Guest Post: How Not To Balance Efficiency and Integrity in Public Procurement–The Case of Italy

Today’s guest post is from Roberta De Paolis, a Ph.D. researcher in criminal Law at the Sant’Anna School of Advanced Studies.

In designing an effective public procurement system, a key challenge is striking the proper balance between ensuring efficiency and promoting integrity. But emergency situations make it hard to maintain an appropriate balance, as the response to the global Covid-19 pandemic has again demonstrated. When confronted with an urgent situation, governments often allow the need for speed to trump the interest in transparency and oversight, and thus grant public procurement authorities exemptions from the ordinary rules and monitoring procedures.

If one wants to find a good example of how not to address the challenge of striking the right balance between these competing interests, one need look no further than Italy. Rather than design a system that can ensure an appropriate degree of integrity without stifling efficiency, while at the same time building in adequate flexibility to handle urgent situations appropriately, the Italian public procurement system is characterized by a set of overly rigid, stifling baseline rules, from which the government has created a set of overly broad discretionary exceptions to address situations in which the application of the usual rules is untenable.

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Guest Post: Highlights from the UNGASS Anticorruption Session Side Events

Last month, the UN General Assembly held its first-ever Special Session focused specifically on the fight against corruption. In addition to the UN General Assembly Special Session (UNGASS) itself, various governments and civil society organizations arranged various side events, held in parallel with the main UNGASS meeting, to allow activists, policymakers, and researchers to share their expertise. Today’s guest post, contributed by Michaella Baker, a JD-MBA student at Northwestern University (working in collaboration with Northwestern Law Professor Juliet Sorensen), summarizes the themes and principal contributions of three of these side events.

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Corruption at the Heart of India’s Coronavirus Crisis? Prime Minister Modi Must Answer for the PM Cares Fund

India’s unfathomable Covid tragedy has left the country gasping for breath, and no oxygen can be found. Hospitals are overrun, and are often unable to help even those lucky enough to be admitted. Desperate relatives are turning to social media and the black market for help, as beleaguered crematoriums shift from unprecedented 24/7 hours to the horrors of mass cremation to keep up with demand. In the midst of this appalling tragedy looms the question: Why was the government so unprepared? And, more specifically, whatever happened to the billions of dollars raised last year through the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (known as the “PM Cares Fund”)? 

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Guest Post: Lessons from Moldova’s Covid-19 Vaccine Distribution Scandal

Today’s guest post is from Valeria Ciolac, a member of the National Political Council of Moldova’s Party of Action and Solidarity, and a Youth Delegate of the Republic of Moldova to the Congress of Local and Regional Authorities of the Council of Europe.

Since the prospect of effective Covid-19 vaccines emerged last fall, experts have warned about the risks of corruption in the vaccine procurement and distribution process. Alas, in many countries these warnings proved prescient. My home country, the Republic of Moldova, is reeling from reports that politicians and local officials arranged for certain doses of the Covid-19 vaccine to be provided, in secret, to themselves, their family members, and their associates. Evidence of such corrupt misallocation first emerged last March, in the city of Edinet. But this was not an isolated incident. Over the last several weeks, it has become clear that even though the vaccine supply—which was procured only through donations and considerable effort—is supposed to be allocated first to high-priority groups, a group of seven hundred politicians, bank directors, restaurant owners, and others from around the country jumped in front of the line, leaving seven hundred medical workers behind.

When confronted with this evidence, the officials involved tried to explain away the diversion of the vaccines as legitimate use of excess supply. The Mayor of Edinet, for example, claimed that some medical workers chose not to get their vaccines right away, and the vaccines provided to politicians and their friends were surplus doses that would otherwise have been thrown away. But given the long history of public corruption in Moldova, and the resulting lack of trust in the state authorities, most Moldovan citizens doubt this explanation. It seems far more likely that in this case, as in so many other cases, politicians and well-connected individuals used their influence to secure vaccines that should have gone to those with greater need.

