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Q69.

What sanctions are used to punish the corrupt activities of a supplier?

69a. Sanctions

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SCORE: 0/100

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69b. Undue influence

Score

SCORE: NA/100

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69c. Application of sanctions

Score

SCORE: NA/100

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The Criminal Code allows for the criminal prosecution and punishment of active and passive corruption with sentences of up to 12 years imprisonment for high-level government officials and up to five years imprisonment for private company officials [1]. The Law on Public Procurement (LPP) allows for the exclusion from procurement bids of bidders who have been convicted for corruption or other criminal activities [2].

Cases are investigated and prosecuted and sanctions are given, but the number of investigations and prosecutions is small compared to the scale that is provided in the various reports [1, 2, 3]. As the EU Commission has noted, the overall rate of corruption convictions remains very low, especially for high-ranking officials, [4] suggesting that high-ranking officials have the power to influence investigations and prosecutions.
For instance, in 2018 the SSAI referred to the prosecution the former chairman of the PPC, two of its former members and two current members, on charges of favouring or unduly disqualifying economic operators from tendering procedures [5]. However, the case was not pursued by the Prosecution Office.

In 2014, the prosecution investigated ten cases, and 17 defendants were sentenced while in 2015, 13 cases were prosecuted, and six defendants were sentenced [1]. In 2016, 19 cases were prosecuted, and six defendants were sentenced, while in 2017, 15 cases were prosecuted, and six defendants were sentenced [2]. All the investigations were conducted under as a criminal offence of violation of the equality in tender procedures. No investigations based on offences of passive or active corruption appear in prosecution reports of the last four years [1, 2].
However, no data or reports are published by the MoD on the number of economic operations disqualified or excluded on corruption grounds. The PPA reports do not include excluded operators on corruption grounds [3, 4, 5].

There are clear legislation and implementation guidelines, which allow for termination of the contract where there is a conviction or credible evidence of bribery and corruption-related offences. Art. 89 of the 2016 Public Procurement Law states that any person who engages in acts or schemes designed to promise to offer or grant public officials remunerations or benefits in connection with a public contract would constitute sufficient grounds for taking any coercive measure. This includes the termination or cancellation of the contract and to prohibit the person from bidding again (1). Moreover, the Anti-Corruption Law of 2006 states that businessmen trying to increase the price or change the quality of the good or services to their advantage will be punished by imprisonment of two to ten years and a fine of 200,000 to 1,000,000 DA (Art. 26), (2). Art. 168 of the Public Procurement Law only makes a clear exemption for the Ministry of National Defence concerning external control mechanisms. Therefore, it can be assumed that the guidelines apply to the defence sector.

Research has found no public cases of corrupt activities of a supplier working for the defence sector during the last few years. Allegations of corruption by a businessman in civil procurement have been investigated by law enforcement agencies and prosecuted in courts, such as corruption in the construction of a major highway (1), (2). In the Algerian context of “crony capitalism and political complicities” (3), there is likely political influence in the decision-making process.

There are cases where businessmen have been prosecuted and jailed for corruption, but no cases have been found where businessmen were doing businesses with the armed forces. In 2016, a court jailed two men in a corruption case dealing with the state energy firm Sonatrach (1). A recent International Crisis Group report notes that “the struggle against corruption is too often used to settle political scores” (2, p. 19), suggesting that cases are only prosecuted when it is politically desirable. As has been stated before the judiciary lacks independence.

The 2016 Public Procurement Law empowers procurement officials to exclude companies where there is credible evidence of bribery and corruption (Art. 9). Exclusion may result in the public blacklisting of the company for a duration of one to three years, and heavy fines (Art. 56). All public officials involved in public procurement procedures, including Assessment Committee members, can be held equally accountable for active or passive corruption and conflicts of interest, and are required to annually file an asset declaration that includes their family members (Art. 8) (1).

In July 2018, President Lourenço annulled several public procurement contracts with companies linked to his predecessor’s family for alleged fraudulent practices in direct adjudications of public contracts (1), (2). Angola’s Public Prosecutor has in the past few months indicted an unprecedented number of top officials including family members of former President Dos Santos under corruption charges, some of which are currently in pre-trial detention. However, this stands in contrast to numerous cases in recent years, in which foreign companies that faced judicial proceedings in their home countries for charges of bribery in Angola have continued doing business in Angola (3), (4).

There are examples of foreign companies that were charged and/or sanctioned in foreign countries and in other jurisdictions since 2015, even so, many have continued doing business in Angola. The US Securities and Exchange Commission charged the US companies Halliburton, General Cable Corporation and Goodyear for violations of the Foreign Corrupt Practices Act in Angola. In 2017, the US Department of Justice also charged the Brazilian Odebrecht group (whose former CEO in 2016 was sentenced to 19 years in prison in Brazil) for corrupt practices in Angola (5), (6), (7), (8), (9).

In July 2018, President Lourenço annulled several public procurement contracts with companies linked to his predecessor’s family for alleged fraudulent practices in direct adjudications of public contracts (1), (2). Angola’s Public Prosecutor has in the past few months indicted an unprecedented number of top officials including family members of former President Dos Santos under corruption charges, some of which are currently in pre-trial detention. However, this stands in contrast to numerous cases in recent years, in which foreign companies that faced judicial proceedings in their home countries for charges of bribery in Angola have continued doing business in Angola (3), (4).

There are examples of foreign companies that were charged and/or sanctioned in foreign countries and in other jurisdictions since 2015, even so, many have continued doing business in Angola. The US Securities and Exchange Commission charged the US companies Halliburton, General Cable Corporation and Goodyear for violations of the Foreign Corrupt Practices Act in Angola. In 2017, the US Department of Justice also charged the Brazilian Odebrecht group (whose former CEO in 2016 was sentenced to 19 years in prison in Brazil) for corrupt practices in Angola (5), (6), (7), (8), (9).

The regulations find that corruption (giving or receiving money) is a sufficient reason to reject any part of the bidding process or the formalisation of the contract. [1] When it is reliably found that the bidder, awardee, or co-contractor has participated in such conduct, the “suspension to contract” applies for a term greater than 1 year and up to 2 years. [2] [3] The 2018 Law on Criminal Liability of Legal Entities [4] establishes criminal sanctions for when companies commit crimes such as bribery and influence trafficking, nationally and transnationally, negotiations incompatible with the exercise of public functions, collusion, illicit enrichment, and false and aggravated balances and reports. Penalties include fine, suspension, dissolution, and loss of benefits. [5]

Cases are investigated, but not everyone goes to trial. There are complaints regarding impartiality in the processes. Cases are evidenced in which there was judicial prosecution for both public officials and businessmen. [1] Likewise, in the case publicly called “Notebooks,” the businessmen denounced for corruption were arrested in a preventive manner. [2] [3] [4] At the same time, there are other cases that have not advanced in the judicial field and/or where there are complaints regarding influences in the proceedings and/or impartiality, which have led to both public complaints and complaints by civil society. [5] In the specific area of the defence jurisdiction, the tender that took place for the repair of the San Juan submarine is under judicial investigation. [6] [7]

It is not clear if offences by corrupt suppliers are appropriately sanctioned. There is no evidence of cases of sanctions.

Cases that do not qualify as illegal are treated through administrative sanctions, such as including the company/firm/individual in a so-called “blacklist”. Once included in the list, the company/firm/individual can only argue the decision by the Complaint Board in the court [1]. Corrupt activities of suppliers are subject to the general provisions of the Law on Procurement and Criminal Code. Article 312, 313, 314, 315 of the Criminal Code of Armenia provide for cases of bribery and corruptive behaviour [2]. Procurement responsible person has the authority to exclude companies and senior company officials where there is a conviction or credible evidence of bribery and corruption-related offences. However, there is no separate legislation or provision by law that backs up the responsible person, s/he exercises the right to exclude within the general legislation addressing corruptive activities.

Cases of corruption in the Army in 2017 (116) almost doubled as compared to the cases of 2016 (57). Thirty-six criminal cases involving 72 people were sent to court [1, 2]. However, there were cases before the revolution, when the Ministry of Defence (MoD) demanded to reject the complaints, and the board was doing so. In general, few complaints were met, others were denied [3].

Article 12 of the Law on Procurement provides that a written appeal is immediately submitted to law enforcement institutions upon revealing any illegal activity by applicants and suppliers [1]. In practice, a case was launched when it was revealed that instead of beef, buffalo meat was illegally supplied to the military [2]. Sanctions can include both criminal procesution and imprisonment as well as exclusion from the future competitions.

Australia has been criticised for not having a formal debarment regime to exclude companies accused of bribery, corruption, and anti-competitive practices, though procurement officials are allowed to exclude companies and officials in the absence of official guidelines. The OECD [1, 2] and Transparency International [3] have both expressed their concern at a lack of government-wide debarment regime over several years. Additionally, there is a lack of consistency in debarment policy. The OECD Phase 4 report on Australia’s implementation of the Anti-Bribery Convention states that since at least 2012, “Australian public procurement agencies had the discretion to debar companies convicted of domestic or foreign bribery. It was a matter for individual agencies to develop their own policies in this regard” [1]. The Senate Economics References Committee inquiry into Foreign Bribery report recommended in March 2018 that the government introduce a consistent and comprehensive debarment policy [4], but the government has not responded to or acted on this recommendation as of June 2020 [5]. The Australian government justifies the lack of debarment regime by explaining, “it was inappropriate to ‘specify particular offences as grounds for termination,'” though many Australian allies, such as the U.S., Canada, and the European Union have successful debarment regimes that do specify particular offences as grounds for termination [6]. In the absence of a formal debarment regime, the Foreign Bribery report stated that “while it is true that under the current Procurement Rules, relevant authorities have the discretion to debar (preclude) companies convicted of domestic or foreign bribery from public procurement contracts, this is not clearly stated” [4, p169]. It is not clear how aware Defence procurement officials are of the possibility of debarment, how exactly debarment works in Defence, or how often it is implemented, given the lack of legislation or policy outlining official powers and obligations. There is no evidence that an official debarment list exists, or that any company has ever been debarred for corruption and/or bribery by the Department of Defence or the Australian Commonwealth Government [7].

The legal system in Australia is generally considered robust and without undue influence, with Australia ranked 12 of 126 countries for the quality of its criminal justice system by the World Justice Project in its 2019 Rule of Law Index [1]. Procurement officials are expected to follow clear Codes of Conduct, which precludes favouritism and unethical behaviour, in all areas of responsibility [2, 3], including in their decisions to debar companies. However, in the absence of clear, public guidelines and policies, the door is open to subjective debarment decisions which may be influenced, intentionally or not, by relations with suppliers or political considerations. It is alleged that political considerations and supplier relations played a large role in the unprecedented forced redaction by the Attorney-General of a critical Australian National Audit Office report on the Hawkei combat vehicle [4]. While undue influence does not appear to be a concern in the legal system, the Hawkei case and enhanced secrecy around politically compromising information [5-7] creates reasonable doubt that undue influence would not be a concern among procurement officials, particularly political appointees who make high-level decisions. There are no recent public cases where companies were debarred from Defence contracts for corruption related offences [8], but concern has been raised over the engagement of and lack of corruption controls employed for Naval Group on the Future Submarine Program. Naval Group has been repeatedly embroiled in corruption scandals, yet it was chosen as the supplier for the $50 billion Future Submarines Project, seemingly without any corruption control requirements built into the contract [9]. Observers have made arguments that Naval Group was probably chosen for reasons of political expediency [5, 10].

It appears that corruption-related offences do not often attract sanctions, though a paucity of examples of procurement corruption investigated or prosecuted makes it difficult to tell. There have been no recent public cases of Defence procurement corruption prosecuted [1]. However, media reports revealed that the Defence Audit and Fraud Control Division undertook a 10-month internal investigation in 2016 in response to allegations of significant mismanagement and corruption [2], including wanton disregard for procurement standards and “Defence Department staffers colluding with contracting companies to design handsomely-paid jobs with requirements tailored to their own qualifications and experience” [3]. None of the individuals or companies involved faced sanctions, nor were the allegations referred to external investigators such as the Australian Federal Police, because “‘An initial assessment of the matter determined that there was insufficient evidence to substantiate the allegations relating to fraudulent and corrupt conduct,'” though other serious problems were revealed [2]. There was also inadequate evidence of corrupt conduct by contracting companies to warrant a deeper investigation, “although one company was no longer engaged on Defence contracts,” [3] though it is unclear if they were debarred or if Defence contracts they were engaged on simply ended.

There are no concrete articles in different laws (Law on Procurement, Criminal Code) that state that procurement officials have authority to exclude companies or individuals implicated in bribery or corruption-related offences. There are no concrete and clear sanctions for “the punishment the corrupt activities of a supplier”. However, in various laws and the Criminal Code, corruption is considered a criminal offence, and it also applies to the defence procurement.
According to Article 311 of the Criminal Code (1), receiving a bribe is called “passive bribery”. Bribery committed by an official for illegal actions (inaction) shall be punished by imprisonment for the term from five up to ten years, with deprivation of the right to hold certain positions or engage in certain activities for up to three years. Article 312 stipulates that giving a bribe is considered “active bribery”. Bribery or repeated bribery by an official for illegal actions (inaction) shall be punished by a fine ranging from two thousand to four thousand manats, or by deprivation of liberty for the term from four up to eight years.
For example, a person who gives a bribe is exempted from criminal liability when he/she gave a bribe as a result of threats imposed by an official or voluntary reporting to the relevant state body for bribery.
According to the Law on Procurement (Article 4), the relevant public authority for public procurement controls the legitimacy of procurement of goods (works and services), oversight the implementation of contracts, explores controversial issues, if it finds out that there is a violation of the law, suspends procurement procedures, tries to eliminate the results of the tender as needed (see 4.1.2) (2). In recent years there have been no cases of cancelling the results of tenders in the defence and security sector or punishing suppliers (3).

