The Global Initiative against Transnational Organized Crimes (GITOC) has issued its 2020 report on “Illicit Financial Flows in Albania, Kosovo and North Macedonia – Key Drivers and Current Trends”. It paints a damning view of criminal money flows in the region, particularly in Albania.
This Exit News report will focus only on the main corruption-related findings of the August 2020 GITOC report.
The report notes that contracts not open for public tender increased sharply in Albania between 2014 and 2018. Up to 30% of the bid value of procurement contracts in the country is paid in bribes.
In 2018/19, the Albanian government issued €679 million worth of public contracts, which would indicate bribery of €200 million. But it could be even higher. An investigative report suggested that €300 million is lost annually to abuses in public procurement procedures, which would be nearly 45% of the 2018/19 contracts.
OECD found that 57% of foreign bribes in the region are paid for to secure public procurement contracts, and 20–30% of the value of procurement contracts is lost to corruption.
Contracts worth €1.03 billion are budgeted for 2020 in Kosovo, which could generate €205–308 million in bribes.
Construction of roads and highways is extremely susceptible to corruption, as price-fixing, fraud in implementation, and the falsification of documents are all easy to implement and hard to detect. In December 2018, a ‘ghost company’ in Albania was discovered to have won an €18 million road-construction contract on the basis of false documentation.
In Kosovo, numerous reports have pointed to tender violations in the Gjilan highway project and road-construction segments from Gjakova to Shkodër and Prizren to Tetovo.
North Macedonia’s Skopje 2014 project has raised serious concerns about public-procurement procedures. What began as an €80 million project to revamp the Macedonian capital with new facades, monuments and buildings has now devoured more than €680 million in state funds.
In Albania, corruption is the second-largest source of illicit financial flows after narcotics trafficking. In North Macedonia and Kosovo, it is a principal source of money-laundering funds.
In Albania, 36.1% of companies received at least one bribe request in 2019, while those in North Macedonia reported 13%, as did 6% in Kosovo.
Informality in Albania represents around 30–40% of the economy, the highest of the three countries. Explicitly criminal transactions were estimated to be 22% of the GDP in 2017.
In Kosovo, the informal economy has been estimated at 31.7% of GDP, of which more than 8% appears likely to represent illegal forms of economic activity.
In North Macedonia, the informal economy is also estimated to be worth around a third of the country’s GDP.
1.15 million Albanians living abroad provide support to more than one-quarter of Albanian families. In 2017, Albanian remittances totalled €1.16 billion, of which 39% was sent in cash and 57% via non-bank financial services. Albanian emigrants send home about 10 percent of the country’s GDP every year.
Total remittances sent to North Macedonia were estimated at €318 million in 2018, of which the majority similarly entered through informal channels.
Of the three countries, it is in Kosovo that remittances play the most crucial role as a source of income for citizens and businesses. Its diaspora remittances amount to €1.5 billion annually, which is equivalent to around 70% of state revenue.
The scores of Albania, Kosovo and North Macedonia in the Corruption Perception Index Report for 2019 all declined since the previous year’s Index, with Albania hitting a five-year low.
The GITOC report notes that nepotism, clientelism and graft are embedded in the structure of these societies’ interaction with the state, to the point that corruption has been described as part of the culture.
Criminal enterprises in these countries establish links with well-placed politicians, officials, and members of the judiciary and other state institutions to secure their various ends.
By means of bribery, influence-peddling, brokering, abuse of power, and blackmail, they gain access to confidential information about ongoing judicial or law-enforcement plans and investigations. They may secure permits, concessions and public procurement contracts or ensure that their cross-border transport of goods is uninterrupted and uncontrolled. The rule of law is further curtailed through other obstructions of justice, such as witness tampering.
As elites warp political, economic and regulatory systems to amass wealth and maintain it for their own benefit, corruption creates a criminal ecosystem. The rule of law does not function while it has no support from the rulers.
People’s trust in the rule of law and state institutions in these three countries is very low, and the widespread perception of corruption and impunity creates few barriers for citizens themselves to engage in illicit enterprise.