Nearly 20% of Firms Owned by Elected Officials Do Business with the State

(Patria) - Institutions at all levels of government in Bosnia and Herzegovina have awarded over 27,000 public procurement contracts to companies that supported the work of political parties through donations in some of the election cycles from 2018 to the present. The total value of these tenders exceeds one billion convertible marks, and they were most often concluded in the areas of alarm system monitoring and security services, followed by restaurant and food service, and organization of educational seminars.

Cross-referencing the asset declarations of politicians submitted to the Central Election Commission (CIK) with public procurement data shows that 19.8% of elected officials who declare ownership of private companies in their asset declarations have done business with the state through awarded tenders. This percentage stands at 36.4% for officials elected in 2022, indicating a systemic problem that deepens during the term of office. The data, available on the platform, illustrates a high degree of interconnectedness between political parties, their donors, and the institutions that manage the distribution of public funds.

One example of a contract that clearly illustrates this practice is the case of the Minister of Human Rights and Refugees of Bosnia and Herzegovina, Sevlid Hurtić, against whom Transparency International in Bosnia and Herzegovina (TI BiH) filed a report because his private company received million-dollar contracts from budget-funded institutions. The Commission for Decision on Conflict of Interest only determined two years after the report that Minister Hurtić was in a conflict of interest and imposed a sanction, even though in the meantime his company continued to indirectly participate in public procurement through other legal entities.

An analysis of over 930,000 public procurement procedures in the period of the last few years conducted by TI BiH shows that companies owned by elected officials in Bosnia and Herzegovina received 2,450 contracts in a given year, while more than two-thirds, or 76.9%, of all tenders were awarded through direct agreements with suppliers, i.e., without the possibility of competition and bidding.

Parties record the highest number of donations precisely in election years, while companies that received tenders are responsible for about 10% of total donations to parties. This is only a small part of the funds that parties report, given that research has shown that parties largely do not report donations.

What is particularly important to emphasize is that data on the ownership of business entities by politicians is limited only to elected officials who have submitted asset data to the CIK, and does not include appointed persons and all companies over which politicians have actual ownership, transferring ownership to third parties.

These phenomena are monitored by a platform that enables a visual and analytical overview of public procurement procedures, searching for donations to political parties, and insight into the asset declarations of elected officials, all of which provides an overview of the mechanisms through which public resources are placed in the service of private and party interests.

These findings are just one more piece of evidence that in Bosnia and Herzegovina, as an example of a state whose institutions are captured, business success depends exclusively on connections with political parties and their leaders, who enable their donors – clients – unhindered access to contracts through the public procurement system.

TI BiH calls on the media, researchers, and citizens to use Integrity Watch BiH as a tool that, by connecting three different data sources: reports of the Public Procurement Agency of Bosnia and Herzegovina, financial reports of political parties, and asset declarations of elected officials, enables the detection of corrupt patterns and connections that have been capturing institutions and undermining the budget of Bosnia and Herzegovina for decades.