00%

Other

Source: YES Foundation phone survey

CHART 16 compares views on the issue of non-reporting according to gender. As evident from

the chart, female managers (51.3%) are considerably more inclined than their male counterparts

(43.5%) to acknowledge that fear of consequences is the most important reason for not reporting corruption.

CHART 16: RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY GENDER Surveyed business managers were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages of business managers by gender.

CHART 16 compares views on the issue of non-reporting according to gender. As evident from the chart, female managers (51.3%) are considerably more inclined than their male counterparts (43.5%) to acknowledge that fear of consequences is the most important reason for not reporting corruption.

CHART 16: RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY GENDER

Surveyed business managers were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages of business managers by gender.

REG

46.2

Male

5.8

43.5

F emale

6.2

51 .3

40.2

40.8

5.0

20%

9.5

39.0

40%

F ear of pos s ible c ons equenc es

7 .8

60%

Not knowing how to report it

4.7 80%

1 00%

Doubt there will be a res ult

O ther

Source: YES Foundation phone survey

Source: YES Foundation phone survey CHART 17 organizes responses according to the length of company experience, that is, years in

CHART 17: RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY YEARS

operation. Again, to views are closely alignedexperience, and lengththat of is, operation not appear CHART 17 organizes responses according the length of company years in does operation. Again,to be a IN OPERATION views are closely alignedrelevant and length of operation does not appear to be a relevant factor in shaping managers’ views Most factor in shaping managers’ views on the reasons for not reporting corruption. on the reasons for not reporting corruption. Most respondents agree that the fear of possible consequences is the major Surveyed business managers asked, “In your opinion,iswhat the most important not respondents agree that the fearwere of possible consequences the is major reason for notreason reporting reason for not reporting corruption, led by 48% of managers from most senior enterprises (over 10 years old), 44.4 tothan report corruption?” The chart below shows percentages of business managers corruption, led byand 48% of managers most response senior enterprises 10 years old), 44.4by %the of % of junior enterprises (less 3 years), followed closely from with 43.7% of managers from (over enterprises in operation number of years their has beenand in operation. 3-10 years. junior enterprises (lesscompany than 3 years), followed closely with 43.7% of managers from CHART 17:

enterprises in operation 3-10 years.

RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY YEARS IN

REG

46.2

5.8

40.2

7 .8

38.7

8.4

OPERATION Surveyed business managers were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages

more than 1 0 years

48.0

3-1 0 years

4.9

43.7

les s than 3 years

7 .1

44.4 0%

20%

F ear of pos s ible c ons equenc es

42.8

5.9 40%

Not knowing how to report it

6.4

40.0 60%

9.8 80%

Doubt there will be a res ult

of business managers by the number of years their companySource: has been in operation. YES Foundation phone survey

1 00%

Other

Page | 36

Source: YES Foundation phone The survey next chart in sequence, CHART 18, organizes respondent views on non-reporting of

corruption according to company size, measured in terms of number of employees. Consistent with the views on the previous issue of corruption as an obstacle to work, managers from

The next chart in sequence, CHART 18, organizes respondent views on non-reporting of corruption according to company size, measured in terms of number of employees. Consistent with the views on the previous issue of corruption as an obstacle to work, managers from medium-sized enterprises (51.2%) are again the most inclined to agree that fear of consequences is the major reason for not reporting bribery. The views of managers from the other three sizes of enterprises are similar: 48% of managers from large, 46.3% from CHART 18: RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY small, and 45.6% from micro (less than 10 employees) say that the fear of possible consequences is the most important reason not to report corruption. COMPANY SIZE Consistently, the view that not knowing howbusiness to reportmanagers corruption is a key factor in shaping managers’ behavior showed Surveyed were asked, “In your opinion, what is the most important reason not marginal percentages, with between a mere 5-8% of entrepreneurs citing this as a reason for non-reporting of bribery. to report corruption?” The chart below shows response percentages of business managers by size Doubt in the results of reporting corruption was also cited as a factor, particularly by small (40.7%) and micro (40.6%) of company (number of employees). enterprises, followed by medium-sized enterprises (36.2%).

CHART 18: RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY

REG

COMPANY SIZE

46.2

250 and more employees

Surveyed business managers were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages of business managers by size of company (number of employees).

5.8

48.0

50-250 employees

8.0

51 .2

1 1 -50 employees

20%

F ear of pos s ible c ons equenc es

Not knowing how to report it

7 .1

40.7

6.1 40%

1 6.0 36.2

5.0

45.6 0%

7 .8

28.0

5.5

46.3

les s than 1 0 employees

40.2

8.0

40.6 60%

7 .7 80%

Doubt there will be a res ult

1 00%

Other

Source: YES Foundation phone survey

Finally, CHART 19 groups views on the non-reporting issue according to the sector in which the Source: YES Foundation phone survey company operates. The percentage of managers citing fear of consequences as a reason for not reporting corruption is highest in the hotels, restaurants and bars sector (51.6%), followed by the Finally, CHART 19 groups views on the non-reporting issue according to the sector in which the company operates. The construction sector (50.2%). The third highest rank by sector came from managers in the percentage of managers citing fear of consequences as a reason for not reporting corruption is highest in the hotels, processing (47.8%). restaurants and bars sector (51.6%), followedindustry by the construction sector (50.2%). The third highest rank by sector came from managers in the processing industry (47.8%). The view that the major reason for non-reporting is the doubt that such action would lead to The view that the major reason for non-reporting is the doubt held that by such action in would lead services’ to desired results is most desired results is most strongly managers the ‘other sector (43.8%), followed strongly held by managers in the ‘other services’ sector (43.8%), followed by 41.9% in trade, and 40.9% in real estate. by 41.9% in trade, and 40.9% in real estate. Together, the fear of consequences in reporting coupled with the lack of trust in the results of due process constitute the Together, fear of consequences in reporting coupled the lack of in the results overwhelming reasons why corruption goesthe unreported. These factors – whether takenwith individually ortrust jointly – point to of due the need for systemic solutions at process the government constitutelevel. the overwhelming reasons why corruption goes unreported. These factors – whether taken individually or jointly – point to the need for systemic solutions at the government level.

Surveyed business managers were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages of business managers by sector.

CHART 19:

RESPONSES ON REASONS NOT TO REPORT CORRUPTION – BY SECTOR

REG

P ro c es s in g In d u s try C o n s tru c tio n Wh o les ale an d retail trad e... T raffic , s to rag e, an d c o mmu n ic atio n s

46.2

47 .8

5 .8

5 .2

5 0.2 44.7 47 .0

40.2

4.5 6.0 4.7

3 7 .8 3 7 .3 41 .9 3 8.9

7 .8

9.2 8.0 7 .4 9.4

Surveyed H o tels , res tau ran ts , an d b ars 5 1 .6 5 .5 3 4.4 8.6 business F in an c ial med iatio n 41 .4 1 0.3 3 7 .9 1 0.3 managers were R eal es tate, leas in g ... 40.9 9.7 40.9 8.6 asked, “In O th er s erv ic es 45 .1 5 .3 43 .8 5 .8 your opinion, 0% 20% 40% 60% 80% 1 00% what is the F ear o f p os s ib le c o n s eq uen c es No t k no wing h o w to rep ort it D o ub t th ere will b e a res u lt O th er most important reason not to Source: YES Foundation phone survey report corruption?” The chart below shows response percentages of business managers by sector.

Source: YES Foundation phone survey

4. Roots of corruption (who generates corruption and who should fight it)

In general, answers to questions in this chapter indicate that there is a fair share of responsibility 4. Roots of corruption for the level of corruption meted out to both governments of the region and general populations (who generates corruption and who should fight it)

(in almost equal numbers). Both governments and citizens are also seen as having responsibility In general, answers to questions in this chapter indicate that there is a fair share of responsibility for the level of to participate in the fight against corruption. Research results indicate that most stakeholders corruption meted out to both governments of the region and general populations (in almost equal numbers). Both surveyed believe that governments should lead the process to fight against corruption but that all governments and citizens are also seen as having responsibility to participate in the fight against corruption. Research sectors should be equally involved, including the general public. Another key conclusion is that results indicate that most stakeholders surveyed believe that governments should lead the process to fight against an should effective identifying and punishing corruption neededkey as conclusion a basic toolis (and corruption but that all sectors be policy equallyfor involved, including the general public. is Another that an effective policy for identifying and punishing corruption is needed as a basic tool (and prerequisite) in fighting corruption, and subsequent education of all actors would improve understanding of how to resist and fight corruption Page | 39 within the parameters and purview of each sector, position, and role in society. Regionally 63.2% of managers believe that corruption stems from the government, with the highest percentages in Croatia (74.2%) and BiH (67.8%), and the lowest percentage in Montenegro (45.1%). When asked if corruption was rooted in the culture of the people, 63.5% of regional respondents agreed that it was. Regionally, 33.1% of managers believe that enterprises initiate corruption, though more than 20% of regional respondents neither agreed nor disagreed with this charge. Such indicators, aside from either a lack of opinion or an inherent reluctance to talk about one’s own sector (for example, in business over 20% of respondents neither agree nor disagree), seem to assign

equal responsibility for corruption to citizens and government, which is logical and in line with the complexity of the corruption phenomenon. However, in Croatia and BiH, the highest percentages of people believe that corruption stems from government, which may indicate systemic corruption or may be an indicator of a so-called “captured state” (where the private sector or interest groups can significantly influence policy making and implementation of law); it may conversely indicate increased awareness about the problems connected to corruption. It is logical that corruption that is by definition connected to public office would be deemed to be of government origin in perception indices; however, since citizens in a democracy elect governments, then citizens must also share responsibility. Results on triangulated questions relating to the responsibility for fighting corruption (CHARTS 24, 25, and 26) show that over 80.8% of surveyed managers agreed or completely agreed that it is primarily the responsibility of government to fight corruption, while 65.3% of managers agreed or completely agreed it was primarily the responsibility of citizens, and 78.1% of managers agreed or completely agreed that each individual organization can make a contribution in fighting corruption. These responses, though overlapping whose ‘primary’ responsibility it is to combat corruption, are generally in line with responses to previous questions and in line with commonly accepted knowledge about corruption. Answers further suggest (78.5% as a regional average) that effective policies for identifying and punishing corruption are the best tools in combating corruption (refer to CHART 27). The only surprising result in this chapter (in CHART 21) comes from Montenegro, where 64.6% of managers surveyed believed that enterprises can refuse to get involved in corruption without any consequences to the company, which does not align with results showing that 49.3% of the same managers were afraid to report corruption due to possible consequences (though perhaps there is a difference in consequence between not getting involved in corruption versus ‘whistle-blowing’ or reporting on others who are involved). This result will be further investigated for clarity. A relatively high percentage of managers (20.7%), neither agree nor disagree that enterprises can refuse to be involved in corruption, which may indicate a reluctance to talk about one’s own sector but may also support the need for anticorruption policies that educate business managers on how to resist involvement in corruption. CHART 20 below explores managers’ views, organized by country, on the actual strength or capacity of the private sector to stand up to corruption. Managers were asked whether they agree or disagree with the statement that the private sector is helpless in the face corruption because it stems from the government. Even though some country differences are visible, it is clear that by-and-large managers are a lot more inclined to agree than to disagree with this statement. This view is most dominant in BiH where 54.3% of managers surveyed said they completely agreed that business was helpless before corruption, followed by Croatia with 50.5%, and Kosovo with 49.7% agreement that business remained helpless.

30 CHART 20:

THE PRIVATE SECTOR IS HELPLESS BECAUSE CORRUPTION DERIVES FROM GOVERNMENT – BY COUNTRY

CHART 20: THE PRIVATE SECTOR IS HELPLESS BECAUSE CORRUPTION DERIVES FROM GOVERNMENT – BY COUNTRY Surveyed business managers were asked to agree or disagree with the statement, “The private sector is helpless before corruption, because corruption derives from the government.” The chart below shows response percentages of business managers by country.

REG

1 1 ,7

7,6

ALB

1 1 ,1

1 0,6

1 7,6

1 9,4

43,8

22,2

24,2

31 ,8

BiH 1 0,7 7,6 1 3,8 1 3,5 54,3 Surveyed business CRO 5,4 5,9 1 4,6 23,7 50,5 managers were asked KOS 1 6,4 6,3 1 1 ,9 1 5,7 49,7 to agree or disagree MAC 1 3,3 9,7 21 ,5 1 8,6 36,9 with the statement, MON 31 ,9 6,3 1 6,7 1 2,5 32,6 “The private sector SER 8,9 7,3 21 ,1 21 ,4 41 ,4 is helpless before corruption, because Completely disagree (0-1 ) Disagree (2-4) Neither agree nor disagree (5) Agree (6-8) Completely agree (9-1 0) corruption derives from the government.” The Source: YES Foundation phone survey chart below shows response percentages of business managers by country. 0%

1 0%

20%

30%

40%

50%

60%

70%

80%

90%

1 00%

The percentages of managers who completely disagree that the private sector is helpless are Source: YES Foundation phone survey proportionately small across all countries, with the notable exception of Montenegro, where managers who completely disagree (31.9%) are almost as strong in number as managers who

The percentages of managers who completely disagreeThe that overall the private sector is helpless are proportionately small and completely agree (32.6%). conclusion is nevertheless that managers across all countries, with the notable exception of Montenegro, where managers who completely disagree (31.9%) entrepreneurs in all countries of the region by-and-large believe that the business sector are cannot almost as strong in number managers whocorruption. completely agree (32.6%). The overall conclusion is nevertheless that do as much to confront managers and entrepreneurs in all countries of the region by-and-large believe that the business sector cannot do CHART 21 below provides respondents’ reactions to the statement that “private enterprises can much to confront corruption. refuse to get involved in corruption without consequences to their operation”. Considerable

CHART 21 below provides respondents’ reactions to the statement that “private enterprises can refuse to get involved in differences across countries can be discerned. BiH managers expressed the strongest opposition corruption without consequences to their operation”. Considerable differences across countries can be discerned. BiH to the statement (34.3% completely disagreed), followed by managers from Kosovo (31.4%) managers expressed the strongest opposition to the statement (34.3% completely disagreed), followed by managers from Kosovo (31.4%) who also strongly disagreed. 27.2% of managers from FYR Macedonia disagreed, along Page with| 42 24.4% from Croatia. On the opposing side, 26.1% of all managers in the region said they completely agreed that the business sector could refuse getting involved in corruption without consequences. At the country level, Montenegro jumps out from the rest with 60.4% of respondents completely agreeing that involvement in corruption can be avoided. Other countries range somewhere between Albania with 15.2% and BiH with 30.1% of managers completely agreeing with the statement.

CHART

21:

PRIVATE

ENTERPRISES

CAN

REFUSE

GET

INVOLVED

CORRUPTION WITHOUT CONSEQUENCES – BY COUNTRY Surveyed business managers were asked to agree or disagree with the statement, “Private enterprises can refuse to get involved in corruption without consequences to their operation.” The chart below shows response percentages of business managers by country.

CHART 21:

PRIVATE ENTERPRISES CAN REFUSE TO GET INVOLVED IN CORRUPTION WITHOUT CONSEQUENCES – BY

25,0

REG

1 8,2

ALB

COUNTRY

1 4,3

21 ,2 1 0,0

24,4

CRO

1 6,0

MON

5,6

1 3,9

30,1 1 3,2

1 9,5

1 7,2

1 5,2

1 0,7

28,0 1 3,8

27,2

MAC

26,1

24,7

1 4,9

1 4,4 31 ,4

KOS

1 4,0

20,7

34,3

BiH

Surveyed business managers were asked to agree or disagree with the statement, “Private enterprises can refuse to get involved in corruption without consequences to

20,7

20,0

1 6,4

1 9,4

1 8,9

1 2,2

4,2

24,0

60,4

21 ,1 1 5,1 21 ,1 27,0 completely agree, and 14.2% who generally agree that1 5,7enterprises initiate corruption.

SER

1 0%

20%

30%

40%

50%

60%

70%

80%

90%

1 00%

Considerable variations evident acrossNeither countries. managers are mostCompletely inclinedagree to (9-1 agree Completely disagree (0-1are ) Disagree (2-4) agree norBiH disagree (5) Agree (6-8) 0)

that enterprises are the problem (33.2%). On the opposite end, managers from Montenegro most Source: YES Foundation survey their operation.” The chart below shows response percentages of business managers byphone country. strongly opposed the idea with 46.5% saying they completely disagreed. 44% of entrepreneurs from Kosovo also strongly disagreed. Source: YES Foundation phone survey

CHART 22 presents managers’ reactions to the statement that “enterprises are the ones which

[actually] initiate corruption”. Overall, respondents are more inclined to disagree than CHART 22: ENTERPRISES INTIATE CORRUPTION TO GET BENEFITS – agree BY with CHART 22 presents managers’ reactions to PRIVATE the statement that “enterprises are the ones which [actually] initiate COUNTRY the statement: 28.6% completely disagree, 16.1% disagree, as opposed to 18.9% who corruption”. Overall, respondents are more inclined to disagree thanand agree withmerely the statement: 28.6% completely disagree, and 16.1% merely disagree, as opposed to 18.9% who completely agree, and 14.2% who generally agree Surveyed business managers were asked to agree or disagree with the statement, “Private that enterprises initiate corruption. Considerable variations are evident across countries. BiH managers are most Page | 43 enterprises initiate corruption by offering bribes to get benefits they don’t deserve.” The chart inclined to agree that enterprises are the problem (33.2%). On the opposite end, managers from Montenegro most below shows response percentages of business managers by country. strongly opposed the idea with 46.5% saying they completely disagreed. 44% of entrepreneurs from Kosovo also strongly disagreed.

CHART 22: PRIVATE ENTERPRISES INTIATE CORRUPTION TO GET BENEFITS – BY COUNTRY Surveyed business managers were asked to agree or disagree with the statement, “Private enterprises initiate corruption by offering bribes to get benefits they don’t deserve.” The chart below shows response percentages of

28,6

REG

1 6,1

24,2

ALB

25,8

22,8

BiH

21 ,4 0%

20%

Completely disagree (0-1 )

Source: YES Foundation phone survey

33,2

22,2

8,3

60%

1 1 ,3 1 7,9 1 8,1

1 5,7

Neither agree nor disagree (5)

1 3,2

1 4,5 1 2,5

24,9 40%

Disagree (2-4)

1 1 ,3 21 ,9

4,9 1 7,0

1 4,1

1 5,6

1 8,9

46,5

SER

1 7,2

25,4

1 5,8

MON

1 8,9

1 2,5

1 9,0

31 ,9

MAC

business managers by country.

