Europe & Central Asia
Belarus risk report
Corruption is present at all government levels in Belarus; customs, public procurement, and construction are particularly vulnerable sectors. Companies are likely to face discrimination and corruption in public procurement in favor of state-owned enterprises, and making informal payments or giving gifts to secure government contracts are common practices when doing business in the country. While petty corruption is relatively limited, high-level corruption occurs with impunity. The Criminal Code of the Republic of Belarus criminalizes attempted corruption, extortion, active and passive bribery, bribery of foreign officials and money laundering, but anti-corruption regulations are vague and require improvement. In addition, anti-corruption laws have been poorly enforced and officials engage in corruption with impunity. The legal status of facilitation payments is uncertain.
Judicial system Moderate risk
Companies face moderate risks of corruption when dealing with Belarus' judiciary. Corruption and bribery are perceived to be fairly uncommon (NiT 2017). The judiciary lacks independence; President Lukashenka has described the judiciary as a branch of the presidency which he can trim when he sees fit (BTI 2016). The president appoints the majority of all judges, including half of the Constitutional Court judges (BTI 2016). The regime wields the judiciary as a tool to crack down on opponents (BTI 2016). Foreign investors should note that there have been reported cases of interference in the judiciary that have harmed their operations in Belarus (ICS 2016). Enforcing a contract in Belarus takes significantly less time than elsewhere in Europe and Central Asia (DB 2017).
Bribery within the judiciary can affect the outcome of decisions. In one case, the deputy chairman of the Mogilev district court accepted a USD 2,700 bribe from an attorney to influence the outcome of district court decisions (Belteleradiocompany, 2013). Later, both parties were indicted for active and passive bribery respectively (Belteleradiocompany, 2013).
Belarus has signed the New York Convention of 1958 and is a party to the International Centre for the Settlement of Investment Disputes (ICSID).
Police Very high risk
The police force in Belarus suffers from widespread corruption. Impunity among police officials is a problem, and the government rarely investigates abuse within the sector (HRR 2016). Inadequate training, shortages of equipment, and poor working conditions create a fertile environment for corruption (OSAC 2016). As part of its anti-corruption agenda, the government has managed to provide anti-corruption training to its law enforcement officials (GRECO, May 2015).
Land administration Very high risk
Businesses encounter a high risk of corruption when interacting with Belarus's land administration. The country's highest corruption rates were registered in the construction sector, among others (HRR 2016). Almost one-fifth of companies expect to give gifts to obtain a construction permit (ES 2013). Expropriation in the form of 'de-privatization occurs in Belarus (ICS 2016). Instances of the confiscation of business property as a penalty for violations of the law have been recorded (ICS 2016). While the Investment Code calls for fair compensation for expropriated property, in practice the government usually refers to breaches of the law and offers no compensation (ICS 2016). Registering property in Belarus only requires two steps and takes just three days (DB 2017). Obtaining a construction permit in Belarus requires less time and fewer costs compared to the regional average (DB 2017).
Former Deputy Minister of Forestry Lisitsa was convicted in June 2016 on charges of illegal acquisition of land and illegal construction among other charges; he was sentenced to five years' imprisonment (Belarus in Focus, Apr. 2016).
Tax administration Low risk
Companies face a moderately low risk of corruption in the tax administration. Few companies consider tax administration a major constraint to business (ES 2013). Belarus has eased the process of paying taxes by introducing an electronic filing and paying system and by simplifying the requirements for corporate income tax and VAT (DB 2017). Tax payments are due seven times each year, less than half of the regional average (DB 2017). Companies also spend significantly less time on paying taxes compared to neighboring countries (DB 2017).
Customs administration Very high risk
Corruption risks are high in Belarus' customs administration. The customs administration is perceived to be over-regulated, leading to increased opportunities for extorting bribes from companies importing or exporting goods (NiT 2014). Belarus struggles to maintain control of its borders (Belarus Digest, Nov. 2016). Allegations of large-scale smuggling of products such as cigarettes to sell on the black market in Europe have repeatedly surfaced (Belarus Digest, Nov. 2016). The costs and time required to import goods into Belarus are far below regional averages (DB 2017).
Public procurement Very high risk
The public procurement sector is among the most corrupt sectors in the country (HRR 2016). About one in eight companies expect to offer gifts to secure government contracts in Belarus (ES 2013). Public procurement processes suffer from ambiguous legislation and untrained personnel (EUCOR 2017). Belarus' potential is held back by a clientelistic distribution of goods and services (BTI 2016, EUCOR 2017). The main risks arise from the complicated and inconsistent system of legislative regulations governing procurement, according to which 'single source procurement' (procurement from only one supplier) is recognized, and information on the procedure involved is not made public (Krivorotko*,* 2014). Another concern is the exploitation of the legal concept of 'secret trade' to escape transparent procurement procedures, resulting in a non-transparent selection of the winning bidder (Krivorotko, 2014). In 2016, several high-level officials and businessmen who had previously been convicted of various crimes, including corruption-related crimes, were released at the request of parliament in order to lead other loss-making state-owned enterprises (Belarus Digest, Feb. 2016). State-owned enterprises (SOEs) frequently receive benefits, exemptions, and subsidies from the government that are not available to private companies (ICS 2016). On a more positive note, Belarus developed e-procurement services predominantly in the form of e-auctions; requiring information to be public, the effective and optimal expenditure of budgetary funds, and full anonymity of bidders (Krivorotko, 2014).
