Conflict of Interest in the Administrative Contracts in Albania
European Scientific Journal December 2016 edition vol.12
Conflict of Interest in the Administrative Contracts in Albania
Candidate General Prosecution Office of the Republic of Albania Fjorida Ballauri General Prosecution Office
In Albania the issue of conflict of interest is present at today's public debate, as in many other countries. Due to this phenomenon, public funds, state property, public service, etc., are at risk at any time, and therefore there is obligation of the state to establish the appropriate legal instruments to prevent such situations. In principle, while exercising official duties and functions, the elected person or the public official should not be influenced by personal interests. In this sense, through actions, inactions or decisions, they cannot gain benefits or advantages for themselves, their family members, relatives or other persons, in case they share economic or political interests with them. In Albania, the domestic legislation provides restrictions and prohibitions for several private interests of the officials exercising public functions, depending on their functions, responsibilities and competencies in public decision-making. Also, the law provides specific prohibitions and restrictions in cases of entering into administrative contracts, considering a contract as a special public decision, which is vulnerable to be damaged by the action of officials' private interests. This paper aims to make an analysis of the legislation in terms of restrictions of private interests of public officials to prevent specific cases of conflict of interest while concluding administrative contracts. Also, the paper leads to conclusions on how conflict of interest is related to other criminal offences like abuse of office, corruption or violation of equality of participants in public tenders or auctions etc.
Corruption; public officials; administrative contract; conflict of interest
Conflict of interest has become one of the most discussed issues in
our everyday public debate, but also beyond. This is because the conflict of
interest is directly linked to the life and welfare of the citizens, since due to
this phenomenon, public service, public funds, state property etc., are at risk
at any time. These areas are currently at higher risk of being affected by
conflict of interest, corruption, abuse of office etc. It is already known that
conflict between private interests and public official’s functions can lead to
corruption, if not managed properly. In a country with solid democracy,
citizens should recognize and have proper transparency regarding the fact
that where their contributions go through paid taxes, or how public funds are
used, while businesses are also interested to this process, considered not
only as indirect beneficiaries of public funds, as well as beneficiaries in
conducting the process of redistribution. In this process, the state must
ensure that public officials do not allow their private interests to influence
their decisions. Failure to do so would weaken and violate the trust of
citizens and public institutions.
In principle, all activities of public officials should be guided by
some basic elements such as legality, protection of public interests and the
rights of privacy of the person, equality, justice and impartiality, internal
control, efficiency, etc., regulated mostly by the Code of Administrative
Procedures and specific laws.
In 1998, Albania made a comprehensive integrated approach within
the domestic legislation, focusing on the adoption of legislation and
implementation of relevant laws with an active participation in international
anti-corruption initiatives and the implementation of an anti-corruption
strategy, through action plans to prevent and combat corruption monitored
by specialized structures that were set up for this purpose.
After the signing the Stabilization and Association Agreement (SAA)
on 12 June 2006, the approximation of legislation with the acquis
communautaire and its application, constituted a very complex and very
demanding process. It required that Albania will not only set up its
regulatory framework according to these requirements, but it will also
reassure the administrative structures and other conditions necessary for the
implementation of the acquis.
The priorities of the Albanian institutions and ongoing requirements
of various international organizations to strengthen the fight against the
phenomenon of corruption in public administration, have been identified the
end of 2004, and later was adopted a legislative package to the Penal Code
and the Code of Criminal Procedure. These changes mainly affect the
phenomenon of corruption in terms of defining more clearly the offense, as
well as in terms of defining the tools and special methods of investigation,
Part of this package was the adoption of the law no.9049, dated
04.10.2003 “On the declaration and audit of assets, financial obligations of
elected and certain public officials” and the Law 9367, dated 07.04.2005 “On
preventing conflicts of interest in the exercise of public functions”, as a new
anti-corruption instrument in Albania.
