Q66.

Does the country have legislation in place to discourage and punish collusion between bidders for defence and security contracts?

66a. Legal framework

Score

SCORE: 100/100

Assessor Explanation

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66b. Sanctions

Score

SCORE: 0/100

Assessor Explanation

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66c. Enforcement

Score

SCORE: NA/100

Assessor Explanation

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66d. Training

Score

SCORE: 50/100

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Relevant comparisons

Art. 49 of the Anti-Corruption Law mentions collusion with regards to exemption and mitigation of sentences. Art. 49 says that a person who has committed or is complicit in one or more offences and makes it possible to identify the persons implicated shall be entitled to an absolute excuse under the conditions provided for in the Criminal Code. Art. 52 of the same law stipulates that the provisions on complicity provided for in the Criminal Code shall apply to the offences provided for in this law (1). Numerous articles deal with collusion, including Art. 42, 43, 44, 91, 92 (2). Art. 42, for example, states that participants in the offence are considered accomplices to an offence if they knowingly aided and abetted the perpetrator or perpetrators of the action in the acts that prepared or facilitated it. Thus, no side is excluded from the law (2). No clear reference to the defence sector was made in both laws. The 2016 Public Procurement Law does not mention collusion (3). It is not clear if anti-corruption training addresses collusion. Reportedly, training conducted by the ONPLC included the legal and institutional framework for fighting against corruption, transparency in public life, the code of conduct for public officials, and recriminations, fraud risks in public procurement and internal control (4), (5).

Art. 33 of the Anti-Corruption Law mentions sanctions against individual public officials. It says that any public servant who intentionally abuses his/her office or position to obtain an undue advantage for himself/herself or another person or entity should be punished of two to ten years in prison, and a fine up to 1,000,000 DA (1). Art. 75 of the 2016 Public Procurement Law mentions reasons why biding companies can be excluded from participating in public procurement, for example, bankruptcy or non-compliance with their tax obligations (2). No reference to collusion or the defence sector was made in either law.

This sub-indicator has been marked Not Applicable because research has found no public cases of collusion in the defence sector during the last few years. And public cases of collusion in the civil sector during the last few years have not been found either. According to a US Department of State report, the government does not always provide information on disciplinary and legal action against the military, police, or security forces, even though existing laws allow for the possibility of investigating abuses and corruption (1).

Therefore, the question can only be answered, if at all, by referring to the general state of the judiciary and criminal justice systems in Algeria (2). Freedom House notes that the judiciary lacks independence and the government puts pressure on it. The president appoints all judges and prosecutors. The report also states that security forces frequently undertake warrantless searches (3). Furthermore, the Bertelsmann Transformation Index (BTI) critically assesses Algeria’s anti-corruption efforts stating that there is a lack of an independent judiciary, and notes there is unimplemented anti-corruption legislation (4).

Reportedly, training conducted by the ONPLC included the legal and institutional framework for the fight against corruption, transparency of public life, the code of conduct for public officials, and recriminations, fraud risks in public procurement and internal control (4 and 5).

Article 9 of the 2016 Public Procurement Law prohibits collusion between an official and a bidder, as well as between bidders (1). However, Article 7 exempts arms and military logistics procurement from the law (1).

There is no legislation covering defence procurement that addresses collusion. Thus, this indicator has been marked Not Applicable.

The public procurement law grants authority to officials of the National Public Procurement Service (SNCP) to blacklist companies and senior officials found guilty of corruption, collusion, fraud or other criminal acts for the duration of one to three years and apply heavy fines (more than 20% of the contract value) for repeated offenders of particularly serious infractions (Art. 56, 1.) (1).

There is no legislation covering defence procurement that addresses collusion. Thus, this indicator has been marked Not Applicable.

There is no evidence that comprehensive training has been provided so far.

According to the Executive Secretary of the National Anti-Corruption Network (REN-LAC), “there is no legal framework available, which is specific to the defence sector addressing collusion between bidders; and the practice is widespread” (1). While no law prohibits collusion within the defence sector, Law No, 039, does prohibit collusion. Article 50 of Law No. 039 addresses collusion: – (2) among people working for the contracting authority – (11) among bidders. Therefore, in absence of a specific law or a given article within Law No. 038, on the general status of the personnel of the armed forces addressing collusion in the defence procurement, Law No. 039 addresses collusion, and it applies to the defence procurement, like any other government institution (2), (3).

According to the Executive Secretary of the National Anti-Corruption Network (REN-LAC), “as there is no legal framework specific to the defence prohibiting collusion, then there is no sanctions as well” (1). However, Law No. 039 addresses offences to its provisions. Article 50 prohibits collusion, conflicts of interest, abuse of authority, corruption, facilitation payments and favouritism. For example, collusion between people working for the contracting authority engenders a jailed term from two to twelve months and a fine from 100 000 CFA francs to 500,000 CFA francs or one of these punishments (Article 50. 2). As for collusion between bidders displayed under Article 50 (11), offenders are fined from 300 000 CFA francs to 500 000 CFA francs and a jailed term from 2 months to 12 months. For offenders convicted with conflicts of interest, fine ranges from 1,000,000 to 10,000,000, and jailed term from 6 months to 12 months or one of the two sanctions (1), (2), (3).

Defence procurement for secret military expenditures is excluded from the provision of procurement laws. According to the Business Anti-Corruption Portal, enforcement of the law is weak (1), and this resulted in widespread corruption in all sectors of the economy (2). For example, according to the US DoS (2012), the “gendarmerie is responsible for investigating corruption within the police and the gendarmerie units, but it never made its report public”. And further, local NGOs such as the REN-LAC have already reported a complete lack of political will to address corruption affirming that the government rarely applies sanctions against public officials. Hence, cases a superficially investigated, and do not serve as a deterrent for perspectives offenders (1), (2), (3), (4).

This indicator has not been assigned a score due to insufficient information or evidence.

Articles 4 and 71 of the Procurement Code (2018) clearly state that defence and security-related procurement are “Special Contracts and are not subject to tenders or OTC markets and the consideration of any public procurement commission under this Code” [1].

