Every year, governments spend huge sums of money through public contracts, on everything from pencils and paper to providing basic services such as health clinics, roads and schools. However, the concentration of money, government discretion and corporate influence in providing these vital goods and services makes public contracting particularly vulnerable to corruption – and the impacts of this corruption can be particularly devastating.
Between 2001 and 2016, Brazilian construction company Odebrecht paid as much as $788 million in bribes to win public contracts across Latin America. The Car Wash investigation, known as Lava Jato, showed how a sophisticated network of executives, politicians and contractors rigged the procurement system in Brazil to award themselves lucrative contracts and fleece the public purse.
In Hungary, four oligarchs were awarded EUR1.88 billion in public contracts in just six years, an example of cronyism that shows just how procurement can benefit the few rather than the many.
In Venezuela, a recent award-winning investigation revealed systemic conflicts of interest in public spending on the military.
This is why Transparency International, together with its partners, CoST – the Infrastructure Transparency Initiative, Open Contracting Partnership (OCP), Hivos and Article19, have launched the Clean Contracting Manifesto. The whole lifecycle of public procurement must be implemented to the highest possible standards of transparency, accountability and efficiency and in the public interest.
“The goal is for civil society to work collectively to make public contracting accountable to citizens, as opposed to corrupt special interests, especially when it comes to infrastructure delivery,” said Zoe Reiter, senior project lead at Transparency International.
At a time of economic austerity, this is crucial. By 2030, close to US$6 trillion could be lost annually in the construction industry through corruption, mismanagement and inefficiency. Think of how many schools and hospitals could be built and how much public infrastructure improved with that money.
But it’s not just the public who lose when procurement isn’t clean. According to a 2013 Eurobarometer survey, more than 30 per cent of companies participating in EU public procurement say corruption prevented them from winning a contract.
We’re calling on governments and international organisations to adopt the manifesto. It has five pillars that form the core of what is needed to foster a culture of clean contracting:
- Open Contracting Data Standard (OCDS) and monitoring systems
- Independent civil society monitoring of specific projects, using tools such as an Integrity Pact
- Effective and meaningful participation by affected communities in all phases of the public procurement process, including the pre-tender phase
- A strong, professional and engaged civil society sector
- A strong and credible sanctions regime
Just to meet the United Nations’ Sustainable Development Goals (SDGs) infrastructure investments of US$93 billion each year will be needed. At the same time, the G20 has highlighted the US$1 trillion financing gap that is required to meet the global infrastructure needs. We urge our elected leaders in the G20, the Organization of American States, the EU and across the world to engage with civil society and affected communities to ensure that this money is not lost to corruption.
When large infrastructure projects are designed and implemented without an anti-corruption perspective, roads can be built to nowhere, bridges crumble, environments are damaged and communities are displaced. People’s lives are on the line.
Our work on public procurement in the EU
In 2016 the European Commission teamed up with Transparency International to pilot the use of Integrity Pacts to monitor public procurement on 17 projects in 11 Member States worth a total of over EUR 900 million. Find out more.
Image: CC0, Unsplash / Jamie Street
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