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Controversial Slovakian Procurement Law Will Be Ineffective, Claim Critics

New public procurement laws in Slovakia have restricted and complicated the tendering process, drawing criticisms from law experts and opposition parties.

Since last year’s scandal over an overpriced computed tomography scanner, Slovakia has been making changes to procurement legislation. According to an article in the Slovak Spectator, the scandal forced the resignation of health minister Zuzana Zvolenska, Smer official Renata Zmajkovicova and parliament speaker Pavol Paska, as well as prompting street protests.

Since the beginning of March, new laws have prevented companies with unclear ownership or those owned by public officials from taking part in public procurements. The government also included an amendment that streamlines purchasing made in preparation for the EU Council presidency in 2016, according to another article in the Slovak Spectator.

Opposition parties Most-Hid and Siet have criticised the legislation, claiming that it is simply a marketing solution by the current Smer government and does not force companies to disclose the true recipient of profits. Under the new law, companies will not be able to bid for public contracts if they have residence in a country that does not require them to reveal owners with more than a 10 percent stake in the firm. Limits are also placed on companies in which public officials have a 10 percent share or more.

Law expert Andrej Leontiev is quoted in the article as saying that such a law violates European law on public procurement. He says Slovakia may not prevent bids from companies from EU countries where stakeholders’ anonymity is permitted. Meanwhile public procurement expert Peter Kunder from NGO Fair-Play Alliance says that the new law is essentially toothless as companies can easily bypass it with “dummy owners.” Similarly, MP Miroslav Beblavy claimed that while the legislation looks good on paper, it would fail in practice.

The legislation’s exception for purchases made in preparation for the EU Council presidency has drawn particular criticism. By allowing a simplified process for these particular purchases, the Smer government has arguably opened up the process to corruption and non-transparent public spending.

And in recent years, Slovakia has had a number of issues around corruption in public procurement. Last September we wrote in Slovakia – Commission asked to investigate amazing contract success rate on how the European Commission planned to look into a suspicious set of public procurements involving a firm called Star EU. Allegations of corruption were made, but an official criminal complaint by opposition politician Ondrej Dostal was rejected without explanation by police last month.

Opposition parties proposed their own amendments to the new procurement laws in January, including a registry of financial beneficiaries for all cases of public procurement. The law would also offer a means to adjudicate doubtful cases and offer public control, according to Most-Hid spokesman Gabriel Gilanyi. He added that public control would not be left only to politicians and their nominees. The registry would also be managed by the National Bank of Slovakia.

However, experts from the Fair-Play Alliance think that the registry will not solve major issues. Beblavy says that while the establishment of a registry is a partial step, real changes wont take place until new laws can prevent public procurement from being a complicated and pretend competition. According to Leontiev, any new legislation should find a way to be indiscriminate of any legal forms acknowledged in other EU countries and require consistent disclosure of ownership structure as requirement to be able to bid for public contracts.