Concept of conflict of interest in the Albanian legislation
In Albanian legislation, conflict of interest is defined by law,
according to the same definition provided by the standard document
recommended by the OECD3. The definition contains a general concept of
conflict of interest and is divided into several sub-definitions of actual
conflicts of interest, apparent and potential conflict of interest. These three
types of conflicts of interest differ in relation to the effects of interest in
Albanian law governing conflicts of interest, nr.9367, dated
07.04.2005 "On the prevention of conflict of interest in the exercise of public
functions" as amended, in its Article 3.1 provides the following definition:
“Conflict of interest” is a situation of conflict between the public duty
and the private interests of an official, in which he has direct or indirect
private interests that affect, might affect or seem to affect in an incorrect way
the performance of his public responsibilities and duties”.
Meanwhile, according to various authors in this field4, the concept of
conflict of interest does not refer to the actual violations, but more to the risk
to be involved in violations of the law.
In exercising public functions, an officer may face different issues of
conflict of interest, in the form of a) “Continuing conflict of interest” or what
we call “inconsistent” with the public function and b) “Conflict of interest,
considered case by case”, which is related to a particular decision-making of
The Albanian law on prevention of conflict of interest has foreseen
several prohibitions of private interest of the public officials. Such
restrictions are made to guarantee an impartial and transparent
decisionmaking in the best possible interest of the public and of its trust in public
3 OECD guidelines for managing conflict of interest in the public service, June 2003
4 Bruno W. Speck, Conflict of Interest: Concepts, Rules and Practices regarding Legislators
in Latin America,
The Latin Americanist, Volume 49, Issue 2, 2008 ,f. 67
5 Article 3 “Definitions” of the Law no.9367, dated 7.4.2005, as amended
Depending on the public position and the role in certain
decisionmaking processes, the levels of limitations for the official’s private interests
are also defined by law. These limitations are potentially associated with the
risk that these positions carry for illegal benefits or abuse of power.
The law nr.9367, dated 7.4.2005 “On the prevention of conflicts of
interest in the exercise of public functions”, as amended, defines the
private interest that can be considered a cause for the situation in a conflict of
interest7, these are as follows:
a) property rights and obligations of any kind;
b) every other juridical civil relationship;
c) gifts, promises, favors, preferential treatment;
ç) possible negotiations for employment in the future by the official during
the exercise of his function or negotiations for any other kind of form of
relationships with a private interest for the official after leaving the duty
performed by him during the exercise of duty;
d) engagements in private activity for the purpose of profit or any kind of
activity incurring income, as well as engagements in profit-making and
nonprofit organizations, syndicates or professional, political or state
organizations and every other organization;
i) family or living together;
ii) the community;
v) recognized [relationships] of friendship or enmity;
e) prior engagements from which the interests mentioned in the above
letters of this article have arisen or arise.
In Chapter III, Section 1 of the Law no.9367, dated 7.4.2005 as
amended, are provided a range of limitations of the official's private interests
to prevent conflict of interest in specific cases.
These restrictions are concentrated in three main directions:
• Prohibition of entering into contracts
• Prohibitions on receiving income because of a particular function
• Prohibition of receiving gifts, favors, promises or preferential
Given the importance on preventing the conflict of interest, in the
legislation is provided a set of prohibitions of entering into contracts with a
6 Article 1 “Purpose”of the Law no.9367, dated 7.4.2005, as amended
7 Article 5 of the Law no.9367, dated 7.4.2005, as amended
public institution for a category of officials. Irrespective of the three main
prohibitions above, this article is specifically focused on the prohibitions for
public officials entering into contacts. The law on prevention of conflict of
interest has devoted a special section for prevention of conflict of interest
when entering in contracts (Article 21), considering a contract as a specific
public decision, which, because of the importance and values of public
property, is at risk to be damaged by the action of the private interests of the
officials involved in this decision.
There are specific prohibitions on certain categories of officials,
despite their role in entering into contracts with a public institution (points 1,
2 and 6) and other prohibitions dependent on the role of the officer in
decision making for these contracts (point 3).
Specifically point 1 of Article 21 of the law on conflict of interest
"No individual, when he is equated with an official holding one of the
functions defined in Chapter III, Section 2 of this law, judges and
prosecutors at the first instance and appeal courts, and no commercial
company, partnership or simple partnership, where this official possesses,
actively or passively, shares parts of capital, at whatever amount, and
cannot enter into a contract or sub-contract with any public institution".
