Europe & Central Asia
Albania risk report
Corruption is a serious problem in Albania. It is one of the country’s greatest stumbling blocks, impeding its bid for EU candidacy and hindering its investment climate. The procurement and construction sectors are particularly affected by patronage networks and other forms of corruption. The judiciary is also hampered by corruption and political influence. The necessary anti-corruption legal framework is in place, but enforcement is poor and conviction rates are very low. Active and passive bribery, as well as the bribery of foreign officials, are illegal under the country's Criminal Code. The same applies for offering gifts or facilitation payments, yet these practices are widespread.
Judicial system Very high risk
Corruption in the Albanian judicial system is widespread and a very high risk for businesses. Bribes are often exchanged for favorable judicial decisions, and judges and prosecutors lack accountability (GCR 2015-2016; EU Progress Report, 2015). Public perception reflects this, as more than three-quarters of surveyed citizens believe the judiciary is corrupt (the judiciary is ranked as the most corrupt institution among the 12 institutions included in the survey) (GCB 2013). On numerous occasions, judges and prosecutors have failed to comply with asset declaration requirements, yet no sanctions have been issued to date (EU Progress Report, 2015). Although the Constitution provides for an independent judiciary, in practice the courts are subject to political pressure and intimidation (HRR 2015). The process of appointing judges is also opaque and plagued by corruption (EU Progress Report, 2015). In addition, the enforcement of court decisions is weak, particularly when they conflict with the government's interests. There is also an apparent failure of the judiciary to properly prosecute the abuse of functions, which is pervasive among the political elite (BTI 2016). When sanctions in corruption cases are imposed, they are overly lenient (EU Progress Report, 2015).
Companies in Albania do not perceive the legal framework to be efficient when settling disputes or when challenging regulations (GCR 2015-2016). The business community believes the judiciary is an impediment to conducting business, so international arbitration is often sought as an alternative to dispute settlement (ICS 2016). Albania is a member of the International Centre for Settlement of Investment Disputes (ICSID) and is a signatory to the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Police Very high risk
Businesses face a high risk of corruption when dealing with the police. Corruption and impunity are persistent problems, largely because of the low salaries of police officers, as well as a subsequent lack of motivation, diversity, and leadership (HRR 2015). Accordingly, most Albanian households believe the police is corrupt (GCB 2013). In 2015, camera systems were installed in patrol vehicles to limit the bribery of officers – with success (HRR 2015). The government then expanded the automated system to include traffic tickets (HRR 2015). Businesses report that Albania's police cannot be consistently relied upon to enforce law and order (GCR 2015-2016).
Public services Moderate risk
The public services sector presents business with a moderate risk of corruption. Bribes and irregular payments are at times exchanged to obtain utilities (GCR 2015-2016). Almost 20% of companies report giving gifts to officials to "get things done" (ES 2013). Nevertheless, business registrations and licensing are improving through a growing network of one-stop shops such as the government platform e-albania, although local administrations need greater resources to effectively deliver services (Albania Progress Report 2013; EU Progress Report, 2015). Business registration is easy, yet licensing remains challenging for companies in some sectors (ICS 2015). On average, starting a business requires 6 procedures, takes 6 days and costs 10% of income per capita (DB 2016).
Land administration Very high risk
The land administration carries a high risk of corruption. The process of obtaining construction permits is plagued by corruption (ICS 2015). More than one-third of businesses expect to give gifts to obtain permits (ES 2013). Additionally, the problem of land ownership in Albania is among the greatest impediments to the development of the country's real estate market (ICS 2016). This is due to cumbersome property registration procedures, and poor enforcement of immovable property rights, which are also subject to corrupt practices (ICS 2016). Furthermore, securing property titles is made more difficult due to illegal construction work (ICS 2016).
In early 2015, the mayor of Vlora, Shpetim Gjika, along with a municipal official and a construction company manager were arrested on charges of abuse of office, illegal construction, and the falsification of documents (Press TV, Feb. 2015). No further information was available at the time of review.
Tax administration Very high risk
The tax administration carries a high corruption risk for businesses. Irregular payments and bribes are often exchanged when meeting with tax officials (GCR 2015-2016). Some improvements have been made in the tax administration (such as the establishment of an e-filing tax system), but corruption persists (particularly during inspections), negatively affecting the business environment (Albania Progress Report 2013). Paying taxes is more time consuming and more costly in Albania compared to neighboring countries, taking 357 hours per year at a total tax rate of 37% of profit (DB 2016).
Customs administration Very high risk
Corruption is a very high risk for businesses dealing with Albania's customs administration. Bribes and irregular payments are frequently exchanged when importing and exporting, and transparency at the borders is poor (GETR 2014). Corruption is more widespread when importing than when exporting (GETR 2014). Companies also complain about the unequal application of base pricing by customs officials when they assess taxes and duties on imported goods (ICS 2015).
Recent years have shown progress regarding administrative and operative capacity of the Albanian customs administration, with an improvement of internal investigation activities and in the internal IT system (Albania Progress Report 2013). Additionally, a 24-hour camera surveillance system at border-crossings was extended, further limiting the possibilities of corruption (Albania Progress Report 2013). However, more is required regarding IT compatibility with EU standards and in simplifying customs clearance procedures (Albania Progress Report 2013).
Public procurement Very high risk
The public procurement sector carries a high corruption risk for business. Irregular payments and bribes are frequently exchanged in the process of awarding contracts and licenses (GCR 2015-2016). In the same vein, more than a quarter of companies expect to give gifts to officials to secure government contracts (ES 2013). Favoritism is also a problem in procurement as officials are perceived to often favor well-connected companies and individuals. Companies in Albania experience non-transparent processes when competing for public tenders (e.g. 'fixed' technical specifications) as a means to exclude potential bidders (ICS 2015). The diversion of public funds to companies and individuals due to corruption is also a problem in Albania (GCR 2015-2016).
