Strengthening the Framework on Pre‑ and Post‑Public Employment in Romania

1. Introduction

Abstract

This chapter provides background on risks in pre- and post-public employment, as well as Romania’s strategic objectives for reform in this area and relevant OECD standards.

To promote accountability and safeguard the public interest, countries need to ensure transparency and stakeholder engagement at all stages of the political process and policy cycle (OECD, 2017[1]; 2024[2]). This includes managing conflict of interest situations, promoting transparency and integrity in lobbying, and regulating pre- and post-public employment (OECD, 2020[3]).

One way in which conflicts of interest can undermine public integrity is through the abuse of “revolving doors”, in which public officials treat private sector actors favourably while in office, in exchange for the promise of employment following their term and vice versa. When these officials’ positions involve direct regulation of certain sectors, the revolving door can grant an unfair advantage to the non-public employer in terms of information or contacts their employees gained during public employment. In some cases, public officials may make decisions in the interest of a former or future employer instead of in the public interest. While it is important to safeguard individuals’ right to seek employment, limited constraints on exercising this right are necessary in specific circumstances to mitigate risks of undue influence on government decision making.

Beyond corruption risks, the revolving door can also contribute to economic distortions. Granting undue advantages to certain actors can serve as a mechanism for rent-seeking behaviour in which these actors capture and divert public resources (Brezis and Cariolle, 2014[4]). It can similarly lead to regulatory capture in which regulators hoping to secure employment after leaving public office treat their prospective employers more favourably (Kalmenovitz, Vij and Xiao, 2022[5]), potentially worsening those firms’ own financial health and/or negative externalities of their activities. The revolving door can also have a negative impact on firms by undermining their decision making and draining their resources (Kramarz and Thesmar, 2013[6]) while contributing little to improving their productivity (Cingano and Pinotti, 2013[7]) thereby harming overall economic performance if use of the revolving door is widespread. Finally, exploitation of the revolving door tends to favour large firms, thereby influencing policy in favour of these firms at the expense of smaller firms (Slinko, Yakovlev and Zhuravskaya, 2005[8]). It is therefore in countries’ economic interest to ensure measures are in place to promote integrity in pre- and post-public employment.

However, the optimal level of revolving door use from an economic perspective is not zero. In the sphere of regulatory enforcement, for example, allowing some level of revolving door use can help attract better regulators, thereby leading to more effective economic regulation (Brezis, 2023[9]). Just as from an ethical perspective, it is also important from an economic perspective to balance between combatting the negative effects of corruption and avoiding disproportionate regulatory burden. To that end, measures to promote integrity in pre- and post-public employment must balance encouraging knowledge exchange between the public and private sectors while also protecting the public interest (OECD/World Bank/UNODC, 2020[10]). A comprehensive framework to promote integrity in pre- and post-public employment should involve measures to support officials in upholding integrity upon entering public office, during their tenure and after they leave. The framework can also include measures to support non-governmental actors, particularly the private sector, in respecting governments’ pre- and post-public employment rules (OECD, 2010[11]).

Romania has highlighted improving post-public employment integrity as a key priority in its National Anti‑Corruption Strategy (Strategia Naţională Anticorupţie, NACS). In particular, Point 6 of Specific Objective 3.1 envisions legal changes to the post-public employment regulations. Specifically, it calls for “the establishment of a unitary regulatory framework for the regulation of post-employment prohibitions from the public system to the private system and vice versa, control procedures regarding their compliance and the sanctions related to the violation of the prohibitions, as well as the establishment of a priori verification procedures by private sector employers to comply with employment bans” (Government of Romania, 2021[12]). The strategy assigns institutional responsibility to the National Agency of Civil Servants (Agenția Națională a Funcționarilor Publici, ANFP), the National Integrity Agency (Agenția Națională de Integritate, ANI), the Ministry of Investments and European Projects (Ministerul Investițiilor și Proiectelor Europene, MIPE), the National Agency for Public Procurement (Agenția Națională pentru Achiziții Publice, ANAP), the Ministry of Finance (Ministerul Finanțelor, MoF), the Ministry of Justice (Ministerul Justiției, MoJ) and the Control Body of the Prime Minister (Corpul de Control al Prim-Ministrului, CCPM).

