"No science is immune to the infection
of politics and the corruption of power."

Jacob Bronowski
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Violation of Procedural Restrictions

 

A bailiff sells the assets of debtors to his close relatives

A bailiff organises an auction where a company connected to his close relative takes part. In two auctions, the only bidder is the company where the bailiff’s father is the Chairman of the Management Board. On three auctions, competing companies also take part but the successful bidder is still the company connected to the bailiff’s father.

No

This entails a restriction of activities and a violation of the bailiff’s duties. Pursuant to the Code of Enforcement Procedure, § 9 (11), a bailiff must remove himself or herself in the case a person close to him or her is a participant in the proceedings or a beneficiary of the enforcement action.

A bailiff must not create any doubt about his or her honesty and thus the reliability of the entire institution of bailiffs. A transaction should also not be made if there are no other bidders besides companies connected to close relatives; in that case, the matter must be handed over to another bailiff or a new auction must be conducted.

A City Council Member participates in a bidding for the lowest price

A member of the City Council of a settlement with 50,000 residents is the owner of a company providing street cleaning services. She decides to participate with her company in the same City Council’s bidding for the lowest price of snow removal services.

Yes

The Local Government Organisation Act, § 17 (5) sets out that a City Council Member shall not participate in the debate and resolution of legislation of specific application in the City Council with regard to which a conflict of interests exists for him or her. An official is forbidden in principle from making an act or a decision if it is made concerning the official him/herself and if the official knows about the interests of a person affiliated with him/her.

A City Council Member’s company may participate in a bidding for the lowest price of street cleaning services but in order to prevent a conflict of interests, the City Council Member must not belong to the committee evaluating the bids, nor make the decision about declaring the successful bidder. She must remove herself as the City Council Member from all decisions related to her company’s bid. If her company turns out the successful bidder, she must remove herself as a City Council Member from all future decisions concerning the street cleaning works performed by her company. Moreover, the removal as a City Council Member must be documented in writing in the minutes of the City Council’s meetings where matters concerning her company were discussed.

An upper secondary school Headmistress’s transactions with her son

A son of a Headmistress of an upper secondary school is a Management Board Member and a shareholder of a furniture company. On a family event, the Headmistress mentions that renovation works will soon start in the school and that there are plans to buy new shelves there for 5,000 euros. The son suggests that as the Director of the company, he can offer the school some 30% discount. The Headmistress also visits other furniture companies and sees that the market price is notably higher. So the Headmistress abandons the idea of competing bids and places an order for 20 shelves with her son’s company.

No

The Headmistress’s transaction with a furniture company where her son has holding in is a transaction with oneself and thus a violation of the restriction on activities, entailing a conflict of interests. By deciding as a school’s Headmistress and an official to order the school furniture from her son’s company, she directly influences the economic interests of her son’s company through that transaction.

A Management Board Member of a city’s company leases a car from his spouse’s father on behalf of the company

A Management Board Member of a company with the city’s holding signs a lease contract on behalf of the company for the use of a passenger car. The car is leased from a company, the owner of which is the father-in-law of the Management Board Member of the company with the city’s holding.

No

The spouse’s father is a related person for the official. Officials are prohibited from performing transactions with related parties because those entail a conflict of interests. Therefore, the Management Board Member of the company with the city’s holding nust not lease the official car from the company of the Management Board Member’s father-in-law.

A Rural Municipality Mayor approves a company’s invoices, being its shareholder and Management Board Member

A Rural Municipality Mayor places his signatures to approve three invoices that a company has issued to the rural municipality government for interior design works. The Rural Municipality Mayor is both a shareholder and a Management Board Member in that company. No other bids were taken. Also, the rural municipality government did not sign a contract with the company for the works stated in the invoices because the rural municipality government considered the works to be low-cost. Before presenting the invoices to the Rural Municipality Mayor, the Head of Office and the Accountant of the company have superscripted them. 

No

A situation where a Rural Municipality Mayor orders interior design works from his own company and then signs the invoices himself is a transaction with oneself and entails a conflict of interests because the Rural Municipality Mayor’s duty upon managing the local government’s budget conflicts with the profit increasing interests of the manager and shareholder of the interior design company.

