Bosnia and Herzegovina Adopts a New Law on Conflicts of Interest

1. Area of application

Law of 15 March 2024 No. 18/24 “On the Prevention of Conflicts of Interest in the Public Administration of Bosnia and Herzegovina” (Zakon No. 18/24 o sprečavanju sukoba interesa u institucijama na nivou Bosne i Hercegovine) amends previous Law of 20 June 2002 No. 16/02 “On Conflicts of Interest in the Public Administration of Bosnia and Herzegovina” (Zakon №16/02 o sukobu interesa u institucijama vlasti Bosne i Hercegovine)*.

The Law regulates the anti-corruption restrictions, prohibitions and obligations for public officials aimed at countering corruption and preventing conflict-of-interest situations.

A “public official” is:

An individual holding an elected position;
The head of a public body, including the one enjoying the status of a civil servant – secretary-in-charge, an individual holding a position in a public body;
The head of a legal person subordinate to a public body;
The head of a legal person fulfilling certain public functions under the law;
An individual whose election or appointment has been approved by the Parliamentary Assembly, the Presidium and the Council of Ministers;
The President of the Council of Ministers;
A counselor.

2. Conflicts of interest

As per the Law, a conflict of interest is a situation where personal interest of a public official affects, can affect or creates the appearance of influence on legality, transparency, impartiality and fairness of the public official in the execution of his/her professional duties.

In this context, personal interest is considered as a possibility to obtain property or non-property benefits for the public official and/or his/her associates.

The associates of public officials are:

Close relatives, i.e. spouses, permanent partners, children, including adopted ones, parents and adoptive parents;
Direct relatives;
Indirect relatives up to the third degree of kinship;
Relatives-in-law up to the second degree of kinship;
Other persons having close friendship, political, economic and business relations with public officials.

The adopted legal act obliges public officials to inform the Commission for the Management of Conflicts of Interest in the Public Administration of Bosnia and Herzegovina (Комисија за одлучивање о сукобу интереса у институцијама на нивоу Босне и Херцеговине, hereinafter, the Commission) about conflict-of-interest situations.

The Commission, in its turn, prepares a motivated conclusion on the presence or absence of a conflict of interest within eight days from the receipt of the notification; in the event that the indicators of a conflict of interest are detected, the public official must delegate his/her functions associated with the conflict of interest to another person or his/her direct superior.

3. Disclosure of assets and interests

The adopted legal act also obliges public officials to submit declarations on their assets and interests, as well as the assets and interests of their close relatives, to the Commission:

Within 30 days upon assumption of the office;
Annually;
A year after the termination;
At the request of the Commission in case of a verification.

Declarations must include the information on:

Income;
Immovable property in and outside the country;
Movable property subject to registration in and outside the country;
Other movable property (precious stones, collectables, works of art etc.) whose value exceeds 5,000 of convertible marks (CM) (roughly USD 2,750);
Accounts in banks and other financial organisations in and outside the country;
Shares, participation interests in the capital of legal persons, other securities;
Debt securities, receivables;
Copyright, licences and other intellectual property rights;
Other remunerated activity;
Membership in nongovernmental and/or not-for-profit organizations;
Other information necessary in the opinion of the public official.

4. Restrictions and prohibitions for public officials

The Law also establishes a number of other restrictions and prohibitions associated with conflicts of interest for public officials.

In particular, public officials are prohibited from:

