Parliament’s Backstage: Lobbying or Corruption?

After an amendment to the cigarette tax law pushed forth by the Socialist Party of Serbia was recently passed in Parliament, the public has begun asking questions on whether lobbying is practiced in the country, and if so, how and where does it take place.

According to the Socialists, who proposed the amendment without consulting the remainder of the ruling coalition, the reduced excise tax on cheaper cigarettes is geared toward protecting the country’s less affluent smokers. However, the tax difference will also significantly benefit the manufacturers of cheaper brands, the majority of which are domestic companies, and it is this fact that has roused the public and spurred speculations that the Socialists are being acting in cahoots with Predrag ‘Peconi” Rankovic, the owner of Monus, Serbia’s largest manufacturer of low-cost cigarettes. Yet the problem is not that the rest of the ruling coalition failed to support the controversial amendment – it is that the tax reduction in question, according to estimates, is likely to deprive the state budget of some two billion dinars.

Thus talk of lobbying has come to Serbia, and the public is now asking what lobbying is, and whether all forms of influence immediately involve corruption, or if it is possible to legally define such processes and have them take place in the open, thereby making them normal and acceptable as in developed democratic countries.

What is lobbying? An exchange of favors? Paying for a favor? Something else? “Lobbying is an attempt to influence the authorities’ decision, either executive or legislative. And such an attempt can be made directly or through an intermediary. These intermediaries are professional lobbyists – companies that do not represent their own interests, but the interests of their clientele,” Argus learns from Nemanja Nenadic, the executive director of the non-government organization Transparency Serbia.

According to Nenadic, Serbia has in no way regulated lobbying, be it direct or indirect. All that exists are clauses from the Penal Code and regulations regarding conflicts of interest, which set boundaries in cases when a decision-maker is offered or promised some kind of benefit for deciding in favor of a specific cause.

“There’s that line: if something were offered or given to an MP, a minister, or a public official, so they would influence the legislation, that would constitute a criminal act,” Nenadic says, adding that a start point for regulating this field should be the obligation for every state body and official to notify the public of who contacted them regarding a law – be it a company, an NGO, or an individual.

“That is where to begin, and if the publicizing of [such] information were mandatory, then the public could judge if a decision was brought to protect the interests of a certain group,” Nenadic said. Yet the NGO head reminds that the country needs not only a law on lobbying, but control mechanisms to keep influencing in check. According to him, one such measure would be the publicizing officials’ property, another, letting the public know where political parties get their funds.

When asked to comment on the situation in Parliament, and on the fact that the director of Rankovic’s factory Monus had frequented the assembly just prior to the controversial amendment being passed, Nenadic said that the factory head’s presence was in itself not the problem. What is wrong, claims Nenadic, is that the public does not know who visited or sent written proposals to caucuses and the government regarding legislation.

“No one should be denied the right to try influencing the authorities’ decision by accepted means – offering suggestions, pointing out why a decision should be made in this or that way. What’s bad is that such activities are not public, [that they] are unknown. The issue would never even have been raised had at one point the Socialists not voted contrary to the government’s stance. Who knows how many laws have already been passed in the country under the influence of groups with certain interests at stake, without it ever becoming known,” Nenadic explained.

Serbia’s Lobbyists

Just about the time the scandal over cigarette taxes broke out, an announcement came that a Lobbyist Society had been founded in the country and that it had already adopted a Code of Ethics and formed a working group to draw up a Bill on Lobbying.

Ana Bovan, the head of the newly-founded society, has told Argus that the society’s goals are to combat corruption, create a law on lobbying, and further harmonize domestic regulations with European standards.

According to Bovan, the Lobbyist Society was formed in December of last year and currently numbers 30 members that are experts in law, professors, attorneys, judges, and entrepreneurs.

“[Our] main objective is to combat corruption on all levels through the passing of a Law on Lobbying, to develop highly professional and ethical standards for lobbyists, to train members, and enhance Serbia’s overall lobbying potential in political and economic diplomacy. The task of educating all those participating in the lobbying process is immense, because the current understanding of this field and its procedures and methods is at a very low level,” Bovan claims.

According to her, the new law should regulate every activity that could be termed the representing of interests or lobbying with the legislative or executive authorities.

