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SYSTEMIC CORRUPTION AND PUBLIC PROCUREMENT IN DEVELOPING
COUNTRIES: ARE THERE ANY SOLUTIONS?
Sope Williams-Elegbe*
Abstract
Corruption affects development and the quality of life of citizens in affected countries.
The increase in anti-corruption measures globally reflects a consensus that corruption is
pervasive and costly. Public procurement is one area in which corruption manifests, due
to the sums of money involved; the asymmetry of information; and the bureaucratic
nature of decision-making, which presents opportunities for abuse. In developing
countries, procurement corruption is rife due also to institutional weaknesses, the lack of
enforced accountability mechanisms, and a culture of silence in relation to public sector
malfeasance. This paper examines procurement corruption in countries with systemic
corruption, using Nigeria as a case study, to determine how to reduce public
procurement corruption. The paper will highlight the prevalent corrupt schemes in public
procurement in Nigeria, examine the reasons for the failure of state anti-corruption
institutions, and analyze the kinds of initiatives that reduced procurement corruption and
increased accountability in other countries and the utility of adopting such mechanisms
in the Nigerian context.
INTRODUCTION
There is little gainsaying the fact that corruption in Nigeria has reached epidemic
proportions (Smith 2007, 113, Apampa, 2005). Corruption is systemic (or endemic)
“where bribery, on a large or small scale, is routine in dealings between the public sector
and firms or individuals. Where systemic corruption exists, formal and informal rules are
at odds with one another; bribery may be illegal but is understood by everyone to be
routine in transactions with the government. Another kind of equilibrium prevails, a
systemic corruption "trap" in which the incentives are strong for firms, individuals, and
officials to comply with and not fight the system” (World Bank, 1997). According to
Klitgaard, “a distinguishing characteristic of systemic corruption is that the many parts of
the government that are supposed to prevent corruption have themselves become
corrupted — budgeting, auditing, inspection, monitoring, evaluation, and enforcement”.
(Klitgaard, 2004). This affects the efficacy of normal anti-corruption enforcement and
makes the anti-corruption task much more difficult (Klitgaard, 2004).
The systemic nature of corruption in Nigeria can be seen in the country’s consistently low
scores in the Corruption Perceptions Index1 as well as the shocking results of the 2013
Global Corruption Barometer, which tracks public opinion on corruption; and the sheer
number of corruption scandals and allegations reported during the last decade (Okonjo-
Iweala, 2012, 81-94). Although these do not give a complete picture, they provide a
snapshot of what the corruption landscape in Nigeria looks like. There is also a growing
body of academic and other literature, which traces the origins of corruption in Nigeria
and highlights, examines and decries the extent to which corruption manifests in Nigeria
(Salisu, 2000; Oji & Oji, 2010; Smith, 2007; Okonjo-Iweala, 2012; Rotberg, 2009, Smith
2009).
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* Sope Williams-Elegbe. PhD is a Senior Lecturer in Law at the University of Lagos, Nigeria, a public
procurement consultant, and a Research Fellow & Deputy Director of the African Public Procurement
Regulation Research Unit at Stellenbosch University, South Africa. Her teaching and research interests are in
public procurement, anti-corruption law, business ethics, corporate governance, and commercial law.
sopewe@gmail.com
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Table 1: Nigeria in the Corruption Perception’s Index 2005-2015.
Year
Rank
Score
2005
152/158
1.9/10
2006
142/163
2.2/10
2007
147/179
2.2/10
2008
121/180
2.7/10
2009
130/180
2.5/10
2010
134/178
2.4/10
2011
143/182
2.4/10
2012
139/174
27/100
2013
144/175
25/100
2014
136/174
27/100
2015
136/168
26/100
Source: Transparency International
As can be seen from the table, there has not been an appreciable improvement of the
perceptions of corruption in Nigeria in the highlighted period. Further, in 2013, the latest
edition of the Global Corruption Barometer reported that 72% of Nigerians felt that
corruption was on the increase, with the view that the most corrupt institutions were
political parties (94%); the police (92%); the legislature (73%); and the civil service (69%).