22,8

44,0

KOS

1 4,2

1 8,7

8,7

26,8

CRO

22,2

21 ,1 80%

Agree (6-8)

1 00%

Completely agree (9-1 0)

Source: YES Foundation phone survey

CHART 23 below presents respondents’ reactions to the proposition that “corruption is rooted in culture”, and therefore people believe they should pay bribes in order to get the job done. In

Nevertheless, considerable differences do exist across countries. Complete agreement with this statement ranges from only 17.6% in Kosovo and 20.2% in Albania, to 62.6% in BiH. On the opposite end, complete disagreement ranges from 8.6% in FYR Macedonia to 37.7% in Kosovo.

CHART 23 below presents respondents’ reactions to the proposition that “corruption is rooted in culture”, and therefore CHART 23: CORRUPTION ROOTED IN OUR CULTURE – BY COUNTRY people believe they should pay bribes in order to get the jobISdone. In other words, that corruption is normal and culturally accepted. Overall, as evident from the chart, business managers are more inclined to agree than to disagree Surveyed business managers were asked to agree or disagree with the statement, “Corruption is with such a statement. Nevertheless, considerable differences do exist across countries. Complete agreement with this rooted in our culture; people believe they should ‘grease’ to get the job done.” The chart below statement ranges from only 17.6% in Kosovo and 20.2% in Albania, to 62.6% in BiH. On the opposite end, complete shows response percentages of business managers by country. disagreement ranges from 8.6% in FYR Macedonia to 37.7% in Kosovo. CHART 23: CORRUPTION IS ROOTED IN OUR CULTURE – BY COUNTRY

1 4,3

REG

business managers by country.

1 3,7

1 7,7

ALB

Surveyed business managers were asked to agree or disagree with the statement, “Corruption is rooted in our culture; people believe they should ‘grease’ to get the job done.” The chart below shows response percentages of

8,5

1 0,4

BiH

1 4,1 2,8

1 1 ,7

CRO

9,3 8,3

20,7

8,6

7,5

1 4,4

9,5

SER 0%

41 ,2

1 6,4

1 7,6

1 5,8 5,6

8,6 1 0%

1 0,7

9,0

49,3

1 9,5 30%

1 7,6

56,6

1 3,9

1 2,7 20%

20,2

24,4

1 1 ,5

22,2

MON

27,3 62,6

37,7

KOS

MAC

44,9

1 4,9

Completely disagree (0-1 )

Source: YES Foundation phone survey

1 8,6

40%

Disagree (2-4)

49,7 50%

60%

Neither agree nor disagree (5)

70%

Agree (6-8)

80%

90%

1 00%

Completely agree (9-1 0)

Source: YES Foundation phone survey CHART 24 presents entrepreneurs’ responses to the suggestion that the fight against corruption is primarily a responsibility of the authorities, that is, of the government. There is a strong

CHART 24 presents entrepreneurs’ responses to the suggestion that the fight against corruption is primarily a regional consensus in the business community that indeed the fight against corruption should responsibility of the authorities, that is, of the government. There is a strong regional consensus in the business primarily be the responsibility of government institutions. A total of 70.7% of all respondents community that indeed the fight against corruption should primarily be the responsibility of government institutions. A from the region said they completely agree and an additional 10% have generally said they agree total of 70.7% of all respondents from the region said they completely agree and an additional 10% have generally with the statement. The rate of complete agreement ranges from 60.6% in Albania to 81.7% in said they agree with the statement. The rate of complete agreement ranges from 60.6% in Albania to 81.7% in BiH. BiH. The strongest rate of complete disagreement can be found among respondents in Albania The strongest rate of complete disagreement can be found among respondents in Albania (5.6%), followed by those (5.6%), followed by those from Macedonia (5%). from Macedonia (5%). Page | 45

COUNTRY Surveyed business managers were asked to agree or disagree with the statement, “The fight against corruption is primarily an obligation of the authorities.” The chart below shows response percentages of business managers by country.

CHART 24:

FIGHTING CORRUPTION IS AN OBLIGATION OF GOVERNMENT – BY COUNTRY

4,1

REG

5,6

ALB

Surveyed business managers were asked to agree or disagree with the statement, “The fight against corruption is primarily an obligation of the authorities.” The chart below shows response percentages of business managers by country.

0,3

CRO

4,1

3,9

KOS

3,8 3,1 5,0

MAC

1 1 ,4

1 7,7

1 ,4

9,0

1 1 ,7

74,2

1 4,6

1 1 ,5

62,0

4,2

1 3,0

76,4

1 3,5

1 0%

Source: YES Foundation phone survey

71 ,2

7,5 1 7,2

60,6 81 ,7

1 1 ,3

1 ,4

SER 2,4

70,7

2,1

4,3

3,5

MON

1 0,2

1 0,1

6,1

4,5

BiH

1 2,2

2,9

69,7

20%

30%

Completely disagree (0-1 )

40%

Disagree (2-4)

50%

60%

Neither agree nor disagree (5)

70%

80%

Agree (6-8)

90%

1 00%

Completely agree (9-1 0)

Source: YES Foundation phone survey The next, CHART 25, confronts respondents with the contrary statement, that the fight against

The next, CHART 25, confronts respondents with the contrary statement, that the fight against corruption is instead corruption is instead primarily an obligation of Notwithstanding previous strong CHART 25: FIGHTING CORRUPTION IS citizens. AN OBLIGATION OFtheCITIZENS – BY primarily an obligation of citizens. Notwithstanding the previous strong agreement that fighting corruption is primarily agreement that fighting corruption is primarily a government responsibility, respondents tended COUNTRY a government responsibility, respondents tended to also express strong agreement with this seemingly contradictory to also express strong agreement with this seemingly contradictory position – that it is actually position – that it is actually an obligation citizens. Nevertheless, the percentage of complete agreement thisfight Surveyed of business managers were asked to agree or disagree with the statement,with “The an obligation of citizens. Nevertheless, the percentage of complete agreement with this suggestion is considerably smalleragainst compared to the responsibility of government. The regional average of complete corruption is primarily an obligation of citizens.” The chart below shows response suggestion is considerably smaller compared to the responsibility of government. The regional agreement stands at the rate of 52.5%. Country rates of complete agreement vary from 42.9% in Albania to 65.7% percentages of business managers by country. average of complete agreement stands at the rate of 52.5%. Country rates of complete agreement in BiH. vary from 42.9% in Albania to 65.7% in BiH.

CHART 25: FIGHTING CORRUPTION IS AN OBLIGATION OF CITIZENS – BY COUNTRY Surveyed business managers were asked to agree or disagree with the statement, “The fight against corruption is primarily an obligation of citizens.” The chart below shows response percentages of business managers by country.

Source: YES Foundation phone survey

REG

7,8

ALB

9,1

5,1

CRO

6,3

MON

7,8

SER 0%

59,7

21 ,5

9,5 1 0%

1 3,3

Completely disagree (0-1 )

44,4

5,6

65,3

22,7 20%

52,9

7,5

1 8,8

Page | 46

65,7 1 8,3

20,1

4,2

42,9

2,8

1 6,6

1 1 ,5

52,5

20,7

1 6,6

9,4 9,3

1 2,8

1 6,7

2,1

7,1

3,1

MAC

1 9,0

1 0,6

1 2,8

BiH

KOS

7,8

30%

Disagree (2-4)

1 5,1 40%

44,9 50%

60%

Neither agree nor disagree (5)

70%

Agree (6-8)

80%

90%

1 00%

Completely agree (9-1 0)

Source: YES Foundation phone survey Finally, CHART 26 presents business managers’ responses to the proposition that each individual and organization can make a strong contribution in the fight against corruption. The regional rate of complete agreement with that suggestion is 67.2%. The country where managers are least likely to completely agree is Albania, with 54.5%. On average, around 12% of

CHART 26: EACH INDIVIDUAL AND ORGANIZATION CAN CONTRIBUTE TO

FIGHTING CORRUPTION BY COUNTRY Finally, CHART 26 presents business managers’ responses to the –proposition that each individual and organization can make a strong contribution in the fight against corruption. The regional rate of complete agreement with that Surveyed business managers were asked to agree or disagree with the statement, “Each suggestion is 67.2%. The country where managers are least likely to completely agree is Albania, with 54.5%. On individual and organization can make a strong contribution in the fight against corruption.” The average, around 12% of managers surveyed in the region said they either disagreed or strongly disagreed with the chart below shows response percentages of business managers by country. statement.

CHART 26:

EACH INDIVIDUAL AND ORGANIZATION CAN CONTRIBUTE TO FIGHTING CORRUPTION – BY COUNTRY Surveyed business managers were asked to agree or disagree with the statement, “Each individual and organization can make a strong contribution in the fight against corruption.” The chart below shows response percentages of business managers by country.

5,5

REG

6,4

7,6

ALB

1 0,0

8,6

3,4

CRO

5,2

6,8

KOS 2,5 MAC 2,9

70,2

1 4,1

64,6 76,7

1 2,5

65,6

4,2

86,8 1 3,2

1 0%

Source: YES Foundation phone survey

3,5

1 0,8

6,5

54,5

6,9

8,2

5,4

SER

8,7

8,2

3,5 1 ,4 4,2

MON

20,7

1 1 ,0

5,7

67,2

8,6

1 2,5

BiH

1 0,9

1 0,8

20%

30%

Completely disagree (0-1 )

64,1 40%

Disagree (2-4)

50%

60%

70%

Neither agree nor disagree (5)

Agree (6-8)

80%

90%

1 00%

Completely agree (9-1 0)

Source: YES Foundation phone survey

Next, respondents were asked to reply to CHART the statement the INSTRUMENT basic instrument for fightingPOLICIES corruption effective AND 27: THEthat BASIC IS EFFECTIVE TO isIDENTIFY – BY COUNTRY policies and sanctions; results are shown inPUNISH CHART CORRUPTION 27. The vast majority of all respondents tended to completely agree. Next, respondents were asked to reply to the statement that the basic instrument for fighting Overall, 66.3% of all respondents in the region completely agreed with the statement. The only country diverging from Surveyed business managers asked to agree with the statement, “Themajority basic corruption is effective policieswere and sanctions; resultsoraredisagree shown in CHART 27. The vast the rest of the group is Albania, with complete agreement at only 39.4%, which is lower than any other country in the instrument in the fight against corruption is an effective policy for its identification and of all respondents tended to completely agree. Overall, 66.3% of all respondents in the region region. punishment.” The chart below shows response percentages of business managers by country. CHART 27: THE BASIC INSTRUMENT IS EFFECTIVE POLICIES TO IDENTIFY AND PUNISH CORRUPTION – BY COUNTRY Surveyed business managers were asked to agree or disagree with the statement, “The basic instrument in the fight against corruption is an effective policy for its identification and punishment.” The chart below shows response percentages of business managers by country.

Source: YES Foundation phone survey

completely agreed with the statement. The only country diverging from the rest of the group is Albania, with complete agreement at only 39.4%, which is lower than any other country in the region. REG

8,0

5,1

ALB

8,6

8,4

1 0,6

4,6

3,7

MAC

6,5

3,5 3,5

6,3

5,1 0%

5,1

6,6

7,5

39,4

6,2

65,1 69,5

1 1 ,3

7,5

67,3

1 4,0

Page | 48

65,6

4,9 6,8

1 0%

26,3

1 2,4

4,4

MON SER

3,1 9,8

9,4

KOS

66,3

1 5,2

1 9,0

BiH CRO

1 2,2

81 ,9 1 0,8 20%

Completely disagree (0-1 )

72,2 30%

40%

Disagree (2-4)

50%

60%

Neither agree nor disagree (5)

70%

Agree (6-8)

80%

90%

1 00%

Completely agree (9-1 0)

Source: YES Foundation phone survey CHART 28 and 29 below present differences in business managers’ positions vis-à-vis the statements presented above in CHARTS 13 and 20-27. It can be concluded that overall there is a clear consistency between the views of male and female managers - hence gender is not a strong

CHART 28 and 29 below present differences in business managers’ positions vis-à-vis the statements presented above in CHARTS 13 and 20-27. It can be concluded that overall there is a clear consistency between the views of male and female managers - hence gender is not a strong factor in shaping managers’ views on corruption. The statement on which there is the strongest discrepancy between the male and female managers is the proposition that a small degree of corruption can be good for business: only 11% of women have completely agreed with the idea as opposed to 17.9% of men. On the opposite end, men are much more likely to completely disagree that enterprises initiate corruption (22.5%) compared to women (16.2%).

CHART 28: BUSINESS MANAGER RESPONSES TO QUESTIONS ON CHARTS 13 AND

CHART 28:

20-27 – DIFFERENTIATED BY FEMALE GENDER

BUSINESS MANAGER RESPONSES TO QUESTIONS ON CHARTS 13 AND 20-27 – Each individual and organization can make a strong contribution in the fight against DIFFERENTIATED corruption BY FEMALE The fight against corruption is primarily an obligation of citizens GENDER

4,2 5,0 8,5 6,9 7,0

The fight against corruption is primarily an obligation of the authorities 3,5

2,9

1 6,3 1 6,8

66,0 21 ,7

47,6

9,6

1 8,1

65,9

3,4 The basic instrument in the fight against corruption is the effective policy for its 3,8 7,6 identification and punishment

1 8,3

66,8

Corruption is rooted in our culture; people believe they should "grease" to get the job done

1 0,4 6,9

1 6,2

Private companies can refuse to get involved in corruption without consequences to their operation

9,6 0%

Source: YES Foundation phone survey

1 6,4

1 9,7

The private (business) sector is helpless before corruption, because corruption derives from the government

Disagree (2-4)

22,3

48,7

47,5

A certain (small) degree of corruption is useful for business Private companies are the ones which initiate corruption by offering bribe to get benefits they don't disserve

Completely disagree (0-1 )

1 1 ,8

1 7,6 22,4

1 7,0

1 0,1

1 9,9

1 8,1 20%

Neither agree nor disagree (5)

24,2 40%

Agree (6-8)

Source: YES Foundation phone survey

1 4,1

9,8

1 1 ,0

22,9

22,2

20,6

22,9 38,1

60%

80%

Completely agree (9-1 0)

1 00%

CHART 29: BUSINESS MANAGER RESPONSES TO QUESTIONS ON CHARTS 13 AND

CHART 29:

20-27 â&#x20AC;&#x201C; DIFFERENTIATED BY MALE GENDER

BUSINESS MANAGER RESPONSES TO QUESTIONS ON CHARTS 13 AND 20-27 â&#x20AC;&#x201C; Each individual and organization can make a strong contribution in the fight DIFFERENTIATED against corruption BY MALE GENDER The fight against corruption is primarily an obligation of citizens

4,8 7,3 8,6

1 0,3 8,7

1 9,3

3,2 The fight against corruption is primarily an obligation of the authorities 4,0 1 2,0 The basic instrument in the fight against corruption is the effective policy for its identification and punishment

7,4 4,9 7,6

Corruption is rooted in our culture; people believe they should "grease" to get the job done

1 4,3

8,1

22,5

Private companies can refuse to get involved in corruption without consequences to their operation

23,2

The private (business) sector is helpless before corruption, because corruption derives from the government

1 1 ,2 0%

Source: YES Foundation phone survey

Disagree (2-4)

64,8 1 6,1

1 0%

67,2

1 4,0

66,1

1 1 ,9

21 ,0 1 3,6

1 4,8

30%

Neither agree nor disagree (5)

1 6,7

1 9,2

1 7,5 20%

44,8

21 ,1

1 6,8

8,8

47,3

1 3,6

39,6

A certain (small) degree of corruption is useful for business Private companies are the ones which initiate corruption by offering bribe to get benefits they don't disserve

Completely disagree (0-1 )

1 2,8

1 2,3 1 8,6

23,1

1 6,0

24,8

22,0 40%

50%

Agree (6-8)

1 7,9

40,5 60%

70%

80%

90%

1 00%

Completely agree (9-1 0)

Source: YES Foundation phone survey

in the last year 5. Bribery in5.theBribery last year A total of 18.8% of surveyed managers paid some form of bribepaid during theform last year, whichduring represents a significantly A total of 18.8% of surveyed managers some of bribe the last year, which high percentage and is an indicator that should be of concern to policy makers. It is important to bear in mind that represents a significantly high percentage and is an indicator that should be of concern to policy this number represents bribes only during the last year and would presumably increase if gauged over a longer time makers. It is important to bear in mind that this number represents bribes only during the last span. In addition, the number may actually be even higher as the research team observed reluctance on the part and would presumably increase if gauged over a longer time span. addition, thefemale number of managers to talk year about corruption in their own sector (as stated in earlier chapters). ResultsInindicate that managers are less inclined to pay be a bribe male managers women and 20.7% on of the menpart saidofthey paid a to may actually even than higher as the research(15% teamofobserved reluctance managers bribe in the last year). Results further indicate that in last year enterprises most exposed to bribe were medium-sized talk about corruption in their own sector (as stated in earlier chapters). Results indicate that (50-250 employees; 22%) and small enterprises (11-50 employees; 20.3%). 20.4% of enterprises in operation 3-10 female managers are less inclined to pay a bribe than male managers (15% of women and 20.7% years paid a bribe, followed by approximately 18% of enterprises older than 10 years and younger than 3 years. of men said paid affected a bribe inenterprises the last year). Results further that in last year enterprises This leads to the conclusion that they the most last year were small indicate and medium-sized enterprises in operation between 3most and 10 years and managed the men. Bribery in theemployees; past year was almost spread across exposed to bribe wereby medium-sized (50-250 22%) andequally small enterprises (11several sectors: financial mediation 20.3%). (20.7%);20.4% real estate and leasing (20.4%); wholesale tradefollowed (20.2%);by 50 employees; of enterprises in operation 3-10 yearsand paidretail a bribe, construction (19.9%); traffic, storage and communication (18.8%); and the processing industry (18.7%). According to approximately 18% of enterprises older than 10 years and younger than 3 years. This leads to the the research, the least exposed sectors were hotels, restaurants and bars (14.8%); and other services (14.2%). Page | 51

over the last year. Answers range from strongly to fairly consistent across manager ages (CHART 30), genders (CHART 31), years the company has been in operation (CHART 32), company size (CHART 33), and sector of operation (CHART 34). Roughly, around 80% of all respondents said they and their colleagues had not paid bribes in any form over the past year. Around 20% said they or their colleagues had paid bribes.

