Europe & Central Asia
Slovakia risk report
Corruption is a high risk for businesses in Slovakia, most notably in the judiciary and public procurement sectors. Companies cite the lack of transparency and inefficient government bureaucracy as the largest impediments to business. The Slovak Penal Code, the Criminal Procedure Code, and the Specialized Criminal Act provide for the criminalization of most forms of corruption, including active and passive bribery, bribery of foreign officials and extortion. However, insufficient law enforcement negatively affects foreign companies in Slovakia. Companies report the possibility of facilitation payments and bribes in the customs, public utilities, public procurement, and judicial sectors. Facilitation payments and gifts are illegal under Slovak law, but officials in some sectors expect to receive gifts and irregular payments.
Judicial system Very high risk
There is a high risk of corruption when interacting with the Slovak judiciary. Companies report that they perceive irregular payments and bribes in return for favorable decisions as very common (GCR 2015-2016). Compared to their EU peers, Slovak businesses report the absolute lowest levels confidence in the judiciary; only one in ten businesses perceive the independence of courts and judges as 'fairly good' and the rest considered it 'fairly bad', 'very bad', or don't know (JS 2017). Companies also express extremely low satisfaction with the efficiency of the legal frameworks when it comes to settling disputes and challenging regulations (GCR 2017-2018). The court system remains slow and inefficient and some judges are suspected of manipulating the case assignment systems (ICS 2017). Verdicts often lack predictability and are often not properly justified, leading businesses to prefer arbitration to the Slovak court system even in cases involving multi-million dollar losses (ICS 2017). The removal of controversial figure Stefan Harabín, who held a number of high positions in the judiciary, has been noted as improving confidence in reforms of the judiciary (SGI 2017). However, widespread nepotism and cronyism remain commonplace in Slovakia's judiciary (BTI 2018). Reportedly, businesses have complained about the private sector's influence on judicial decisions and claim that court proceedings have become a contest between people with vested interests and those with judicial connections (HRR 2017).
It takes significantly longer and it is significantly more expensive in Slovakia to enforce a contract compared to other OECD high-income countries (DB 2018). Slovakia has ratified the International Centre for Settling International Disputes (ICSID), the World Bank’s Commercial Arbitration Tribunal and the New York Convention on the Recognition and Enforcement of Foreign Arbitrage Awards.
Police Moderate risk
Slovakia's police force carries a moderate corruption risk for businesses. More than half of the surveyed firms pay for security in Slovakia (ES 2013); the police does not reliably protect companies from crime (GCR 2017-2018). Nearly half of Slovaks perceive bribery and abuse of power to be widespread among police and customs officers, but virtually none report actually paying a bribe (EB 2017). Political influence over the police and prosecution services impedes investigations of corruption (ICS 2017). In 2015, 121 police officers were charged with 145 crimes, including two charges of money laundering and six cases of bribery (HRR 2016).
Public services Very high risk
Corruption represents a high risk for businesses dealing with public services in Slovakia. In a survey, seven out of ten businesses agreed that bribery and the use of connections is the easiest way to obtain certain public services in Slovakia (FEB 2017). About a third of Slovaks perceive bribery and abuse of power as common among officials issuing business permits (EB 2017). Businesses cite corruption and inefficient government bureaucracy as the two most problematic factors for doing business in the country (GCR 2017-2018). Slovakia suffers from weak administrative capacities and a lack of transparency in the regulatory system (ICS 2017; SGI 2017). The business community in Slovakia describes a number of regulatory bodies as not fully impartial and their decisions as unpredictable (ICS 2017). Legal certainty in Slovakia suffers from frequent changes in laws, which are growing increasingly complex, in turn leading to an opaque and inconsistent legal framework (SGI 2017). Starting a business in Slovakia involves more steps and takes more time than the average among OECD high-income countries (DB 2018).
Slovakia's General Prosecutor's Office has launched an investigation into outgoing Interior Minister Robert Kaliňák, Police President Tibor Gašpar, the head of the National Criminal Agency (NAKA) Peter Hraško, and the head of the National Anti-corruption Unit Robert Krajmer. The four stand accused of the crime of sabotage for running a scheme to whitewash money earned corruptly involving up to EUR 200 million (The Slovak Spectator, Mar. 2018).
Land administration Very low risk
Corruption represents a low risk for businesses dealing with Slovakia's land administration. Almost a third of households perceive that giving and taking bribes and abusing positions for personal gain are widespread among public officials issuing building permits (Eurobarometer 2017). Businesses complain about unpredictable and time-consuming procedures in the process of buying land (ICS 2017). However, property rights are well defined and enforced and a reliable land title system is in place (ICS 2017). Expropriation may only happen if unavoidable and in the public interest and in return for adequate compensation (ICS 2017). However, companies report insufficient confidence in the protection of property rights (GCR 2017-2018). Property and contractual rights are generally enforceable in the courts, but the process may take years, limiting the effectiveness of proper dispute resolution (ICS 2017).
