The provisions of the Integrity and Prevention of Corruption Act (hereinafter: IPCA) on the restrictions on business activities protect domestic and EU public funds from use motivated by private interest. The law distinguishes between two categories of business activities on the basis of the risk of corruption or private use of public funds: business activities with an absolute ban (IPCA, Article 35, Paragraph 1), and conditionally allowed business activities (IPCA, Article 35, Paragraph 3) contingent on the compliance with the provisions on the due avoidance of conflicts of interest. The Commission calls particular attention to the fact that the provisions of the IPCA apply only to bodies and organisations with officials on duty. For public-sector institutions headed by high-ranking civil servants, the provisions on the restrictions on business activities contained in Paragraph 6 of Article 100 of the Public Employees Act apply instead.
The rules or rather the system of restrictions on business activities is therefore intended to completely, or to the greatest extent possible, exclude formal and informal influence of officials in all phases of obtaining business or a different form of awarding public funds when the said officials have a (partial) private interest in obtaining the said business.
In two cases, the restrictions of business activities also extend to the period after the termination of an official’s office. When an official’s office within a body is terminated, they may not act as a representative of a business entity which is about to establish or has established business contacts with the said body. This is to prevent the so-called revolving doors phenomenon, which is increasingly being regulated by law of various states and part of the practices of the Council of Europe and OECD. Similarly, the body in which the official previously held office may not do business with an entity in which the former official has a 5% or greater participation in the founders’ rights, management, or capital, until one year after the termination of the office.
List of entities subject to restrictions on business activities
Officials are obliged to provide information on entities with which they or their family members have a relationship which effects restrictions on business activities to the body in which they hold office. The bodies are obliged to submit the list of entities and any changes to the list to the Commission, which publishes the list of said entities on its website on a monthly basis. Officials must inform the body about any changes within eight days from the occurrence, and the body is obliged to submit this information to the Commission within 15 days.
(Restrictions on business activities and the consequences of violations)
(1) A public sector body or organisation which is committed to conducting a public procurement procedure in accordance with the regulations on public procurement or which carries out the procedure for granting concessions or other forms of public-private partnership, may not order goods, services or construction works, enter into public-private partnerships or grant special and exclusive rights to entities in which the official who holds office in the body or organisation concerned or in cases where the official’s family member has the following role:
– participating as a manager, management member or legal representative; or
– has more than a 5% level of participation in the founders’ rights, management or capital, either by direct participation or through the participation of other legal persons.
(2) The prohibition referred to in the preceding paragraph shall also apply to the public sector body or organisation’s business dealings with the official or the official’s family member as a natural person.
(3) The prohibition of operation within the scope detailed in paragraph 1 and the preceding paragraph of this Article shall not apply to other procedures or ways of obtaining funds that are not covered in paragraph 1 of this Article, providing that the provisions of this or any other Act relating to conflicts of interest and the obligation to avoid any conflicts of interest are duly complied with, or that the official is consistently excluded from all stages of decision–‐making on the performance and entering into of procedures or transactions. If the official or the official’s family member violates the provisions on the avoidance of conflicts of interest or exclusion, the consequences shall be the same as those specified for the prohibition of operation.
(4) The prohibition of operation referred to in paragraph 1 of this Article and the prohibition referred to in the preceding paragraph shall also apply to smaller parts of a municipality (village, local and quarter communities), which have their own legal personality, if the municipal official is a member of the council of a smaller part of the municipality or if a particular transaction may be entered into only with the municipal official’s consent.
(5) Officials shall communicate the name, registration number and head office of those entities with which they or their family members have a relationship, as specified in paragraph 1 of this Article, to the body in which they hold office within one month after taking office and then no later than within eight days of any change occurring. The body shall submit the list of entities referred to in the preceding sentence of this Article to the Commission no later than within 15 days of receipt of information on or a notification of changes regarding the entities. The Commission shall publish the list of entities referred to in the first sentence of this paragraph on its website every month.
(6) The restrictions under the provisions of this Article do not apply to operation on the basis of contracts concluded prior to the official taking office. (7) A contract or other forms of obtaining funds that are in conflict with the provisions of this Article shall be null and void.
(Temporary prohibition of operation after the termination of office)
(1) An official may not act as a representative of a business entity that has established or is about to establish business contacts with the body in which the official held office until two years have elapsed from the termination of his office.
(2) The body in which the official held office may not do business with the entity in which the former official has a 5% participation in the founders’ rights, management or capital, either by direct participation or through the participation of other legal persons until one year has elapsed from the termination of the office.
(3) The body in which the official held office shall immediately, or within 30 days at the latest, inform the Commission of the situation referred to in paragraph 1 of this Article.