Bribe - a $500 million market in Romania

The Romanian companies confess: they are paying more bribes, as the amounts allotted for securing various “favours” have increased, from an average of 1.7% of annual sales in 1999 to 2.6% this year, according to a recent survey conducted by the European Bank for Reconstruction and Development and the World Bank. In other words, considering an estimated $25bn global turnover of Romanian companies, bribe amounts to about 500 million dollars!
However, there are fewer taxpayers that pay the so-called “bribe tax”. In 1999, 50% of companies paid it, but today only 35% of them admit they give money to make life easier. The survey has canvassed almost 6,000 companies in 26 countries in Central and Eastern Europe, including the Baltic states.
“The lower number of companies paying bribe is obvious. However, I do not agree with those statements saying that the amounts of money have increased,” says Aurelientu Popescu, chairman of the Light Industry Patronage Federation (FEPAIUS). “Sometimes it happens that a company comprised of only two or three individuals wins a tender worth millions, then another company steps in and does the actual work, so you realise the first company has fraudulently won the tender and the contract. Which makes you wonder how it managed to win the tender in the first place,” the representative of a construction company says.
However, the EBRD notes a significant drop in corruption in the entire area, by measuring the sales percentage used by the companies to “unofficially” make various payments to public servants.
The main destinations of these expenses: landing contracts with the state, solving problems related to debts to the state budget, easier access to public services, obtaining licences and authorisations, solving customs-related problems, influencing court rulings and the legislative process.
“This is very serious (i.e. that 35% of Romanian companies claim they pay bribe), but, in my opinion, the company managers are to blame,” says Mihai Fercala, chairman of SIF (Financial Investment Company) Transilvania and a member of PSD (Social Democrat Party). “Most Romanian companies don’t have directors that can also be managers. They are mere directors. Faulty management is the cancer eating away at the Romanian economy and the source of corruption,” he says. SIF Transilvania lost more than one million dollars it had deposited at the Banca RomA„sna de Scont (Romanian Discount Bank).
Corruption represents a significant cost for the companies operating on the Romanian market, the survey says, and it could be assessed by the share of unofficial payments aimed to solve various problems with the state officials.
Considering the level of these expenses, Romania ranks fifth in the “bribe classification” of the Eastern, Southeastern and Central European countries, the Commonwealth of Independent States included.
Estonia logged the lowest level of bribery in the entire area, as it amounts to 0.3% of annual sales in 2002, while Albania ranked first, as companies admit that this kind of expenses account for 3.3% of annual turnover.
To cope with the high taxation level, companies operating in Romania generally declare only 85% of the real level of sales.
The Romanian business environment can also be compared to the other countries in terms of the time average managers have to spend talking to public servants about the enforcement of various laws and regulations. In Romania, 8% of the total working time is spent this way.
Latvia and Poland, in Central and Eastern Europe, are among the countries with the highest “time taxes,” while in Southeastern Europe the top positions are held by Albania, Bosnia-Herzegovina, Yugoslavia, Macedonia and Romania. In the Commonwealth of Independent States, the record is held by Georgia, Kazakhstan, Russia and Ukraine.