“In this way, the representing of legal and legitimate interests is a completely founded and natural part of the democratic process. When things occur without a law, corruption in lobbying is often inevitable, but with a law [such activities] become transparent and the risk of corruption is significantly reduced. The legal solution would encompass several fields, including whether a certain action is or is not legally acceptable, how the registration process will work, and how lobbying is to be reported,” Bovan stressed.

“The passing of a law and setting of standards for lobbyists and lobbying base on EU laws will constitute an great hindrance to corruption on all levels. Also, the law will promote professionalism and lessen the ignorance and lack of expertise which sometimes lead toward corruption, because the participants of the lobbying process are unaware of the procedures and methods of both the state and professional lobbyists, and therefore seek other means, often illegal,” Bovan said.

The Lobbyist Society has already adopted a Code of Ethics which, according to the society’s president, not only represents a professional and moral compass for its members but will guide future lobbyists as well once the law on influencing is passed. “The Serbian Lobbyist Society’s Code of Ethics sets standards for transparent work and action, using information and documents, avoiding conflicts of interest, employing former government officials, financial integrity, confidentiality, and responsibility in lobbyists,” Bovan said.

Ana Bovan herself is head of the Bovan Consulting public relations firm, and has spent twenty years working for leading American and European corporations such as Deutsche Telekom, Glenayre Electronics, CallMax Telecoms, Mobility4Sweeden, ICN Pharmaceuticals, Bel Pagette, and Mobtel. Bovan has also masterminded several political campaigns in Serbia-Montenegro and Republika Srpska, is the author of the PR News television show, the editor of the weekly business magazine BC Bilten, and has penned numerous papers. She is one of the founders and executive vice president of the Serbian Managers’ Association. She is married to Sasa Bovan and has two sons.

Lobbying in Serbia and the Region

When it comes to lobbying in the region. Ana Bovan says that none of the neighboring countries have yet adopted a Law on Lobbying, but that the practice of lobbying in Slovenia and Croatia is somewhat more advanced, especially on the international level, than in Serbia.

“Since the spring of 2008, Croatia has had a professional society led by its former interior minister, Mate Granic. Our Society has recently prompted the formation of similar associations in Slovenia, Montenegro, Bosnia and Herzegovina, and Macedonia, and I believe that our quality will improve through cooperation and exchange of experiences in the region,” Bovan said.

Nenadic claims that Transparency International was the one to tackle the influencing issue in Slovakia, and that it had recommended the adoption of a law that would regulate relations between lobbyists and the authorities and ensure that all activity was made public.

“The most advanced [lobbying systems] exist in countries with an Anglo-Saxon legal system, namely the U.S., which has very strong lobbying organizations – registered lobbyists with their own codes [of ethics] – and where lobbying is a quite common practice,” said Nenadic, and added that the control system is such countries is twofold – external, on part of the state, and internal, among the lobbies themselves.

“In these countries it is very difficult to directly reach the decision-makers and that’s why professional lobbyists are usually hired or large-scale action takes place – [e.g.] several thousand citizens write to their congressman or submit an amendment,” Nenadic added.

Jeremy Pope, one of the world’s leading experts on fighting corruption, defines lobbying as actions whose goal is to help pass, abolish, or change a law that influences the lives of an individual or community.

The interest groups are very different – from oil companies to migrant agricultural workers – but all have lobbyists in the capitals of the world, who are protecting and endeavoring to further their interests. Still, not all lobbying is done for the benefit of the public. The negative aspect of this activity, which has become obvious today, when lobbying is done by professionals, is that the relationship between lobbyists and those lobbied can become unhealthy and based on corruption. Such situations are promoted by the money and privileges offered to lobbyists, says Pope in his anti-corruption handbook.

Pope stresses that many people today believe that lobbying has gone too far, and that governments today are being held hostage by lobbying groups, all of which is taking place at the expense of true politics and work for the public good.

The legislative bodies of the United States and their northern neighbor, Canada, have the most developed forms of lobbying registration. The Canadian law on registered lobbying is based on four principles: that free access to authorities is a matter of significant public interest, that the lobbying of public officials is a legitimate activity, that both the holders of public offices and the public must be able to learn of who is attempting to influence the government, and that the system for registering lobbyists must not hinder free and open access to the authorities.

Possibly the best legal solutions for lobbying are those that envisage an on-line lobbying register, as the publishing of such data on the Internet enables quick and efficient monitoring. An American NGO, the Center for Responsive Politics, has done just that, and offers information on American lobbyists and interest groups on its web site, http://www.opensecrets.org/lobbyists/