This paints a wholly dismal picture of Nigerians’ experience of and interaction with the
government and provides a clue as to the high level of public disillusionment with the
public sector and a feeling that there is little that ordinary citizens can do in the fight
against corruption (Global Corruption Barometer, 2013; Smith, 2009). The results of
these surveys are supported by the research by Persson et al, which revealed that in
developing countries with systemic corruption; the problem of corruption seems to have
become worse with efforts to curb it (Persson et al, 2013). That certainly seems to be
case in Nigeria where public sector corruption scandals in the last decade now involve no
less than millions of dollars or billions of naira (Obuah, 2010).2
One of the main areas in which corruption manifests is in public procurement (Williams-
Elegbe, 2012, 25; Okonjo-Iweala, 2012, 88; Suberu, 2009, 266; Ware et al, 2007;
Klitgaard, 1988; Rose-Ackerman, 1999; Thai, 2005). In Nigeria, “access to and
manipulation of the government-spending process has become the gateway to fortune.”
(Salisu, 2000). Thus, corruption in the public sector is hugely dependent on the
manipulation of the procurement framework and public financial management more
generally. Despite legislative intervention to curb the abuses in the public procurement
system, through the passage of the Public Procurement Act in 2007 (PPA), which
mandates the use of competitive processes in public procurement, criminalizes a wide
range of procurement-related offences, and creates a procurement regulatory institution,
(Williams-Elegbe, 2012a) it is clear that public procurement in Nigeria continues to be
plagued by corruption, fraud and unethical practices.
It is important at this juncture to mention that despite an extensive (and comprehensive)
legal and institutional framework against corruption in Nigeria (Bello, 2014, Okogbule,
2006), very little progress has ben made in the fight against corruption. The reason for
this is not complex. The study by Persson conceived of systemic corruption as a problem
of the collective in affected societies, thus moving away from the principal-agent
paradigm that had been used to characterize corruption in economic literature for
decades (Groenendijk, 1997). Where corruption manifests as a collective action problem,
this leads to a breakdown of even panoptic anti-corruption measures based on the
principal-agent paradigm as there are no “principled principals” in existence who can
enforce the anti-corruption regime (Persson et al, 2013, Klitgaard, 2004). This ultimately
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means that the formal anti-corruption prescripts are flouted with impunity, or ignored at
best.
Beyond the absence of ethical principals to enforce the anti-corruption regime, Soudry
opined that it is in fact an anomaly to speak of principals as a homogenous group, as
what exists in fact is “a diverse collection of principals, composed of interests
represented by pressure groups influencing politicians and the general public.” (Soudry,
2007, 435-436). The upshot is that where there is systemic corruption, there are few
persons or even institutions committed to integrity, and the consequent lack of a critical
mass of enforcers and enforcement. Further, the interests that are represented in
government are likely to be uninterested in dismantling a corrupt system that they are
content to profit from. It thus becomes necessary to base anti-corruption efforts on a
system that as much as is possible, is not wholly reliant on the traditional (public sector)
principals or interests.
Procurement corruption produces devastating consequences for development. One issue,
which remains unclear, is the effect that development has on corruption. Whilst there is
much literature devoted to the effect of corruption on development (Bayley, 1966; Mauro,
1997; Bardhan, 1997; Theobald, 1990), with the conclusion that reforms necessary for
development are likely to fail because of corruption, less academic information exists on
whether development itself “creates” more corruption, or at least more awareness of
corruption through increased agitation for transparency, good governance and stronger
action over corruption. It certainly appears to be the case that an improvement in
development indicators creates more of a focus on corruption as a result of factors such
as better literacy, and increased access to technology and information, which provide
citizens with the tools needed to demand accountability and the platforms necessary to
do this (Heroles, 2012).
This paper will begin by highlighting some of the corrupt procurement schemes that are
prevalent in Nigeria, briefly highlight the challenges faced by state institutional anti-
corruption organisations and will then discuss anti-corruption initiatives that have worked
in the procurement context in other jurisdictions and examine whether such measures
will be useful in the Nigerian context. One thing is clear, as was stated by Nigeria’s
President, Muhammadu Buhari, who in 2015 was elected on an anti-corruption platform
that “if Nigeria does not kill corruption, corruption will kill Nigeria.” (Buhari, 2015). This
paper is an attempt to find ways to “kill procurement corruption” in Nigeria.
CORRUPT SCHEMES IN PUBLIC PROCUREMENT IN NIGERIA
There are several ways by which both the public and the private sector may manipulate
public procurement for illicit ends. Corruption schemes in public procurement are often
similar in “form, shape, nature, and anatomical structure worldwide” (Ware et al, 2007,
299). This section will examine the more common schemes used in Nigerian
procurement, highlighting the Nigerian contextual approach to these schemes with a view
to putting procurement corruption into perspective. As will be seen, there are several
areas of overlap between the schemes and they do not necessarily fit into neat
compartments, but are here grouped and categorized for ease of reference. Most
corruption schemes are in fact a composite of different kinds of corruption, making it
difficult to unravel. It is thus often the case that demands or offers for illegal payments
are accompanied by bid rigging or other anti-competitive schemes and fraud in
documentation and contract and financial management to cover up the bribery and bid
rigging (INT, 2009; World Bank, 2013). It may be noted also that these schemes may be
perpetuated by either the public or private sector participants acting alone, or with the
participants collaborating to effectuate the corrupt scheme.