Research did not provide us with evidence of collusion in defence procurement by companies named on the ARMP website, where all companies banned from procurement are listed along with the reason, with the exception of one company that built a National Security building, which does not fall under the “Special Contracts” of Article 71 of the Code [1] [2].

Nonetheless, according to the Business Anti-Corruption Portal, “Cameroon’s public procurement is plagued by bribery and fraud at every step of the process” [3].

Companies involved in corruption are prosecuted and barred from working on or bidding for government contracts for a duration of not more than two years determined by the gravity of the fault committed (Article 191 of the 2018 Procurement Code [1]). Other sanctions include penal sanctions (according to article 184 and 185 of the penal code), confiscation of profit made from the contract, and licence withdrawn (article 191 of the Code [1]. The sanctions noted here do not apply to defence and security procurement, which falls under Special Contracts under the Code. Procurement officials have no oversight or authority to impose such sanctions on defence and security-related procurement violations as defence procurement is exempt from all oversight and is conducted in secret (Articles 4 and 71) [1]. In addition, there is no company involved in defence procurement that is known to have been banned like the ones on the ARMP list [2].

Because there is no legislation in place addressing collusion in procurement, this indicator has been marked Not Applicable.

There is a complete failure to investigate or prosecute corruption in defence and security procurement. Articles 4 and 71 of the Procurement Code (2018), clearly states that defence and security-related procurement are “Special Contracts and are not subject to tenders or OTC markets and the consideration of the public procurement commission” [1].

Procurement officials have no oversight or authority to impose sanctions on defence and security-related procurement violations as defence procurement is exempt from all oversight and is conducted in secret (Articles 4 and 71) [1]. There is no evidence that training is provided to procurement officials with regards to collusion.

There are provisions against collusion in the 2009 Code of Public Procurement and the fact that they only apply to the bidders (soumissionnaires). These provisions do not refer to the training. The 2009 Code of Public Procurement (Décret n° 2009-259, Portant Code des marchés publics), Chapter 2 (Sanction des violations commises par les candidats soumissionnaires ou titulaires), Article 186 (Pratiques frauduleuses), Sections 2 and 7 make a direct reference to instances of collusion in which bidders can be sanctioned for fraudulent practices, including collusion among bidders to set artificial prices for a contract (1).

The Code of Public Procurement states:

“Art. 186 – Fraudulent practices
Without prejudice to the penal sanctions provided for by the laws and regulations in force, the contractor, supplier or service provider having:
2. practices of collusion between bidders in order to establish the prices of offers at artificial and non-competitive levels and to deprive the contracting authority of the benefits of free and open competition;
7. ban on future public contracts, either definitively or for a fixed period, depending on the seriousness of the fault committed by the contractor, the supplier or the service provider, including, in the event of proven collusion, any company that owns the majority of the capital of the company concerned, or of which the accused company owns the majority of the capital.

Article 187 (Actes de Corruption), Section 2, also bans companies that have been proven guilty of collusion to participate in future public tenders.

Art. 187 – Corrupt practices
2. the exclusion from public contracts, either indefinitely or for a fixed period depending on the seriousness of the fault committed by the guilty party, including, in the event of proven collusion, any company that owns a majority of the capital of the company concerned, or of which the accused company owns the majority of the capital” (1).

There is no evidence of training on matters of collusion for public procurement officials.

The provisions in Articles 185-187 in the 2009 Code of Public Procurement exclude companies found guilty of corruption (fraudulent practices) from applying for future public tenders. But the penalties that public procurement officials can impose on non-compliant companies are otherwise vague.

The 2009 Code of Public Procurement (Décret n° 2009-259, Portant Code des marchés publics), Chapter 2 (Sanction des violations commises par les candidats soumissionnaires ou titulaires), Article 185 (Inexactitudes délibérées), Article 186 (Pratiques frauduleuses) and Article 187 (Actes de Corruption) stipulate that procurement officials have the authority to exclude companies where there is evidence of bribery and corruption. However, the available sanctions in the 2009 Code are restricted to banning companies from future public tenders (1).

The 2009 Code of Public Procurement states:

“Art. 185 – Deliberate inaccuracies
Deliberate inaccuracies in the certificates or justifications contained in an offer entail the elimination of the bidder from the competition and its temporary or definitive exclusion from the participation in public contracts, as well as the cancellation of the award decision. Where such inaccuracies are found, the contracting authority may, without prior notice and without expense and risk to the holder, apply additional penalties: (1)
• the cancellation of the award decision;
• the termination of the contract;
• the establishment of a board.

Art. 186 – Fraudulent practices
Without prejudice to the penalties provided by the laws and regulations in force, the contractor, the supplier or the service provider having:
4. outsourced beyond the ceiling set in article 53.3 above, incurs the following penalties;
5. establishment of a management board, followed, where applicable, by the termination of the contract at the expense and risk of the holder;
6 confiscation of the deposits paid, as compensation for the loss suffered by the contracting authority;
7. exclusion from public contracts, either definitively or for a fixed period, depending on the severity of the violation committed by the contractor, supplier or service provider including, in the event of proven collusion, any company which owns the majority of the capital of the company concerned, or of which the accused company possesses the majority of the capital.

Art.187 – Corrupt Acts
Without prejudice to the criminal penalties incurred, any attempt by a tenderer to influence the evaluation of the tender or the award decisions, including the offering or gifts, or any other advantage, entails:
1. the cancellation of the offer and the confiscation of the corresponding guarantee, if necessary, by the seizure of the amount recorded; this sanction being considered as automatically registered as a penalty clause in any public contract;
2. the exclusion from public contracts, either indefinitely or for a fixed period depending on the seriousness of the fault committed by the guilty company, including, in the event of proven collusion, any undertaking that owns a majority of the capital of the company concerned, or of which the accused company owns the majority of the capital.” (1).

There are prosecuted cases and rescinded contracts through formal processes. However, none of the cases are linked to the Ministry of Defense. It is difficult to determine whether there has been clear interference (undue influence) in the decision-making process of the ANRMP. There is evidence that cases are investigated by the ANRMP and its agencies. A tab on the ANRMP website titled “Liste Rouge” has uploaded a range of cases in pdf format from 2016-2018 detailing the reasons for the cancellation of public contracts, some of them based on Articles 185-187 of the 2009 Code of Public Procurement: deliberate inaccuracies, fraudulent practices and corrupt acts (1). For example, on 29 June 2018, the ANRMP decided to rescind a public contract with a utilities company (CCCI) that was found to have included deliberate inaccuracies, as per Article 185 of the 2009 Code of Public Procurement, in the context of a public tender (No. F006-PREMU/2017) to improve the water supply in an urban setting (2). However, none of these cases involved defence institutions or are linked to military procurement.

