Guest Post: High Level Reporting Mechanisms — A Promising New Tool To Fight Corruption

GAB is delighted to welcome back Gönenç Gürkaynak (Managing Partner at ELIG Attorneys-at-Law in Istanbul and 2015 Co-Chair of the B20 Anti-Corruption Task Force), who, along with his colleagues Ç. Olgu Kama (ELIG partner and B20 Anti-Corruption Task Force Deputy Co-Chair) and Burcu Ergün (ELIG associate), contributes the following guest post:

One of the most promising new tools for eradicating public sector corruption, especially in public procurement, is the so-called High Level Reporting Mechanism (“HLRM”), a concept that began under the 2012 G20 process and that has been advocated by various international institutions (mainly by the Basel Institute and the B20). An HLRM provides a reporting channel that companies can use to report corrupt behavior they encounter during a public process, such as a tender. An HLRM presents an alternative mechanism to companies who need to deal with corruption allegations swiftly, rather than waiting for the outcome of a criminal investigation. An HLRM can also provide an enforceable independent mechanism to resolve commercial disputes in countries where criminal law enforcement is unduly influence by politics. To be clear, an HLRM does not aim to replace formal, judicial reporting channels. Rather, the HLRM is used for rapid response and is advantageous particularly in situations where a swift clarification is critical for business, as when allegations of corruption affect a tender process that is still open. By quickly resolving such claims, an HLRM can both deter potential perpetrators and will generate more public trust in the procurement process.

There are no strict requirements as to how an HLRM should be established or what authority it should have. Indeed, any HLRM would need to be adapted to the local environment of each jurisdiction, taking into account the circumstances and necessities of the relevant state. That said, an effective HLRM should have certain core features: it should be prevention-oriented, and swift in its response to reported issues so that it can save the integrity of the public transaction at issue. The HLRM should be hierarchically above the public agencies it regulates, such that those agencies should be bound by the decisions made by the HLRM. If the HLRM is not a public body, this can be achieved through contracts, or by regulations governing public procurement. In order for HLRM to be effective, the contractual or other arrangements through which the HLRM is established should authorize the HLRM to investigate allegations and to enforce disciplinary measures. Accordingly, in the context of a public procurement process, the HLRM should be empowered, for example, to determine the outcome of the procurement or disqualify bidders. (The allegations and the corresponding findings could also be sent to the attention of the relevant public institutions.) The HLRM should guarantee confidentiality and anonymity, to ensure that parties to a public procedure that encounters corruption will be willing to report the issue without fear of retaliation. In addition, there should be adequate guarantees of the independence of the HLRM.

HLRM mechanisms can and should be developed and expanded gradually over time. As in other public-private partnerships, trust is an important element to the success of HLRM. Initially, trust in the HLRM is likely to be low, so the scope of the HLRM should be limited. To start out, the HLRM should be established as a small unit. However, as the people’s trust in the process grows, both the HLRM’s size and the scope of the projects it supervises can get larger, with more and more processes made subject to the HLRM. Likewise, though existing HLRMs are voluntary mechanisms, if HLRMs prove successful, some states might consider establishing mandatory HLRM processes regulated by legislation.

Turkey is a good example of a country that would benefit from an HLRM. Turkey ranks 64 out of 175 countries on Transparency International’s 2014 Corruption Perceptions Index and Freedom House ranks the Turkish press as “not free” and Turkish internet as only “partly free.” Given this opaque institutional environment, an HLRM would be welcomed by multinational and local companies wishing to do business in Turkey. Such an HLRM—which would not be a public institution, but rather an independent entity available to those who wish to use it, much like an arbitrator—would introduce more transparency, foreseeability, and fairness into the public procurement processes. Given the inclusive nature of HLRM, such a mechanism could be established under an independent professional association. In order to ensure HLRM’s independence, the HLRM could be funded on a project basis by the private parties wishing to make use of the mechanism.

Although an HLRM is a useful tool, there are several problematic areas in relation to their application. One concern is that the necessary guarantees of confidentiality for whistleblowers may conflict with local laws. (For example, Article 278 of Turkish Criminal Code provides that those who do not inform the relevant authorities about crimes that are being committed may themselves be subject to imprisonment of up to one year.) Another concern would be that any report to public authorities might lead to an investigation in which the identity of the reporter is disclosed. Also, companies might reasonably fear that competitors who are likely to lose a bid will use the HLRM to manipulate the system. These difficulties are serious and need to be addressed, but despite these issues, the HLRM holds great promise, and may generate trust not just in public processes, but the markets themselves, helping to ensure a transparent, level playing field and a market suitable for investment.

2 thoughts on “Guest Post: High Level Reporting Mechanisms — A Promising New Tool To Fight Corruption

  1. Pingback: High Level Reporting Mechanisms — A Promising New Tool To Fight Corruption | Anti Corruption Digest

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