Croatia C

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Croatia is placed in Band C. Regarding political risk, the country’s parliament debates a yearly report by the government on defence, and the parliamentary Defence Committee is generally transparent and can affect parliamentary decisions on defence─though it cannot scrutinise the Ministry of Defence (MOD). Basic defence strategy documents are publicly debated but whether the feedback is processed properly is uncertain. The Chief Army Inspectorate and the Criminal Military Police exist to counter corruption though their degree of independence is also uncertain. There appears to be no links between the military and natural resource exploitation, nor to organised crime. However, the disclosed defence budget is not detailed and committee scrutiny of the budget is recognised to be undermined by lack of time. Sources of the budget other than from central allocation are published but not scrutinised.

In financial corruption risk, the Defence Inspectorate controls asset disposals but has discretionary powers. There is little financial transparency on the secret services and parliament receives limited information on sensitive items. There is no evidence of off-budget expenditure, though there are reported to be modest contingency funds that are rarely used. Lastly, there are some MOD-owned businesses, for example the ‘Alan Agency’ which trades equipment, though details on the operations of such firms are not transparent and standards of scrutiny are uncertain.

In terms of personnel risk, the Law on Service in Armed Forces penalises corruption but its effectiveness has been uncertain. Examples of prosecution are not forthcoming, and there is no provision for whistle-blowing. There are publicly disclosed personnel numbers and payment systems, and there is a lack of evidence to suggest that chains of command and chains of payment are not separated, nor that ghost soldiers do not exist. Consistent with a theme of considerable uncertainty over personnel issues, there is little sign of objectivity of promotions, and though the Penal Code covers facilitation payments, certainty over its application is again lacking.

In operations corruption risk, there is not yet anti-corruption provision in military doctrine, but the new Strategic Defence Review does contain a paragraph relating to anti-corruption. There is selective training in anti-corruption topics for deployed troops, but there is no evidence of operational monitoring role for Croatian forces even when they are part of a bigger, international, operational contingent.

On the procurement front, the Public Procurement Act and the attendant defence and security regulation cover purchasing by the MOD but there are quite clear exceptions to the legislation, such as purchases for the intelligence system. Transparency around procurement is limited, and it is indicated that purchases are unnecessarily declared ‘secret’ as this makes the process for the MOD easier. Suppliers do not appear to be required to have compliance programmes, nor are there checks on agents or subcontractors. Competitiveness is limited: less than ten per cent of the value of purchases is made as a result of open competition, ad hoc tender boards are recognised to be used, and there are indications of clear collusion risk. It is also recognised that procurement is often decided in advance and that this is common knowledge, discouraging complaints about malpractice in procurement. Finally, in offsets contracts there is little transparency and competition, and little confidence in processes of due diligence.

Research finalised: May 2012


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