Tag Archives: monitoring

Integrity Pacts: A Contractual Approach to Facilitate Civic Monitoring of Public Procurement

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Public procurement is one of the highest risk areas for corruption. A public project contaminated with corruption is a recipe for disaster: ordinary citizens suffer from substandard facilities and services; competitive companies lose out when the bidding is rigged; and government money vanishes without making a difference. To rein in procurement corruption in, improving transparency and civic monitoring is vital. That’s why an “integrity pact” (IP)—a legally-binding contractual provision that commits all parties to comply with anticorruption best practices from the time the tender is designed to the completion of the project—can be such a useful tool.

An IP is more than a demonstration of commitment to avoid corruption practices on the part of its signatories. An IP contains obligations for bidders and government authorities, among other things, to refrain from offering or accepting bribes and to disclose all contract expenses and commissions; the IP also sets out sanctions for non-compliance, such as termination of the contract, liability for damages, or debarment from future public contracts. Perhaps most importantly, an IP creates a monitoring process where an Independent External Monitor—which can be an individual, a civil society organization, or a group with combined expertise and technical support—independently scrutinizes the deal for any anomaly or violation of the IP, and ensures proper implementation of the contract and the satisfaction of all stakeholders’ obligations. To execute these functions, the monitor is entrusted to examine government tender documents, bidders’ proposals, and evaluator’ assessment reports of the bids, to visit construction sites and contractor offices, and to facilitate exchange with the local communities and public hearings.

IPs have previously been used in public procurement projects in many countries, including Romania, Bulgaria, the Czech Republic, Slovenia, Portugal, Hungary, Latvia, Poland, Greece, Italy, India, and many others. It’s notable that many of the states that have embraced IPs are countries where governments have a long track record of corruption and abuse of power. IPs have at least three roles to play to help facilitate transparency and civic monitoring so as to safeguard the competitiveness and fairness of the procurement process:

Continue reading →

Guest Post: We Need To Talk About Donors

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GAB is delighted to welcome back Mark Pyman, Senior Fellow at the London Institute for Statecraft, who also served as Commissioner of the Afghanistan Joint Independent Anti-Corruption Monitoring and Evaluation Committee until November 27, 2017.

When it comes to fighting corruption and promoting accountable government, donors provide funds, expertise, and support, often over many years. They face many difficult challenges, and we all sympathize with the hard issues they have to contend with. Yet at the same time we have to forthrightly acknowledge that, for all their good intentions, when it comes to corruption, international donors easily become part of the problem. Donors, researchers, politicians and grantees have all been too silent on this.

Let me illustrate this with problems at one large, well-intentioned donor program in Afghanistan, the Comprehensive Agriculture and Rural Development Facility (CARD-F) Program. This Program, funded by the UK’s Department for International Development (DFID) and Denmark’s aid agency DANIDA to the tune of $120 million over two phases, was established to increase rural employment, incomes, and business opportunities through the design and implementation of projects, such as infrastructure work (such as building irrigation canals), provision of grants to producers and processors, establishment of greenhouses and poultry farms, and training for farmers.

Between March and October 2017, the Afghanistan Independent Anti-Corruption Monitoring and Evaluation Committee (MEC) made an inquiry into corruption concerns at CARD-F, based on allegations from five whistleblowers. MEC is the premier anti-corruption entity in Afghanistan, set up by Presidential decree in 2010, led by a Committee of six (three eminent Afghans and three international experts), and with an Afghan Secretariat of some 25 professional staff. It is funded by international donors. MEC found plenty of malpractice, including nepotism and cronyism in the Management Unit; multiple irregularities in the awarding of grants and procurement contracts; poor monitoring provided by expensive UK companies (that, to be blunt, were not doing their job); and international (UK) contractors with a built-in incentive to use up more of the available budget for their own “technical assistance.” MEC found that only 33% of CARD-F funds in the first phase reached the intended end users, instead of the planned 60% (the other 40% planned to going on technical assistance and administration; eventually 67%). Moreover, not one of the five separate whistleblowers whose concerns were passed to MEC felt protected enough to complain through the CARD-F program, nor through DFID or DANIDA. At least two of these whistleblowers were fired, and others felt they had to leave.

