Corruption and Conflict of Interest Stalk the Newsroom

Western Balkans: Corruption in media slows progress to democracy

By Sanela Hodžić

The closure of the magazine Feral Tribune in 2008 (a magazine published in Croatia but acclaimed across the region), after a boycott by advertisers over its critical reporting on politics and centers of power, is a brutal reminder that independent journalism that holds power to account can hardly survive in these testing times.

This grim situation applies for the most part across the countries of Serbia, Bosnia, Albania, Macedonia, Kosovo and Montenegro and also appears in the media landscape of Croatia, a European Union member state. This report gives an overview of major models of media corruption that limits quality journalism.

The dark hand of state influence in the media landscape

The political and economic environment, combined with a lack of policies protective of public interest, renders media vulnerable or forces them into corrupt relations with different centres of power. The idea that the market should be free of state control and left to manage the sector remains only theoretical. The influence of political and economic elites on media is pervasive. Media are tied into networks driven by politics and finance through controversial and non-transparent funding and ownership.

Partial privatisation of media in the 1990s was carried out amidst suspicions of corruption and misuse of power, while many media still remain under government ownership or influenced by state institutions through financing.

The state is a major source of media revenue, accounting for the strengthened political control over mainstream media especially in Macedonia and Montenegro in recent years. As pointed out in a recent report on Montenegro: “…major private and independent media outlets are aligned with opposition parties, whereas public/state-owned outlets very much support the government” (MSI Irex, Montenegro 2014).

The online media sphere is still open to some critical journalism, but as an investigative journalism project in Macedonia called MediaPedia (2013/2014) showed, the independent journalism of online media is also a victim of non-transparent funding and ownership.

The 2011 report of the Anti-Corruption Council of Serbia expressed concerns about the fact that about a quarter of media revenues comes from state institutions. In Bosnia and Herzegovina, the Government of the Republika Srpska (RS) provided extensive subsidies for media, worth about 10.3 million euros in the five years to 2012 (source: CIN Sarajevo). This is considered an efficient way to put the majority of media under government control. Simultaneously, local authorities across BiH have provided funds amounting to more than 7.8 million euros in 2012 alone (Hadžović, E., article published on www.media.ba), partly through donations and also through direct financing of broadcasters still owned by municipal and cantonal governments (14 out of 44 television stations and 62 out of 140 radio stations). The criteria of allocation of these funds are questioned. A manager of a local radio station commented the funding of media by Government of RS: “…they allocated the funds to television stations, newspapers and the most influential outlets before the public call was closed” (Radmila Žigić, Radio Pan, 2010, source: Irex 2011).

Cases of corruption are rarely investigated and punished by the institutions. Major scandals in Croatia reveal the role of political elites and advertising agencies in money laundry and corruption in media. The Fimi media case revealed that former Prime Minister Ivo Sanader had been rewarding media supportive of him and his political party either through state funding or through favorable bank loans.

In November 2013 an affair involving the Croatian Chamber of Economy showed that almost 4.2 million euros had been used in fictional marketing services (Popović, 2014, p. 209). And the case of Core Media revealed fraud and tax evasion by the owners of this production company, as well as a bribe of 67,500 euros to Siniša Svilan, former director of Nova TV, to air content made by Core Media on Nova TV.

Public service broadcasting: Major battleground for political influence

State broadcasters in the region are perceived to be primarily at the service of political structures. Political influence is assured often through managing and editorial structures loyal to ruling parties. This is made possible primarily where parliamentary bodies have a key role in the appointment of managerial personnel. In recent years there have been attempts to strengthen control. Amendments to the Croatian Radio and Television Act in 2012, for instance, handed the appointment of the Director of public broadcasting to the Parliament.

Similarly, amendment to the Law on Radio and Television of the Republika Srpska ousted the Communications Regulatory Agency from the procedure of appointment to the broadcaster’s supervisory body. The director appointed in 2014 assumed his position virtually directly from the office of the Prime Minister of the Republika Srpska and he is known for his affiliations with the SNSD party.

A telling example was a case when the Parliament of the Federation of Bosnia and Herzegovina hastily attempted to appoint all three members of the Board of Governors in 2012 clearly going against a rule that permits only one appointment per year. The action was interpreted as an attempt to grab political control over this public broadcaster. Fortunately, the initiative was retracted after local and international protests.

In addition to the widespread assumption of political affiliations, the lack of power of the supervisory bodies is illustrated in a recent case in Croatia where the Board called for the dismissal of a newly-appointed director general, over a conflict of interest, but the Parliament simply rejected their request.

