Taming Technical Corruption is Beyond Politics
Posted on March 22nd, 2015

By Dr. Chandana Jayalath

Well planned, properly maintained, safe roads are critical for economic growth. The roads sector was the major target for development financing over the latter part of the previous regime. While road projects have had consistently positive development results, fraud, corruption, and collusion plagued the entire sector chaotically. From high ranking officials diverting funds, a known fact is that corruption takes place in contracting firms offering bribes for new jobs and technical officers approving bills on a commission. On one side, this is extortion where some ministers were heard of taking 10 to 15 percent of the awarded contract prices as bribes. Though the devastating impacts include increased project costs and technically poor products, we find no criminal prosecution, fines, or blacklisting so far in the pursuit of good governance. Coupled with the deliberate failure to act on corruption charges against the ministers and state officials and their cronies, a question arises as to why the general public should shoulder these pains any longer. While corruption is very difficult to trace mainly because the involved parties only deal with hard cash, it has become a ‘technical’ cancer not easily detectable when it is connected with the supply and demand side of the construction means, processes and procedures.

In project identification, corruption can occur where decision takers choose a project primarily for their own illicit profit. This may occur, for example, where an airport project is commissioned when it is not necessarily a national priority. Also, a power project could be approved while imposing tariffs far in excess of the population’s ability to pay back. In project financing, corruption can occur where project owner or funding agency corruptly secures a financing arrangement for the project, by way of bribery or fraud. For example, a bank may pay a bribe to a senior official of the project owner, possibly through an agent, in return for the bank being awarded the contract to finance the project at enhanced interest rates. A representative of the funder may be entitled to a performance bonus if a funding transaction is completed. In order to ensure that he receives bonus, he may conceal adverse project data which would have prevented the funder’s board from approving the contract. Further, the project owner may pay a bribe to the funder’s consulting engineer to issue an engineering report which conceals adverse site, social or environmental data in relation to the project. The funder may then make a decision on the viability of the project on the basis of false advice.

In planning and design, the project owner may bribe a local authority official in order to obtain planning permission. A government official may extort bribes as a condition of his approval of the project, for example, he may require cash payment, shares in the project owner, or the use of his own company to provide construction services or supplies to the project owner. On the other hand, a bidder may bribe the consulting engineer to specify a design which improperly favours that bidder over the others. For example, a certain technology which is only possessed by one of the bidders may be specified, even though other technologies may be preferable or cheaper. This would normally result in those bidders who do not possess the specified technology being kept off the pre-qualification list, or being rejected as non-compliant at tender stage. A tenderer may make a donation to the ruling political party, in return for which a party official ensures that the tenderer wins a contract, or obtains a preferential treatment.

Technical evaluations are processes that make it possible to evaluate the technical performance of any type of material, equipment, or product, and determine if they are suitable for their intended use.  The idea behind the technical evaluation is to make sure the item under scrutiny has a level of technical suitability that meets basic standards, and thus ensures that the item will perform within the expectations of the user. Quite often, there remains a broad overarching interpretation when it comes to technical matters that only a similarly situated professional can argue against.

During the execution, a bidder may have bribed the project owner’s representative to persuade him to award the contract to the bidder. These two parties may also have agreed that the cost of the bribe would not be included in the tender price, but would be fraudulently included in the cost claimed for a large variation during execution of the project. Deferring recovery of the cost of a bribe until after the appointment of the contractor can be an effective means of concealment, since there is normally no competitive tender for variations, and post-contract award variations attract much less scrutiny and publicity. A contractor may bribe the project owner’s representative to persuade him to issue an unnecessary variation which materially increases the contractor’s scope of work and which has an inflated price. A contractor may bribe the engineer to persuade him to issue an extension of time to the contractor, which is not properly due. A contractor may bribe the project owner’s quantity surveyor to persuade him to approve the interim bills. A contractor may bribe the project owner’s works inspector to persuade him to approve defective or non-existent work. Conversely, contractors may agree with contract administrators to account for off-site materials which are not properly designated and set aside for the project in question. They may also offer bribes to facilitate approval of claims for additional money, or time where such claims are not properly justified.

