Fighting Procurement Corruption: the Essential Role of Bid Challenge Systems

Ensuring firms that loose the competition for a government contract can challenge the result is a critical part of the fight against corruption in public procurement.  A losing bidder will have lost the chance to make a profit and will have invested time and money in preparing its bid.  It thus has not only a strong motive for contesting a decision it believes tainted by corruption but the expertise to do so.  Bid challenge systems complement procurement oversight by civil society.  Indeed, they may even be a more powerful tool.  Whereas civil society monitoring typically relies on public-spirited volunteers unfamiliar with the technical aspects of the procurement, bid challenge systems harness firms’ self-interest and technical knowledge in service of ferreting out procurement corruption.

Transparency International’s 2014 volume on combating procurement corruption and the OECD’s 2016 procurement integrity handbook both note the importance of bid challenge systems but offer little guidance on what makes for an effective system.  Here are five questions anticorruption advocates can ask to assess the effectiveness of their nation’s bid challenge system: Continue reading

New Case Studies on Specialized Anticorruption Courts in Indonesia, the Philippines, Slovakia, and Uganda

As is well-known, many countries around the world–especially developing and transition countries–have established specialized anticorruption institutions with prosecutorial and/or investigative functions. These agencies have attracted a great deal of attention and analysis (including on the blog–see, for example, here, here, here, and here). Many countries have gone further, and established specialized courts (or special divisions of existing courts) to focus exclusively or substantially on corruption cases. These specialized anticorruption courts have gotten relatively less attention, but as proposals for such courts have become increasingly prominent in many countries, there is a growing need for close analysis of these institutions.

To meet this need, the U4 Anticorruption Resource Centre has a new project, under the direction of Senior Advisor Sofie Arjon Schutte, on specialized anticorruption courts (a project in which I have been fortunate enough to participate). The first set of publications to result from this project are a series of short case studies on four of the existing special courts, in a diverse set of countries: Indonesia, the Philippines, Slovakia and Uganda. Readers who are interested in this topic might want to click on the links. Also, in addition to these four country briefs, there’s a longer U4 paper in the pipeline (coauthored by Sofie and myself) that discusses and compares a larger set of special courts around the world. I’ll do a post announcing that as well, as soon as it’s ready. And if anyone out there has information and insights about any special courts in other countries, please feel free to send it!

Lessons from a Pathbreaking DfID Anticorruption Project in Tanzania

Britain’s Department for International Development is funding thoughtful, ambitious projects in Ghana, Tanzania, and Uganda to help those governments step up the enforcement of national anticorruption laws.  What makes the three thoughtful is their recognition that improving anticorruption law enforcement requires the simultaneous strengthening of the entire criminal justice chain – from the entities that turn up possible corruption violations to the agencies which investigate these leads to prosecution services and courts – together with measures to improve  collaboration among them.  What makes the three projects ambitious is that they provide assistance from one end of the chain to another;  building capacity in a single agency can be challenge, building it in several simultaneously even more so.

Yet if developing countries are to do better at catching, prosecuting, and convicting corrupt officials and those who corrupt them, more programs like these three, whether donor- or self-funded, are needed.  It does no good to improve the ability of an anticorruption agency to investigate corruption if prosecutors don’t have the skill to present a convincing case.  And no matter how skilled the prosecution, it will be for naught if the courts don’t understand the law or the evidence.

The 4 ½ year, £11.3 million Tanzania project, dubbed “STACA” for Strengthening Tanzania’s Anticorruption Action, was the first of the three DfID projects to tackle the criminal justice chain in one fell swoop, and along with the U4 Anticorruption Resource Center and REPOA, a Tanzanian think-tank, I reviewed its progress at roughly the half- way mark in implementation.  While we trust close study of the review is merited, below I summarize three points that came out of it that I think are particularly critical, both for developing country policymakers looking for ways to enhance the enforcement of their nation’s anticorruption laws and for donor organizations wanting to help them. Continue reading

Coordination by Legislation: Is Regional Anticorruption Legislation in the East African Community a Good Idea?

This past September, at a meeting of the East African Association of Anti-Corruption Authorities, Daniel Fred Kidega, the Speaker of the East African Legislative Assembly (EALA) announced that the regional legislature planned to consider a series of anticorruption and whistleblower bills (also reported here). (The EALA is the legislative body of the East African Community, a treaty organization to which Burundi, Kenya, Rwanda, Tanzania, and Uganda are members.) According to the Speaker’s remarks, “[t]he Laws passed by EALA supercede those of the Partner States on matters within the purview of the Community.”

Details on the legislation are scant, and movement on this proposal does not seem imminent. (Drafts of the proposed legislation are not available on the EALA website, nor could I find them through other sources. And at the mid-October EALA session, anticorruption does not appear to have been on the agenda.) Furthermore, the EAC Treaty does not provide the EALA all of the legislative power the Speaker’s statements suggest, because, according to Article 63 of the EAC Treaty, acts of the EALA only become effective law for member states if each of the five Heads of State “assents” to the measure. Nonetheless, given the interest in East Africa and elsewhere in greater international cooperation on anticorruption efforts, it’s worth reflecting on whether regional anticorruption legislation such as that proposed by Speaker Kidega is a good idea.