CHARTS 30-34 below present respondents’ answers on whether they paid bribes in any form over the last year. Answers CHART 30: BRIBES PAID IN THE LAST YEAR – BY RESPONDENT AGE range from strongly to fairly consistent across manager ages (CHART 30), genders (CHART 31), years the company has been in operation (CHART 32), company size (CHART 33), and sector of operation (CHART 34). Roughly, around 80% Surveyed business managers were asked to respond ‘yes’ or ‘no’ to the question, “In the last of all respondents said they and their colleagues had not paid bribes in any form over the past year. Around 20% said year, have you or anyone in your company paid bribes in any form (gift, money, service)?” The they or their colleagues had paid bribes.

chart below shows response percentages of business managers by respondents’ age.

CHART 30: BRIBES PAID IN THE LAST YEAR – BY RESPONDENT AGE Surveyed business managers were asked to respond ‘yes’ or ‘no’ to the question, “In the last year, have you or anyone in your company paid bribes in any form (gift, money, service)?” The chart below shows response percentages of business managers by respondents’ age.

REG

more than 40yo

less than 40yo

1 8,8

80,6

0,6

1 8,1

81 ,7

0,2

80,0

0,8

1 9,2 0%

1 0%

20%

Yes

30%

40%

50%

60%

70%

80%

90%

1 00%

DK/NA

Source: YES Foundation phone survey

Source: YES Foundation phone survey Page | 52

Female managers (15%) were less likely to confirm that they themselves or colleagues have paid bribes, compared to male managers (20.7%, CHART 31). Large enterprises stand out with no confirmation of any bribes having been paid (CHART 33), compared to medium-sized enterprises (22%), small enterprises (20.3%) and micro enterprises (17.7%), which all confirmed the payment of bribes. The percentages of managers confirming payment of bribes are also consistent across sectors (CHART 34), most of which revolve closely around the regional average of 18.8%. The two sectors with the lowest confirmation of paying bribes are the sectors of ‘other services’ with 14.2%, and hotels, restaurants, and bars with 14.8%.

Surveyed business managers were asked to respond ‘yes’ or ‘no’ to the question, “In the last year, have you or anyone in your company paid bribes in any form (gift, money, service)?” The chart below shows response percentages of business managers by gender.

CHART 31:

BRIBES PAID IN THE LAST YEAR – BY GENDER Surveyed business managers

REG

1 8,8

were asked to respond ‘yes’ or ‘no’ to the question, “In the last year, have you or Male 20,7 anyone in your company paid bribes in any form 1 5,0 Female (gift, money, service)?” The chart below shows response 0% 1 0% percentages of business managers by gender. CHART 32: BRIBES PAID

80,6

0,6

78,8

0,4

84,1 20%

30%

40%

50%

0,9 60%

70%

80%

90%

1 00%

IN THE LAST YEAR –NoBY YEARS IN OPERATION Yes DK/NA

Source: YES Foundation Source: Foundation phone survey Surveyed business managers were askedYES to respond ‘yes’ or ‘no’ to the question, “In the last phone survey

year, have you or anyone in your company paid bribes in any form (gift, money, service)?” The chart below shows response percentages of business managers by years of company operation. CHART 32: BRIBES PAID IN THE LAST YEAR – BY YEARS IN OPERATION REG

1 8,8

80,6

Surveyed business managers were asked to respond ‘yes’ or 1 7,9 81 ,5 more than 1 0 years ‘no’ to the question, “In the last year, have 20,4 79,1 3-1 0 years you or anyone in your less than 3 years 1 8,0 81 ,5 company paid bribes in any form (gift, 0% 20% 40% 60% money, service)?” The Yes No chart below shows Source: YES Foundation phone survey response percentages of business managers by years of company operation.

0,6

0,5

Page | 53

0,5 80%

1 00%

DK/NA

CHART BRIBES PAID IN THE LAST YEAR – BY COMPANY SIZE Source: YES Foundation phone33: survey Surveyed business managers were asked to respond ‘yes’ or ‘no’ to the question, “In the last year, have you or anyone in your company paid bribes in any form (gift, money, service)?” The chart below shows response percentages of business managers by size of company (number of employees).

CHART 33: BRIBES PAID IN THE LAST YEAR – BY COMPANY SIZE

Surveyed business managers were asked to respond ‘yes’ or ‘no’ to the question, “In the last

year, have you or anyone in your company paid bribes in any form (gift, money, service)?” The

chart below shows response percentages of business managers by size of company (number of

CHART 33:

employees).

BRIBES PAID IN THE LAST YEAR – BY COMPANY SIZE Surveyed business

REG 1 8,8 80,6 managers were asked to respond ‘yes’ or ‘no’ 250 and more employees 72,0 to the question, “In the 50-250 employees 22,0 77,2 last year, have you or anyone in your company 20,3 78,6 1 1 -50 employees paid bribes in any form 1 7,7 82,0 less than 1 0 employees (gift, money, service)?” The chart below showsCHART 34: BRIBES PAID Yes IN THE LAST YEAR No– BY SECTOR response percentages of Source: YES Foundation phone survey business managers by size of company (number of employees). 0%

1 0%

20%

30%

40%

50%

60%

70%

0,6

0,0 0,8 1 ,1 0,3 80%

90%

1 00%

DK/NA

Surveyed business managers were asked to respond ‘yes’ or ‘no’ to the question, “In the las

Page | 54

Source: YES Foundation phone survey

year, have you or anyone in your company paid bribes in any form (gift, money, service)?” The chart below shows response percentages of business managers by sector.

CHART 34: BRIBES PAID IN THE LAST YEAR – BY SECTOR Surveyed business managers were asked to respond ‘yes’ or ‘no’ to the question, “In the last year, have you or anyone in your company paid bribes in any form (gift, money, service)?” The chart below shows response percentages of business managers by sector.

Source: YES Foundation phone survey

REG

1 8,8

80,6

0,6

Processing Industry

1 8,7

80,1

1 ,2

Construction

1 9,9

79,6

0,5

Wholesale and retail trade...

20,2

79,4

0,4

Traffic, storage, and communications

1 8,8

80,5

1 4,8

Hotels, restaurants, and bars

0,7

85,2

0,0

Financial mediation

20,7

79,3

0,0

Real estate, leasing...

20,4

78,5

1 ,1

1 4,2

Other services 0%

Yes

85,4 20%

40%

60%

0,4 80%

1 00%

DK/NA

Source: YES Foundation phone survey

B. Regional Statistical Overview: Perceptions of Young People

The research survey of business managers from the region was complemented by a paralle

B. Regional Statistical Overview: Perceptions of Young People The research survey of business managers from the region was complemented by a parallel survey of young people viewed as potential managers or entrepreneurs. A total of 1,340 young people were surveyed during the period Februaryâ&#x20AC;&#x201C;June, 2010 (see Note on Methodology at end of document). Respondents were approached through universities with the help of partners and associates, and in addition, through a web-based survey. The content of the survey conducted with young people as potential business managers and entrepreneurs was consistent with that of business managers, with some adjustments in questions to adapt to the type of respondents.

1. Trends of corruption Research shows that young people are more pessimistic than managers in their views on corruption trends, especially young women (68.9%, regional average) who believe that corruption has been getting worse over the past decade. The regional average of 87.2% of young people who believe that corruption is stagnating or worsening is consistent with the overall regional trends which indicate a decline in impact of anti-corruption policies over last three to four years (see World Bank indicators, Chapter A.1.). This result is important in navigating future anti-corruption and youth policies, especially since the reactions of young people confronting corruption may differ â&#x20AC;&#x201C; from a desire to leave the country to co-optation and learning the corruption game â&#x20AC;&#x201C; and policies must understand and satisfy varying reactions that can significantly affect the future of the region. Research responses of young people surveyed are shown on the following charts and further described in the text that follows. CHART 35 below presents the views of young people in relation to corruption trends over the past decade. As evident from the chart, respondents are generally inclined to think that corruption in the region has grown over the past decade: 61% of all young people surveyed in the region believe that corruption has been on the rise, a considerably higher rate compared to the responses of business managers, 43.8% of whom said that corruption was growing (CHART 1). By country, the percentage of young people who feel corruption has worsened ranges from 38.5% in Macedonia to 74.6% in Kosovo. At the country level as well, young people have by-and-large displayed greater pessimism than business managers concerning the trend of corruption, with notable differences between countries. For example, in Albania 35.4% of managers compared to 64.2% of young people said that corruption had risen (CHART 1 versus CHART35); in Croatia 44.1% of managers compared to 71.5% of young people saw corruption grow. The conclusions which can be clearly derived are: a) in regional terms, young people are more pessimistic than business people regarding the trend of corruption; and b) in each individual country, despite in-country variance, young people are more inclined to think corruption has increased compared to business managers. A regional average of 87.2% of young people believe that corruption has been stagnating or worsening, which is consistent with overall regional trends of the last three to four years (see World Bank indicators, Chapter A.1.)

Surveyed young people were asked, “Do you think corruption in your country in the past decade has [multiple choice response]”. The chart below shows response percentages by country.

CHART 35:

RESPONSES ON PERCEIVED CORRUPTION TRENDS –BY COUNTRY Surveyed young people were asked, “Do you think corruption in your country in the past decade has [multiple choice response]”. The chart below shows response percentages by country.

61 ,0

REG

1 2,2

64,2

ALB

26,2

1 5,4

BiH

72,0

CRO

71 ,5

20,3

5,1

MAC

38,5

1 0,0

MON

39,1 53,2 0%

1 0%

Source: YES Foundation survey

20%

Been growing

40%

50%

Been declining

1 6,2

0,0 1 ,3

34,8

6,5

1 3,1 30%

0,0

41 ,0

1 9,6

SER

1 ,9 1 8,6

9,2 1 9,2

0,0

21 ,0

74,6

KOS

0,6

33,6

60%

70%

0,0

80%

90%

Remained unchanged

1 00%

DK/NA

Source: YES Foundation survey

CHART 36 below breaks down by gender young people’s responses to the question about the trend of corruption. As CHART 36 below breaks by gender young people’s topast the question the evident from the chart, 68.8% of young women saiddown that corruption has been on theresponses rise in the decade, about compared CHART 36: RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY GENDER to 49.6% of young men.trend Women are also considerably less inclined to believe corruption has declined, with 9.5% of corruption. As evident from the chart, 68.8% of young women said that corruption has seeing a reduction compared to of men. Similarly, fewer women believe corruption remains unchanged, with been Surveyed on16.2% the rise in the pastwere decade, compared 49.6% of young men.country Women also young people asked, “Do youtothink corruption in your in are the past decade 21.4% as compared to 33.2% of men. considerably less inclined to believe corruption has declined, with 9.5% seeing a reduction has [multiple choice response].” The chart below shows response percentages by gender. compared to 16.2% of men. Similarly, fewer women believe corruption remains unchanged,

CHART 36:

with 21.4% as compared to 33.2% of men. RESPONSES ON PERCEIVED CORRUPTION TRENDS – BY GENDER 61 ,0

REG

Surveyed young people were asked, “Do you think corruption in your country in the past decade has [multiple choice response].” The chart below shows response percentages by gender.

1 2,2

49,6

Male

26,2

1 6,2

33,2

0,6

1 ,1

Page | 57 Female 0%

68,8 20%

Been growing

Source: YES Foundation survey

9,5 40%

Been declining

60%

21 ,4 80%

Remained unchanged

Source: YES Foundation survey

2. Corruption as an obstacle or a tool for doing business

0,3 1 00%

DK/NA

2. Corruption as an obstacle or a tool for doing business Most young people believe that corruption is either an ‘enormous’ obstacle or a ‘big’ obstacle to business (68.8% combined regional average). However, the results significantly differ from country to country, as 90.9% of young people in Kosovo consider corruption an important obstacle, while a comparatively small 58.7% of young people in are also likely to be effective. Such approaches are the most appropriate in countries such as Montenegro share the view. Montenegro where several indicators show that there is space for educating young people about The question of whether a small degree of corruption can be good for business generated a similar percentage of all aspects of corruption. youth who rejected the statement, as 57.7% at the regional level completely disagree or generally disagree with this premise. However, the results in Montenegro again stand out, with 58.7% of to respondents that a small degree CHART 37 displays young respondents’ answers the questionbelieving “is corruption an obstacle to of corruption can actually be good for business, and only 19.6% completely disagreeing or generally disagreeing with business?” Almost half of all young respondents from the region, or 48.5%, said that corruption the statement. is a big obstacle; 20.3% said it is an enormous obstacle; 13.3% that it is a small obstacle; and Notably, in framing anti-corruption beanimportant still apeople large are space forprone improvement in only 4.4%policies said thatit itmay is not obstacle atthat all. there Again,isyoung more to pessimism policies targeting the younger population. Policy makers should consider education programs and public awareness (or compared to business managers, who, in regional terms (CHART 7) are more inclined to think information) campaigns showing corruption to be an illegal and harmful act. Social marketing approaches featuring that corruption is either a small obstacle (35.7%) or no obstacle at all (22.1%). “zero tolerance” of corruption are also likely to be effective. Such approaches are the most appropriate in countries such as Montenegro where several indicators show that there is space for educating young people about all aspects CHART 37: RESPONSES ON WHETHER CORRUPTION IS AN OBSTACLE TO of corruption. BUSINESS – BY COUNTRY CHART 37 displays young respondents’ answers to the question “is corruption an obstacle to business?” Almost half of all young respondents fromSurveyed the region, or 48.5%, said asked, that corruption is a big isobstacle; 20.3% said it to is business?” an enormous young people were “In your opinion, corruption an obstacle The obstacle; 13.3% that it is a small obstacle; andresponse only 4.4% said thatby it is not an obstacle at all. Again, young people are chart below shows percentages country. more prone to pessimism compared to business managers, who, in regional terms (CHART 7) are more inclined to think that corruption is either a small obstacle (35.7%) or no obstacle at all (22.1%).

CHART 37: RESPONSES ON WHETHER CORRUPTION IS AN OBSTACLE TO BUSINESS – BY COUNTRY Surveyed young people were asked, “In your opinion, is corruption an obstacle to business?” The chart below shows response percentages by country.

4,4

REG

ALB

0,8

KOS

25,3 67,6

7,0

1 5,5

47,9

43,0

26,9

44,9

1 5,2 7,3

SER

22,8

53,7

1 3,9

MAC 1 ,3 MON

20,3

61 ,0 1 4,4

CRO 3,0

1 ,4

48,5

1 5,4

5,4

BiH

Source: YES Foundation survey

1 3,3

25,6

23,9

50,0

7,6 20%

It is not an obstacle at all

8,7

29,1 40%

It is a small obstacle

1 2,2 60%

It is a big obstacle

Source: YES Foundation survey

80%

It is an enormous obstacle

1 00%

these numbers indicate that young people in Montenegro and Serbia may have a different understanding and experience related to corruption than the rest of the region.

CHART 38 below disaggregates answers to this question according to gender. Responses are

fairly close but again young women are more inclined to think that corruption is a big obstacle

The rate of young people sayingcompared corruptiontoisyoung a bigmen obstacle to business ranges from 29.1% in Serbia and to a (51.7%), (43.8%). whopping 67.6% in Croatia. In Montenegro, most young people feel that corruption is either a small obstacle (23.9%) or no obstacle to business at all (15.2%). These variationsON may WHETHER point to differences in understanding corruption from CHART 38: RESPONSES CORRUPTION IS of AN OBSTACLE TO country to country and may serve as an indicator of the level of awareness of corruption among young people. As BUSINESS – BY GENDER such, these numbers indicate that young people in Montenegro and Serbia may have a different understanding and experience related to corruption than the rest of the region.

Surveyed young people were asked, “In your opinion, is corruption and obstacle to business?”

CHART 38 below disaggregates answers to this question according to gender. Responses are fairly close but again The chart below shows response percentages by gender. young women are more inclined to think that corruption is a big obstacle (51.7%), compared to young men (43.8%).

CHART 38: RESPONSES ON WHETHER CORRUPTION IS AN OBSTACLE TO BUSINESS – BY GENDER Surveyed young people were asked, “In your opinion, is corruption and obstacle to business?” The chart below shows response percentages by gender.

REG

4,4

Male

5,3

Female 3,7 0%

1 3,3

48,5

1 7,1

43,8

1 0,8 1 0%

51 ,7 20%

It is not an obstacle at all

30%

40%

It is a small obstacle

20,3

1 3,4

21 ,1

1 2,6

1 9,8 50%

It is a big obstacle

60%

70%

1 4,0 80%

It is an enormous obstacle

90%

1 00%

DK/NA

Source: YES Foundation survey

CHART 39 presents young people’s reactions to the suggestion that “a small degree of

corruption is good for business”. Most young people tend to either disagree (15.5%) or

CHART 39 presents young people’s reactions to the suggestion that “a small degree of corruption is good for business”. disagree(15.5%) (42.2%)orwith this idea, though(42.2%) 13.8% of those said 13.8% that they Most young people tendcompletely to either disagree completely disagree with this surveyed idea, though of agree, those surveyed said thatand they16.9% agree,that andthey 16.9% that they agree completely with the statement. The percentage completely with agree the statement. The percentage of dissentof differs dissent differs across countries; it ranges from 47.5% in BiH (completely disagreeing) to 17.4% in Montenegro. On the opposite end, the rate of complete agreement ranges from 11.3% in BiH to 30.4% in Montenegro. The fact that Page | 60 according to regional averages almost one third of young potential future managers believe that a small degree of corruption is useful for business is a frightening prelude to the future of fighting corruption, as these new managers may generate new corruption in the countries of the region. Their responses indicate a lack of awareness and understanding of the problems related to corruption. Results are especially worrying in Montenegro where almost 60% of young people agree that some corruption is useful. These findings should be considered in framing anti-corruption strategies, as the numbers strongly indicate that there is a lack of information and education on corruption among young people.

– BY COUNTRY Surveyed young people were asked to agree or disagree with the statement, “A certain (small) degree of corruption is useful for business.” The chart below shows response percentages by country.

CHART 39:

RESPONSES ON WHETHER CORRUPTION CAN BE USEFUL TO BUSINESS – BY COUNTRY

42,2

REG

39,0

ALB

Source: YES Foundation survey

1 7,4

MON

21 ,7

1 5,5

40%

Disagree (2-4)

1 1 ,9

3,5

22,5

1 5,4

20,5 30,4

1 3,1

20%

Completely disagree (0-1 )

1 0,3

1 1 ,3

1 4,4

28,3

48,0

SER

1 2,8

1 3,3

1 2,8

2,2

25,2

1 4,4

1 9,0

41 ,0

MAC

1 6,9

1 4,6

23,5

39,4

KOS

6,5

1 3,8

1 4,0

36,8

CRO

1 1 ,6

1 4,6 47,5

BiH

Surveyed young people were asked to agree or disagree with the statement, “A certain (small) degree of corruption is useful for business.” The chart below shows response percentages by country.