The winning company should support the existing political power. If they do not support, they have no chance of winning. At the same time, the winners of the tender are close relatives and friends of the officials. The fact that the winning bidder shares the finances with the winner is widespread in Azerbaijan. The scheme is simple, you can bribe and win the tender, then you can again bribe and win the next tenders. So, there is a complete failure to investigate or prosecute, even in the face of clear evidence. The winners are protected by the officials (2).
Tenders in Azerbaijan are mainly held indoors, and the proposals of contractors involved are not publicly available. The tender organization, by referring to the legislation, conducts closed tenders and, in this case, precludes the participation of the bidders, and specific support is provided to the winning partner (1).
The selection criteria for the winners are not disclosed. According to the data, the winners of tenders are primarily selected by state officials. In such a situation, information about problems that may arise in the future activities of suppliers may not be disclosed (2). Ismayil Alakbarov, founder and head of Neuron Technologies, one of the well-known IT companies in Azerbaijan, has accused the Azerbaijani government of holding tenders illegally and allowing serious misconduct in this area. The entrepreneur said that winners in 90% of public procurement were previously announced, “[t]he State Tender Bidding Commissions award tenders to the companies they have previously defined.”
According to Alakbarov, some organizations generally refrain from issuing a “set of conditions” of the tender that they do not offer additional proposals: “Because competition in the tenders can not afford their contracts to their” companies “. The horrible thing is that the Tender Committees cancel the tenders by various excuses, legitimate “reason” and no one is punished for that. Because there are many gaps in the legislation.” He went on to say, “[t]here are gaps in the legislation, I suggest that the law on procurement with the participation of entrepreneurs be revised and changes will be made, and businessmen have a lot of proposals” (3).

According to the expert, the reports of the Chamber of Accounts do not reflect the opinion on the efficiency (or inefficiency) of public procurement and tenders. However, the main task of this body is to investigate expenditures from the state budget and to express their attitude towards the shortcomings (1). The Chamber of Accounts does not carry out any controls or audits of the State Agency for Procurement and does not announce the results of these inspections (2). “If during the tenders we want to learn something about X company, we can get answers like “it is against national security”, says expert Zohrab Ismayil (3). In this way, no information is given about sanctions.

Procurement officials and committees have no authority to sanction any supplier or individual who may have committed corrupt activities. Sanctions are based on the contract, but usually require a lengthy process to investigate and sanction them. Generally, sanctions are imposed by minister or the commander in chief, not the procurement committtee [1, 2, 3].

As outlined in 69A, procurement officials have no authority to sanction suppliers or individuals implicit in corrupt activities. This indicator has therefore been marked ‘Not Applicable’ [1, 2, 3].

As outlined in 69A, procurement officials have no authority to sanction suppliers or individuals implicit in corrupt activities. This indicator has therefore been marked ‘Not Applicable’ [1, 2, 3].

Under Section 30 of DP-35 [1], the Secretary of the MoD has the legal power to cancel contracts or debar a company when allegations of bribery or corruption-related offences are established through due process. In addition, the inspector or relevant Director of Inspectorate and official dealing with quality control issues are also authorised to cancel or reject supplies after delivery, which may result in cancellation of the contract.

DP-35 outlines the process of investigation, however, in the absence of any official reports on the blacklist or debarment list, which is authorised by the Defence Secretary, it is difficult to ascertain what types of punishments are imposed on suppliers [1]. Given the lack of available information, this indicator cannot be scored and is marked ‘Not Enough Information’.

The DGDP does not provide a publicly available debarment list. The debarment list of the Central Procurement Technical Unit (CPTU) [1] does not contain any information about the Ministry of Defence. Therefore, it is unclear whether offences result in sanctions. As such, this indicator is not scored and is marked ‘Not Enough Information’.

Economic operators who have been convicted of corruption also have to be excluded from all defence and security procurement, as stated in Article 20 of the law on public procurement and Aritcle 63 of the royal decree on defence and security procurement [1, 2]. However, a company cannot be excluded by the procurement authority before a judicial decision.

The Central Office for the Repression of Corruption is the entity that deals with corruption, concussion and interest taking and misappropriation [1]. OCRC has the authority to investigate and support the investigation of offences committed to the detriment of the interests of the State, as well as complex and serious corruption offences. In addition, it performs a pilot function in the fight against abuses and infringements in the areas of public procurement, subsidy legislation, approvals and permits. The judicial power is independent of the political power in Belgium. There is no evidence of undue political influence in the investigation or prosecution of corruption cases [2].

There is Not Enough Information to score this indicator. No cases of corrupt activities of suppliers were found [1, 2]. There is no evidence that sanctions in practice would not include prosecution, exclusion from current and future competitions, heavy fines or imprisonment – if they were to be applied.

The Public Procurement Law of Bosnia and Herzegovina (PPL) orders contractors and suppliers that have been convicted of corruption may not bid for the Ministry of Defence’s (MoD) tenders, and those who have committed bribery in the course of a procurement procedure will be disqualified [1].

In general high-level corruption is not prosecuted (you can see it is mentioned in EU reports on Bosnia and Herzegovina).

There have been cases of supply of goods of poor quality, where, according to the contract, there were no obligations that the contractor had to replace goods that had expired or would expire [1]. For example, the procurement of food for Armed Forces of Bosnia and Herzegovina in 2018. In these cases, the Ministry of Defence (MoD) resorts to legal protection measures to try and punish poor contract fulfilment [2, 3]. No information was found as to whether sanctions have been handed out so far in the defence sector or if they are effective.

The available information shows no evidence in practice, thus it does not allow to properly score this indicator.

Section 16 of the PPADB provides that the register of persons found with a fault
(1) The Independent Committee shall establish a register of persons against whom fault was found in any inquiry under these regulations.
(2) The register shall give a brief statement of the (a) procurement project concerned; and (b) decisions of the Board and the Independent Committee regarding the person concerned.
(3) The register shall be kept by the Secretary of the Independent Committee and shall be open to the public for examination on payment of a fee of P50 during business hours.

Section 17 of the PPADB Act provides that for fines, The Independent Committee may, after consultation with the Board, order a complainant against whom fault has been established in an inquiry to pay such fine as the Independent Committee may consider appropriate.

Section 18 of the PPADB Act provides for the Offence any person who submits or provides to the Independent Committee any information that such person knows to be false or documents that such person knows to have been falsified commits an offence and is liable to a fine not exceeding P500 or to imprisonment for a term not exceeding six months or to both [1,2]. Please note that there is no exceptional procedure on reporting corruption outside that which is prescribed in terms of the CECA, the principal legislation on corruption. The Independent Committee whilst established in terms of the PPADB Act operates autonomously of the PPADB (the Board).

Generally, cases are investigated independently. However, there have been a few reports of corruption, in the BDF, that have never been investigated and this has alluded to some political interference as reported by the media. There have been reports involving the former President’s twin brothers that were involved in BDF procurement as private suppliers. For example, it has been reported in the media that Botswana Defence Force and Botswana Police have not been an exception when it comes to this rule. The latter was embroiled in a tender to supply the new police uniforms as accusations were flying all over about the award of such to favourable Botswana Democratic Party faithful. With BDF, issues of corruption surrounding the procurement of military equipment are so perennial and have become a culture. There is a history of skewed tendering at our military institution and the name of Seleka Springs has always been highlighted in almost every deal. The BDF is regularly allocated a large proportion of the national budget, which is criticised as being far greater than actually required. [1,2].

PPADB have not recently reported any cases of this nature. The Code of Conduct expressly prohibits collusion, frontism, tokenism, window dressing and rent-seeking behaviour, which are forms of corruption. Given that there have been no recent reported cases of corrupt activities by suppliers, it is not possible to score this indicator and it is marked ‘Not Enough Information’.

The PPADB Act provides as follows:
123. Code of conduct of contractors.
Contractors shall, under registration, be bound to conform to a code of conduct in respect to all procurement and disposal activities.
124. Suspension and de-listing from the register.
A contractor, who does not comply either with the code of conduct or the contract concluded with a procuring entity, may be suspended or delisted by the Board from the Register of Contractors.
125. Non-registration of suspended contractors.
A suspended contractor shall be debarred by the Board from registering a newly incorporated entity for the period of suspension in question.
126. Restriction on the defaulting contractor.
Where the defaulting shareholders, directors and senior officers of the suspended contractor join another contractor in key operational positions, that contractor shall be debarred from bidding on new tenders until the period of suspension has lapsed.
127. Procedures and regulations.
The procedures, value and weight of each criterion and the modality to be used by the Board in the registration, review, elevation, de-listing and suspension of contractors shall be set out in the Regulations [1,2].

Companies can be subject to formal admonition, the fines already established in the contract, temporary suspension of any participation in public procurements, and a declaration of disreputability, which can prevent this company to ever participate again in public biddings [1]. Companies that are not allowed to participate in any public bidding are listed in the Transparency Portal [2].

It is not clear that all suppliers are investigated properly, as there are cases that are resolved within the barracks, without formal processes [1]. However, one emblematic case that was in the media was the Saúva Operation (Operação Saúva) in 2006. The Federal Police found and dismantled collusion between a local company in the Amazon state, the Army and other public entities. This led to the imprisonment of the private company owner [2]. Companies that are not allowed to participate in any public bidding are listed in the Transparency Portal [3].

There is evidence that sanctions are applied in practice since in the Transparency Portal, there is a list of companies who were prosecuted and prohibited from participating in future public bids [1]. Once investigated and prosecuted, the application of sanctions is coherent.

Law N° 039 (2016) is the legal framework for public procurement and contracting in Burkina Faso (1). It is complemented by Decree N° 0049 (2017) also covers issues not mentioned in the above law (2). Sanctions on corrupted activities of suppliers are under Article 50 through Article 57. However, there is ongoing widespread corruption among public officials (3), coupled with weak enforcement of the law (4), procurement officials have limited authority to exclude companies and senior company officials from public order/procurement.

Again, the legislation on public procurement is available, and it provides the contracting authority with the power to apply sanction where necessary. However, the increasing level of corruption hinders the enforcement of the law (2), (3). There is no political will to fight corruption, as the government rarely imposes sanctions on convicted officials (1). Most of the time, case are superficially investigated, and defendants rarely get punished. For example, in 2017 three members of the last government of former President Blaise Compaore: Salif Kabore, Jerome Bougma, and Jean-Bertin Ouedraogo were arrested for corruption (procurement), embezzlement and mismanagement (4). However, it appears most of them were not prosecuted (5).

Most offences to public procurement regulations rarely result in real sanctions, and often offences to procurement regulation in the defence sector remain unknown (3). From my personal experience working for the military, I have neither seen nor heard that a military official was prosecuted for corruption, even though disciplinary measures are often applied. Also, the government rarely imposes sanctions against officials (2). For example, the United States Department of State 2017 Report states that “on September 6, the Ministry of Justice issued a warrant against the head of the CSC, Nathalie Some, for embezzling 650 million CFA francs ($1.2 million). Some, who was in detention at the MACO since September awaiting trial”. Unfortunately, as of March 2018, Mrs. Some was given provisional release for medical reasons (1), and there is no evidence that she returned to prison.

The Procurement Code does not apply to defence and security procurement, as per articles 4 and 71 [1], and there are no known sanctions used to punish the corrupt activities of a supplier in defence and security procurement.

Because procurement officials have no authority to exclude companies or individuals implicated in bribery or corruption related offences, this indicator has been marked Not Applicable.

The Procurement Code does not apply to defence and security procurement, as per articles 4 and 71 [1], and there are no known sanctions used to punish the corrupt activities of a supplier in defence and security procurement.

Because procurement officials have no authority to exclude companies or individuals implicated in bribery or corruption related offences, this indicator has been marked Not Applicable.

The Procurement Code does not apply to defence and security procurement, as per articles 4 and 71 [1], and there are no known sanctions used to punish the corrupt activities of a supplier in defence and security procurement.

The Government Contracts Regulations (GCR) that came into force on June 10, 2019 provide clear guidelines regarding sanctions and punishments for corrupt activities. This includes a requirement that “all bidders and contractors must now declare that, throughout the solicitation process, they have not committed certain offences related to fraud or corruption.” [1] The changes to the GCR allow the government to penalise suppliers engaging in corruption without a conviction through the judicial system, meaning that the government can act more quickly to prevent and sanction corruption. [1] Suppliers may be deemed ineligible for or suspended from competitive bidding processes in the future. [2] [3] Individuals may also be held accountable under existing legislation such as the Competition Act. [4]

Cases are investigated and/or prosecuted through formal processes clearly guided by a body of appropriate legislative and legal measures that include accounting for potential violations by suppliers: Competition Act, Controlled Drugs and Substance Act, Corruption of Foreign Officials Act, Excise Tax Act, Financial Administration Act, Income Tax Act, and the Lobbying Act. [1] The Office of the Procurement Ombudsman also acts as a mechanism for suppliers should they dispute decisions made by the contracting authority. [2] According to an OECD ethics report on Corruption in Public Procurement, the Office of the Procurement Ombudsman plays an integral role in preventing undue influence from either the political or client side of the procurement process as it provides for an effective and credible complaints and arbitration process. [3] However, given that the Prime Minister was found to have contravened section 9 of the Conflict of Interest Act, in the criminal matter involving SNC-Lavalin, which is a major defence contractor, undue political influence can be argued to have been attempted. [4]

The changes to the GCR allow the government to penalise suppliers engaging in corruption without a conviction through the judicial system, meaning that the government can act more quickly to prevent and sanction corruption. [1] Suppliers may be deemed ineligible for or suspended from competitive bidding processes in the future. [2] [3] The Vendor Performance Corrective Measure Policy also aids in assisting PSPC in mitigating the future risks for contracts and improving front line client service. [4] Suppliers that are ineligible to be awarded a contract or real property agreement by the Government of Canada, as per the Ineligibility and Suspension Policy, are publicly listed. [5]

Legislation to exclude companies and senior company officials in the face of bribery and corruption-related offences exists, but procurement officials might have limited authority to ban suppliers if misconduct has not been investigated and processed through the justice system in the first place. The regulations of the registries of special providers for the armed forces establish several causes for providers’ disability (Decreto 746, Art. 17) [1], including misdemeanours related to malfeasance, fiscal fraud, and bribery (cohecho) (Código Penal, Título V párrafo 9º) [2, 3]. Specifically, the regulation excludes from the registries of special providers those individuals who have been prosecuted or accused of giving, offering or consenting to give a public employee an economic benefit to performing an illicit action (Art. 250). The initiative of procurement officials is limited. For instance, the army’s Center of Acquisitions Management (Centro de Gestión de Adquisiciones) (CGA) can make complaints against suppliers for the breach of the commitments made with the institution. However, these complaints correspond to administrative procedures related to compliance with the bidding conditions and do not specify situations of evidence of bribery or corruption [3, 4].

