Corruption remains endemic in many political and economic institutions in BiH and raises the costs and risks of doing business. BiH law provides criminal penalties for corruption by public officials and their family members, and BiH is party to the UN Anticorruption Convention, but the government does not implement the laws fairly or effectively. Public officials engaging in corrupt activity can often act with impunity. Numerous BiH individuals and business entities are under OFAC sanctions for destabilizing activities and corruption, while others have been designated by the Department of State under 7031(c) authorities barring their entry to the United States. Most prominent among these is RS President and President of the Alliance of Independent Social Democrats party Milorad Dodik, his adult children Igor and Gorica Dodik, and a number of companies under their control. Other individuals have been sanctioned for war crimes.
The multitude of state, entity, cantonal, and municipal administrations, each with the power to establish laws and regulations affecting business, creates a system that lacks transparency and opens opportunities for corruption. BiH’s overly complex business registration and licensing process is particularly vulnerable to corruption. Paying bribes to obtain necessary business licenses and construction permits, or simply to expedite the approval process, occurs regularly. Digitalization of public services such as permitting and business registration can streamline processes and reduce the touch points for corruption, but roll-out of digital services has been sporadic and almost exclusively funded by international donors. Foreign investors have criticized government and public procurement tenders for a lack of openness and transparency. BiH amended its law on public procurement in August 2022, and its law on conflict of interest in March 2024. Both laws are imperfect, do not meet international standards, and do little to end opportunities for corruption, undue influence, and nepotism. Despite the February 2024 adoption of legislation on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), the country remains at risk of ending up on the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering and Combating the Financing of Terrorism’s (MONEYVAL) “Grey List.”
Transparency International’s (TI) 2023 Corruption Perception Index ranked BiH 108 out of 180 countries, making it the lowest-ranked country in Europe (Russia and Turkey notwithstanding). According to TI, relevant institutions lack the will to actively fight corruption; law enforcement agencies and the judiciary are not effective in the prosecution of corruption cases and are visibly exposed to political pressures or under the outright control of politicians and their patronage networks; and prosecutors complain that citizens generally do not report instances of corruption and do not want to testify in these cases. Some journalists publishing investigative stories about corruption and civil society groups engaged in combatting corruption have faced pressure and threats, and the government limits access to information about ongoing corruption cases and the improper use of public funds. In July 2023, the RS government passed a controversial law re-criminalizing defamation, which restricts freedom of the press and increases pressure on journalists who report on corruption.
In 2011, BiH established the state-level Agency for Prevention of Corruption and Coordination of Fight Against Corruption to coordinate efforts to combat corruption; while officially active, the agency has shown limited results. The agency is responsible for preventing corruption and coordinating the fight against corruption in public and private sector institutions; of elected officials in the legislative, executive, and judicial institutions; public servants, employees, and police officers in government institutions at all levels; and members of management, supervisory boards, and other employees in GOEs. Efforts to establish cantonal-level Anti-Corruption Offices, with U.S. support, are underway throughout the Federation and have yielded results, particularly in Sarajevo. Efforts to undermine their independence and obstruct investigations remain widespread, however.
Corruption has a corrosive impact on both market opportunities overseas for U.S. companies and the broader business climate. Corruption deters foreign investment, stifles economic growth and development, distorts prices, and undermines the rule of law. U.S. companies must carefully assess the business climate and develop an effective compliance program and measures to prevent and detect corruption, including foreign bribery. They must also closely monitor the conduct of their local partners, who may be vulnerable to political pressure. U.S. individuals and firms should take the time to become familiar with the relevant anticorruption laws of the United States and of BiH at all levels of government in order to properly comply, and where appropriate, seek the advice of legal counsel. The American Chamber of Commerce in BiH has a project on business integrity through which U.S. and other companies can access resources on internal ethics and compliance programs, which are not mandated by the government.
The U.S. government seeks to level the global playing field for U.S. businesses by encouraging other countries to take steps to criminalize their own companies’ acts of corruption, including bribery of foreign public officials, and uphold obligations under relevant international conventions. A U.S. firm that believes a competitor is seeking to use bribery of a foreign public official to secure a contract should bring this to the attention of appropriate U.S. agencies.
While the U.S. Department of Commerce cannot provide legal advice on local laws, the Department’s U.S. and Foreign Commercial Service can provide assistance with navigating the host country’s legal system and obtaining a list of local legal counsel.
The U.S. Department of Commerce offers a number of services to aid U.S. businesses. For example, the U.S. and Foreign Commercial Service can provide services that may assist U.S. companies in conducting due diligence when choosing business partners or agents overseas and provide support for qualified U.S. companies bidding on foreign government contracts. For a list of U.S. Foreign and Commercial Service offices, please visit the Commercial Service website: www.trade.gov/cs
Alleged corruption by foreign governments or competitors can be brought to the attention of appropriate U.S. government officials, including U.S. Embassy personnel or through the Department of Commerce Trade Compliance Center “Report a Trade Barrier” Website at:
https://tcc.export.gov/Report_a_Barrier/index.asp
Contact at government agency or agencies responsible for combating corruption:
BiH Agency for the Prevention of Corruption and Coordination of the Fight against Corruption
Phone: +387 57 322 540
email: kontakt@apik.ba
www.apik.ba
Contact at “watchdog” organization (international, regional, local or nongovernmental organization operating in the country/economy that monitors corruption):
Transparency International BiH
Phone: +387 51 216928
Fax: +387 51 216369
email: info@ti-bih.org
www.ti-bih.org