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i. Bribes and kickbacks: These are a “staple” in the corrupt procurement diet of any
country and are often requested or paid in order to obtain a government contract,
and in some jurisdictions in order to participate in the bidding process. In some
cases, payment may be made for inside information or to have tailor-made
bidding specifications (Rose-Ackerman, 1999, 27-38). Bribery schemes have
become increasingly more difficult to trace and understand, given the use of
“kickback brokers” (Ware et al, 2007, 299) or “agents” who interface between
the bidding company and the public sector. It should be noted that recent anti-
corruption legislation such as the UK Bribery Act 2010, criminalize activities of
such agents and representatives, thus blocking a loophole in the criminalization
of foreign bribery. In Nigeria, the secretive nature of bribery schemes in public
procurement and inadequate publication of government information makes it
difficult to uncover bribery schemes. However, investigations and prosecutions by
the US government provide an indication into the scale of bribery in Nigerian
federal procurement. For instance starting from a 1994 bid to build a $2 billion
natural gas plant for the Nigerian government, Halliburton was found to have
channeled $182 million dollars to several former Nigerian Presidents and officials
through an agent (US DOJ, 2009). Although Halliburton faced stiff penalties in the
US for its role in this scandal, (US DOJ, 2009) in Nigeria none of the officials
named in investigations have been indicted and in January 2016, the current
President, demanded that the files be re-opened as part of his anti-corruption
stance. Another case involving Airbel Group Ltd highlighted bribes totaling $2.1
million bribes paid to Nigerian Customs officials and government officials in
relation to oil exploration contracts (US DOJ, 2008). In 2009, an executive of
Willbros International Inc. admitted to paying bribes worth over $6 million to
officials in Nigeria’s state owned petroleum corporation to obtain pipeline
construction contracts (US DOJ 2009a). In 2010, Panalpina World Transport
admitted to paying bribes worth $27 million to public officials in seven countries,
including Nigeria (US DOJ 2010). Whilst these cases mentioned involve foreign
participants, the limited anti-corruption investigations, and enforcement in public
procurement in Nigeria mean that there is little information on bribery by
domestic firms, but anecdotal evidence suggests that such practices are thriving
in the procurement market.
ii. Political pressure, conflicts of interest and fronting: Like many developing
countries in Africa, (Williams-Elegbe, 2015) Nigeria undertook procurement
reforms in order to inter alia make procurement fit for purpose and less prone to
corruption, fraud and mismanagement and assist in better managing resources
to meet developmental outcomes (Basheka, 2009). During the procurement
reform process, the World Bank Country Procurement Assessment Report (CPAR)
on Nigeria highlighted political interference and the operational involvement of
politicians in the procurement process as one of the risk areas for and causative
factors of corruption in procurement (World Bank 2000, Williams-Elegbe, 2013).
Although politics is important for an understanding of public procurement (Spiller,
2008), the intervention of politicians in the bureaucratic decision-making process
creates distortions and opens opportunities for political corruption (Soudry, 2007,
438). The CPAR recommended that the approval required by politicians for
contracts over a certain threshold be discontinued. However, this
recommendation was not implemented and politicians are required to approve
contracts over a certain threshold (section 17 PPA) and in doing so are able to
improperly influence procurement outcomes (Williams-Elegbe 2012a).
There are different ways in which political pressure may affect the procurement
process. In the first place, the approvals authority for contracts over defined
threshold in ministries is the Ministerial Tenders Board, which is of course
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headed by a Minister, with the power to authorize contract awards. Secondly,
contracts that have been reviewed by the regulatory authority (the Bureau of
Public Procurement) require further approval by the Federal Executive Council
(ministers in council). This “approval” process is often used as a bargaining tool
between ministers on such contracts. Thirdly, and perhaps, the most
objectionable scheme is the practice whereby a proportion of an agency’s
contracts are earmarked for the Minister, the Permanent Secretary, and other top
officials to be awarded to their nominees.