Albania now has an obligatory and fully operational e-procurement platform (ICS 2015; EU Progress Report 2015). Regulations can be found at the official website of the procurement system of Albania, which also publishes a list of companies that have committed irregularities during the procurement process. However, in practice, companies guilty of corruption are not effectively prohibited from participating in future procurement bids. To mitigate corruption risks associated with public procurement in Albania, investors are advised to exert caution when bidding on public tenders and are recommended to use a specialized public procurement due diligence tool.
In one case, the former governor of the Central Bank, Ardian Fullani, and his close aids were investigated during 2014 for the embezzlement of ALL 700 million from the bank's reserves (BTI 2016). Under Fullani's term, most of the bank's employees enjoyed family connections to prominent politicians (BTI 2016). Fullani was later released from prison, despite the prosecutor ordering that he be put in isolation; the prosecutor was later removed from the case (BTI 2016). Fullani was eventually acquitted of the charges, while two former employees received 10 and 20 years of prison respectively for embezzlement (NiT 2016).
In another case in 2013, a former Minister of Defence was involved in a corruption case for the alleged violation of tender laws; in 2015, the prosecutor withdrew the file and closed the case (BTI 2016).
Natural resources Very low risk
The Albanian Extractive Industries Transparency Initiative (ALBEITI) became fully compliant with the EITI Standard in 2013. EITI compliance ensures an effective and transparent process for annual disclosure and reconciliation of all revenues from Albania’s extractive industries.
Albania has a legal anti-corruption framework in place, yet frequent amendments subject to conflicting interpretations have undermined the legal certainty of the laws (EU Progress Report 2015). Furthermore, the government does not implement these laws effectively (HRR 2015).
The Criminal Code criminalizes active and passive bribery, bribery of foreign officials, influence peddling, abuse of office and money laundering. These provisions apply to both the public and the private sectors (U4 2011). Active corruption is penalized with prison terms ranging from six months to three years, and passive corruption can result in up to twelve years' imprisonment. A public employee is not allowed to accept any gifts, money or services for performing their service duties, according to the Law on Prevention of Conflicts of Interest in the Exercise of Public Functions and the Law on the Rules of Ethics In the Public Administration. Civil servants are allowed to accept gifts only of a symbolic traditional value or traditional hospitality of a value not clearly defined in legislation. In the case of an offered unfair advantage, a public official must report to their superiors or risk a fine between ALL 10,000 and ALL 100,000. A Code of Ethics regulates the conduct of civil servants, and high-ranking officials are subject to asset declaration laws. Albania's Constitution puts restrictions on the immunity of high-level public officials and judges; nonetheless, no high-level officials have been successfully prosecuted for corruption (ICS 2016). Financial investigations, money laundering measures, and asset confiscation are rarely implemented or used in Albania (EU Progress Report 2015). Other relevant anti-corruption laws include the Law on Conflict of Interests. The protection of whistleblowers is not adequately provided for by the current legal framework (EU Albania Report 2015).
Albania has ratified the United Nations Convention against Corruption (UNCAC) and the Council of Europe Civil and Criminal Law Conventions on Corruption.
Freedoms of expression and of the press are guaranteed by the Constitution, and the government generally respects these rights in practice (HRR 2015). Libel and defamation are illegal. Most media outlets are biased in favor of one of the political parties, and the links between politics, business, and the media have led to increased censorship among journalists (NiT 2016). In 2015, the mayor of Elbasan was recorded warning journalists not to ask difficult questions and pointing to the potential consequences (NiT 2016). Media ownership has become more transparent, yet hidden ownership and lack of transparency of financing remain a source of concern (EU Progress Report 2015). Access to government information is provided by the law, yet authorities did not effectively implement these provisions (HRR 2015). The press environment in Albania is considered "partly free" (FotP 2015).
Freedoms of assembly and association are guaranteed by law, and NGOs are not restricted (HRR 2015). Compliance with registration requirements is easy. Civil society organizations were widely involved and consulted in the formulation of the country's anti-corruption strategy (2015-20) and action plan (2015-17) (EU Progress Report 2015). Furthermore, civil society representatives are to be included in the bodies monitoring the proper implementation of the strategy (EU Progress Report 2015). On the other hand, however, attempts by politicians to co-opt NGO representatives into the political parties' agendas have undermined the impartiality of civil society (BTI 2016).
- World Bank & IFC: Doing Business 2016.
- Freedom House: Nations in Transit - Albania 2016.
- The Bertelsmann Foundation: Transformation Index - Albania 2016.
- US Department of State: Investment Climate Statement - Albania 2016.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- US Department of State: Human Rights Practices Report - Albania 2015.
- Freedom House: Freedom of the Press - Albania 2015.
- US Department of State: Investment Climate Statement - Albania 2015.
- European Commission: Albania Report 2015.
- Press TV: 'Mayor of Albania city detained in corruption case', 7 February 2015.
- World Economic Forum: Global Enabling Trade Report 2014.
- European Commission: 2013 Progress Report- Albania.
- Transparency International: Global Corruption Barometer 2013.
- Konrad-Adenauer-Stiftung: Whistleblowers protection in Albania: An assessment of the legislation and practice 2013.
- U4 Expert Answer: Albania: Overview of Corruption and Anti-Corruption, 12 July 2011.