An online search – and through interviews – revealed insufficient information on the subject of prosecution and undue influence. As such, this indicator is marked ‘Not Enough Information’.

An online search – and through interviews – revealed insufficient information on the subject of prosecution and undue influence. As such, this indicator is marked ‘Not Enough Information’.

There are two types of sanctions: administrative and criminal. Administrative sanctions include suspending or revoking licences for equipment procurement and production (Articles 52-6, Weapons and Equipment Quality Management Regulations 2010 武器装备质量管理条例). [1] Procurement officials may also refer cases for criminal investigation according to “Chapter VIII: Corruption and Bribery Crimes” of the PRC Criminal Law (中华人民共和国刑法). [2] On paper, procurement officials have the legal and administrative instruments necessary to exclude companies and their senior management from military procurement.

Undue influence is a systemic problem in military procurement in China and, in the past, there have been many cases of corruption in procurement. Pei Minxin [1] identified PLA construction, logistics, real estate, health care, finance and personnel management as the most corrupt areas. In 2016, the CMC reorganised its departments, [2] dismantling the formerly powerful General Logistics Department. During the current anticorruption campaign, more than 100 senior military commanders have been arrested on corruption charges. [3] Despite the many arrests, the institutional changes introduced (CMC reorganisation, new procurement platforms) need to be tested in the long run. There is no way to fully assess the present situation as cases of corruption usually emerge after a few years.

China’s Defence Industrial Complex, comprised of State Owned Enterprises, is very secretive and corrupt. [1] No case of an SOE being banned from military procurement has been identified. SOEs are protected by the regime [2] and especially those in the Defence sector will not be closed down or barred from future procurement. However, measures against SOE senior management have been applied in recent years. [3]

Article 82 of the Anti-Corruption Statute or Law 1474 of 2011 establishes the civil, fiscal, criminal and disciplinary liability of the interveners, consultants, contractors and external advisers for the performance and non-compliance with the obligations of contracts concluded causing damage or harm to the procuring entities. [1] For its part, the Colombian Penal Code [2] defines a series of offences applicable to suppliers and contractors, including bribery, the penalty for such a crime carries a sanction of three to six years in prison, a fine of 50 to 100 legal minimum monthly wages, and disqualification for the exercise of public rights and functions from 5 to 8 years. Other offences stipulated in this legislation are embezzlement, illegal levying, improper conclusion of contracts, trafficking in influence, malfeasance, restrictive agreement of competition, or collusion. [2] Article 27 of Law 1474 of 2011 stipulates that in the event of collusion, a sentence of 6 to 12 years in prison will be incurred, a fine of 200 to 1000 legal minimum monthly wages will be levied, and the individual will lose the ability to contract with state entities for eight years. [1] The Prosecutor’s Office, Attorney General’s Office, and Comptroller are in charge of criminal proceedings, with the latter assuming the investigation of the facts and deciding the type of sanction or penalty charged to the contractor. The public official is obliged to inform the authorities of the facts or crimes to be investigated, as stipulated in the criminal procedure code. [3]. Interviewee 7 states that the internal control offices have an obligation to inform and file investigations before the control authorities, in compliance with the Colombian regulations. The defence sector does not intervene or exercise control over criminal, fiscal, or administrative investigations. [4] Procurement or procurement officials are therefore not entitled to issue judgments or exclude companies in the contractual process until the corresponding sanction is issued by the competent authorities. Therefore contracting officials cannot exclude companies or contractors in the public offering process until a penalty judgment on acts of corruption is issued by the competent authorities.

Corruption cases by suppliers and contractors are investigated by the Attorney General’s Office. The Colombian criminal proceedings are divided into three phases: inquiry, in which the prosecutor and the judicial police obtain evidence and physical evidence of the crime that occurred, and the prosecution is brought before a judge of guarantees; research phase, where a formulation hearing is held and research is open; and trial phase, where indictment, preparatory, oral trial, and judgment hearings are held before a judge of knowledge. [1] During the criminal proceedings, the internal control office of the Ministry of Defence participates in the delivery of reports, documents, and evidence that it has in its possession that contribute to the criminal process. [2] However, it should be noted that according to the 2018 Gallup Survey, [3] the Attorney General’s Office of the Nation has a disapproval rating of 62% regarding credibility in its processes because citizens do not trust the actions it takes to end impunity, its independence, or the rigor of its investigations into acts of corruption. [4] The New York Times reporting found that the prosecution has little legitimacy and major conflicts of interest, preventing it from having autonomy to investigate and prosecute public officials and businessmen who carry out bribes to win public bids. [5]

There is evidence that sanctions are applied to suppliers and contractors who engage in corrupt practices. It is common to request imprisonment and pre-trial detention for crimes related to bribery, embezzlement, and coercion. In cases of collusion, it is more common to apply sanctions in the form of fines. For example, the SIC imposed a fine of 47 billion pesos in the case of cartelisation of Army food rations. According to the OECD, since the enactment of Law 1474 of 2011, fines but not imprisonment has been applied in cases of collusion between bidders. [1]

ANRMP officials are empowered by the 2009 Code of Public Procurement to impose sanctions and punish the corrupt activities of a supplier. Though Articles 185-187 are clear, they lack the implementing guidelines. Decree No. 2009-259 (Portant Code des marchés publics) contains provisions allowing public officials to exclude bidders (soumissionaires) from future bids if they are found guilty of bribery or corruption offences. Title 10 (Penalties for violations of the public procurement rules), Chapter 2 (Penalties for violations committed by Bidding Applicants), Articles 185-187 describe the corrupt practices that can lead to ANRMP penalties:

“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:
– 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: (1)
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)
1. the cancellation of the offer and the confiscation of the corresponding guarantee, if necessary, by the seizure of the sum 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).

A “limited capacity” of public officials to impose sanctions and this is not the case given the clarity of Articles 185-187 in the 2009 Code of Public Procurement.

TThere are cases for which rulings are available on the ANRMP website where companies were convicted of irregularities in a public procurement process. The cases demonstrate that formal processes were seized to resolve litigation between ANRMP and the bidding company/supplier. However, it is not possible to ascertain whether there was undue political interference when it comes to the sanctions imposed. The ANRMP website has a dedicated tab on its website titled “Liste Rouge” forbidding companies, including suppliers and service providers, that have been sanctioned for corrupt activities. The cases range from December 2016 to November 2018, so they accurately reflect the current litigation landscape in public procurement. Though the full details of each case can be accessed via pdfs, it is not possible to ascertain the extent of undue political interference based on these rulings (1). For example, on November 13, 2018, the public tender with a construction company by the name of Société Internat des Grands Travaux (IGTX) was cancelled after irregularities were detected in the public tender for the construction of a school in the district of Yopougon, Abidjan. The contract with IGTX was nullified and the company has been barred for two years from taking part in public tenders. However, there are no details in the ruling describing the reasons for cancelling this project other than that the company committed an offence (2).

There are recent cases on the ANRMP’s website with the names and individual rulings against companies/suppliers found guilty of irregularities during the procurement process. The offences consulted demonstrate that the company can be sanctioned by cancelling a project midway as well as by imposing a ban on future public tenders. The ANRMP website has a dedicated tab tilted “Liste Rouge” where it has red-listed a total of 17 companies/suppliers that have been convicted of irregularities by the ANRMP and national courts during the course of a public procurement project. The cases range from December 2016 to November 2018 and cover many sectors, from IT and medical suppliers to construction companies building school infrastructure (1). As shown in 69B with the November 2018 case of the cancellation of a public contract with the Société Internat des Grands Travaux (IGTX), the offense committed by the company was sanctioned not only with the annulment of its contract to build a school, but also with 2 years of inability to participate in future public tenders (2). The evidence suggests that the ANRMP is following through and following the formal processes to impose sanctions on bidding companies and suppliers.

The EU Directive on contracting in the fields of defence and security and the EU Directive on public tenders state that member states should avoid giving contracts to persons/economic operators who have participated in criminal organisations or have been found guilty of, among other things, corruption or fraud to the detriment of the financial interests of European communities [1, 2]. The Danish law on public tenders (Ubdudsloven) states that the bidder shall be banned if he or she is convicted or fined for bribery or fraud and if there are demonstrable conflicts of interest [3]. It further includes stipulations which allow procurement officials to exclude the bidder, e.g. if there are demonstrable doubts about the integrity of the bidder [4]. The DALO standard terms of delivery state that, if asked, the supplier is required to present documentation that the supplier is counteracting all forms of corruption [5]. Thus, there are clear regulations in place that empower procurement officials to exclude corrupt companies/persons.

As bribery, fraud and corruption related activities are criminal offences according to the Danish Penal Code, cases are investigated and prosecuted through strictly formal processes by the relevant national authority (e.g. the Police or the State Prosecutor for Serious Economic and International Crime) and without undue political influence [1, 2].

The Danish Penal Code provides a range of sanctions including fines or imprisonment [1]. As mentioned in Q69A, bidders who have been found guilty of corrupt activities are excluded from the competition [2].

The Public Authorities’ Contracts Law states that a contractor who wins a contract through means of manipulation or corruption should be debarred and removed from the suppliers and contractors register (1). According to the same law, each procurement department should keep a register of all the companies that are debarred from tenders (1). The governmental 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 the body in charge of monitoring public procurements.

This sub-indicator is marked Not Applicable because no evidence suggests that suppliers have been sanctioned, or prosecuted in corruption cases even in the face of clear evidence. Examples from older cases suggest that whenever a procurement corruption case is known and makes it to court, the supplier or the bribe giver are rarely prosecuted, and only those who received a bribe are prosecuted. For example, in the Mercedes bribery case, there is no evidence that Mercedes was fined or sanctioned even though it was fined in the US over the same case (1). In Egypt, only those who received the bribe were prosecuted and convicted (2).

This sub-indicator is marked Not Applicable because there is evidence that sanction(s) (debarring) do take place (1). However, because the published decisions do not include reasons for debarring, it is difficult to determine whether the sanctions happened due to corrupt activities or not and whether they are all always applied whenever corruption is discovered.

In accordance with the Penal Code, a company can be prohibited from engaging in enterprise from one to five years for giving or mediating a bribe. [1] Moreover, an official is obliged to announce any incidents of corruption that are known. The confidentiality of the informer must be guaranteed. [2]

Cases of corruption can be taken to court. The corruption or corruption-related incidents can be revealed and investigated by different institutions that are deemed trustworthy. [1] For example, the Police and Border Guard Board deals with general corruption cases, and the Estonian Internal Security Service with corruption cases that involve higher public officials. [2] As evidence shows, the Estonian Internal Security Service has discovered many corruption or corruption-related incidents within the procurement sector in recent years. The corruption cases discovered by the Estonian Internal Security Service are published in the yearbook. [3]

In accordance with the Anti-Corruption Act, corruption cases can lead to fines or imprisonment. [1] Corrupt use of public resources is sanctioned by a fine. Knowing of a violation of a procedural restriction to a large extent is punishable by a pecuniary sanction or up to one year’s imprisonment. [2] Giving or promising a bribe is sanctioned by a pecuniary punishment or up to five years’ imprisonment. In accordance with the Law of Obligations Act, a tenderer that has been convicted of corrupt practices, can be excluded from participating in the procurement. [3]

According to the general terms of public procurement – goods (JYSE 2014 tavarat) and the general terms of public procurement – services (JYSE 2014 palvelut) the buyer has the right to cancel the agreement immediately, if the provider falls within the conditions (even if retrospectively) provided in Act on Public Procurement and User Agreements that require the exclusion of a bidder from the competition. [1, 2, 3]

This can be done also if the supplier’s economic situation or other conditions have changed to the extent that it cannot be expected that the supplier is able to carry out its obligations detailed in the contract and has not given a report on how it will carry out its obligations in the changed circumstances. [1, 2]. Similar conditions requiring exclusion are given in the Act on Public Defence and Security Procurement. [4]

The cases are investigated and prosecuted through formal processes as defined by legislation, e.g. Act of Pre-Trial Investigation and Code of Judicial Procedure. [1, 2]. There are no reports on undue political influence.

