22 October 2015, by Katja Bechtel and Susan Cote-Freeman, Business Integrity Unit, Transparency International.
It is estimated that some US$9.5 trillion of public money is spent each year by governments procuring goods and services on behalf of their citizens. With such vast sums of money at stake, few government activities create greater temptation or opportunity for corruption. Indeed, the OECD estimates that 20 to 25 per cent of national procurement budgets is lost to corruption.
However, the past few months have seen promising developments that aim to advance integrity and transparency in public procurement. In July, the World Bank approved a new Framework to shape how it will contract and oversee projects that it will fund in the future. Most notably, it contains provisions for the collection and disclosure of information on the beneficial ownership of bidders. It also acknowledges the importance of independent monitoring, including by civil society, to improve the integrity of procurement processes. Given that the World Bank spends billions of dollars every year on procurement contracts in 172 countries, these developments will no doubt have impact on a global scale. Transparency International welcomes these developments and urges the Bank to follow through with strict implementation of these and other provisions included in the new framework.
In addition, international business is reinforcing the case for clean procurement. Last month, the Anti-Corruption Task Force of the B20 Coalition, an outreach group of the G20 representing the international business community, issued policy paper that contains five main recommendations on corruption.
Significantly, one of the recommendations calls on governments to promote integrity in public procurement. It also calls on G20 countries to commit to enforcing major international anti-bribery conventions, including the UN Convention against Corruption (UNCAC). These recommendations should be influential, as they come from a group that includes significant representation from multinationals and business groups. Together with the new World Bank framework, they add weight to UNCAC provisions on procurement. Indeed, the B20 policy paper emphasises that influential business actors believe that more attention should be given to the procurement issue.
The upcoming Conference of States Parties (CoSP) on the UNCAC will address the role of the private sector in tackling corruption. Transparency International strongly believes that businesses can play a key role in keeping the procurement process clean. They can do so by ensuring that their own anti-corruption policies and systems are stringent and that their effectiveness is monitored. In addition, companies participating in procurement processes should proactively disclose their beneficial ownership and disclose contracts once they are awarded. Beyond these individual steps, businesses can and should work with governments and civil society to ensure the integrity and transparency of public procurement.
To examine how this can be achieved, Transparency International, in cooperation with the United Nations Global Compact, will host a workshop as part of a side event to the CoSP. The workshop is entitled, Making Public Procurement Public: Public-Private Cooperation to Promote Integrity and Transparency in the Public Procurement System. It will explore ways to reduce corruption in public procurement through the joint efforts of governments, businesses and civil society, and will identify the prerequisites for such models of cooperation to ensure that each party to a procurement process endeavours to keep procurement clean.
Businesses, governments and citizens all stand to win from smart, efficient and corruption-free procurement.