OECD Integrity Scan of Kazakhstan: Preventing Corruption for a Competitive Economy

315 Pages·2017·3.608 MB·English

by  Organization for Economic Cooperation and Development

OECD Public Governance Reviews O
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OECD Integrity Scan of Kazakhstan D
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PREVENTING CORRUPTION FOR A COMPETITIVE ECONOMY lic
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o OECD Integrity Scan
This series includes international studies and country-specifi c reviews of government efforts to make the public ve
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sector more effi cient, effective, innovative and responsive to citizens’ needs and expectations. Publications in n
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this series look at topics such as open government, preventing corruption and promoting integrity in the public n of Kazakhstan
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service, risk management, illicit trade, audit institutions, and civil service reform. Country-specifi c reviews e
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assess a public administration’s ability to achieve government objectives and preparedness to address current e
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and future challenges. In analysing how a country's public administration works, reviews focus on cross- ie PREVENTING CORRUPTION FOR A COMPETITIVE
departmental co-operation, the relationships between levels of government and with citizens and businesses, w
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innovation and quality of public services, and the impact of information technology on the work of government
and its interaction with businesses and citizens.
This report looks at how to curb corruption and build a more competitive economy in the Republic O
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of Kazakhstan by assessing four crucial factors: governance, prevention, detection, and prosecution C
and recovery. In its analysis, it draws on good international practices as well as OECD instruments and tools D
in 15 policy areas: regulatory governance, competition policy, public fi nancial management, development In
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co-operation, public sector integrity, public procurement, tax administration and transparency, export credits, g
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lobbying, whistleblower protection, business sector integrity, criminalising bribery, civil society, and media. it
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The report provides recommendations for improving Kazakhstan’s laws and policies as well as effectively S
implementing them in each of these areas. c
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Consult this publication on line at http://dx.doi.org/10.1787/9789264272880-en. N
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This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Y
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ISBN 978-92-64-27287-3
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42 2017 18 1 P
WINNER

OECD Public Governance Reviews
OECD Integrity Scan
of Kazakhstan
PREVENTING CORRUPTION FOR A COMPETITIVE
ECONOMY
This document was approved by the Public Governance Committee on 23 February 2017
and prepared for publication by the OECD Secretariat.
This document and any map included herein are without prejudice to the status of or
sovereignty over any territory, to the delimitation of international frontiers and boundaries
and to the name of any territory, city or area.
Please cite this publication as:
OECD (2017), OECD Integrity Scan of Kazakhstan: Preventing Corruption for a Competitive Economy, OECD
Public Governance Reviews, OECD Publishing, Paris.
http://dx.doi.org/10.1787/9789264272880-en
ISBN 978-92-64-27287-3 (print)
ISBN 978-92-64-27288-0 (PDF)
Series: OECD Public Governance Reviews
ISSN 2219-0406 (print)
ISSN 2219-0414 (online)
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© OECD 2017
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3
FOREWORD –

Foreword

Many of the world’s ills can be traced, at least in part, to corruption. Indeed,
corruption is recognised as one of the main barriers to sustainable economic growth,
political and institutional stability and social cohesion. It generates added costs to doing
business, deterring investment and stifling an economy’s competitive advantage. It
weakens the rule of law and threatens security. It diverts resources and public services
from those who need them most, undermining their chances of achieving greater well-
being and prosperity. It strips ordinary citizens of their voice in democratic processes,
cementing or exacerbating social inequalities and ultimately eroding trust in, and the
legitimacy of, institutions.
Making matters worse, snuffing out corruption has proven to be extremely
challenging. It is often systemic and deeply engrained in organisations’ and individuals’
ways of working and thinking. It is both adaptive and agile, finding new avenues and
ignoring national and international jurisdictions. It thrives on legal loopholes, or, more
blatantly, in the open, by influencing the content of laws themselves. It is no surprise,
then, that governments are recognising that real, effective anti-corruption reform requires
a coherent and comprehensive approach. Adopting an “all hands on deck” tactic is needed
to eliminate corruption and cultivate cultures of integrity both within the public and
private sectors, as well as society more broadly. Nevertheless, such approaches are not
without their own challenges; they require strong leadership and continual monitoring,
effective inter-institutional co-ordination, and adequate resources and capacities.
In Kazakhstan, government, firms, civil society and individual citizens alike are all
too familiar with these challenges. Corruption is a principal barrier to completing the
ongoing economic transition and to ushering in much-needed governance reforms. As
such, the government has made tackling corruption one of its main priorities and has
embarked on a series of anti-corruption reforms, including restructuring the Anti-
Corruption Bureau, revising the Law on Combating Corruption, and introducing new
laws to increase transparency and civil society participation in government decision-
making.
To support these efforts, and under the auspices of the OECD’s CleanGovBiz
Initiative, the OECD has undertaken an “integrity scan” of Kazakhstan, based on OECD
instruments and tools in 15 specific policy areas. The scan provides examples of
international good practices in each area. By focusing on the four key pillars of healthy
governance, effective prevention, robust prosecution and recovery, and sharp detection,
the integrity scan helps identify both potential gaps and synergies in a country’s integrity
systems. An initial diagnostic exercise for future work, these scans focus more on the
existing legal and policy frameworks than on the effective implementation or impact of
policies.
As a transitional economy, addressing corruption will become increasingly important
for Kazakhstan to continue to move forward in strengthening its economy and improving
wellbeing for citizens. As foreign investment and trade flows continue to increase, it will
OECD INTEGRITY SCAN OF KAZAKHSTAN: PREVENTING CORRUPTION FOR A COMPETITIVE ECONOMY © OECD 2017
4– FOREWORD

