SIXTH FRAMEWORK PROGRAMMEPRIORITY 7

FP6-2004-CITIZENS-5

CRIME AND CULTUREPROJECT MEETING

(FIRST PROJECT RESEARCH PHASE)Bucharest, 3 – 4 November 2006

Case studies

•Case Study 1: Suspect donation to the party foundation Democracy of the United Democratic Forces

•Case Study 2:Privatization of Bulgartabac Holding (BTH)

Data Generation

•Documents related to the two particular cases - media materials, NGO analysis, Verdicts, Parties leaders’ statements etc.

•General materials on corruption from the target groups we were not able to obtain documents to the cases.

Codes development:

•1st level: Most explicit ideas, usually associated with specific words and phrases

•2th level:beyond the basic meanings of the concepts, deeper argumentations and perceptions

•3rd level: hidden ideas or concepts with more abstract character

Interpretation: building a single story to place findings in appropriate position.

Case study 1

•Michael Chorny announcing “his” donation to the Democracy foundation in October 2003•The pre-history of his expulsion from the country in 2000•Immediate start of several investigative proceedings•Huge media coverage•Libel cases won by Chorny 2004-2006•Nicosia court decision that Chorny was not the owner of the company which made the donation

Background facts

•Party financing is a poorly regulated area – the issue of “structural corruption” (problems with disclosure, parties-foundations)•Party funding and organised crime. What is organised crime? Gap between judicial pronouncements and “public knowledge”

Major dichotomies in the understanding of crime and corruption

•Legalistic conceptions v. public-interest-based conceptions•Pro- and contra-foreign financial participation in domestic politics (no special worries about the foreign element)•What to do with money from illegitimate sources – accept to make good use of them or reject and blacklist?•Legitimate lobbying v. corrupt influence. How to build a social base for a political platform•Private use of political money v, public use of political money•Transparency v. egalitarianism

Target Group Politics

•From legalistic to inflated interest-based conceptions of corruption: favouritism in privatisation; state control of smuggling channels; turning the party into a corrupt hierarchical structure•Gap between the understandings of accusers (Sugarev) and accused (Kostov); government and opposition•Attempt to normalise “inflated” conceptions of corruption – the circle of firms idea (clientelism and favouritism in defence of the public good)

Target Group Judiciary

•Heavy emphasis on legalistic conceptions •Transformation of corruption allegation into libel•Was it an attempt to setup Kostov, or an instance of a kickback for a governmental favour?•Inconclusive character of judicial involvement – neither confirm or reject allegations conclusively, which provides ground for the production of myths

Target Group Police and Prosecutors

•Wide-spread use in official documents of “inflated” public interest based conceptions of corruption: “circles of friends”, favouritism, party machines, “political umbrella against investigation”, massive theft through privatisation•Naming people as part of mafiotic structures – including a minister of interior•Use of such documents in election campaigns•Lack of judicial confirmation of allegations – these rarely reach the courts as formal indictments•More politicians than magistrates in terms of discourse

Target Group Media

•Corruption as an all-embracing metaphor – criminal and bad government;•Main theme: The elite is stealing from the people on a massive scale.•Solutions: convictions. But also, people want to share in the spoils of corruption. Participatory corruption ideal.•Role of the media: to hook in the people in the process of grand stealing, to make them a witness, rather than to “condemn” and “sanction” corruption.•Arguments: disproportionate interest in the outbreak and unfolding of scandals, and lack of interest in its resolution

Target Group Civil Society

•Most sophisticated discourse, dictating the fashion in general•Corruption is measurable, and it is increasing or at least is very high. It is bad for the economy.•It is a problem which could be dealt with through institutional change and a change in the incentive structure of important actors (Stanchev on party funding)•Results could be expected quickly•Civil Society discourse raises dramatically public expectations, delegitimises governments, creates new populist political actors (necessity of political will, new facs, etc.)

Target Group Economy

•The discourse of silence•Corruption as an economic problem stemming from read tape•Depersonalised speak of corruption – structural problems come to the fore•Disparity between popular perceptions and business community perceptions•Corruption as “grease” – the business community will never surrender this option

Conclusions

•From legalistic, quid pro quo understandings of corruption to the predominance of the metaphor of criminal government•Delegitimation of mainstream politics •Preparation of ground for new populist actors•The wearing out of the effect of the corruption discourse

Case Study 2: Privatization of Bulgartabac Holding

BULGARTABAC Holding:– leading tobacco company in SEE– state-owned and managed– tobacco buying, processing and leaf trade, manufacturing and export of cigarettes

1998: First put up for sale by the UDF Government in. July 2000: Privatization Agency (PA) cancels tender and invites new bids. March 2001: privatization procedure terminated.

Case Study 2: Privatization of Bulgartabac Holding

•The parliamentary elections in 2001 were won by Simeon II National Movement (SIINM)

•New Minister of the Economy and Vice Prime-Minister Nikolay Vasilev announced that the privatization of the Bulgartabac tobacco holding would be completed by the end of 2001.

•Due to political and economic constraints, the new bidding did not start until the spring of 2002.

Case Study 2: Privatization of Bulgartabac Holding

•March 25, 2002 – procedure opened

•June 5, 2002 - start of second phase with 5 candidates remaining

•July 22, 2002 – final bids submitted

•August 23, 2002 – PA chooses Deutsche Bank

•Chorni appeals PA decision at SAC

Case Study 2: Privatization of Bulgartabac Holding

•March 25, 2002 – procedure opened

•June 5, 2002 - start of second phase with 5 candidates remaining

•July 22, 2002 – final bids submitted

•August 23, 2002 – PA chooses Deutsche Bank

•Chorni appeals PA decision at SAC

Case Study 2: Privatization of Bulgartabac Holding

•October 2002 – 3 member SAC panel declare the procedure illegitimate and cancels the choice of buyer

•December 2002 – 5 member SAC panel confirm decision of 3 member panel. Final decision

•Chorni succeeds to block the deal with Deutsche in court, but not to buy BTH

•February 7, 2003 – Government prepared a special privatization law to overrule court decision

•April 3, 2003 – due to opposition in Parliament, PA stops negotiations, and Council of Ministers stops the procedure

Target group Politics

•Political vs. technical privatisation•“National security” (ab)use

Target Group Judiciary

• Economically effective privatisation

Target Group Media

•Non-transparency, lack of transparency

•Favouritism, Friendly connections

•Violation of journalistic ethics

Target Group Civil Society

•Political rent seeking

Target Group Economy

•Definitions of corruption-Power abuse for personal benefit-Pressure exercised by state agencies/local authorities-Way to get things done-Corruption as a deal-Compensatory corruption

Target Group Economy

•Hierarchic structure of corruption-1st level: Favors exchange-2nd level: preferable treatment in return to bribes-3rd level: corruption in procurement-4th level – corruption in the legislative process and at governmental level

Target Group Economy

•Corruption as a barrier to business. •Business interest in corruption exchange

Conclusions

•What privatisation??

•Political capital as a profit from corruption?