Under the law are applied prohibitions for officials of middle
management level only to the conclusion of contracts in the territory and
jurisdiction of the institution, where the official works8. This prohibition is
applied even if the party in the contract is a subordinate institution.
For the purposes of Article 21 paragraph 1 and 2, the limitation is
applied only when the officer in relation to a public institution appears as an
individual, natural commercial person, free professions or when as a party
appears a legal entity in the form of a commercial organization when he has
interests, such as shares or capital.
Categories of officials having restrictions to enter into administrative
contracts with public institutions
Law no. 9367, dated 7.4.2005, as amended, explicitly defines who
will be the officials with whom one is absolutely prohibited to benefit from
contracts with a public party. Categories included in the ban are:
• The President of the Republic;
8 Article 21, point 1 paragraph 2, of the law no.9367, dated 7.4.2005, as amended
“With regard to officials of medium management level provided for in Article 31 and the
officials provided for in Article 32, Chapter III, Section 2, of this Law, the prohibition in
accordance with the first paragraph of this point shall apply only in terms of entering into
contracts within the territory and jurisdiction of the institution where the official works. This
prohibition shall apply even where a subordinate institution is a party”.
• The Prime Minister, the Deputy Prime Minister, ministers and deputy
• The members of Parliament;
• The Judges of the Constitutional Court of the Supreme Court; the
members of the High Council of Justice (HCJ), the Attorney General, the
Chief of the Supreme Audit Institution (SAI),
• The members of the Central Election Commission (CEC), the
Ombudsman, the Inspector General of the High Inspectorate of Declaration
and Audit of Assets and Conflict of interest (HIDAACI);
• The members of regulatory bodies (Supervisory Council of the Bank
of Albania, including the Governor and Deputy Governor, competition,
telecommunications, energy, water supply, insurance, securities, media);
• The General Secretaries, heads of departments, general directors and
employees of mid-level managers of central institutions, as well as any other
officer in every public institution, which is at least equivalent to the position
of these officials,
• Judges and prosecutors at the court of first instance and of the
• Civil middle management level, but only to contracts concluded in
the territory and their jurisdiction.
The paragraph 2 of Article 21 of Law 9367, dated 07.04.2005, as
amended, foresees the prohibition of entering into contracts with a public
party in local government. The law in this case has restricted this prohibition
to exercise the jurisdiction and powers of the elected officers.
Specifically in Article 21 paragraph 2 of this law stipulates that:
"When the official is the mayor or deputy mayor of the municipality
or county council, the relevant board member or official of the senior
management level of a unit of local government, according to the
interpretation of this term in the relevant laws, prohibition in paragraph 1 of
this article, because of the private interests of the official defined at this
point, applies only to the conclusion of contracts, where appropriate, with
the municipality, the municipality or county council, where the official
functions. This prohibition applies where a party to the contract is a public
institution, depending on the unit ".
So in this case, the restriction is applied only to contracts made by the
municipality and their subordinate institutions, on the one hand and officials
determine at this point, just that these officials have an interest in the kind
covered in point 1, explained above. This means that local officials are not
ruling out the possibility of entering into contracts with any other public
institution (central or local), excluding local institution where they perform
The prohibitions set forth in Article 21 paragraph 1 of the Law no. 9367,
dated 07.04.2005, as amended, are applied in the same measure, even to
persons related to the aforementioned officials9. According to the concept of
Albanian law on prevention of conflict of interest, the circle of people
connected with the officer consists of the spouse, cohabitant, adult children
and parents of the official and those of the spouse and cohabitant.
Types of prohibited contracts
For the above categories of officials absolute prohibition includes, as
a rule, all types of contracts: public procurement of construction, goods or
services, sale, exchange, lease, donation, delivery, enterprise, transportation
and any other contract which is not excluded by paragraph 4 of Article 21 of
the law on the prevention of conflict of interests.