Registering property in Slovakia takes fewer steps and less time compared to the average among OECD high-income countries (DB 2018).
Tax administration Moderate risk
Companies face a moderate corruption risk when dealing with the tax administration in Slovakia. Businesses indicate that bribes and irregular payments do sometimes occur when paying taxes (GCR 2015-2016). Tax rates and regulations are among the most problematic factors to business (GCR 2017-2018). Tax fraud and non-payment of VAT are cited as among the most widespread corrupt practices by a quarter of businesses surveyed in the Slovak Republic (FEB 2017). About a third of Slovaks perceive bribery and abuse of power to be widespread among tax officials (EB 2017). Slovakia has among the largest VAT gaps in Europe; Slovakia is estimated to lose over EUR 2.25 billion a year in VAT receipts (representing 29.39 percent of expected VAT revenue) due to tax fraud and inadequate tax collection systems (EC VAT GAP 2017). Paying taxes is more time consuming than the average among OECD high-income countries, but requires fewer annual payments (DB 2018).
Customs administration Moderate risk
Slovakia’s border administration carries a moderate corruption risk for business. Companies indicate that irregular payments and bribes during import and export procedures occur occasionally (GETR 2016). Businesses are moderately satisfied with the time predictability and efficiency of the clearance process (GETR 2016). Nearly half of Slovaks perceive bribery and abuse of power to be widespread among police and customs officers (EB 2017).
The costs and time required to comply with border procedures in Slovakia are negligible compared to the average among OECD high-income countries (DB 2018).
Public procurement Very high risk
Corruption in public procurement is a serious challenge and a high risk for companies operating in Slovakia. Companies indicate that bribes and irregular payments are very common in the process of awarding public contracts (GCR 2015-2016). Two out of every five businesses believe that corruption has prevented them from winning a public tender (FEB 2017). Favoritism in the decisions of government officials is considered extremely common (GCR 2017-2018). Other risks cited by at least half of businesses as prevalent include tailor-made specifications for particular companies, collusive bidding, conflicts of interest and unclear selection or evaluation criteria (FEB 2017).
Slovakia passed a new Public Procurement Act in 2015, which is hoped to bring substantial savings to the government, but some stakeholders and NGOs have expressed concerns that the new Act is insufficiently transparent and will increase the risk for bid-rigging (ICS 2017). All government contracts for public tenders are now published on the Central Registry of Contracts. Mandatory disclosure of contracts has been acknowledged to have contributed towards reduced levels of corruption, but public tendering still suffers from an overall lack of transparency and integrity (ICS 2017). The Slovak Information Service (SIS) found that cronyism and nepotism are widespread among national, local and regional governments and state entities involved in procurement (EUACRS 2014). Irregularities in hospital tenders have also been found (SGI 2017).
Irregularities in the allocation of over EUR 20 million in funds from the European Union to a number of small businesspeople in the village of Babindol have spurred an investigation by the Supreme Audit Office (NKÚ) (The Slovak Spectator, Feb. 2018). It is alleged that they operate businesses from these funds, which they obtained with the help of members of the ruling Smer party, including a former minister of agriculture (The Slovak Spectator, Feb. 2018). OLAF, the EU's anti-fraud office has launched its own investigation into alleged abuses of EU agricultural funds in Slovakia (Politico, Mar. 2018). Companies are strongly advised to use a specialized public procurement due diligence tool to mitigate corruption risks associated with public procurement in Slovakia.
The government does not implement anti-corruption laws effectively (HRR 2017), and the number of prosecutions of corruption cases is low (EUACRS, Feb. 2014); high-level officials are rarely prosecuted for corruption (HRR 2017). Important anti-corruption legislation in Slovakia includes the Penal Code, the Criminal Procedure Code, and the Specialised Criminal Act, which criminalize attempted corruption, extortion, active and passive bribery, bribery of foreign officials, conflicts of interest, facilitation payments, giving and receiving gifts and money laundering. Slovakia introduced criminal liability for companies in 2016 (OECD 2017). The punishment for receiving or offering a bribe is up to fifteen years in prison and companies are liable for fines and confiscation of assets (CMS 2016). The Conflict of Interest Law mandates public officials to annually disclose their assets and income, public servants are generally forbidden to have any conflicts of interest, the maximum punishment for violating these regulations is imprisonment of up to twelve years (EUROPAM 2017). The Public Procurement Law provides for streamlined tender procedures, fair competition and transparency, and bans companies with unclear ownership or those owned by public officials from taking part in public procurements. The Whistleblowing Act provides for the protection of persons reporting on corruption, but Transparency International has indicated that the law has been poorly implemented and offers inadequate protection (TI 2016).