Allegations of a shadow procurement schemes involving arms trade and the oil refining industry through private companies exist (BTI 2016). Moreover, hospitals and drug manufacturers in Belarus reportedly widely engage in kickback schemes when procuring medical chemicals: Hospitals routinely bought equally usable but more expensive imported chemicals from companies in return for large kickbacks (FCPA Blog, Apr. 2015).
Belarus's anti-corruption legislation is not properly enforced; and public officials engaged in corruption with impunity (BTI 2016, HRR 2016). The Criminal Code of the Republic of Belarus criminalizes attempted corruption, extortion, active and passive bribery, bribery of foreign officials and money laundering. The Law on Fighting Corruption and the Law on Measures to Prevent Legalization of Income acquired in an illegal way are also part of the anti-corruption legal framework. Likewise, the Anti-corruption law and the Public Service Law governing gifts to public officials are reportedly unclear and contradicting (GRECO, May 2015). The anti-corruption law prevents persons previously dismissed for discrediting reasons from being appointed to high civil service positions. This law is not expected to significantly aid the fight against corruption (NiT 2017). Elected officials are required to disclose their assets as well as those of their spouses and children under Belarusian anti-corruption laws, but there are exceptions for candidates running for presidential, parliamentary or municipal elections (HRR 2016). Asset declarations are not public. Officials at all levels reportedly engaged in corruption with impunity (HRR 2016). It is common practice in Belarus to pardon those convicted of corruption offenses that offset the financial damage by paying fines twice the embezzled amount or more (NiT 2017). This practice undermines anti-corruption measures and is exacerbated by the president's decision to treat the list of those pardoned as an official secret (NiT 2017). Belarus is a party to a number of international conventions, such as the Council of Europe Civil Law Convention on Corruption, the Criminal Law Convention on Corruption, the United Nations Convention against Transnational Organised Crime and the United Nations Convention against Corruption (UNCAC) but is not a party to the OECD Anti-Bribery Convention.
While freedoms of speech and of the press are guaranteed by Belarus's Constitution, criticism of the president and the government is a criminal offense (FotP 2016). The government has the power to close a publication based on a range of restrictions after two warnings in one year (HRR 2016). The Information Ministry is tasked with monitoring the media, which is subject to opaque and politicized licensing and registration regulations (FotP 2016). The government frequently tries to harass and intimidate reporters (FotP 2016). The government shapes and influences the online public debate by imposing various restrictions (BTI 2016). Investigative journalism focusing on corruption is rare (NiT 2017). Belarusian law does not provide for effective legal guarantees for public access to government information (FotP 2016). The media environment in Belarus is considered 'not free' (FotP 2016).
Freedoms of association and of assembly are provided by the Constitution, but the government restricts these rights in practice (HRR 2016). A large part of civil society in Belarus is state-sanctioned and does not seriously challenge the authorities (BTI 2016). Legitimate civil and political opposition exists in a "democratic ghetto" where they are tolerated by the regime, but also constantly repressed, monitored and attacked by authorities (BTI 2016). The government has eased the registration requirements placed on NGOs, yet arbitrary denials still occur (FitW 2016). Citizens are often not aware of civil society organizations and when they do they often view them with suspicion (BTI 2016).
- World Bank: Doing Business 2017.
- Freedom House: Nations in Transit 2017.
- EUCOR: Preventing Corruption and Promoting Public Ethics at the Local and Regional Level in Eastern Partnership Countries 2017.
- Bertelsmann Foundation: Bertelsmann Transformation Index 2016.
- US Department of State: Human Rights Practice Report 2016.
- US Department of State: Investment Climate Statement 2016.
- US Department of State: Belarus Crime and Safety Report 2016.
- Freedom House: Freedom in the World 2016.
- Freedom House: Freedom of the Press 2016.
- World Bank: Doing Business 2016.
- Belarus Digest: "Belarus Struggles To Control Its Borders", 4 November 2016.
- FCPA Blog: "Maryna Kavaleuskaya: Doing Business Where Corruption is A 'Method of Governance'", 1 November 2016.
- Belarus in Focus: "Belarusian Authorities Anticipate Boosting Popular Support Through Fight Against Corruption and Economic Crimes", 22 April 2016.
- Belarus Digest: "Belarus Recycles Corrupt Officials", 19 February 2016.
- GRECO: Summary of the Compliance Report on Belarus 2015.
- FCPA Blog: "Witness to Corruption: The Belarus Medical Sector", 28 April 2015.
- Freedom House: Nations in Transit – Belarus 2014.
- GRECO: Summary of the Evaluation Report on Belarus 2014.
- Yuri Krivorotko: Public Procurement System in Belarus: Administrative Aspect 2014.
- Belteleradiocompany: ‘Крупный коррупционный скандал в Могилеве’, 24 June 2013 (in Russian).
- World Bank & IFC: Enterprise Surveys 2013.