Public Procurement and Public Procurement and Corruption in SerbiaCorruption in Serbia

BORISAVBORISAV KNEZEVIC M.A.KNEZEVIC M.A.SENIOR ADVISERSENIOR ADVISER

8th December 2010, Serbian Chamber of Commerce8th December 2010, Serbian Chamber of Commerce

TS Corruption Perception index 2010TS Corruption Perception index 2010

Serbia 78th (3.5)Serbia 78th (3.5) Denmark 1stDenmark 1st (9.3)(9.3) Twinning/IPA 2007 with Denmark Twinning/IPA 2007 with Denmark

(LGDK/Public Procurement Office): (LGDK/Public Procurement Office): “Strengthening the Serbian PP System”, 21 “Strengthening the Serbian PP System”, 21 months durationmonths duration

output: corruption map/”red-flags”output: corruption map/”red-flags”

Corruption in PP: legal vs Corruption in PP: legal vs economic/social aspecteconomic/social aspect

In Serbia, focus is on legal aspect-”find the vioalator In Serbia, focus is on legal aspect-”find the vioalator and put him in the jail”and put him in the jail”

Economic/social aspects are neglected. Corruption Economic/social aspects are neglected. Corruption decreases living standard, empoyment; domestic decreases living standard, empoyment; domestic companies are losing competitivness-get contract due companies are losing competitivness-get contract due to bribery, that encourage import and discourage to bribery, that encourage import and discourage exportexport

Result: growing powerty of the nationResult: growing powerty of the nation

How to cure the disease?How to cure the disease?

To fight against corruption in public To fight against corruption in public procurement you need three things:procurement you need three things:

TRANSPARENCYTRANSPARENCYTRANSPARENCY andTRANSPARENCY andTRANSPARENCYTRANSPARENCY

Possible instrumentsPossible instruments Corruption map/”red flags”-this is a general Corruption map/”red flags”-this is a general

tool for detection of possible hot-points for tool for detection of possible hot-points for corruption in the tender process-but detection corruption in the tender process-but detection is not enough-the problem must be is not enough-the problem must be removed/solvedremoved/solved

Comparison of the pricesComparison of the prices Blacklisting (informal vs formal, Leeds Blacklisting (informal vs formal, Leeds

experience)experience)

Additonal instrumentsAdditonal instruments Public Procurement web-portal-CE obliged to Public Procurement web-portal-CE obliged to

announce notices on the portal-large-value contractsannounce notices on the portal-large-value contracts Permanent education of the PP officials and Permanent education of the PP officials and

promoting of professionalism in PP, (domestic promoting of professionalism in PP, (domestic certification shall start on 15 December, foreign certification shall start on 15 December, foreign support-the Dutch G2G project), performance support-the Dutch G2G project), performance measurementmeasurement

N.B.: even licenced/sertified PP official are often N.B.: even licenced/sertified PP official are often influenced by superiors, so the only solution is influenced by superiors, so the only solution is changing of general climate in the country in the field changing of general climate in the country in the field of PP and wider...of PP and wider...

Additional instruments IIAdditional instruments II E-procurement: increasing transparency BUT E-procurement: increasing transparency BUT

very sensitive-may cause more problems than very sensitive-may cause more problems than benefitbenefit

-Consip Italy vs Albanian example-Consip Italy vs Albanian example Centralised/collaborative procurement (Italian Centralised/collaborative procurement (Italian

vs U.K. approach)vs U.K. approach) In Serbia: UNDP project-sofware for 5 In Serbia: UNDP project-sofware for 5

municipalities (Pancevo, Subotica, N.Sad, Nis, municipalities (Pancevo, Subotica, N.Sad, Nis, Pozarevac)Pozarevac)

Serbian PPL-anticorruption clausesSerbian PPL-anticorruption clauses

““CE may refuse a bidding if dispose with CE may refuse a bidding if dispose with relevant proof that a bidder tried to bribe any relevant proof that a bidder tried to bribe any relevant person in PP process in order to relevant person in PP process in order to influence them to unveil inside information or influence them to unveil inside information or to affect the decision-making in any phase of to affect the decision-making in any phase of PP”PP”

This is also valid if a tenderer tried to threaten This is also valid if a tenderer tried to threaten those persons (member of PP commission, those persons (member of PP commission, persons who prepare tender documents...)persons who prepare tender documents...)

PPOPPO’s role’s role Promotion of usage of open procedure (PEFA) and Promotion of usage of open procedure (PEFA) and

discouraging of usage of restricted proceduresdiscouraging of usage of restricted procedures The most dangerous situation: NO PROCEDURE (no The most dangerous situation: NO PROCEDURE (no

transparency, no process, no possibility for transparency, no process, no possibility for complaints)complaints)

Post-festum approval of “urgent procedures”: reports Post-festum approval of “urgent procedures”: reports sent to SAIsent to SAI

Collection of quarterly reports-precious data for SAICollection of quarterly reports-precious data for SAI

Role of the Review CommissionRole of the Review Commission Appointed recently in accordance with the Appointed recently in accordance with the

LawLaw May reject, partially accept the complaint or May reject, partially accept the complaint or

fully cancel the tender fully cancel the tender Possibility of appeal to the Administrative Possibility of appeal to the Administrative

Court-BUT ONLY compensation of damageCourt-BUT ONLY compensation of damage Decision of Commission to be published on Decision of Commission to be published on

the PP web-portalthe PP web-portal

Corruption-examplesCorruption-examples Corruption in PP is the most plausible in big Corruption in PP is the most plausible in big

infrastructure (works) contractsinfrastructure (works) contracts Africa: “black elephants’ projects”-projects Africa: “black elephants’ projects”-projects

that are not necessary for citizens (Nigeria-that are not necessary for citizens (Nigeria-concrete)concrete)

Italy-Milan subway-after the Italy-Milan subway-after the anticorr.investigation costs fell from 227 anticorr.investigation costs fell from 227 mill.EUR to 97 mill.EUR; construction works: mill.EUR to 97 mill.EUR; construction works: violation of rules in order to save money-violation of rules in order to save money-human lifes losseshuman lifes losses

Other aspectsOther aspects

Neglected ecological rules because of Neglected ecological rules because of corruption cause investments in project that corruption cause investments in project that are unacceptable from ecological point of vieware unacceptable from ecological point of view

So called “estetic criteria”-give space for So called “estetic criteria”-give space for corruptioncorruption

EU integration of Serbia-Chapter 5: EU integration of Serbia-Chapter 5: opportunity to strengthen the institutionsopportunity to strengthen the institutions

Importance of public procurementImportance of public procurement

Example: Public Procurement are part of the Example: Public Procurement are part of the Constitution of South Africa (article 187.)Constitution of South Africa (article 187.)

Thank you for your attention!Thank you for your attention!

bknezevic@ujn.gov.rsbknezevic@ujn.gov.rs