While it is tempting to conclude that such corruption is inevitable in a country like Moldova—the poorest country in Europe, and one that has long been immersed in corruption and negligence by the of public authorities—it is more useful to look closely at the Moldovan vaccine distribution system and ask whether things could have been done differently. And indeed, while there’s probably no way to prevent some degree of corruption in vaccine distribution, there are several measures that Moldova, and other countries in a similar situation, could have adopted, and should still embrace now, to minimize the risk of this sort of corruption. Continue reading

Guest Post: Corruption in Covid-19 Vaccine Distribution–Early Lessons from Brazil

Today’s guest post is from Guilherme France, a legislative assistant in the Brazilian Senate

The urgency of halting the Covid-19 pandemic, combined with the limited supply of vaccines, has increased the challenges of distributing the vaccine quickly but fairly. As others have pointed out, including on this blog, there are significant risks of corruption in the vaccine distribution process. Brazil provides a troubling illustration of this problem, with instances of corruption or other improprieties related to vaccine distribution having already sparked investigations into mayors and other local officials. For example, there have been complaints that in Manaus, a Covid-19 epicenter, relatives of a local businessman in were fraudulently appointed as employees in health clinics so that they would qualify for early vaccination. And this is but one of several cases where mayors and other local officials allegedly helped their relatives or close associates cut in the line. There have also been reported attempts to pay bribes to nurses for early vaccine access.

There has been similar line-cutting behavior on a grander scale, with various groups, such as prosecutors and judicial authorities, using their political influence and leverage to attempt (without success) to get priority status for receiving the vaccine, ahead of those, like health care workers and the elderly, who need it more urgently. On other occasions, the government acceded to the use of the “priority status” for vaccine distribution as a bargaining chip. In the midst of strike negotiations, it agreed to place truck drivers and other transportation workers ahead of the general population in the vaccination line.

This behavior, while reprehensible, is understandable. Given how hard Brazil has been hit by Covid-19, access to the vaccine is a life and death matter, and the temptation to cut the line, for oneself or a loved one, is just too great. This is why increased control and transparency for vaccine distribution should be a priority for governments at all levels. Continue reading

A Covid-19 Checkup: How the IMF’s Transparency Measures Have Fared So Far

With a trillion dollars in lending capability, the International Monetary Fund (IMF) is one of the best-equipped institutions to deal with the Covid-19 public health and financial crisis. Since March, the IMF has met an “unprecedented number of calls for emergency financing” with “unprecedented speed and magnitude,” through renegotiations of rapid credit facilities, refinancing initiatives, and debt relief assistance for more than 100 countries, totaling over $100 billion in disbursements so far. In the early days of the pandemic, there was a great deal of concern among anticorruption advocates over the way these emergency funds would be monitored (see collections of pieces here and here). The IMF’s initial approach generally did not impose formal transparency or governance requirements as a condition for receiving emergency Covid relief funds. Rather, the IMF chose to rely more on after-the-fact safeguards: recipient countries were told to spend as needed but to “keep the receipts.”

The IMF’s approach is understandable. As Jason Keene argued on this blog, the IMF at that early stage faced a trade-off between speed and transparency, and may have reasonably concluded that it would not be advisable to bargain over transparency measures if doing so would slow the deployment of much-needed funds. This conclusion, as a May 2020 IMF publication revealed, was influenced by the IMF’s experience with the 2014-2016 Ebola outbreak in West Africa: Many, including a prominent public health journal, blamed the IMF for the lethality of the Ebola epidemic, provoking a backlash against what was seen as unduly burdensome loans, a focus on austerity, and the underfunding of medical systems in vulnerable countries (see here, here, and here). Given this background, it’s understandable that the IMF might, on balance, favor speed over transparency, providing loans for Covid-related public health and budgetary shortfalls without much conditionality.

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Fast-Tracking Justice: India’s New(ish) Strategy to Curb Corruption

How do you deal with the problem of more than 6,000 corruption cases and nearly 5,000 criminal cases pending against politicians, some dating back almost 40 years? The answer, according to India’s Supreme Court: put a one-year time limit on cases involving politicians.

