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26 March 2015

News,

Mitigating Risks to Integrity in Public Procurement in Thailand

PUBLIC PROCUREMENT represents on average 15% to 20% of GDP in developing countries, making it among the most corruption-prone sectors. In Thailand the presence of irregularities in public procurement is high and actually has deteriorated over time according to a 2010 survey, with major recent scandals in big infrastructure projects.

In July 2014 the Office of the Public Sector Development Commission (OPDC) requested UNDP to undertake a risk assessment to mitigate risks in the procurement system. The project is the result of the cooperation with several organizations: the Office of Public Procurement Management Department (PPO) of Comptroller General’s Department (CGD), the Ministry of Finance, the private-sector-led Anti-Corruption Organisation of Thailand, the State Enterprise Policy Office, and other key stakeholders.

Conducted through desk reviews, interviews and surveys with the actors involved by missions of international advisors, the assessment focused on the four main pillars of the public procurement system:

i) Legal and Regulatory Framework

ii) Institutional Framework and Capacity

iii) Operational Capacity and Market Functionality, and

iv) Control Structure and Integrity Mechanisms.

The results of the assessment were presented on 7 January 2015 in Bangkok and discussed by a panel of experts including the main stakeholders involved in the project: representatives from the Government (Comptroller General, National Anti-Corruption Commission), the private business sector (Thai Institute of Directors), the non-profit sector (Thailand Development Research Institute) and UNDP. Around 200 participants attended the presentation of the findings, from public agencies, private companies, CSOs and media.

As a result of the assessment UNDP recommended a 20-point action plan to strengthen integrity in public procurement as well as the development of integrity red flags and risk mitigation measures in procurement. UNDP also supported the government in developing guidelines for mitigating risks to integrity in procurement.

The project has gained a lot of political momentum, with the Prime Minister, General Prayuth Chan-Ocha, announcing the partnership with UNDP in a televised speech on 3 October2014. The Thai government has now taken the initiative of drafting a procurement law and setting up a sub-Committee on procurement as part of its National Reform Council. Besides the successful involvement of all major stakeholders from government and the private sector in the project, another condition for the success has been to ground the analysis on evidence-based data through surveys. This pilot provides the basis for developing a methodology that could be used at the global level, as previously done by UNDP in the areas of water, health and education.

Preventing illicit financial flows for financing development in Asia-Pacific

Illicit financial flows are drawing enormous resources out of countries: Most aid-dependent countries struggle to finance their population’s basic needs (schools, hospitals, infrastructure, and the like), even though they could access larger development budgets more easily by preventing financial resources from illicitly flowing out of their borders. These outflows are not only budget losses but also total losses in terms of the legitimate economy since they reduce investments and future growth.

Illicit flows are cross-border flows of money illegally earned, transferred (through trade misinvoicing, among other means), or utilized. This definition includes the transfer of the proceeds of crime, corruption, money laundering, and tax evasion. If the capital breaks laws, regulations, or global standards anywhere along the path of the international transaction, then it is classified as an illicit financial flow.

Asia-Pacific accounts for nearly 40% of total illicit outflows from developing countries, according to Global Financial Integrity, a non-profit based in Washington DC. This percentage is the largest share among regions in terms of volume. And yet, the topic so far has gained little attention in the region.

“Coming to Grips with Illicit Financial Flows in Asia-Pacific – Illicit financial flows as a result of trade misinvoicing, 2002-2011” is a ground-breaking study prepared by Global Financial Integrity, in cooperation with the United Nations Development Programme, and the United Nations Office on Drugs and Crime. This study provides a new perspective, as it analyses the phenomenon not only in the least developed countries (Bangladesh and Nepal), but also in the middle-income countries, which are the major drivers of illicit financial flows in the region, with case studies of Indonesia and Malaysia. In these countries financing for development is not an issue, but the activities fuelling illicit flows (corruption, organised crime, drug smuggling, etc.) undermine governance, rule of law, and security.

The challenge with illicit financial flows lies in the development of integrated solutions to this multi-faceted problem. Illicit financial flows are fuelled by various sources and although there have been several regional and international efforts to curb these issues, they have been scattered, focusing often on one side of the problem – for example on tax loss from capital flight (e.g., UN Tax Committee, Tax Justice Network) or money laundering (e.g., FATF Asia-Pacific Working Committee on Anti-Money Laundering).