There are provisions against collusion in the 2009 Code of Public Procurement and the fact that they only apply to the bidders (soumissionnaires). These provisions do not refer to the training, and there is no evidence that training on collusion is provided to procurement officials.

Law no. 182 of 2018 addresses collusion and the more general themes of “corruption” and “manipulation” in winning contracts (Article 38) as well as conflict of interest between officials and bidders (Article 26) (1). General conflict of interest is also covered by Law no. 106 of 2013 concerning the prevention of conflict of interest for state officials (2). None of these laws mentions providing procurement officials training that addresses collusion. The risk of collusion is also much higher in the defence sector due to the many exemptions granted to the MoD and the MMP (see 59A) (3), (4).

Generally, procurement officers have no authority to bar any company or contractor, that power lies in the hand of senior officers and management within the MoD. However there is some limited ability to bar companies, as illustrated by Article 6 of the Tenders Law Executive Regulations, each procurement department should keep a register of all the companies that are debarred from tenders (1). The government’s e-tenders portal publishes a list of the debarred companies (2). The power to debar certain companies lies with the General Authority for Government Services (GAGS), which is a governmental body in charge of monitoring public procurements. The GAGS debarring happens based on local decisions by government entities. However, the reasons for debarring are vague, and the decisions are usually not reasoned.

As much as judicial independence is possible in Egypt, the State Council is known to be one of the relatively independent entities. All decision to debar companies were issued by the State Council (several debarring decision are listed in the examples section), which is evidence that cases are investigated through a relatively effective formal process with limited third party interference. However, it is important to note that this relative independence has been under attack since the State Council issued some key rulings against the government, most prominently the ruling to challenge Egypt’s decision to transfer two Red Sea islands Tiran and Sanafir to Saudi Arabia, which led to a legal crackdown on the State Council and some of its independent-minded judges such as Yahia al-Dakroury, who was also the judge that issued the Tiran and Sanafir ruling (1). In recent years, however, our interviews have noted that the State Council’s influence on the military is diminishing (2), (3), (4), (5).

There are no training programs that allow procurement officers or financial officers to spot the collision or corruption risks within the process of procurement (1), (2).

The Public Procurement Act and related procurement legislation do provide a broad framework (Article 284 of the 1992 Constitution, the PPA Act (2003), the Public Officers (Disqualification and Assets Declaration) Act (1998)), but it is not specific to the defence sector (1), (2).

Ghana has a piece of legislation, the PPA (2003) on procurement that specifically spells out guidelines for procurement-related corruption (1), (2). Companies can be disbarred if they are deemed to have colluded. The PPA (2003) also states that anyone breaching the PPA is liable for a fine and imprisonment of up to 5 years (3).

The PPA’s provision for enforcement does not seem to be used concerning the GAF. There is no public record in recent years, made available by the government themselves, that is easily accessible that lists or describes enforcement measures against military or defence ministry personnel. The GAF has been completely untouched by all the investigations conducted by Ghana’s Economic and Financial Crimes Commission.

Cases are superficially investigated, but defendants are not punished (1), (2), (3).

There is no evidence that training is provided to procurement officials with regards to collusion (1), (2).

Iraq’s Competition and Monopoly Prevention Law emphasises the importance of regulated procedures and encourages investigations into anti-competitive behaviour (Article 15) (1), but requires contractors to provide evidence of alleged malpractice or corruption to the specialised Iraqi court. Iraq’s flawed regulatory procurement regime, as various analysts shed light on, has furnished an environment many views as vulnerable to collusion. Furthermore, the formation of commissions mandated to combat anti-competitive efforts and deliberate on punishments have not been established under Law No. 14 as was intended (2), (3). The Law, however, fails to specify whether tackling collusion is within their jurisdiction. One interview dating back to 2010 shares important insight on foreign-held perceptions of local Iraqi legislation (4). Adviser to the Investment Authority in Iraq, Abdullah al-Bandar revealed in an interview with Aljazeera Arabic that the GOI hopes that providing access to dispute mechanisms and court-procedures will encourage foreign investors to consider settling complaints internally instead of resorting to international arbitration, which implies that steps towards fostering an environment of trust are being taken by the government.

According to Al Tamimi (1) collusion in bids to tenders is illegal, but a curious loophole to evade responsibility exists; in the form of joint bids. Despite the fact the collusive bidding is deemed a form of bid-rigging under OECD regulations, joint bids are acceptable if their purpose “is not anti-competitive in any way” (1). As noted during an OECD a conference held in Baghdad in 2014, uncertain contract enforcement ranks high among the litany of concerns held by investors (2). There is a significant lack of transparency over the contracting authorities obligations.

There is a complete failure to investigate or prosecute, even in the face of clear evidence, which is seldom available. The catch-all phrase of rooting out corruption is a popular slogan (1), (2) among politicians and yet the responsibility to quash collusive tendering within the realm of defence procurement is not twinned (3), neither as part of a strategy or otherwise (3), (4), with the fight against corruption. Acts of bid-rigging, collusion, forgery (5) among other cartel-like to influence contracting parties practices are not combated beneath newly drafted laws. Anti-corruption legislative framework legislation offers vague definitions but no laws have been tailored with the prosecution of collusive tendering and bidding in mind.

There is no evidence that training is provided to procurement officials on collusion.

Military Supplies Law No. 3 of the year 1995, Military Works Law No. 4 of the year 1995, and the Ministry of Finance’s Tenders Regulations No. 1 of the year 2008, are the main publicly available regulations and policies related to defence procurement. The Tenders Regulations No. 1 of the year 2008, includes clauses that make deception and providing inaccurate information punishable. The punishment is a ban from bidding for contracts for an unspecified amount of time. The above laws regulate the procurement of the armed forces. The procurement committee includes a person from the Ministry of Industry and Trade and one from the Department of Finance [4,5].

