Esther Smith – Embassy of the Kingdom of the Netherlands, U.S.A.

In June, the Anticorruption for Development (AC4D) Global Forum was held at the World Bank Group’s headquarters in Washington D.C.  Aware of corruption’s high societal and environmental costs, the World Bank has reaffirmed its commitment to anticorruption as a development priority and seeks to foster partnerships with other stakeholders working towards better governance and integrity. Equally important to the Netherlands, the event was co-hosted by the Netherlands Ministry of Foreign Affairs, and well-attended by an audience from all over the world and various organizations.

Corruption is a huge detriment to people, business, institutions, and nations. Unfortunately, it still often occurs. Corruption basically amounts to a tax on citizens, as it carries significant costs for societies – even more so for those in developing countries and/or crisis, thereby negatively impacting development. It affects safety, justice and public projects (e.g., procurement). It reduces private sector investment, breeds distrust, and threatens democracies.

There are many forms of corruption, ranging from petty fraud to unfair or rigged processes, all the way up to so-called ‘state capture’. Sometimes instances of corruption are evident and easy to spot, other times it is more difficult. When corruption is suspected, the question arises what to do about it, and how to report it? When reported, will it be taken seriously and those at fault be held accountable? Will the person or organization reporting be safe and not negatively impacted in any way? How to establish or restore trust in institutions? How do we more strategically combat corruption in the future? These were some of the main issues discussed during the Forum.

The World Bank Group considers corruption a major challenge to its twin goals of ending extreme poverty and boosting shared prosperity by 2030. As public procurement is an important avenue for achieving development goals, particularly by International Organizations and Multilateral Development Banks, it was extensively discussed during the Forum. Beyond its economic function, procurement can also have a social function, helping to accomplish sustainability goals and providing equal opportunities for women and minorities. However, there needs to be a level playing field and trust so that companies feel compelled to partake in a procurement process.

It is estimated that 20-30% of public expenditures and approximately 3-8% of procurement costs are lost due to corruption, and even more in emergency situations. Furthermore, when surveyed, a significant number of companies have admitted to making “informal agreements or payments” to succeed in certain markets. Clearly the problem is not only from the supply-side but also from the demand-side, which emphasizes the role that the private sector can play. But because corruption tends to benefit those in more powerful positions it needs to be tackled from within, in the first instance on the supply-side. This can be difficult due to fear and lack of leverage, which makes transparency and help from the outside and other stakeholders, i.e., International Organizations, media, civil society a crucial part of the process.

To adequately uncover and prevent corruption, transparency and accountability are pivotal. People need to have trust in their governments, institutions, and the business processes in which they participate. Moreover, there need to be adequate ways to report corruption and the will, and power, to hold people accountable.

Significant strides have been made in recent years, through comprehensive policies, safeguards, and risk management. Moreover, increased transparency has played a crucial role, e.g., via disclosure mandates, reporting mechanisms and requirements around beneficial ownership. Additionally, technological advancements such as e-Procurement systems that capture data, provide insights on public procurements, and encourage best-practices have proven to be very helpful. The function of “GovTech” that increases digitalization, simplifies processes and minimizes “human loopholes” generally leads to more efficient and secure practices – also in procurement.

Although we often tend to focus on the procurement bidding process (procedure, selection of bidders, type of contract, award criteria etc.), during the AC4D Forum it was emphasized that attention should also be paid to the contract management phase, until the project is completed. It can be more difficult to detect corruption in this phase and is sometimes overlooked. However, this is where unnecessary delays, waste, quality manipulation, renegotiations, various inefficiencies, and malpractice can take place. Furthermore, the question should be asked if there truly was a need for the project (e.g., via a ‘needs assessment’), and if so, whether it has been adequately completed. Unfortunately, there isn’t much data on these facets due to lack of standardization and reporting. Even though digitalization and data can help, it is also important to have more boots on the ground to retain some flexibility and room for discretion on a case-by-case basis. This means more oversight throughout the project and qualified experts who, of course, need to be fair and unbeholden to anyone. Furthermore, they should be able and willing to act (review, stop the process, reprimand etc.) in instances of corruption. This requires resources and well-functioning institutions for which a strategic approach is needed, also with the help of International Organizations like the World Bank (e.g., via capacity building).

Practically speaking though, when participating in a procurement process, all parties involved must remain diligent and attuned to the applicable rules (the procurement framework, bidding documents etc.). Everyone’s responsibilities and dealings should be monitored along the way, until the project is completed. In the event something seems amiss, you should be willing to address this and even report it through the formal channels if warranted. Understandably, one might be hesitant to report misconduct, but accountability and consequences are necessary to rectify matters, foster trust in the system and prevent corruption in the future. If this truly is too prohibitive, one may consider contacting the Embassy, other stakeholders, or a trusted ally to discuss an appropriate course of action (on your behalf).

All in all, the take-aways from the AC4D Forum were encouraging in that there is broad and international concern for the topic of corruption and its impact on society. Many advancements have been made so far. With increased emphasis on global development, equality, transparency, and a level playing field in procurement it hopefully will continue to improve. Digitalization and data collection methods can also be useful tools and are becoming more common. Additionally, the role of independent media and an engaged civil society cannot be underestimated. Overall, strong institutions, simplified processes, increased transparency and holding people accountable all contribute to the fight against corruption.

As emphasized throughout the Forum, combatting corruption requires continued attention and collective action from a coalition of stakeholders, but it can be done!

 

For further reading on the AC4D Forum & this topic see:

Anticorruption for Development Global Forum

 Combating Corruption (worldbank.org)

Enhancing Government Effectiveness and Transparency: The Fight Against Corruption (worldbank.org)

Integrity Vice Presidency | World Bank

Global Public Procurement Database (worldbank.org)

www.Transparency.org

#AC4D  #UnitedAgainstCorruption  #Procurement