1 5,5

1 0,1 60%

Neither agree nor disagree (5)

1 4,7

1 4,1

80%

Agree (6-8)

1 00%

Completely agree (9-1 0)

Source: YES Foundation survey

3. Reasons for not reporting corruption (why we don’t report corruption)

Page | 61

A large percent of young people in Bosnia and Herzegovina (47.1%), Montenegro (43.5%) and Serbia (32.7%) do not know how to report corruption. Though the regional average (21.8%) is lower, results still demonstrate the necessity for policy actions that target youth. Such policies should provide an information campaign on how and where to report corruption, while at the same time expanding the integrity of state actors to address the mistrust toward government institutions, particularly those charged with anti-corruption efforts. In total, 70% of young respondents at the regional level stated that fear of possible consequences and doubts about legitimate results were the reasons for not reporting corruption. These responses signal that the majority of young respondents do not trust in existing mechanisms set up to fight against corruption. The numbers are especially high in Kosovo (91.6%), Albania (89.4%), Croatia (88.7%) and FYR Macedonia (83.3%). Responses are also indicative of systemic corruption and should be taken into account when designing policy strategies. Results for each question are spelled out in the text and charts that follow. CHART 40 below presents young people’s answers to the question “what is the most important reason for not reporting corruption”. At the regional level, 42.9% of all young respondents said that their main reason was fear of possible consequences, while 27.1% had doubt in any result, and 21.8% said they did not know how to report corruption. Evidently young people are more inclined to think that not knowing how to report corruption is an important factor as compared to business people: 21.8% of young people said that lack of knowledge was the most important reason, compared to only 5.8% of managers. An especially large portion of young people in Bosnia and Herzegovina, Montenegro, and Serbia do not know how to report corruption, which should be considered in framing anti-corruption policies in these countries.

CHART 40: REASONS WHY CORRUPTION IS NOT REPORTED – BY COUNTRY Surveyed young people were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages by country.

CHART 40:

REASONS WHY CORRUPTION IS NOT REPORTED – BY COUNTRY

42,9

REG

51 ,2

ALB

27,1

9,8

30,0

BiH

Surveyed young people were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages by country.

21 ,8

3,0

59,2

KOS

30,9 0%

1 0%

30%

Fear of possible consequences

40%

2,61 ,3

21 ,7

32,7 20%

21 ,1 50%

60%

Not knowing how to report it

70%

Doubt there will be a result

4,3 8,3

80%

Other

0,3

0,0 2,8

33,3

43,5

2,3

8,0 32,4

1 2,8

26,1

SER

5,1

31 ,6 5,6

50,0

MAC

0,0 0,8 1 5,6

57,1

3,1

38,2

47,1

CRO

MON

5,0

4,3 7,0

90%

1 00%

DK/NA

Source: YES Foundation survey

CHART 41 below breaks down by gender views on the reasons for not reporting corruption. As

41: REASONS WHY CORRUPTION IS NOT REPORTED – BY GENDER CHART 41 below breaks CHART down byfrom gender the is reasons for difference not reporting corruption. As evident from theand chart, evident theviews chart,on there no major between the views of young men young

there is no major difference between views youngconcur men and women. Both men and women concurfactor that in women. Boththe men andofwomen thatyoung ‘fear of possible consequences’ is the major Surveyed young people were asked, “In your opinion, what is the most important reason ‘fear of possible consequences’ is the major factor in non-reporting, confirmed by 42.4% of all women and 43.6% of not to non-reporting, confirmed by 42.4% of all women and 43.6% of all men included in the survey. all men included in the survey. report corruption?” The chart below shows response percentages by gender.

CHART 41: REASONS WHY CORRUPTION IS NOT REPORTED – BY GENDER Surveyed young people were asked, “In your opinion, what is the most important reason not to report corruption?” The chart below shows response percentages by gender.

REG

42,9

Male

43,6

Female 0%

20%

27,1

1 8,6

42,4

Fear of possible consequences

Source: YES Foundation survey

21 ,8

29,2

24,1 40%

Not knowing how to report it

25,7 60%

Doubt there will be a result

3,1

6,0

2,6

4,4 3,5 1 00% | Page 63

80%

Other

5,0

DK/NA

Source: YES Foundation survey

4. Roots of corruption (who generates corruption and who should fight it) On a regional average, 73.3% of young people agree that the roots of corruption are in their own

4. Roots of corruption (who generates corruption and who should fight it) On a regional average, 73.3% of young people agree that the roots of corruption are in their own culture. This seeming pessimism may cloak a more purulent danger - that young people have come to accept that corruption is a normal part of doing business. Naturally, this sentiment, if accurate and not addressed, could lead to a cycle of corruption in the next generation. The data may also indicate that awareness about the damage corruption exacts is not known or not taken seriously; this supposition is in line with previous responses of young people. The percentages of young people that believe corruption is imbedded in the local culture are especially high in Croatia (82%), Serbia (79.9%), and Bosnia and Herzegovina (78.1%). At the regional level an average of 60.8% of respondents agree or completely agree that corruption derives from government. When asked whether private enterprises are initiators of corruption, 58.5% of respondents agreed or completely agreed. And when asked if corruption was rooted in the culture, 73.3% of respondents supported the statement. Such responses are in line with replies from managers on the same questions and demonstrate that young people understand that there is a fair share of responsibility in each corner and sector for the current level of corruption in their societies. The concomitant somewhat high percentages of youth that neither agree nor disagree with statements that point to the origins of corruption may be useful in informing policy actions that address public education. 65% of young people in Montenegro neither agreed nor disagreed with the statement that corruption derives from government, followed by 21.8% in Macedonia, 20.5% in Albania, 18.3% in Croatia, and 16.5% in Serbia. Similarly in regional averages respondents neither agreed nor disagreed with the statement that private enterprises can refuse participation in corruption (18.3%) or that private enterprises actually initiate corruption (19.9%). Again, this neutrality suggests a lack of clarity and may point to a need for enhanced and more carefully nuanced public education. In responding to the set of questions that aim to determine where the responsibility for fighting corruption lies, 83.1% of young people stated that the burden primarily lies with the authorities; 67.8% noted that responsibility primary falls to citizens; and 83.6% agreed that each individual and organization can contribute to the fight. Again, as with business manager respondents, the overlapping of primary responsibility (government authorities and citizens) is noted. And again, government emerges as the dominant percentage, confirming the view that government should spearhead the fight against corruption. However, in doing so, governments should open (and business leaders and citizens demand) a meaningful space for active participation. Overall, most of the respondents believe that developing a more effective policy for identifying and punishing corruption is essential as a basic tool for combating corruption (88.1%) which is consistent with the view of business managers, and equally spread among all countries. However, in designing policies it is crucial to bear in mind other findings of this research such as the necessity to better understand corruption and its potential harm and damage to society and business in particular. All sectors need to understand how corruption can be resisted, and how to fight corruption through participation in public processes that aim to remedy corruption and to report it. All sectors also need to

cooperate to rebuild the integrity of government institutions and thereby restore trust in institutions by the general public and business communities. The charts and text that follow illustrate the responses of young people on the origins of and the responsibilities to curb corruption. CHART 42 presents young people’s reactions to the proposition that “the business sector is helpless before corruption since it derives from government”. As evident from the chart, young people in the region are generally inclined to either agree (28.5%) or completely agree (32.3%) with this statement. On the opposite end, only 11.7% disagreed, and 9.3% completely disagreed with this suggestion. Considerable differences across countries can be observed. Respondents who completely agree thatCHART the private sector is helpless before corruption range only 4.3% in Montenegro to 42: BUSINESS IS HELPLESS IN THE FACE OFfrom CORRUPTION – BY COUNTRY 54.9% in Kosovo. The variations from country to country may speak to the strength of the private sector (thus explaining why only 4.3% in Montenegro feel helpless) or may conversely awareness understanding corruption Surveyed young people were asked tomean agree that or disagree withand the statement, “The of business sector are low (thus presuming that Montenegro does not feel helpless because it is ignorant about the issues), whereas is helpless before corruption, because corruption derives from the government.” The chart below increased understanding of the problem of corruption may lead to a more severe sense of helplessness (which might shows response percentages by country. explain why Kosovo feels especially helpless).

CHART 42: BUSINESS IS HELPLESS IN THE FACE OF CORRUPTION – BY COUNTRY Surveyed young people were asked to agree or disagree with the statement, “The business sector is helpless before corruption, because corruption derives from the government.” The chart below shows response percentages by country.

Source: YES Foundation survey

9,3

REG

1 1 ,7

1 2,3

ALB

1 0,7

9,3

BiH

7,0

MAC

1 1 ,5

6,4

6,5

7,7

29,1

1 9,7

54,9

21 ,8

39,7

20,5

65,2 1 4,4

1 0%

40,1 33,8

6,5

8,9

SER

27,9

23,3

1 8,3

1 0,6

32,3

28,7

1 4,0

1 2,7

KOS

MON

28,5

20,5

1 3,2

6,1

CRO

1 8,3

1 7,4

1 6,5 20%

Completely disagree (0-1 )

30%

Disagree (2-4)

27,5 40%

50%

4,3

32,7 60%

Neither agree nor disagree (5)

70%

Agree (6-8)

80%

90%

1 00%

Completely agree (9-1 0)

Source: YES Foundation survey CHART 43 below reviews young respondents’ reactions to the proposition that “private enterprises can refuse to get involved in corruption without consequences to their operation”. As evident from the chart, views are fairly equally distributed across the board: 21.6% of young

respondents who completely agree range from 10.8% in Croatia to 31% in Kosovo. In comparison to young people, managers seem more inclined to think that refusing corruption

CHART 43 below reviews young respondents’ reactions to the proposition that “private enterprises can refuse to get without consequences is possible: 25% completely disagree with the statement, as opposed to involved in corruption without consequences to their operation”. As evident from the chart, views are fairly equally 16.5% of youth (refer also to CHART 21). However, this is in part dispelled with the inverse distributed across the board: 21.6% of young people surveyed agreed completely with the statement; 23.6% generally of disagreed; those who 20.1% only generally “disagree”: 14.3% of business people asRight-column opposed to agreed; 18.3% neitherpercentages agreed nor disagreed; and 16.5% disagreed completely. 20.1% of youth. views (agree and completely agree) outweigh the left-column views (disagree and completely disagree) by close to 9 percentage points. Views on the issue are fairly steady across countries: respondents who completely disagree range CHART 43: ENTERPRISES CAN REFUSE TO GET INVOLVED IN CORRUPTION – BY from 12.8% in Macedonia to 22.6% in BiH; respondents who completely agree range from 10.8% in Croatia to 31% COUNTRY in Kosovo. In comparison to young people, managers seem more inclined to think that refusing corruption without consequences is possible: 25% completely disagree with the statement, as opposed to 16.5% of youth (refer also to Surveyed young people were asked to agree or disagree with the statement, “Private enterprises CHART 21). However, this is in part dispelled with the inverse percentages of those who only generally “disagree”: can refuse to get involved in corruption without consequences to their operation.” The chart 14.3% of business people as opposed to 20.1% of youth. below shows response percentages by country.

CHART 43: ENTERPRISES CAN REFUSE TO GET INVOLVED IN CORRUPTION – BY COUNTRY

REG

1 6,5

ALB

1 6,4

BiH

22,6

20,1

1 8,3

1 6,4

23,0 1 6,0

1 7,1

23,6

21 ,6

21 ,3

23,0

1 8,7

Surveyed young CRO 1 5,8 28,0 1 8,8 26,6 people were asked to agree or disagree KOS 1 5,5 1 2,0 1 4,1 27,5 with the statement, MAC 1 2,8 20,5 20,5 25,6 “Private enterprises MON 1 7,4 1 5,2 1 7,4 28,3 can refuse to SER 1 5,3 22,1 1 6,6 23,0 get involved in 0% 20% 40% 60% corruption without consequences to Completely disagree (0-1 ) Disagree (2-4) Neither agree nor disagree (5) Agree (6-8) their operation.” The Source: YES Foundation survey chart below shows response percentages by country.

25,7 1 0,8 31 ,0 20,5 21 ,7 23,0 80%

1 00%

Completely agree (9-1 0)

Asked whether they agree that enterprises themselves actually initiate corruption to obtain

Source: YES Foundation survey

benefits they do not deserve (CHART 44), young respondents are far more inclined to agree (30.1%) and completely agree (28.4%) than to disagree (14.4%) or completely disagree (7.2%).

Asked whether they agree thatsense enterprises themselves actually initiate corruption obtain benefits notopposite: deserve In this they differ from company managers who aretomore inclined to they thinkdothe (CHART 44), young respondents are far more inclined to agree (30.1%) and completely agree (28.4%) than to disagree Page | 68 (14.4%) or completely disagree (7.2%). In this sense they differ from company managers who are more inclined to think the opposite: 28.6% of managers completely disagree with the statement (CHART 22), while only 7.2% of young people are in complete disagreement. Results show similar patterns on the agreement side of the chart: only 33.1% of business people either agree or completely agree that enterprises initiate corruption to serve their own

of the chart: only 33.1% of business people either agree or completely agree that enterprises initiate corruption to serve their own interests, whereas among youth 58.5% either agree or completely agree. The rate of complete disagreement with this statement among young people is relatively consistent across countries, and ranges from 4.2% in Croatia to 17.4% in Montenegro. The results are a bit more variable on the agreement side, with complete agreement ranging from 14.4% in Croatia, to a notable 48.6% in Kosovo.

interests, whereas among youth 58.5% either agree or completely agree. The rate of complete disagreement with this statement amongCHART young people is relatively consistent acrossCORRUPTION countries, and ranges 4.2% in Croatia to 17.4% in 44: ENTERPRISES INITIATE FOR from THEIR OWN BENEFIT – BY Montenegro. TheCOUNTRY results are a bit more variable on the agreement side, with complete agreement ranging from 14.4% in Croatia, to a notable 48.6% in Kosovo. Surveyed young people were asked to agree or disagree with the statement, “Private enterprises

CHART 44:

are the ones which initiate corruption by offering bribes to get benefits they don’t deserve.” The ENTERPRISES INITIATE chart below shows response percentages by country. CORRUPTION FOR THEIR OWN BENEFIT – BY COUNTRY 7,2

REG

1 4,4

1 9,9

30,1

28,4

Surveyed young people ALB 5,7 1 7,1 1 5,4 32,5 29,3 were asked BiH 8,2 1 4,0 1 7,1 26,5 34,2 to agree or disagree with CRO 4,2 1 8,6 32,4 30,5 1 4,4 the statement, KOS 1 2,0 7,7 8,5 23,2 48,6 “Private MAC 9,0 1 5,4 20,5 37,2 1 7,9 enterprises MON 1 7,4 26,1 1 9,6 1 9,6 1 7,4 are the ones SER 6,4 1 1 ,0 1 9,3 31 ,2 32,1 which initiate corruption by Completely disagree (0-1 ) Disagree (2-4) Neither agree nor disagree (5) Agree (6-8) Completely agree (9-1 0) offering bribes Source: YES Foundation survey to get benefits they don’t deserve.” The chart below shows response percentages by country. The next, CHART 45, explores young respondents’ reactions to the proposition that “corruption 0%

20%

40%

60%

80%

1 00%

Source: YES Foundation survey is rooted in culture” and that people believe they should “grease” to get things done. The vast Page | and 69 The next, CHART 45, explores young respondents’ reactions to the proposition that “corruption is rooted in culture” that people believe they should “grease” to get things done. The vast majority of respondents in the region (48.1%) said they completely agree with the statement, and an additional 25.2% said they agreed in general. On the opposite end, only 10.9% of respondents completely disagreed, in addition to 6.7% who generally disagreed. There is an obvious similarity of views on this issue between company managers and young people. Company managers are also strongly inclined to agree (18.6%) and completely agree (44.9%) with the idea that corruption is rooted in culture (CHART 23).

50 CHART 45:

CORRUPTION IS ROOTED IN OUR CULTURE – BY COUNTRY Surveyed young people were asked to agree or disagree with the statement, “Corruption is rooted in our culture; people believe they should ‘grease’ to get the job done.” The chart below shows response percentages by country

that corruption is rooted in culture (CHART 23). CHART 45: CORRUPTION IS ROOTED IN OUR CULTURE – BY COUNTRY Surveyed young people were asked to agree or disagree with the statement, “Corruption is rooted in our culture; people believe they should ‘grease’ to get the job done.” The chart below shows response percentages by country.

1 0,9

REG

9,0

1 6,4

ALB

6,2

BiH CRO

6,7

2,5

25,2

1 3,1

7,4

5,0

1 1 ,5

8,2

57,6

7,0

1 1 ,5

9,0

49,9

9,9

6,4

20,4

9,2

SER

3,1

56,4 8,7

8,0

1 0%

38,7

1 6,7

34,8

MON

35,2

32,1

23,9

MAC

23,8

20,6

1 0,5

KOS

48,1

8,7

1 5,2

32,6

29,4 20%

50,5

30%

Completely disagree (0-1 )

40%

Disagree (2-4)

50%

60%

70%

Neither agree nor disagree (5)

Agree (6-8)

80%

90%

1 00%

Completely agree (9-1 0)

Source: YES Foundation survey

CHART 46: FIGHTING CORRUPTION IS THE OBLIGATION OF GOVERNMENT – BY Source: YES Foundation survey

CHART 46 below explores the views of young people in response to the proposition that the

COUNTRY fight against corruption is primarily the to responsibility of thethat authorities. youth in the region CHART 46 below explores the views of young people in response the proposition the fightMost against corruption (59.3%) tend to completely agreeinwith the statement, and an to additional 23.8% agree in the general. is primarily the responsibility of the authorities. Most youth theagree region Surveyed young people were asked to or (59.3%) disagreetend with thecompletely statement,agree “The with fight against Complete disagreement is limited to 3.6%, with an additional 3.8% disagreeing in general. In this statement, and an additional 23.8% agree in general. Complete disagreement is limited to chart 3.6%, below with anshows additional corruption is primarily an obligation of the authorities.” The response young people’s are consistent those with of business of whom 3.8% disagreeing in general.sense, In this sense, youngviews people’s views are with consistent those ofmanagers, business 70.7% managers, percentages by country.agree, and 10.2% that they agree in general. said they completely 70.7% of whom said they completely agree, and 10.2% that they agree in general. Page | 70

CHART 46: FIGHTING CORRUPTION IS THE OBLIGATION OF GOVERNMENT – BY COUNTRY

REG

3,6 3,8

ALB

4,1

Surveyed young people were BiH asked to agree or disagree with the statement, “The CRO fight against corruption is KOS primarily an obligation of the authorities.” The chart below MAC shows response percentages MON by country.

