Public Tenders Winners Donate to Leading Parties
By The Center for Investigative Reporting
Every year, but especially in election years, political parties in Bosnia and Herzegovina (BiH) receive donations from companies doing business with the authorities. This is in violation of the Law on Financing of Political Parties.
The Center for Investigative Reporting in Sarajevo (CIN) has found that six leading political parties took nearly 210,000 KM between 2006 and the end of 2009 from 70 private businesses which held contracts with the government.
Parties also received donations from 39 companies that held contracts with government-controlled public companies. While the Law prohibits accepting donations from companies which have done business with government, the same does not apply to doing business with public companies.
The ban was passed to prevent private businessman from reaping the benefits of financing parties which, through their elected officials, give out contracts through public tenders.
According to financial reports filed with the Central Election Commission (CIK), the Croatian Democratic Union (HDZ), the Alliance of Independent Social Democrats (SNSD), the Social Democratic Party (SDP), the Serb Democratic Party (SDS), the Party of Democratic Action (SDA), and the Party for BiH, reported receiving more than 2 million KM in donations from private companies. This amounts to just 3 percent of their budgets. However, CIK has warned for years that parties have not been reporting all their income as well as that they have received donations above the allowed annual cap. According to the law, the parties are bound to report all donations over 100 KM, and the annual cap consists of 15 times the average salary.
Most donations to the parties come in election years. Thus in 2006, they received 704,000 KM, and in 2008, 845,000 KM of donations.
Owners of the donating companies, who agreed to interviews with CIN, said that they give across partisan lines and that the donations did not bring in business contracts with government agencies.
Hering, construction company from Široki Brijeg, donated 11,000 KM to HDZ in 2008. CIK established that the amount was 4,984 KM over the allowed limit, and the party followed the recommendations to return over-the-cap money. Hering donated 5,000 KM to HDZ the following year.
Between the end of 2005 and April 2008, when it first donated to HDZ, Hering already had six contracts with government agencies and public companies worth nearly 67 million KM.
Hering continued to receive construction contracts from government agencies and companies in which HDZ cadre participated in the boards, such as the Elektroprivreda of the Croatian Union of Herzeg-Bosnia and the City of Mostar. These amounted to more than 17 million KM. This April, a consortium Vijadukt-Hering signed a contract with the FBiH Bureau for Construction, Management and Maintenance of Highways for more than €43 million.
‘This was buying of peace, of sorts’, says Ladislav Bevanda of Hering adding that HDZ’s donations did not help his firm win bids because it had been successfully doing business before them.
The most generous company donor was the oil firm Hifa Petrol which donated 14,100 KM to SDA, SDP and the Party for BiH between 2006 and 2008. Hifa was a major fuel supplier to government agencies and public companies when it paid out its first donation in 2006 and to this day it has concluded nearly 8.5 million KM of contracts based on public procurement.
As with Hifa, Brčko-based Alcoop that specializes in office equipment and its owner Almir Zejnilović, donated to three political parties in 2008: 1,000 KM to HDZ; 6,000 KM to Party for BiH and 500 KM for SDA.
According to data CIN obtained, from the moment it donated to political parties until now, Alcoop has signed at least 12 contracts with the Brčko District government, the total amount exceeding 400,000 KM.
Zejnilović said that donations have not helped his company and that as of recently he were possibly in worse straits than before the giving. ‘I know a 100 people. This has nothing to do with my status and persuasion. That is, I don’t have persuasion.’
In 2001, the Brčko supervisor dismissed Hasija Zejnilović as head of Education Department at the Brčko District government. A report by the Office of High Representative (OHR) detailed how Zejnilović had abused her office on several occasions to benefit Alcoop and its owner, her son Almir, also a Brčko government employee.
A year before it donated to SNSD, Brčko Gas was awarded contracts by the Republika Srpska forest management company Šume RS, whose director Neđo Ilić is a member of SNSD’s main board, and by the municipality of Modriča whose head Mladen Krekić is an SNSD member while the city council is made mostly of the party members; and by Laktaši municipality whose head Milovan Topolović and all 25 council members are SNSD members.
SDP’s Bihać-based donor Cestogradnja was awarded public bids put out by the town’s Bureau for Spatial Planning which is headed by Mirsad Kurić, a member of SDP‘s Municipal Board.
The most severe sanction proposed by the law is to deny a party the chance to run for the elections. The parties have not been punished so far in this way, nor have they been fined by an amount which could surpass three times the sum received illegally.
CIK does not sanction corporate donors. ‘The Law on Financing of Political Parties has no penalties. Maybe some way to make those persons accountable could be found in the Law on Conflict of Interests, but that is beyond our authority’ said Hasida Gušić, head of the CIK Auditing Department.
Donations for Subsidies
In addition to doing business with authorities while at the same time donating to their parties, some companies also have received government incentives or low-interest loans, CIN found.
Promark from Mostar, an HDZ donor which in 2008 received 8,000 KM in incentives from the FBiH Ministry for Development, Entrepreneurship and Crafts. This company was also awarded several public tenders put out by Elektroprivreda HZ HB.
Similarly, SDA donor, Rial-Šped from Doboj Istok received a 22,000 KM incentives in 2007 and it was awarded several contracts put out by the Ministry for Spatial Planning, Traffic and Communication and Environment Protection of Zenica-Doboj Canton. That ministry is headed by Nermin Mandra, president of the SDA Kakanj Municipal Board.
In the same year Hering donated money to HDZ, the firm received a low-interest 200,000 KM loan from the FBiH Ministry for Development, Entrepreneurship and Crafts.
HDZ spokesperson Mišo Relota described how donations were transparent and legal. He said the donations were unconditional and not based on some agreements and that all persons signed a statement of donating money to HDZ.
Asked whether all donors were listed in the party’s report, Relota said: ‘I won’t go into who, what, where, how. I have a final annual report from the CIK and everything is fine. ‘There are no would be’s or could be’s here. It’s not our style.’
Hering owner Bevanda said that he was neither a member, nor a party sympathizer, but that he had donated money after meeting with HDZ members. He added that on that occasion he was told that he had been getting contracts put out by the party’s’ ministers while he had never even bought them lunch.
‘Then I said: ‘Well, if I should be some, quote unquote Big Time Croat, then pass me the bill. How should I pay? To be sure, I will not pay you under the counter or illicitly.’
First published on Jan. 15, 2011