There is not enough information to score this indicator. No cases or instances of corrupt activities by a supplier could be found through a review of the media. It is worth pointing out that an offence can lead to a range of processes and sanctions specified in legislation, mainly in the Criminal Code of Finland. [1]

Clear legislation does exist to exclude companies and senior company officials where there is a conviction or credible evidence of corruption-related offences.
According to Article 48 of Order n°2015-899 of July 23, 2015 dealing with public procurement, people who create a situation of conflict of interest are excluded from public procurement. A conflict of interest is defined as “any situation in which a person who participates in or is likely to influence the outcome of the procurement process has, directly or indirectly, a financial, economic or other personal interest that could compromise his or her impartiality or independence in the context of the public procurement procedure.” [1] Article 48 also defines “collusion” (entente) as a situation when “the persons in respect of whom the buyer has sufficiently probative elements or constituting a bundle of serious and concordant indices to infer that they have entered into an agreement with other economic operators in order to distort competition”. [1] Bidders who are in this situation are excluded from public procurement.
As for officials involved in choosing bidders, they are prohibited from expressing favouritism or collusion by the “Sapin 2” law of 2016. [2] Public agents, French or foreign, corrupt or corrupting, can face up to 10 years in prison and up to one million Euros in fines (or double the amount gained in the transaction).
The “Sapin 2” law also instigates a new litigation process, the “judicial convention of private interest”: in cases of corruption, influence peddling, money laundering, tax fraud committed by a legal person (a company), a judge sets a sanction and a timeline for financial compensation. As a legal person, the company has no criminal record and if proof is provided of corruption practices in the past, the sanction is limited to debarment, but the company can apply again to other tender boards or procurements. CSOs such as Anticor, Sherpa, and Oxfam have criticised this new procedure as a way for a company guilty of corruption to “buy its innocence”. [3] “Physical persons” like senior company officials involved in corruption-related offences, if convicted, do have a mention on their criminal record.
The head of the company him/herself may be held personally liable for the company’s lack of compliance with the measures for the prevention and detection of corruption. In case of breach, he/she may be fined up to 200,000 Euros.

Once cases are in the hands of the administrative judge or the PNF, like for the ICS case, they are investigated and prosecuted through formal processes and without undue political influence. The undue influence seems to be exerted ahead of cases being transmitted to the judicial authority, to prevent complaints being filed and sent to the judge, as happened with the ICS case [1] when a competitor wrote a complaint email to the procurement officials at the Ministry of Defence. It seems that these officials did not take the complaint forward as they should have. And when Cour des comptes again asked for clarification about the choice of ICS, the request was left unanswered.
However, once the case is referred to the judge, convictions do happen, like in the Balard case (construction of the Ministry of Defence headquarters) in 2015: [2] three people were indicted on corruption charges, one military officer working at the Ministry of Defence, a manager of the Bouygues construction company and a Franco-Tunisian national serving as an middleman in the favouritism corruption scheme.

According to the “Sapin 2” law on transparency and anti-corruption of 2016, [1] public agents, French or foreign, corrupt or corrupting, can face up to 10 years in prison and up to one million Euros in fines (or double the amount gained in the transaction).
Companies and officials convicted of a corruption-related crime can be excluded from current and future tenders.
However, the Sapin 2 law, by creating the “judicial convention of private interest” (CJIP) mechanism, softened the vetting process. Now, cases can avoid prosecution: in cases of corruption, influence peddling, money laundering, tax fraud committed by a legal person (a company), a judge can set a sanction and a timeline for financial compensation. As a legal person, the company has no criminal record and if proof is provided of corruption practices in the past, the sanction is limited to debarment, but the company can apply again to other tender boards or procurements. Since the inception of the “Sapin 2” law in 2016, there have been ten CJIPs against different companies for breaches to anti-corruption regulations, all prescribing financial penalties to the companies involved [2]. One of the biggest was the Airbus case where Airbus was forced to pay €3billion in France for bribery and corruption charges in international deals over a period of close to ten years [3]. Though the fines have been significant in these cases, to date there has been no long-term exclusion of companies from tendering procedures. CSOs such as Anticor, Sherpa, and Oxfam have criticised this new procedure as a way for a company guilty of corruption to “buy its innocence”. [2] The head of the company him/herself may be held personally liable for the company’s lack of compliance with the measures for the prevention and detection of corruption. In case of breach, he/she may be fined up to 200,000 Euros.

In Germany, there is clear legislation and implementing guidelines that empower procurement officials to exclude companies and senior company officials where there is a conviction or credible evidence of bribery & corruption-related offences. Corruption is punishable under the German Criminal Code [1]. Corrupt acts include bribery of German and EU public officials and German soldiers (see Sections 333 and 334), bribery of Members of Parliament (see Section 108e) and commercial bribery (see Section 299) [1]. In severe cases, this legislation also covers bribery of other foreign officials (see Section 335a) [1,2]. A Competition Register has also been established at the Federal Cartel Office. The Federal Competition Register provides public contracting authorities, sector contracting entities and concession grantors with information for award procedures that enables the customer to check whether a company must or can be excluded from the award procedure because of previously committed economic offences [3].

Companies may be subject to fines if their employees commit corruption offences on their behalf. Companies whose employees have been found guilty of corruption on their behalf are debarred from public contracting for a period of up to five years. In the case of other improper behaviour intended to unduly influence the outcome of a procurement procedure, a contractor may be debarred for up to three years. Eligibility for public contracts may be restored if the contractor has taken appropriate remedial measures to ensure future compliance. Some regional states operate registers of contractors that have been found guilty of corrupt practices. In these states, state government entities must consult the register to check whether a prospective contractor is listed. There is no federal register yet, but there are ongoing discussions as to setting one up. There are no statutory provisions on value limits for gifts or invitations to meals, travel or lodging for government officials or business partners. Unless government or company internal guidelines provide otherwise, social etiquette is usually the appropriate benchmark. Still, most government entities have issued strict internal guidelines on accepting gifts or other benefits. In particular, law enforcement authorities (e.g. police, customs) do not allow their personnel to accept any benefits at all in the discharge of their duties. Other government authorities are also quite restrictive on accepting gifts [4].

Article 12, subsection (2) of the ‘Federal Government Directive Concerning the Prevention of Corruption in the Federal Administration’ states that private companies have to work under the standards defined in the Directive in accordance with subsection (1) of Article 1 of the ‘Act on formal obligations for non-permanent civil servants’ (‘Verpflichtungsgesetz’) [1]. This implies that a supplier would be subject to the same sanctions as public servants based on the German Criminal Code. The German Criminal Code defines these sanctions further, for example, bribery is punishable by a prison sentence of three months up to five years, or in less severe cases, by up to two years’ imprisonment or financial penalties, pursuant to Article 334. Additionally, companies can be fined up to EUR 10 million, and this fine can be exceptionally higher when the corrupt practice was more profitable for the company [2]. Germany does not practise blacklisting.

Cases are investigated or prosecuted through formal processes, but undue political influence is attempted, and sometimes it is effective at derailing prosecutions. Germany’s Prosecution Offices have recently been criticised for not having been sufficiently independent from the executive branch for some time [3]. Notably, the Ministry of Justice’s authority to issue instructions to prosecutors has been considered problematic [4]. Prosecution officials work under the supervision of the respective ministries of justice.

Back in 2009, the Council of Europe called on Germany to strengthen the independence of its prosecutors and judges. In 2014, GRECO also recommended that Germany cease this practice [5]. More recently, the Court of Justice of the European Union ruled on 27 May 2019 that German public prosecutors are not sufficiently independent as they have to report to the Ministry of Justice before starting investigations. Thus, the Minister of Justice could influence or prevent the work of investigators [6].

German courts are generally considered to be impartial, professional and independent. The independence of judges and courts is perceived to be very good (22%) or good (52%) by the general public and very good (20%) or good (53%) by companies. While economic or specific interests are the main reason for a perceived lack of independence among citizen respondents (14%), company respondents see political interference as the main cause for a perceived lack of independence (15%) [7].

In 2017, law enforcement and the judiciary were the target of 12% of bribers, which means that approximately 182 bribers were interested in exerting influence in this sector. This is a decrease of 6% compared to 2016 [8].

An offence can regularly result in a range of sanctions, including prosecution, exclusion from current and future competitions or other sanctions, including heavy fines or imprisonment [1,2]. Recent cases have seen significant fines and confiscatory penalties imposed against Rheinmetall, Airbus and MAN Ferrostaal for corruption and foreign bribery, though no prosecutions of senior figures [3].

However, the monopolist nature of the defence industry could undermine the application of sanctions. As TI-DS has highlighted, in the current market, suppliers can potentially become ‘too big to fail’ and wield a disproportionate amount of market power [4]. In Germany, the BMVg itself admitted the resulting powerlessness. In response to a parliamentary inquiry into what contractual penalties the BMVg had included in the procurement agreement with Rheinmetall and Krauss-Wegmann Maffei for the severely delayed Puma (a mechanised infantry combat vehicle), the BMVg stated that ‘Contractual penalties are not included in the procurement contract [of the Puma] as, due to the monopoly position of the contractor, these were not enforceable during contract negotiations’ [5]. This increases the risk that sanctions will not be applied in the event of breaches due to the BMVg’s reliance on key suppliers that can bypass due process.

There is clear legislation and implementation guidelines empowering procurement officials to exclude companies who committed inappropriate procurement practices (1), (2).

Cases are investigated, but not often prosecuted. There is undue influence in the decision-making process (1), (2).

Sanctions are not officially applied. The PPA has not listed a single supplier as blacklisted on its website. Rather, sanctions may take unofficial, politically-related forms. Sanctions in the Public Procurement Act (2003) are severe sanctions, but in reality, they are not applied as such, partly because of undue political and other influences. Most suppliers are well connected and generally tend to lose their contracts when there is a change of government that they are perceived to be affiliated with (1), (2).

There are clear legislation and implementing guidelines empowering procurement officials to exclude companies and senior company officials where there is a conviction or credible evidence of bribery and corruption related offences [1]. For example, Article of 57 Law 3978/2011 states that “any candidate or tendering supplier may be excluded from participating in procurement procedures if the supplier has been convicted of a criminal offence related to his professional conduct, such as a breach of existing legislation relating to the export of defence equipment or security equipment, or for any of the offenses of fraud, extortion, forgery and bribery” [2]. Moreover, the general provisions of the 2019 Penal Code, which are provided in Articles 236 and 237A, apply in the case of active bribery or unfair influence [3].

Cases are investigated or prosecuted through formal processes, but undue political influence is sometimes attempted [1]. For example, IΝΤΡΑΚΟΜ Defence Electronics allegedly received political support from former Minister of Defence Panos Kammenos between 2015-2019 to avoid sanctions [2].

An offence can regularly result in a range of sanctions, including prosecution, exclusion from current and future competitions and heavy fines (Article 57 of Law 3978/2011) [1]. The exact number of companies punished is unknown, but no more than three or four companies face sanctions per year [2].

Although procurement officials – and the even more Central Procurement Authority [1], as well as the Central Procurement Council, have the right to sanction companies due to corruption-related offences or providing false data it is very rare to exclude bidders due to corruption-related to activities. However, the CXLIII Law on Public Procurements [2] and the 321/2015 Government Decree describes the procedure on the exclusion of bidders [3]. According to the law, those individuals convicted for bribery and corruption-related offences cannot participate in public procurements. The Procurement Authority describes the list of documentation necessary for the bids and those offences that exclude natural and legal persons from applications [4].

As described earlier politics can derail any investigation and there have been several cases when the prosecutor general stopped investigations. The most important case was the Elios case of public lightning. The EU’s OLAF found major irregularities related to the company of the son-in-law of the Hungarian Prime Minister, however, the prosecutor general closed the investigation without requesting documents from the local authorities, who claimed to find major irregularities as well [1]. A former judge recently accused the prosecutor-general of selecting cases on a political basis [2].

The Central Procurement Council has banned or terminated companies from participating in public procurement in the previous years. However, banning companies from further competitions does not happen often. The evidence shows that over three years, it only happened only thirteen times in Hungary covering every tender [1]. None of the thirteen banned companies had connections to defence procurement. Fines concerning tenders are common in Hungary, and they are often published in the media, but again no defence related tender was mentioned in this regard for the last years. Currently, there are seventeen companies temporarily suspended. Of these two have connections to military procurements [1].

There is no comprehensive central legislation which exclusively covers public procurement in the defence and security sector. Offending suppliers are punishable primarily under the Prevention of Corruption (Amendment) Act, 2018 [1]. The Sale of Goods Act, 1930 and the Arbitration and Conciliation Act (Amendment) Act, 2015 could also be applied [2][3].

As of 2016, the Ministry of Defence published guidelines on Penalties in Business Dealings with Entities which encompasses capital and revenue procurement of goods and services. Sanctions stated include suspension, banning and financial penalties. The ban period has been reduced from 10 to 5 years [4].

Violation of the Pre-Contract Integrity Pact (PCIP) may result in cancellation of the contract, encashment of bank guarantee and debarment from future procurement. Violation of Integrity Pacts can lead to sanctions such as blacklisting and heavy fines [5][6].

In the past, there is evidence of undue political influence, notably in the Bofors scandal where the then Prime Minister Rajiv Gandhi was implicated. After a change in hands in power to the BJP, the CBI filed chargesheets against the aforementioned, key middleman Ottavio Quattrochi and others [1].

In recent times, there is evidence of cases being investigated. In 2014, the AgustaWestland VVIP helicopter deal was cancelled on the grounds of breaching the PCIP [2]. The case still continues [3][4].

There is evidence of companies being blacklisted [5][6] .

There is evidence that sanctions have been recently applied such as suspension and banning. As of 2018, six firms were debarred from further business dealings with Ministry of Defence for a period of ten years. This also applied to allied and subsidiary firms of each of the debarred firms. Business dealings with fourteen firms were suspended. Orders were issued restricting procurement from two other firms [1][2].

Article 19 of Minister of Defence Regulation No. 17/2014 defines the authority and obligations of the ULP and its head [1]. The Head of ULP is authorised to propose the dismissal of members of the working group who are found guilty of violating regulations or engaging in KKN (corruption, collusion or nepotism). The same regulation also requires the prospective supplier company to provide a statement confirming that it is neither currently under court supervision, nor is its director serving a criminal punishment. This is one of seven administrative conditions required to join a bid. Furthermore, Article 66 Paragraph (1) specifies the actions of providers that can be subject to sanctions, including attempting to influence the committee and conspiring to regulate prices. Article 66 Paragraph (2) stipulates four types of sanctions that can be imposed in addition to the unilateral termination of contracts by the PPK, namely administrative sanctions, blacklisting, civil lawsuits and criminal reporting. Administrative sanctions are imposed by the PPK, whereas blacklisting is carried out by the PA/KPA following input from the PPK. The blacklist is submitted by the MoD to the LKPP to be included in the national blacklist, which is posted on the national procurement portal and can be updated at any time. Similar arrangements were also found in procurement regulations for the police, for example, in Article 36 of Chief of Police Regulation No. 10/2015 [2].