4,7

35,8

1 1 ,3

60,2

27,1 9,9

7,7

60,1

1 6,2 9,0

66,2 24,4

53,8

8,7 6,4

35,8

1 9,1

7,8

2,2 4,3

59,3

1 7,1

5,6 2,1 5,1

23,8

7,3

1 ,9 3,0

SER 2,81 ,5

Source: YES Foundation survey

9,6

84,8 21 ,4 20%

Completely disagree (0-1 )

67,9 40%

Disagree (2-4)

60%

Neither agree nor disagree (5)

80%

Agree (6-8)

1 00%

Completely agree (9-1 0)

Source: YES Foundation survey CHART 47 presents responses to an opposing suggestion – that the fight against corruption is

CHART 47: FIGHTING CORRUPTION IS AN OBLIGATION OF CITIZENS – BY COUNTRY Surveyed young people were asked to agree or disagree with the statement, “The fight against

CHART 47 presents responsescorruption to an opposing suggestion – that the fight against primarily the duty of is primarily an obligation of citizens.” The corruption chart belowisshows response percentages citizens. Again, respondents largely agree in general (27.9%) or completely agree (39.9%) with this suggestion. Those by country. in disagreement (7.5%) or complete disagreement (8%) are a definitive minority. This situation is consistent across all the countries included in the survey.

CHART 47:

REG

FIGHTING CORRUPTION IS AN OBLIGATION OF CITIZENS – BY COUNTRY

ALB

Surveyed young people were asked to agree or disagree with the statement, “The fight against corruption is primarily an obligation of citizens.” The chart below shows response percentages by country.

8,0

7,5

5,7

4,9

5,8

CRO

20,2

1 1 ,6

1 8,8

6,3

7,7

MAC

MON 2,2 4,3

Source: YES Foundation survey

40,5

29,9

33,8

1 4,1

1 5,4

52,8 34,6

38,5

1 5,2

1 0,4

SER

30,9

23,0

1 6,2

3,8

39,9

38,2

7,8

1 0,6

KOS

27,9

20,3

8,6

BiH

1 6,7

78,3

8,3

1 3,5

26,9

41 ,0

CHART 48: INDIVIDUALS AND ORGANIZATIONS CAN CONTRIBUTE TO FIGHTING 0%

1 0%

20%

30%

CORRUPTION – BY COUNTRY Completely disagree (0-1 )

40%

Disagree (2-4)

50%

60%

70%

Neither agree nor disagree (5)

80%

Agree (6-8)

90%

1 00%

Completely agree (9-1 0)

Source: YES survey Surveyed young were asked agree orFoundation disagree and/or with the organization statement, “Each individual and CHART 48 below displays the reactions to thepeople suggestion that toeach individual can make a organization can make aSimilar strong contribution in against corruption.” The below meaningful contribution in the CHART fight against the previous statements, respondents tend tochart express 48 corruption. below displays theto reactions to the thefight suggestion that each individual and/or agreement: 65.1% agree completely and an additional 18.5% agree in general with this statement. A very small shows response percentages by country. organization can make a meaningful contribution in the fight against corruption. Similar to the minority expressed dissent: 5.4% disagree in general and 3% disagree completely. CHART 48: INDIVIDUALS AND ORGANIZATIONS CAN CONTRIBUTE TO FIGHTING CORRUPTION – BY COUNTRY

previous statements, respondents tend to express agreement: 65.1% agree completely and an additional agree in general with this statement. A very REG 3,018.5% 5,4 8,0 1 8,5 65,1small minority expressed dissent: 5.4% disagree in general and 3% disagree completely.

Surveyed young people were asked to agree or disagree with the statement, “Each individual and organization can make a strong contribution in the fight against corruption.” The chart below shows response percentages by country.

ALB 1 ,61 ,6 4,1

4,7

BiH

CRO 3,0

9,0

4,3

83,6

9,0

1 0,2

KOS 2,8 2,1 4,2

24,7

9,9

49,0 81 ,0

24,4

MON

4,3

6,5

SER

3,7

7,3

6,5

69,2 1 5,2

8,9

67,4 20,2

20%

Completely disagree (0-1 )

Source: YES Foundation survey

62,7

1 3,0

MAC 1 ,3 5,1

1 9,2

40%

Disagree (2-4)

Page | 72

59,9 60%

Neither agree nor disagree (5)

80%

Agree (6-8)

1 00%

Completely agree (9-1 0)

Source: YES Foundation survey CHART 49 explores young people’s responses to the suggestion that the basic instrument in the

CHART 49: THE BASIC INSTRUMENT IS EFFECTIVE POLICIES TO IDENTIFY AND

CHART 49 explores young people’s to the suggestion that the basic instrument in the fight against corruption PUNISHresponses CORRUPTION – BY COUNTRY is effective policies to identify and punish corruption. The vast majority of young people in the region (67%) said they people were 21.1% asked to agree disagree with the statement, completely agreed with the Surveyed statement,young while an additional said they or agreed in general. Responses are“The firmlybasic consistent across all countries involvedinin the the fight research. In order to beisidentified, corruption understood. and instrument against corruption an effective policy must for itsbeidentification Therefore, a combination ofpunishment.” policy and direct and specific education maypercentages lead to better impact in the countries of the The chart below shows response by country. region.

CHART 49: THE BASIC INSTRUMENT IS EFFECTIVE POLICIES TO IDENTIFY AND PUNISH CORRUPTION – BY COUNTRY Surveyed young people were asked to agree or disagree with the statement, “The basic instrument in the fight against corruption is an effective policy for its identification and punishment.” The chart below shows response percentages by country.

REG 2,6 3,0

6,3

ALB 1 ,6 4,9

4,1

BiH

3,5 3,5

CRO 2,2 3,3

4,2 2,1

KOS

MAC 2,6 2,6

67,0

1 8,7 7,4

5,6

70,7 1 9,8

6,4

1 0%

61 ,8

9,9

78,2 25,6

1 3,0 6,4

65,8

26,3

6,4

MON 2,22,2 SER 2,42,1

21 ,1

62,8

1 7,4

65,2

22,0 20%

Completely disagree (0-1 )

67,0 30%

40%

Disagree (2-4)

50%

60%

Neither agree nor disagree (5)

70%

Agree (6-8)

80%

90%

1 00%

Completely agree (9-1 0)

Source: YES Foundation survey

Source: YES Foundation survey Finally, CHARTS 50 and 51 present respondents’ views on the previously discussed

propositions, (CHARTS 39 and 43-49) disaggregated by gender. As can be seen from the charts, Finally, CHARTS 50 and 51 present respondents’ on are the quite previously 39 and67.8% 43- of the views of men andviews women similardiscussed on manypropositions, of the issues (CHARTS being explored: 49) disaggregated by gender. As canand be seen the charts, the views of men are quite on many women 61%from of men completely agree that and eachwomen individual can similar make an important of the issues being explored: 67.8% of women and 61% of men completely agree that each individual can make an contribution in combating corruption; 41.9% of women as opposed to 37% of men are in full important contribution in combating corruption; 41.9% of women as opposed to 37% of men are in full agreement agreement that the fight against corruption is primarily a citizen responsibility; 58.7% of women that the fight against corruption is primarily a citizen responsibility; 58.7% of women and 60.1% of men completely and 60.1% of men completely agree that fighting corruption is primarily a duty of the authorities. agree that fighting corruption is primarily a duty of the authorities. In general, there is a definitive convergence of views general, there a definitive convergence of views gender. Theversus question generating across gender. The questionIngenerating theisstrongest divergence between the across attitudes of men women was the divergence thebusiness: attitudes whereas of men versus about whether about whether corruption in strongest small doses could bebetween good for 23.9%women of menwas completely agreed,corruption only 12.1% of women concur. Overall, except perhaps to tolerate or not23.9% tolerate doses of corruption, in small doses could in betheir goodproclivity for business: whereas of small men completely agreed, only the conclusion is that gender is not a major factor in shaping young people’s views about corruption. Page | 74

12.1% of women concur. Overall, except perhaps in their proclivity to tolerate or not tolerate small doses of corruption, the conclusion is that gender is not a major factor in shaping young

CHART 50:

people’s views about corruption.

YOUNG PEOPLES’ CHART 50: YOUNG PEOPLES’ RESPONSES TO QUESTIONS ON CHARTS 39 AND 43-49 RESPONSES TO QUESTIONS –DIFFERENTIATED BY FEMALE GENDER ON CHARTS 39 AND 4349 –DIFFERENTIATED BY FEMALE GENDER Each individual and organization can make a strong contribution in the fight 2,44,4 7,4 against corruption The fight against corruption is primarily an obligation of citizens

1 8,0

6,2 7,0

The fight against corruption is primarily an obligation of the authorities 3,33,6 9,6

28,4

41 ,9

24,9

The basic instrument in the fight against corruption is the effective policy for its 1 ,7 2,46,7 identification and punishment Corruption is rooted in our culture; people believe they should "grease" to get the job done

67,8

1 6,5

58,7

21 ,3

1 0,6

6,5

67,8

1 0,0

24,0

48,9

46,8

A certain (small) degree of corruption is useful for business Private companies are the ones which initiate corruption by offering bribe to get benefits they don't disserve

7,1

Private companies can refuse to get involved in corruption without consequences to their operation

21 ,7

1 6,9

The private (business) sector is helpless before corruption, because corruption derives from the government

1 7,9

1 4,2

9,9

1 9,8 1 2,2

1 1 ,3

1 8,5

22,0

28,9 40%

1 2,1

26,2 22,8

1 8,7

20%

1 1 ,9

30,8

30,4

60%

80%

1 00%

CHART 51: YOUNG PEOPLES’ RESPONSES TO QUESTIONS ON CHARTS 39 AND 43-49 – DIFFERENTIATED BY MALE GENDER Completely disagree (0-1 ) Disagree (2-4) Neither agree nor disagree (5)

Agree (6-8)

Completely agree (9-1 0)

Source: YES Foundation survey Source: YES Foundation survey

CHART 51: YOUNG PEOPLES’ RESPONSES TO QUESTIONS ON CHARTS 39 AND 43-49 – DIFFERENTIATED BY MALE GENDER

Each individual and organization can make a strong contribution in the fight 3,8 6,9 against corruption

4,1

The fight against corruption is primarily an obligation of the authorities 4,0

1 9,2

8,2

Corruption is rooted in our culture; people believe they should "grease" to get the job done

1 1 ,4

61 ,1

1 7,0

9,5

27,2 60,1

20,8 7,1

65,8

7,6

27,0

35,3

A certain (small) degree of corruption is useful for business Private companies are the ones which initiate corruption by offering bribe to get benefits they don't disserve

7,4

Private companies can refuse to get involved in corruption without consequences to their operation

8,5

1 2,0

1 7,2

30%

24,7

27,8 40%

50%

23,9 31 ,6

1 7,8

1 7,7 20%

1 6,7

29,2

20,6

1 0,9 1 0%

46,9

1 2,2

1 4,7

1 5,8

37,0

22,2

3,9 The basic instrument in the fight against corruption is the effective policy for its 3,9 5,7 identification and punishment

The private (business) sector is helpless before corruption, because corruption derives from the government

Source: YES Foundation survey

9,0

1 0,6

The fight against corruption is primarily an obligation of citizens

21 ,1 35,1

60%

70%

80%

90%

1 00%

Page | 75 Completely disagree (0-1 )

Disagree (2-4)

Neither agree nor disagree (5)

Agree (6-8)

Source: YES Foundation survey

Completely agree (9-1 0)

5. Attitude toward bribery Attitudes of young people toward bribery are somewhat complex. Although the majority of young people (48.9% on a regional average) would reject paying a bribe, for the purpose of this research it is more important that 40.3% of young people surveyed would indeed pay a bribe if asked to do so. The highest percentages of young people who would pay a bribe were found in Serbia (57.7%) and Montenegro (54.5%), and the lowest percentage was found in Kosovo (21.1%). These findings may point to an array of possible explanations – from fear to co-optation to ignorance as to the illegality of corruption or its damage to society and individuals. However, such attitudes, if unchecked, may lead to another cycle of corruption when these young people mature into the next generation of managers. Therefore introducing corruption related topics in school and university curriculum might be of significant importance, as well as implementing information campaigns targeting the younger generation in general. It is interesting that there is material discrepancy in answers between male and female students on this question: on a regional average basis, 49.6% of male students and 34% of female students would pay a bribe, which is consistent with all other survey results, indicating that women are less inclined to participate in corruption than men. Respondents’ answers on the subject of bribery and corruption are depicted in the charts and text that follows. CHART 52 displays young people’s answers to the question “would you pay a bribe if asked?” A regional majority of 48.9% claimed they would not pay a bribe; 24% said they would pay a bribe but only if it was a small amount; 10.8% said they would pay but they would report it as well; and 16.3% acknowledged that they would agree to pay. The rate of those saying they would reject paying ranges from 33.6% in Serbia to 62% in Kosovo. Although there are CHART 52: WOULD YOU PAY A BRIBE IF ASKED? – BY COUNTRY some material differences across countries, overall young people’s responses to the question are relatively consistent. The percentage of potential future managers would a bribe is lowest in Kosovo (7.7%) Surveyed young who people were agree asked to to pay answer ‘yes’ iforasked ‘no’ to the question, “If you had and a highest in Serbia (18.3%). However, the regional average shows that over 40% of young people would pay a bribe if company, would you pay a bribe if asked to do so?” The chart below shows response asked to do so, and would notpercentages report it. This finding further highlights the necessity of university education on the topic by country. of corruption along with anti-corruption policies to target young people in general.

CHART 52: WOULD YOU PAY A BRIBE IF ASKED? – BY COUNTRY Surveyed young people were asked to answer ‘yes’ or ‘no’ to the question, “If you had a company, would you pay a bribe if asked to do so?” The chart below shows response percentages by country

REG

1 6,3

48,9

24,0

1 0,8

ALB

1 6,3

49,6

22,8

1 1 ,4

1 5,2

BiH

1 7,5

CRO

Yes

20%

30%

1 6,7

43,5 33,6

1 0%

8,3 1 6,9

1 2,8

39,1 1 8,3

SER

1 3,4 51 ,3

1 0,9

1 6,1

62,0 1 9,2

MON

1 3,6

58,2

7,7

KOS

MAC

Source: YES Foundation survey

60,3

6,5

39,4 40%

50%

60%

Yes, but only if it is a small amount

70%

8,6 80%

90%

1 00%

I would pay, but I would report it

Source: YES Foundation survey CHART 53 disaggregates by gender responses on agreeing to pay a requested bribe. It is evident that a considerable gender difference exists: women (56.2%) are significantly more inclined than

CHART 53: WOULD YOU PAY A BRIBE IF ASKED? – BY GENDER CHART 53 disaggregates by gender responses on agreeing to pay a requested bribe. It is evident that a considerable young people were to than answer ‘yes’ or ‘no’ to the question, “If you had gender difference exists: women Surveyed (56.2%) are significantly moreasked inclined men (38.2%) to respond that they would

not pay a bribe if asked to do so.company, Inversely,would men (26.5%) area far more (9.4%) to agree theyrespons you pay bribe if inclined asked tothan do women so?” The chart below that shows would pay a bribe if asked. Views are convergent on the options of paying depending on the amount, and paying but percentages by gender. then reporting the case.

CHART 53: WOULD YOU PAY A BRIBE IF ASKED? – BY GENDER

1 6,3

REG

Surveyed young people were asked to answer ‘yes’ or ‘no’ to the question, “If you had a company, would you pay a bribe if asked to do so?” The chart below shows response percentages by gender.

26,5

Male

Female

48,9

38,2

9,4

23,1

56,2

20%

Yes

24,0

40%

Yes, but only if it is a small amount

Source: YES Foundation survey

1 2,2

24,6 60%

1 0,8

80%

9,8 1 00%

I would pay, but I would report it

Source: YES Foundation survey

C. In-Depth Interviews: Business Managers’ Views

Research surveys of business managers and young people from the region were complemente

with a series of in-depth interviews with entrepreneurs and business people from the region. A

total of 133 interviews were conducted (see list of respondents in Annex). The next sectio

presents the most interesting findings from the interviews. It complements the quantitative dat

on corruption and perception of corruption in the business sector with in-depth explorations o respondents’ views on the subject.

1. Trends of corruption

Within the spectrum of three choices to describe corruption trends – declining, rising o

stagnating –most of the managers interviewed polarized between the options ‘declining’ an

‘rising’. Those that believed corruption was on the decline indicated three major reasons

government action and strengthening of government, the EU accession process, and the fact tha

societies speak more candidly about corruption as a problem. Specific government policie

named as reasons for the decline include: intervention in public procurement processes, use o

Page | 7

C. In-Depth Interviews: Business Managers’ Views Research surveys of business managers and young people from the region were complemented with a series of indepth interviews with entrepreneurs and business people from the region. A total of 133 interviews were conducted (see list of respondents in Annex). The next section presents the most interesting findings from the interviews. It complements the quantitative data on corruption and perception of corruption in the business sector with in-depth explorations of respondents’ views on the subject.

1. Trends of corruption Within the spectrum of three choices to describe corruption trends – declining, rising or stagnating –most of the managers interviewed polarized between the options ‘declining’ and ‘rising’. Those that believed corruption was on the decline indicated three major reasons: government action and strengthening of government, the EU accession process, and the fact that societies speak more candidly about corruption as a problem. Specific government policies named as reasons for the decline include: intervention in public procurement processes, use of electronic forms and other technical tools, and stronger government actions such as arrest and prosecution that “scared people” and thereby thwarted participation in corruption. On the opposing side, those that believed corruption was rising focused on their belief that government actions against corruption were insufficient and represent pure political posturing and not “real political will” to suppress corruption. Another opinion cited was that corruption was on the rise due to the global and local economic recession, and/or that the ratio of public sector investments (in relation to private investment) had increased. In either case, the rise in corruption is largely blamed on government: first, because of the inefficacy of government actions to curb corruption, and second, because government and politics are seen as generators of corruption. A minority of managers chose the third option – that corruption is stagnating. Their reasoning was that in the absence of visible improvement, the situation remained more-or-less the same. However, all groups of respondents acknowledged that corruption may be changing its forms and that it is becoming more sophisticated. In comparing the Western Balkan region against Europe, respondent opinions clustered around two predominantly held views: a) those that believe there is less corruption in Europe; and b) those that believe there is the same level of corruption. Respondents who felt that corruption was more widespread in the Balkans than in Europe noted the reasons for Europe’s ‘superiority’ in dealing with corruption as better application of the rule of law, stronger state institutions, and stronger economies. However, those believing that the same level of corruption exists in the Balkans and in Europe thought that corruption in Europe is better hidden, is on a higher level, and is more sophisticated than in the Balkans. The notion that corruption is evolving and becoming increasingly more sophisticated should be given serious consideration by policy makers, as this opinion reoccurred in several categories. Managers’ views on corruption trends are examined in the text that immediately follows.