The compulsory disclosure of ownership does not apply to Slovak companies and subsidiaries listed on stock exchanges in the European Union, the European Economic Area or the OECD. Bidders providing false information on company ownership are subject to fines ranging from EUR 1000 to 10,000 (Tax Justice Network, Jan. 2015). The law has been criticized for violating European regulations as they ban companies residing in countries where laws do not require the disclosure of owners, and firms are not forced to reveal the ultimate recipient of profits (Slovak Spectator, Mar. 2015).
Slovakia has ratified the OECD Convention, the Criminal Law Convention of Corruption, the Civil Law Convention on Corruption of the Council of Europe, and the United Nations Convention against Corruption (UNCAC).
Freedoms of speech and press are protected by the Constitution, and the government generally respects these rights (HRR 2017). However, the government does at times restrict access to information and it has impeded criticism (HRR 2017). Journalists face libel suits and verbal abuse, and judicial and government officials have been criticized for the lawsuits and the compensations sought (FotP 2015). Media restrictions in the name of privacy protection are reportedly imposed only in favor of politicians and business tycoons (BTI 2018). Public media is frequently subject to political involvement and various oligarchs and financial groups with political ties own print and electronic media organizations (BTI 2018). The prime minister's language has been hostile towards the media, after it reported on alleged corruption of his party's ministers (BTI 2018). Access to information is provided for under the Act on Free Access to Information. Slovakia's media environment is described as 'free' (FotP 2017).
Ján Kuciak, a journalist investigating allegations of tax fraud involving a number of businessmen with connections to Slovakia's ruling party, and his fiancée were found murdered in February 2018 (The Guardian, Feb. 2018). Kuciak was known for covering various stories of tax evasion and the police have indicated that they expect their murders to be related to Kuciak's investigative activities (The Guardian, Feb. 2018). Demonstrations have taken place in Bratislava in March 2018 to demand a swift response to the killings (Reuters, Mar. 2018).
Freedoms of assembly and association are guaranteed by the Constitution and are respected in practice (HRR 2017). Slovakia's civil society is vibrant and has many competent interest associations (SGI 2017). However, grassroots civil society remains weak (BTI 2018). A wide variety of NGOs continue to fulfill watchdog functions and create effective policy proposals (BTI 2018).
- World Bank: Doing Business 2018.
- Bertelsmann Stiftung: Slovakia Transformation Index 2018.
- Politico EU: "OLAF Examines Alleged Abuse of EU Funds in Slovakia", 27 March 2018.
- The Slovak Spectator: "Kaliňák sees accusations of corruption against him as a witch hunt", 9 March 2018.
- Reuters: "Thousands March for Slain Slovak Journalist who Probed Corruption", 2 March 2018.
- The Guardian: "Slovakian Journalist Investigating Claims of Tax Fraud Linked to Ruling Party Shot Dead", 26 February 2018.
- The Slovak Spectator: "Suspicious "Rural Entrepreneurs" involved with Smer Emerge in Nitra", 20 February 2018.
- World Economic Forum: Global Competitiveness Index 2017-2018.
- US Department of State: Investment Climate Statement 2017.
- US Department of State: Human Rights Practices Report 2017.
- OECD: Anti-Bribery Convention Implementation Report 1bis 2017.
- Freedom House: Freedom of the Press 2017.
- EUROPAM: Slovakia Profile 2017.
- Bertelsmann Stiftung: Sustainable Governance Indicators - Slovakia Report 2017.
- European Commission: EU Justice Scoreboard 2017.
- European Commission: VAT GAP Study 2017.
- European Commission: Eurobarometer 470 - Corruption - 2017.
- European Commission: Flash Eurobarometer 457 - Businesses' Attitudes towards Corruption in the EU - 2017.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- World Economic Forum: Global Enabling Trade Report 2016.
- Transparency International: Whistleblower Protection in Only on Paper 2016.
- US Department of State: Human Rights Practices Report 2016.
- CMS: Guide to Anti-Bribery and Corruption Laws 2016.
- Freedom House: Freedom of the Press - Slovakia 2015.
- The Slovak Spectator: 'New procurement law lacks teeth', 30 March 2015.
- Tax Justice Network: 'Slovak govt. to enact new anti-shell company law after scandal', 14 January 2015.
- European Commission: EU Anti-Corruption Report: Annex 25, Slovakia 2014.
- World Bank Group: Enterprise Surveys 2013.