13. What is the most important lesson learned through this project?
There is also an important lesson of the whole project – the project has proved that it is possible to increase the transparency of public finance, facilitate the debate on adopted and planned investments and projects as well as decrease the risks for illicit management, abuse of functions, and above all, to limit systemic corruption, unfair competitiveness and clientalism in public procurement procedures. And most important, this can be done with a minimal financial input. The Supervizor project shows, it is possible to achieve better transparency with a good idea and devotion to the ideal of transparency.
12. What upgrades do CPC plan for future versions of Supervizor?
The first version of the web application did not contain transactions among the budget users, but CPC is planning to include these transactions in the future versions of the Supervizor. Because of the Slovenian tax legislation (tax secrecy), CPC cannot publish transactions from the companies to the budget users. However, in future versions of Supevizor CPC is going to try to distinguish between transactions containing payment of taxes and other transactions, which are not protected as a tax secrecy, i. e. returns of incorrect payments (those made by mistake, etc).
11. Can Supervizor be implemented also on international level and how?
This example of proactive transparency of public finances could be implemented in other countries too. The most important condition that must be fulfilled in this matter is the existence of the single treasury system, which records all public financial transactions in a centralized way, or a system, which gathers all records of government and local budget’s financial transactions in a single database.
The next condition is the existence of the access to public information legislation and a political will towards transparency. Important prerequisite is also the existence of the business registry, containing data about ownership, management structure and company’s annual reports, and a database of the public procurements.
Technical aspects of the project are relatively easy to solve. The most important are the legislation and issues related to organisation of budget and public finance.
The project had great media and European anti-corruption authorities’ impact. Experts from the field of preventing and investigating corruption expressed great satisfaction with the idea and the outcome of the project, while foreign journalists and general public also expressed their expectation that this kind of proactive approach towards transparency of public finances would be implemented in their countries too.
10. How useful are data collected in Supervizor?
As already mentioned the application Supervizor was launched on 23th of August 2011 at 11 a.m. Already during the first day, there were around 1.200.000 page views and raised up to 2.616.000 within only 6 days. After the initial phase, when the main reason by most of the public for using an application was curiosity, the data are now used in a more analytical way, so the main aim of the CPC regarding use of Supervizor was achieved. It is used as an everyday tool by public, research journalists and regulatory and supervisory government when investigating economic crime, public finance crime and corruption. And most importantly - the web application enables the public, government and local authorities asking more qualitative questions regarding the use of public money and accountability of public service.
9. What were the financial, technical and human resources and costs associated with this initiative?
The whole project was carried out with almost no costs. The web application has been made for free in cooperation with an independent expert and an effort of the CPC’s employees.
8. What are best features of selected technologies that support Supervizor?
By using open source technologies CPC reduced the costs of software (operating system, database server and web server). Selected technologies have high performance for carrying out a lot of database and web requests from the end users.
7. What were the main obstacles encountered? How were they overcome?
The biggest obstacles for realisation of the project were relatively long period of time needed for all the arrangements related to receiving data (making the agreements with different institutions) and, secondly, elimination of personal and classified data from the financial transactions.
Money flows from the public to private sector were already accessible to the public through legislation on access to public information. However public institutions have always lacked a proactive approach towards transparency of public finances. In the past there has been no freedom of information request made on a public spending data. CPC therefore requested data on a basis of Article 16 of Integrity and Corruption Prevention Act, which gives the CPC powers for acquisition of data and documents.
After CPC had received data, data were examined and CPC developed algorithms elimination of personal and classified data from the databases. By doing that, all remaining data became public information and could be released and accessible to anyone. The removed data were transactions related to physical persons (salaries, expenses related to salaries, etc.), transactions to accounts of health insurance companies containing personal data, transactions from deposit account of the Customs Administration of the Republic of Slovenia, transactions to Central Securities Clearing Corporation for the purchase of debt securities and payments of Public Payments Administration for the repayment of debts, transactions to intelligence and security services, transactions to banks, returns of taxes, etc.
During the performed analysis CPC received some additional data on financial transactions (statistical code of transaction and SEPA code of the transaction purpose). These data also helped CPC to remove transactions containing personal and classified information.
6. What were the strategies used to implement the initiative?
CPC asked the Public Payments Administration to provide the data on all payments of the public sector bodies for the period 1 January 2003 to 31 December 2010. Later the agreement with Public Payments Administration was signed to provide CPC with data about financial transactions on a monthly basis.