To support Romania in implementing this objective, this report provides recommendations for managing and preventing risks related to pre- and post-public employment, in particular by proposing key legislative changes and implementation measures. Anchored in OECD standards, including the OECD Recommendations of the Council on Transparency and Integrity in Lobbying and Influence, on Public Integrity and on Guidelines for Managing Conflict of Interest in the Public Service, as well as interviews with stakeholders in Romania, the recommendations focus on strengthening the pre- and post-public employment framework in four main areas: expanding the scope of officials and activities covered, introducing a more diverse set of safeguards tailored to high-risk areas, clarifying institutional responsibilities and monitoring arrangements, and defining sanctions and enforcement mechanisms. The recommendations also address measures for ensuring effective implementation of this framework. Overall, the recommendations aim to balance the need to promote knowledge exchange between the public and private sectors – particularly given the currently limited nature of this exchange in Romania and the difficulties attracting qualified talent in the public sector – while assuring that the public interest remains protected.

Across the OECD, countries have taken steps to strengthen their pre- and post-public employment frameworks, and there is a wealth of relevant good practice to draw upon. Likewise, at the European Union (EU) level, provisions including Article 245 of the Treaty on the Functioning of the European Union, Article 11 of the Code of Conduct for Members of the European Commission and Article 9 of the Code of Conduct for Members of the European Parliament Regarding Integrity and Transparency regulate pre- and post-public employment within European institutions and could also provide inspiration.

References

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[4] Brezis, E. and J. Cariolle (2014), “The revolving door indicator: Estimating the distortionary power of the revolving door”, U4 Brief, No. 2014:10, U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute.

[7] Cingano, F. and P. Pinotti (2013), “Politicians at work: The private returns and social costs of political connections”, Journal of the European Economic Association, Vol. 11/2, pp. 433-465.

[12] Government of Romania (2021), Decision no. 1,269 from December 17, 2021 Regarding the Approval of the National Anti-corruption Strategy 2021-2025 and Its Related Documents, Official Monitor.

[5] Kalmenovitz, J., S. Vij and K. Xiao (2022), “Closing the revolving door”, SSRN Electronic Journal, https://doi.org/10.2139/ssrn.4275137.

[6] Kramarz, F. and D. Thesmar (2013), “Social networks in the boardroom”, Journal of the European Economic Association, Vol. 11/4, pp. 780-807, https://www.jstor.org/stable/24538772.

[2] OECD (2024), Recommendation of the Council on Transparency and Integrity in Lobbying and Influence, OECD, Paris, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0379 (accessed on 17 May 2024).

[3] OECD (2020), OECD Public Integrity Handbook, OECD Publishing, Paris, https://doi.org/10.1787/ac8ed8e8-en.

[1] OECD (2017), Recommendation of the Council on Public Integrity, OECD, Paris, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0435.

[11] OECD (2010), Post-Public Employment: Good Practices for Preventing Conflict of Interest, OECD Publishing, Paris, https://doi.org/10.1787/9789264056701-en.

[10] OECD/World Bank/UNODC (2020), Preventing and Managing Conflicts of Interest in the Public Sector: Good Practices Guide, OECD, World Bank and United Nations Office on Drugs and Crime, https://www.unodc.org/documents/corruption/Publications/2020/Preventing-and-Managing-Conflicts-of-Interest-in-the-Public-Sector-Good-Practices-Guide.pdf.

[8] Slinko, I., E. Yakovlev and E. Zhuravskaya (2005), “Laws for sale: Evidence from Russia”, American Law and Economics Review, Vol. 7/1, pp. 284-318.