This sub-indicator has been marked as Not Applicable because the procurement committee has limited authority to exclude companies and senior company officials where there is a conviction or reasonable evidence of bribery and corruption related offences. The committee reports such cases to the commander in chief who decides the outcome. However, there is no available information about sanctions [1,2].

This sub-indicator has been marked as Not Applicable because there have been no cases of investigation of persecution. As a source informed us: “For 15 years in service, I never saw some companies persecuted even when there was some evidence of failure, just because a senior official relative owns the company” [1,2].

There is no evidence that training on collusion is provided to procurement officials [1,2].

Collusion between bidders is illegal in Kuwait in general, according to the PTA’s law (1). In fact, the whole tender process can be dissolved if evidence of the practice emerged, according to section 5 of article 50 of the law.

But this is one of the laws that do not apply to the aforementioned “defense materials” purchases. It is unclear if the internal tender policy of the security agencies also outlaw this practice because these policies are not available to the public or upon request.

Defense purchases, according to the government guide of doing business in Kuwait, include all weapons, communications and monitoring systems related to defense and security (2).

This sub-indicator has been marked Not Applicable because it is unclear if there is such legislation that applies to the defence sector. There is also no information on what happens if/ when this practice occurs. (1-3)

This sub-indicator has been marked Not Applicable because it is unclear if there is such legislation that applies to the defence sector.

There is no evidence that training is provided to procurement officials with regards to collusion.

No specific laws were found that prohibit collusion within the defence sector, where collusion is defined as between an official and a bidder or between bidders (1). Although Lebanon has “Illicit Wealth Law” that prohibits state employees from using their positions in public administration to gain money, it is ineffective (2). The GDA is responsible for overseeing the procurement process (3). According to the DoO, military personnel are continuously reminded of the rules and procedures that have anti-corruption content (4). The US’s IMET programs trains militaries in financial management, procurement, and acquisition all emphasize anti-corruption best practices, and the LAF take part in that training (5).

Decree no. 11574 empowers procurement officials to exclude companies where there is a conviction or reasonable evidence of bribery & corruption-related offences. But the range of sanctions available is limited to debarment (1).

This sub-indicator has been marked Not Applicable, as there is no legislation covering defence procurement that addresses collusion (1).

There are no specific laws in place that prohibit collusion within the defence sector, where collusion is defined as between an official and a bidder or between bidders (1). According to the DoO, military personnel are continuously reminded of the rules and procedures that have anti-corruption content (2). Furthermore, no specific training is provided on collusion patterns and reporting malpractices (2).

The public procurement code (Code des Marchés Publics et des Délégations de Service Public) clearly outlaws collusion between bidders, but doesn’t extend to contracting authorities.¹
Article 127 of the code, which sits within the chapter relating to candidates for and holders of public contracts, lists a series of offences that warrant sanctioning. Among them is one that forbids candidates or holders from “engaging in acts of collusion between candidates to inflate the price of offers to artificial and non-competitive levels, denying the contracting the authority the advantages of a free and open competition”.¹
While not referenced in the procurement code, public officials found guilty of facilitating or participating in acts of collusion are subject to punishments in accordance with the Penal Code.
The Penal Code allows for the punishment of those deemed to share information unlawfully:⁵ Section 3, article 130 of the Penal Code states:
“Anyone who, by position or profession had secrets entrusted to them, that they then revealed shall be punished by imprisonment of six months to two years and, optionally, a fine of 20 000 to 150 000 francs.
The penalties will apply in to members of all jurisdictions guilty of violating the code. If the offender is a public officer or government official, he will be punished by three months to five years imprisonment and a fine from 20,000 to 240,000 francs. The culprit will become forbidden from any function or public employment for at least five to ten years.
Except as provided above, deletion, all correspondence opening addressed to third parties, in bad faith, shall incur the same penalties.
The attempt of the offence shall be punished as if the offence itself”.⁵
Article 123 of the code also outlaws “trading of favours” for commercial or private gain by state employees or private individuals.⁵ Offenders are thus subject to the penalties contained in article 121 of the Code, which states that “Anyone in either the performance or the obtaining of an act or benefits or favours, uses violence or threats, promises, offers, gifts or presents, or acts tending to corruption will be subject to the measures included in article 130, ‘five to ten years’ imprisonment and a fine of twice the value of approved promises or things received or requested, without that fine be less than 100,000 francs”.⁵
However, article 8 of the Procurement Code creates a large legal loophole for defence and security contracts, which can exempt them for all of the standard procurement requirements (see Q57A).¹ This provision undermines the legal framework covering defence procurements and prevents the country from scoring higher than a 2 on this measure.

The public procurement code (Code des Marchés Publics et des Délégations de Service Public) provides sanctions for acts of collusion between candidates or holders of public contracts.¹
Article 128 states that entities found guilty of collusion or acts of corruption by the relevant body (Comité de Règlement des Différends) can have their contracts confiscated and be banned from competing for public contracts for a variable period of time, which is determined by the seriousness of the offence committed.¹ Such bans can extend to companies holding a majority share in firms that contravene the rules and for companies in which the offending entity retains a majority stake.¹ The procurement code underlines that any sanctions issued under the code are not prejudicial to any legal prosecution that may follow. Yet, there is no evidence of clear implementing guidelines empowering procurement officials to exclude companies and senior company officials, and to what extent officials can block companies or individuals with previous convictions, etc. from bidding.
The Penal Code allows for the punishment of those deemed to share information unlawfully:² Section 3, article 130 of the Penal Code states: “Anyone who, by position or profession had secrets entrusted to them, that they then revealed shall be punished by imprisonment of six months to two years and, optionally, a fine of 20 000 to 150 000 francs.
The penalties will apply in to members of all jurisdictions guilty of violating the code.
If the offender is a public officer or government official, he will be punished by three months to five years imprisonment and a fine from 20,000 to 240,000 francs. The culprit will become forbidden from any function or public employment for at least five to ten years.²
Except as provided above, deletion, all correspondence opening addressed to third parties, in bad faith, shall incur the same penalties.
The attempt of the offence shall be punished as if the offence itself”.²
Article 123 of the code outlaws ‘trading of favours’ for commercial or private gain.² Offenders are thus subject to the penalties contained in article 121 of the code, which states that “Anyone in either the performance or the obtaining of an act or benefits or favours, uses violence or threats, promises, offers, gifts or presents, or acts tending to corruption will be subject to the measures included in article 130, ‘five to ten years’ imprisonment and a fine of twice the value of approved promises or things received or requested, without that fine be less than 100,000 francs”.²
Thus, acts of collusion between bidding parties are highly likely to fall foul of the penal law too, exposing offenders to the threat of criminal prosecution and heavy sentences.

