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Civil Society Engagement myths and realities. A
case from the Integrity Pact experience. Eduar
do Bohórquez and Juanita
Olaya Transparencia Mexicana
Transparency International
Secretariat Transparency International Nove
mber 2003
www.transparency.org
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Overview

• The case for Civil Society involvement in
  preventing corruption in public contracting
• Civil Societys involvement myths and limits
• Practical Implications for policy makers and CSOs

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The impact of corruption
in Governance

• Could the government be trusted for the decisions
  they are making?
• Was the final outcome of these decisions altered
  by the procurement or contracting process?
• Were fiscal resources spent wisely?
• Is the Government trusted to do anything about
  (against) corruption at all? And then on, on
  other issues?

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The case for CSOs involvement in preventing
corruption in public contracting

• The cost of corruption from
• the citizens and firms perspective
• On average, households paid USD 9.50 for each
  bribe
• On aggregated figures, this accounts for USD 2.3
  billions (23,400 millions of pesos) in petty
  corruption
• Households in Mexico use 6.9 of their income
  just for bribes
• Households in Mexico under one minimum wage use
  13.9
• Firms worldwide percentage of the contract value
  typically offered in unofficial payments when
  firms (in your industry) do business with the
  government between 5 and 10 (WBES2000 Survey).
• Firms worldwide more than 80 of the firms pay
  up to 25 of their revenue per annum as
  unofficial payments to government officials.
  (WBES2000 Survey).

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How harmful is corruption in Public Contracting?

• It has been estimated that about 68 of
  government expenditure (world average) turns one
  way or another into contracts (e.g. on a yearly
  basis, the Federal Mexican government
  participates in more than 15,000 20,000 public
  procurement processes).
• Experts estimate that corruption can add up to
  25 to the costs of contracting.
• Low levels of trust in government procurement
  and contracting are important sources of social
  distrust.
• Citizens needs unattended.

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Is there a rolefor Civil Society in Procurement?

• An opportunity to attend unforeseen consequences
  of the law and to act accordingly
• An independent facilitator to the contracting
  process or procurement law enforcement
• A final chance to directly address the loopholes
  of the contracting or procurement laws
• A source of support and sustainability for public
  policy
• A tool for conflict management and good policy
  implementation
• CSOs can contribute in bringing balance vs.
  powerful stakeholders.

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Civil Societys involvement

• The benefits
• Safeguarding integrity, but much more relevant,
  trying to restore trust in public institutions
• Allows civil society and public opinion to
  understand the rationale behind a public decision
• Provides an open discussion about the quality of
  the public decision
• A third party is conscious about the output of a
  procurement process but also about the final
  outcome
• Preventive role
• Helps important initiatives to survive government
  change

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IP the model and some results

• The model
• Collaborative public sector, private sector and
  Civil Society
• Based on political will
• Explicit agreement levels the playing field,
  facilitates law enforcement, facilitates acces to
  information
• Creates monitoring role
• Current application
• Different versions retaining essential elements
  worldwide (aprox 12 different countries)
  on more than 100 contracting processes.
• Assesment on its way

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IP the model and some results

• Reported impact, some examples.
• Savings. For example
• Colombia technological turnaround of the -Banco
  Agrario- ( 2002), finished with an awarding price
  30 below the budgeted price
• Pakistan K-II Greater Karachi Water Supply
  Scheme (2001-2002) the Karachi Water and Sewerage
  Board (KWSB) included the application of the IP
  concept in the contracting process for
  consultants.
• Trust. When losing bidders say we are unhappy
  that they lost, but know we lost fairly
• Sanctions. In some countries, companies have been
  blacklisted for violating the Pact. ( i.a. Italy,
  Korea)

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The Myths

• Civil Society engagement is
• The panacea
• An Unncessary hassle pandora box for intruders
• Another word for lobbying
• Is Not-Civil or Not-Society
• We all know what Civil Society is
• Civil Society is the same everywhere

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The Limits

• Unbalanced interests, the direct output (a
  winner) vs. the final purpose and outcomes.
• An early warning system, like civil society
  monitoring in public procurement, is not a
  permanent solution for a problem room for future
  legal reform.
• The importance of keeping a comprehensive
  approach to governments overall operation.
• When engagement backfires misunderstanding civil
  society, enforcing prejudice and exaggerating
  limitations.
• Daily life is difficult enough understanding
  priorities and transaction costs.

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The Limits

• What do we MEAN by Civil Society? Definitions and
  approaches vary from country to country.For
  example
• Arab world limitations to freedom of speech and
  association, local-type organizations,
  non/representativeness, no tax payers. Is there a
  Civil Society?
• Eastern Europe government was too big? Distrust
  in law, government and institutions..who trusts
  who?
• Asia role of ethnicity and religion.
• The test what stakeholders are not having a
  voice in the process but do have a say in it?

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Practical Implications

• The role of political will and firms social
  responsibility without it, it does not happen.
• The difference between power and authority
  losing power may give authority and thus give
  more power afterwards.
• Technical capacity on all sides is crucial at
  making participation productive and constructive.
• No news is good news success is not appealing to
  the Media.
• Local dynamics are wiser.
• International civil society also exists.
• A different sense of government balanced
  involvement, cannot serve as an excuse to
  postpone Govmt. Reform.

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