Thursday 28 Mar 2024
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(July 6): The Organisation for Economic Co-operation and Development (OECD) is concerned about the outbreak of Covid-19 which would create opportunities for many integrity violations and could intensify fraud and corruption, especially in public procurement, public organisations and economic stimulus packages.

Many governments, due to the Covid-19 outbreak effects, have allocated billions through stimulus packages for emergency pandemic responses to address economic problems such as unemployment, assist social-welfare programmes and for urgent health needs and procuring the most critical medical supplies. At the same time, the rakyat are looking to the government for their very economic survival.

The first stimulus package introduced by the Malaysian government was valued at US$4.8 billion and aimed at countering the immediate impact of the outbreak on the country’s most vulnerable sectors and households. Prior to this, former prime minister Tun Dr Mahathir Mohamad committed RM150 million to purchasing the relevant equipment, medical and consumables in an effort to contain the Covid-19 outbreak.

The second stimulus package the government allocated comprised special allowances for healthcare providers, one-off cash aid and a microcredit scheme for small and medium enterprises (SMEs), among others. 

Of the total, RM128 billion will be spent on public welfare, RM100 billion to support businesses and RM2 billion to strengthen the country's economy.

Procurement fraud is a common issue in every stage of a product or service procurement process, especially so during the Covid-19 pandemic and crisis.

Transparency International (TI) stated that, unfortunately, corruption often thrives during times of crisis, particularly when institutions and oversight are weak, and public trust is low. It happened in past global health emergencies, like during the Ebola virus and Swine flu; even in times of crisis, there were those who aimed to profit from others’ misfortune.

According to Robert Klitgaard’s formula of C = M + D – A, corruption equals monopoly plus discretion minus accountability. One tends to find corruption happens when an organisation or person has monopoly power over a good or service, has the discretion to decide who receives it and how much that person gets, and is not accountable. Combating corruption is such a difficult task and sensitive issue that many national political leaders who support such efforts in principle are hesitant to undertake them in practice.

There is a consensus agreement among economists that the Covid-19 pandemic has ravaged and dealt a severe negative impact on the global economy. It will definitely create a monopoly-supplier spontaneously.

In the present situation, the U4 Anti-Corruption Resource Centre stressed that in many countries, responses to Covid-19 have seen breaches of anti-corruption standards, such as cutting corners in procurement processes, or persons in power taking advantages of the crisis to increase their private benefits.

It is quite normal for countries to respond to the Covid-19 pandemic by loosening procurement procedures and checks and balances. During the crisis, they have invoked emergency legislations by awarding tenders through direct negotiations instead of open tenders. 

The crisis can create environments for corruption and fraud in procurement processes, such as conflicts of interest, embezzlement and tender manipulation or direct awards to cronies, “with all sorts of reasons being given” to justify the awards.

Subsequently, con artists, including corrupt politicians and public officials who have been exploiting every trick, would see this as a gold mine and opportunity to defraud and make easy money.

Identifying these corruption risks before they happen can help strengthen our responses and get the best value for money and the right contractors, vendors or suppliers.

Government transparency for contracts is fundamental in ensuring proper management of contracts, with clear and robust internal accountability arrangements, strengthening accountability, reducing corruption and enhancing good governance. Without transparency, openness and transparent information, there can be no accountability. Bear in mind that the public want to see even during the crisis whether they are getting their money’s worth from government contracts.

Contracts should be awarded to contractors with evidence of reliability, capability, responsibility and a good track record, both technically and financially. If possible, it is good to conduct an honest due diligence on contractors before awarding contracts as nowadays, getting information via the Internet is easy, especially on the market price.

Even the World Economic Forum has agreed that transparency and accountability must not be lost in the haste to respond to Covid-19, and putting sound processes and accountability into place is an opportunity not just to avoid corruption, but to rebuild trust.

The government’s process of acquiring goods and services is diverse, complex and huge. It ranges from papers to commercial and complex projects. Prior to this, the Malaysian government spent RM40 billion annually to purchase assets and RM35 billion on the service sector.

Based on complaints received by the Malaysian Anti-Corruption Commission (MACC) between 2013 through 2018, wrongdoing involving procurement was approximately 43%, which topped the list of sectors prone to corruption. This is duly expected as it is the public sector that has the power that is exchangeable with money.

Prior to the new normal, Tan Sri Ambrin Buang, a former auditor-general, predicted that up to 30% of Malaysia's public projects' value was lost owing to mismanagement and corruption. Consider the amount of savings the government would have obtained if it paid 30% less for goods and services the contractors and vendors provided. If left unchecked, the present crisis may develop into a worst-case scenario.

Past high-profile prosecution cases should be a lesson to all on accountability and an impetus to carry out duties with responsibility and integrity. Even though nobody can prevent politicians from trying to interfere, public servants can exercise their right to ignore them, especially when a request is made not in accordance with the laws.

In the absence of a culture of accountability and organisational integrity, no one would bear the responsibility or feel embarrassed by their wrongdoing, while corruption would get further aggravated. But one must remember that the penalty for corruption cases is severe, with a ripple effect on families for generations to come.

Corruption during the Covid-19 crisis is a threat to good governance, political stability and the socio-economic development of a nation.

Datuk Seri Akhbar Satar is the president of the Malaysian Association of Certified Fraud Examiners.

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