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National particularities of declaring incomes and estate
Sergiu Grosu, August 31, 2006

I. Surrealist contrasts

The Central Commission for the Control (CCC) of declarations on incomes and properties released on August 25 some data on estate of first-ranking dignitaries of Moldova to mass media. The event has aroused the attention of public opinion, becoming a delight for mass media. The way how this information was released made various agencies and publications comment on the event in a very various manner - from expressing puzzle to emanating a torrent of irony and even sarcasm.

Like earlier, the main opinion was that a) the Law # 1264-XV from 19.07.2002 concerning declaration and control of incomes and property of state dignitaries, judges and prosecutors, public functionaries and high-ranking officials is a formal and inefficient act; b) the data from declarations do not correspond to reality, unfit the elementary common sense; c) the transparency of public authorities is stagnating; d) the efficiency of control in the invoked field is not discernible1.

Several facts should be outlined in this context:

  1. CCC did not issue a single document to publish it in mass media, but it continues to issue press releases based on own preferences;
  2. the possibility of estimating the truth and the presentation of data from declarations remain a major problem, though both declarers and the commission have formally a legal coverage that they do not hesitate to invoke: a) data which are not considered "confidential" are published; b) the value of property is estimated accordingly to data from the act that certifies the origin; c) only real estate worth over 50,000 lei must be declared, etc.;
  3. the moment when these data are published leaves room for doubts - when the majority of "active" population is in vacation. This happened because February 1 was the deadline for declaration of incomes and properties, while the CCC must check the declarations within 75 days, under the Law # 1576-XV from 20.12.2002.

Inquisitively, the information released by CCC does not allow estimating the estates of dignitaries in absolute figures, an important fact to satisfy senseless curiosities, but especially for an adequate taxation, but this information does not allow at least a comparative estimation of property. As a result, it may be ascertained that the implementation of the Law # 1264-XV cannot ensure the fulfilment of its declared goal - "introduction of measures to prevent and combat the unjustified enrichment of state dignitaries, judges, prosecutors, public functionaries and officials."

Firstly, the declared property of dignitaries is worth between thousands of lei (1$ ~ 13 USD) and one million lei (the highest declared value), while the proportion between extremes is approximately 200 (!). It is interesting that the reporting of declared estates of dignitaries is inversely proportionate to expectations based on information related to functions held by these dignitaries previously. As for example, the expectation that the property of some high-ranking dignitaries who have served as chairmen, prime ministers, ministers, mayors, etc., (some of them making business in the past) be worthier than the property of dignitaries who have served in education or science fields is normal. Indeed, CCC data reveal that the state of things is exactly reverse. Thus, the value of real estate (!) declared by a lawmaker from academic environment who is part of the "middle class" is tens of times higher (!) than the value of similar goods declared by dignitaries who have held leading offices for many years, after all imaginable parameters.

Curiously, many high-ranking dignitaries said that they do not know the value of their estate in general2. The palliative of those who chose not to publish absolutely wrong information if they did not hire a property estimation agency in order to comply with requirements of the law must be appreciated, but by the way, they should do this after investiture. But dignitaries throw a bad light on CCC when they declare that they do not know the value of their property, and we could think that the commission fails its tasks since it is in charge with checking their declarations.

II. Short history of regulations in the field

The attitude of Moldovan authorities toward the problem of declaration and control of incomes and properties deserves a retrospective analysis, at least a summary:

