TACKLING DEMAND SIDE CORRUPTION

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TACKLING DEMAND SIDE CORRUPTION

• BIMILACI 2007
• Washington, D.C., May 10 - 11, 2007
• Emmanuel L. LOMO

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OUTCOMES

• Participants will be presented
• The four elements of unethical behavior described
  by the AfDB Procurement Rules
• Provisions made by the IFI Anti-Corruption Task
  Force

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OUTLINE

• Definitions
• Supply and Demand?
• Ethics
• Elements and Examples
• Policy Reference
• Penalties and Consequences
• Institutional Measures
• IFI Anti-Corruption Task Force
• Recapitulation/Conclusion

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SUPPLY DEMAND?

• Essentially two sides of same coin
• It takes two
• For there to be CORRUPTION, there has to be a
  Corrupter and a Corrupted
• Corruption as Additional Cost of doing business
• Transparency International Reports
• OECD/DAC Web Site
• Supply and Demand?

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ETHICS

• Seeks to understand and to determine how human
  actions can be judged as right or wrong.
• Is about what ought to be, not what is.
• Is based on theory.
• Consequentialism
• Deontologism
• Natural Law
• Virtue

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ELEMENTS

• Corrupt Practices
• Fraudulent Practices
• Collusive Practices
• Coercive Practices

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CORRUPT PRACTICES

• Offering, giving, receiving, or soliciting,
  directly or indirectly, of anything of value to
  influence the action of a public official in the
  procurement process or in contract execution.

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MANIFESTATIONS/EXAMPLES

• Money
• Enticement
• Gift
• Excessive hospitality

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FRAUDULENT PRACTICES

• Misrepresentation or omission of facts in order
  to influence a procurement process or the
  execution of a contract.

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MANIFESTATIONS/EXAMPLES

• Qualification/Experience
• Eligibility
• Manipulation of facts
• Specifications/TOR

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COLLUSIVE PRACTICES

• Scheme or arrangement between two or more
  bidders, with or without the knowledge of the
  Borrower, designed to establish bid prices at
  artificial, non-competitive levels.

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MANIFESTATIONS/EXAMPLES

• Geographical Market Segmentation
• Industry Market Segmentation
• Restricted Bidding
• Accreditation

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COERCIVE PRACTICES

• Harming or threatening to harm, directly or
  indirectly, persons, or their property to
  influence their participation in a procurement
  process, or affect the execution of a contract.

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MANIFESTATIONS/EXAMPLES

• Cronyism
• Directives to Evaluation Committee
• Syndicate action
• Physical violence

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POLICY REFERENCES

• Bank Rules
• Goods and Works
• Consultancy Services
• Standard Bidding Documents and Requests for
  Proposals (RFPs)
• Borrowers Laws/Regulations

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PENALTIES/CONSEQUENCES

• Rejection of proposal for contract award
• Cancellation of the portion of loan relating to
  the contract award
• Sanction the firm or the individual
• Bank right to inspect firms account relating to
  the particular contract
• Declaration of illegibility to participate
• Undertaking to observe the countrys laws against
  fraud and corruption

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INSTITUTIONAL MEASURES

• The Bank in November 2005 created Anti-Corruption
  and Fraud Division (OAGL.2)
• Includes telephone HOTLINE
• Protection of Whistle-Blower

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IFI ANTI-CORRUPTION T.F.

• Task Force 18 February 2006
• Framework Joint Statement of Heads of IFIs AfDB
  ADB EBRD EIB Group IADB IMF WB Group
  Singapore, 17 September 2006
• Corruption undermines sustainable economic
  growth, and is a major obstacle to the reduction
  of poverty

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IFI ANTI-CORRUPTION T.F. Ctd

• Uniform Framework for Preventing Combating
  Fraud and Corruption
• Standardized definitions of fraudulent and
  corrupt practices their investigation
• Common principles/guidelines for investig.
• Exchange of information (confidentiality)
• Integrity/due diligence principles, on private
  sector lending/investment
• Mutual support regarding compliance and
  enforcement actions

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IFI ANTI-CORRUPTION T.F. Ctd

• Principles and Guidelines for Investigations
• Preamble
• General Principles
• Definitions
• Rights and Obligations
• Procedural Guidelines
• Investigative Findings
• Referrals to National Authorities
• Review and Amendment
• Publication

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RECAPITULATION/CONCLUSION

• Four elements of unethical behaviors
• Corrupt practices
• Fraudulent practices
• Collusive practices
• Coercive practices
• IFI Anti-Corruption Task Force

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TACKLING DEMAND SIDE CORRUPTION

• Thank you.