Today, the EU’s Anti-Fraud Office (OLAF) launched a long-awaited study
* titled “Public Procurement: costs we pay for Corruption” during a public hearing in the European Parliament (agenda) organised by MEP Monica Macovei.
The study estimates the amount of direct losses to public budgets throughout 8 EU countries in five different sectors: road & rail, water & waste, urban/utility construction, training and research & development. In total, it is estimated that the overall direct costs of corruption in public procurement in those five sectors in eight countries was 1.4 to 2.2 bln Euros in 2010 (data based on contracts published in the TED database).
As important as the study itself was the discussion at the event that turned around the wider topic of corruption risks in public procurement – one of our Focus Areas here in Brussels:
- The Commission’s Director General for Home Affairs, Mr. Manservisi, highlighted that this topic will be the focus of the upcoming 1st EU Anti-Corruption Report announced for November during the hearing.
- Joaquim Nunes De Almeida, Director for Public Procurement in DG Markt, reminded that new EU public procurement directives will come into force later this year, and that they include new rules on conflicts of interest and strengthened rules against collusion and on exclusion of corrupt actors.
- Commission Semeta in his speech (full text) addressed a range of issues, including the upcoming EU Anti-Corruption report but also the need for a European Public Prosecutor.
- Paulius Griciūnas, Vice Minister of Justice of Lithuania (the current EU Council Presidency) underlined that corruption includes both private and public actors, and that measures should be taken to address both. He proposed, in his personal capacity, to provide economic incentives for officials to report when bribes have been offered to them.
What all of the speakers on the panel highlighted was the need for more transparency in public procurement as one of the major deterrent against corruption, echoing our calls with regard to public procurement procedures but also with regard to the need for transparency of beneficial ownership, which would not just help to prevent money laundering but could also be used to detect hidden collusion. On a side-note: the issue of beneficial ownership will be on the European Parliament’s agenda in October in the LIBE and ECON committee.
PwC, who had co-conducted the study, also underlined on the panel that part of the difficulty in assessing corruption and its costs was the difficulty in getting data – and anyone who has ever tried to use the EU-wide tender database TED will understand that. The OpenTed project tries to make the data more accessible, but much more work needs to be done to allow the public to trace public contracting and spending in Europe. And the database of organisations debarred from EU tenders is not even (partially) accessible to the public.
The next months will be crucial for all these questions, with the EU Anti-Corruption Report, the new EU directives on procurement that need to be implemented in all 28 EU countries and with more EU efforts to tackle corruption to EU structural funds, which includes looking into procurement procedures. We’ll be following this closely!
* I couldn’t find the document online as of now, but if anybody is interested, contact me and I’ll share a digital copy I grabbed at the event.