  1. The Law # 663-XIII on declaration of incomes by individuals was adopted on November 23, 1995; it obliged individuals to declare incomes in money and kind, the value of material and social goods (transactions worth over 2,000 minimum salaries (36,000 lei), constructions worth over 3,000 minimum salaries (54,000 lei))3;
  2. The Law on public service (# 443 from 04.05.1995) was enforced on November 2, 1995; its Article 12 established that the functionary must declare his incomes, real estate and chattels, bank deposits and securities, financial commitments, including abroad, when he is employed. The declaration must also cover the property of members of his family. The refusal to declare the property or the declaration of wrong data result with unemployment in public service or dismissal4;
  3. The Law # 900/27.06.96 on combat of corruption and protectionism took effect on August 22, 1996; its Article 10 stipulates that the functionary declares his incomes, real estate and chattels, bank deposits and securities, financial commitments, including abroad, when he is employed and every year later. The refusal to declare the estate or the declaration of wrong data result with unemployment in public service or dismissal. The same article established that the declarations on incomes of officials of the highest ranking, as well as of other decision-making officials whose appointment and election is regulated by Constitution are published every year in official issues of public authorities. Declarations on incomes of persons who bid for these posts are also made public when their candidacies are proposed5;
  4. The Tax Code enforced in 1997 obliges individuals to declare their incomes in dependence of the source of these revenues, their size and other criteria typical to fiscal procedures;
  5. The Election Code adopted under the Law # 796-XV from 25.01.2002 establishes in Article 44 that the Central Election Commission or electoral constituency councils receive the declaration on real estate, bank deposits, securities, inherited sums and revenues for the two years before the elections, as well as sources of these incomes, including revenues from investment funds paid under the shape of interests, renting of property, from candidate when he is registered.6;
  6. On July 19, 2002, the Parliament adopted the Law # 1264-XV on control of incomes and property, in line with recommendations and at insistence of international financial organisations.

Thus, the Law # 1264-XV should crown the efforts of the seven precedent years aimed to ensure the transparency of incomes and properties of dignitaries on basis of the principle bona fide. Starting January 30, 2003, the envisaged dignitaries should submit declarations. But the story of implementation of this law is an eloquent sample of inefficiency and legislative intervention with equivocal effects:

  1. The Parliament adopted the Law # 1576-XV in late December 2002, approving the regulation on mode of organisation and functioning of CCC and the regulation on mode of organisation and functioning of departmental commissions in charge with control of declarations on incomes and property7. Under this law, the 9 CCC members are appointed on parity basis by Parliament (without establishing the obligation of appointing a representative of the opposition), chief of state and Government. The commission members work on public bases, they are lawmakers, functionaries, members of the Government; it means they must declare their incomes and properties and check them;
  2. In early 2003, a month after incomes and property should be declared, the Parliament adopted the Law # 85-XV from February 28, 2003, which modifies (retroactively) the term for enforcement of the Law # 1264, establishing that the first declarations of dignitaries will be submitted by July 1, 2003. No information about declarations submitted by dignitaries on summer 2003 was made public so far;
  3. The law on declaration and control of incomes and estate is modified and completed again through the Law # 136-XV from 06.05.2004, with the view to establish that: - it aims to combat and prevent the unjustified enrichment of dignitaries; - to exclude the obligation of declaring the incomes and properties of members of families of dignitaries (only the obligation of declaring the incomes and properties of spouse, minor children and maintained persons is kept). Also, the changes establish that only chattels worth over 50,000 lei will be declared. The law has also introduced amendments to the Penal Code and Code on Administrative Contraventions, introducing responsibility for violation of rules on declaration of incomes and property (fine from 3,600 up to 20,000 lei), (two years after the framework law was adopted).8

III. Efficiency of regulations in "country of crooked mirrors"

Transparency of authorities, including of declarations on incomes and properties of dignitaries, is defining for perception of seriousness and efficiency of anti-corruption fight by population. This supposition is confirmed by international experience in the field, attention paid by mass media to this topic, as well as by a series of researches in the area. Thus, a survey conducted by Transparency International - Moldova, the Centre of Journalistic Investigations and the Independent Press Association in 2004 revealed that more than 90 percent of respondents said that they are interested in property of state dignitaries; salaries of functionaries; use of public funds9 when they were asked what information they would like to learn from public authorities?

The current situation in Moldova proves that the authorities treat this topic very superficially or with reticence. It seems that the situation in this area of maximum sensitiveness is not wanted to be made clear. Thus, the information about annual incomes of dignitaries and their spouses is named confidential information, though no law classifies this information express as "state secret" or "confidential information". Article 13 (2) of the Law # 1264-XV from 19.07.2002 establishes tangentially what information is published and what information is not "secret", but this exemption is not a sufficient legal ground to qualify other information as confidential and inaccessible to public.