Of the three procurement cases tainted by corruption and brought to trial, there is only one in which undue political influence was apparent: the case of the AW101 procurement. Public opinion was divided about the case [1] and there were clear attempts to stir the debate, with the help of a self-proclaimed academic who justified the procurement. The way in which the government handled the situation was far from effective, as the statements issued by public officials, such as the Ministry of Defence, the Chief of TNI and the Chief of Air Force, tended to be contradictory [1]. In August 2017, MP Supiadin Aries (from the government coalition parties Nasdem), publicly stated that the procurement followed the right procedure and questioned the Chief of TNI’s statement on the state’s losses because there is no such report by BPK [2]. Even if there were no financial losses (a state audit later proved that these losses did exist), the procurement itself violated Law No. 16/2012, which is something that the MP should not have missed. Eventually, the mid-level officers (PPK officer) and brokers involved were charged, but the criminal proceedings failed to bring down the higher-level officers, who declined the KPK’s call under the pretext of keeping state secrets [3].

Throughout the current administration, there have been three procurement cases linked to corruption offences committed by military officers and brokers. All involved were brought to trial separately: the military officers were tried in military court, sentenced to life imprisonment [1] and forced to pay heavy fines, while the brokers were brought to trial and sent to prison [2]. No harm was done to the supplier companies though, as they continue to operate and participate in other procurement bids as usual [3].

There is no indication that procurement officials have the authority to exclude companies and individuals implicated in bribery or corruption related offenses [1].

This indicator is marked Not Applicable, as there is no indication that procurement officials have the authority to exclude companies and individuals implicated in bribery or corruption related offenses [1].

This indicator is marked Not Applicable, as there is no indication that procurement officials have the authority to exclude companies and individuals implicated in bribery or corruption related offenses [1].

Commercial courts are a recent addition to Iraq’s judicial environment and while their introduction can be seen as a move forward for dispute resolution mechanisms and the lawful imposition of sanctions (1), enforceability in light of Iraq’s “weak and understaffed court system” remains to be seen. Some evidence suggests that the right of procurement agencies to exclude, blacklist or issue severe sanctions can be disputed by contractors before the Independent Administrative Tribunal (IAT) (2), as part of commercial court proceedings. However, enforcement remains weak (3). There is no mention of the formal rights of procurement officials.

There has been a complete failure to investigate or prosecute corruption in the past five years based on an in-depth look into news coverage where no evidence was found. Local suppliers with ties to powerful politicians or armed forces enjoy undue influence which Iraqi law does not outlaw. One case in point was the decision adopted by a Baghdad court against corrupt food suppliers connected to former Trade Minister Milas Mohammed Abdul Kareem, on corruption charges. As was covered at the time, Reuters reported that “the court statement, which did not name the officials, said the case was related to violations in two contracts signed in 2015 between the Grain Board of Iraq and one company to supply basmati rice. It was not clear when the verdict was issued” (1). Overall, the emergent picture is one of impunity and unenforceability against undue influence (2).

No recent cases that show the enforceability of sanctions through the rule of law could be found. There was a case involving the Ministry of Industry and Minerals in 2010 the IAT sided with the unsatisfied bidder (1, p.115). The Regulation of Foreign Company Branches Law of 2017 further states that “the penalties and provisions stated in Corporate Companies Law No. 21 of 1997 shall apply” against fraudulent foreign companies (2). However, no evidence of clear procedures for the enforcement of sanctions could be found. Undue influence is not adequately addressed by Iraqi courts, and sectarian-quotas and political favouritism complicate business relationships and open the door to corruption. Administrative processes in light of the above are marred by Iraq’s ‘Muhsasa’ system, which, alongside a “convoluted bureaucracy” creates new opportunities for bribery and contractual fraud (3).

There is clear legislation and implementing guidelines empowering procurement officials to exclude companies and senior company officials where there is a conviction or credible evidence of bribery & corruption related offences. The Ministry of Defence’s internal instruction on the Committee for Suspension’s powers determines the framework for suspension of suppliers and actions to be taken against companies who breach contract terms and/or engage in corrupt activities (1). They are charged in civil courts. army personnel in army courts. Sometimes the investigative authority is civil too, for example YAHBAL and LAHAV 443 (2).

There are formal procedures such as the exclusion from competition (1). Cases are investigated or prosecuted through formal processes, but undue political influence is attempted, and sometimes effective at derailing prosecutions. For instance, in relation to the 2016 submarine deal with ThyssenKrupp, Prime Minister Netanyahu and his allies allegedly pushed for the deal to be completed despite opposition from defence officials in case that is being investigated for corruption and bribery (2). While Israeli police have conducted an investigation that has resulted in the arrests of seven public officials and businessmen, PM Netanyahu has so far avoided prosecution (3). Meanwhile the contract has not been rescinded and the supplier has not been penalised, with the deal still expected to be completed. The Knesset has also rejected a bill to create a commission of inquiry into the scandal which could implicate senior political figures (2).

An offence can regularly result in a range of sanctions, including prosecution, exclusion from current and future competitions, or other sanctions, including heavy fines or imprisonment. Equally, a supplier cannot receive a new “supplier number” if one of its functionaries was a functionary in a suspended company. However, in the case of ThyssenKrup, no sanctions have yet have been imposed and the supplier continues to have contracts with Israeli defence institutions, including for the provision of submarines and navy patrol boats (1) (2).

The Italian legislation outlines different cases of corruption activities of a supplier. Should the corrupt activity be performed during the tender procedure, for example by trying to corrupt a personnel of the contracting authority, the latter has to exclude the company from the selection procedure and make it pay the temporary deposit foreseen in the pact of integrity the company has to subscribe with the Ministry. Instead, should the corruptive activity be performed during the adjudication of the contract, the contracting authority can resume contract [1] [2]. Moreover, art.80 of the Code for public procurement [3] excludes economic operators who have been sentenced for a series of crimes including corruption and mafia infiltration to participate in public biddings. Should the sentence be pronounced once the contract is awarded, art. 108 of the code for public procurement indicates that the contract has to be resumed.

Sanctions can be harshened by the President of the National Anticorruption Authority as regulated by law 114/2014 [4] [5].

According to the information available on the website of the Ministry of Defence, there seems to have been no recent exclusion of companies from bidding procedures due to spotted or previous corruption activities of the supplier [1]. Nonetheless, cases of corruptions are investigated and prosecuted by the police and judiciary system, as highlighted by recent cases of corruption in defence procurement that led to the imprisonment of all persons involved in the corrupt activities, including the supplier [2]. When cases of corruption are identified, the tender procedure is suspended and those already awarded are cancelled.

As indicated in the code of coduct of the personnel of the Ministry of Defence and in the three-year anticorruption plan [1] officials have the right and the duty to follow national legislation and report irregularities. These can lead to the exclusion of economic operators from current and future procedures or to heavier sanctions (also imprisonment) as indicated in 69A. Application of sanctions is the navy corruption case, for example, led to the imprisonment of both the military personnel and the supplier involved [2].

Key pieces of Japanese legislation make bribery and corruption by private companies clearly illegal. The Penal Code prohibits bribery of Japanese officials. In addition, specific articles of the Penal Code ban the use of fraudulent means or force to impair fairness of a public auction and ban collusion for the purpose of acquiring a wrongful gain. [1] Under the Antimonopoly Act, it is illegal for an enterprise to effect private monopolisation or unreasonable restraints on trade and for a trade association to restrain competition. [2] Under the Bid Rigging Act, it is illegal for employees of corporations with a large proportion of the shares owned by the government, as well as government representatives, to be involved in bid rigging. [3] According to the Guidance on Bidding and Contract, enterprises must report correct production cost prices to the Acquisition, Technology & Logistics Agency (ATLA) and accept ATLA’s inspections if the price of their delivery is determined by this method rather than by the market mechanism. [4] The Ministry of Defence (MOD) circular “On the criteria for nomination stop” gives implementing guidelines that empower procurement officials to exclude companies and senior company officials that have broken legislation on bribery and corruption. Specific officials representing the MOD can exclude enterprises from bidding on all contracts with the ministry, whereas specific officials representing a unit of the MOD, such as ATLA or a service branch, can exclude enterprises from bidding on contracts with that unit. If a company official is arrested or prosecuted for a bribery or corruption related offense, or if the Japan Fair Trade Commission (JFTC) issues a Cease and Desist Order or imposes a surcharge on a company for breach of the Antimonopoly Act, or if a business submits an inflated invoice for a delivery with price calculation based on cost price, ATLA can issue a nomination stop. The term of a nomination stop can vary from 2 to 36 months. [5] A notice from ATLA gives more specific guidelines and has 22 attached forms for informing various parties when a nomination stop of a company or senior company official is to take place. [6] A list of material for the press on ATLA’s homepages includes announcements of nomination stops (指名停止). [7]

One case of suspected collusive bidding, for the tenders that ATLA had called for was found in a search of the mainstream newspapers Asahi Shimbun [1] and Yomiuri Shimbun [2] and the English press releases of the Japan Fair Trade Commission [3] (see Q59A). This case was investigated by the JFTC, which found, in March 2017, that two companies that had bid on a tender for a vinylon defence textile product had colluded. The JFTC concluded that this was a breach of Article 3 of the Antimonopoly Act and issued a Cease and Desist Order to the enterprises and ordered one of them to pay a surcharge. [4] Thereafter, ATLA announced a nomination stop of the two enterprises. [5] The cited reports indicate that this case was investigated and prosecuted according to formal processes. The reports examined do not indicate that there was any use of undue political influence in the case. Only one case of a prosecution by the public prosecutor involving an SDF official in a case dealing with corruption was found for the timeframe of this research in a search of mainstream media (see Q49A). In this case, the Yokohama public prosecutor prosecuted the director of the company Meikai, which supplied food to the SDF, for bribery of an SDF official. [6] [7] Shortly after the director was charged by the public prosecutor for the crime, the MSDF issued a nomination stop of the company Meikai. [8] The reports indicate that this case was also investigated and prosecuted according to formal processes and without undue political influence.

Bribery of a Japanese public official can be punished with exclusion and prosecution. Under the Penal Code, individuals can get a penalty of up to three years in prison or a fine of up to 2.5 million yen for bribing a Japanese public official. Companies cannot be punished for bribery under the Penal Code, however. [1] In one case, the MSDF announced a one year long nomination stop of a company whose director was prosecuted for bribery (see Q69B). [2] Collusion can also be punished with exclusion and prosecution. In another case, the JFTC found that two companies had colluded, in breach of the Antimonopoly Act (see Q69B). The JFTC issued a Cease and Desist Order to the two companies and ordered one of them to pay a large surcharge. [3] The MoD announced a nomination stop of the companies for three months and six months, respectively. [4] ATLA can announce a nomination stop of an enterprise or individual after the JFTC has issued a cease and desist order or a surcharge order or after a person has been arrested or prosecuted for breaking a relevant law. [5] Individuals can receive a sentence of up to five years in prison or a fine of five million yen, and enterprises can receive a fine of up to five hundred million yen, for breaking the Antimonopoly Act. [6] Enterprises may also be subject to civil enforcement when a cease and desist order becomes finally binding. The Antimonopoly Act covers most cases of bid rigging by private businesses, although the Penal Code also has rules for this breach. [7] The maximum penalties for breaking the ban on bid rigging under the Penal Code are slightly less severe than those of the Antimonopoly Act, however. [8] Submitting inflated invoices for a delivery under a contract determined by cost prices can lead to exclusion for up to three years. [5] Furthermore, companies that are not able to document their cost prices can be excluded from future contracts with the MoD. [9]

The only sanctions imposed on suppliers are related to failure in delivery, and there are no sanctions to punish corrupt activities of a supplier. Military Supplies Law No. 3 of the year 1995 and Military Works Law No. 4 of the year 1995, both, are the main sources of legislation in relation to armed forces’ contracting [1, 2]. Military Works Law No. 4 of the year 1995 is the only piece of legislation that sanctions suppliers for delivery failures, however, there is no mention of compensations or resolution [2]. Procurement officials can propose to sanction a supplier to Commander in Chief who has the authority to do that [3,4]. However, the law only mentions disqualification as a sanction.

This sub-indicator has been marked as Not Applicable because cases are rarely investigated but not often prosecuted. In studied affairs, political level interferes to avoid either sanction sor disqualifications of the supplier from other tenders [1,2].

This sub-indicator has been marked as Not Applicable because there is no clear evidence if any investigated cases would result in a sanctions [1,2].

Section 41 of the Public Procurement and Asset Disposal Act (PPADA) addresses ‘Debarment’ as a sanction for offences committed by a supplier. Offences may include corruption, poor performance, refusal to sign an official contract and giving false information. [1] Furthermore, article 5 of section 176 of the PPADA also allows a procuring entity to lodge a complaint with the relevant professional body for the institution of disciplinary proceedings against a contractor/supplier who is a member of a professional body and who contravenes the provisions of PPADA.

In the new regulations, individuals or corporates who contravene provisions of the PPADA under section 181 of the Act are liable upon convictions to fines or imprisonment for individuals. [2] Suppliers who are found culpable of corruption and undue influence can be reported to the Public Procurement Regulatory Authority can be reported and investigated under section 176 of the Public Procurement and Asset Disposal Act.