Regulation aimed at assuring the independence of media, (such as regulation of conflict of interest and independent sources of revenues) is already scarce and weak where it exists, but recent regulatory changes are making matters worse. Most notably, the newly-adopted law on public broadcasting in Serbia raises concerns of direct state interference, as it has been in Kosovo already. It is also indicative that the new regulation in Albania, which obliges private broadcasters to air (during election campaign) footage prepared by political candidates themselves seems to put media in the direct service of political marketing. In sum, the political shadows grow longer in the newsrooms of the region, despite all the good work to try to build more respect for professionalism and independence.

In addition to political interference, public broadcasters also face the challenge of uncertain financial sustainability, even in Croatia where the level of license fee collection is around 95 percent. Organisational and programming problems persist. In Bosnia and Herzegovina the ethno-political divides hinder reforms. Not least, public broadcasters have been commercialising their work in recent years. The fact that 40 percent of revenues of RTVFBiH, for example, comes from advertising contracts (well above desirable levels) suggests the public service role is jeopardised.

Transparency: Missing link in the scrutiny of ownership and finances

For a business that thrives on disclosure, media are notoriously closed about their own affairs. A lack of transparency prevails even where there are provisions to guarantee openness about ownership in the region, because of the poverty of comprehensive and systematic monitoring of data.

There are widespread suspicions of hidden owners and revenues that damage journalism. The anti-corruption body in Serbia reported earlier that in 2010 some 18 out of 30 media in Serbia did not have sufficiently transparent ownership. To this day it is not known how many media in Serbia are owned by the state. There are also cases in which tycoons/businessmen conceal their media shares through off-shore companies (Bašić-Hrvatin and Petković, 28-29).

Other countries in the region have similar problems. In Croatia, it was not before 2010 that contracts concerning ownership over Jutarnji list and Slobodna Dalmacija were partly revealed, which showed that important contractual obligations were not fulfilled, such as obligations to keep all employees and to purchase new equipment. In Bosnia and Herzegovina, the online media sphere carries additional risks since some media are not even registered as media businesses and some are speculated to be directly managed by the headquarters of political parties.

There is a lack of assurances that appointments of media managers are based on professional criteria and there are major doubts about the political affiliations. The distress about the state funding for media is caused mainly for the reasons of the lack of clear public interest criteria and transparency. For example in Albania (like most countries of the region), the criteria by which state advertising should be allocated are vague, and as Londo suggests, recent decisions of the Council of Ministers in Tirana did not make them any more specific (2014).

The criteria used are in some cases non-programmatic — as in the case of allocation of funds by the government of Republika Srpska in Bosnia and Herzegovina — or the exact performance of media related to these funds is not being monitored. In the case of the Fund for Pluralism in Croatia, where just over 4.1 million euros alone is annually allocated for supporting non-entertainment content (as well as for employment of higher education workers in media) transparency is questioned and there is no continual monitoring to ensure that supported programmes are actually produced.

Market crisis corrupting the newsroom

The overall financial environment works against quality and credible media outlets. Media markets are saturated with a high number of media, all of them competing for scarce, and often compromised, sources of revenues. The very fact that the high number of media remain in place despite low revenues from the market suggests the existence of opaque sources of income, which are corrupting media and journalism. In addition, media are further compromised by excessive commercialisation in the fight for audience and advertising revenues.

The advertising market has many problems. In addition to the economic crisis, some countries face the challenge of advertising from foreign media being rebroadcast within their territory. Additionally, members of the advertising community are worried about automatic systems of advertising which are further limiting the market revenues.

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“RTL Televizje (Croatia) OB Van” by Jan Starzak (https:// ic.kr/p/ccZhxG)is licensed under CC BY 2.0

Online media increasingly depend on Google advertising which is based on the number of clicks (instead of the previous measures of screenings or the time duration of advertising), leading to additional lowering of advertising prices and impoverishment of the advertising market (Senad Zaimovic, Fabrika advertising agency, Digital Media Forum, Sarajevo, 6 March 2014).

Power in the media sector in Croatia is increasingly in the hands of a few major commercial players which have considerable ownership (mostly RTL and Nova, WAZ, Styria and Deustche Telecom, with press distribution dominated by the Agrokor company). They are also affiliated with political elites and may be influencing policy developments in line with these particular interests (see Popović, 2014).