The law has provided exceptional cases, given the fact that the
official may enter in contractual relationship with relevant institutions on
various issues including cases relating to his employment, or when it finds
adjustment to special laws for public purposes, etc.
Specifically Article 21.4 of the Law No.9367, dated 07.04.2005, as
amended provides that:
The prohibitions arising from points l, 2 and 3 of this article are
linked to cases when the conclusion of the contract:
a) relates to the employment in a public institution itself or its legal
b) relates to the receipt by the official of a service offered by public
institutions or bodies and entities created by or under the control of the
public, when these services are provided in the scope of activity of a public
institution, and provided that service is not given preferentially officer or as
preferential treatment in relation to others;
c) is based on the specific laws for public purposes or for special
treatment of different categories of officials;
d) is necessary for the performance of public functions and there is no
e) has to do with a gift, favor or preferential treatment, in each case
without counter, the subjects specified in paragraph l letters "a" and "b" and
paragraph 2 of this article do in favor of a public institution ".
The amendments of the Law on prevention of conflict of interest
approved by Law no. 86/2012 dated 09.18.2012, foresees that officers or
9 Article 24, point 1 of the Law no. 9367, dated 07.04.2005, as amended provides that “1.
The circle of persons related to the official, by way of applying the prohibitions set out in
Articles 21 and 22 of this law, consist of the spouse, cohabitant, adult children and parents
of the official and those of the spouse and cohabitant”.
persons related to him, are prohibited to benefit from public contracts even
through subcontracting. This provision in the law10 aims to prevent cases of
finding possible clauses to avoid the legal restrictions, removing thus the
possibility of fictitious participation in public procurements or administrative
contracts, which effectively were realized through subcontracting, by those
people who could not enter into contracts because of the legal restrictions11.
Limitations due to the role of the official’s decision to enforce contracts
Law on Conflict of Interest no.9367, dated 07.04.2005, as amended,
provides some other restrictions of the private interests of an official for
preventing case by case conflicts of interests for particular instances.
Article 21.3 of the Law on Conflict of Interest specifies that:
“Notwithstanding the definitions in points 1 and 2 of this article, a
contract may not be entered into force between the public institution and any
public institution under this institution on the one side and a natural, civil or
commercial natural person, or a legal person, or any other form of
partnership on the other side, when the following conditions are met at the
a) the official, that exercises his function in this public institution, has
fundamental and definitive competence in the decision-making process in the
evaluation of the offerors and the offers and the determination of the terms of
b) the official has private interests according to the definition of
article 37 of the Code of Administrative Procedures and/or article 709 of the
Civil Code or has an interest in the types of interests specified in points 1
and 2 of this article”.
In principle, any official in any position, even if that has an interest in
the aforementioned type associated with a particular decision, leading to the
signing of a contract with a public or party issuing a specific act, according
law has only one option: "To declare private interests and to avoid, not
taking part in decision-making. In contrary, contract or act that he produces
will be null".
In the particular case that the officer involved in a specific decision
has a private interest, as it is defined in Article 5 of the Law on Conflict of
Interest (above), and does not declare that, regardless that they are known
consequences, this constitutes an omission that is punishable
10 Article 21 point 1 of the law no.9367, dated 07.04.2005, as amended
11 Ballauri, F. “Conflict of interest in the criminal offenses committed by public officials
/Konflikti i interesave në veprat penale të kryera nga punonjësit shtetërore ose në shërbim
publik (Albanian version), Tirane 2015, p.158
administratively under the law by a fine12 and has legal consequences. The
act will be announced or found invalid13 depending on the type and extent of
If this omission has produced some harmful consequences (for unfair
material profits, damage the legitimate interests of the state, the citizens and
other legal persons) and is related to other actions related to a stable
causeeffect link, the elements to refer the case to the prosecutor office for further
investigations are sufficient.
Thus, the identification of private interest, leading to the official’s
violation of the law, would be a major component to prove the existence of
the crime of abuse or illegal profit interests. This is why article 40/1 of law
on prevention of conflict of interest provides the responsibility of the
institution to send the case to the prosecution office in the cases when the
official has acted unfaithfully by consuming elements of a criminal offense.