At the same time the donors vigorously opposed MEC’s plan to do the inquiry, suggesting that MEC surely had other more important priority topics to examine, and that MEC shouldn’t be concerned because the donors had already done an audit (which was not shared with MEC) in response to a previous whistleblower. Not-so-subtle pressure was applied: MEC’s own core funding, which comes partly from DFID and DANIDA, would need to be “reviewed” if MEC persisted. Ultimately, MEC had to request the President of Afghanistan to intercede, before DFID Afghanistan offered its support to MEC’s inquiry.

Any organization doing or sponsoring work in a tough environment like Afghanistan can expect to have corruption issues. But trying to hide the problem, and then to bully it away? As an anticorruption professional who has seen DFID do good work elsewhere in the world, and indeed in Afghanistan, I was really shaken. Less naïve than me, the Afghans are well aware that such internationally sanctioned malpractice is taking place, and they too see this as evidence of dishonesty and hypocrisy.

The huge disconnect between donors’ generally good intentions on the one hand and the, frankly, perverse bureaucratic politics that drives donor agencies is a known problem. Most donors know what is going on in their programs, but feel driven to cover themselves with expensive and often ineffective technical veils – fiduciary risk assessments; supply chain mapping, due diligence, layers of oversight – to protect themselves from charges of lax supervision.

An honest conversation about this is surely overdue. Here are ideas on four of the key topics to start the discussion: Continue reading →

Dispatches from the UNCAC Conference of States Parties, Part 2: International Enforcement of Anticorruption Agreements

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Last month, the UN Convention Against Corruption (UNCAC) Conference of States Parties (COSP) was held in Vienna, Austria. In addition to the formal meetings of government representatives, the COSP also featured a number of panels, speeches, and other side events, at which leading experts discussed and debated a range of anticorruption topics. GAB is delighted that Northwestern Pritzker School of Law Professor Juliet Sorensen and her student Kobby Lartey, who attended the COSP, have offered to share highlights of some of the most interesting sessions in a series of guest posts. Today’s post is the second in that series.

The COSP panel on “Corruption and International Laws and Judgments” generated candid conversations about the role of international laws and judgments in the fight against corruption. Moderated by Bart Scheffers of the Open Society Foundation, the panel included one of us (Juliet Sorensen), along with Transparency International’s Gillian Dell; the Helsinki Committee’s Harry Hummel; and France Chain of the OECD. Continue reading →

Large-Scale Land Acquisitions: Opportunities for Corruption

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Recent years have seen a significant rise in large-scale land acquisitions by foreign investors, generally for agricultural or extractive purposes. Many of these land deals, termed “land grabs,” have had injurious effects on local populations who are often pushed off of their land without their informed consent. (For a description of contemporary land grabs and a land grab bibliography, see here.) Foreign companies and governments secure the majority of these land deals in poorer countries, where large tracts of land can be purchased cheaply, and where many of the local inhabitants do not have the means to contest the deals through the legal system. The land is frequently used for agriculture or production of “flex crops” (such as soy or palm oil), which are then sold abroad, rather than to the host country. Therefore, land grabs can result in not only the displacement of local communities, but also the reallocation of these vital resources to external actors, rather than to the inhabitants of the host country.

Large-scale land deals are often facilitated by corrupt practices perpetrated by the foreign purchaser and/or the host government, through the transactions themselves or through weak institutions. Last November, the International Corporate Accountability Roundtable (ICAR) and Global Witness released a report that details the opportunities for corruption at each stage of large-scale land acquisitions, as well as the current legal frameworks for addressing this corruption. As noted in the report, corruption can occur in each of the six phases of a land deal: Continue reading →

Guest Post: 43 Government Reps Walked Into a Summit…. What Next?

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Maggie Murphy, Senior Global Advocacy Manager for Transparency International, contributes the following guest post:

International summits come and go, and all too often the promises made at these summits are quickly forgotten, lost in an online catacomb or otherwise hard to track. We at Transparency International are determined that the commitments made by government representatives at last May’s London Anticorruption Summit (648 total commitments by 41 of the 43 participating governments) must not slide into oblivion in this way. That’s why, as Matthew announced in a post earlier this month, we’ve gone through every single country statement and compiled all commitments into one central database, sortable by country, theme, and region. Our goal is for this database to be used by anticorruption advocates and activists to monitor what their countries have committed to, and whether and where they are making progress.