Although political pressure in procurement is not uncommon, (Ware et al, 2007,
296), in Nigeria, this is compounded by the weak institutions and the low level of
anti-corruption enforcement. Apart from these factors, the extensive political
impunity and lack of accountability that pervades the public sector in Nigeria
(Suberu, 2009; Smith, 2009) also means that where procurement officers are
pressured to award contracts to companies in which officials and politicians have
an interest, there are no consequences for such breaches of the rules. In such
cases, although the formal procurement procedures are followed by the
government agency in question, the entire process is a fait accompli despite the
outward show of legality, (Blundo, 2006, 228) transparency and procedural
regularity through the tender advertisement, public bid opening and constitution
of tender evaluation committees as is required by law.3 This manipulation of the
procurement process is also a form of bid-rigging.
Other ways in which conflicts of interest manifest is the situation where seemingly
independent private companies act as a front for politicians and are awarded
public contracts (Williams-Elegbe, 2012, 26). Fronting also occurs where a
politician or other official desires the award of the contract to a particular
company, but that company does not posses the statutory documentation
required to bid for the contract. In such cases, another company is introduced as
the bidder and awarded the contract; but the actual implementation of the
contract is done by the preferred company, which then pays the contract winner a
fee for its participation in the scheme.
iii. Bid-rigging: This is also a common private sector-led method of manipulating the
procurement process and takes various forms, with the ultimate aim that a
preselected bidder obtains the contract (Ware et al, 2007, 301). There is a
plethora of literature, which describes these schemes, which will not be restated
here, but suffice it to say that such schemes restrict the competition that
procurement procedures are designed to facilitate and often increase the prices
paid for public goods and services (McAfee and McMillan, 1992; Albano et al,
2006; Kovacic, 2006; INT, 2009; World Bank, 2013). A prevalent bid-rigging
scheme in Nigeria is the practice wherein a contractor, with or without the
knowledge of the procurement officials submits more than one bid for the same
lot, thus increasing its chances of securing the contract. In such cases, it is very
difficult to decipher when this has occurred as procurement officials are not
required to investigate company ownerships. Multiple bidding schemes may also
be accepted by procurement officials as a result of political pressure described
above. In addition, procurement officers have been known to tamper with bidding
documents after the submission of bids, by inserting or deleting information into
the bidding documents in order to ensure that the preferred firm obtains the
contract.
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iv. Illegal assignment of government contracts (also known as the “sale of contract
papers”): This is a scheme whereby contractors or suppliers who succeed in
obtaining government contracts assign or sell the rights to the contract to a third
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party for a fee. Although this practice in contract law is referred to as an
assignment, in law, a party to a contract may only assign the benefit, but not the
burden of a contract, and ought to do so with the consent of the other contracting
party.4 However, in Nigeria, both the benefits (i.e. the right to payment) and the
burdens (the obligation to perform the contract) are transferred to a third party
without the formal consent of the government, but with the informal
acquiescence of procurement officials. The motivation for this scheme is derived
from the frequent manipulation of the procurement process either through
conflicts of interest or political pressure, which means that in some cases, the
persons who obtain government contracts do not have the interest, skill,
competence or expertise to deliver on the contract, where the contract was
obtained as a result of a favour or a relationship with a highly placed official or
politician. Thus, once the contract is obtained, the winning bidder, with no desire
or interest to fulfill the contract, sells the rights to the contract to a person who
desires to fulfill and extracts a small rent for this. This of course affects the
profitability on the contract leading to low quality performance and deliberately
poor contract management, described below. The prevalence of this scheme can
be seen in the existence of a permitted informal gathering for the sale of contract
papers known as “The Exchange” within the office premises of the Federal
Capital Development Authority (FCDA)5 in Abuja.
v. Contract splitting: As is the case in many jurisdictions, contracts over a certain
threshold are subject to more formal processes and more stringent approval
mechanisms. Nigeria is no different in this regard and by virtue of a circular dated
11th March 2009, the Secretary to the Government of the Federation issued the
thresholds for prior review of contracts (i.e. the issuance of a certificate of no-
objection) and contract approval. In a nutshell, prior review by the Bureau of
Public Procurement is required for goods contracts over a NGN 100 million, works
contracts over NGN 500 million, non-consultant services over NGN 100 million
and consultant services over NGN 100 million.6 These, the contracts also have to
be approved by the Federal Executive Council. In order to circumvent the
thresholds for prior review and approval by FEC, some government agencies spilt
contracts into several lots, to avoid the regulatory review mechanism and in order
to manipulate the processes for the award of those contracts. It must be noted
here that for contracts below the threshold, the regulatory agency is unable to
track those contracts and will only be aware of illegal or unethical conduct where
there is a complaint by another bidder, or during the ex post procurement audit of
the government agency in question. This provides government agencies with a lot
of latitude to manipulate processes for below threshold contracts.