This consideration is especially effective for the first dignitaries in the state (parliamentarians, ministers, judges, mayors), whose salaries are public (the law on salary system in budgetary sector establishes concrete salaries for dignitaries), whose functions do not allow them to hold other remunerated activities, while the intense working regime, presumed dedication, attention of mass media, exposure and public dignity do not allow them to make important business.

Even more, the law does not obstruct dignitaries to demonstrate own initiative and to publish their declarations on incomes and property independently on basis of bona fide. On the contrary, this step would make a positive image to them, would enhance their authority, affirming a high probity in front of public opinion, electors. The plenary and thorough checking by electoral organs, control commissions and the Centre for the Struggle Against Economic Crimes and Corruption required by legislation would certify the lack of violations, giving weight to initiatives of dignitaries and destroying doubts of common citizens and voters, as well as of obvious malevolent people.

The citizen who pays taxes must be sad and desperate or motivated to resort to various tricks "justified" by behaviour of dignitaries of the highest ranking when they see that properties (apartments, fields, cars) declared by the latter are estimated at derisory prices of thousands of lei, which are tens and hundreds of times lower than their real values. Really, everybody knows that a one-room apartment built in Chisinau 20-30 years ago costs around 24,000 dollars at present, a two-room apartment is worth about 30,000 dollars, while a 3-4-room apartment costs more than 35,000 dollars. Although the legislation adopted by same dignitaries ensures legal protection, establishing that the estimation is based on property origin acts, the common citizen received in 2005 notifications from the cadastral body that his apartment evaluated recently by cadastral office is estimated at hundreds of thousands of lei. The authorities have started the evaluation of real estates at real prices in order to tax their true values. The authorities gave up the implementation of this procedure without too many explanations. As a result, the problem remains unsolved while the common elector is waiting for fair conditions for all taxpayers, so that worthy properties be taxed appropriately.

Under these conditions, how credible are the authorities who assume periodically the intention to examine the problem of amnesty of capitals, but did not adopt any decision in this respect for many years? What should citizens think about intentions of authorities to modify the Constitution in terms to exclude the provisions establishing that the licit nature of property is presented without specifying that the owners are dignitaries, public functionaries or any other citizens? Why does the Government plan to work out the draft law on declaration of incomes, properties and means of raising incomes by individuals who are citizens of Moldova10 in the 3rd quarter of 2006 instead of demonstrating its intentions to clarify the incomes and properties by improving and adequately implementing the law on declaration and control of properties of dignitaries?

The intention of any Government to know such information about its citizens may be understood, but how credible is the launching of such a census and complete control of property when the Government hints that it does not want to ensure the efficiency of control on declarations of incomes and properties of dignitaries?

IV. Experience of states with European aspirations

The Moldovan authorities declare on different occasions that they strongly want to combat the corruption. The combat of corruption is part of strategic documents adopted earlier and recently by authorities: the national strategy against corruption; the action programme of the Government; the Economic Growth and Poverty Reduction Strategy Paper (EGPRSP); the European Union-Moldova Action Plan, the concept on Moldova's participation in the preliminary stage of the programme "Millennium Challenge Account", etc. Perhaps the international experience especially of neighbouring countries, of those which recently joined or are about to join the E.U., a desideratum of Moldovan authorities declared as a national priority should be studied in order to implement these plans and strategies successfully, isn't it?

In this respect, maybe the example of Romania is the best. It is enough to surf any website of public institutions from Romania and Moldova in order to compare the situation regarding declaration of incomes and property of dignitaries from the two countries.