We’ve done our own preliminary analysis of the commitments, assessing the extent to which each commitment is (1) “concrete” (i.e measurable), (2) “new” (i.e., generated by the Summit), and (3) “ambitious” (according to country partners). We found that more than half of the commitments were concrete, about a third were brand new, and about a third seen to be ambitious by our country partners. That’s encouraging, and certainly better than I would have expected.

We’ve put together a more formal analysis here, including a description of how we came to our conclusions. Let me highlight some of the most interesting ones: Continue reading →

Watching the Watchmen: Should the Public Have Access to Monitorship Reports in FCPA Settlements?

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When the Department of Justice (DOJ) settles Foreign Corrupt Practices Act (FCPA) cases with corporate defendants, the settlement sometimes stipulates that the firm must retain a “corporate monitor” for some period of time as a condition of the DOJ’s decision not to pursue further action against the firm. The monitor, paid for by the firm, reports to the government on whether the firm is effectively cleaning up its act and improving its compliance system. While lacking direct decision-making power, the corporate monitor has broad access to internal firm information and engages directly with top-level management on issues related to the firm’s compliance. The monitor’s reports to the DOJ are (or at least are supposed to be) critically important to the government’s determination whether the firm has complied with the terms of the settlement agreement.

Recent initiatives by transparency advocates and other civil society groups have raised a question that had not previously attracted much attention: Should the public have access to these monitor reports? Consider the efforts of 100Reporters, a news organization focused on corruption issues, to obtain monitorship documents related to the 2008 FCPA settlement between Siemens and the DOJ. Back in 2008, Siemens pleaded guilty to bribery charges and agreed to pay large fines to the DOJ and SEC. As a condition of the settlement, Siemens agreed to install a corporate monitor, Dr. Theo Waigel, for four years. That monitorship ended in 2012, and the DOJ determined Siemens satisfied its obligations under the plea agreement. Shortly afterwards, 100Reporters filed a Freedom of Information Act (FOIA) request with the DOJ, seeking access to the compliance monitoring documents, including four of Dr. Waigel’s annual reports. After the DOJ denied the FOIA request, on the grounds that the documents were exempt from FOIA because they comprised part of law enforcement deliberations, 100Reporters sued.

The legal questions at issue in this and similar cases are somewhat complicated; they can involve, for example, the question whether monitoring reports are “judicial records”—a question that has caused some disagreement among U.S. courts. For this post, I will put the more technical legal issues to one side and focus on the broader policy issue: Should monitor reports be available to interested members of the public, or should the government be able to keep them confidential? The case for disclosure is straightforward: as 100Reporters argues, there is a public interest in ensuring that settlements appropriately ensure future compliance, as well as a public interest in monitoring how effectively the DOJ and SEC oversee these settlement agreements. But in resisting 100Reporters’ FOIA request, the DOJ (and Siemens and Dr. Waigel) have argued that ordering public disclosure of these documents will hurt, not help, FCPA enforcement, for two reasons:  Continue reading →

To Fight Corruption, the Green Climate Fund Should Improve the Anticorruption Mechanisms in its Accreditation Process

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The Green Climate Fund (GCF), which the UN created in 2010, seeks to marshal pledges of $100 billion per year by 2020 from wealthy nations (which have been disproportionately and primarily responsible for the world’s carbon emissions), as well as other private and public sources, to finance climate change mitigation and adaptation projects in developing nations, which bear the greater share of adverse effects from those emissions. Last March, the United States delivered $500 million to the GCF, the first installment of the $3 billion pledge the United States made as part of the COP 21 UN Climate Summit last December. Climate and development advocates hope that the GCF will support development that is both “low-emission” and “climate-resilient,” helping countries limit greenhouse gas emissions and adapt to impacts of climate change. The GCF operates principally through so-called “accredited entities”—private and public sector subnational, national, regional, and international entities, which will implement climate change programs using GCF funds. These entities are selected through an accreditation process (hence the name), which assesses their ability to manage resources against the GCF’s fiduciary principles, environmental and social safeguards, and gender policy. Specific projects are assessed against investment criteria, including impact potential, sustainable development potential, responsiveness to recipients’ needs, promotion of country ownership, and efficiency.