Even though investigations are theoretically possible, evidence suggests that there have not been any since 2013.
Cases of possible collusion in defence contracts are seldom investigated and there have been no signs that the authorities are willing or capable of prosecuting offenders. Indeed, there have been no such prosecutions since IBK became president in 2013.
One media article refers to a possible case of collusion relating to a public tender issued by the state-owned textile company, Compagnie Malienne pour le Développement des Textiles (CMDT).¹ The contract was for the supply of fertiliser for the 2015-2016 season.¹ The article alleges that despite attracting more than 30 tenders for the contract, 15 of the companies colluded to set an artificially high price.¹ It alleges that the officials awarding the contract received kickbacks of 10,000 CFA per tonne of fertiliser agreed upon in the contract.¹ There is no record of the case having been investigated by the authorities or of anyone being held accountable.¹
The judicial system in Mali is unable to efficiently deliver prosecutions as a result of internal corruption. For example, in December 2013, judicial representatives threatened to hold an indefinite strike due to state interference in arrest warrants against judges accused of corruption.¹¹ The same month, four judges and a court clerk were arrested on suspicion of corruption.¹²
The IMF says that “economic agents involved in bribery are seldom prosecuted. Embezzlement in public procurements is sanctioned by the criminal code, but there again prosecutions remain the exception rather than the rule. Administrative sanctions against bidders and holders of public contracts exist for cases of incitement to corruption or the commission of fraudulent acts. However, in practice, they are seldom or never applied”.¹⁵
A US State Department report also noted in 2013 that “corruption and limited resources affected the fairness of trials. Bribery and influence peddling were widespread in the courts (…) There were problems enforcing court orders. Sometimes judges were absent from their assigned areas for months at a time”.¹² Other cases illustrate the judiciary’s continuing inability to challenge the executive.
When the IMF, the World Bank and the EU suspended their aid programmes to Mali following reports of the off-budget purchase of a new presidential jet in 2014, the BVG audited the account (see Q16C). The BVG determined that the former Minister of Defence, Soumeylou Boubeye Maïga, and the Minister of the Economy incorrectly interpreted article 8 of the Procurement Code that allows for certain acquisitions to be off-budget (see Q29A).²
The audit found that the government had spent 87.77 billion CFA (USD 163.44 million) on defence items that were not declared in the official budget.² ³ The report found that 18.59 billion CFA went towards the presidential jet, of which CFA1.4 billion were commissions and fees paid to a broker linked to the president’s friend, Michel Tomi.⁵ Meanwhile, a further 69.18 billion CFA was spent on other military equipment, primarily transport vehicles.⁹ The BVG found that the MDAC had failed to respect the 2014 Finance Law requiring it to register these contracts and submit them as part of the annual budget. Moreover, many of the contracts were found to be heavily overpriced, strongly suggesting that these acquisitions involved substantial illicit activity.³ ⁴ ⁵ The public prosecutor launched an investigation into the affair, but as of April 2018, no charges had been brought against any of the individuals or companies implicated in the BVG’s report.⁶ Indeed, the Defence Minister responsible for signing these contracts, Soumeylou Boubeye Maïga, has since returned to government as Prime Minister. This is despite the fact he was reportedly arrested in Paris by French police in 2014 in connection with an ongoing investigation into French businessman, Robert Franchitti. Franchitti, whose company MagForce bought military equipment from Guo Star and sold them to Mali for ten times the price, was arrested on arrival at the hotel where Maiga was staying.⁷ ⁸ Franchitti reportedly had EUR 10,000 in cash on him, which he was intending to pay to Maiga.⁷ ⁸ Moreover, IBK’s special advisor, Sidi Mohamed Kagnassy, was reportedly Director General of Guo Star at the time of the deal (he denies this), indicating an obvious potential conflict of interest and a significant potential for collusion.⁹
Finally, there are reports in the Malian media, based on sources within the defence sector, alleging that fraudulent practices are commonplace at the Directorate of Finance and Equipment (DFM).¹³ Defence contracts are not typically subject to open and competitive tenders: instead they are often awarded to family members or close associates of defence officials amid a lack of accountability for offenders.¹³
Mali’s online portal for public contracts publishes a list (Liste Rouge) of the individuals or companies it has deemed ineligible to apply for public tenders.¹⁴ As of April 2018, only one person appears on the list. In August 2014, ARMDS judged that the businesses of Hamady Traore would not be able to compete for public contracts for a period of three years. However, it does not specify why the decision was taken.¹⁴

There is also evidence that officials responsible for overseeing the handling of public contracts undergo annual training to help them regulate public tendering processes and awards and ensure good governance (1), (2), (3). The comprehensiveness and regularity of the training programmes undertaken suggest that officials receive training in how to identify acts of collusion.

In the general legislation, the 2013 version of the Code of Public Procurement Contracts provides the following in relation to collusion between bidders. Nothing in this legislation explicitly exclude defence and security (1)(2).
⁃ Article 168 forbids fraud, corruption and conflict of interest but does not refer to sanctions for individuals found guilty of these offenses.
⁃ Article 26 states that candidates to a procurement contract must make a sworn statement about avoiding conflict of interest.

No evidence was found of legislation in place that specifically discourages and punishes collusion between bidders for defence and security contracts (3). Moreover, the lack of transparency over the previous elements discussed in this assessment concerning procurement contracts – including the omerta on detailed military spending and the King’s absolute power over this sector – increases the risk of corruption in this regard.

This sub-indicator has been marked Not Applicable because there is no legislation covering defence procurement that addresses colusion.

Procurement officials have no authority to exclude companies or individuals implicated in bribery or corruption related offences, as there are no legal provisions enabling sanctions against individuals found guilty these offenses.

