Country policy reports on institutions in public procurement for the infrastructure sector

The goal of this deliverable is to provide an assessment of the impact of corruption on development by focusing on infrastructure through a survey of EU-funded infrastructure projects in selected countries. Our reports focus on the construction sector because this sector is indicated by nearly every source as the highest public investment and top risk area in nearly all the countries.
The report on Turkey draws on quite complex analysis to identify the public-private partnerships and concessions as the main means to achieve favouritism, for instance, which would not be possible in the context of EU legislation. The existence of private favourite firms with political connections is confirmed for Hungary, Romania, Bulgaria and Turkey. Some state agencies seem entirely captured, with all over 50% of their budget going to such firms. In Croatia state-owned companies are the most favoured, but their management is entirely politicized, so the research team argues that private profit exists (for the appointing party). The Hungarian report found EU funds a liability especially since the 2010 government change. In the case of Romania, national funds, as compared to EU funds, are more susceptible to procedural irregularities as evidenced by the larger share of contracts won by a single bidder. However, politically well-connected companies are winning not just national Romanian contracts but are also winning more EU funded contracts. The indicators on market concentration are more ambiguous and difficult to interpret, but there seems to be less distortion than hypothesized. The main impact is on public funds and democracy, as procurement seems an important means to fund politics. Particularism seems an important presence and part of the rules of game, even in Germany, despite insufficient evidence indicators exist to suggest that ethical universalism is far from being the general norm and many informal practices still persist. The impact on society is however highest in new democracies such as Romania, where most of the top fortunes in construction and most other areas are actually made from public contracts, not the private market. Similarly in Hungary, the most rapid wealth accumulation can be directly traced to procurement contracts awarded to companies with direct links to the top leadership of the right-wing government.
Each country report contains recommendations which can be grouped in three main areas: improvement of transparency, training of administrators, and monitoring. Indeed most of the problems found reflect rules of the game that are perceived by the population of these countries and which could be avoided by prevention, consisting of full transparency, training, and monitoring.

Tags: , , , , , , , , ,