Phnom Penh (Cambodia), 17 March 2021 - Accounting for an average of 15-30% of GDP in many countries, procurement is a highly lucrative form of government expenditure, which is highly vulnerable to corruption globally. According to UNODC’s Guidebook on Anti-Corruption in Public Procurement, an average of 10-25% of a contract’s value may be lost through corruption, amounting to hundreds of billions of dollars worldwide per year. In Southeast Asia, public procurement likewise constitutes a major risk area for corruption. Over 2020, around 40% of official corruption complaints reported in the region related to public procurement.
Under Article 9 of the United Nations Convention Against Corruption (UNCAC), States pledge to establish procurement systems “based on transparency, competition and objective criteria” that serve to prevent corruption. Provisions include the public distribution of information relating to procurement procedures and contracts, the establishment of selection criteria in advance, an effective system of review and appeals mechanism, and integrity measures for procurement personnel.
To strengthen measures against corruption in public procurement, UNODC held a training from 17 – 19 March 2021 for 38 officials from 5 departments of Cambodia’s Anti-Corruption Unit, in Phnom Penh. The sessions looked at common trends, ways to assess risk and technical measures to strengthen prevention frameworks.
Officials Develop Risk Assessments to Detect Corruption in Public Procurement
Key messages discussed in the training include:
Each phase of the public procurement process is associated with corruption risks
The public procurement process can be broken down into three phases: pre-tender, evaluation and award, and post-tender (see below). Common corruption practices can be grouped around each of these phases, leading to the development of detailed risk assessments that allow for the issuance of precise prevention measures at each stage.
Slide from Lucio Picci Summarizes the Stages of Public Procurement
Each public procurement phase is commonly associated with a series of paper trails – online or offline – that enable auditors to assess procedural integrity. Corruption tends to create distortions in the consistency of this paper trail when viewed as a whole, public officials should therefore be capable of identifying these discrepancies (or red-flags) in order to prevent and uncover corruption schemes.
The application of data analytics for identifying corruption need not be expensive
The role of data analytics in detecting corruption – the subject of a recent UNODC webinar and study – is gaining traction across Southeast Asia. While many such methodologies may be technically complex, the training emphasized that statistical analysis can be used to identify corruption red flags in ways that are simple and inexpensive.
The training included an example (below) of how red flags can be set up to detect sharp increases in instances of contract splitting, whereby a sum of money is disbursed in a series of smaller amounts in order to remain beneath the threshold at which the publication of the tender is required. A spike in the number of public contracts granted just below the threshold may indicate that officials are trying to give contract to specific companies avoiding the public tender, possibly against the payment of bribes.
Slide by Lucio Picci underlines the simplicity of basic red flag approaches to detect sharp increases in contract splitting
Open data is key to participatory monitoring
One difficulty that investigators face is establishing in a short timeframe whether the costs of goods and services purchased by the public administration are in line with market rates – if they are not it could imply collusion between public officials and companies to inflate prices. This can be particularly challenging in the case of long-term projects, whose value may only become clear closer to the completion date.
The training emphasized that, among the various benefits of an open data approach is the opportunity to open up the fight against corruption to multiple stakeholders. One key example of this participatory strategy is civic monitoring, which enables ordinary citizens to assess the value of goods and services in relation to the price paid for them by the public administration. To harness the full power of civic participation, citizens may be engaged as early as the planning phases of public procurement, to help ensure that corrupt behaviour does not go escape detection.
This article is part of activities made possible with the support of the UK Government.
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