It is important to work for improving interagency cooperation, enhancing transparency in financial transactions, improving data collection, enabling and building capacities of FIUs, conduct further in-country consultations to analyse the problems and its possible solutions.

The study was presented for the first time on 5 September 2014, during a Workshop on Preventing Illicit Financial Flows hosted by the Anti-corruption Unit of the Government of Cambodia with support from UNDP, UNODC, at the sides of the 8th regional Conference of the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific. This was followed by an e-consultation to gather comments from workshop participants and other experts. The comments received were utilized to edit, expand and revise the paper before its finalization. The final study can be accessed here.

Related story: UNDP helps Thailand towards a corrupt–free public procurement system

By Liviana Zorzi, Event Coordinator on Transparency, Accountability and Anti-corruption (UNV), UNDP Bangkok Regional Hub

News,

The 2015 Seoul Debates: Lessons from Korea and Around the World

By Anne Marie Sloth Carlsen, Director, UNDP Seoul Policy Center

THE 2015 Seoul Debates[1], held on 29-30 January 2015 in Seoul, Republic of Korea, with some 80 participants from Korea and countries around the world, provided a forum to identify innovative practices and consolidate lessons learned in tackling corruption.

Government partners, UNDP practitioners, civil society experts, and researchers had lively and candid discussions on policies, strategies, and institutional arrangements to prevent corruption in the public sector using Korea’s experience as well as experiences from several countries around the world as reference. The meeting also gave Korean and international experts a networking opportunity to build partnerships for future collaboration.

The 2015 Seoul Debates was organized as part of the UNDP Seoul Policy Centre’s (USPC) Development Solutions Partnership (DSP) on anti-corruption. DSPs are a new approach for USPC as a knowledge broker to connect Korean partners with the wider UNDP network and enhance the overall Korea-UNDP partnership on strategic development issues. The DSP on anti-corruption is designed to facilitate knowledge-sharing, and South-South/triangular cooperation for more effective development cooperation, utilizing Korea’s experiences and innovative tools.

“From our own experiences, we understand the twists and turns as well as the practical realities in fighting corruption,” said H.E. Shin Dong-ik, Deputy Foreign Minister for Multilateral and Global Affairs of Korea in his congratulatory remarks. “As such, we possess unique know-how and seasoned insights to share with developing countries,” he added, mentioning that Korea wished to share the country’s lessons learnt over the past 50 years with other countries.

Mr. Haoliang Xu, Assistant Secretary General of the UN and Director of the Regional Bureau for Asia and Pacific of UNDP, echoed this view: “I believe that putting in perspective Korea’s experience with other countries will be a great occasion to draw lessons on how anti-corruption can be promoted as part of a wider development agenda,” he said.

The main corruption challenges that Korea faced during its rapid development, and the ways of overcoming them were put up for discussion by practitioners and academics as well as experts from a number of Korean institutions, such as the Korea Anti-Corruption and Civil Rights Commission (ACRC), the Supreme Prosecutors’ Office, the Board of Audit, the Seoul Metropolitan Government, the Korea Institute for Public Administration, and Transparency International Korea.

Detailing Korea’s experience in fighting corruption, Kwak Jin-Young, Vice Chair of ACRC, highlighted the importance of prevention. “In order to improve the effectiveness of anti-corruption policy, it is important to prevent corruption practices by determining environments and factors that cause corruption and addressing them in advance instead of detecting the cases afterwards.” She told how strong will from politicians and the public had prompted the introduction of a range of legal and policy measures such as integrity assessments to assess corruption levels in public services, laws to protect whistle blowers as well as bills to target nepotism and solicitation practices and fraud in public finances.

International participants found Korea’s case particularly interesting because of its history of rapid economic and social development despite manifold governance challenges including corruption. Anti-corruption tools developed in Korea also attracted attention. Besides ACRC’s integrity assessment which is conducted by over 600 public organizations in Korea, and is also being applied in several countries including Bhutan, this was also the case of, in particular, the electronic subcontract payment system for transparent public infrastructure projects of the Seoul Metropolitan Government.

