Playing by the same rules

Transparency International’s (TI) Integrity Pact has found its way into some of Latin America’s corruption hot spots:   Columbia, Panama, Ecuador, Mexico, as well as countries in Eastern Europe and Asia.

The billion dollar question is, can it find its way into Trinidad and Tobago?

At a symposium organised by Transparency International and held at Normandie Hotel last week a number of stakeholders involved in the procurement process, including members of various Government Ministries, members of State owned enterprises and the private sector, were given an insight into what the pact was all about.

The pact is a system designed to prevent corruption in public contracts and one in which the government and companies pledge that they will not offer bribes or take any themselves. The parties could be sanctioned, when the pact is broken. Executive Director of TI in Ecuador, Valeria Merino Dirani, in an interview at the symposium,  noted that one of the major problems facing TI was how to reduce corruption, adding that this was a prevailing problem in every part of the public sector.

The procurement of public contracts though was particularly worrying, she added.
Trinidad and Tobago has been listed at number 33 on the Transparency International’s (TI) Corruption Perception Index (CPI) for 2002 with a score of 4.9. The 2002 CPI score relates to the perceptions of the degree of corruption as seen by business people, academics and risk analysts. It ranges between 10 (highly clean) and zero (highly corrupt). Finland was listed at number one on the survey with a score of 9.7, whilst Bangladesh came in at number 102 with a score of 1.2.  The 2002 Index ranks 102 countries — the highest number ever.

According to Peter Eigen, Chairman of TI, corruption is perceived to be dangerously high in poor parts of the world, but also in many countries whose firms invest in developing nations.
He said, “Corrupt political elites in the developing world, working hand in hand with greedy business people and unscrupulous investors, are putting private gain before the welfare of citizens and the economic development of their country.”

Eigen revealed in a press release that corruption was rampant in Indonesia, Kenya, Angola, Madasgascar, Paraguay, Nigeria and Bangladesh, all with a score of less than two. He further noted that countries with a higher score than nine which signified very low levels of perceived corruption were predominantly rich countries, namely Finland, Denmark, New Zealand, Iceland, Singapore and Sweden.

The 2002 CPI complements the TI’s Bribe Payers Index (BPI) which addresses the tendency of companies from top exporting countries to bribe in emerging markets. The 2002 BPI revealed high levels of bribery by firms from Russia, China, Taiwan and South Korea followed closely by Italy, Hong Kong, Malaysia, Japan, USA and France. Ironically many of these countries signed the OECD Anti-Bribery Convention which outlaws bribery of foreign public officials. Trinidad and Tobago was not listed. Dirani, a lawyer, has been involved with TI International in Ecuador since its inception eight years ago. She has also been a member of Transparency Inter-national worldwide and was the former Executive Director of TI Latin America (TILAC) for three years. Additionally she was appointed by the General Secretary of the United Nations to serve as a member of the Council of the United Nations University for six years. What led to her work with in Ecuador, she said, was a belief that officials there turned a blind eye to rule of law and, in such an environment, corruption flourished.

“When you live in a developing country like Ecuador and you are told that more than one billion dollars per year is lost because of corruption, you wonder what can be done to change this.” With nothing to lose, Ecuador, she said, decided to give the Integrity Pact a chance. Contracts that fell under the pact where those that had strategic value for government or those that involved a lot of money, she explained. One of the reasons Ecuador opted to take the Pact, she said, was to try and plug the holes in the public procurement systems. Ecuador, she said. has a fairly good procurement system, but it still is still flawed.

Dirani noted Ecuador had used the pact to try and clear up problems that existed in its telecommunications sector. There was a major conflict of interest in the telecommunications sector, especially in the provision of cellular services, since service providers were not open to competition, she explained. The result was that the price of cellular services were exorbitant. The local chapter of Transparency International was eventually called in to oversee negotiations between local providers and parties interested in being providers, she explained.

After a year of negotiations, at a cost of over one million dollars, the process finally went through, and the country was finally able to have a third competitor providing cellular services. A good procurement system needs competition, Dirani asserted. “Procurement is an area in which both the government and the private sector have a vested interest,” she said. “We are still losing money in Ecuador because of corruption,” she lamented,  “but now the biggest contracts are going to be under this type of supervision.”

According to Chairman of the TT chapter of Transparency International, Boyd Reid, the Integrity Pact would help reduce the pressure on firms to bribe by establishing what most companies want — a level playing field, where the “rules of the game are the same for all and known for all.” Reid believes that if an agreement like the Integrity Pact was in place when the Piarco Terminal was under construction there would have been no need for a Commission of Inquiry. “They can be confident that public authorities will follow transparent procedures,” Reid asserted, adding further that the Pact would reduce costs.

The pact helps ensure that the desired product or service is obtained at a competitive price and in accordance with specifications, he said, noting that the high cost and corruption are avoided. Reid further added that the pact would help to increase public trust in Government contracting and encourage a more hospitable investment climate. Dirani explained that one main characteristic of the Integrity Pact is that once the document is signed, the parties must adhere to the rules of transparency process. If they don’t, they will face the consequences or be blacklisted. “If you are found to be trying to pay someone off to win a contract or illegally determine the outcome of a process, you can be fined or face being blacklisted,” she said, noting that “you would no longer be allowed to compete in any government procurement process for two to three years.”

Dirani further noted that a number of Latin American and European countries have established an arbitration process who decides whether a penalty can be imposed on a company. The pact also has a “due process” facility which allows companies to defend themselves or their cause. “The interesting thing about the Integrity Pact,” she said, is that the burden of monitoring the procurement process is shifted from the government and given to the competitors. The pact, she observed, provided her government with a lot amount of expertise for free.