vi. Contractual variations and price increases: Contractual variations are a huge
problem in Nigerian procurement and are used as a way of rewarding crony
contractors, who have obtained a contract by being the lowest evaluated bidder,
but are also required to distribute the proceeds of such a contract to politicians or
officials as bribes or “gifts”. In order to make this possible, contractual variations
and price increases are approved after the conclusion of the contract. The
problem became so widespread that in 2009, there were two circulars, dated
11th March 2009 and 25th August 2009, which prohibited variations in existing
contracts without review by the Bureau of Public Procurement. Further, another
government circular dated 25th July 2013, requires that Presidential approval is
required for any revision to a contract price above 15% of the original sum and/or
above N1 billion before such is reviewed by the BPP. The reason for this directive
requiring Presidential approval was merely to limit the number of government
agencies that were approaching the BPP for contractual variations subsequent to
the 2009 circulars. Evidence from interviews conducted with BPP officials in
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2015 indicate that this circular served its purpose and there are fewer requested
variations over the limit.
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vii. Deliberately poor contract management: Contract management is an important
part of the procurement process, but the one that receives the least attention in
developing country legislative frameworks on procurement. In most countries, the
regulatory framework on public procurement ends at the point of the award of
contract, thus for the most part omitting any prescripts on contract management
and administration. The reason for this approach may be purely historical; in
countries that belong to the Commonwealth as a result of past colonization by
Great Britain, the received common law in those countries, which for a large part
governs the post-colonial legal system applies administrative (or public) law to the
formation of government contracts and the private law of contracts to the
administration and management of these contracts.7 It is thus believed that the
private law of contract and the specific terms of the contract between the
government agency and the private supplier or contractor will suffice to ensure
the proper management of the contract. However in countries that are affected
by systemic corruption, this belief is not borne out in practice, and the contract
management phase of the contract may be deliberately neglected in support of a
contractor, permitting the contractor to skimp on materials and quality and to
deliberately shortchange the government in breach of the procurement contract
without consequence (Aguilar et al, 2000). Poor contract management also
involves permitting contractors to submit fraudulent invoices and providing
certificates of completion, which in fact ought not to be provided. This may
happen in cases where a contractor has been forced or has agreed to provide a
kickback to government officials or politicians or has paid a bribe upfront and
desires to recoup this cost.
viii. Poor planning, misrepresenting urgency and inflating prices: Although
government agencies in Nigeria are required to submit annual procurement plans
to the BPP and ensure that these plans are tied to needs and that the budget can
support these plans (section 18 PPA), in practice, many government agencies do
not submit these plans as and when due, and instead choose to misrepresent the
urgency for particular procurements in order to utilize emergency procurement
provisions, which obviate the need for competitive selection methods (sections
42 & 43 PPA). Beyond the failures to develop and implement robust plans, there
is very little by way of actual demand forecasting that attends the planning
process (due in part to a lack of proper data collection and management), and
many procurement plans are a regurgitation of previous years’ plans.
Further, another way of diverting financial resources through the procurement
system is by inflating the prices of procurement items (Okonjo-Iweala, 2012, 88;
Obuah, 2010, 23). In the years after the conclusion of the CPAR mentioned
above, it was found that the prices of common items in Nigeria were often four
times as much as in neighbouring Ghana (Okonjo-Iweala, 2012, 88). It should be
mentioned here that for contracts whose prices are above the threshold, the BPP
is able to conduct a downward review of prices, where these are found to be in
excess of market or internationally benchmarked prices. However, for contracts
below the thresholds, which do not entail a prior review by BPP, government
agencies are able to enter into contracts at inflated prices.
THE FAILURE OF STATE INSTITUTIONS TO COMBAT SYSTEMIC CORRUPTION
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As can be seen from the foregoing discussion, there are various means by which both
private and public sector participants in the procurement process may manipulate the
procurement process. As was mentioned in the introduction, one of the problems with
combating corruption in countries where the corruption is systemic is the absence of
“principled principals” dedicated to enforcing anti-corruption mechanisms. The traditional
state-centric anti-corruption organisations have failed to make any appreciable changes
in the fight against corruption, especially in the procurement space.