1.1. What Is the Trend of Corruption? Responding to a series of open-ended questions about perceived corruption trends, answers given by business managers sorted into one of three possibilities: that corruption has been declining, rising, or stagnating. Quantitative responses to the same questions asked by phone survey were noted above in Section A. Responses from the in-depth interviews can help further elaborate the reasons for such views, that is, why entrepreneurs feel corruption has been declining, rising, or stagnating and what factors they use to gauge or measure corruption trends. Open-ended responses are quoted below as representative examples of some of the thoughts expressed by managers when answering the questions. Those managers who felt corruption has been decreasing cited the following vivid examples and reasons: “I think corruption in Albania has been declining. For example, in the past people brought in cars without paying the custom duty; now the rules are much more strictly enforced.” “I think it is seriously declining because rules have become stricter... the government is not sleeping,” “5-6 years ago we had to pay everywhere - if you did not pay you did not get the job done - this is why there is a big change.” “I think corruption is in decline; in the past it was very evident.” “In the past 2 years, since things started being done electronically, we have not felt it.” “I think that digitalization reduced corruption; now we all pay taxes electronically...” “Things are getting better but there is still a lot to do. It has to do with government stability; things need to be solved politically.” “I think it is more visible, there is more talk about it; I think this helps reduce corruption. But I think people should also be more aware about it.” “Corruption is closely connected to politics - now there is certainly more talk about it; there is more action, with investigations and everything, so people fear less compared to the ‘90s.” “I think it is decreasing because of our EU aspiration, even though at the same time there is the impression that there is more talk about it. Now we also have institutions in charge of it which did not exist until recently. I think it is decreasing.” “I think it is declining with regards to the number of enterprises involved, because it is always the same enterprises, it is a closed circle.” “People are beginning to realize that things should not be like this.” “I think that in this period of time there is less; I think there is more talk than there is actually corruption.”

“I think it is declining, because in the past many things were paid in cash, now everything goes by invoicing and you cannot hide either revenue or taxes.” “I think it has been declining; things are much stricter now; there is more control. Also, some of the major infrastructure investments have been completed, and this is also a factor.” “I think it is declining because of government action. I think this action shows results and in the long term we can expect decline of corruption; they do good campaigns and actions.” “I think it is declining, because government action is stronger, the anti-corruption commission is more active, laws are better enforced, and the government is more vigilant.” “I think it is declining because of government action. All these arrests have scared people.” “Perhaps it is declining a bit; the laws are more strictly enforced, but this is selective.” “As we move towards the EU, I think that corruption is declining.” As illustrated in the above quotes, responses credited improvements in government action, digitalization of service forms, improvement in financial transactions, EU influence, and greater awareness for the perceived decline in corruption. Those managers who felt corruption has been rising cited the following illustrative examples and reasons: “It is in absolute rise - because when the economy declines, corruption rises.” “I think corruption is on the rise because business is growing; more business, more corruption. I am not necessarily right.” “I would say the corruption has been on the rise, because we are down in social-political mud and it is getting deeper and deeper - so it is likely that is more widespread than 10 years ago.” “I think corruption is growing; the reason is the political situation. When the government is stealing, then everyone can do whatever they want.” “It is rising, and also, I think it is becoming more organized; people are involved in it for years and have become better organized.” “I think it is very widespread because more and more the public sector is buying certain services.” “I do not see any changes for the better; I think that in the last 10 years corruption has become as common as having coffee - if something is so present every day.” “I think it is on the rise because of the global crisis.” “There has not been a single action in the last 10 years to reduce corruption; it is on the rise.” “It is definitely rising; government measures to fight it are insufficient and selective.” “I think it is on the rise and that the government is not doing anything to fight it; the government actions are mere political marketing. In order to fight it, you need much stronger control of all institutions.”

“I think it is increasing because of the ever greater partisan-ation [sic] of society.”

Common themes emerge from the quotes and point blame in a number of directions: government inaction and government participation in corruption, increased public sector procurement (where this is assumed to increase corruption), socio-political turmoil and ethics, and the global economic downturn. Many comments seem infused with cynicism, as if trust in the culture of government, business, and fellow citizens had disintegrated.

In addition to the two poles of decline versus rise, a smaller number of respondents suggested corruption was stagnating: “I think it is stagnating, neither rising nor declining.” “I think corruption is always the same [laughs].” “I think it is about at the same level; it cannot get any higher than it is right now.” “I think the level is the same, only now there is more talk about it.” “I do not see any improvement in recent years; maybe it is stagnating.” “I think it is stagnating. Things are the same as 10 years ago; only the people change.” Again, comments from those who perceive stagnation seem more dampened by cynicism that definitively certain about levels of corruption. There is a sense of weariness that pervades many of the comments.

1.2. The Balkans Compared to Europe? When queried to compare corruption in Europe against corruption in the Balkans, entrepreneurs’ responses sifted along two main tracks. The first track agreed that corruption in the Balkans is more widespread compared to Europe, whereas the second suggested that differences exist only in appearance and forms. Respondents who indicated that corruption in the Balkans is more widespread than in Europe shared some of their thoughts: “I think corruption is more present in the Balkans than in Europe.” “Corruption is smaller there [Europe] because governments are stronger, more developed.” “It is present in Europe and the world of course; it is a matter of degree naturally.” “No one is immune to corruption, but the level of economic development there [Europe] makes it smaller; laws function.” “There is corruption everywhere, but there [Europe] it is [found] at higher levels and the common citizen is not so concerned.”

When speaking about Europe’s positive edge, repeated emphasis was given to stronger, more developed government and economic prosperity. It was also noted that corruption remained present at the higher levels, but that the average citizen was less affected. The opposing view suggested that the difference between the Balkans and Europe was only in appearance and form. Arguments for this view included some of the following: “There is corruption everywhere, not just in the Balkans. I think in bigger and richer countries there is even more corruption, only it is much better covered, at higher levels. Then when the Pandora’s box is opened occasionally, it can be seen.” “I think there is corruption everywhere, only in the world they know better how to hide it; here it is wide in the open.” “I do not think that only the Balkans is corrupt; Europe should take a look at itself. Some diseases we got from them.” “Corruption was not invented in the Balkans; we learned it from others.” “In Europe it is done in a subtler way, and it is not so widespread.” “There is corruption also there [in Europe] only it is more sophisticated.” “There is corruption also there [in Europe] but it is better covered. We are under a strong scrutiny; nobody is looking into what is happening in Germany.” Those believing that corruption was equal but more clandestine in Europe generally alluded to the increased sophistication of Europe’s corruption, as if corruption itself can mutate with age.

2. Roots of Corruption (who generates corruption; who should fight it, and how) Questions related to the roots of corruption and why businesses get involved in corruption provided a wide spectrum of answers, which may be grouped into seven main ideas: 1) corruption is endemic/systemic; 2) corruption derives from poverty; 3) corruption derives from institutional and government weakness; 4) corruption is a product of culture; 5) corruption is forced – involvement in corruption is a matter of survival; 6) businesses get involved in corruption because of greed. A few remaining opinions cluster into a separate category of ‘other’ (7) but often relate to one of the six categories above. Among business manager respondents, the three most dominant opinions were that: 1) corruption is a matter of survival; 2) corruption derives from institutional and government weakness; and 3) corruption is endemic/systemic. These opinions label corruption is intentional, forced on businesses by government malfeasance or neglect, such that businesses simply endure by complying with someone else’s rules. This suggests that, at the moment of transaction, there is no tenable alternative for business people. Expectedly, this position is supported by a parallel opinion that laws are not implemented or that there are no sanctions for abuse or misuse of the law – that there is essentially no

“safe place” for reporting corruption, and that if it were reported, malfunctioning courts would sabotage efforts at justice. Discussions with business manager respondents suggest that in such an environment the business sector merely considers corruption as a normal way of conducting business. These insights are in line with phone survey data that shows that managers mistrust the government, but also believe that the government bears the brunt of responsibility for improving levels of corruption in the societies in the region. Managers cited systemic corruption that they believe has significantly influenced decision making at the government level. Comments falling into the ‘other’ category also supported the notion that government is key, stating that since public sector investments make up a large share of the market, it follows that responsibility for corruption related to those transactions would at least partly fall on governments. Among business manager respondents, a smaller cluster of opinions center around the idea that corruption is rooted in culture, that it derives from poverty, and derives from greed. Not surprisingly, these responses, which more clearly indict the business community itself (and citizens who also make up the business community), were less often cited. This may point to a natural blind sightedness or reluctance to acknowledge one’s own shortfalls. Curiously, in the phone survey, 63.5% of business managers agreed that corruption is rooted in the culture, but few mentioned it during the longer interviews. When they did allude to the idea, they seemed to re-nuance the point, tagging corruption as ‘normal’ and expected rather than as a societal ill. This might be an indication of an insidious development in which the predominant view of business managers has evolved until corruption is simply a part of life and culture, and therefore inevitable, leading many to learn and practice the rules of the game in order to successfully compete in a market-driven economy. Any anti-corruption policy or program in the countries of the region needs to address this challenge. Combined respondent answers suggest that in order to “fight” such complacency, policy and legal frameworks need to be strengthened and more efficient, and the institutional framework more keenly developed, thus giving managers a broader array of viable options and specific disincentives to involve themselves in corruption. At the same time, issues of the integrity and accountability of anti-corruption policy actors should be addressed so that trust can be restored and pressure to act appropriately outstrips pressure to participate in corruption. Interviewees were also asked to respond to the question. “Who gets most involved in corruption?” Their responses matched quantitative survey results, and reiterated that enterprises participating in large deals, businesses that work with government, and businesses in the construction sector tended to be more involved in corruption. In terms of size of the company, quantitative perception indicators from the phone survey showed that small and medium-sized enterprises (11 – 250 employees) were most exposed, as opposed to bigger enterprises. However, during interviews, most respondents talked about large deals being more prone to corruption, but did not always correlate this to the actual size of the company. These insights and nuances should be actively explored and addressed in future anticorruption policies that aim to tackle the issue of corruption in the business sector. In relation to questions about who should fight corruption and how they should do it, six main groups of opinion were shaped: 1) government or political leadership should take the leading role; 2) effective law enforcement is a critical

factor; 3) the judiciary should lead the way; 4) everyone should be included and do their part; 5) action should start with education, culture, and raising awareness; and 6) reduction of bureaucracy is a vital component. Predominant views are that government should take a leading role, that effective rule of law and law enforcement be instituted, and that the judiciary should take an active part in the fight against corruption. Within these three predominant themes, the strong message was that government should finally demonstrate the will to fight corruption by designing effective laws and building an effective institutional framework supported by an efficient judiciary. This directive can serve as guidance for governments of the region if they expect to win the confidence of the business sector. All of the above answers are in line with the findings gathered through the corruption perception indicators (phone survey) of business managers, thus giving more strength to their arguments. Respondent remarks on who should fight corruption also clustered into three lesser groups, suggesting that everyone should share in the fight against corruption; that action should start with education, culture and raising awareness; and that the reduction of bureaucracy can facilitate a reduction in corruption. These opinions are also in line with the perception indicators based on the managers’ views during the phone survey. In summary, based on in-depth interviews and phone survey data, it is possible to construct a sequence of recommendations put forward by the business community. Put succinctly, the government should spearhead the action by designing effective policies and a legal environment that supports anti-corruption efforts. Government should endeavor to educate the public about the means and impact of unchecked corruption while informing citizens about existing legal instruments to combat corruption. All sectors should actively participate in anti-corruption efforts. A necessary precondition is the demonstration of authentic will by the government in acting without reluctance on reported cases and supporting those who wish to fight corruption - this is viewed as the only way to win public confidence not only within the business sector, but also in all sectors and among all potential actors.

2.1. Why Does Business Get Involved in Corruption? Respondents’ views on “why business gets involved in corruption” can be divided into several groups or categories. These categories are provisional and as a general rule intertwined. Many respondents have naturally cited more than a single reason; often these reasons or factors have been produced in a logical, causal sequence, or have alternatively been bundled together at random, without preference for primacy or importance. Observations are possible as to the frequency or dominance of certain views, which is of great use for analysis. It is plausible to construct at least the following categories of views on why businesses get involved in corruption based on respondents’ most frequently espoused answers: a) b) c)

corruption is endemic corruption derives from poverty corruption derives from institutional and government weakness

d) corruption is product of culture e) corruption is forced; involvement in corruption is a matter of survival f)

businesses get involved in corruption because of greed

g) other 2.1. a) Corruption is Endemic A frequently expressed view has been that corruption is systemic or endemic, that is, that it is engrained in society and life, which therefore makes it very difficult to eradicate. Respondents have described this view with some of the following statements: “It is systemic and cannot be changed.” “It has become a new way of doing business; it has become pervasive. You are confronted with the choice whether to resist it or adapt to it.” “They get involved because of weak ethics; corruption is endemic.” “Here it is endemic because for years it was considered ‘normal’, so most people do it unconsciously just because ‘this is how things are done’.” “People think ‘everyone else is doing it so I must do it too if I am to succeed’; they feel they do not stand a chance if they do not do it too.” “People accept corruption because they have come to realize that it is something normal, customary.” “Of course you need to give some commission to the institution; it is normal that if you want to win a tender, you need to pay something. If you want to get things done, it is normal to have to pay.” “We should not delude ourselves; since the country exists there has been corruption; it exists and it will exist.” “It is completely engrained. You need connections to see a doctor, even a priest. It is completely rooted in our culture. Even the teacher in primary school when he grades you is selective; it is in our culture and we should not think we could just eradicate it like this. It takes time, but I do not think it could be eradicated in this region in the next 1,000 years.” “It is systemic, engrained; you cannot get anything done without corruption.” The view that corruption is endemic is most closely related with the view that bribery is rooted in culture. A particular policy or action challenge that pertains to this view is the strong conviction that such a state of affairs cannot be changed, that nothing can be done to actually change things. At the same time, the pervasiveness of this view points to where efforts should probably start – in changing the conviction that things are unchangeable.

2.1. b) Corruption Derives from Poverty Quite a few respondents were inclined to seek the roots of corruption in poverty, thereby proposing the argument that economic growth itself would help reduce corruption. Some of the most common statements in this regard included the following: “If people’s pockets would be full, there would be no corruption.” “It is normal that there is a lot of corruption in the Balkans because we are poor.” “The standard of living is low - corruption derives from poverty.” “People are forced into it because of the low wages.” “Corruption is more widespread in poorer countries.” This view can easily be seen as moral exculpation even though this is most often not directly visible from respondents’ statements. It is usually not clear how poverty creates corruption; the logical idea is that people (perpetrators) are drawn to it because of lack of financial resources. The view also indicates that corruption could decline by itself under conditions of economic growth. This view also comprises the implicit conviction that direct action against corruption would not change much, given that it is a product of poverty, and as such it points to an area which could be addressed through policy. 2.1. c) Institutional/Government Weakness A clearly defined group of views related corruption primarily to government and institutional weakness, poor law enforcement, and institutional ineffectiveness, thereby suggesting that improvement in the work of government is the way ahead in dealing with corruption. This view most often does not relate government ineffectiveness with intent, or deliberate abuse of power. The views expressed sought the reasons for corruption in some of the following: “Corruption exists because laws are not implemented properly.” “... because the government does not have full authority.” “In a country with strong government, the business will also be strong, and there will be less corruption.” “You have laws but they are not implemented properly.” “Corruption appears where there is lack of control.” “The reasons are more in the system than the culture of people or ethics; if there is no law and no sanctions for disrespecting them, then... In Europe the system is much better and hence the corruption is much smaller.” “Naturally corruption is part of the life of a company, part of business; this is so because there are no laws and there is unfair competition.”

“Between enterprises themselves there is not much corruption. As for the public sector, the situation is worrying; the reason is that there is no institution where you can make a complaint. You have a situation when a truck comes to the border and it is not allowed to enter. You have to offer a bribe if you want to be allowed entry, because delays are very costly. Officials do this on purpose we know, but enterprises have to comply because they are not protected; they have no place to complain - the courts do not function.” The view that corruption results from inadequate rule of law was more frequent than and overlapped the alternate views that it is endemic, related to poverty, or the result of culture; in fact, improving rule of law was also offered as a solution to the other causes. Asked what should be done to fight corruption (see section 2.3 below) many of the respondents’ answers went in the direction of improving the rule of law and in this sense consistency can be observed in pointing to weak rule of law as a major factor and suggesting its improved effectiveness as an instrument in fighting corruption. 2.1. d) Corruption is Rooted in Culture A common view has been that corruption is rooted in culture. This view is close to the view that corruption is endemic, but it is more specific in the sense that it identifies cultural traits and types of behavior as the root causes for corruptive behavior: “Corruption exists because of culture, mentality.” “It derives from people and their education.” “I think corruption is part of our culture or lack of culture.” “In this country corruption and incompetence are the big problems. I would not call it incompetence but a state of mind actually.” “It has become rooted in our culture since a long time ago, and now in order to change it, we need to change the entire mindset and the moral values.” “I think it starts in school; you know the saying that it is all right to cheat a little on exams...and it is something that the sly ones do; it has a positive prefix, and it is looked upon favorably.” Similar to the previous section on the weak rule of law, when asked what should be done to fight corruption many of the respondents’ answers suggested work to change culture, such as educational and awareness-raising campaigns, and in this sense consistency can be observed between the identification of root causes and suggested interventions. 2.1. e) Corruption is Forced; It is a Matter of Survival The view that businesses are forced to get involved in corruption if they want to survive was the most frequently cited compared to all other positions. This view exonerates entrepreneurs from moral blame and indirectly points to the intentional abuse of government power as the core reason for corruption. Some of the most interesting views held that:

“It is not possible to be 100% legit; I have my own business and try to respect the rules, but I can tell you that you cannot survive without some bending of the rules.” “Businesses are not corrupt but they are involved in corruption due to politics. Businesses have no interest in corruption; they do not want to pay money.” “When people get involved in corruption, they do it out of necessity.” “Businesses get involved with corruption in order to survive.” “Businesses get involved in corruption because they do not have an alternative; they do not have another choice. The bureaucracy will return your papers many times; you can spend months waiting for a permit, until you no longer need it.” “Economic interest forces you into corruption; justice in our country is at zero level. No matter how much you want to work by the rules, you are surrounded by people and institutions which force you to make a payment.” “Businesses get involved in corruption because they are forced to this by the government. Corruption is forced; if you do not accept it, you cannot survive.” “Even people who want to do things honestly, realize that they cannot.” “People fight for survival and do what they have to; nobody has the time to deal with other things.” “I know people who had to give money; it needs to be clear. Business is very difficult, so managers, in order to keep their enterprises going, to survive, they are forced to work in this way.” “Businesses get involved in corruption out of necessity, because of the need to get something done, or get in done quickly. This is because of difficult procedures.” “Businesses are forced to get involved in corruption, they are forced by the public institutions.” “Why? Because you do not have a choice.” “They get involved because they need to survive; they have no other way. They have no support from the government. You cannot get the job done if you do not bribe someone.” “... in order to survive and keep working; it is as simple as that.” “They usually get involved because they are forced to, in order to get something done with the government.” The intensity of this position, seen from the frequency with which it appeared in respondents’ answers, is a strong indication of entrepreneurs’ views on the inevitability of corruption. In addition, it is indicative of a particular mental attitude on the part of businessmen. This is most clearly seen from respondents’ answers to the question, (see section 3.1 below) “What is the best course of action when being confronted with the dilemma to pay as opposed to not to pay?” Almost without exception, managers agree that it is better to pay and move on.