The consequences of acts or contracts on conflict of interest
Law on prevention of conflict of interests, Chapter V, Article 40,
provides that administrative contracts and acts of every public institution,
and appealing against them, issued under the conditions of an actual or
apparent conflict of interests are invalid according to the meaning of this
term and the principles and procedures defined in the Code of Administrative
Procedures. On the other hand, it is foreseen that any civil contract entered
into force in violation of this Law, or in any other case, when it is related to
the presence of an actual or apparent conflict interest, does not create any
In cases where a conflict of interest constitutes an act or contract of
absolute nullity, the request for its finding can be made at any time. The
absolute invalidity of the act may be declared at any time, either ex officio or
upon request of any interested person, by the public institution that has
issued it, its superior organ, or the organ which is competent to review the
administrative legal remedies and by the competent court for administrative
issues, in accordance with the law. In case only a part of the act is absolutely
invalid, and such part is so important that the public body would not have
issued the act without it, the whole act shall be absolutely invalid15. The
effects of the repeal or revocation start and are regulated by the provisions of
the Administrative Procedure Code.
12 Article 44 of the Law no.9367, dated 10.04.2005 “On the Prevention of Conflict of
interest..”, as ammended.
13 Depending on the type of violation if we are dealing with absolute or relative invalidity
14 Article 40, point 2, of the Law nr.9367, dated 7.4.2005 “On the Prevention of Conflict of
interest..” as ammended.
15 Article 110 of the Albanian Code of Administrative Procedure.
The amendmends that are made to the Law 9367, dated 04.07.2005,
with the law 44/2014, foresee several legal instruments to regulate the legal
consequences obtained in a conflict of interest in cases where the responsible
institutions does not provide solutions.
Article 44 of the Law 9367, dated 04.07.2005, as amended,
specifically foresees that an infringement of obligations set out in this law, as
long as it does not constitute a criminal offence, shall be an administrative
infraction and shall be sentenced with a penalty that varies from 100.000
ALL to 300.000 ALL depending on the violation.
Fines and disciplinary measures taken against officials who commit a
conflict of interest are only a part of the punishment and measures provided
by law. The most important instrument that should be implemented as a form
of punishment of violations, rests in the invalidation of an act under the
condition of a conflict of interest, to the open trial process to such a case, to
the possibility of retrospective and compensation the damage to the parties
and passing the entire burden of damage, including moral damages that may
be caused to a public institution, to the responsible official who has acted in
terms of conflict of interest16.
Law on prevention of conflict of interest sanctions in its article no.
40/1/2 the obligation of public institutions, since their act becomes invalid
due to conflict of interests, and should take disciplinary punishment
procedures of officials acted in bad faith; shifting the burden of
compensation for the damage inflicted to the official, asking the court to
order compensation for moral damage caused by illegal actions of this
official; as well as file criminal charges against the official, if the
infringement committed by him is considered to constitute a criminal
In case the public institution itself does not take the initiative under
this point, the superior institution shall, in a hierarchical way based on their
legal power, perform the obligations set out herein. In case of their omission,
the actions provided in letter “a”, point 2, shall be performed by the High
Inspectorate for the Declaration and Audit of Assets and Conflict of
Interests (HIDAACI), which shall, as appropriate, cooperate with the State
Advocacy (Article 40/1/2).
The criminal offenses directly relates to violations in public
procurement are enshrined by Article 258 of the Albanian Criminal Code
which provides that:
“Breaching the equality of participants in public bids or auctions
16 Ballauri, F. “Conflict of interest in the criminal offenses committed by public officials
/Konflikti i interesave në veprat penale të kryera nga punonjësit shtetërore ose në shërbim
publik (Albanian version), Tirane 2015, p.69
Committing actions in breach of the laws which regulate the freedom
of participants and the equality of citizens in bids and public auctions, by a
person holding state functions or public service in order to create illegal
advantage or benefits for third parties, is punishable up to three years
In the analysis of the inevitable connection that exists between
conflict of interest and the criminal offenses in breaching the equality of
participants in public bids or auctions or corruption offenses, is to mention a
practical case in the Supreme Court.