In Nigeria, this is particularly the case as the key anti-corruption agencies, viz the
Economic and Financial Crimes Commission and the Independent Corrupt Practices and
Other Offences Commission are “not effectively insulated from manipulation by the elite”
(Suberu, 2009, 260) and have in the past been used as a tool to witch-hunt political
adversaries and have themselves been embroiled in corruption scandals (Suberu, 2009,
264). Apart from these, institutional and capacity weaknesses, and funding shortages
also constrain the effectiveness of these agencies (Obuah, 2010). In addition, interviews
with former officials of one of these agencies revealed that where corruption
investigations involved high-ranking politicians, the anti-corruption agencies were often
required to drop these investigations, and failure to do so led to a transfer, a termination
of employment or forced retirement.
One of the traditional oversight institutions in any democracy is the legislature
(Stapenhurst et al, 2006, Thai, 2001). By the Nigerian Constitution, the National
Assembly (a bicameral parliament) is charged with oversight responsibility over all
matters.8 However, the reliance on the National Assembly to pursue anti-corruption
matters is not particularly effective, given that several former and current members of the
National Assembly themselves currently have or have had pending cases over corruption
allegations and others have in the past been indicted of corruption or fraud prior to their
election to the Assembly (Suberu, 2009, 266, 273).
From all these, it can be seen that in order to properly address procurement corruption in
Nigeria, it is necessary to adopt an approach that relies less on the formal and statist
anti-corruption institutions and to rely more on anti-corruption frameworks that are
outside the government such as civil society organisations (Johnston, 2005) and the
media as well as relying on “citizen power.” It will be seen that similar approaches have
worked in other contexts in Nigeria (Williams-Elegbe 2015a) and in the procurement
context in other countries with a corruption problem.
ADDRESSING SYSTEMIC CORRUPTION IN P UBLIC PROCUREMENT: SOME
SOLUTIONS
Corruption control measures in common law countries are often complex, fragmented
and heavily reliant on hierarchy, (Anechiarico & Jacobs, 1996) investigators and
prosecutors. In public procurement, these measures fail, due in part to the paucity of
evidence in corruption cases and in a developing country context, the precise lack of
capacity for tracing financial crimes. Other factors affecting the efficacy of these
measures are the large direct and indirect costs of combating corruption (Klitgaard,
1988, 27); the time resources required for investigations in complex cases and the slow
nature of the judicial system. For these reasons as well as the absence of principals to
enforce the anti-corruption regime, the solutions proposed will rely on activity by civil
society and citizens. As was mentioned above, non-governmental agencies and citizen
action have been used to improve public sector accountability and reduce the scope for
abuse by the public sector in other contexts and are increasingly being used in the
procurement context. In Nigeria, they present the best chance of effecting change in the
procurement system, as long as the action can be sustained. This section presents an
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evaluation of (mostly) citizen-led measures that may be useful to reduce corruption in the
procurement context in Nigeria.
i. Citizen surveillance, monitoring, and participation: Platforms like the Open
Government Partnership and the concomitant commitment by countries to
increase accountability through citizen participation illustrate that “citizens active
and direct engagement in government processes is a growing trend.” (Parafina,
2015). In 2009, OECD countries, in recognizing the importance of citizen
engagement in public procurement committed to “empower civil society
organisations, media and the wider public to scrutinize public procurement”
(OECD, 2009).
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The past 30 years have shown the strength of sustained and organised citizen
action in fields such as environmental conservation and public accountability
(Bohorquez and Devrim 2012, 26). This model can be replicated and is already
being adopted in the procurement context (Landell-Mills, 2013, 160), and there
are some examples where active citizen participation is required by law or
pursued by civil society (Heroles, 2012). For instance in Mongolia, the
procurement law provides for civil-society co-evaluators in the bidding process
(Parafina, 2015). Similarly, in Mexico, “social witnesses” are legally required in all
major procurements and this has significantly reduced the cost of public
contracts in Mexico (Simone & Shah, 2012, 43).
In terms of monitoring, citizen participation could also be included in the
monitoring and evaluation (M&E) of concluded contracts. This approach would
certainly work in Nigeria, where there is an active (if fragmented) civil society that
could be called on to provide participatory M&E for high value, high impact
projects. It may be noted that section 19 of the Nigerian Public Procurement Act
gives an express mandate to government agencies to invite “two credible
persons” to participate as observers in every procurement process. This is
currently not being done, but it gives an indication that citizen surveillance is
acceptable in the Nigerian context.