2.1. f) Corruption Derives from Greed Another view - which is in direct contrast to the view of corruption as a mode of survival – sees bribery as resulting from the sheer drive for profit, or simply – greed. This view shifts the burden of moral blame on entrepreneurs themselves, and it suggests that (often) businesses are the ones that initiate corruption: “Business gets involved in corruption because it is a tool for making profit. If you don’t pay things will not get done; everyone does their job.” “Why you cannot be honest? It is the genome of transition societies; it is used in order to gain some kind of advantage.” “Easy money is a strong motivation definitely. The huge bureaucracy is not helpful either.” “When certain people get involved in corruption, I think it is for extra profits.” “Enterprises get involved because the private sector does not want to work transparently.” “Enterprises get involved in corruption in order to make quick profits.” “They get involved in order to make profit or avoid paying taxes.” This view highlights a polarization in attitudes about corruption in the business community. Whereas the predominant view accepts corruption as inevitable and a mode for survival, thereby clearing any blame from entrepreneurs themselves, this minority view argues that business people themselves are the greedy ones. This is relevant food for thought especially in designing awareness raising campaigns that should appeal to varying types of behavior on the part of the business community. 2.1. g) Other In addition to the major views on the reasons for corruption presented above, some views, even though less represented, deserve attention. One such view seeks the reasons for corruption in the strong government presence in the economy (and inherently seems to suggest that the connection to government means a proclivity to corruption): “Corruption appears where the government is a big investor.” “The government in Croatia has influence on the entire private sector in the country; 60-70% of all transactions are in some way related to the government.” There is no doubt that this view is based on solid knowledge of economic theory and reality. When the question was asked differently (see section 2.2 below) to inquire who gets most involved with corruption, most respondents readily pointed to public procurement deals, that is, business dealings involving the government. In this sense, the possible direction of the intervention is not to reduce the government presence in the economy – this would be a systemic issue which exceeds the mandate of this inquiry – but to assure better control of the work of the government as an agent on the market.

2.2. Who Gets Most Involved in Corruption? The question “who gets most involved in corruption?” – wherein “who” means “what types of enterprises” or “what sectors” – elicited very consistent and narrowly specific responses. This was somewhat expected given that potential list of culprits can to some extent be considered common knowledge. Nevertheless, a relevant observation is the intensity of this consensus in the business community. Views on who is most corrupt can be shaped into three major groups, which are in addition closely interlinked. A fourth group can be added comprising the less represented views. The major views are the following: a) big businesses or businesses in areas where there is a lot of money are most involved in corruption b) businesses dealing with government and with public procurement c) construction enterprises d) other 2.2. a) Big Money - Big Corruption Even though some respondents were inclined to argue that small businesses are/can also be corrupt, most respondents suggested that corruption is more typical of big businesses, or businesses working with large deals: “I think it is mostly enterprises which are involved in large deals.” “Where there is more money, there is more corruption.” “Big businesses which get involved with tenders are most in contact with corruption.” “Big businesses are more involved in corruption than small ones. Those businesses which deal with the government are more involved naturally.” “We see from the news that it is big enterprises which have black funds which they use for greasing. Small enterprises definitely cannot do this, they do not have the resources.” “We are in services and I think there is a lot less corruption here; the money is much smaller compared to where the big public procurement deals are.” “I think it is mostly enterprises which are involved in large deals.” “Usually these things are done by the big enterprises; small enterprises are not in a position to do it.” “Big enterprises are more involved; I do not think that small enterprises are involved.” “Where there is big money, there is corruption. It is not necessarily sector related.” “Where there is more money, there is more corruption, such as construction, road maintenance, municipal land, etc.”

Unequivocally and repeatedly respondents indicated that large businesses, involved in big deals with the government, were the most corrupt. 2.2. b) Public Procurement/ Working With the Government Another major response to the question of “who” was that it is primarily enterprises that have dealings with the government. The response was clear, specific, and frequent in all countries surveyed: “Businesses which work directly with the government, for example enterprises which build roads.” “Not just the big enterprises, the small enterprises are also involved in corruption, if they are connected with the government.” “Big enterprises are naturally involved, because they work with the big tenders.” “Corruption is widespread. It is mostly related to tenders, to working with the government.” “Corruption is most present in those sectors which are related to the government and in particular [those] which work with public tenders.” “I think the most dangerous forms of corruption take place in public procurement, between the governments and enterprises which become huge overnight, exactly because of corruption.” “I think there is most corruption where the public sector is involved. Why would private enterprises pay more than they should? I think that 99% of corruption is from the public sector.” “The most corrupt enterprises are those which work with the government. They can be in different sectors, as long as they offer products or services needed by the government and public institutions.” “I think it is mostly related to tenders.” “It mostly involves enterprises which work with the government and government tenders; enterprises working with infrastructure, roads - all businesses that work with government, no doubt.” “It is usually those enterprises which are involved with the public sector.” “I think that all enterprises working with the government are corrupt: transport enterprises, construction, also enterprises which import food I think are very involved.” “Without the government’s involvement there can be no corruption.” The specificity and intensity of the views are strong indicators of the level of awareness in the business community concerning perceived hot spots of corruption. A lot of this can be taken as common knowledge; however, the insights are nevertheless useful in that they really sharpen the focus. For example, other forms of perhaps smaller scale, but still common corruption, such as bribing officials, controllers, etc., were completely exempt from respondents’ views.

70 2.2. c) Construction

Finally, the key word that definitely emerged from the responses to the question “who gets involved” was – construction. The construction sector was the most frequently cited culprit, accounting for a huge share of all answers. The response was sometimes directly elicited by asking the respondents to name a sector they felt was involved in corruption, but in many cases it was non-elicited and put forth by respondents themselves. The intensity of this view, as presented by the frequency of respondents’ answers, across countries, is a pertinent observation. For purposes of brevity, only a small number of responses will be presented: “I think in some sectors there can be more corruption, such as in construction.” “... mostly construction enterprises. I do not think small enterprises could get involved in corruption.” “I hear that enterprises, for example which make roads, they are the ones which are most involved in corruption.” “I think that most corruption is related to the tenders, and I think it can most often be found in construction.” “I think it is widespread - mostly in tenders and in construction.” “It is mostly present in public works, infrastructure works.” “It is most present in tenders. It is always the same enterprises; it is most often found in construction, building of roads.” “It is most present in tenders. It can be seen from construction tenders; most of them go to 1-2 pet enterprises.” “It is definitely very present in construction, definitely. There are always problems over those tenders; many good quality constructors cannot get the work because of family connections or political deals.” “I do not think it depends on the sector. The thing with construction is that there has been plenty of construction in the past period. In the future it will be something else; it depends on the economic trends.” “If it is a construction company, it is not some small company building houses, but a large one involved with roads, big buildings.” The responses provide a compelling picture of where the business community in the region thinks the center of corruption lies. The responses do provide some breadth for additional considerations, for example as to why construction, or what types of enterprises in the sector, but nevertheless the answer is specific and keenly relevant. 2.2. d) Other In addition to the three major groups of views on who is most involved in corruption, a fourth group can be formed of the minority views. These views can serve as indications of what other sectors or types of business, in addition to the major ones already discussed, are seen as most involved in corruptive practices: “I think that gas stations and customs are most involved.” “There is corruption also in customs.”

71 “... in pharmaceuticals...”

“Most corrupt are enterprises working with pharmaceuticals.” “I think it is mostly enterprises which work with tobacco in Kosovo.” “I think it is mostly businesses which import goods into the country; they are I think most pressured to offer bribes.” “... in oil, energy, tobacco, construction, alcohol...” “...pharmaceuticals...”

2.3. How to Fight Corruption? As a final question, respondents were asked how corruption should be fought and who should take the lead in fighting it. Respondents’ answers were grouped into several clusters depending on where entrepreneurs put the emphasis, that is, what they felt was the primary, or critical factor in action against bribery and other forms of corruption. The clusters of views are the following: a) the government or political leadership should have the leading role b) effective law enforcement is the critical factor c) the judiciary should lead the way d) everyone should be included and do their part e) action should start with education, culture, raising awareness f) reduction of bureaucracy is a critical component

From among these clusters of views, the two most dominant ones were: a) that the government or political leadership should have the key role, and b) that effective law enforcement was the critical factor. Respondents who suggested an accent on government and political leadership produced some of the following lines of argument: “[The] fight against corruption should start from the government and people in power; this is the level to start at.” “Motivated political leadership could help.” “You have to start from the head of the government.” “Politics and government should get more involved.”

“It is up to the government to fight it primarily; when politics reaches the level of the EU, so will corruption.” “The only one who can do something about it is the government; individuals can only try to stay away from it if it is possible.” “.Primarily the government should do something about it. The business people are just the victims; you cannot expect the victim to do something about it. They will adapt to the new conditions as they have adapted to existing ones.” “If you start from the top, it would trickle down and you won’t have even small corruption; but this would not happen if corruption at the top is tolerated.” “You need public officials, who are willing to fight it, and people also need to become aware; but without strong will on the part of the government, it is not possible to fight it.” “The government needs to take charge. Small enterprises are helpless in this regard; only the government and perhaps very big players can do something about it.” In addition to the perspectives above, stressing the necessity of institutional and political leadership, managers’ responses also definitively emphasized the need for effective rule of law: “Rules should be enforced. Businesses that sell products have to issue fiscal receipts. The work of the control bodies should not be discussed.” “In order to eradicate corruption you need good legislation which will be enforced. “Effective enforcement of the laws can reduce corruption.” “Laws need to be enforced.” “I think that more and stricter control could help reduce corruption.” “In order to reduce corruption you need to setup mechanisms. Businessmen cannot do much about it; if they want to get a share of the market, they need to play by the rules, whatever those rules are.” “Transparency is the key factor. Especially the public procurement has to be transparent, registered, documented; if something goes wrong, there should be an independent control.” “The only way is to enforce the laws rigorously; I don’t think that campaigning and talking will help.” “It takes simpler laws and more effective and simple administrative procedures.”

One group of views particularly emphasized the critical role of the judiciary in the fight against corruption: “I feel that with the judiciary improving there could be less corruption.” “First, it is up to the judiciary; it has to pursue it.”

“The courts have to react and sanction it so that people understand that it is wrong.” “The judiciary should play the main role, and the government should make things more transparent.” “The main thing is the judiciary; without an effective judiciary we cannot talk about fighting corruption.” “You need a special court which can lock people up expeditiously.” “The corrupt should be arrested and fired. Here they are only shamed publicly a bit and after a few days they are back at work. Their property should be seized also, and this is not something that works here.” “In order to fight corruption, we should import judges, for example from the U.K.”

Further, a minority view identified as a priority the reform of public administration and in particular the reduction of bureaucracy: “We need more transparency, less bureaucracy; corruption comes from huge bureaucracy.” “Red tape and bureaucracy should be reduced; sometimes when all our papers are in order customs officials look at us with anger.”

Another group of responses argued that the fight against corruption is a common obligation and a shared responsibility: “I think that no one should be excused from the fight against corruption; that everyone should be included: individuals, political parties, NGOs, the private sector.” “Everyone should be involved: the government, enterprises, individuals. Transparency can help, and I think it is essentially about raising the awareness.” “I think we have to start from ourselves and eradicate corruption from our own heads first.” Finally, there is the view that stresses the role of education and awareness raising work, and transforming culture: “It should start in the elementary school. Young kids need to be educated against it - then through high schools and universities.” “Schools should also be involved in teaching that it is wrong.” “I have some hope that the younger generations could make changes, especially raise the awareness of the people; I think that the people should say stop to corruption.” “We also need education and campaigns.” “People’s attitudes need to be changed, that is the core issue.” The views on how and who should fight corruption present relevant insights into entrepreneurs’ perceptions of the

problem and provide important guidance for policy action. Overall these views do represent common knowledge, but their intensity is an indication of what business people feel are the critical areas that need addressing. In combination with the preceding views on other related aspects of corruption, they can serve as guidelines for designing effective action.

3. Corruption: Tool or Obstacle to Doing Business? The most worrying responses related to the question about whether managers would pay a bribe if asked. Almost uniformly, the answers suggested that businesses do not see any alternative to paying bribes, that they do not believe that working with the government (public procurement) is possible without bribes, and that faced with a bribe situation they would “pay and move on”. It is significant to note that respondents see themselves as victims of such processes, and that they expect government to provide a safe environment for doing business. This is consistent with responses to previous questions and with research perception indices as well. When confronted with corruption, managers have a myriad of other parameters to balance in their decision: survival or sustainability or growth of their business, the welfare of employees and stockholders, cash flow and the fastest and most efficient way of meeting fiscal objectives and market needs, the threat of (fair or unfair) competition, spoilage factors and windows of opportunity, the fiscal security of families and loved ones, etc. Given these undulating variables, their short-term pragmatism is not surprising. Also of some concern was the response to the question about whether a small level of corruption can be good. Respondents that believed some level of corruption can be good state the necessity for an expeditious process, and consider “gifts” or symbols of appreciation a customary habit or reward for service. Other respondents stated that business may benefit from corruption but that it grows into a habit and can become dangerous. Those that disagreed about the benefits of even a small level of corruption are more firm in their conviction that corruption can under no circumstances be viewed as good, and that it damages competition, quality of work, and economic growth. The conclusion is that there is little dilemma in a large part of the business community about denouncing corruption. Even though everyone agrees it is widespread, and everyone without exception agrees that it is better to pay and move on, most entrepreneurs also agree that ultimately it can under no circumstance be good. This is a relevant insight into the complexity of the attitude of the business community to corruptive behavior.

3.1. To Pay or Not to Pay? Respondents provided an almost uniform answer to the open-ended question of how to react when confronted with the choice to pay as opposed not pay a bribe. The vast majority of respondents, practically with no exceptions, indicated that, under present circumstances, it is better to pay. This is a poignant reminder of business reality; it begs the question: until circumstances change, how can business actually be expected to reject involvement in corruption? Even though entrepreneurs agree in condemning corruption as a matter of principle, when they are confronted with

it in reality and must weigh their response in view of other interests, they almost unanimously agree that it is better to make the payment and move on: “It is difficult to refuse to pay if you have to; no one would want to ruin their business just because they refused payment once.” “The damage is even greater when you do not pay and you do not get things done.” “It is better to pay and get things done, and keep your business and the jobs of your employees.” “In our case, they asked for a lot of money and we could not pay, otherwise we would have in order to get the tender. Several years ago we won a tender without paying anything to anyone, and then the tender got annulled. Probably it could not be allowed that someone uncorrupt gets it.” “It is not possible to get a tender if you do not pay bribes.” “If you don’t pay, I think you will never get the job done.” “Everybody is trying to work out their problems, so it is best to pay and move on.” “I think it is better to pay and get on your way; our goal in business is to get the job done.” “It is better to pay and get things done.” “I had to give bribes in the past and still have to do it today; in some situations, such as to get a tender, you simply must pay.” These insights, as mentioned earlier in the text, should be taken as strongly relevant indications to inform and guide policy. The bottom line, also expressed directly by a respondent, is that “you cannot expect the victim” to take charge in the fight against corruption. Or in other words, any intervention should consider whether or not it is a realistic or practical expectation that business itself would be in a position to confront corruption. As the responses above very clearly demonstrate, when confronted with the dilemma, entrepreneurs usually also have other major interests at stake, often too vital to sacrifice.

4. Can Corruption Be Good? Asked whether some small level of corruption can be good, entrepreneurs are by-and-large inclined to argue ‘no’. The majority agrees that even small or petty corruption is bad, and that no corruption can be considered good under any circumstances. There is a minority view that some corruption can be useful, but with the reservation that this pertains only to small degrees, at the micro level, and so forth. Overall, the majority sees corruption as a negative phenomenon; a smaller minority acknowledges certain positive aspects of corruption but they are always strongly limited.

The minority views on corruption as possibly good suggested the following: “[It] could be that some corruption helps business; still I think that it is both necessary and harmful. It is necessary because the whole world has achieved development in this way, through corruption (laughs)...” “Corruption is harmful, but not necessarily, and it can also be useful, where there is corruption there is also development, because wealthy people can invest their money; without it, there would be no investment.” “I think that the so-called “greasing” is widely spread. I do not see anything bad in a small gift of appreciation after the job has been done, but it cannot be cash or anything of value. I think the border exists. There is a difference between a candy box and money. I do not think that the fight against corruption should go to the point where everyone fears any type of gift or service.” “Small presents are common; I think that it is easy to make the distinction between a small present and corruption.” “Some small level can be useful; things are done more quickly.” “For a small individual company it can be good; in order to position itself on the market it has to pay bribes. Businesses can benefit from corruption of course, but it grows into a habit, and you will always try to do things in such a way.” Again, these views agreeing that some aspects of corruption can be useful, were in a strong minority to the predominant view that under no circumstances can corruption be considered anything but bad. For reasons of brevity and avoiding redundancy, only a small selection of responses reflecting this view will be presented: “I do not think corruption is good for business; it distorts things. Someone who was not supposed to win wins, and the work is given not to the best worker.” “I am absolutely against corruption, big or small.” “I do not think our country can develop by breaking the laws.” “I do not approve even of petty corruption.” “I do not think that a small level of corruption is good because in that way enterprises cannot develop.” “Corruption is harmful; it is a disease.” “Corruption is bad, very bad, because it kills the competition.” “Corruption cannot be good in any sense.” “Corruption cannot be good under any conditions.” “Corruption creates unfair competition. I think that every form of corruption is bad for economic growth.” “I have never heard that corruption can be good. Corruption is bad in general, because good projects do not have a chance because of it. In order to have normal market competition and give good products a chance, we need to have equal chances.”

