On a road project, corruption of different types may be committed by a variety of organisations and individuals in various phases of the project and by a variety of methods. (Road Projects: How does corruption occur?) Such corruption occurs for a variety of reasons, some specific to the nature of road projects, others more general. (Road Projects: Why is there corruption?) Given the variety of mechanisms by which and reasons for which corruption may occur on road projects, there is no single means by which corruption on projects may be limited. A number of methods must be used. Whilst these will not stop all corruption on a project, they will significantly reduce it.
Steps to be taken at international and national level to prevent corruption
There are a number of factors, at international or national level, which contribute to corruption on road projects. These factors include:
At international level
- Lack of inter-governmental co-operation
- Lack of pro-active steps by donors and funders to limit corruption on projects
- Lack of co-ordinated action between international contractors and professional associations
- Lack of sufficient debarment of corrupt companies
At national level
- Corruption in government in both developed and developing countries
- Lack of consistent anti-corruption policy on the part of governments
- Insufficient prosecution of corruption
- Insufficient reporting of corruption
- Lack of publicly available data on corruption convictions
- The vulnerability of project owner officials to corruption
- The vulnerability of other government employees to corruption
- Lack of sufficient data regarding national road networks
- Lack of sufficient data regarding comparative costing of road projects, materials, and methods
There are international and national initiatives which are focusing on the above problems and it is not within the scope of this section to consider what steps may be taken to address them. This section looks only at how to prevent and detect the corruption that occurs on specific projects.
Steps to be taken at project level to prevent corruption
The extent to which the following steps are implemented will depend on the cost of such implementation relative to the value of the project. On small projects, it would not be cost effective, for example, to carry out extensive due diligence on all major project participants, or to appoint an independent assessor full time to monitor the project. The steps would need to be scaled down to suit the size of the project.
(1) Publication of project details
Greater transparency as to project details and project participants would reduce corruption. The following information should be published to the public, as far as possible, in national newspapers, notifications and on the internet. In developing countries, newspapers and notifications to towns and villages may be an important means of communication to the many citizens who may not have access to the internet but who may be in a position to observe and report on corruption in projects. The internet is the ideal means of communication for detailed documentation which would be too lengthy or expensive to publish in newspapers or in hard copy. The published details should include:
- Location of the road project
- Reasons for the project
- The routes to be taken by the intended road
- The villages, towns and residents affected by the proposed project
- Planning permissions granted
- Details of opposition, if any, to the project
- Cost of the project
- Design and construction method for the project
- Names of all major project participants (to include the project owner, the main contractor, the designer, the certifier, major sub-contractors and suppliers, and agents)
- Project accounts
- Regular up-dates on significant events on the project, such as delays, major variations which have increased the project cost, or other matters which may significantly affect cost or progress or which may be of interest to local residents
- Name and contact details of the independent assessor appointed, if any (see below)
- Guidance as to the types of corruption that may occur on the project
- Requests that any corruption observed or suspected should be reported to the independent assessor
- Assurances that any such reports may be made anonymously or that the identity of the person making the report will be kept confidential.
(2) Due diligence by lenders and all major project participants
It is essential that each major project participant should assess both the project and other major project participants in order to determine the potential for corruption on that project. Such major project participants would include:
- the project owner,
- tenderers for the main contract
- tenderers for the major sub-contracts
- the engineer, and
- the certifier.
Such an assessment would require each major project participant to make enquiries in relation to the project and other project participants in order to identify any factors which may suggest that the project or those participants may be vulnerable to corruption. Such inquiries may include questions to determine whether:
(a) The country and the government of the country in which the project is to be located has a reputation for corruption;
(b) The project is bona fide and not corrupt in its purpose or design;
(c) There is any family or business connection between any of the following:
- the shareholders, directors or other employees of one major participant; and
- those of any other major participant; and
- any member of the government of the country in which the project is to be located.
(d) Any agents or other representatives have been or will be appointed, on suspicious terms, by any participant or by its subsidiary or associated companies, consortium or joint venture partners, or major sub-contractors.
(e) Any participant, or any of its shareholders, directors or employees, has previously been investigated, prosecuted or convicted for corruption;
(f) Any participant does not have in place internal procedures for preventing corruption.
Prospective lenders to the project should make the above enquiries of all major project participants.
Where initial enquiries raise concerns as to potential corruption, then further enquiries should be made to ascertain whether such concerns are justified.
(3) Transparent procurement procedures
Procedures for pre-qualification and tender should be used which are transparent and fair in respect of all pre-qualification applicants and tenderers. However, in addition to specifying the use of such procedures, it must be ensured that they are properly implemented. One of the duties of the independent assessor (referred to below) is to monitor whether this is done and, if not, to make reports to relevant parties such as the project owner, lenders or donors, the designer, if any, involved in the pre-qualification and tender process, and all pre-qualification applicants and tenderers.
(4) Anti-corruption agreements
There should be contractual anti-corruption commitments provided by all major project participants in relation to:
- The pre-qualification and tender phase of each major contract; and
- The execution phase of each major contract.