As with many humanitarian or development aid efforts, the GCF is not without corruption risks. Recognizing this, the GCF Board approved an Initial Monitoring & Accountability Framework for the accredited entities that manage and implement GCF projects. Yet the GCF should do more to ensure that its basic accreditation mechanisms themselves rigorously evaluate entities for their capacities not only to disburse climate funds but also to monitor and address corruption. This up front assessment would complement efforts to ensure that entities, once accredited, remain faithful to the Fund’s fiduciary principles. The following aspects of the GCF accreditation process raise potential corruption risks, and the GCF should take steps to address them: Continue reading →

Guest Post: A Behavioral Science Approach to Preventing Corruption

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Johann Graf Lambsdorff, Professor of Economic Theory at Passau University, contributes the following guest post:

Some of our current approaches to corruption prevention perform badly. One reason is that many preventive methods are built on distrust towards officials and employees, who are seen as potentially corrupt actors. Yet research in behavioral science has provided us with impressive evidence that (many) people are (mostly) trustworthy, intrinsically motivated, and responsive to encouragement, praise, expressions of gratitude, and criticism. The problem with assuming that everyone is prone to engage in corruption if not carefully monitored is not only that prevention strategies premised on that assumption are very costly, but also that such approaches can be counterproductive: The atmosphere of distrust that they create can reduce interpersonal trust, intrinsic motivation, and the self-esteem that people get from contributing to public goods and working responsibly.

Economists have labelled these adverse collateral consequences “the hidden costs of control.” In a recent paper entitled “Preventing Corruption by Promoting Trust – Insights from Behavioral Science”, I explain how taking this phenomenon, as well related insights from behavioral sciences about creating positive incentives for good behavior, can help us design more effective policies. The paper illustrates this with the help of six examples: Continue reading →

Community-Level Aid and Corruption in the Democratic Republic of the Congo

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As Rick has discussed in a previous post, one common strategy adopted by donors seeking to engage in development and humanitarian work in countries with corrupt governments is to try to bypass national institutions. Instead, they direct their efforts towards the local level, engaging with communities, local leaders, and smaller-scale NGOs. Theoretically, this approach means the money passes through fewer hands, and there are therefore fewer opportunities for some of it to be skimmed off. Furthermore, donors may believe that local institutions are less corrupt or more easily subjected to (or more responsive to) monitoring by donors or other overseers. Donors may also opt for a local-oriented approach for reasons not related to corruption, like supporting projects that are more responsive to people’s actual needs, furthering community empowerment, and building institutions.

However, recent evidence from the Democratic Republic of the Congo (DRC) indicates that a local-oriented approach has its corruption-related drawbacks. Resources channeled through national political figures may have the potential to be stolen or misdirected for personal gain, but community-driven development programs are also vulnerable to elite capture. In fact, broader research has indicated that members of community development organizations—the very people with whom donors are partnering in hopes of side-stepping corruption—are more likely to pay bribes than non-members.  Furthermore, even when donor programs succeed in creating infrastructure, they tend to fail to improve local governance, accountability, or capacity.

Still, given the pervasive corruption in national governments (in the DRC and elsewhere), and the way those in power benefit from avoiding any meaningful action against corruption, the impulse towards local-side aid is understandable. What, then, are donors to do? Though it’s impossible to guarantee positive results, there are some steps that foreign governments and NGOs can take to mitigate the risk of the money targeted locally from being illicitly diverted:

Continue reading →

Guest Post: Monitoring as a Democratic Imperative

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Professor Paul Lagunes of the Columbia University School of International and Public Affairs contributes the following guest post:

The fact the bureaucrats who populate the ranks of the public administration do not run for office poses a significant challenge to electoral democracy—a challenge that is accentuated by citizens’ inability to properly monitor their own government. Citizens, after all, dedicate a majority of their time to private affairs and are often confused, if not repelled, by the complexities of public administration. Given this principal-agent problem, what can be done to improve monitoring, fight corruption, and hold governments accountable?

I recently had the opportunity to evaluate the efficacy of anticorruption monitoring in Mexico. This research indicates that independent audits over sensitive governmental processes can boost the levels of discipline, stringency, and honesty among civil servants. Indeed, even when communities find it difficult to overhaul their governing institutions and renew and professionalize their bureaucracies, they can rely on independent experts to raise bureaucrats’ level of accountability. But the improved monitoring associated with independent audits is only when accompanied by robust oversight and accountability. Continue reading →