“It creates obstacles to fair competition and I think no level of corruption can be useful.” “If corruption were good, it would be legal.” “How can corruption be good if 30-40% of the profits of a certain company have to be paid to someone? It is clear where this money will end. How can such a company be successful?” The conclusion is that there is little dilemma in a large part of the business community about denouncing corruption. Even though everyone agrees it is widespread, and everyone without exception agrees that it is better to pay and move on, most entrepreneurs also agree that it can under no circumstance be good. This is a relevant insight into the complexity of the attitude of the business community to corruptive behavior.

Note on Methodology The research combined a quantitative and a qualitative component. The quantitative component consisted of a phone survey (closed questionnaire) of a total of 1,848 company owners or senior managers and, separately, a total of 1,340 young people from the region of the Western Balkans.

Survey of Business Managers The sample of business managers was structured by business sectors (using the standard international nomenclature), and the number of enterprises per sector and country was set in proportion to the number of active enterprises per sector in each of the countries, that is in proportion to the size of the respective sector in each of the countries (Table 1).

TABLE 1: SAMPLE OF PHONE SURVEY Sector Processing industry Construction Trade (wholesale & retail), vehicle repair, items for domestic use Communications and storage Hotels, restaurants, and bars Financial services Real estate Other services

REG 1848 246 198

CRO 410 36 75

MAC 278 36 22

SER 370 62 37

ALB 198 33 21

BiH 295 48 19

MON 144 11 14

KOS 153 25 13

781 147 128 29 93 226

154 35 24 5 17 64

138 15 22 6 13 26

153 27 14 3 28 46

68 28 21 3 8 16

129 20 16 6 13 44

66 12 16 2 11 12

63 12 15 4 3 18

Balanced geographic distribution of respondents was maintained, with enterprises selected from different parts of the country, and from both big cities and small towns. In terms of years of operation, 55% of the enterprises surveyed had been in operation for more than 10 years; 33.7% had operated between 3-10 years, and 11.1% for less than 3 years. In terms of company size measured in number of employees, 66.1% of the enterprises surveyed had less than 10 employees, 25% had between 11-50 employees; 6.9% had between 50-250 employees; and 1.4% had over 250 employees. In terms of gender, 65.7% of the managers surveyed were men, and 34.3% women. In terms of age, 54% of respondents were below the age of 40, and 45.1% were above the age of 40. The phone survey was conducted during the period Marchâ&#x20AC;&#x201C;April, 2010.

Survey of Young People In addition to the phone survey of business managers, a survey of 1,340 young people was conducted separately. The survey of young people combined several surveying techniques: written questionnaires, web surveying, face-to-face surveying, as well as a smaller amount of phone surveying. The combination of techniques used was necessitated by the different types of respondents (young people usually without a regular office phone number, hence more difficult to reach at random by phone). Many of the respondents were reached through their universities, which agreed to help the research effort. Effort was made to ensure overall balanced geographic distribution by reaching out to respondents from different parts (both urban and rural) of the countries involved. The regional sample (Table 2) was compiled according to the share of young people (up to the age of 30) in the total population of each of the seven countries involved, and in the regional total. Small weighing was applied to the sample.

TABLE 2: SAMPLE FOR SURVEY OF YOUNG PEOPLE ALB

BiH

CRO

KOS

MAC

MON

SER

REG

210

198

242

118

133

399

1340

In-Depth Interviews with Business Owners and Managers In addition to the phone surveys, a series of 133 in-depth interviews were conducted with company owners and managers in the seven countries included in the research. The inclusive list of all interview respondents is presented in Table 3 below. The interviews were conducted during the period Februaryâ&#x20AC;&#x201C;June, 2010. Given the sensitivity of the topic, the opinions expressed are not credited to individual respondents as a general principle. This approach was decided given the large number of respondent requests not to be cited, or to stay anonymous.

TABLE 3: LIST OF INTERVIEWS

General Manager General Manager

COMPANY, CITY, DDB Albania, Tirana Printec group, Tirana

3 Alba Paparisto

Manager

KPMG, Tirana

Albania

22 Feb 2010

4 Alfred Kalo

President

Ernika, Korca

Albania

23 Feb 2010

5 Ariana Berberi

Director

Albania

23 Feb 2009

Trade

Albania

24 Feb 2010

Services

Albania

22 Feb 2010

Albania

22 Feb 2009

Trade

Albania

22 Feb 2009

Albania Albania Albania

22 Feb 2010 24 Feb 2010 3 March 2010

Food production NK Production Trade

Albania

24 Feb 2010

Albania

23 Feb 2010

Production

RESPONDENT 1 Adrian Garo 2 Adrian Shehu

6 Arjan Calliku 7 Erald Shvajapi Ermira Jahiqi 8 Lulaj 9 Fatmir Vogli 10 Arian Quato 11 Hasan Sokollari 12 Ilia Bano 13 Kujtim Koka 14 Proletar Hasani

POSITION

Artinel 95, Tirana Arjan Calliku, Director Durres Manager Shvajapi, Tirana Ermira Jahiqi Sales Manager Lulaj, Todi Anita Milk, Manager Shodra Manager Quato, Tirana Director Dante, Durres Director Ilia Bano, Tirana several Manager enterprises, Tirana Pap Metal Manager Impex, Durres

COUNTRY

DATE OF INTERVIEW

SECTOR

Albania

22 Feb 2009

Marketing

Albania

23 Feb 2010

Business consulting Business consulting Food production

Food production Food production

NO. of EMPLOYEES 11 15 45 11

11 NK 7 5 5 20

15 Shaniko Goxhaj

Manager

Behari, Tirana

Albania

23 Feb 2010

16 Sokol Doci

Director

Doci, Durres

Albania

2 March 2010

17 Subi Cako

Director

Albania

9 March 2010

Trade

18 Vjollca Cubi

President

Albania

22 Feb 2009

Art

19 Zamir Faja

President

Albania

3 March 2010

Construction

20 Andis Papa

Director

Albania

3 March 2010

Kosovo

12 Feb 2010

Tourism

15 Feb 2010 15 Feb 2010

Consulting

Trade

Besnik Islami

2 Hazër Shehu 3 Blerim Morina

General Manager Director Manager, Partner

4 Yll Zagragja

Director

5 Sokol Ismaili

Managing Partner

Subi Cako, Tirana Bar Gallery Art, Tirana ACC Xhomen, Durres Fastech, Tirana Hotel Prishtina, Pristina NT “Kalavishi “ “Out Source”tek, Pristina “ Zagragja & Associates “, Pristina “Globex”, Pristina

Kosovo Kosovo Kosovo

15 Feb 2010 15 Feb 2010

11 6

POSITION

COMPANY, CITY,

COUNTRY

6 Ardit Krasniqi

Director

Kosovo

7 Astrit

Manager

8 Afrim Berisha

Director

RESPONDENT

9 10

Mehmet Bajramaj Sadik BYTYQI

Director Director

ELKOS Group, Peja “Bylmeti “, Kosovo N.P.T.Fabatex, Decan “Galaktika”, Prizren

Kosovo

Food production

Kosovo

18 Feb 2010

Production

Kosovo

18 Feb 2010

Production

19 Feb 2010

Food production

12 Vedat Jashari

Director

“Vedat Jashari”, Kosovo Pristina

13 Flamur Visoka

Director

Synergy Kosova Kosovo

14 Durim Hoxha

Director

15 Burim Piraj

Director

17 Abdyl Latif Ese

Director

18 Shkelzen Popaj

Director

19 Shpetim Alimusaj Director 20 Avdi Azemi 1 Gëzim Shaqiri 2

Arben Abdulrrahmani

Director Manager Director

3 Agim Poshka

Director

4 Nexhat Aliu

Director

5 Perparim Berati

Director

Slavica Ilievska, Suzana Ilievska, Sandra Stevanovic

Ksella International , Skopje Vezë Sharri, Tetovo “Shtepia –Art, Struga “NEPA PLAST”Tetovo IGNATIA, Gostivar

18 Feb 2010

Kosovo

“Oaza “

Director

Consulting

NO. of EMPLOYEES

Trade

General Manager

16 Mustafa Hoxha

SECTOR

18 Feb 2010

11 Ender

“C E B D“, Pristina N.P.T. MEKA MISH, Plave “Eko” Rahovec “EuroFood”, Prizren Xeni Commerce, Gjakova Fabrika e Re e Brumeve, Peja Elan Petrol

DATE OF INTERVIEW 16 Feb 2010

Kosovo

Kosovo Kosovo Kosovo Kosovo Kosovo

19 Feb 2010 19 Feb 2010 20 Feb 2010 4 March 2010 9 March 2010 9 March 2010 9 March 2010

Services Consulting Business consulting Food production Food production Food production Trade

310

3 NK 6 41 5 6 13

Kosovo

9 March 2010

Kosovo

5 Feb 2010

Food production Oil industry

Macedonia

19 Feb 2010

Construction

2 March 2010

Food production

Tourism

Production

Tourism

14 3

Macedonia Macedonia Macedonia Macedonia

9 March 2010 8 March 2010 19 March 2010

23 10 6

Co-owners

Momenti, Skopje

Macedonia

5 Feb 2010

Services

9 Nikola Vranovik

Owner, Manager

construction company, Negotino,

Macedonia

5 Feb 2010

Construction

10 Goran Georgiev

Owner, Manager

Trimaks, Skopje Macedonia

5 Feb 2010

Publishing

6-8

81 RESPONDENT

11 Bojan Perevski 12 Anonimous Nenad 13Fidanovski , 14 Nikola Javorac 15 Anonimous 16

Miroslav Grujovski

POSITION Owner, Manager Owner Owner and Manager/ Partner Legal Officer Engineer

17 Jasmina

Manager

18 Lazo Gligorovski 19 Kiril Tasevski 20 Anonimous Marina & 21 Daniela

Manager Manager Manager

22 Anonimous

Manager

23 Anonimous

Manager

24 Anonimous

Manager

25 Kate

Manager

26 1

Manager

Katerina Velkovska

Owner

Dzenan Dzipa (ANONIMOUS)

Owner, Manager

2 Haris Ćatić

Co-owner

Tatjana Spasojević 4 Faruk Jaganjac 5 Mersudin Mujić

Owner, Director Owner Director

6 Elvedin Lović

Owner

Dragan 7 Pandurević 8 Damir Dračić

Owner Director

9 Zoran Topić

Director

10 Amel Čorda

Director

11 Josip Raić

Director

12 Edis Čauš

Director

COMPANY, CITY, ICT Creative, Skopje Kumanovo Global Net, Skopje Mavrovo Inzinering, Skopje Kreativa Design, Bitola Rafajlovski Konsalting, Skopje Te-ki-la, Kicevo GMM, Skopje Eurisk, Skopje DiM Konsalting, Skopje Eurobroker, Skopje Flamingo, Strumica Vila Silia, Skopje Houzmajstor, Skopje Sanedonia, Ohrid

COUNTRY

DATE OF INTERVIEW

SECTOR

Macedonia

3 Feb 2010

Macedonia

5 Feb 2010

Macedonia

NO. of EMPLOYEES 2 NK 5

Macedonia

31 May 2010

Construction

Macedonia

May 2010

Grafhic design

Macedonia

May 2010

Law consulting

Macedonia Macedonia Macedonia

May 2010 May 2010 7 June 2010

NK Trade Consulting

NK NK NK

Macedonia

1 June 2010

Consulting

Macedonia

28 May 2010

Finance

Macedonia

28 May 2010

Tourism

Macedonia

28 May 2010

Tourism

Macedonia

May 2010

Services

Macedonia

28 May 2010

Tourism

BiH

2 Feb 2010

Production

BiH

2 Feb 2010

Consulting

Trios, Doboj

BiH

2 Feb 2010

Consulting

MET plast, Tuzla Almers, Živinice Lović&Co Lukavac MP Pandurević Modriča Int-Ware Prijedor Zavarivač Prijedor Pansion Aura Mostar Terra Kop Mostar Ce Inžinjering Zenica

BiH BiH

3 Feb 2010 3 Feb 2010

Production Production

21 9

BiH

3 Feb 2010

Production

BiH

3 Feb 2010

Production

BiH

3 Feb 2010

BiH

3 Feb 2010

Production

BiH

3 Feb 2010

Food services

BiH

3 Feb 2010

Construction

BiH

3 Feb 2010

Design

FIP, Tuzla CEDES.ba, Sarajevo

5 12

82 13

RESPONDENT

POSITION

Mehmed Šaćirović

Director

14 Salih Durić

Direktor

15 Mario Bandić

Owner

16 Mato Brkić

Owner

17 Dragan Zovko

Owner, Director

18 Mario Đuzel

Owner

19 Sanel Grabovica Owner 20 Željko Jovićević

Owner, Director

21 Sanel Nezirić

Owner

22 Kemal Beganović Director 1 Ivan Matuna

Owner, Director

2 Nika Rukavina

Co-owner

3 Sanjin Kindin

Owner

4 Bruno Birgmajer

Owner, Manager

5 Ivan Sarar

Director

Lucija Bilandžić (group interview) Ana Marković 7 (group interview)

Katarina Magić Koščević

9 Krešimir Golubić 10 Sasa Stular 11 Mario Cerinski 12 Kristijan Prikratki Ivan Jenkač, 13 B.Sc. 14 Marin Šipek 15 Marko Horvat

COMPANY, CITY, Extreme net Zenica PMG ViP Gradačac Band Grad, Grude Koka, Domaljevac OTIS o.r. Žepče Rolex-trade Žepče Sanit Granit Modriča Tesla Modriča

COUNTRY

DATE OF INTERVIEW

SECTOR

BiH

4 Feb 2010

BiH

4 Feb 2010

Food production

BiH

4 Feb 2010

Construction

BiH

4 Feb 2010

Food production

BiH

5 Feb 2010

Production

BiH

5 Feb 2010

Production

BiH

5 Feb 2010

Production

BiH

8 Feb 2010

Production

8 Feb 2010

Law

9 Feb 2010

Trade

25 Feb 2010

Advokatski ured BiH Sarajevo Ing Biro Zenica BiH Matuna, Zagreb Cro Studio Glazar, Rijeka Studio Kindin, Rijeka Visor, Zagreb

Manufaktura, Rijeka Binđo, Ivanič Co-owner Grad Co-owner and Insula tours, Ass. Director Ivanič Grad Co-owner and Head Mi-Maris, Ivanič of Business Grad administration Owner, Golmax, Ivanič Director Grad Director Garstil, Zagreb Intelika, Director Varaždin Co-owner Ekobit ,Varaždin Meritum soft, Owner Varaždin RA Sjever, Manager Varaždin RA Sjever, Manager Varaždin

NO. of EMPLOYEES

Cro

22 March 2010 Grafhic design

Cro

22 March 2010 Grafhic design

Cro

25 Feb 2010

Cro

22 March 2010

Recording studio

Cro

25 Feb 2010

Construction

Cro

25 Feb 2010

Tourism

Cro

25 Feb 2010

Construction

Cro

25 Feb 2010

Trade

Cro

25 Feb 2010

Production

Cro

19 March 2010 IT

Cro

19 March 2010 IT

Cro

19 March 2010 IT

Cro

19 March 2010

Cro

Research and Development Research and 19 March 2010 Development

28 5

8 8

83 RESPONDENT

Ana Matić, B. Arts 17 Leo Šušnić Slobodan 18 Banašin

1 2 3 4

B.P. V.I. M.C Z.C.

POSITION Co-owner Director Director

COMPANY, CITY, Studio Glažar, Rijeka DLS, Rijeka Adriatic Tim, Rijeka

COUNTRY

DATE OF INTERVIEW

Cro

22 March 2010 Design

Cro

19 March 2010 Consulting

Cro

19 March 2010 Tourism

Director Co-owner Director Owner Director of Commerce Owner Co-owner Director Director Owner Owner

NK; Prokuplje NK; Prokuplje NK; Prokuplje NK

Ser Ser Ser Ser

12 Feb 2010 11 Feb 2010 18 Feb 2010 18 Feb 2010

Ser

19 Feb 2010

NK; Prokuplje NK; Prokuplje NK; Prokuplje NK; Prokuplje NK; Prokuplje Omnis, Nis

Ser Ser Ser Ser Ser Ser

17 March 2010 18 March 2010 18 March 2010 18 March 2010 19 March 2010 6 June 2010

Owner

Aquaterm, Nis

Ser

10 June 2010

Owner Owner Advisor

Kalibar, Nis Leskovac RTK, Nis

Ser Ser Ser

11 June 2010 10 June 2010 10 June 2010

16 Nenad Tomcic

Owner

Frigo Nais, Nis

Ser

11 June 2010

17 Goran Gajic

Owner

Tri praseta, Kursumlija

5 Z.J. 6 7 8 9 10 11 12 13 14 15

S.A. D.M. S.M D.K. D.J. Miodrag Lukic Miloje Stamenkovic Miodrag Ilic Anonymous Dragan Paunovic

1 Ivica Pavlovic 2 Anonymous 3 Anonymous Ljiljana 4 Dragojevic 5 Anonymous 6 Drago Zecevic 7 Anonymous

Co-owner Co-owner Director Owner, Manager Owner, Manager Owner, Manager Owner, Manager

8 Anonymous

Manager

9 Anonymous 10 Anonymous

Lawyer Manager

SECTOR

NO. of EMPLOYEES 3 11 2 11 14 15 40

Ser

11 June 2010

Production Trade Construction NK Food production Marketing Food services NK Services Production Trade Business Consulting Production Production Consulting Food production Food production

Ital Mont, Bar Pulena, Bar Podgor Import

Mon Mon Mon

17 March 2010 Trade 17 March 2010 Food sercives 17 March 2010 Trade

6 30 15

SZR Junior, Bar

Mon

17 March 2010 Trade

Mitrex, Bar

Mon

17 March 2010 Trade

Abordage, Bar

Mon

18 March 2010 IT

Mon

17 March 2010 Trade

Mon

mid March

Design

Mon Mon

mid March mid March

Law NK

Tom Company, Bar Start Design Studio Advokat, Bar Peshe, Bar

10 5 6 5 6 5 5 4 6 8 30 18 4

NK NK NK1

Project title:

Responsible youth entrepreneurship: creating a culture of anti- corruption in the private sector

Project funded by European Union Implemented by:

YES Foundation, Macedoniaâ&#x20AC;&#x201C; www.yes.org.mk

NBR, Bosnia and Herzegovina- www.nbrudruzenje.org

Initiatives, Serbia- www.theinitiatives.org

Inceptum, Slovenia- www.era.si/sl/Inceptum Supported by:

Partnership for social development, Croatia- www.psd.hr This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of YES Foundation, Macedonia and can in no way be taken to reflect the views of the European Union.