The monitoring of project delivery and completion is one of the ways to ameliorate
the challenges of insufficient or inadequate procurement data and information in
Nigeria. For instance, in the Philippines, the Bantay Eskuwela initiative involves
the local community in monitoring the purchase of books and school furniture by
the Department of Education. Under this initiative, teachers, students, parents
and other volunteers count books supplied and verify their quality and quantity
(Simone and Shah, 2012, 46). Similarly, in Kenya, various kinds of mechanisms
have been implemented to monitor procurement spend with some success
(Okello, 2012). This is not to suggest that citizen participation in procurement
monitoring is not without its challenges, the most obvious ones being the access
to information, funding of monitoring and challenges with monitoring complex
procurements, but there are several ways of circumventing these issues. (Simone
and Shah, 2012).
ii. Data driven action: Procurement corruption thrives in opacity, either through the
provision of limited information or obstacles created to access information.
(Blundo, 2006, 238). As a result, timely and relevant public disclosures of
procurement information is an effective tool for increasing transparency in the
procurement process and limiting the scope for abuse in the procurement
process.
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In January 2016, a group of Nigerian civil society organisations launched an
online platform known as Budeshi9 (“open it” in the Hausa language) to link
procurement data to budget data, with the aim of providing information to the
public that could be used in monitoring procurement contracts and point to red
flags. At present, the platform obtains its datasets through requests under the
Freedom of Information Act, 2011 and thus possesses a limited number of data
sets, but it is also trying to get the public sector to incorporate Open Contracting
Data Standards (OCDS) to improve the accessibility and usability of procurement
data. Whilst the platform is still in its infancy, the publication of procurement data
will lead to improved outcomes and increased accountability in procurement and
in the public sector more generally. In Nigeria, a civil society organization called
BudgIT.ng has succeeded in the last three years in improving visibility of the
public budgeting process by publishing simplified infographics on the budget and
leading citizen demands for accountability of spending at local government level
(Williams-Elegbe 2015a). BudgIT also has a platform known as TrackaNG, which
enables the public to track capital projects in their community. Citizens are
expected to use the platform to “track projects in the budget and give feedback to
the government and their communities” (Tracka 2016). The platform does not
however contain a lot of information, which may point to their inability to obtain
the required data and information from the government.
It may be noted that data-driven action is a sub-set of citizen action described
above, but data-driven action can take any number of forms depending on the
use to which the receiver decides to put it. The example of BudgIT.com in Nigeria
and the promise shown by Budeshi has shown that there are any number of
organisations and individuals that are ready to demand accountability should the
right information be put into the public domain. Some of the information that is
currently not easily accessible in Nigeria is the details of public contract
awardees, the contract value, the final contract values, and the project status. For
large infrastructure projects, especially, which are most prone to corruption, it will
greatly improve procurement outcomes if the Bureau of Public Procurement can
provide this information to the public in accordance with internationally accepted
OCDS, or at least in a machine readable, accessible format. In the procurement
context, Mexico, (Veerman, 2015), which also has a problem with systemic
corruption has succeeded in improving procurement outcomes through similar
initiatives.
iii. Media engagement and support: Media support in the fight against corruption is
crucial to the success of the fight. In many jurisdictions, the media are a crucial
ally of citizens and civil society and they are best placed to demand public sector
accountability through investigative reporting (Landell-Mills, 2013, 208). In such
cases, the kind of activity that appears to deliver results and galvanize
subsequent action is long-term sustained reporting. Thus in countries like South
Africa and Nicaragua, long term reporting or campaigns against particular
corruption issues have led to investigations by the Public Ombudsman (in South
Africa) and legislative reform in Nicaragua (Landell-Mills, 2013, 209-210). In
Nigeria, a similar approach of sustained reporting of corruption cases would be
beneficial to the fight against procurement corruption, and in recent times, social
media platforms have been used to galvanize citizen action and limited changes
in certain areas, such as in relation to the 2012 Fuel Subsidy Protests and the
still on-going Bring Back out Girls campaign. (Williams-Elegbe, 2015a). However,
other forms of media, especially traditional print media and radio must be willing
to devote more attention to these issues in order to reach the segment of the
populace that is currently underserved by the Internet. At present, most
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corruption reporting is limited in scope and duration and many scandals are
removed from the public consciousness within a very short time.
iv. Procurement oversight institutions: Although the thrust of this section is to move
away from state centric anti-corruption bodies, one state sponsored organization
that is able to reduce the scope for corruption in public procurement even in
countries with systemic corruption are the procurement regulatory organisations.