At the same time the political elites interfere in media through corrupt advertising practices as state institutions misuse public funds for promotion of parties in power. In Macedonia for example, the state was the major advertiser in 2012 (Trpevska, S and Micevski, I, 2014). Some sources suggest media affiliated with the government are likely to receive the lion’s share of state advertising. B. Likmeta, for example, showed that TV Klan and agencies owned by Aleksander Frangaj, closely connected with the Democratic Party, received the major part of advertising by the Ministry of Defense in Albania (Balkan Insight, December 2014).

Advertising by major companies, especially those in public ownership, is significantly manipulated in the interests of political groups. Private media use relations with advertisers and their political friends to assure extra profit, but for most media they need the money gained in order to survive.

Not many policies developed in recent years in the region support ethical journalism. On the contrary, the reduction of VAT in Croatia in 2007 for the press from 22 to 10 percent caused an annual loss of around 3.1 million euros in the state budget, bringing benefits only to the big conglomerates such as Styria Group and EPH. It had little impact on strengthening the public interest role of media (see Popović, 2014, p. 200). Additional reduction of Value Added Tax for daily newspapers from 10 to 5 percent (in July 2013) is another triumph of private interests. Furthermore, Popović, for example, suggests that EPH (considered loyal to the government) was treated preferentially by the Ministry of Finance when compared to the treatment of online media Index.hr (a leading investigative website) over their tax debts.

In addition, corrupt advertising practices in Albania are made possible in the absence of a unique and comprehensive audience measurement system, where advertising decisions are based on popular perceptions and unreliable research conducted by individual media outlets.

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“Bosnia’n houses” by Annabella Sperotto (https:// ic. kr/p/7PuSSZ) is licensed under CC BY 2.0

Does poverty pay lead to poor and corrupt journalism?

The system of payment for journalism across the region is a major concern; it devalues journalism, undermines the autonomy of journalists and there are few opportunities for alternative employment.

Journalism is underpaid, with salaries often below the national average, and in some cases lower than 250 euros. There are corrupt employment practices in media, including nepotism and hiring editors and journalists affiliated with and loyal to the key centers of power.

A recent audit report about RTVFBiH in Bosnia and Herzegovina for 2013 suggests that salaries of some personnel were set and changed contrary to the rules set in the regulations.

The international community has itself contributed to distortion of the labor market, providing a hiring model in the post-war period in which journalists received generous high pay contracts (with international organisations and media supported by the international community). Although this gave them relatively high pay, there were no tax and social security arrangements and mainly no collective bargaining.

In general, the labour rights of journalists concerning salaries and working hours are violated with impunity across the region. The mechanisms of protection of labour rights are inefficient and, as Borka Rudić suggests: “In BiH, the penal policy is extremely mild and thus numerous employers consider the payment of fines a lot less expensive than registering employees and paying their [social, health and retirement] contributions”. An example of a questionable dismissal of journalism from 2014 was the sacking of Nermin Bise, a reporter for BHRT, allegedly because the journalist’s Facebook statuses were seen as “disloyal” to the broadcaster.

Because of their generally low socio-economic status, the pressure from within media or from external actors, and with few guarantees of institutional support, journalists are often less willing to engage in critical, risk-taking reporting if it could jeopardise their security and livelihood. Specific examples of direct pay-offs to journalists are hard to identify, but they are considered especially present in sports journalism and tourism reporting. There have also been reports of attempts to buy-off media to suppress negative information as well as threats to withdraw advertising after critical reporting.

All of these factors mean that critical and independent reporting — so-called “fourth estate” journalism — is now a rarity. That’s no surprise given that sources of media revenue and political actors who should be under the media microscope are often closely connected or, in some cases, identical. As a result, some major events are reported by only a tiny section of media, or even by foreign media only. Political and economic elites are considered for the most part off-limits for media scrutiny and editorial integrity is an extravagance that media can hardly afford.

The conclusion of Anti-Corruption Council in Serbia four years ago was dramatic: “There are no more media outlets providing complete and objective information for citizens because the media, under strong pressure by the political circles [and major advertisers — author’s comment], elide events or report about them in a selective and partial manner” (2011).

While serving interests of owners and the power elites, some media engage in tendentious campaigns, tailored to their particular needs. These may be political campaigns or campaigns based on particular business interests. For example, a series of articles published by Jutarnji list in Croatia was perceived as a possible campaign against the Health Insurance Fund, indicative of the particular interests of the owners, the EPH group which is engaged on two projects related to health insurance.