The Rural Municipality Mayor could have participated in a tendering procedure if the procurement were public and the Rural Municipality Mayor had not been in the procurement committee and not influenced the committee’s decision in any other way. Even later, turning out the winner if the tendering, the Rural Municipality Mayor must remove himself from all decisions related to his company. Considering the Rural Municipality Mayor’s competence, such work arrangement may turn out difficult to implement, but in principle the rural municipality counsel can assign someone else to represent the rural municipality in that transaction.

A Rural Municipality Mayor’s son-in-law participates in a procurement organised by the rural municipality

A company’s Management Board Member is a son-in-law of the Rural Municipality Mayor. The company participates in the rural municipality’s procurement and wins.

No

Although the son-in-law is formally not a related party as defined in the Anti-corruption Act – otherwise a restriction of activities would have to be applied and the Rural Municipality Mayor’s removal obligation would be apparent –, other arguments must be considered as well, for example: whether the son-in-law is in the same household with the Rural Municipality Mayor; whether the Rural Municipality Mayor and the son-in-law are in an economic or other dependency relation. It must also be taken into account that pursuant to the Anti-corruption Act, § 11 (1) 3), the Rural Municipality Mayor is prohibited from making a decision or an action if he is aware of other risk of corruption (e.g. that the son-in-law participates in organising the renovation of the Rural Municipality Mayor’s home or the Rural Municipality Mayor takes a holiday in his son-in-law’s summer cottage).

In any case, things should be arranged so that the actions related to the procurement are performed by the rural municipality government in full staffing and the Rural Municipality Mayor removes himself from those actions.

A Municipal Council Member participates in a decision pertaining to himself

The county government is proceeding the files of giving land plots into usufruct. In five cases, the Chairman of the Municipal Council is approved as a person receiving the land plots into usufruct. The materials enclosed to the resolution indicate that the Chairman has removed himself from the discussion of the agenda item pertaining to him but he has undersigned the Municipal Council’s resolution, which approves the inclusion of the Municipal Council Member as a private person in the list of persons receiving the usufruct.

No

A Municipal Council Member as a private person has an interest towards the resolution’s result. Therefore, the Chairman of the Municipal Council acted correctly by removing himself from the discussion of the agenda item in question, but he acted wrong by undersigning the resolution. A resolution undersigned by the Chairman of the Municipal Council may give an impression of his participation and influencing of the decision-making process. To adopt such resolutions, incl. to sign them, the Municipal Council’s internal regulations must prescribe the opportunity to substitute or remove a person.

An official belonging to a grant scheme’s Lead Committee participates in a project’s implementation

A Ministry’s official has filed her direct superior an application for a side activity, which is to participate as an expert in the bidding of a project application prepared for a European Union grant. The participation as an expert in the project involves the giving of a two-hour lecture. The official is not an employee of the consultation company that made the offer but participates in the project as a one-off activity. The expert will be paid and the official’s participation as an expert is not related to her duties defined in her job description. Yet, the Ministry’s official is appointed a member of the Lead Committee of the same project and is to participate in the evaluation of applications. The project’s Lead Committee has seven members.

Yes

The role of the official belonging to the Lead Committee means giving one lecture in this project and the official does not have a continuous employment relationship with the consultation company responsible for the project’s implementation. In the described case, the official may participate in the project’s implementation but to prevent a conflict of interests, she must remove herself from the evaluation of a project that she herself participates in as an expert. An official cannot be objective when evaluating his/her own project and thereby deciding about his/her own remuneration.

The situation would be different if the official were working continuously (as a side activity) for the company participating in the preparation of project applications. In that case, the official would not be allowed to participate in the project scheme’s Lead Committee because her interest as an employee of the consultation company would conflict with the requirements of objectivity and independence placed on her as a member of the project scheme's Lead Committee. Also, a member of the Lead Committee working for the consultation company would have access to information about bids made by competitors and that would give her an unjustified competitive advantage.

An IT specialist participates in the preparation of a procurement for a company related to his spouse

An employee of an agency administrated by a Ministry has the duty to advise the Ministry about IT projects and to deal with IT procurements, among the rest. His spouse works in an IT company and holds 25% of its shares. The spouse’s company also participates in the procurement and therefore the official has to communicate with the employees of his spouse’s company.

No

Participation in the preparation and negotiations of such a procurement would not be unbiased because the company’s win in the procurement would affect the family’s economic situation – the company would gain more turnover and presumably its owners would gain more profit. There is essentially no difference whether the company’s owner is an official spouse or a cohabitee, as they are two related persons concerning each other.