Participants in the 2015 Seoul Debates also shared lessons and examples from other countries – Bhutan, China, Colombia, El Salvador, Indonesia, Singapore, Thailand, Uganda, Uzbekistan and Vietnam – as well as perspectives by various international organizations including the United Nations Office on Drugs and Crime (UNODC) and Organization for Economic Cooperation and Development (OECD), and international civil society organizations such as Transparency International and Global Integrity.

Ang Seow Lian, Deputy Director of Singapore’s Corrupt Practices Investigation Bureau (CPIB) emphasized that corruption can compromise anyone, even in advanced economies like Singapore today, and shared how his country started its battle against corruption after gaining independence in 1965 as a necessary means to attract investment for national survival. “The political leaders thought that we could not survive if we still had corruption among us, so political will is one of the key factors that led to our success,” he noted. He also stressed the importance of strong anti-corruption systems with independent enforcement agencies, in order to maintain the political will through generations.

Participants also noted the increasing opportunities with various international mechanisms and networks for utilization by practitioners to strengthen country-level anti-corruption efforts. The importance of the United Nations Convention against Corruption (UNCAC) was stressed as a tool for opening up the space for dialogue at the national level to build country-level commitment and capacity to fight corruption, also helped by the review mechanism that was put in place in 2009.

The need for striking an appropriate balance between prosecution and prevention was also highlighted. Practitioners noted that anti-corruption strategies are most effective when both prevention and prosecution are well incorporated and balanced in a country’s anti-corruption efforts. In addition, political independence in prosecution, institutionalised coordination among all relevant public institutions, as well as adequate and predictable budget allocation for anti-corruption agencies were stressed as key.

Discussions also affirmed the importance of understanding the political economy of corruption, e.g. the multi-dimensional nature of corruption and its functionality in the broader governance environment. Understanding the actual function of corruption and patronage, in consideration of a country’s drivers of conflict of interest, makes it possible to formulate appropriate steps to replace that function with something productive, rather than replacing one form of corruption with another.

It was also stressed that anti-corruption measures need to be mainstreamed, institutionalized and owned by all of society, rather than seen as the responsibility of an ‘anti-corruption’ institution only. The Chairperson of the Anti-Corruption Commission of Bhutan, Ms Neten Zangmo, stressed that other bodies must have anti-corruption as part of their agenda and specifically suggested that such mainstreaming be considered for development cooperation. She also pointed to the post-2015 development agenda and underscored that governance would be key for achieving the sustainable development goals.

Working with non-traditional actors—such as the private sector and political partners—was also flagged as important for tackling corruption. UNDP‘s Governance Team Leader in Colombia, Ms. Blanca Cardona, informed the participants of UNDP’s work with political parties and presented a newly developed transparency assessment tool for political parties to strengthen their accountability. Developed by the Country Office and Transparency International Colombia, the tool has been tested with Columbia’s political parties, and the information gathered will be publicly available.

Throughout the 2015 Seoul Debates, participants addressed the question of political will and the need to mobilize and strengthen the political will in the first place, rather than only flagging the importance of political will as a panacea for tackling corruption. Practitioners shared examples of successfully building the public sentiment by increasing citizen awareness—for instance through an investigative research and presentation of real data that showed the exact magnitude of corruption and compelled the government to take an action.

From its conceptual design, the 2015 Seoul Debates deliberately sought to avoid the approach of finding ‘best practices,’ or ready-made solutions that can be transplanted in other contexts. The assumption was that, owing to different political, socio-economic and legal contexts,there is no universal model of successful anti-corruption policies.

While honestly expressing their desire to take practical and immediate solutions home, meeting participants still noted that “what works” should be analyzed and understood via careful analysis of political, economic, and cultural contexts, given that the effectiveness of anti-corruption efforts depends on many factors unique to the local environment. Conclusion was that exemplary policies and tools need to be referenced and adapted as a “best fit” for specific contexts.At the same time, participants reaffirmed the usefulness of peer learning from good as well as bad practices, in order to identify what works, what doesn’t and why with a holistic perspective.