Thus, official websites of the Parliament, President, Government, Chamber of Auditors, Superior Council of Magistrates, ministries and central and local services from Romania provide complete information about properties and incomes of dignitaries and publish even copies of declarations of entities. Political governors in Romania do not avoid declaring that they own important property or they raised important incomes throughout their mandates. The models of applicable declarations are more comprehensive than those filled by dignitaries from Chisinau, with declarations containing information about address, surface, category, taxation value and mode of gaining the owned real estate; brand and year of make of automobiles, earnings, other sources established by legislation.

It would be an exaggeration to believe that the transparency demonstrated by authorities and politicians from Romania has killed the corruption in country. But this transparency based on legislative and normative regulations implemented consistently through clear and open procedures offers very precise references for estimation of the impact of holding a public office on properties and other goods of dignitaries and public functionaries by public opinion. Of course, the reformation of this field was speeded up in Romania by imperative need of fulfilling the requirements for entry into the E.U., which does not accept taxpayers to hide information of public interest.

Of course, dignitaries and public functionaries from Moldova know the recent experience of Romania, its effects and impacts. Many Moldovan dignitaries may be overwhelmed by fate of some Romanian counterparts and colleagues whose properties have incredible origins. Many dignitaries and public functionaries from Moldova could have rich and generous "aunts", but this does not count the most. The most important conclusion is that the declaration of real values of properties of dignitaries in Romania did not challenge a social seism with unpredictable and harmful consequences for the Romanian state. We may suppose that the real declaration of estates and incomes will not challenge misunderstandings from common citizens in Moldova, but on the contrary, the process would be understood as transitory from a country of "crooked mirrors" to a normal state based on the rule of law.

V. True field of "national consensus"

It is known from sociological surveys, ratings of national and international organisations specialised in combating the corruption, as well as from usual practice of common citizens that Moldova is a country with a high corruption rate. Objectively, the political corruption, the so-called "peak corruption", produces the most harmful phenomena whose collateral effects make the corruption of medium level "flourish". The latter is spread more widely though it involves more petty functionaries, leaving pale traces on reporting and mediation of discovery of minor bribery and serving as a screen for "settlement of serious actions" this way.

The comparisons mentioned above regarding the way the dignitaries make public their incomes and value of properties, actions of authorities against corruption make Moldova lose real opportunities of fast progress forward European integration. Thus, the "national consensus" for European integration is pretty ephemeral from this point of view. It means that the expectations of Moldovan citizens to see their country engaged on a normal groove are illusory. Truly, learning information about declared values of properties of dignitaries and public functionaries, citizens should suppose that Moldova is ruled by altruists, true "servants of people" who serve the public benefit in the detriment of their own benefit. But the same citizens are justified to ask why tens of candidates queue for eligible public posts? Why the electoral race for these offices is so fiery and without compromise, except for the "April 4 voting"? Is the "introduction of measures for prevention and combat of unjustified enrichment" the main field of the "national consensus" for the entire political class (not only between power and "constructive opposition", the way it happened with the "April 4 voting", but also the consensus with the participation of "active opposition" on basis of hyper-equality and even as loyal as possible competition), like we see it when incomes are declared?

We may admit that governors resort to tricks anywhere, though this is not an excuse for those from Moldova. But what illusions should Moldovan citizens nourish regarding the opposition, if the latter fails an extraordinary opportunity clear to simple citizens to demonstrate its skills of "watchdog" of democracy and to apply the blow of grace to governors on a so prolific field? Why leaders of the "active" opposition who accuse the "constructive" opposition of betraying electors (!) and conspiracy with communists rally them and post the "poverty" like a virtue, why they do not admit that the displayed "poverty" is understood as a simple manifestation of conformism and cynicism? Under these conditions, there is a risk that guarantors may turn Moldova into a country with failed opportunities, while the opposition make citizens lose all illusions. It seems that unexpected opportunities open to the extra-parliamentary opposition to manifest itself.

VI. Conclusions

The publication of some data regarding value of properties of Moldovan dignitaries has outlined very important facts: a) the ensuring of transparency and control of truth of information about estates of dignitaries are mimicked in continuation; b) dosing of information, legislative and normative ambiguities reduce significantly the confidence of citizens for efficient and responsible governance capable to honour own promises and provisions of multiple plans and strategies; c) these facts produce negative social effects on European integration process, implementation of the E.U.-Moldova Action Plan, throwing doubts on sincerity of international commitments of Moldova.