At the pre-qualification and tender phase, such commitments will need to be set out in an anti-corruption agreement relating specifically to those phases. Every pre-qualification applicant and tenderer for that contract should be required to sign such an agreement with the project owner and the designer, if any, who will be involved in the pre-qualification and tender process.
At the execution phase, an anti-corruption agreement should be signed by the project owner, the appointed contractor and the certifier.
The anti-corruption agreements may include, as appropriate, the following anti-corruption commitments:
(a) Not to pay or receive bribes.
(b) To use objective pre-qualification and tender procedures (a commitment given by the project owner and designer).
(c) To use objective and fair procedures for certification (a commitment given by the certifier).
(d) Not to submit fraudulent claims.
(e) Not to conceal defects.
(f) To agree to the appointment of an independent assessor whose duty will be to assess the extent to which the parties comply with their obligations under the anti-corruption agreements.
(g) To report corruption to the independent assessor and to the criminal authorities.
(h) To provide all co-operation necessary for the independent assessor to carry out his duties under his appointment agreement.
The anti-corruption agreements should contain enforceable penalties in the event of breach, including the right to terminate the project contract and/or claim damages.
(5) Independent Assessor
An independent assessor should be appointed who would monitor the pre-qualification, tender and execution phases of the project in order to assess whether there is corruption. A person of suitable qualification and integrity should be appointed. Preferably, he should be independently accredited and should also be a member of a recognised professional association.
For the purposes of monitoring corruption on the project, the assessor should have, with or without prior notice, open and unlimited access to the site and to the books, records and staff of all major project participants. He should attend all pre-qualification and tender selection meetings, tender openings, and project progress and claims meetings. He should receive and assess reports relating to corruption on the project, and he should submit regular reports to all major project participants. Where corruption is detected, he should refer the matter to the criminal authorities, as well as to all relevant project participants, lenders and donors.
The scope of work of the assessor will depend on the overall value of the project. It may be appropriate on a major project to appoint an assessor who is employed to work full time on the project and who may be permitted to appoint assistants where this is warranted by the complexity of the project. On the other hand, for a smaller project it may be appropriate to appoint an independent assessor part time whose duty will be to attend the tender openings and to make, throughout the duration of the project, random inspections and audits with or without prior notice to the project participants.
In addition to his monitoring role, the very presence of the independent assessor and the threat of random inspections by him will act as a powerful deterrent to corruption. It is highly probable, therefore, that the savings made by the reduction in corruption will more than off-set the cost of the assessor.
It may be practical for the assessor to be appointed and paid by the project owner. It is of course possible that the project owner could appoint an assessor who is biased in favour of the project owner. It is also possible that the independent assessor could himself be corrupt. This risk will be reduced to the extent the independent assessor is recommended or nominated by an independent body or is independently accredited.
A reporting structure should be established for the project whereby any company or individual can make confidential and safe reports of suspected or actual corruption.
The sequence of reporting could run as follows:
- Individual employee to
- Employer to
- Independent assessor to
- Professional bodies, criminal authorities and other project participants
Where there are fears of retribution, for example, where an individual suspects corruption within his own company, there should be provision for an individual to by-pass his employer and to report confidentially to the independent assessor. The independent assessor should then investigate all such reports and, where he believes that there is fairly strong suspicion of corruption, he should report the matter to relevant professional associations and the criminal authorities, while ensuring that sufficient care is taken to protect the identity of whistle-blowers.
(7) Neighbourhood Corruption Alert
A system should be established whereby the local residents in the area surrounding the road project are formally notified of the project, and are provided with contact details for the independent assessor, and an outline account of matters which should arouse their suspicions of corruption. They should then be encouraged to report any suspicious circumstances to the independent assessor or to a locally appointed ombudsman. Such reports could be particularly helpful in detecting corruption in planning matters, material deliveries, defective workmanship and extortion of local staff.
(8) Anti-corruption codes of conduct and management programmes
All major project participants should be required to implement an internal anti-corruption code of conduct and management programme for the duration of the project.
The anti-corruption code of conduct should be designed to inform individual employees:
(a) that they must not commit any corrupt acts in relation to the project;
(b) of the types of acts that could constitute corruption;
(c) of the criminal and civil consequences for an individual and his employer should he commit corrupt acts; and
(d) that they must report suspicions of corruption to the independent assessor.
The purpose of the anti-corruption management programme is to ensure that the anti-corruption code is complied with. Consequently, the programme should:
(a) appoint a senior officer with responsibility for requiring and monitoring compliance with the anti-corruption code;
(b) ensure that all employees are aware of and receive training in relation to the anti-corruption code;
(c) ensure that all consultants employed by the company, for example, to prepare claims, are aware of the company's anti-corruption policy;
(d) ensure that steps are taken to require the company's joint venture partners, agents and sub-contractors to comply with equivalent commitments;
(e) institute internal whistle-blowing procedures;
(f) institute an internal monitoring and audit function to ensure that the code is
Catherine Stansbury, Global Infrastructure Anti-Corruption Centre