Where it comes from and what are the costs of corruption in the municipality of Chisinau?

Apr 6, 2017

Photo: UNDP Moldova

The corruption risks for the Chisinau city hall services are estimated to 117.7 million lei annually. Only for the issuance of permits in the field of construction, advertising and trade, the informal taxes would constitute approx. 6 million lei per year, according to a study of the Independent Analytical Centre "Expert-Grup", released today at a roundtable.

The study on assessment the impact of corruption on good governance of municipality of Chisinau was commissioned by the United Nations Development Programme (UNDP), in the framework of the project “Strengthening the Corruption Prevention and Analysis Functions of the National Anticorruption Center”, implemented with the financial support of the Ministry of Foreign Affairs of Norway.

According to the authors, the existing legal framework has 2 important constraints that favours corruption, namely:

  1. The existence of gaps in the new law on the status of Chisinau municipality, which leaves space for non-transparent decisions.
  2. The existing legislation on the privatization of land, uninhabited premises and associated land allows the privatization of land and of uninhabitable premises at far below market price.

“The instability of the municipal budget process, caused by delays in approval of the law on budget, reflects a high risk of corruption because of the absence of a tax system in which local taxes and charges can be used as an administrative instrument for influence and corruption”, according to the authors of the study. The most important sources of corruption are the taxes on commercial and industrial real estate, the market fee, the fee for commercial units.

The city hall and the divisions of the Municipal Council, as provider of 40 public services, generate an environment vulnerable to corruption, according to the authors of the study. This would happen because of gaps such as: too many actors involved in the process of providing services, insufficient transparency, lack of a unique register to monitor the flow of requests for obtaining the requested and issued services.

The authors of the study note that in the case of 63 municipal enterprises (joint stock companies) founded by the Chisinau Municipal Council (CMC) there is an absence of relevant data on the activity of enterprises, of performance indicators, of services provision processes, which may result in risks of corruption. At the same time, the available data have indicated poor performance, recorded yearly losses and formalization of reporting. The most important risks, in the opinion of the authors, are: the influence of political factor, the increase of artificial expenses, the management of assets at the balance sheet value, the revenue gap in the form of illegal commission; the reduction of CMC share resulting from the issuance of hidden shares aiming at acquisition and control, bankrupting joint stock companies and taking control over it (as a result of privatisation process).

The study comes with a set of recommendations for the mitigation of 57 identified risks of corruption, which should be included in the Integrity Plan of the Chisinau City Hall.

“We hope the Chisinau City Hall administration will find the recommendations useful and will take them on board by developing an Integrity Plan and implementing it for the benefit of the citizens of Moldova’s capital”, noted Dafina Gercheva, UN Resident Coordinator and UNDP Resident Representative.

Some of the recommendations are:

  • A clear delimitation of competences of central and local public administration of level I and II, exact delimitation between the activities of the Chisinau Municipal Council and those of executive structures;
  • Introduction of electronic voting system in CMC and of the electronic documents circulation mechanism;
  • The introduction of transparency and availability of access to information about the conditions, terms and costs of the provision of services by the CMC;
  • Developing a development strategy for real estate sector of the municipality, which should include a holistic view on how the heritage of Chisinau municipality is managed;
  • Development of a strategy of concentration and centralization of public procurement, carried out by different contracting authorities in the municipality;
  • To intensify control over the activity of municipal enterprises through the establishment of a corresponding framework of regulatory services and the development of investment plans;
  • Better promotion of transparent procurement policies in public enterprises managed by the CMC.

The study analyses the impact of introducing the one-stop-shop, as a solution for the optimization of the process of public services’ provision, reducing corruption risks and costs in the process of providing and obtaining services. According to the experts, the implementation of the one-stop-shop would bring a 26% increase in the efficiency, calculated on the basis of all direct costs supported by beneficiaries and by authorities

Contact information

Olga Crivoliubic, project manager, olga.crivoliubic@undp.org