Mihály Fazekas – Ágnes Czibik

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Presentation transcript:

Mihály Fazekas – Ágnes Czibik EU Funds, corruption risks, & integrity pacts in public procurement across the EU Mihály Fazekas – Ágnes Czibik Corruption Research Center Budapest, agnes.czibik@crcb.eu Integrity Pacts – Preventing Fraud In Public Procurement Through Civil Society Oversight Mechanisms, 10th June 2015; Zagreb 10/11/2018

Two questions CHALLENGE? To what degree are EU Funds susceptibe to corruption? SOLUTION? What scope for Integrity Pacts in corrupt environments? 2018.11.10.

PART I – EU Funds’ corruption risks? 2018.11.10.

What kind of corruption? In public procurement, the aim of corruption is to steer the contract to the favoured bidder without detection. This is done in a number of ways, including: Avoiding competition through, e.g., unjustified sole sourcing or direct contracting awards. Favouring a certain bidder by tailoring specifications, sharing inside information, etc. See: World Bank Integrity Presidency (2009) Fraud and Corruption. Awareness Handbook, World Bank, Washington DC. pp. 7. 10/11/2018

Using what data? Tenders Electronic Daily (cleaned by DG GROW, big thanks!) 2009-2013 EU28 minus MT&HR 2.3 million contracts awarded Data quality is a BIG issue! 2018.11.10.

‚Red flags’ for measuring corruption risks in PP Single bid submitted Winner's contract share Call for tender publication in OJEU Procedure type Lenght of advertisement period Weight of non-price evaluation criteria Length of decision period Call for tenders modification Annulled procedure re-launched subsequently Contract modification Contract value/duration increase CRI methodology-single bidder only now Final contract value 2018.11.10.

Number of bidders predicts prices Price savings by the number of bidders 121,794 contracts, EU26, 2009-2013 reg relprice i.nr_bid_c ib31.country ib6.anb_csector i.anb_type i.year ib45.ca_cpv_div lca_contract_value if mcvfilter_ok_eu26==1 & relprice<=1 2018.11.10.

Single bidding correlates with perceptions 2018.11.10.

Single bidding co-varies with other ‚objective’ risks Risk of money laundering, diversion of funds Tax havens (TJN’s FSI), EU26, foreign winners, 2009-2013 N=20,024 Tax haven= SS score>59.5+CY 2018.11.10.

Monitoring EU Funds procurement Single bidding in EU Funds and non-EU Funds in PP Matchelt minta: szerződésméret, piac, év, szektor, AK típus 2018.11.10.

PART II – Role for Integrity Pacts? 2018.11.10.

Structural role of Integrity Pacts Theory of change Creating islands of integrity? Sustainability? Catalists for systemic change? Network position of IPs  stability&systemic impact 2018.11.10.

Organisational clusters matter! Hungary 2009-2010 Nod size=CRI Colours=clusters 2018.11.10.

Systemic corruption: Place for IPs? Dots: red is supplier; black is issuer. Size: How many contracts they receive or award. Restricted to the high risk organizations. They tend to be clustered. Closer dots that share a lot of common ties. Captured organisations Hungary 2011-2012Q2

2 (tentative) answers I. EU Funds carry some additional corruption risk on average, BUT... ...impact is strongly context dependent Context: general level of corruption, quality of bureaucracy, amount of EU funding received 2018.11.10.

2 (tentative) answers II. Select IPs carefully and monitor impact rigorously BY... ...building on objective data, big data (e.g. Digiwhist) Link IPs to public procurement data in exisiting databases allowing for: before-after analysis, compareing to control group of organisations, following-up over a longer period 2018.11.10.

Corruption Research Center Budapest: www.crcb.eu Further readings Corruption Research Center Budapest: www.crcb.eu Fazekas, M. and Tóth, I. J. (2014). From corruption to state capture: A new analytical framework with empirical applications from Hungary. CRC-WP/2014:01, Budapest: Corruption Research Centre. Czibik, Ágnes; Fazekas, Mihály; Tóth, Bence; and Tóth, István János (2014), Toolkit for detecting collusive bidding in public procurement. With examples from Hungary. Corruption Research Center Budapest, CRCB-WP/2014:02. Fazekas, M., Chvalkovská, J., Skuhrovec, J., Tóth, I. J., & King, L. P. (2014). Are EU funds a corruption risk? The impact of EU funds on grand corruption in Central and Eastern Europe. In A. Mungiu-Pippidi (Ed.), The Anticorruption Frontline. The ANTICORRP Project, vol. 2. (pp. 68– 89). Berlin: Barbara Budrich Publishers. Fazekas, M., Tóth, I. J. (2014), Three indicators of institutionalised grand corruption using administrative data. Budapest: Corruption Research Centre. Fazekas, M., Tóth, I. J., & King, L. P. (2013). Anatomy of grand corruption: A composite corruption risk index based on objective data. CRC-WP/2013:02, Budapest: Corruption Research Centre. Fazekas, M., Tóth, I. J., & King, L. P. (2013). Corruption manual for beginners: Inventory of elementary “corruption techniques” in public procurement using the case of Hungary. CRC- WP/2013:01,Corruption Research Centre, Budapest. Fazekas, M., Tóth, I. J., & King, L. P. (2013). Hidden Depths. The Case of Hungary. In A. Mungiu-Pippidi (Ed.), Controlling Corruption in Europe vol. 1 (pp. 74–82). Berlin: Barbara Budrich Publishers. 2018.11.10.