The Supreme Court Decision no. 269 of 2012 has reversed the
decision of the Court of Appeal that had decided the innocence of two
defendants for the offense of violation of equality in tenders as provided in
Article 258 of the Criminal Code. Criminal Chamber upheld the decision of
the first instance court, which sentenced two officials, L.M in the position of
the Mayor and the Chairman of the Procuring Entity and Gj.M in the position
of Deputy Mayor and Chairman of the Evaluation Committee of
procurement, bidding for the criminal act provided by article 258 of the
In the decision the Supreme Court inter alia noted that the defendants
by their illegal actions have favored a private entity in the tendering
procedures of public funds to the detriment of other subjects participating in
the tender conducted on 27.03.2008. Criminal Chamber of the Supreme
Court concluded that “the Bid Evaluation Committee has not been
investigated in connection with the conflict of interest of the candidates”.
In this case the position of the operator's legal representatives, who
held the function at the same time as the member of the Municipal Council,
constitute a legal reason for disqualification of the company he represented,
pursuant to Law no. 9643, dated 20.11.2006 “On Public Procurement”, as
amended, and Law no.9367, dated 7.4.2005 “On the prevention of conflicts
of interest ..” as amended. This conflict of interest untreated and unsolved on
time (before the beginning the procurement procedures) has lead the
possibility of the consumption of the offense of breaching the equality of
participants in public bids or auctions.
Despite the risk of conflict of interest in public procurement and
managing administrative contracts there are no data recorded on cases
identified or avoided of conflict of interest in this field. If we refer to the
annual reports of the Public Procurement Agency17, where are provided
general statistical data for public procurement that have been completed or
cancelled, there are no specific data about the reason for the cancelation, if
the cancellation was because of conflict of interest or other causes.
Law on prevention of conflict of interests provides special
restrictions and prohibitions on the private interests for officials exercising
public functions, depending on their functions, responsibilities and
competencies in public decision-making. These prohibitions - in a certain
category - are extended even to persons connected to the official
(husband/wife, cohabitant/wife, adult children, parents of the official and
his/her spouse). In principle, the law obliges officials not to participate in
those decisions, when they or their family members have any interest directly
In addition, this law in its Articles 21-24 provides some prohibitions
and restrictions on officials to enter into contract with a public institution,
prohibitions on providing income due to the special function, as well as bans
on receiving gifts, favors and preferential treatments. These restrictions are
intended primarily to protect the interests of citizens from any influence of
public officials who, in view of their interests or their relatives, in an
administrative process, may harm the interests of the state, citizens or legal
While emphasizing that a situation of conflict of interest can be
potentially associated with a criminal offense of corruption, abuse of power,
violation of equality in public bids or unlawful profit of interests, it is
legitimized that, in the framework of prevention, by law, several specific
restrictions on private interests of the public officials are provided.
7. Law 9367, dated 07.04.2005, "On the prevention of conflict of
interest in the exercise of public functions", as amended.
8. Law no.9049, dated 04.10.2003, "On the declaration and audit of assets, financial obligations of elected persons and certain public officials" as amended.
9. Law nr.9131, dated 09.08.2003 “On the rules of ethics in public administration”. 10. Law No 9643, dated 20.11.2006 "On public procurement" as amended .
1. OECD Guidelines for the management of conflicts of interest in public service , June 2003 .
2. Bruno W. Speck , Conflict of Interest: Concepts, Rules and Practices regarding Legislators in Latin America , The Latin Americanist, Volume 49 , Issue 2 , 2008 .
3. Ballauri , F. “ Conflict of interest in the criminal offenses committed by public officials / Konflikti i interesave në veprat penale të kryera nga punonjësit shtetërore ose në shërbim publik (Albanian version) , Tirane 2015 , http://www.doktoratura.unitir.edu.al/tag/doktoraturafjorida-ballauri-kallco.
4. The Albanian Code of Administrative Procedure, adopted by Law No. 44/ 2015 .
5. The Criminal Code of the Republic of Albania .
6. The Civil Code of the Republic of Albania .