There is little evidence on this issue, and therefore this indicator is marked ‘Not Enough Information’. Most procurement decisions and processes at Ministry of Defence (MOD) are not made public and therefore it is challenging to establish whether suppliers do meet their obligations and terms of contract. [1] Although there are instances where auditors identified irregularities and various parliamentary committees have also investigated and recommended prosecutions of individuals and companies who have breached regulations, some cases are never investigated and prosecuted. [2] It is not clear whether these individuals excercised undue influence or not for prosecutions not to take place.

Offences of corruption in defence procurement have often been penalised through prosecution, debarment, fines of up to ten million Kenya shillings, and imprisonment of up to ten years. These penalties are stipulated in the Public Procurement and Asset Disposal Act. [1] However, the fairness with which sanctions are applied is in question, as defence officials have been reported to blacklist suppliers who may not necessarily have committed corrupt activities. Some suppliers have found themselves penalized for questioning corrupt practices by KDF officers. [2]

The Law on Public Procurement does not explicitly stipulate that procurement officials have legal rights to exclude companies or senior company officials in the case of a conviction or of reasonable evidence of bribery or corruption-related offences. However, there are some legal provisions referring to this issue:
The Law stipulates that whenever a contracting authority prevents a candidate or tenderer from further participation in a procurement activity, that contracting authority shall immediately notify the candidate or tenderer in writing, providing one of the following reasons: i) in the case of a rejected candidate, the statement shall specify the reasons for the rejection of that candidate’s request to participate [1]; ii) in the case of a rejected tenderer who was rejected due to submitting an irregular or ineligible tender, the statement shall specify the deficiencies of the tender [1]; and iii) in the case of an unsuccessful tenderer who submitted a tender, the statement shall specify the characteristics and features of the winning tender and the name of the winning tenderer [1].
Furthermore, a contracting authority may terminate a procurement activity that does not result in the award of a contract for the following reason: a violation of the Law on Public Procurement has occurred or will occur during the procurement procedure, and this cannot be remedied or prevented through any lawful amendment of the procurement conditions [2].

Prosecutors in Kosovo investigate cases relating to violations of public procurement rules in the country. However, there are a number of challenges in this process, as evidenced by the Civil Society Organisations who monitor the process. Prosecutors have been involved in the recent years to deal with allegations in the procurement sector, and the success in prosecuting senior officials and confiscating unlawfully acquired assets has been symbolic in recent years [1].
In general, there is a concern among prosecution bodies around the small number of prosecutors in the Serious Crimes Prosecution Department, with only forty-three prosecutors in total engaged in this department [2]. Another challenge is the lack of prosecutors’ profiling in public procurement cases and the need to increase their professional capacity [3]. Prosecutors have stated the need to specialise and be offered professional development for public procurement cases [3]. Even though there are figures that indicate that the Prosecution has resolved some cases related to corruption, the lack of profiled prosecutors and the lack of results in public procurement cases remains concerning [3]. According to the Civil Society Organisations’ research findings, due to the complex nature of public procurement cases, the investigation and disclosure of cases is complex [4]. This is mainly due to the professional shortcomings of the Prosecutors and the lack of external experts in the area of public procurement, which consequently leads to the inability and difficulty in resolving cases in this field [4]. Prosecutor representatives point to the lack of licensed experts in the area: out of five Prosecution experts, only two are licensed in public procurement [4].
The lack of cooperation between the procurement bodies and the Prosecutors is another major impediment to preventing abuse in the public procurement sector in Kosovo [4]. The findings evidenced by the Public Procurement Regulatory Commission has not been shared with other institutions [5], and the Procurement Review Body does not seem to work with the Prosecutors regarding violations of the Law on Public Procurement [6].

The Procurement Review Body (PRB) has decided to blacklist economic operators [1] disqualify them from participating in procurement activities for a period of up to one year [2], as stipulated by current legislation in Kosovo. However, monitoring reports conducted by Kosovo Civil Society Organisations indicate that the PRB decisions to blacklist economic operators do not have any impact as some operators continue to partake in the procurement activities [1]. This happens due to the weaknesses of the online procurement system, which should suspend the disqualified economic operators from the e-procurement platform and therefore make it impossible for them to bid [1].
No information is available as to whether the Prosecution of Kosovo has undertaken or is undertaking investigation into suppliers for corrupt activities [3] in the country. The Anti-Corruption Agency addressed 151 corruption cases in the sector of public procurement in 2018 [4], with twenty-five cases closed and only one case submitted for further investigations [4].

There is only clear legislation for punishment when it comes to offset programs and the purchases that don’t fall under “defence materials” by the security agencies, according to article 2 of the PTA’s law and the NOC’s booklet for offset deals (1 and 2). Punishment for the latter includes imposing a fine whose value should not exceed six percent of the total investment and the NOC will recommend the exclusion of this contractor from future tenders.

The PTA law says companies that violate contracts can be permanently excluded from all future tenders, they could be given warnings or have their grade lowered. There is no legislation for fines but the law says that the Government can, of course, apply whatever fines they had agreed on in the contract as punishment for failure to deliver, or undermining the integrity of the process.

It was impossible to find examples since security, defence and justice ministry officials refuse to talk, and the media has no reports on the matter.

These bodies, however, assure the SAB and other auditing bodies that there are sanctions in place for the “defence materials” deals, auditors said (3, 4 and 5).

This sub-indicator has been marked Not Applicable because auditors, analysts and activists could not evaluate how the security agencies investigate and sanction contractors for these practices since these bodies have not disclosed any information about the process to them or to the public. However, it is not unreasonable to assume that the same problems that plague other matters, like investigating internal corruption, would undermine this process as well (1, 2, 3, 4, 5, 6 and 7). There are no media reports about this.

This sub-indicator has been marked Not Applicable because auditors, analysts and activists could not evaluate how the security agencies investigate and sanction contractors for these practices since these bodies have not disclosed any information about the process to them or to the public. However, it is not unreasonable to assume that the same problems that plague other matters, like investigating internal corruption, would undermine this process as well (1, 2, 3, 4, 5, 6 and 7). There are no media reports about this.

The Latvian Criminal Code criminalises active and passive bribery and abuse of influence, prescribing sanctions of imprisonment of up to five years (or up to 11 years in aggravated cases where the involvement of high-level officials or groups is ascertained), fines, community service and prohibition from some forms of employment. This also applies to individuals acting on behalf of legal persons. Coercive measures such as fines can be applied to legal persons. [1] The Public Procurement law states that suppliers are excluded from further participation if their supplier is found guilty (in a final court decision) of bribing, commercial bribing, trading with influence and other crimes. [2]

The cases are solved according to the Latvian Criminal Law. [1] The judicial system is a politically independent state system. [2] At the same time, until the case comes to court, while living is such a small country the mutual recognition aspect must be taken into account. Obstacles could appear in the pre-trial investigation process.

There is not enough evidence to score this indicator. The amercement is ordered by the court or, in the cases provided for by the law, the prosecutor shall establish a sentence on punishment, including sanctions, heavy fines or imprisonment. [1] If the supplier has faced sanctions, the company cannot provide services. There have been no such cases in the defence sector and, therefore, sanctions have yet to be applied. [2]

Articles 55 and 60 in Decree no. 11574 (1968) is the legislation and implementation guideline empowering procurement officials to exclude companies and senior company officials where there is a conviction or credible evidence of bribery and corruption-related offences (1).

It is unclear if cases of corruption are investigated and prosecuted without undue influence due to the lack of information (1). However, undue political influence is generally prevalent in Lebanon’s public procurement process (2).

It is unclear if offences result in sanctions since decisions are not publicized (1).

Procurements are regulated by the Law on Public Procurement and the Law on Public Procurement in the Defence Sector. Both laws stipulate that procurement officials can exclude companies or individuals who in the last 5 years were convicted of crimes relating to corruption and/or other criminal activities [1,2]. What is more, the Criminal Code of Lithuania regulates crimes relating to corrupt activities and oversees the sanctions such as fines, restrictions of liberty, arrest or incarceration for a term of up to eight years [3]. According to the laws on public procurement, the purchasing organisation has the right to eliminate suppliers from the procurement process if the supplier is convicted of crimes relating to corruption [1,2]. In addition, the Public Procurement Office publishes unreliable suppliers on a black list [4]. In summary, procurement officials may exclude and punish suppliers for corrupt activities.

Cases are investigated or prosecuted through formal processes without undue political influence. The assessor did not find evidence to conclude otherwise. There have been no prosecution cases targeting suppliers in recent years; although a few suppliers were included on the black list, and several were reported to have offered higher prices than the average market price [1, 2, 3].

The criminal code oversees sanctions such as: fines, restriction of liberty, arrest or incarceration. Suppliers are most often sanctioned with fines and are excluded from current or sometimes future competition [1].

There are no clear laws and regulations that empower procurement officers to exclude companies or individuals implicated in bribery or corruption related offences. The power to exclude companies and individuals lies with the Ministry of Finance. The Ministry can blacklist companies or strike out licences if they 1) fail to deliver the contract within the agreed terms; 2) are implicated in corrupt practices during the process of awarding the contract; or, 3) are found guilty under the MACC Act 2009. [1] [2] [3]

Such a case is usually investigated by the internal audits. [1] If corrupt practices are proven to exist, the case will be reported to the legal unit of the Ministry. The legal unit would first make a police report, and submit a case file to the Attorney General’s Office for further action. The process can be hampered in between if there is political intervention, especially when the companies are closely related to the ruling parties and royal houses. If such a situation occurred, the case may not be pursued further.

Under the Corporate Liability Provision, Section 17A of MACC 2009, prosecution can be initiated against “a commercial organisation if a person associated with that commercial organisation corruptly gives, agrees to give, promises or offers to any person any gratification whether for the benefit of that person or another person with intent”. [1] However, in reality, the implementation of this clause is the weakest aspect of defence contracts. There have been various examples, like the controversial submarines and helicopter contracts, which involved corrupt practices in awarding the contract, but there have been no concrete actions. This might be due to political intervention from political leaders or parties. [2]

The public procurement code (Code des Marchés Publics et des Délégations de Service Public) clearly outlaws corruption and provides robust penalties for companies found guilty of such offences.¹
Article 29 is dedicated to mitigating the risks of corruption. Entitled “De l’engagement de la lutte contre la corruption” (Concerning the commitment to fight against corruption), the article stipulates that:
“Offers and submissions must contain a commitment by the candidate or tenderer to:
– neither grant nor promise to grant to any person involved in the process of awarding a contract an improper advantage, financial or otherwise, directly or via an intermediary, with the intention of securing the contract.
– inform the contracting authority of any payment, advantage or privilege accorded to the benefit of any person, acting as an intermediary or an agent, to recompense them for any service provided.
– to respect, in general, legal provisions, notably those outlawing acts of passive corruption or trading of favours or any constituting offences of this nature”.¹
Article 128 states that entities found guilty of 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, the length of which is determined by the seriousness of the offence(s) committed.¹
Such bans can extend to companies holding a majority share in firms that contravene the rules and for companies which the offending entity retains a majority stake in.¹ The procurement code underlines that any sanctions issued under the code are not prejudicial to any legal prosecution that may follow.
The Penal Code allows for the punishment of those deemed to have committed acts of corruption. 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, companies resorting to corrupt acts to win public contracts are highly likely to fall foul of the penal law too, exposing offenders to the threat of criminal prosecution and heavy sentences.

Cases of possible corruption 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 corruption 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 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
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 June 2018, no charges have 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. There is very little evidence to indicate that the investigation even went through the motions of trying to appear credible. For instance, neither of the ministers responsible for the contracts was questioned by police.
This is despite the fact that Maïga 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

Cases of possible corruption 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 corruption 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 the companies involved being blacklisted.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 procurement 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).¹ 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 have 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 There is no evidence to suggest that Guo Star, Kagnassy, Tomi, or Franchitti have been blacklisted by the Malian authorities.
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

The law empowers agencies and entities, through their procurement and contracting officials, to exclude companies or individuals involved in bribery or corruption, refraining from receiving proposals or awarding contracts to them. [1] In fact, there is a directory of sanctioned suppliers and contractors that allows public officials to verify that bidders are not unable to present proposals or enter into contracts with agencies, entities of the Federal Public Administration of the State Governments. [2] The sanctions include fines and temporary disqualifications from 3 months to 5 years, [3] and more recently a permanent disqualification. [4]

These powers are applicable to defence and security institutions, just as sanctions are applicable to companies that commit crimes and want to enter into contracts with these agencies.

According to journalistic reports and documents of investigations, cases of corruption by suppliers are not always investigated and on even fewer occasions do they go to trial. [1] [2] [3] In fact, in recent months, more corruption networks have become evident that involve high-level public servants, whose political influence has served to derail due judicial processes. [4]

There is evidence of company sanctions. In fact, there is a Directory of Bidders, Suppliers, and Contractors sanctioned with the impediment to present proposals or enter into contracts with the federal government, whose objective is to facilitate access to the data of moral or physical persons who are sanctioned by the Internal Bodies Control in dependencies and entities. [1]

Some companies have been penalised more than once for committing corrupt acts. That is why COFECE has indicated that a more effective sanction would be the permanent disqualification of companies that break the law. [2]

According to SFP figures, between 2017 and 2018 there were 164 sanctions imposed on bidders, suppliers, and contractors, [3] and from 2018 to 2019, there were 192. [4] The corresponding sanctions have been economic or temporary disqualification. [5]

The Law on public procurements requires all suppliers to prove that they and their legal representatives are not found guilty of organised crime with elements of corruption, money laundering and fraud. [1] However, if one is found guilty only of corruption, and not organised crime, this provision does not apply.

