An Integrity Pact: Snuffing out bribes

Getting rid of
corruption

Assuming that there really is this strong pressure to bribe, can anything be done about it? The usual answer is, “You’ll never get rid of corruption.”

 “To succeed in business you have to be prepared to bribe.” Is this true? Many people think so. Some even go further and say that, once people don’t ‘overdo it’, it’s not really a problem.

It gets things done. It’s an inevitable and tolerable cost of doing business.And when it comes to getting new business, many will say that you cannot avoid ‘offering inducements’ in one form or another because that’s what your competitors are doing.

And that’s probably true. But it is also true that you can at least reduce it and, in some cases, prevent it. The Hong Kong Independent Commis-sion Against Corruption (ICAC), when it was proposed in the late seventies, was greeted with some scepticism in what was then considered one of the most corrupt societies of East Asia. People said that ‘ICAC’ really stood for ‘Interfering with Chinese Ancient Customs’. But it really worked. Some years later, Hong Kong managed to build a state-of-the-art airport involving thousands of contracts with no evidence of corruption  in the award process and very few problems in the execution. Maybe if we had such a commission in Trinidad and Tobago there would have been no need for a commission of inquiry into our own airport project.

Most firms, whether foreign or local, would prefer to do business in an environment that is free of the pressure to bribe. Most would prefer not to have the high cost of bribery affecting their bottom lines. And surely they would prefer not to run the risk of prosecution. For some foreign firms, this risk is double as the laws of their home countries make it a crime to bribe local officials. So they are not comfortable doing business in places where corruption appears to be a way of life.

There are plans to set up an ICAC here. If it is half as successful as the Hong Kong Commission, it will go a long way to cleaning up the business environment. This will not be an easy or inexpensive task. But, as the Attorney General is reported as saying, “The price we have to pay to clean up the Augean stables is great but necessary.” She is also reported as noting the very important point that we cannot rely solely on legislative measures.

A Preventative Pact

And there are other measures available almost immediately. We do not have to wait on an ICAC. Without making any new laws we can begin to implement in public contracts the Integrity Pact (IP). This is a legal agreement between a public authority, such as a Government agency or State owned enterprise, and all the bidders for a public contract of any type, used to prevent corruption throughout the whole contracting process.

Developed by Transparency International (TI), it has been used to good effect in Colombia, Ecuador, Italy, Korea, Pakistan and Nepal. Here is an example of how it worked in Argentina.
In May, 2000 the municipality of Moron, a suburb of Buenos Aires, put out for tender a four-year garbage collection contract estimated to be worth US$ 48 million.

After a public hearing on the bidding documents and the terms of the contract attended by more than 500 people, the estimated cost was cut by 30%. Ten days after the hearing the municipality published the final bidding documents on its Internet website, explaining which of the participants’ observations and suggestions it had accepted or rejected and why. Then the municipality and the four pre-qualified bidders (one foreign, three local) together signed the Pact.

Each bidder affirmed that it had not paid, and would  not pay, any bribes in order to obtain or retain the contract. Each bidder further undertook to disclose all payments made in connection with the contract and to report any violations by other tenderers during the bidding, and by the winner during contract execution.

The municipality undertook that its officials would not demand or accept any bribes and agreed to enforce appropriate disciplinary or criminal sanctions in case of violation. All agreed to public disclosure of the award, of the major elements of the evaluation and of the reasons for selecting the successful bidder. Bidders agreed to heavy sanctions for violation of the Pact, including damages payable to the municipality of 10% of the contract value and blacklisting for five years. Any conflict was to be resolved by national arbitration. The Argentinian chapter of TI was appointed to monitor the bid evaluation, the award decision process and the implementation of the contract. About one year later an independent opinion poll revealed that 80% of the citizens of Moron were satisfied with the refuse collection service.

Good for business

It’s not hard to see how an agreement like this one can help reduce the pressure on firms to bribe. It establishes what most firms want — a level playing field. The rules of the game are the same for all and known to all. The bidders can abstain from bribery and other corrupt practices because they are assured that their competitors will also abstain. They are assured, too, that Government officials will not demand or expect bribes. They can be confident that public authorities will follow transparent procedures.

Best of all, it reduces costs. Bribery can now be seen for what it really is — an avoidable, intolerable and excessive cost of doing business. For the public authority and thereby for the public whose money is being spent, the IP helps ensure that the desired product or service is obtained at a competitive price and in accordance with specifications.  The high cost and the distorting impact of corruption are avoided.  Also the IP helps increase public trust in Government contracting and encourages a more hospitable investment climate.

We can do it 

All of this is good for business. And, in an economy in which public funds are not siphoned off into the pockets of the corrupt, there should be more available for investment in projects and hence more opportunities for suppliers of goods and services.

But can it work here in Trinidad and Tobago? Experience in other countries has shown that, for successful implementation of the IP, there must be, first of all, sufficient political will on the part of Government, its agencies and its enterprises. There must also be commitment on the part of the suppliers. Then the drafting of the pact must be done properly-adapting it to local conditions while maintaining its essential elements. Lastly and possibly most importantly, there must be careful monitoring both by an independent body and by the general public provided with easy access to all necessary information. Can we meet these conditions? I think so.