CPC also signed an agreement with AJPES for providing records on business entities in Slovenia, their subsidiaries, and other organization segments located in Slovenia which perform profitable or non-profitable activities, also on a monthly basis. AJPES is also providing database of companies’ annual reports.
In this period CPC also requested and gathered the database of public procurements in Slovenia from the public company Official Gazette.
All these data were requested by the CPC on the basis of Article 16 of the Integrity and Corruption Prevention Act, which gives the CPC powers for acquisition of data and documents. Records on business entities, annual reports and information about public procurements were completely public at that time, however data about financial transactions had not been published, since public institutions have always lacked a proactive approach towards transparency of public finances.
However, financial transactions gathered by CPC contained all transactions, including those containing personal and classified data. CPC developed algorithms for detection and elimination of those data and decided to use proactive approach towards transparency of public finances.
5. Who provides data for Supervizor?
Public Payments Administration is providing payment services for direct and indirect users of central and local government budgets, and streamlines and records the flows of public finance within the single treasury system. Public Payments Administration maintains a register of budget users, and manages budget user accounts and performs the tasks of payment service provider on behalf of budget users. For the purpose of Supervizor application they provided the CPC the data on all payments of the public sector bodies to private companies for the period 1 January 2003 to 31 December 2010.
AJPES is keeping records on business entities in Slovenia. AJPES manages the Slovenian Business Register as a central public database on all business entities, their subsidiaries, and other organization segments located in Slovenia which perform profitable or non-profitable activities. They are also in charge of managing annual reports of Slovenian business entities. In Slovenia, companies (including banks, insurance companies, investment funds and co-operatives), sole proprietors, legal entities governed by public law, non-profit organizations, and associations have to present their annual reports to AJPES for the purpose of presenting them publicly and for tax and statistical purposes. For companies with a mandated statutory audit, AJPES publishes audited annual reports.
The third source of data is the database of public procurements in Slovenia. The database is maintained by the public company Official Gazette and Ministry of Finance. Database contains information about all public procurements and all small value public procurements, including companies which received public procurement and the financial value of certain business.
4. What are the key benefits of Supervizor?
The key benefit of the project is that money flows from the public to private sector are accessible to the public quickly, simple and free. This proactive approach towards transparency of public finances could lead to the strengthening of public integrity, transparency of public finances, and accountability of public service and would have decreased risks of systemic corruption.
The application enables insight in financial flows among the public and the private sector not only to the public, the media and the profession, but also to other regulatory and supervisory bodies. Supervizor is not only a tool for responsible journalism and responsible citizenship, it is also valuable source of information for law enforcement authorities. Since financial transactions and financial flow analyses are a vital part of the evidence-gathering process when investigating economic crime, public finance crime and corruption, the use of a tool where information on business transactions of public sector bodies as well as other information regarding recipients of public funds is in one place, is extremely useful.
Transparency of financial flows among the public and the private sector achieved through this application increases the level of responsibilities of public office holders for effective and efficient use of public finance, facilitates debate on adopted and planned investments and projects as well as decreases risks for illicit management, abuse of functions, and above all, limits systemic corruption, unfair competitiveness and clientalismin public procurement procedures. In short: the principle of proactive transparency - provided by Supervizor - is strengthening the accountability of the public sector.
Supervizor implements the primary purpose of the CPC's mission: strengthening the rule of law, integrity and transparency and mitigation of corruption risks and conflicts of interest. Moreover, transparency of financial flows among the public and the private sector achieved through this application increases the level of responsibilities of public office holders for effective and efficient use of public finance, facilitates debate on adopted and planned investments and projects as well as decreases risks for illicit management, abuse of functions, and above all, limits systemic corruption, unfair competitiveness and clientage in public procurement procedures.
3. Who designed the application Supervizor?
The Supervizor is a project, conceptually designed and prepared by the CPC in cooperation with an independent expert and assistance of other bodies which provided the relevant data and cooperated in its presentation and interpretation (the Slovenian Ministry of finance, the Public Payments Administration of the Republic of Slovenia, the Agency of the Republic of Slovenia for Public Legal Records and Related Services - AJPES).
2. What was the main motive to perform proactive approach and publish data on the internet?
CPC and non-governmental organisations active in the anti-corruption field have in their in past reports repeatedly underlined the problem of systemic corruption and state capture in public procurement and overall financial flows between the public and the private; as well as the need for greater transparency in this area.
