Public Procurement and Corruption in Serbia. BORISAV KNEZEVIC M.A. SENIOR ADVISER 8th December 2010, Serbian Chamber of Commerce

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1 Public Procurement and Corruption in Serbia BORISAV KNEZEVIC M.A. SENIOR ADVISER 8th December 2010, Serbian Chamber of Commerce

2 TS Corruption Perception index 2010 Serbia 78th (3.5) Denmark 1st (9.3) Twinning/IPA 2007 with Denmark (LGDK/Public Procurement Office): Strengthening the Serbian PP System, 21 months duration output: corruption map/ red-flags

3 Corruption in PP: legal vs economic/social aspect In Serbia, focus is on legal aspect- find the vioalator and put him in the jail Economic/social aspects are neglected. Corruption decreases living standard, empoyment; domestic companies are losing competitivness-get contract due to bribery, that encourage import and discourage export Result: growing powerty of the nation

4 How to cure the disease? To fight against corruption in public procurement you need three things: TRANSPARENCY TRANSPARENCY and TRANSPARENCY

5 Possible instruments Corruption map/ red flags -this is a general tool for detection of possible hot-points for corruption in the tender process-but detection is not enough-the problem must be removed/solved Comparison of the prices Blacklisting (informal vs formal, Leeds experience)

6 Additonal instruments Public Procurement web-portal-ce obliged to announce notices on the portal-large-value contracts Permanent education of the PP officials and promoting of professionalism in PP, (domestic certification shall start on 15 December, foreign support-the Dutch G2G project), performance measurement N.B.: even licenced/sertified PP official are often influenced by superiors, so the only solution is changing of general climate in the country in the field of PP and wider...

7 Additional instruments II E-procurement: increasing transparency BUT very sensitive-may cause more problems than benefit -Consip Italy vs Albanian example Centralised/collaborative procurement (Italian vs U.K. approach) In Serbia: UNDP project-sofware for 5 municipalities (Pancevo, Subotica, N.Sad, Nis, Pozarevac)

8 Serbian PPL-anticorruption clauses CE may refuse a bidding if dispose with relevant proof that a bidder tried to bribe any relevant person in PP process in order to influence them to unveil inside information or to affect the decision-making in any phase of PP This is also valid if a tenderer tried to threaten those persons (member of PP commission, persons who prepare tender documents...)

9 PPO s role Promotion of usage of open procedure (PEFA) and discouraging of usage of restricted procedures The most dangerous situation: NO PROCEDURE (no transparency, no process, no possibility for complaints) Post-festum approval of urgent procedures : reports sent to SAI Collection of quarterly reports-precious data for SAI

10 Role of the Review Commission Appointed recently in accordance with the Law May reject, partially accept the complaint or fully cancel the tender Possibility of appeal to the Administrative Court-BUT ONLY compensation of damage Decision of Commission to be published on the PP web-portal

11 Corruption-examples Corruption in PP is the most plausible in big infrastructure (works) contracts Africa: black elephants projects -projects that are not necessary for citizens (Nigeria- concrete) Italy-Milan subway-after the anticorr.investigation costs fell from 227 mill.eur to 97 mill.eur; construction works: violation of rules in order to save money- human lifes losses

12 Other aspects Neglected ecological rules because of corruption cause investments in project that are unacceptable from ecological point of view So called estetic criteria -give space for corruption EU integration of Serbia-Chapter 5: opportunity to strengthen the institutions

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

14 Thank you for your attention!