This decision, which was issued this past September in a “public interest litigation” case, seeks to increase public confidence in the judicial process and to make the legal system more effective in addressing India’s pervasive political corruption. Corrupt politicians in India are typically able to slow down legitimate prosecutions, for example by exploiting India’s complex court filing procedures, leading the cases to drag on for years or even decades. This delay increases the chances that key evidence will be lost or obscured—a process that corrupt defendants can and do help along by bribing, threatening, or even killing witnesses. By preventing cases from ending in conviction, corrupt politicians have created a de facto culture of impunity. The problem is particularly acute in the current parliament, where 43% of new members elected in 2019 had pending criminal charges. The Supreme Court’s order seeks to address this and other problems.

This isn’t the first time that the Supreme Court has ordered fast-tracking. The Supreme Court previously called for time-bound trials against politicians back in 2011, during the tenure of the corruption-riddled Congress Party, yet the case backlog remained. There is reason to believe, though, that this time is different. The current ruling Bharatiya Janata Party (BJP) swept into power in part by making anticorruption efforts a priority, and there are signs that the BJP’s general commitment to anticorruption may be having a meaningful impact in the context of the one-year order. Following the Supreme Court’s ruling, the highest courts in (most) states submitted action plans for dispatching cases, and India’s Solicitor General said that he is “100% serious” about completing trials within a year. Despite certain serious challenges to effective implementation of this new fast-tracking program, India’s renewed commitment to moving the wheels of justice more quickly could prove powerful in holding corrupt politicians accountable and restoring public confidence in the judiciary.

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Guest Post: IMF General Counsel Rhoda Weeks-Brown on the Fund’s Role in Promoting Governance, Transparency and Accountability

Since 2018 the IMF has laid greater stress on governance and corruption issues in its annual reviews of member countries’ economic performance and when extending loans to stabilize their economies and restore economic growth. GAB is delighted to publish this post by Fund General Counsel Rhoda Weeks-Brown explaining why the organization strengthened its focus on governance and corruption and what it is doing to help member countries promote good governance and combat corruption.

The COVID-19 pandemic is a crisis like no other. It has brought about tragic human loss and suffering, coupled with disruptions in the social and economic order on a scale that we have not seen in living memory. The IMF’s response to help its member countries manage the crisis and save lives and livelihoods has been similarly unprecedented, including in the sheer speed and size of that effort. In only seven months, the institution has provided lending assistance of more than US$100 billion to over 80 countries, including over US$31 billion in emergency financing to 78 countries (as of December 4, 2020). We can all agree that the dire economic effects projected to result from the COVID crisis—including declines in living standards, increases in inequality, and a reversal of the decades-long declining trend in global poverty—have made the fight against corruption more urgent now than ever before.

Despite the speed of the IMF’s response, we have focused on safeguards to ensure that appropriate governance, transparency and accountability measures are in place even for our rapid emergency financing. This financing supports countries’ commitments to level up healthcare spending and provide income support for affected households and businesses. Our advice to countries has been “spend what you need, but keep the receipts.” Governments in turn have made firm commitments to address governance, transparency and accountability.

The IMF is also providing technical assistance to countries to help them make progress on these commitments. This reflects a clear understanding that improvements in transparency and accountability are driven by changes in institutional practices across multiple institutions involved in budgeting, spending, monitoring the use of public financial resources and responding to instances of misappropriation and misbehavior.

Governancekey to economic success

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Corruption and the COVID-19 Vaccine: The Looming Problem of Distribution

From the earliest days of the COVID-19 pandemic, activists and analysts have called attention to the significant corruption risks associated with the response to both the public health crisis itself and the economic disruption it has caused. Anticorruption advocates have highlighted, for example, the corruption risks associated with the distribution of relief funds and personal protective equipment, and have emphasized the need for reforms like enhancing transparency, requiring audits, and ensuring protections for whistleblowers. (For samples of the discussion of the need for anticorruption measures in coronavirus response, see here, here, here, and here.) Yet there has been surprisingly little sustained discussion or planning concerning a specific issue which, while still prospective, is of pressing global importance: the inevitable corruption risks that will be associated with the distribution of a COVID-19 vaccine, if and when such a vaccine becomes available.