be more important than ever that opportunities for corruption be mitigated. As the middle
class grows and citizens demand more of their institutions, ensuring quality public
services and building trust in institutions will be essential. Curbing corruption and
achieving these goals will be key to the country’s continued path to more inclusive and
competitive growth.
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ACKNOWLEDGEMENTS –

Acknowledgements
This Integrity Scan was prepared by the Public Sector Integrity Division of the Public
Governance and Territorial Development Directorate under the leadership of Janos Bertók
and Julio Bacio Terracino. Contributions from across the OECD were coordinated by
Natalia Nolan Flecha, Carissa Munro, Yukihiko Hamada and Chad Burbank.
Contributions were received from Daniel Trnka of the Regulatory Policy Division in
the Public Governance and Territorial Development Directorate, GOV (Chapter 1:
Improving regulatory governance in Kazakhstan); Lynn Robertson and Sabine Zigelski of
the Competition Division in the Directorate for Financial and Enterprise Affairs, DAF
(Chapter 2: Competition policy in Kazakhstan: Promoting efficient and sound markets);
Ronnie Downes and Annamaria Tuske of the Budgeting and Public Expenditures
Division, GOV (Chapter 3: Open budgeting for integrity and accountability in
Kazakhstan); Lena Diesing of the Public Sector Integrity Division, GOV (Chapter 4:
Development Co-operation in Kazakhstan); Carissa Munro of the Public Sector Integrity
Division, GOV (Chapter 5: Strengthening public sector integrity in Kazakhstan, Chapter
9: Regulating lobbying in Kazakhstan to prevent policy capture, Chapter 11: Empowering
civil society in Kazakhstan, Chapter 13: Encouraging reporting of corruption in
Kazakhstan through stronger whistleblower protection, and Chapter 14: Supporting an
independent, vibrant media in Kazakhstan); Lena Diesing and Petur Matthiasson of the
Public Sector Integrity Division, GOV (Chapter 6: Ensuring integrity in public
procurement in Kazakhstan); Martine Milliet-Einbinder of the Tax and Development
Programme in the Centre for Tax Policy and Administration, CTP (Chapter 7: Creating a
level playing field in Kazakhstan through tax transparency and Chapter 12: Enabling the
tax administration in Kazakhstan to better detect corruption ); Marianne Aalto from the
Corporate Affairs Division, DAF (Chapter 10: Corporate governance and business
integrity in Kazakhstan); Julian Paisey of the Export Credits Division in the Trade and
Agriculture Directorate (TAD) (Chapter 8: Deterring and detecting bribery in export
credits in Kazakhstan); and Dmytro Kotliar from the Anti-Corruption Network for
Eastern Europe and Central Asia, DAF (Chapter 15: Criminalising bribery in
Kazakhstan).
The publication was edited by Ulrika Bonnier. Special thanks go to Alpha Zambou
and Thibaut Gigou for their assistance in preparing the document for publication, and to
Miguel Castro, Yerim Park, Anara Makatova, Kanat Kaiyrberli and Dauren Zakumbayev
for their support and useful insights on the Study.
The OECD expresses its gratitude to Ministries, government institutions and civil
society organisations who were involved in this Integrity Scan, namely: Mr. Askarbek
Ertaev and Mr. Ayan Tazhibay of the Ministry of National Economy, the Ministry of Civil
Service Affairs and Anti-Corruption, the Ministry of Finance, the Ministry of Foreign
Affairs, the Ministry of Justice, the Ministry of Culture and Sport, the Strategic
Development Department Accounts Committee, KazExportGarant, and the Development
Bank of Kazakhstan as well as Transparency International Kazakhstan, Soros Foundation
Kazakhstan, Sange Research Centre, the Legal Policy Research Centre, Social Fund:
Legal Media Centre, and the Almaty Office of Friedrich Ebert Stitftung.
OECD INTEGRITY SCAN OF KAZAKHSTAN: PREVENTING CORRUPTION FOR A COMPETITIVE ECONOMY © OECD 2017

