Financial Crime World

Title: Corruption and Ethics in Business: A Persistent Challenge in Slovakia

Challenges Faced by Businesses in Slovakia

Brussels, November 5, 2020 (The Slovak Spectator) - Slovakia, a European Union (EU) member since 2004, continues to face the issue of financial crime and corruption, specifically in the business sector. Companies operating in Slovakia encounter considerable difficulties in areas such as the judiciary, public procurement, police, public services, and tax administration.

High Risk in the Judiciary

According to the latest Global Competitiveness Report (GCR) rankings, Slovakia’s judiciary poses a very high risk for businesses. Businesses report irregular payments and bribes for favorable decisions, leading to dissatisfaction. An independent judiciary is a rarity, with only one in ten companies expressing confidence in it (JS 2017). In contrast, their EU peers exhibit greater trust, indicating the need for significant reforms.

Police Force and Corruption

The police force in Slovakia carries a moderate corruption risk, with over half of the surveyed firms paying for security there (ES 2013). Despite concerns that the police do not effectively protect companies from crime, most Slovaks report not having paid bribes themselves (EB 2017). However, political influence hampers investigations of corruption, with 121 police officers charged with various crimes in 2015, including money laundering and bribery (HRR 2016).

Corruption in Public Services

Corruption is described as a significant issue when dealing with public services due to widespread bribery and nepotism (FEB 2017). Slovenia’s weak administrative capacities and lack of transparency contribute to this issue. Although businesses report a decrease in corruption following reforms, concerns persist.

Tax Administration and Fraud

Despite being considered a moderate risk, tax fraud and non-payment of VAT are prevalent in Slovakia. Approximately a third of Slovaks perceive bribery and abuse of power in tax officials as common (EC VAT GAP 2017). Businesses reportedly lose over EUR 2.25 billion a year due to tax fraud and inadequate tax collection systems.

Fighting Corruption in Slovakia

Despite these challenges, Slovakia has taken steps to combat corruption:

  • Slovakia ratified several international conventions, including the OECD Anti-Bribery Convention, the UNCAC, and the Criminal Law Convention of Corruption of the Council of Europe.
  • The Slovak Penal Code, Criminal Procedure Code, and Specialized Criminal Act criminalize most forms of corruption.
  • Slovakia introduced criminal liability for companies in 2016, with severe penalties for corrupt acts.

Media Environment and Civil Society

The Slovak Republic’s media environment is described as ‘free,’ but journalists face libel suits and verbal abuse, with some access to information restricted (BTI 2018). Civil society is vibrant but still grappling with issues such as weak grassroots organizations and political interference.

Businesses’ Call for Transparency and Effectiveness

Slovak businesses advocate for greater transparency, efficiency, and effectiveness in government processes to minimize the risk of financial crime and corruption. The EU, OECD, and other international organizations support these efforts by encouraging regulatory improvements, training, and stronger enforcement. The business community remains vigilant and informed about best practices to mitigate risks and maintain a level playing field.