In the general legislation, the 2013 version of the Code of Public Procurement Contracts provides the following in relation to collusion between bidders (1).
⁃ Article 168 forbids fraud, corruption and conflict of interest but does not refer to sanctions for individuals found guilty of these offenses.
⁃ Article 26 states that candidates to a procurement contract must make a sworn statement about avoiding conflict of interest.

However, no evidence was found of legislation in place that specifically discourages and punishes collusion between bidders for defence and security contracts (2). The lack of transparency over the previous elements discussed in this assessment concerning procurement contracts – including the omerta on detailed military spending and the King’s absolute power over this sector – increases the risk of corruption in this regard.

This sub-indicator has been marked Not Applicable because there is no legislation covering defence procurement that addresses colusion.

There is a complete failure to investigate or prosecute, even in the face of clear evidence, as there are no legal provisions enabling sanctions against individuals found guilty of these offenses.

In the general legislation, the 2013 version of the Code of Public Procurement Contracts provides the following in relation to collusion between bidders (1).

⁃ Article 168 forbids fraud, corruption and conflict of interest but does not refer to sanctions for individuals found guilty of these offenses.

⁃ Article 26 states that candidates to a procurement contract must make a sworn statement about avoiding conflict of interest.

However, no evidence was found of a legislation in place that specifically discourage and punish collusion between bidders for defence and security contracts (2). The lack of transparency over the previous elements discussed in this assessment concerning procurement contracts – including the omerta on detailed military spending and the King’s absolute power over this sector – increases the risk of corruption in this regard.

No information regarding training for procurement officials has been found.

Decree No. 2013/570/PRN/PM, Chapter XIII (Contrôle à postériori et sanctions A posteriori control and sanctions), Article 74, Section 3, prohibits acts of collusion among bidders for a procurement contract (1). However, it does not contain any provisions requiring procurement officials to be trained in identifying such acts.

Article 74 states:
“Offences and sanctions applicable to the candidates and holders of procurement contracts: Within the scope of this Decree, the hereunder violations or breaches by candidates, tenderers or holders of public contracts are prohibited” (1).
(Consultant translation French to English)

Section 3 states:
“Collusion between bidders in order to rig bid prices at artificial, non-competitive levels and deprive the contracting authority of the benefits of competitive bidding” (1).
(Consultant translation French to English)

(Article 74:
“Infractions et sanctions applicables aux candidats et aux titulaires des marchés: Dans le cadre de l’application du présent Décret, les violations ou manquements ci-après sont interdits de la part des candidats, soumissionnaires et titulaires des marchés publics”.
Section 3:
“Les pratiques de collusion entre soumissionnaires afin d’établir les prix des offres à des niveaux artificiels et non-concurrentiels et de priver l’autorité contractante des avantages d’une concurrence libre et ouverte”. )

Decree No. 2013/570/PRN/PM, Article 75, Sections 1–6, is clear about the sanctions imposed on companies convicted of bribery or corruption during a procurement bid. Article 75 states:

“Without prejudice to the penal sanctions provided for by applicable laws and regulations, the contractor, supplier or service provider, whether candidate or holder of a procurement contract, responsible for and/or complicit in the above-mentioned offences, shall be subject to the sanctions hereunder which may be imposed cumulatively, as appropriate, with the consent of the Prime Minister” (1).

Six sanctions can be imposed, with the consent of the prime minister. The following sanctions are the punishments that can be imposed.
Sections 1-6
“1) exclusion from bidding;
2) rejection of its tender and seizure of the corresponding security;
3) forfeiture of guarantees as compensation for the damages suffered by the authority;
4) forfeiture of securities lodged by the offender as part of the contract,
5) exclusion from bidding for a specified period of time;
6) the establishment of a governance framework or the termination of the contract at the expense and risk of the holder.”
(Consultant translation French to English)

However, there is no mention of imprisonment for those found guilty.

The assessor found no evidence that collusion has taken place in defence procurement or more broadly in public procurement in recent years (1,2). However, the absence of available information does not mean such instances have not occurred. Given the confidentiality of the procurement process, it is plausible to assume that the risk of collusion may be high.

Decree No. 2013/570/PRN/PM, Chapter XIII (Contrôle à postériori et sanctions A posteriori control and sanctions), Article 74, Section 3, prohibits acts of collusion among bidders for a procurement contract (1). However, it does not contain any provisions requiring procurement officials to be trained in identifying such acts.

The PPA 2007 S.15 expressly excludes the defence sector from its ambit subject to presidential discretion (1). Sources confirmed that Tender Boards are subject to regulations and Code of Conduct under the PPA 2007 concerning non-defence items like building contracts and the supply of materials and services. The decisions of such boards are subject to independent audit and procurement compliance procedures (2). The Bureau of Public Procurement conducts public reviews and auditing to verify due process and fair and open competition. Part XI of the PPA provides for an extensive process which includes a Code of Conduct (1). Section 22 PPA 2007 provides that Tender Boards should be created in each procuring entity. Section 57(2) of the PPA 2007 imposes an obligation of honesty and accountability, transparency and accountability and equity on persons involved with public procurement (3). The Bureau of Public Procurement also has residual powers to review and recommend investigation of any matters related to the conduct of procurement. A bidder may, under section 54(1) PPA 2007, seek judicial review for any omission or breach by a procuring entity or disposing entity under the provisions of the Act. “Procurement offences – Contravention of any provision of the Public Procurement Act (PPA) is an offence (1). Particular offences under the Act include collusion with a supplier to quote a higher price and fraudulent and corrupt acts such as unlawful influence, undue interest, favour, agreement, bribery, and corruption. Other procurement offences include:
• Direct or indirect attempt to influence the procurement process to obtain an unfair advantage
• in the award of a procurement contract;
• Splitting of tenders to enable the evasion of monetary thresholds
• Bid-rigging
• Altering any procurement document with intent to influence the outcome of a tender
• proceeding
• Uttering or using fake documents or encouraging their use
• Willful refusal to allow the Bureau or its officers to have access to any procurement records” (1), (3).

The legal framework expressly prohibits collusion between bidders and public officials. There are further relevant rules contained in the Public Procurement Goods and Works Regulations 2007 (1).