These bodies are often constituted with relative independence from the executive
and legislature (Soudry, 2007 438-439) and are designed to be able to detect
and uncover corrupt practices in public procurement. Nigeria is no exception and
the Bureau of Public Procurement is at the forefront of the fight against
procurement corruption, although it is constrained by funding and capacity
challenges and limited enforcement powers. If the BPP were to be supported to
address some of its institutional weaknesses, it could record a much higher level
of success in the fight against procurement corruption.
!
v. The tone from the top: In countries that have successfully moved away from
systemic corruption, this move has often been tied to the emergence of a leader
who was committed to anti-corruption reform and sent a signal of change to
public sector institutions and to citizens (Klitgaard, 2004). In Nigeria, this is
already the case with the election of President Muhammadu Buhari in 2015.
However, his strident anti-corruption rhetoric must be accompanied by the
prosecution of important or VIP offenders, focusing on short term gains and low
hanging fruit as well as the mobilization of the citizens in the fight against
corruption (Klitgaard, 2004). Without these accompanying elements, the change
that is wrought by the rhetoric alone will be very limited. It may be noted that as at
February 2016, the prosecution of several high profile personalities who
subverted procurement processes and diverted state resources under the
previous administration are currently ongoing, although none of the defendants
have been convicted yet. These include the former National Security Adviser, Col.
Sambo Dasuki (rtd.) being tried for the diversion of USD$322 million meant for
the purchase of arms; the former Minister of State for Finance, Bashir Yuguda;
Olisa Metuh, former National Publicity Secretary of the opposition Peoples’
Democratic Party, both being tried for their role in the arms scandal and several
other high profile officials and politicians who are being tried for various offences
ranging from procurement fraud to money laundering and criminal breach of trust
(EFCC, 2016).
CONCLUSION
Addressing systemic corruption in public procurement in developing countries is a
complex, multi-faceted issue, requiring multi-level approaches, that take into account the
economic, social, cultural, and political nature of this corruption. The failure of the
principal-agent framework in providing effective solutions to systemic corruption presents
additional challenges for developing countries. This means that the usual approaches,
such as improving enforcement, limiting discretion and increasing accountability
mechanisms may not yield much fruit as the officials and politicians responsible for
enforcing these frameworks are themselves part of the problem. This is one reason why
this paper advocates for non state-centric approaches, relying on the public and civil
society to address corruption in public procurement.
It must be noted that these non-state solutions are clearly not a panacea to all the ills of
corruption in public procurement and are not designed to absolve state institutions and
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12!
public officials of their responsibilities in relation to procurement corruption, but are
expected to provide the pressure and the impetus required for the state to respond to
demands for more accountability in the procurement space. Public sector support and
willingness to address corruption at a macro or micro level is always necessary to
effectively combat corruption, even where this support is not forthcoming. At present, the
current Nigerian President is keen to holistically address corruption in the public sector in
Nigeria, and it is hoped that in the long term, both the government led as well as the
citizen led measures against procurement corruption will produce tangible and
measureable results.
NOTES
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1 See Table 1
2 In 2014, the then Governor of the Central Bank alleged that $20 billion was missing
from government accounts; he was suspended and later relieved of his duties. In 2014,
the whistle was blown on the purchase of armoured vehicles at an inflated price by the
then Minister of Aviation (the former Minister is now a Senator). In 2016, the former
National Security Adviser was indicted for misappropriating $322 million meant for the
purchase of arms and is currently on trial.
3 Soreide refers to this as the predestination of contracts. See Tina Soreide, Corruption in
Public Procurement. [Online]. Available at
http://www.cmi.no/publications/2004%5Cprocurementsoreidejan2005.pdf
4 A. Obikoya v Wema Bank Ltd SC 61/1986
5 FCDA is the agency responsible for the development of Abuja, the capital city. It thus
issues a vast number or construction and other contracts.
6 As at February 2016, USD$1 = NGN199 at the official rate and NGN345 at the parallel
market.
7 See for instance the South African case of Aquafund (Pty) Ltd v Premier of the Western
Cape [1997] 2 All SA 608 (C) 616e.
8 Sections 4, 88 & 89 Constitution of the Federal Republic of Nigeria, 1999. Note that by
section 88 (2) (b), the National Assembly may direct an investigation into any matter in
order to “expose corruption, inefficiency or waste in the execution or administration of
laws within its legislative competence and in the disbursement or administration of funds
appropriated by it.”
9 See www.budeshi.org
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