At the end, corruption is concealed to try to avoid detection and prosecution. For example, a bribe paid to have an inflated contract claim approved must remain secret otherwise the contract claim will be rejected. A bribe paid to secure planning permission must remain secret otherwise the planning approval will be set aside. The payment of a bribe may be made direct by the payer to the ultimate recipient who executed the dishonest act. However, it is common for a bribe to be paid through intermediaries, so as to make it more difficult to detect that a bribe has been paid. A company bidding for a contract which wishes to hide the payment of a bribe may appoint an agent who has contacts with a representative of the project owner or with the government of the country concerned. The company will enter into an agency agreement with the agent which purports to be an agreement for legitimate services. However, the scope of those services will often be false or exaggerated and the size of the payment due under the agreement will often be significantly in excess of the value of the legitimate services specified in the agreement. The payment may sometimes be expressed as a percentage of the contract price and the agent will normally receive the payment when the company is awarded the contract. The agent may then pass the whole or part of the payment to the representative of the project owner or government who has dishonestly ensured that the company would win the contract. The payment is often made in foreign currency into an offshore bank account.

Under circumstances, how corruption has been tamed in other countries offers us few key lessons in recent times. Oman brought in tougher powers to clamp down on corruption after it signed up to the UN Convention against Corruption. The Sultanate has seen a number of high-profile corruption trials in recent years– including one which saw the founder of the country’s biggest publicly-listed construction company, Galfar, sentenced to three years in jail. The first and foremost is therefore the establishment of rule of law. Justice should be seen to be done” is not a term in law which should be taken lightly. What it means is that, the public needs to see justice done or they will feel that the system is failing them. The whole validity of the justice system is based on the public’s consent to justice served. The second approach is the establishment of good governance. Uganda adopted a system of democratic decentralisation to improve the systems of governance. They considered that devolution best serves enshrined after the Constitution of the Republic of Uganda (1995) and the Local Governments Act, 1997. Nigerian engineers are currently preoccupied with finding ways to curb the growing corruption and excessive involvement of politicians in infrastructure projects.

The third approach is to foster an ethical culture.  Involvement of engineers, equally with other allied professionals, in corruption with politicians was causing more harm than the monetary values revealed in media. It could not be possible for politicians to steal government funds via projects without an engineer’s signature, which must always appear on such projects. If practitioners uphold, at all times, the dignity, standing and reputation of the profession, then it may well be difficult for the politicians to play dirty tricks with public money. In nutshell, professionals carry moral responsibilities to those held by the population in general and in society because professionals are supposed to be capable of making and acting on informed decisions in situations that the general public cannot. They are trained to produce certain outcomes which take moral precedence over other functions of society. Professionals must take the rod and guide politicians in the right strategic direction. Professional institutes therefore have a key role in regulating the conduct of members on the basis of peer judgment. Instituting due diligence in the supervision and execution and instigating clear sanctions for non-compliance and, most importantly, effective enforcement procedures are ethical obligations on the part of any professional.

Transparency International (TI) believes that corruption on construction projects can only be eliminated if all project participants co-operate in the implementation of effective anti-corruption actions which address both the supply and demand sides of corruption. These participants include governments, funders, project owners, contractors, consultants, and suppliers, and more importantly, the professional associations. Considering the number of project participants, it is important that broad reform approaches are taken to reduce the extent and impact of corruption. These include transparency, participation, and competition, reduced discretionary powers, improved financial management, post project review and extended auditing. Greater transparency can make a significant contribution to reducing corruption. Promoting greater transparency around the actions of officials creates disincentives for them to engage in corrupt transactions and also raises citizens’ awareness on the quality levels of the goods and services they should receive. Increasing the amount of information such as public accounts, budgets and annual reports available to the public can also reduce corruption to a considerable extent.

 

3 Responses to “Taming Technical Corruption is Beyond Politics”

  1. Christie Says:

    Namaste: Dr. Chandana, when it comes to issues like graft, bribes, corruption, fraud etc. one medicine or injection is not going to bring a cure. Just look at the people who have been targeted as corrupt by examining the complains made by the people of the island to all kinds of investigators and law enforcement instruments. Almost all of them are against non Indians, how come Indians in the island are so clean. Transparent International should study this and you should too. Our problem is we are still a colony and a dominion of Indian Empire. The worst form of corruption in the island nation is the destruction of non Indian businesses and entrepreneurs by the Indian Imperialists. This started with 1956 Banda who nationalized emerging Sinhala businesses while leaving Indians untouched, in fact providing them with incentives. How come all these non Indians are running the economy of the Island? Jai Hind

  2. Lorenzo Says:

    That GON SHOT naked actor MP has gone crazy over what he (rather she) calls corruption.

  3. Independent Says:

    Lorenzo,
    But the corrupt lot is still having parties and they are worse than heshes.

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