According to the MoD reviewer, it is the responsibility of the Contracting Authority to reject the Bidder’s bid if it finds that it has taken any of the corruptive actions referred to in Article 15 of the Law on Public Procurement. The contracting authority is obliged to record the cases referred to in paragraphs 1 and 2 of Article 15 of the Law, make an official note thereof, submit a report to the competent state authorities for taking measures in accordance with the law and inform the competent authority. Finally, the Public Procurement Law contains an imperative norm that states that a public procurement contract concluded in violation of the anti-corruption rule is null and void. The Commission for the Implementation of the Public Procurement Procedure has the power to propose the authorized person of the Contracting Authority to reject the tender i.e. exclude the tenderer from the public procurement procedure if determines that there is a pronounced measure in the criminal record of the competent authority on offenses related to bribery and corruption.

No cases related to corruption in public procurements in defence has been investigated by the prosecution. [1][2][3] The number of individuals and especially companies that are found guilty of organised crime with elements of corruption is very limited. [4] Despite concrete cases of possible corruption reported by whistleblowers, institutions failed to investigate. [5][6] Responsible inspectorates did not report a singe case to the prosecution in the last three years. [7]

Offences do not result in sanctions because they are not prosecuted, [1][2] and in many cases citizens and/or whistleblowers are afraid to report possible corruption. [2][3] According to the Criminal Code, if suppliers engage in corruption they might be subject to imprisonment. [4]

The 2013 version of the Code of Public Procurement Contracts makes a number of provisions concerning some acts of misconduct and their corresponding sanctions (1).

Article 138 in particular states that a company found guilty of false sworn statements, false proofs, corruption, or working conditions breaches will be faced with judicial proceedings.

These judicial proceedings can result in temporary or definitive exclusion from participation in calls to tenders (for calls to tenders made by local authorities) or cancellation of the call to tenders and execution of a new call to tenders paid for by the guilty party.

However, no evidence was found in judicial proceedings or in the local and foreign press that these sanctions had been implemented (2)(3)(4)(5)(6)(7)(8)(9)(10)(11).

Interviewees added that in the case of armament and military equipment contracts, procurement officials had no authority to exclude companies or individuals implicated in bribery or corruption related offences (12)(13). These statements however are not supported by other sources.
Such a lack of implementation of sanctions hints at an important lack of transparency, which in turn increases corruption risks.

The law does not specifically empower procurement officials to exclude companies implicated in corruption offences.

As procurement officials have no authority to exclude companies or individuals implicated in bribery or corruption related offences, this sub-indicator has been marked Not Applicable.

The 2013 version of the Code of Public Procurement Contracts makes a number of provisions concerning some acts of misconduct and their corresponding sanctions. However, no evidence was found in judicial proceedings or in the local and foreign press that these sanctions had been implemented (1).
Interviewees added that in the case of armament and military equipment contracts, procurement officials had no authority to exclude companies or individuals implicated in bribery or corruption related offences (2)(3).

Such a lack of implementation of sanctions hints at an important lack of transparency, which in turn increase corruption risks.

As procurement officials have no authority to exclude companies or individuals implicated in bribery or corruption related offences, this sub-indicator has been marked Not Applicable.

No evidence was found in judicial proceedings or in the local and foreign press that these sanctions had be implemented.

There is no legislation regulating punishment for corrupt contractors. However, there are guidelines for procurement officials [1]. They cannot directly take action against the corrupt companies but they can report the misconduct to their superiors. Then the superior officers can decide what to do about the corrupt companies [2].

This indicator is marked ‘Not Applicable’, as procurement officials have no authority to exclude companies that are implicated in corruption-related offences. There are guidelines for the procurement process and corrupt cases are investigated [1], however, unfortunately we are not able to access enough information to determine whether or not the investigation process is influenced. Politicians are prohibited from participating in the defence procurement process, as the 2008 Constitution grants the military the power to administer its own affairs independently [2].

This indicator is scored ‘Not Applicable’, given that procurement officials have no authority to exclude companies that are implicated in corruption-related offences. As Myanmar’s military normally tackles corruption internally, information on the application of sanctions is not publicly available [1]. But there have been cases of corrupt companies receiving soft sanctions.

The Defence and Security Procurement Act (Article 2.76) states that a contracting authority must exclude a candidate who has (previously) been convicted of fraud, bribery or connection to a criminal organisation [1]. Article 2.74 of the same Act mandates bidders to submit a self-declaration stating that the grounds for exclusion (including corruption) do not apply to them [1]. If the self-declaration is found to be false, the contract can be terminated. Furthermore, there are terms and conditions that apply to all government contracts which stipulate sanctions for corrupt activities. The General Government Purchasing Conditions (ARIV) 2018, the General Government Terms and Conditions for IT Contracts (ARBIT) 2018 and the General Government Terms and Conditions for Public Service Contracts (ARVODI) 2018 all contain provisions banning bribery (gifts, rewards, compensation or benefits of any form) and state that this activity may constitute grounds for (partially) cancelling a contract [2,3,4].

There is some evidence that cases of corruption may be subject to undue political influence. Some cases suggest that not all cases of alleged corruption are treated equally; however, these cases appear to be outliers and, overall, prosecuted cases (see Q69C) show a robust, independent process and heavy sanctions with rare abnormalities.

That being said, cases of corruption may not progress to formal processes as a result of undue political influence. Undue influence occurs in nearly any type of potentially damaging case in many Dutch ministries due to a culture of placing the importance of protecting the Minister above that of addressing the problems at the root [2,3]. Corrupt or questionable actions by suppliers have often been known within the Ministry of Defence before the problem becomes public, but the Ministry is oftentimes preoccupied with keeping the issue a secret rather than addressing and fixing the problem [3,4]. Thus, while prosecuted cases show an independent and formal process, issues that do exist may not progress to an investigation and/or prosecution due to undue political influence.

There is not enough information to score this indicator.

Sanctions were most notoriously applied in 2017, when a corruption and bribery scandal erupted within the defence force. The primary defence official involved was a former defence fleet manager accused of obtaining private discounts and accepting gifts, such as winter car tyres, fuel cards and a dozen leisure trips, from car manufacturers Renault Nederland, Peugeot Nederland and Volkswagen importer Pon in exchange for awarding defence fleet contracts [1]. The National Investigation Service spent five years investigating the case, which culminated in a 12-month prison sentence for the convicted defence official [1]. As part of the same case, a defence officer was fired and criminally tried for asking for a discount when purchasing a private car (the discount amounted to 236 euros on a 35,000-euro vehicle) [1]. During the investigation of this case, the former Minister of Defence testified that he would have preferred to handle the case internally, stating that the MoD’s own correction mechanism was satisfactory [2]. Indeed, the case only progressed to a criminal investigation and trial once the information had been leaked to the media.

This instance occurred four years ago under different ministry leadership and codes of conduct, but may signify a proclivity of the Ministry of Defence to handle corruption and integrity cases internally as much as possible. This was the case in 2013, when the Dutch Ministry of Defence knowingly continued contracts with companies known to be corrupt. During the Iraq mission, catering was handled by a company called Supreme, despite the fact that the company pleaded guilty to deliberate fraud during the American Public Prosecution Service’s case against them and that a report was made to the COID stating that the company was defrauding the Dutch MoD [3]. The case of defrauding (2.8 million euros over a 3-year period) was resolved bilaterally between Supreme and the Ministry of Defence [3].

Rule 44 of the Government Procurement Rules sets out reasons for excluding a supplier by an agency, including corruption and bid rigging. Rule 44 also allows the ministry to exclude a supplier due to “a serious performance issue in a previous contract”, of which corruption would meet that threshold [1]. Numerous legislation exists to deal with bribery and corruption and New Zealand Government Procurement provides the following examples of applicable commercial and public law legislation: Contract and Commercial Law Act 2017; Commerce Act 1986; Fair Trading Act 1986; Construction Contracts Act 2002; Public Service Act 2020; Public Finance Act 1989; Public Finance (Departmental Guarantees and Indemnities) Regulations 2007; Public Audit Act 2001; Public Records Act 2005 Official Information Act 1982; Ombudsmen Act 1975; Privacy Act 1993; Human Rights Act 1993; New Zealand Bill of Rights Act 1990; and Public Bodies Contracts Act 1959. [2,] .The Deputy Secretary (Capability Delivery) and Assistant Secretary (Capability Delivery) at the Ministry of Defence both advised that “if corruption is proven through the judicial system, those suppliers would not be accepted for future contracts” [3].

No evidence of undue evidence could be found on the Commerce Commission’s Case Register Index. It should be noted that “Defence” is not an available option in the “Industry’” dropbox, indicating how minor and rare issues with Defence procurements are [1]. According to the Commerce Commission’s Case Register, there are five non disclosed active cases for anti-competitive conduct as of 14 December 2020 however there is no detail as to whether these relate to defence procurements [2]. A review of a number of private media reports showed no indication of undue influence in the decision [3, 4, 5, 6, 7].

There is not enough information to score this indicator. It is undersood that no prosecution or sanctions have ever been brought (re: companies participating in Defence procurement projects) because no instances have ever occurred. As per the Crimes Act 1961, corruption and bribery penalties are clearly stipulated and persons are liable for imprisonment for a term not exceeding seven years who accepts, or obtains, or agrees, or offers to accept or attempts to obtain, any bribe for themselves or any other person in respect of any act done or omitted, or to be done or omitted [1]. The Armed Force Discipline Act 1971 states that anyone subject to the act is liable for imprisonment who “corruptly accepts or obtains, agrees, or offers to accept, or attempts to obtain any bribe for himself or any other person in respect of any act done or omitted, or to be done or omitted, by him in his official capacity” [2]. Bribery committed with the intention to influence is also detailed, with an imprisonment term not exceeding three years [3]. In matters relating to restrictive trade practices, the Commerce Act 1986 allows the court, on application by the Commerce Commission, to order a person to pay to the Crown such pecuniary penalty as the court determines appropriate. In the case of individuals this must not exceed $500,000 NZD, or $10 million NZD in any other case [4]. In addition, certain persons may be excluded from management of body corporate, and if found in contravention to this may be liable for imprisonment not exceeding five years or a fine not exceeding $200,000 NZD [5, 6].

There is a broad range of other penalties and remedies that may be applied for other matters such as business acquisitions, and regulated goods and services, all of which could be linked to bribery and corruption [7]. The New Zealand Government Procurement Rules provide guidance on excluding suppliers and courses of action [8]. Enforcement Response Guidelines are also available from the Commerce Commission, and these detail an array of sanctions and processes that could be taken with low-level responses, negotiated settlements, urgent responses, and court proceedings. Enforcement criteria considers the extent of harm, seriousness of conduct, and public interest in an escalating scale which together help determine the severity of consequences [9]. If evidence of corruption is proven, those suppliers would also be excluded from future Government contracts [10].

Decree 2013/570/PRN/PM, Article 75, Sections 1–6 states clearly the sanctions that can be imposed on companies convicted of corrupt activities as a supplier.

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, upon approval by the Prime Minister” (1).

Sections 1-6 are ordered thus:
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” (1).
(Consultant translation French to English)

However, all sanctions must be approved by the Prime Minister.

Despite the formal inclusions of sanctions in the legislation, the assessor found no evidence of corruption cases being investigated or prosecuted, and therefore, no evidence that sanctions have been effectively enforced (1,2).

Despite the formal inclusions of sanctions in the legislation, the assessor found no evidence of corruption cases being investigated or prosecuted, and therefore, no evidence shows that sanctions have been effectively enforced (1,2).

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

The PPA 2007, contains numerous procurement-related offences that contain sanctions such as imprisonment upon conviction, debarment from public procurement and fines. In relation to the on-going prosecutions involving high ranking armed service personnel, it is perhaps instructive that the directors of the companies involved are not facing any criminal charges under the legislation even though the military personnel are being prosecuted. This suggests that even though the powers exist under the PPA 2007 its use might be limited by other factors, such as the capacity of the public officials and the political will to use the provisions of the Act. Another reason could be that the companies involved tend to be shell companies or vehicles with no significant track record of economic activity (1).

Following the Buhari administration’s ascension in 2015, several high-profile investigations were conducted into military procurement. Several high-ranking officials are currently on trial for a number of offences concerning military procurement. These cases demonstrate that with political will, more cases will be investigated and prosecuted. This suggests that there is a high degree of political influence on whether the law is upheld or ignored. New procurement cases, which have arisen since 2016, have involved connected political actors. Even where allegations are widely reported in the media and there is an attempt to begin formal investigations, these rarely result in prosecutions. A failure to prosecute is often because of political influence (1).

As the criminal trials are still on-going and have not been concluded, no sanctions have been imposed at this point. In the cases which have come to light since 2016 such as the SGF Lawal, there is evidence of some form of an investigation, but very few sanctions are imposed according to the legislation. “The Human Rights Watch analysis reveals that executive interference with the commission, and a political establishment that continues effectively to reward corruption, has undermined the country’s anti-corruption efforts and derailed key prosecutions. The commission’s chairperson remains deeply vulnerable to the whims of the president and lacks security of tenure” (1). A key reason why sanctions are ineffective is the weakness of the EFFCC as an institution which means that it continues to be subject to political interference, long delays between charges, and conclusions of trials (2).

Corruption related offences are clearly defined in the Law on Public Procurement [1]. Article 146 prescribes exclusion of the bidding party from the public procurement procedures in case there is information suggesting the bidder has been involved in corruption activities, forgery or money laundering within the last 5 years. Chapter XI of the Law contains penal provisions for unlawful procurement procedures involving the contracting authority and refer to cases such as limiting the competition; accepting incomplete tender documents; specifying tender requirements that favour a certain party etc. (Article 232) [1]. After the contract is granted, corruption committed by a contracting party are regulated by the Anti Corruption Law [2] and the Penal code [3]. Article 59 of the Anti-Corruption Law prohibits activities of companies aimed at creating a monopoly position on the market; discriminating against other trade companies or other legal entities; causing market disturbance; and causing damage to another natural or other legal entity. Chapter XII of the Penal Code outlines a number of potential sanctions for corrupt activities for companies and trading subjects.