This is not to say that there has been no exploration of the subject. Commentators have discussed the difficulties of ensuring that a vaccine is distributed equitably, as opposed to simply being given to the most affluent, and have called attention to the problems of black markets and price gouging that are likely to emerge once vaccines are available. There has also been some general, abstract discussion of the fact that the distribution of a COVID-19 vaccine, once one exists, has significant potential for both grand and petty corruption. Absent from the discussion, though, has been the development of concrete plans for incorporating anticorruption measures in vaccine distribution—plans that take into account the inherent logistical challenges. The World Health Organization (WHO), to its credit, has released a seventeen-page plan for fair allocation of a COVID vaccine, which discusses detailed measures to ensure that vaccines are distributed fairly. However, the WHO plan devotes little more than a page to promises of “strong accountability mechanisms” in the governing bodies to “ensure protection against undue influence.” The WHO does note that the primary role of its own Independent Allocation Validation Group is to ensure that proposals from the vaccine Allocation Taskforce remain “transparent and free from conflicts of interest,” but while this sort of internal monitoring is laudable, the WHO plan conspicuously lacks any further guidance or recommendations on appropriate anticorruption measures once the vaccines are handed over to their allocated countries.

Although the timeline for a vaccine remains uncertain—and there’s no guarantee that a vaccine will be available any time soon—it would make sense for both international organizations and national governments to identify the most likely corruption risks associated with vaccine distribution and to begin developing safeguards to mitigate those risks. While there are many possible corruption risks associated with vaccine distribution, the two most significant are diversion of vaccines and extortion. Let’s examine each in turn:

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Guest Post: Promoting Procurement Transparency During the COVID-19 Pandemic in Brazil

Today’s guest post is from Guilherme France, the Research Coordinator at Transparency International Brazil (TI Brazil), together with TI Brazil researchers Maria Dominguez and Vinicius Reis.

While the new coronavirus has slashed through Brazil at alarming rates since March, an old problem has undermined the government’s response: corruption. A considerable portion of the government money spent to deal with the pandemic may have already been lost to corruption and waste. To give just a few examples: in Amazonas the state government bought inadequate medical ventilators from a wine store; In Santa Catarina, the government spent over US$5 million on 200 ventilators that were never delivered; and in Rio de Janeiro, fraud led to losses of more than 700 million reais in the hiring of a company to construct emergency hospitals, most of which were never delivered.

As many have pointed out, the corruption risk in procurement is heightened during an emergency, because traditional procurement rules are relaxed or circumvented to allow goods and services to be purchased in a timely fashion. In Brazil, the problem is compounded by a lack of centralization—with over 5,000 independent government entities (federal institutions, states, and municipalities) competing with each other and international buyers for the same equipment.

In this challenging context, efforts to increase the transparency of government procurement and to promote social accountability are essential. To promote greater integrity and transparency in COVID-19 emergency procurement, last May Transparency International Brazil (TI Brazil) and the Federal Court of Accounts jointly published a set of Transparency Recommendations in Public Procurement. These recommendations inspired a methodology for assessing how well government entities were implementing transparency mechanisms to make emergency procurement data available in their websites. (The assessment method examines four dimensions: (1) the presentation of detailed information on suppliers and contracts, (2) the publication of data in open formats that allow complex analysis, comparison, and reuse; (3) information on the government’s own legislation regarding emergency procurement and related matters; and (4) the quality and availability of channels for citizens to make Freedom of Information requests and report on irregularities related to COVID-19 procurement, as well as the existence of committees, with civil society organizations, to monitor emergency procurement.) Using this method, TI Brazil has created an index on Transparency Ranking on Efforts Against COVID-19, which ranks government entities on a 0-100 scale and also assigns a designation of Poor, Bad, Regular, Good or Great, depending on how well the entity performs on the four dimensions of transparency described above. The initial index included an assessment of 53 local governments (states and state capitals), and monthly evaluations have been undertaken since.

The results are impressive so far. Between the first and the third rounds, for instance, every local government analyzed improved its score, and in the most recent round, 33 governments (20 capitals and 13 states) earned a transparency grade of “Good” or “Great”. The average scores increased from 46 to 85 (capitals) and from 59 to 85 (states). Continue reading