Is there a need for an ICtIC, and what should its functions be?
By hamish; 26 Oct 2005 [Category: All]The negative development impact of corruption in construction and infrastructure projects is well documented. It is not unusual for as much as 30% of a project’s value to be lost through corrupt practices, including both bribery and fraud. In development terms the impacts are severe, including increased costs, inappropriate standards, poor quality and reduced durability and safety. Combined with distortions in the planning process itself, this can mean that, far from stimulating economic growth, some infrastructure projects actually suppress it.
The role of the International Centre for Transparency In Construction (ICtIC) would include provision of the following services to any stakeholder with an interest in curbing corruption:
- Support to, and external verification of, Anti-Corruption Procedures;
- Accreditation of Independent Assessors; and
- Maintenance of related databases
External Verification of Anti-Corruption Procedures
Part of the solution to the problem of corruption is for those who pay bribes to stop doing so. In the UK, the Anti-Corruption Forum is taking a lead in this, by encouraging UK companies to introduce robust internal procedures in support of what have in some cases been nominal ethical policies. Recent changes in UK and international law mean that a company is now at risk if one of its employees or associates engages in, or turns a blind eye to, corrupt practices from which the company benefits. As yet, there is no internationally established best practice for internal anti-corruption procedures, though several promising patterns are emerging. What is missing is a recognised, and appropriately simple, mechanism for undertaking external verification of such procedures. The ICtIC could provide this service by documenting such procedures, encouraging their widespread use, and providing accreditation to those undertaking audits. On 9th December 2005 it was announced that the World Economic Forum Partnering Against Corruption Initiative (PACI), the International Chamber of Commerce, the United Nations Global Compact, and Transparency International had agreed to coordinate their efforts in this field. This represents an important step in bringing these various initiatives together, but the need remains for the services described.
Accreditation of Independent Assessors
Integrity Pacts (IPs) are emerging as an effective means of reducing corruption, and have been successfully used in a number of schemes, particularly in South America, and more recently in Germany. IPs are ‘policed’ by an Independent Assessor (IA), someone who is jointly appointed by all parties involved in a construction contract, and licensed to investigate any allegations of corruption. More details about the work of IAs is given in the FAQs.
There is a recognised need for external accreditation of IAs, to ensure they are both competent, and not involved in corruption themselves. It is anticipated that with a growth in the use of IPs, the current ad hoc arrangements for identifying and monitoring suitable IAs will not meet demand. The ICtIC will meet the need for the external accreditation of IAs for IPs and for a whole range of practical anticorruption measures.
Maintenance of databases
There is an increasing need for better access to information about the internal anti-corruption procedures of companies.
- A project owner or donor agency may wish only to engage consultants or contractors with robust anti-corruption policies and procedures;
- Companies may only wish to associate with other companies whose anti-corruption policies and procedures are independently deemed to be conform to a defined standard; and
- All parties have an interest in the fair and transparent administration of blacklisting procedures.
As yet there is no recognised international body that maintains the databases needed to respond to these needs. The ICTIC will offer access to a growing set of up to date information on sources or relevant data, and may in time itself become a primary central source of such data provided by responsible third parties.
October 31st, 2005 at 12:00 pm
What hard evidence is there that “Integrity Pacts are emerging as an effective means of reducing corruption”?
November 1st, 2005 at 10:29 am
A web search throws up positive references to the use of Integrity Pacts in Columbia, Nepal and Germany. Perhaps someone with more direct experience can comment further on their effectiveness, and on whether there is indeed a need for external accreditation of Independent Assessors?
November 3rd, 2005 at 12:35 pm
I believe we need to be careful about the concept of “construction”. The fact is that there are few UK construction companies doing much actual construction abroad these days, unless it be in developed markets and specialised niches or high-tech elements of a bigger project. For the most part, the contractors are actually doing project management in JV with local companies, and even then the UK staff involved will normally be based abroad with quite a lot of autonomy from their UK parent company. This introduces much greater complexity into fighting corruption, especially when you realise that there may be dozens of companies working on a big project. This is why I prefer to think in terms of “infrastructure”, and including the activities of UK consultants abroad, not just contractors. In my view the two should not be separated.
Graham Hand
Chief Executive
BCCB
November 5th, 2005 at 10:34 am
There is a risk of corruption at all stages of the project cycle. Though the value of corruption involving consultants is relatively small as a proportion of overall project value, the effect can be significant, as it affects the crucial preparatory and planning stages. For this reason, it makes sense to start by tackling corruption involving consultants. Unless the consultants can be trusted, it is unrealistic to expect them to play their part in curbing corruption among contractors during project implementation, when the financial stakes are much higher.
Though this initiative has strong Scottish and UK roots, it is intended that it should quickly become fully international. Ultimately the proposed centre would provide a single point of reference for best practice in the some key aspects of improving transparency in international infrastructure and construction projects.
November 24th, 2005 at 7:45 am
Transparency International (UK) welcomes the “Ethical Edinburgh”
initiative. The external verification of anti-corruption procedures, the
accreditation of independent assessors, and the maintenance of associated
databases are each expected to become increasingly important if sustained
progess is to be made in curbing corruption in international construction
and infrastructure projects.
There is increasing evidence that integrity pacts reduce corruption on projects. Integrity pacts have been used sucessfully in more than 10 countries, and cost savings of up to 30% on budget costs have been recorded. Most notable in the construction sector is the recent decision of the Berlin Government to use an IP on the redevelopment of Berlin airport. An independent assessor has been appointed to monitor the parties’ obligations under the Berlin IP. For more details on the concept of the IP and IA, and for model agreements, go to http://www.transparency.org. On the home page, under “TI Tools and Initiatives” on the top left, go to “Preventing Corruption on Construction Projects”.
December 20th, 2005 at 10:07 am
Having just scanned some of the previous postings, I thought to extend some of the connections I see to what I am dealing with for possible mutual benefit. It is the international practice of ‘Infrastructure (Asset) Management’ eminating from Australazia since before 1996 that has reformed and is seemingly transforming their ‘service delivery’ (rather than ‘infrastructure development’) and is finding some expression even in Africa, particularly in water services. It is ‘best documented’ under the ‘International Infrastructure (Asset) Management Manual’ and in that form has apparently penetrated the UK. Good governance, contracting, auditing, etc. lies at the heart of it and not concentrating just on construction. The ‘corruption’ is perhaps less tangible but maybe even more costly in asset life-cycle terms. It evidently fleshes out environmental management practice. It promotes sound, integrated visible, accountable decision-making and in that sense shares objectives with Ethical Edinburgh. I find it particularly appropriate in South Africa for ‘local government asset and service management NB. excellence’ and setting paths ‘towards sustainability’ as against widespread ‘service decline’ in our context. Our problems lie within broadly the domain of ‘management’, particularly ‘asset owners’ but seems within reach of ‘asset stakeholders’… Try the website here for more.
However specifically auditing practices and expertise (capacity generally) is under-developed. Key issues also stand up – ‘what to measure?’ and ‘who measures?’ In that sense the practice is being labelled ‘Strategic Municipal Asset Management’ and did penetrate the World Bank in 1999 in that form. So key challenges are inter-organisational / institutional rather than merely technical, financial, etc. The key questions posed here are;
– Can anyone else make other connections to this that might be mutually supportive?
– Beyond Transparency International, is there an international ‘body of knowledge’ (or interest like PMBOK) existing or emerging that might be accessible to developing these practices?
I trust others will see the commonalities here and give some pointers. Otherwise congratulations on an interesting initiative that I will continue to monitor anyway.
Nigel Lowe
Technical Analyst
Development Bank of Southern Africa