In Bosnia and Herzegovina, two dailies — Dnevni avaz and Oslobođenje — had been for years utterly manipulated in disputes between two Bosniak parties — SBB and SDA. These clashes eased recently, possibly indicating some now common and shared interests.

In another example dating back to 2010, the daily Pobjeda from Montenegro published a series of lengthy articles accusing the daily Vijesti of tax fraud, double accounting, questionable property dealing, and finally of using media for private interests, including alleged false reporting on prices of stocks in which these persons have their own interests (S. Kusovac, Pobjeda, 30 March — 18 April 2010). The daily Vijesti published an article denying such claims and deeming the sources used in these articles as fabricated.

Alternative sources however suggest that the articles in Pobjeda were part of the campaign against the daily Vijesti, run by the government and Prime Minister Milo Đukanović. Without judging the reliability of these media reports, it is indicative that Pobjeda is known to have acted in a similar fashion in other cases. For example, articles against people connected with the Center for Investigative Journalism (CIN) from Sarajevo — Drew Sullivan and Miranda Petručić — were seen as retaliation for previous articles published by CIN on alleged involvement of Đukanović and related actors in abuse of power and organised crime.

Violations of standards related to advertising content are also common, including those related to time limitations for advertising, inadmissible advertising of specific goods, etc. A trend of hidden advertising was detected in Croatia in 2012 in a report by the Council of Honor. Lack of distinction between journalism and advertising is, for example, notable in travel reporting which are often a sort of hidden advertising, resulting from non-transparent deals and barter with travel agencies.

Despite all the above, credible journalism in the region is still not entirely wiped out. There are valuable contributions from centres for investigative journalism and media outlets founded mostly by NGOs but managed by journalists (for example CIN Sarajevo, magazine Zurnal). This raises another problem, that much of the region’s quality journalism is worryingly reliant on financial support by international donors.

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“Tiranë-Albania” by godo godaj (https:// ic.kr/p/9pbfre) is licensed under CC BY 2.0

Mainstream media rarely take up these cases, but there are some examples of mainstream investigative reporting. For instance, in the course of protests in Albania in January 2011, recordings broadcast first by News 24 television and then by other outlets exposed how the killers of four protestors in a demonstration were not infiltrators among the protestors themselves (as claimed by government officials) but were members of the Republican Guard. Weekly Novosti in Croatia and magazine Insider on television B92 in Serbia are also providing critical voices in the public space.

Conclusions and recommendations

A number of detailed reports and analyses reveals that the trends in terms of financing, ownership and transparency of media in the Western Balkans are far below the standards required for building democracy and pluralism across the information landscape. The ability of media to engage in quality, investigative reporting and to perform their watchdog role is undermined by the political affiliations and increasing reliance on few sources of revenues.

As an investigative journalist from Croatia said:
“Considering that practically the entire media sphere is polluted with corrupt-clientilistic-tycoon-political connections, the scope for corruption is widespread (especially that based on pressure found in the connection of owners with politicians and tycoons which includes threats of dismissal and self-censorship, rather than including direct pay-offs) is an everyday occurrence” (Saša Leković, written reply, 19 August 2014).

The problems of media in the Western Balkans are deeply rooted in a flawed political and operational culture and they go far beyond the corruption of individual media and journalists.

For their part, journalists are largely unable to challenge this situation because of their low socio-economic position. Many are simply discouraged from engaging in any journalism that would cause them problems and which, in all likelihood, would not see them getting the support they need from the media community or public institutions.

However, the news is not all bad. Some good examples and some policies in the region still leave room for hope. For example, in 2013 a policy of allocating three percent of lottery income to non-profit media was introduced in Croatia. Also, the introduction of the policy that media must have an internal statute in order to be eligible for state funding led many Croatian media to introduce editorials statutes which codify relations within their organisations.

And finally, it is noticeable that on some occasions, different stakeholders have taken action against poor media policy or poor practices with relative success. For instance, local civil society actors, together with international institutions, stopped retrograde amendments to the Freedom of Information Act in Bosnia and Herzegovina in 2013.

These developments are, however, isolated. More needs to be done to achieve better transparency of media operations, to eliminate conflicts of interest, to provide independent sources of funding for media, and to install better supervision over the functioning of public service broadcasting. There is a need for clear policy and systematic solutions.

These solutions will require initiatives to overcome profound scepticism about how ethical, independent journalism can be a sustainable and core element of strategies to establish democracy in the region.

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