Do Fines Not Entering the Budget Fuel Corruption?

On November 19, Finance Minister Samir Sharifov stated in the Milli Majlis (National Assembly) that fines issued to citizens in Azerbaijan sometimes do not reach the state budget. According to him, a new software system has been developed to address this issue and ensure proper oversight of fine payments.

The total amount of fines paid by citizens annually in Azerbaijan is generally not disclosed. Similarly, the percentage of fines that fail to enter the state budget remains unspecified. However, the minister noted that revenue of 840 million manats is forecast from budget organizations, with most of this amount derived from fines. "The bulk of the revenue comes from a few institutions. The Ministry of Internal Affairs is the primary contributor, followed by the Ministry of Economy. Within the latter, fines from various subordinate bodies are directed to the budget. The State Customs Committee, the Food Safety Agency, and the Ministry of Ecology and Natural Resources also play a role," Sharifov explained.

Recently, there has been a consistent increase in various fines, suggesting that the share of fines directed to the budget should also rise. But where is the rest of the money, and why isn’t it reaching the state budget?

The Ministry of Finance did not respond to this question. However, Arzu Naghiyev, the Chair of the Parliamentary Committee on Defense, Security, and Anti-Corruption, told Turan that there are different types of fines: "Some are electronic, and others are cash-based. Sometimes fines are delayed or not submitted at all. Even electronic fines are initially directed to the respective organizations, then delayed before being transferred to the state budget."

Naghiyev emphasized that moving forward, fines will be transferred to the state budget as soon as they are paid to the respective organizations. "A software solution has been developed for this purpose, and it will be monitored."

Expert Insights

Finance expert and lawyer Akram Hasanov believes the problem stems from a complex and abnormal system of state institutions that has developed in Azerbaijan over the past decade. He explained to Radio Azadlıq that, previously, only state bodies handled their specific authorities. "However, since 2016, numerous public legal entities have been established in Azerbaijan. These entities are not state bodies but independent legal entities, which means their bank accounts are also independent."

According to Hasanov, public legal entities in Azerbaijan are governed by charters that subordinate them to specific state bodies, such as ministries. "But their bank accounts are independent, and their finances do not go directly to the state budget. The Ministry of Finance has no visibility over them. Consequently, not only fines but other funds also bypass the state budget."

Hasanov believes there are broader motives at play: "These entities engage in various activities, including entrepreneurship. The revenue they generate does not go to the state but to these public legal entities, purportedly to cover expenses. Additionally, state institutions have a regulated salary system for civil servants, while public legal entities have the freedom to set salaries. Often, salaries in these entities far exceed those of ministry employees."

Attempts to contact the leadership of public legal entities for further clarification were unsuccessful. However, these organizations typically claim to operate transparently.