A series of decisive measures must be taken under these conditions:

  1. Revision of legislative and normative framework on evaluation of real estate, fiscal administration, introduction of mechanisms capable to ensure the correctness of taxation, real estate deals.

  2. Revision of legislative and normative framework on declaration and control of incomes and estates of dignitaries:

    • revision of the model of declarations, ensuring the presentation of complete information about properties, incomes, expenses and annual circulation of worthy goods;
    • strict respect for terms of presentation of declarations;
    • plenary publication of information from declarations, including its publication for free access (Internet);
    • thorough and quality checking of declarations, revision of mode of creation and activity of commission which holds this right (examination of possibility of creating institutions in charge with checking the probity of integrity of dignitaries or candidates to public posts);
    • confrontation of data from declarations with information held by competent public institutions (Tax Inspectorate, Ministry of Information Development, Customs Service, cadastral bodies, etc.);
    • creation of possibilities of consecutively following the presented information;
    • special regulation of mechanisms of checking and aleatory confrontation of some declarations.

  3. Revision of legislative framework on full declaration of incomes and properties by electoral competitors, publication of these declarations by electoral bodies and granting of the right to public to say how correct they are (and further checking by electoral bodies, other competent organs).

  4. Revision of regulations that establish sanctions for violation of terms and procedures of submission of declarations, publication of declarations. Introduction of harsher sanctions for repeat and grave violations. Plenary information of public opinion about concrete cases of violation of legislation, sanctions handed to guilty persons.

  5. Creation of a mechanism of independent monitoring of incomes and expenses of public functionaries.

  6. The CCC and representatives of central authorities must take public attitude in order to recognise the imperfection of current regulations, to explain the causes of confusions to public opinion and to assure that they will do their best to improve the situation.

1 See the publications Jurnal de Chisinau (issue 447 from 20.01. 2006; issue 380 from 20.05.2005; issue 405 from 16.08.2005); Ziarul de Garda (issue 51 from September 8, 2005); Centre of Journalistic Researches; communications of news agencies Infotag, Basa-Pres, Info-Prim-Neo, Reporter etc., regarding declarations of incomes and property (precedent and current).

2 Under the Governmental Decision # 670/09.06.2003, residences should be evaluated in 2004-05 with the purpose to tax them accordingly to their market value. Cadastral bodies said that this process was completed in the Chisinau municipality and all owners of apartments received notifications regarding the estimated value of their estate by late of 2005. The Government's agenda for the August 30, 2006 sitting included the draft decision in which the executive describes the achievement of the action plan on implementation of the new system for evaluation of real estates for taxation as successful, since the massive evaluation of private apartments was completed.

3 The law was abrogated through the law on enforcement of Titles I and II of the Tax Code (# 1164 from 24.04.1997).

4 These provisions were not enforced while the "lack of a special law in the field" was the formal reason.

5 Some of these provisions still are effective but they were not implemented so far.

6 This norm was not really implemented; a special model of declaration was not elaborated, while data from these declarations were published partly, selectively. Data from declarations were not checked adequately, no special procedures were elaborated for this purpose.

7 Members of the central commission were appointed by Parliament on December 20, 2002, by chief of state on January 24, 2002 and by Government on January 27, 2003, with three days only after deadline for submission of first declarations.

8 Some information about sanctions applied for violation of these provisions was not published and the anti-corruption prosecutor's office has recently announced (in late May 2006) that it filed a penal case against an officer of the Hincesti Police Department for violating the rules on declaration of incomes and property. Some information about sanctioning of this police officer was not released so far.

9, "Monitoring the access of information in Moldova".

10 Point 1.8 from the action plan for the implementation of the 2006 national strategy on prevention and combat of corruption (PD # 421/16.12.2004)






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