The Procurement Act expressly excludes the defence sector from its ambit subject to presidential discretion. In discussions with a source at the MOD it was stated that although companies are not expressly blacklisted, unreliable companies are not selected even if they participate in the bidding process. Punitive provisions in the PPA 2007 include the power of the Bureau to exclude or blacklist companies which have engaged in procurement malpractice. Companies can be debarred and fined under the legislation. However, given that section 15(2) excludes goods and works and services involving defence or national security it is difficult to confirm the application of sanctions to defaulting companies in the context of defence specific goods and services (1). Under the Open Contracting policy adopted by the BPP, a database of 50,000 contractors has been created which is an official list of companies able to bid for government contracts. However, it is unclear what happens when companies not on the list obtain government contracts. In theory, only companies on the list should be able to bid for government contracts. A red flag should be automatically raised when a contractor not on the list is awarded a contract. The HSLi case illustrates that sanctions are rarely imposed even where cases of collusion between public officials and contractors are discovered (2).

Based on the investigation and prosecution of former defence chiefs following the Buhari administration’s creation of a Panel to investigate the defence sector, it is possible to say that cases are investigated and prosecuted. Based on the outcome of the investigation into defence procurement in previous years, it is arguable that the attitude of the current administration on enforcement is strong. In 2017 a report indicted several senior officers for irregularities in defence procurement. It stated that “the Nigerian Army contracts awarded by the MOD for the period under review were often awarded without significant input from the end-user (Nigerian Army) and to vendors who lacked the necessary technical competence” (1). Another noteworthy observation is that enforcement can also be selective when it is politically motivated or when there is strong political will. In many cases, there is no evidence of sanctions imposed on companies as the companies do not have a track record in the sector and then to be vehicles created by politicians to siphon funds. Further, the efficacy of the sanctions procedure can be questioned given that the companies involved are shell companies created as a vehicle to siphon funds. Such companies have no history or track (2). The HSLI case is illustrative of the weak enforcement of sanctions as neither the minister nor the company involved is currently facing any sanctions.

This indicator has not been assigned a score due to insufficient information or evidence.

There is no legislation addressing collusion between bidders for defence and security contractors; general anti-corruption legislation; however, does account for public officials abuse of positions of power including acceptance of gifts for favours (1), (2). This legislation (RD 112/2011) is not specific to the defence sector, and it is not clear if it includes the defence or security sectors considering both are exempt in many instances (1). Neither Omanuna e-government portal or the Ministry of Defence website highlight relevant legislation addressing private sector rivalries and collusion relating to bids for defence and security contracts (3), (4). Although there is some relevant legislation, it does not address the defence sector or rival bidders collusion.

This indicator has been marked Not Applicable because there is no legislation addressing collusion in the defence sector.

Procurement personnel have no authority to exclude companies or individuals implicated in corruption cases. Additionally, other sources indicate that no company that has previously been excluded as the result of a corruption case (1), (2).

This indicator has been marked Not Applicable because there is no legislation addressing collusion in the defence sector.

According to a senior auditor within the MoD, there is a general lack of transparency when it comes to procurement and bidders collision. There is no legal framework discouraging and punishing collusion between bidders (1). Therefore, even in cases where there is evidence of corruption, there is a complete failure to investigate or prosecute offenders (1), (2).

There is no evidence that training is provided to procurement officials with regards to collusion (1,2).

There is no legislation specific to the security/national forces sector, but there is broader legislation that addresses collusion between bidders and officials (1). The intelligence agency follows the same legal framework as mentioned previously. The legal framework does not mention the relationship between the bidders themselves, instead, it deals with regulations concerning the relationship between the bidders and the officials/institutions. Resolution number 4 for the year 2007 which is related to the system of procurement for the Palestinian intelligence sector explains the process of bids and competition however, there are no clear instructions regarding the punishment for collusion between bidders on defence and security contracts (2).

There is clear legislation (1) and implementation guidelines empowering procurement officials to exclude companies that do not meet the guidelines and requirements stated within the competition (according to the law in the sources) (1). These guidelines usually include corruption convictions among other punishments. However, the range of sanctions available is limited to debarment and in some cases paying fines (according to a senior official within the MoF).

Cases are nominally investigated but are not often pursued to prosecution (1). This legislation is only to regulate the relationship between bidders and the institutions and not between the bidders themselves. There is clear interference by political powers in the decision-making process as essential companies; suppliers have close relations with the ruling party Fatah or the intimate executive circles (2).

There is no evidence that procurement officials receive training on collusion.

There are very limited guidelines that deal with defence procurement in general. These guidelines and internal policies do not address collusion in defence procurement between bidders, but there are guidelines about collusion with the Ministry of Defence or the armed forces. [1,2]

This sub-indicator has been marked as Not Applicable, as with the lack of a legal framework discouraging and punishing collusion between bidders, assessing its sanctions is irrelevant in this context. [1,2]

This sub-indicator has been marked as Not Applicable, as with the lack of a legal framework discouraging and punishing collusion between bidders, assessing its sanctions is irrelevant in this context. [1,2]

There is no evidence that procurement officials receive training on identifying collusion in bidding practices [1,2].

According to our sources, there is an internal policy that is attached to every contract (bidders dossier) which every bidder has to submit before bidding. No legislation in Saudi Arabia addresses collusion specifically in the defence sector. In cases where there are no clear regulations, the financial department refers to the Competition Law (Civil) under certain circumstances (1), (2). The country’s Competition Law, issued under the Royal Decree No. (M/25) in 2004 and amended in 2014, does prohibit collusion and complicity in tenders, including through market allocation. The law also established the Competition Protection Council, a governing authority promoting fair trade practices for non-state-owned enterprises (3). The council was renamed as the General Authority for Competition (GAC) in December 2017. However, there is no reference to defence procurement specifically within the Competition Law, neither does the GAC’s mandate appear to extend to private companies operating in the defence sector. The GAC has the discretion to exempt certain prohibitions within the law, for example when practices and agreements in violation of the law are “deemed to improve efficiency and realize benefits to consumers which outweigh their anti-competitive effect.” The GAC reserves the right to make other exemptions to firms that meet its criteria. Given that defence procurement is exempted from the Government Bids and Procurement Law of 2006 (4), it may in practice also be exempted from the competition law.

