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Terminus: How corruption risks derailed Riga’s tramline development – and what we learn from it

The project monitored through an Integrity Pact in Latvia was cancelled but offers valuable lessons

Sunset in Riga city with cars crossing the bridge creating light trails. Picturesque view on the highway with colourful sky.

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When the city of Riga decided to launch the extension of its tram network in 2016, a lot was at stake. Close to €100 million – over two thirds of which came from the EU cohesion fund – were to be spent to benefit the tens of thousands of Rigans who use the tram every day. To increase oversight in such a large project, Transparency International Latvia (Delna) struck an agreement with municipal authorities that aimed to create space for independent oversight.

The Riga tram extension became one of the 18 ‘Integrity Pacts’ that the European Commission and Transparency International have been piloting to lower corruption risks in public contracting. By opening up the processes to public scrutiny, from bidding to handover, Integrity Pacts have helped bolster integrity in public procurement in 11 EU countries. And Integrity Pacts are not just keeping public funds out of private pockets – they are also contributing to effective climate action in the EU.

The need for civic oversight

Modern and viable public transport is key to lowering emissions, especially in growing urban areas like Riga’s Skanste district. With rapid development and a population predicted to double within the next decade, the need for improved public transport was clear, and citizens were calling for it.

In Latvia, like in so many other countries, public procurement is one of the areas most vulnerable to corruption. A tendency of favouritism and limited access to information pose serious problems for the sparsely staffed national authorities entrusted with overseeing procurement procedures.

To address this, Transparency International Latvia was joined by two independent experts as part of their Integrity Pact. The newly formed monitoring team aimed to make sure that procurement processes were fair, open and transparent, and that rules were enforced or improved, where necessary. As Riga residents were the ultimate stakeholders of this project, Transparency International Latvia aspired to include them in their monitoring as much as possible.

Clarifying confusion through dialogue

The monitoring team experienced first-hand just how big a challenge the lack of public information can be. From the beginning of the tram extension project, speculations and misconceptions were circulating about Integrity Pacts and Transparency International’s role in it, culminating in attacks from political figures who accused our chapter of “brainwashing” Latvians.

To make things worse, residents had been insufficiently involved in the initial planning of the route, leading to staunch opposition from some groups.

Transparency International Latvia counteracted these problems by proactively sharing information and meeting up with citizen initiatives. This eased tensions, as citizens gained insight into the project and the use of official complaint channels. Integrity Pacts are all about public oversight, after all – sharing data on public spending should not be considered brainwashing.

Transparency International Latvia's monitors discuss progress in their Integrity Pact with the public

Integrity Pact monitors organised a public discussion around the tramline project during a festival in the summer of 2018. Photo: © Transparency International Latvia

Meaningful monitoring

Quite the opposite: information is the very basis of a vigilant civil society, and thorough and transparent documentation is key for this. If made accessible, it can increase citizens’ trust in their governments. Transparency International Latvia’s monitoring work made a big difference in Riga: upon their request, key documents were made available online to anyone interested, enabling the public to keep better track of public projects and check for irregularities.

Even more importantly, Transparency International Latvia spotted a number of hurdles to open and fair competition. In one case, traffic authorities had included such specific technical requirements in the tender, that only very few companies could be considered as bidders. Following our experts’ recommendations, the process was re-done, this time on fairer conditions.

In the course of the Riga Integrity Pact, Transparency International Latvia made over two dozen recommendations to improve integrity and accountability. Latvian authorities took over almost all of them, leading to fairer procurement processes, more transparent documentation and better access to information.

Past corruption risks catching up

Transparency International Latvia detected irregularities in several procurement processes of the project, which were then cancelled and re-done. But as the monitoring team was working tirelessly to safeguard public funds, the past eventually caught up with the Riga’s traffic authorities. In 2018, criminal proceedings were launched against several officials for alleged money laundering in the procurement of trams and buses in earlier projects. Up to €20 million in bribes could have been paid according to media reports.

Monitors found links between this case and the tramline extension project, and published them in a 2019 report. While the team was not involved in any investigative capacity, their monitoring did raise further red flags regarding potential corruption risks.

In light of the potential corruption case mentioned above, which led to a big scandal in the country, the country’s Central Finance and Contracting Agency (CFLA) decided to cancel the Riga tramline project due to bad governance and unacceptably high corruption risks. The disbursement of funds was stopped entirely.

In October 2019, the CFLA reached an agreement with Riga Traffic, according to which the latter will have to reimburse the funds that had already been spent on the project. The reimbursement process will go on until the end of 2022.

Four panellists and a moderator during a Transparency International Latvia conference in 2019

In February 2020, Transparency International Latvia brought together experts from government and civil society to discuss key takeaways from the piloting of the Integrity Pacts and to generate concrete ideas for the future of citizen engagement in the implementation of EU cohesion funds in Latvia beyond 2020. Photo: © Transparency International Latvia

Lessons for the future

The premature termination of Riga’s tram extension project tells two stories. One is about the bitter consequences of corruption and the losses involved for residents. The other one holds a valuable lesson and makes the case for opening up public procurement to strong, independent scrutiny.

The project has shown the difference external experts can make in detecting irregularities in infrastructure projects, and how important it is to include affected communities early on. Both should be part of good practice in public procurements, accompanying the implementation of international open data standards to make information accessible from the first to the last day of a project.

And while this project was cancelled, cooperation between Latvia’s civil society and public authorities is far from over: as a follow-up to the project, Transparency International Latvia is working together with the Procurement Monitoring Bureau to improve civil society monitoring of EU-funded project in municipalities across the country.

No country, city or region can afford losing millions to corruption, especially in light of a global pandemic that is still raging and has put a massive strain on public budgets. Recovering from COVID-19 will be hard enough – but clean public procurement is key if we want it to work for everyone.