I tend to think not. While regional coordination, particularly through conventions, can be an effective way to strengthen anticorruption efforts (as Rick previously discussed in a comment on this post), it is not a good idea in every circumstance (as Matthew noted in a recent post in the context of proposals for a ASEAN Integrity Community). Although the EAC might be able to perform a helpful goal-setting and coordinating role (something akin to an UNCAC or African Union Convention on Preventing and Combating Corruption), the proposal for the EALA to enact more binding regional anticorruption legislation involves more risks than benefits.

Continue reading

Why Context Matters: The Failure of the Ugandan Revenue Authority to Curb Corruption

In his 2013 volume explaining why donor-supported reforms often go awry in developing states, Kennedy School Professor Matt Andrews lays the blame on the failure to appreciate how political imperatives, patronage networks, cultural practices, and other elements of local context affect the way reforms are implemented.  While Andrews offers telling examples of how ignorance of context doomed reforms in Argentina and Malawi, the failure to stamp out corruption in Uganda’s revenue collection service provides an even more vivid illustration of the way the very different context in a developing state can cause “best practice” reforms to fail.  The analysis is taken from Odd-Helge Fjeldstad’s classic account of the attempt to reform tax collection in Uganda, “Corruption in Tax Administration: Lessons from Institutional Reforms in Uganda,” chapter 17 of Susan Rose-Ackerman’s 2006 edited volume, International Handbook on the Economics of Corruption.

In 1991 revenue from taxes and customs duties in Uganda were seven percent of GDP, an astonishing low figure even on a continent where tax evasion was the norm.  Under pressure from the IMF, the World Bank, and other donors the then recently installed government of Yoweri Museveni took decisive action.  Following what was then considered best practice for boosting revenues and cutting corruption in a revenue service, the government made the revenue department of the Ministry of Finance into an autonomous agency.  Independent agency status allowed the Uganda Revenue Authority to implement a number of reforms to reduce corruption.  Salaries were raised above civil service levels and strictures on firing non-performing workers removed.  As a new agency, all employees were considered new hires and had to prove themselves during a probationary period; as a result almost 250, or 15 percent, of the old revenue department staff were weeded out.  In addition, “clean” expatriates were hired into senior management positions, and measures were taken to improve morale: offices were upgraded, working conditions improved, and training provided.  All in all, the Uganda Revenue Authority was considered a model for how to create an efficient, non-corruption revenue collection agency.

During the first years of its existence, the authority’s performance suggested these reforms were succeeding.  Revenue collection as a percentage of GDP improved and perceptions of corruption declined.  These early indicators of success, however, soon began to decline.  Forty-three percent of businesses surveyed in 1998 reported paying a bribe to a Uganda Revenue Authority employee; in March 2000 President Museveni termed the authority a “den of thieves,” and in 2003 its former head listed corruption as “problem number one” in the organization.  A Commission of Inquiry of C corruption in the Uganda Revenue Authority was appointed in 2002, and although its report was never released, leaks suggest the commission found massive corruption in the ranks. Continue reading

Combating Corruption in Uganda or Merely Displacing it: The World Bank’s Public Expenditure Tracking Survey

A World Bank-initiated effort to reduce corruption in school funding in Uganda is widely, and rightly, celebrated for its results (click here and here for background).  In the early nineteen nineties on average 87 percent of the monies the Ugandan central government budgeted for textbooks and other school supplies “leaked out” somewhere between departing the Finance Ministry and arriving at the school house front door.  Yearly data revealed that 73 percent of the schools received less than five percent of the monies to which they were entitled, and only ten percent received more than half.  The 1996 Bank project had an immediate effect on the rate of losses.  By 1999 the government found schools were receiving on average 95 percent of what they were supposed to receive, and a 2002 World Bank study likewise showed a sharp drop in fund leakage.

The dramatic improvement is attributed to the enormous publicity the data on losses garnered.  Parents were outraged and the government and donor agencies embarrassed.  Within the development community, the Uganda Public Expenditure Tracking Survey, as the work to dig out and publicize the loss data became known, has been enormously influential, the story becoming a parable for how to fight corruption.  A Uganda-like PETS project is now routinely prescribed for attacking corruption in public expenditures, and a Google search on “Uganda PETS” yields over 100,000 hits and returns some 20,000 citations on Google scholar.

But for all the attention the effort has generated, there is evidence that it may not have had any impact on the level of corruption in Uganda.  It is possible that all it did was force those raking funds off the school fund program to turn elsewhere.  The Uganda PETS thus may simply have displaced the corruption in the school funding program rather than ending it. Continue reading