UNDP country office representatives and national participants from developing countries expressed strong interest in follow-up cooperation and more focused knowledge exchange with Korea, particularly with regards to adapting Korea’s tools and localizing the lessons learnt to suit their own national contexts. The 2015 Seoul Debates thus demonstrated the usefulness as well as the rich potential of the DSP approach and pointed to strategic opportunities for triangular development cooperation, involving Korea, UNDP, and developing countries.

The 2015 Seoul Debates meeting was organized by UNDP Seoul Policy Centre (USPC), in partnership with the Korean Ministry of Foreign Affairs (MOFA) and the Anti-Corruption & Civil Rights Commission of Korea (ACRC), with technical support from UNDP Global Anti-Corruption Initiative (GAIN), the UNDP Bangkok Regional Hub, and the UNDP Global Centre for Public Service Excellence in Singapore (GCPSE). Key findings, suggestions, and conclusions from the meeting are now being fed into USPC’s study publication and design of the DSP pilot phase.

For questions on the 2015 Seoul Debates meeting or the Development Solutions Partnership on anti-corruption, please contact Ms. Ahjung Lee, Programme and Policy Officer of the UNDP Seoul Policy Centre, at Ahjung.lee@undp.org.


[1]The annual Seoul Debates are organized to facilitate policy research and dialogue on critical development issues. The 2013 edition of the Debates focused on the issues of challenges of the middle-income countries, and the final report is available at: http://www.undp.org/content/dam/uspc/docs/MIC-Seoul-Report-2013.pdf.

News,

UNDP calls for transparency in aid and development resources

19 March 2015 – There is the need to make data transparent and open in achieving success in financing for development, especially for the implementation of the up-coming Sustainable Development Goals (SDGs).
Dominic Sam, Ghana Country Director for the United Nations Development Program (UNDP), said this here on Thursday in his opening remarks at the opening of a two-day UNDP and International Aid Transparency Initiative (AITI) regional workshop on data use.

According to him, Development Partners can only be effective when they can join forces in programming, avoiding duplication in projects to make efficient use of the limited financial resources available for development.
The Ghanaian government, UNDP and the IATI are jointly hosting the regional workshop which has brought together a range of actors and stakeholders in development cooperation.

Read the Xinhua story in Spy Ghana. http://www.spyghana.com/undp-calls-for-transparency-in-aid-and-development-resources/

News,

Corruption in Public Procurement: the case of infrastructure in Africa

Addis Ababa, 4 March 2015 (ECA) – Public procurement systems in Africa have increasingly become a target for corrupt practices. Indeed, corruption in the procurement of public goods and services is a major obstacle to economic growth and development. The effects of corruption on the economy can be severe, including misallocation of scarce resources, reduction in the quality of services, increased cost of doing business, discouraging foreign investments as well as shrinking governments’ tax revenues. It is estimated that African countries lose about USD 148 billion per annum in corruption.

Public procurement for infrastructure has not been immune to corruption. The infrastructure sector has become more vulnerable to corruption from the public sector, but also the private sector. This poses a major concern for the continent’s structural transformation agenda as resources are misallocated for corrupt practices.

In line with its initiatives on combating corruption and improving governance in Africa, the Macroeconomic Policy Division of the United Nations Economic Commission for Africa is preparing a framework study on ‘Corruption in Public Procurement: the case of infrastructure in Africa’. This research study is part of the Regional Anti-Corruption Programme for Africa (RACPA), which started in 2011. The purpose of this framework study is to provide an updated assessment of the impact of corruption in public procurement in Africa. Specifically, the study seeks to show the negative effects of corruption in public procurement on Africa’s infrastructure development and propose policy recommendations accordingly.

This framework study highlights the public procurement systems in some African countries, key challenges and the legal and institutional reforms put in place by governments over the years. Based on best practices identified within and outside the region, recommendations will be proposed to policy-makers on how to address public procurement corruption in infrastructure.

Preliminary findings of the study have been debated at an Ad-hoc Expert Group Meeting held on 25th February 2015 and will further inform this research project. 

Source: http://www.uneca.org/media-centre/stories/corruption-public-procurement-case-infrastructure-africa#.VRP8lGYkhBI