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

107 Pages·2007·0.6 MB·English
by  OECD
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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 FraeTmea AInexnnnihLgtelTpatdgeeShhict-eg a eetheOscrigr ndafantoiu tiignnA ndsyrltlr g e cio VutsCiren t eAmptiioxon ohsPttItr s niaLuhoocru tulAefaonst b g ptrnu rBhil psriotdccicuisL oovr ha pEipbPelnm itocgcra rinaoooiertreiktomnncsmes ud ,iurs.e ae nn sr nPraesdusevt.rm cs- aooaTb ihelmaflahr snenbabeootladsre :t it k hi byGnofiinrienpnggaot rgih eulcyoiIn nlrda ridengiet nl e aahvpPm gtinptaoireordo uaritdtnhttc by im,eavtt l iishaailccon easot e n ip ltoPr iw engfrtnurkoyheaossb crlnl:m loalu aiiacswu rnAsea ndsP tm d ti tronecoeoeneno rcnZiw snnuct ,d grc(a l2eaiu;asg 0mncenah0dt net su7 odnoots)uf tfn eh dft( eho2ttierhoew0sse 0 vi. mit5nasohsr)p ipioardordueevosrve wea tncyht te oirrs ublic Procurement, METHODSACTORSA CGCEGGECCEGENNOOOOONNOOOTTVRRVRTTEERVEVRERRERERRRUEUERPPNRRNPUPRRURRAATTPPPININNISPNISOORRTCEEACATNN I IEIENSINCSOC O GGEOOEEECCNOONNNRR EEV GVTGTRR EEEE EE UUOCOCRRNRRNPPNPNPOVOVTTTTRARAIIEEEORORIENNISSRRRNNRCRCREE N NEPE UGUPGCC RAAOEOERPOPONNNVINVRTIRTSTESTERCRCIIEREEROOEUURRENEN P NPNGPPAA G TTRCRCN N OIIOEOIEIOCSCOSOVNNNNEEVEERR E TETGCEGCERRREENRNOOOOUUNTRTRVRRVNEEEPREPRAPPARRRRUUTTNRRPPNNNPPIIRRIACIOAOTTCSSIINISNISEOONNEEECEECN N E CECGECC GE GEOOOENNOOOONNRRRTTRVTVVTRREEEEREUEUERRRRRRPUPRRUPNPTTPPPRNNRAIPIOORRINITSASATNNCIIEIENSINSO E O GGCCEEC CNOOENOO ENEV GVGRR EETE E RROCOCRENRNUURNNOVOVTPPTPAAETEETRRRENNIIRORRIORCRCRSNNNNPEEEUUP RAAGEGCERPPNNONIONOTITSTSTVRVCCIIEEEEOEORERRERER U NNGPPNN G PRCRCA AOTOEIEINSNOISOOVNNCEVECRNRE EETETCC R RR GEEREOOEUUONNRNRRRNVTTPRPRAPPAEEEUUTTNRRRRRNPPIIPNPICIOOTTCSSRRAIIEOONNIENEEISSN NC E ECGEC GE E GGGOGN NOOOOOEOORTTNVRVVVVVEETEEREEEERRERRRRRURRRUNNNNPPPPNANAPAARRRNNTNANATICCISIICCNSINSOEEEOEEE E C CN ECENEE NENEO GNGN TT www.sourceoecd.org/emergingeconomies/9789264013940 ND www.sourceoecd.org/governance/9789264013940 C www.sourceoecd.org/transitioneconomies/9789264013940 O -FTwSohow:Horu wSsrmc.eTseo oCwOreuQiEt rEhicCn e=faDUooc reVicmscXe dats^h.tsoiYeo rt UngoO: / aE9abC7ll o8DOu9’Ets2I2 SC 8t6oBh 4D2niNs00 l i b01n9a73o7ew 89o 0al-4k6i9br s0d21r a- -oP6wrny4i - nlo0inn1f ie3nb 9gso4 ho-so0ke usrvl,d ipc ueesr iaeon dtdhic ifsar ellsien aktnr:i da lss taastiks tyicoaulw rd liabwtraabwraiasn.e,os . e cd.org -UNTERMEASURES EGEC E GECCGNNONOOGNOOOTTVRVTTEOERREV ERRERERRRVUERPPRNRNPERURURAAPTPIRINSPNSPNIRORENCECTATN I IEESICASINC O O GOEEONEECNONNRNR CEGGVTRTR EEEEEE UUOOCRRRNP NPPCNVPVOTTTTRRAIEIGOEOOREIENISROSRNNRRRCREEV N NE RGP GUPECC AARO OUREROPONNVNNVIRPIRTESAESTCRCRITRNREEOEUUENRIECNO P PNPA GEA GTCTCRNN N IIOEOOEIOCOCOS NNEENNVEVETRR NEEETEGEGCRRRNRENTROOOUPCUTTERVNRVNREEPEOPERRPARIARRSRUTTPPRRPNNENNPIRIRR ORAIOACTCCISISNSNIIUNOONESEEECE CRN P E EGECECCECRG T GOOEONUEGNOOIOOVNRNOPRTTOERRVTRVTTRNEREEEIEURUVERONRRRRR PPENRUEUPANPTPTP RRNNNRAIPIPGOORRICNEINSTTOSATNNNIECIEESIEVAS IN TOE OG GEERCEENCE CRONONENROO P CNVTNEGVGPR R REEAEETERE RORORRCNREIIN NUSUSPNRCNCVVOPEPTRTPAEEAEOET TIRERN ENCS IRIEROGIOCRRCERORSNNNENN EERROPUTPC AREAEGUERGOCVRPRUNNNONOORIEPITPPTSTSVRRVCECRRETITEEEEOUREIRINREIEORNSRPUO PNPN EGNTN GTPARCRCN AI AETOOCIONIGESNOSNOI ROONOEENVCECVCRRRN P V NEEGEETCECR RERR GROOETREOU REUCUIOVNRENRNPRNSNEVTPRTOTPRRAPAEAREEIEUUNTOTPRRNR RNRNPPCGINIPANRPORTIOTCEC SRNORAIIGI OUNONEISCNEEEISOSVNNPN ECE E EVEC EEC G TE TG GEEGNEGRCN OOIORONOEROOOOTNNTVTNRVRPVVVRNEEEAEETAREREERRRRNRERIR RRNSURUPN RUCNNP NEPPRPACEANPPA ATRIRNR NSNETNAEITICOCIEISCN CSISINE NOEEOETCEE E CE E NEOCNE E RNNEGOGNN PTT R Bribery in Public Procurement METHODS, ACTORS AND COUNTER-MEASURES ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation 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, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. 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. Applications should be sent to OECD Publishing [email protected] or by fax 33145249930. Permission to photocopy a portion of this work should be addressed to the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, fax 33146346719, [email protected] or (for US only) to Copyright Clearance Center (CCC), 222 Rosewood Drive Danvers, MA 01923, USA, fax 19786468600, [email protected]. 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 4 –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 5 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 6 –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 7 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

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Public works contracts mean big business. From road-building to high-tech communication infrastructure, public procurement averages 15% of GDP in OECD countries--substantially more in non-OECD economies--and it is a major factor in the world trade of goods and services. Given the growing complexity
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