Sources report, the procurement officials have no authority to exclude any company. Excluding any company needs approval from a committee of procurement or tender boards. In the last five years, there has been only one case of exclusion, and it was politically motivated (1), (2). The GAC can impose sanctions on companies found to have violated the Competition Law, including fines of USD 1.3 million and above, or a fine of up to 10% of the company’s turnover under the new amendment of 2014 (3). The GAC can also temporarily or permanently suspend the operations of the violating firm (4). However, as aforementioned, these laws make no specific reference to the defence sector, and it is likely that firms operating in this industry fall outside of the purview of the GAC. There is no evidence of legislation empowering procurement officials to exclude certain companies or individuals found to have committed wrongdoing. It is unlikely that this specific legislation exists given that defence procurement processes are not addressed at all in the Saudi Competition Law.

According to our sources, superficial hearings and investigations occur with companies that break the law. However, due to political pressure and interference by senior figures, these investigations may cease altogether, or companies are only fined (1), (2). There are no known cases of defence companies being implicated on collusion offences within Saudi Arabia. The GAC (under its former name, the Competition Protection Council) has investigated companies found to be involved in collusion and price-fixing, though these companies were medical and consumer goods firms and unrelated to the defence sector (3). Furthermore, publicly available information is limited regarding the investigations of these companies or the penalties, if any, they received. Given the sensitive and secretive nature of processes surrounding the defence industry in general in Saudi Arabia, it is unlikely that cases involving collusion among competing bidders in the defence sector would be made public, or that the aforementioned procedures set out in the Competition Law would be followed.

There is no training provided to procurement officials with regards to collusion (1).

A review of regulations applicable to the defence and security sector confirms the absence of specific provisions for collusion in defence and security. However, collusion between bidders is punished by Law No. 2015-36, of 15 September 2015, relating to the reorganisation of competition and price (1). Also, article 177 of Decree n°1039-2014, dated 13 March 2014, organising public procurement, imposes that the public purchaser cancels the tender if the bidder is convicted of malpractice such as collusion during the bidding process (2,3). According to our sources, collusion is usually managed in an informal way, and in different situations according to the context. The law only targest the bidders’ collusion but not with the security and defence organisations (4,5,6).

Article 177 of Decree n°1039-2014, dated 13 March 2014, organising public procurement, imposes that the public purchaser cancels the tender if the bidder is convicted of malpractice like collusion during the bidding process (1). Governmental Decree n° 2016-498, dated 8 April 2016, determining the conditions and procedures for excluding participation in public contracts, allows to exclude bidders temporarily or definitively from the participation in procurement in case of collusion (2).

According to our sources, there are many cases investigated relating to procurement and bidders collusion, however, many cases end up being solved in a gentlemans agreement or informally. Therefore, they are usually treated internally within the MoD procurement department(1,2,3).

Evidence, has demonstrated that there is no specific or wider national legislation addressing defence procurement in general, and thus there is no legislation addressing collusion in defence procurement. It has been established previously throughout this assessment that there is no information available as defence procurement is privately run by Tawazun Holding L.L.C, established in 2007, as a strategic investment holding company, and a fully owned subsidiary of Tawazun Economic Council, established in 1992. Tawazun Holding L.L.C and Tawazun Economic Council do not share any information about clear legislation and regulations covering any procedures meant to discourage and punish collusion between bidders for defence and security contracts. As mentioned previously in (Q57-58), the UAE Federal Procurement Resolution No. 32 of 2014, amended in resolution No. 43 of 2016, representing the country’s national legislation concerning procurement, explicitly exempts the Ministry of Defence, the Supreme Council for National Security, and the Ministry of Interior (Q57A). Research has revealed that Tawazun Holding L.L.C and the Tawazun Economic Council, Chaired by H.H. Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces is in charge defence and specialised manufacturing through industrial partnerships and strategic investments in the defence sector. There is no information available on Tawazun’s procurement policies and legislation addressing collusion between the bidder.

This sub-indicator has been marked as Not Applicable, as with the lack of a legal framework discouraging and punishing collusion between bidders, assessing its sanctions is irrelevant in this context (1), (2).

This sub-indicator has been marked as Not Applicable, as with the lack of a legal framework discouraging and punishing collusion between bidders, assessing its sanctions is irrelevant in this context (1), (2).

There is no evidence that procurement officials are training in regards to collusion between bidders.

Country Sort by Country 66a. Legal framework Sort By Subindicator 66b. Sanctions Sort By Subindicator 66c. Enforcement Sort By Subindicator 66d. Training Sort By Subindicator
Algeria 100 / 100 0 / 100 NA 50 / 100
Angola 0 / 100 NA NA 0 / 100
Burkina Faso 25 / 100 0 / 100 0 / 100 NEI
Cameroon 0 / 100 0 / 100 NA 0 / 100
Cote d'Ivoire 25 / 100 50 / 100 0 / 100 0 / 100
Egypt 50 / 100 25 / 100 25 / 100 0 / 100
Ghana 25 / 100 100 / 100 25 / 100 0 / 100
Iraq 25 / 100 0 / 100 0 / 100 0 / 100
Jordan 0 / 100 NA NA 0 / 100
Kuwait 0 / 100 NA NA 0 / 100
Lebanon 0 / 100 50 / 100 NA 0 / 100
Mali 25 / 100 50 / 100 25 / 100 100 / 100
Morocco 0 / 100 NA NA 0 / 100
Niger 25 / 100 75 / 100 0 / 100 0 / 100
Nigeria 0 / 100 25 / 100 75 / 100 NEI
Oman 0 / 100 NA NA 0 / 100
Palestine 75 / 100 75 / 100 50 / 100 0 / 100
Qatar 0 / 100 NA NA 0 / 100
Saudi Arabia 25 / 100 0 / 100 25 / 100 0 / 100
Tunisia 50 / 100 25 / 100 25 / 100 0 / 100
United Arab Emirates 0 / 100 NA NA 0 / 100

With thanks for support from the UK Department for International Development and the Dutch Ministry of Foreign Affairs who have contributed to the Government Defence Integrity Index.

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