Bribery in Public Procurement: Methods, Actors and Counter-Measures

107 Pages·2007·0.6 MB·English

by  OECD

Bribery in Public Procurement
METHODS, ACTORS AND COUNTER-MEASURES
Public works contracts mean big business. From road-building to high-tech
Bribery in Public
communication infrastructure, public procurement averages 15% of GDP in OECD
countries – substantially more in non-OECD economies – and it is a major factor in
Procurement
the world trade of goods and services. The large volume of contracts and the very
high stakes often involved – in terms of both money and prestige – are the driving
force behind thousands of potential suppliers’ vying to win. And this can open the
METHODS, ACTORS AND
door to corruption. Left unchecked, a culture of corruption can take root, sabotaging
a country’s financial and political well-being. COUNTER-MEASURES
Given the growing complexity of bribe schemes in today’s globalised markets, the
problem is how to identify corruption in public procurement so governments can B
r
work toward effective prevention and apply sanctions if necessary. This report ib
e
provides insights on all three fronts. Based on contributions from law enforcement r
y
and procurement specialists, the report describes how bribery is committed through in
the various stages of government purchasing; how bribery in public procurement is P
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Bribery in Public
Procurement
METHODS, ACTORS AND COUNTER-MEASURES
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
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respond to new developments and concerns, such as corporate governance, the
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provides a setting where governments can compare policy experiences, seek answers to
common problems, identify good practice and work to co-ordinate domestic and
international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, the
Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland,
Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand,
Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey,
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Also available in French under the title:
Corruption dans les marchés publics
MÉTHODES, ACTEURS ET CONTRE-MESURES
© OECD 2007
No reproduction, copy, transmission or translation of this publication may be made without written permission.
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3
Foreword
A major part of the world’s exports of merchandise and commercial
services are linked to public procurement. In OECD countries, public
procurement accounts for 15% of GDP; in many non-OECD countries, that
figure is even higher. But while public procurement can mean valuable
business opportunities, it is also exposed to bribery. Such corruption
underminesmarkets and welfare, and exertsacorrosiveeffecton societyby
eroding trust in leaders, institutions and business itself. Left unchecked, a
culture of corruption can easilytake root and is hard to remove. The OECD
has been at the forefront of global efforts to fight corruption and bribery in
public procurement. Raising anti-bribery standards in public procurement
wasrecommendedbytheOECDaslongagoas1994.Acoherentstrategyis
necessary in an effective anti-corruption campaign, and the OECD Anti-
Bribery Instruments are the tactical tools developed to carry out this
strategy.
Thispublicationexaminesbriberyinpublicprocurementfromanumber
of vantages. It summarises the techniques and means used to bribe,
examines the relationship between bribery and other crimes as well as the
motivations of those offering and accepting bribes. It also offers insights
into the prevention, detection and sanction of bribery. Finally, pertinent
casesonwhichtheoutlinedobservationsarebasedarealsoprovided.
In January 2007, the Working Group on Bribery agreed that the
following typology of bribery in public procurement should be used in the
review of OECD anti-bribery instruments. It was also proposed that the
study serve as training material for procurement administrators and law
enforcement agents worldwide. In addition, governments should circulate
thistypologytoraisepublicawarenessonbribery.
The work on bribery in public procurement is the result of a
collaborative effort of experts from many countries, observers from
international organisations, delegates to the OECD Working Group on
Bribery in International Business Transactions, and the OECD Anti-
Corruption Division. The typology builds on discussions among experts
present at a seminar held in Paris in March 2006. The seminar brought
BRIBERYINPUBLICPROCUREMENT:METHODS,ACTORSANDCOUNTER-MEASURES–ISBN978-92-64-01394-0- ©OECD2007
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–FOREWORD
together law enforcement officials, procurement specialists and related
professionals from 12 countries – Argentina, France, Germany, Greece,
Mexico, the Netherlands, Norway, Portugal, Spain, Sweden, United
Kingdom, United States – as well as representatives from international
organisations and multilateral development banks. Nicola Ehlermann-Cache
of theOECD managed theproject and is the lead authorof this publication.
She benefited from Helen Green’s editorial suggestions and Patrick
Moulette’spolicyguidance.
BRIBERYINPUBLICPROCUREMENT:METHODS,ACTORSANDCOUNTER-MEASURES–ISBN978-92-64-01394-0-©OECD2007
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Table of Contents
ExecutiveSummary......................................................................................9
Introduction................................................................................................13