Holding more than one public position, holding a position at another level, for example, at the municipal level, besides the public position;
Undertaking other remunerated activity except for teaching, research, culture, artistic and sport activities and have any other sources of income except for copyright and patent rights, intellectual property unless they generate a conflict of interest;
Having membership in a board of directors or any other managerial body, supervisory board, being an authorised representative of a state-owned enterprise and/or a private organisation getting any sort of public benefits, including credits exceeding CM 10,000 (roughly USD 550) annually; a conflict of interest in this case arises also in the event that close relatives of public officials have the aforementioned statuses;
Having financial interest, i.e. the interest that allows public officials to have an annual benefit of over CM 1,000 (around USD 550) and any other share of ownership in a private organisation whose value is equivalent or exceeds CM 10,000 also in the form of provision of services, in a private company getting any sort of public benefits, including annual credits of over CM 10,000 or concluding public contracts/dealing in any other way with public bodies/organisations financed from the public budget with over 10,000 CM annually; similarly to the previous prohibition, in this case a conflict of interest occurs if there is financial interest of close relatives of public officials;
Taking any official action, participate in the discussions, voting or decision-making on the issue that is related to the personal and financial interest of the public official or his/her associates;
Being a representative of not-for-profit and nongovernmental organisations financed from the public budget with over CM 20,000 annually (roughly USD 11,000) or over CM 70,000 (around USD 38,500) annually for sport organisations; a conflict of interest in this case raises also if close relatives of the public official enjoy the aforementioned statuses;
Receiving or requesting a gift or other benefits or the promise of a gift or other benefits due to the exercise of public functions;
Requesting, accepting or receiving gifts or other benefits for voting on any issue and/or influencing a decision of any public body or individual;
Receiving gifts in the form of money, cheques or other securities;
Receiving additional remuneration for exercising public functions;
Making promises to and preferring the person who has given or promised a gift to the public official in the framework of recruiting procedures;
Refusing to be subject to the verification of information on assets and interests;
Exercising illegal influence on assigning public contracts with a view to getting material or immaterial benefits for oneself, an associate and/or a third party;
Using confidential or any other information protected by the law about the functioning of the public administration in personal interest or in the interest of associates;
Exercising illegal influence on representatives of the legislative, executive or judicial powers in personal interest and with the aim to get privileges, rights or opportunities to conclude a contract for oneself or an associate.

Additionally, the Law clarifies the conditions for receiving gifts not related to the exercise of public functions. For instance, if the value of a gift exceeds CM 300, the public official must hand it over to the public body where he/she holds a position, preliminarily notifying about its acceptance. In turn, a representative of the employer informs the Commission about the gift. As per the Law, the Commission shall define the procedure for maintaining the record of, transmitting and storing the gifts by public bodies, as well as adopt the procedure for establishing a centralised register of gifts.

5. Restrictions and prohibitions for former public officials

Within a year after the termination, a former public official is prohibited from:

Being a representative of a legal person having business relations with the public body where he/she held a position;
Being a representative of a legal or natural person interacting with the public body where he/she held a position, if he/she could influence the issues related to this person when in office;
Exercising auditing or managerial functions in a legal person with regard to which he/she exercised control (oversight);
Entering in a contractual relationship or other form of business cooperation with the public body where he/she held a position;
Entering in a labour relationship or strike a business partnership with a legal person funded by the public body where he/she held a position if his/her functions implied the decision-making on its funding;
Using confidential or any other information protected by the law and the information obtained by him/her in the exercise of professional duties to get benefits for oneself or third parties or to damage third parties except for the situations where such information is public.

6. Commission for the Management of Conflicts of Interest in the Public Administration of Bosnia and Herzegovina

Under the Law, a Commission for the Management of Conflicts of Interest in the Public Administration of Bosnia and Herzegovina is established.

The Commission will have, in particular, the following functions:

Verify the presence of a conflict of interest and/or violations of the restrictions, prohibitions and obligations by the public officials at its own initiative or following the notification submitted by public officials about conflicts of interest and/or alleged violations of restrictions, prohibitions and obligations, or based on reports of whistleblowers, including direct superiors of public officials, on conflicts of interest and/or violations of restrictions, prohibitions and obligations committed by the latter;
Notify prosecutorial bodies that it has grounds to believe that a public official has committed a crime;
Holding public officials liable for the violation of provisions of the Law, including the exercise of their functions in a conflict-of-interest situation; the Commission can apply such liability measures to public officials as a reprimand or a fine ranging between CM 1,000 and 20,000 as well as to suggest that the respective public body removes the official form his/her office or dismisses him/her;
Provide public officials with advice on the presence of a conflict of interest in their activities and/or a violation of restrictions, prohibitions and obligations by them;
Establish and maintain a public register of information from the declarations of public officials, and a centralised register of gifts received by public officials;
Organise training on the prevention of conflicts of interest and violations of restrictions, prohibitions and obligations for public officials;
Submit an annual report on its activities to the attention of the Parliamentary Assembly etc.

The Commission will consist of seven members appointed by the Parliamentary Assembly under the procedure defined by Law of 30 September 2003 No. 37/03 “On the Appointment of Ministers, Members of the Council of Ministers and Other Appointments of Bosnia and Herzegovina” (Закон о министарским именовањима, именовањима Савјета министара и другим именовањима Босне и Херцеговине) for a non-renewable five-year term. The body will be chaired by a member of the Commission elected for an eight-month term.

*The Law entered into force on 23 March 2024; the provisions of the Law will be applicable six months after it comes into effect.

All bylaws adopted as a follow-up to previous Law of 20 June 2002 no. 16/02 remain in force until new bylaws are adopted unless they contradict the new Law.