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TABLE OF CONTENTS –

Table of contents
Executive summary ............................................................................................................................... 13
Assessment and recommendations ...................................................................................................... 15
Chapter 1. Improving regulatory governance in Kazakhstan ........................................................... 19
Role of regulatory policy in promoting integrity and combating corruption ...................................... 20
Current status and critical analysis ...................................................................................................... 22
Action Plan and potential OECD support ........................................................................................... 30
Note ..................................................................................................................................................... 32
References ........................................................................................................................................... 33
Chapter 2. Competition policy in Kazakhstan: promoting efficient and sound markets ................ 35
Role of competition to promote integrity and combat corruption ....................................................... 36
Current status and critical analysis ...................................................................................................... 37
Action Plan and potential OECD support ........................................................................................... 49
References ........................................................................................................................................... 54
Chapter 3. Open budgeting for integrity and accountability in Kazakhstan ................................... 55
Role of open budgeting in promoting integrity ................................................................................... 56
Current status and critical analysis ...................................................................................................... 59
Action Plan and potential OECD support ........................................................................................... 72
Notes ................................................................................................................................................... 74
References ........................................................................................................................................... 75
Chapter 4. Development co-operation in Kazakhstan ........................................................................ 77
Role of development co-operation in promoting integrity and combating corruption ........................ 78
Current status and critical analysis ...................................................................................................... 80
Action Plan and potential OECD support ........................................................................................... 87
Notes ................................................................................................................................................... 88
References ........................................................................................................................................... 89
Chapter 5. Strengthening public sector integrity in Kazakhstan ...................................................... 91
Role of strong public sector integrity systems in promoting integrity and combating corruption ...... 92
Current status and critical analysis ...................................................................................................... 94
Action Plan and potential OECD support ........................................................................................... 119
Notes ................................................................................................................................................... 122
References ........................................................................................................................................... 123
Chapter 6. Ensuring integrity in public procurement in Kazakhstan .............................................. 125
Promoting integrity and combating corruption in public procurement ............................................... 126
Current status and critical analysis ...................................................................................................... 128
Action Plan and potential OECD support ........................................................................................... 144
Notes ................................................................................................................................................... 146
References ........................................................................................................................................... 147
OECD INTEGRITY SCAN OF KAZAKHSTAN: PREVENTING CORRUPTION FOR A COMPETITIVE ECONOMY © OECD 2017
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– TABLE OF CONTENTS
Chapter 7. Creating a level playing field in Kazakhstan through tax transparency ....................... 149
The role of tax transparency in promoting integrity and combating corruption ................................. 150
Current status and critical analysis ...................................................................................................... 151
Action Plan and potential OECD support ........................................................................................... 155
Notes ................................................................................................................................................... 156
References ........................................................................................................................................... 157
Chapter 8. Deterring and detecting bribery in export credits in Kazakhstan ................................. 159
Role of Export Credits in promoting integrity and combating corruption .......................................... 160
Current status and critical analysis ...................................................................................................... 164
Action Plan and potential OECD support ........................................................................................... 177
References ........................................................................................................................................... 181
Chapter 9. Regulating lobbying in Kazakhstan to prevent policy capture ....................................... 183
Role of lobbying legislation in promoting integrity and combating corruption .................................. 184
Current status and critical analysis ...................................................................................................... 185
Action Plan and potential OECD support ........................................................................................... 192
Note ..................................................................................................................................................... 193
References ........................................................................................................................................... 194
Chapter 10. Corporate governance and business integrity in Kazakhstan ...................................... 195
Role of effective corporate governance practices for promoting business integrity
and combating corruption .................................................................................................................... 196
Current status and critical analysis ...................................................................................................... 197
Action Plan and potential OECD support ........................................................................................... 208
References ........................................................................................................................................... 211
Chapter 11. Empowering civil society in Kazakhstan ........................................................................ 215
Role of civil society in promoting integrity and combating corruption .............................................. 216
Current status and critical analysis ...................................................................................................... 218
Action Plan and potential OECD support ........................................................................................... 230
Note ..................................................................................................................................................... 232
References ........................................................................................................................................... 233
Chapter 12. Enabling the tax administration in Kazakhstan to better detect corruption .............. 235
Role of the tax administration in promoting integrity and combating corruption ............................... 236
Current status and critical analysis ...................................................................................................... 237
Action Plan and potential OECD support ........................................................................................... 243
Notes ................................................................................................................................................... 245
References ........................................................................................................................................... 246
Chapter 13. Encouraging reporting of corruption in Kazakhstan through
stronger whistleblower protection ....................................................................................................... 247
Role of whistleblower protection in promoting integrity and combating corruption .......................... 248
Current status and critical analysis ...................................................................................................... 251
Action Plan and potential OECD support ........................................................................................... 268
Notes ................................................................................................................................................... 271
References ........................................................................................................................................... 272
OECD INTEGRITY SCAN OF KAZAKHSTAN: PREVENTING CORRUPTION FOR A COMPETITIVE ECONOMY © OECD 2017