PartI
AnalysisofCorruptioninPublicProcurement
Chapter1 PublicProcurementRules,ProceduresandPractices.......17
1.1. Procurementframeworks..............................................................17
1.2. Corruptionrisksinthetenderingprocess ....................................19
1.3. Otherrisksinrelationtotendering...............................................25
Chapter2 VulnerabilitiesRelatingtoProjectSize,Sector
orTenderingAdministration.................................................27
2.1. Contractsize.................................................................................27
2.2. Sectorrisks...................................................................................27
2.3. Otherareasatrisk.........................................................................29
Chapter3 LinkstoOtherOffences........................................................31
PartII
AnalysisoftheActorsEngaginginBribery
andTypicalCorruptionAgreements
Chapter4 PartiesInvolvedinBribery..................................................37
4.1. TheBriber.....................................................................................37
4.2. Intermediaries...............................................................................38
4.3. TheBribee....................................................................................40
4.4. Thirdpartybeneficiaries...............................................................41
4.5. Othersinvolvedininternationalprocurementcontracts...............43
BRIBERYINPUBLICPROCUREMENT:METHODS,ACTORSANDCOUNTER-MEASURES–ISBN978-92-64-01394-0- ©OECD2007
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–TABLEOFCONTENTS
Chapter5 ContentoftheBriberyAgreements.....................................45
5.1. Viewpoint:thebriber....................................................................45
5.1.1. Motivationstoengageinbribery.......................................45
5.1.2. Expectedreturns................................................................46
5.1.3. Advantagesoffered,promisedorgiven.............................47
5.1.4. Organisationofthebribepayment.....................................48
5.2. Viewpoint:thebribee...................................................................50
5.2.1. Motivationstoengageinbribery.......................................50
5.2.2. Returnsinexchangeforanadvantage...............................52
PartIII
Preventing,DetectingandSanctioningBribery
inPublicProcurement
Chapter6 PreventiveMeasures.............................................................55
6.1. Publicnoticeandtransparency.....................................................55
6.2. Trainingofprocurementpersonnel..............................................56
6.3. Goodpractices..............................................................................56
Chapter7 Controls..................................................................................59
7.1. Internalcontrols............................................................................59
7.2. Additionalcontrols.......................................................................61
Chapter8 DetectionMechanisms..........................................................63
8.1. RedFlags.....................................................................................63
8.2. Facilitatingandencouragingreporting........................................63
8.3. Teamwork.....................................................................................64
Chapter9 Investigationandsanctions..................................................67
9.1. Effectiveregulationsandsanctions..............................................67
9.2. Multi-disciplinaryinvestigations..................................................68
9.3. Internationalharmonisationandco-operation..............................71
BRIBERYINPUBLICPROCUREMENT:METHODS,ACTORSANDCOUNTER-MEASURES–ISBN978-92-64-01394-0-©OECD2007
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TABLEOFCONTENTS–
PartIV
TenAnonymousStudiesonBriberyinPublicProcurement
Templateforthedescriptionofthecasesofbribery
inpublicprocurement..............................................................................74
I. Aseniorcivilservantandasubcontractor fromanotherstate..........75
II. Briberyrelatingtopublicprocurement withinalocalauthority.......77
III. Briberyrelatedtoprocurementswithinaninternational
aid-organisation.................................................................................80
IV. Fraudulentbidevaluationbyan“independentconsultant”
ininternationallimitedbidding..........................................................83
V. Awardofaconsultancycontracttofellownational
inexchangeforbribes........................................................................85
VI. Susceptibilityofinternationalbidderstoinfluencepeddling
andcoercioninbidtendering.............................................................87
VII. Collusivebiddingandoverpricingininternational
shopping/internationalpricequotations.............................................90
VIII. Preferentialtreatmentinexchangeforgratuities
andfamily-memberemployment.......................................................93
IX. Bribesinexchangeforawardingcontracts........................................95
X. Bribesfromcontractortoincreasequantityofwork.........................97
AnnexA TheOECDAnti-BriberyInstruments:
HowTheyAddressPublicProcurement................................99
BRIBERYINPUBLICPROCUREMENT:METHODS,ACTORSANDCOUNTER-MEASURES–ISBN978-92-64-01394-0-©OECD2007