The extent of these phenomena was, however, unknown and it heavily relied on perception studies and expert analysis. This has changed with the idea of the CPC in 2010 to subpoena and analyse all the data of the Public Payments Administration on all financial flows between the public sector and the private sector. The data subpoenaed included all financial transactions made from state and local budgets for the period from 1 January 2003 to 31 December 2010.
Initial data analyses (done in-house by the CPC using open-source analytical tools) revealed some controversial practices in budget expenditure and proved systemic corruption risks in terms of "hijacking state"(state capture), political and systemic corruption. Analyses revealed: High correlation between the change of government in power and money disbursements from budget users to a limited number of companies; High inflexibility of the market for certain services (namely IT companies, pharmaceutical companies, construction companies, etc.); there is a very low level of competitiveness and a high degree of the market monopolization in those branches; In some branches (computing, attorneys, notaries), there is a very limited number of subjects, who do business with the country; In some branches (informatics, legal services) state administration and especially different agencies, public institutions, etc. hire external service providers in disproportionately high share, although they already have adequate staff employed; There are a group of companies which are highly dependent on the budget users money transfers, which constitutes a noticeable risk of corruption.
Arguably, this approach provided the first “empirical” analysis of the “level” of state capture of a given country going beyond the methodology of perception studies and expert evaluations. The data suggest the business environment is not transparent; there are too many privileged actors, whose financing are conducted in accordance with the non-negotiable mechanisms, but are arising from links of interest groups. Otherwise legitimate capital, political and interest-based network connections play major role in Slovenia due to its small size and present a particular problem. There are growing indications that this pattern has now descended to the level of senior and somewhere even middle management. Networking and starting their own businesses, through which civil officials (for relatively high financial amounts) provide amortized services (that should be otherwise under the same conditions available to any interested natural person or legal entity) – is more than obvious. This group also includes unsanctioned, although often obvious conflict of interest between “public” and “private” or abuse of official position for purposes of private interests. Although different in terms of "risk", they all share common point – low integrity of the public sector and the inability to control mechanisms to prevent or detect such occurrences.
1. What is Supervizor?
Supervizor is an online application that provides (by clicking) information to users on business transactions of the public sector bodies – all direct and indirect budget users (the bodies of all three branches of power, independent judicial and state bodies, local communities and their parts with legal personality, public institutes, public funds, public agencies, etc.). The data are monthly updated and provide the general public with proactive transparency in the field of public sector spending.
Online application for monitoring expenses of public bodies allows oversight over the average EUR 4.7 bn a year used for goods and services by the public sector. The application indicates contracting parties, the largest recipients of funds, related legal entities, date and amount of transactions and also purpose of money transfers (for all the services and goods payments over 4.000 EUR). It also enables presentation of data using graphs as well as printouts for specified periods of time and other.
Supervizor combines relevant data from different sources (Ministry of Finance, Public Payments Administration, etc.) in a more user-friendly format. Supervisor did not require any law modifications.
Supervizor represents an important step towards more transparent state operations and will be further upgraded and improved by the Slovenian Commission for the Prevention of Corruption (hereby: “the CPC”) in cooperation with other bodies. The application enables insight in financial flows among the public and the private sector not only to the public, the media and the profession, but also to other regulatory and supervisory bodies. Supervizor is not only a tool for responsible journalism and responsible citizenship, however it is valuable source of information for law enforcement authorities. Application also shows ownership and management structure of the Slovenian companies and also some data from their annual reports. Since financial transactions and financial flow analyses are a vital part of the evidence-gathering process when investigating economic crime, public finance crime and corruption, the use of a tool where information on business transactions of public sector bodies as well as other information regarding recipients of public funds is in one place, is extremely useful.
Application Supervizor was launched on 23th of August 2011 at 11 a.m. Already during the first day, there were around 1.200.000 page views and raised up to 2.616.000 within only 6 days (bearing in mind that Slovenia is a country with only 2 million inhabitants and that the access from abroad was limited for the first few days).
Supervizor implements the primary purpose of the CPC's mission: strengthening the rule of law, integrity and transparency and mitigation of corruption risks and conflicts of interest. Moreover, transparency of financial flows among the public and the private sector achieved through this application increases the level of responsibilities of public office holders for effective and efficient use of public finance, facilitates debate on adopted and planned investments and projects as well as decreases risks for illicit management, abuse of functions, and limits systemic corruption, unfair competitiveness and clientage in public procurement procedures. In short: the principle of proactive transparency - provided by Supervizor - is strengthening the accountability of the public sector.