Prior to 2015, three high-profile corruption cases in the Ministry of Defence were investigated, including suppliers and two former Ministers of Defence. The cases of the 2001 Minister Ljuben Paunovski and the so-called ‘Army armaments’ were investigated and effectively prosecuted. However, the case of the former Prime Minister and former Minister of Defence Vlado Buckovski is not so simple. The prosecution was derailed, suggesting potential undue political influence. Except for the aforementioned high profile cases, no public evidence can be found of prosecution of other actors and suppliers. Our assumption is that any such issues were internally solved by negotiations or by activation of financial security instruments (such as bank guarantees) and by the publication of a negative reference. The Electronic System for Public Procurement (EPPS) only gives the name of the supplier but not the related institution, making it difficult to link any negative references to specific Ministry of Defence suppliers [1].

Sanctions for corrupt activites differ. In the Law on Public Procurement, these range from exclusion (if the bidder was involved in corrupt activities over the past 5 years) to prison sentence of one to five years (in the case of unlawful procurement procedures) [1]. The Anti Corruption law prescribes 4000 to 5000 euro fines and asset confiscation [2]; and the Penal Code stipulates up to five years prison sentence for corrupt activities [3]. The 2001 Minister of Defence Ljuben Paunovski was sentenced to three and a half years of prison while the former Minster Vlado Buckovski was sentenced to two years. In these cases, the suppliers Mitre Petkovski and Nelko Menkinovski, directors of the supplying company MZT FOP, were respectively sentenced to three and two years in jail [4]. There was no public evidence of sanctions for other suppliers.

Norwegian legislation contains clear provisions empowering procurement officials to exclude companies convicted of corruption or other criminal charges. These provisions are included in the Public Procurement Regulation (§9-5), the Defence and Security Procurement Regulation (§11-12) and the Defence Acquisition Regulation (§38-8) [1, 2, 3].

According to Section 55 of the Criminal Procedure Act, prosecution authorities shall act objectively in all of their actions, including the investigation phase, when a decision to prosecute is made and a case is tried [1]. The law is aimed at forestalling undue political influence. In 2014, Kongsberg Gruppen and Kongsberg Defence & Aerospace AS, of which the Norwegian Ministry of Trade, Industry and Fisheries is the largest shareholder with a 50.001 percent interest [2], were charged for corruption related to deliveries of communication equipment, worth around 1.5 billion NOK, to Romania between 2000–2008 [3]. In 2016 the National Authority for Investigation and Prosecution of Economic and Environmental Crime (ØKOKRIM) dropped the charges against the company and instead a former Kongsberg executive was charged with fraud and aggravated breach of financial trust [4]. In 2018 he was sentenced to 4 years and 8 months in prison in addition to confiscation of 14.7 million NOK [5]. There is no indication of any undue political influence.

A company found guilty of corruption can no longer bid for Government work, according to procurement regulations [1]. The Defence and Security Procurement Regulation (§11-12) and the Acquisition Regulations for the Defence Sector (§38-8) prohibit the defence sector from contracting companies that have been found guilty of criminal offences or serious misconduct against professional and ethical standards [2, 3]. A corrupt supplier will also be prosecuted in line with the provisions of the Norwegian Penal Code. The Penal Code criminalises “corruption” and “aggravated corruption”, which can be distinguished from other crimes of corruption by being carried out by or toward a public official, beside the size of the economic gain, and whether false accounting information has been prepared. The Penal Code proscribes fine and a punishment of up to 3 years imprisonment for corruption. The maximum penalty for aggravated corruption is 10 years imprisonment [4]. As described in the previous indicator, following an investigation against Kongsberg Gruppen, which started in 2014, a former Kongsberg executive was charged with fraud and aggravated breach of financial trust. Although ØKOKRIM dropped the charges against Kongsberg Gruppen, the case demonstrated some of the corruption risks that may arise for Norwegian companies. One issue that companies have to contend with is whether to report such issues to the investigative authorities. According to the head of Tl Norway, unwillingness to report such matters may be rooted in a fear of potential consequences (for example exclusion from future bids) if charged with corruption [5]. According to a representative of the Ministry of Defence, there have not recently been cases of exclusion of companies charged for corruption [6]. In two earlier instances, however, the Ministry of Defence decided to blacklist suppliers charged for breach of financial trust. The first case concerned Uniteam AS, a Norwegian company supplying the Norwegian Armed Forces with container solutions [7]. The second case concerned Siemens Business Services, which in 2007 was found to have overbilled the Norwegian Armed Forces [8].

Officials have no powers to exclude companies or individuals implicated in bribery or corrupt activities (1), (2). As the majority of these companies are single-source enterprises, officials usually have no power to exclude them as they have political backing from senior leadership. Moreover, given the lack of transparency around defence procurement, there is a lack of accountability by the state and companies themselves.

This indicator is marked Not Applicable because procurement officials have no authority to exclude companies or individuals implicated in bribery or corruption related offences.

The procurement process generally lacks transparency and most procurements occur via single-source, there is a failure to both investigate any corruption activities and a failure to sanction them too (1), (2). Moreover, as outlined above the lack of transparency around defence procurement means it is not possible to analyze it given the lack of accountability. No investigation, or sanction procedures are in place according to desk-based research; therefore, even in the case of undue influence of corrupt suppliers, there is no procedure to investigate.

This indicator is marked Not Applicable because procurement officials have no authority to exclude companies or individuals implicated in bribery or corruption related offences.

Regardless, there is a failure to both investigate corruption activities and to sanction them (1), (2).

There are a general supply and procurement regulations that provide officials with the capacity to exclude companies if they do not meet specific criteria, for example not providing financial statements, not having the technical ability, or the employment of individuals implicated in bribery or corruption-related offences (1), (2).

In corruption cases, companies and officials can be investigated (1), (3). However, these investigations rarely go to trial or result in penalties. Generally, there is an assumption that hearings are politically staged for bureaucratic reasons (if they happen). According to PACC’s 2014 report, there have been 46 cases over five years (2010-2013), but only ten of them had final resolutions and hearings (2).

There are rare cases that officials and companies have been punished. Usually, incidents are ended by negotiating other solutions rather than punishments being handed down (1). According to the 2017 ACC report (2), there have been no sanctions against officials; however, in 2018, there have been cases against civilians for fraud (3).

Procurement officers have the right to review the qualifications of a supplier at any stage of the procurement process. Suppliers who engage in corruption activities can be prosecuted under the Government Procurement Reform Act of 2003 [1] and its Implementing Rules and Regulations (IRR) [2], or the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) [3]. These suppliers will either be suspended or blacklisted.

Cases are investigated but rarely prosecuted and, according to media reports, there is undue political influence in the decision-making process. A frigate acquisition project was recently embroiled in a controversy pertaining to its selection of combat management systems. It prompted the ousting of a navy chief and a Senate investigation involving the Defence Department and the Executive’s Office [1]. At the Senate hearing, the President’s aide denied that he had intervened in the frigates project [2]; however, in a later speech, the President admitted to his involvement in the project [3]. Hyundai Heavy Industries, the South Korean firm that won the contract, has been investigated by the state for its alleged involvement in widespread corruption in South Korea’s defense industry and has been banned from participating in any public bidding for government projects for a period of two years [4, 5].

Despite confirmed offences by some suppliers, it is not clear if sanctions are imposed as in the case of the Korean firm involved in a bribery case [1]. At a Senate inquiry, the Defense Department, after admitting that it did not conduct due diligence, ruled that the South Korean firm would still be given the contract [2].

A contractor convicted of corruption (as legal entity or its members of management or supervisory body) is excluded from public procurement procedures.
Such provisions exist in Public Procurement Law as well as in MoD Decision Nr 367/MON of 2015 which is the base for defence procurements excluded from the Public Procurement Law.
Credible evidence of bribery & corruption related offences, without court conviction, is not direct, legal basis for exclusion of contractor. In some of such cases
Article 24, section 1, item 18 of the Public Procurement Law may be used, namely in case when contractor attempts to unlawfully influence the activities of the customer. Undoubtedly, corruption should be considered an illegitimate attempt to influence [2]. A similar right is granted through MoND regulations [3].
Summarising, there is clear legislation empowering and obligating procurement officials to exclude companies if senior company officials or the company itself was convicted for bribery or other corruption-related offences. Procurement officials have limited authority to exclude companies in case of reasonable evidence of bribery or related offences only.

Cases of suspected corruption are generally prosecuted using formal procedures of the Code of Criminal Procedure. [1]. An example of such activities can be the control of the Central Anti-Corruption Bureau in the Inspectorate of Armament in June 2017 regarding the company that won the tender for the supply of GPS receivers. The media indicated that this company was involved in corruption irregularities related to another tender in 2010 [2]. The CBA inspection may have not found any irregularities, because a few months later the Inspectorate of the Armament signed a contract worth 42 million PLN (~10 million EUR) for the supply of GPS receivers with this company [3].
In January 2020 logistic officers and businessmen have been arrested on suspicion of corruption and collusion. [4].
There are no reports on undue political influence in cases on low or medium level. In some high profile cases (as corruption charges against assistant of a former defence minister) media speculates that his arrest was possible only after his political protector was dismissed. (There are no traces of involvement of the former minister in corrupt activities of his assistant) [5].

Offences can result in criminal sanctions (including imprisonment and fines) against a supplier’s representatives, however, very rarely against the supplier itself. The Act on Accountability of Legal Persons is inefficient (rare sanctions in practice) and for this reason, a new bill has been developed by the Ministry of Justice [1].

The Public Procurement Code explicitly excludes individuals and companies convicted for corruption from bidding [1]. Suspected individuals or companies are not excluded, as exemplified in a recent report on the Portuguese Air Force accepting bids from companies currently on trial [2]. There is no provision in the Public Procurement Code empowering procurement officials to exclude or limit bidding by suppliers against which credible evidence is produced in a court of law. The Public Procurement Code states that bidders may only be excluded after a sentence is final.

Recent evidence suggests that cases are investigated and result in prosecutions [1, 2] without undue influence in specific cases. There is widespread suspicion of inequities in judicial procedures [3] and some debate on undue influence in prosecutions [4], but no evidence pointing specifically to defence-related activities.

There is evidence that corruption in procurement results at least in investigations and prosecutions [1] [2] [3], while bidders are known to be sanctioned with fines if not compliant with the Public Procurement Code [4]. However, it is unclear whether this is representative. Colluding results in sanctions, but these are not criminal [5] [6]. According to the registry maintained by Competition Authority, there have been 7 investigations into colluding practice in public procurement and one resulted in a two-year exclusion from bidding [7].

Procurement officials have no authority or power to sanction the corrupt activities of suppliers. Commanders, heads of units, and procurement committees may do this. However, the approval of a highly ranked commander is also needed (the head of the supplying unit). Procurement within the armed forces is managed partially by civilian personnel who are not Qatari, and therefore they have no power to make decisions. [1,2]

This indicator has been marked Not Applicable because procurement officials have no authority or power to sanction the corrupt activities of suppliers (see Q69A)..

In the case of corrupt activities, the investigation is superficial and subsequent hearings do not happen. As the procurement of the armed forces is not vast, suppliers usually have connections, and could settle collusion or other investigations easily with the commanders. These commanders influence the outcome of any investigation and prevent the sanctioning of suppliers who commit corrupt activities. [1,2]

This indicator has been marked Not Applicable because procurement officials have no authority or power to sanction the corrupt activities of suppliers (see Q69A)..

There is no information as to whether offences result in sanctions. This information remains confidential among the senior commanders. [1,2]

The Criminal Code, Articles 204 ‘On corrupt payment’, 290 ‘On receiving a bribe’, Article 291 ‘On giving a bribe’, Article 291_1 ‘On mediation in bribery’, Article 291_2 ‘On petit bribe’, Article 304 ‘On provocation of bribery, corrupt payment’ [1] stipulate punishments as severe as imprisonment for corruption-related crimes.

When it comes to defence procurement, the Federal Antimonopoly Service can initiate investigations, issue orders or launch administrative or criminal cases [2,3]. The MoD tender board members can exclude from the tender companies whose senior officials have been convicted for economic crimes or bribery or have been convicted for corporate corruption [4].

The Federal Antimonopoly Service can initiate investigations, issue orders or launch administrative or criminal cases [1,2]. The MoD tender board members can exclude from the tender those companiescompanies whose senior officials have been convicted for economic crimes or bribery or have been convicted for corporate corruption [3]. According to statistics, the number of legal cases concerning state orders is rising [4]. Random journalist reports prove that the cases are investigated and prosecuted [5]. However, there is no proof that the legal processes are free from political influence.

Random journalist reports prove that the cases are investigated and prosecuted [1]. The punishment for the offences may include imprisonment and heavy fines [2].

As also mentioned in the 2015 TI Defence Report, the Saudi Government Procurement Law of 1966 states that companies found to be in violation of bribery statutes (or that have employed an intermediary in armaments contracts) will have their contract suspended and be prohibited (temporarily or permanently) from bidding on future government contracts. The law also includes provisions for a five-year blacklist following findings of deceit, fraud or manipulation (1). It is unclear, however, to what extent procurement officials have the authority to enforce these laws, especially with regards to corruption in defence contracts. According to our sources, the laws still exist and can be used whenever senior commanders want to use them. However, our sources stress that procurement officials have no authority or power to impose sanctions. They can issue a report to the senior commanders, which can be used to blacklist and fine the suppliers (2), (3).

This sub-indicator is scored Not Applicable because procurement officials have no authority to exclude companies or individuals implicated in bribery or corruption related offences.

According to our sources, there are no serious investigations into corruption for both individuals, and companies engaged in corrupt activities. The investigations and the crackdown that occurred in 2017, are politically motivated and were solved informally in gentleman’s agreement. However, acts of corruption committed by loyalists are not investigated at all, this includes malpractice with financial assets (1), (2).

Until very recently, there were rarely any cases of investigations into corrupt defence or security contracts in Saudi Arabia, despite the existence of several high-profile bribery and corruption in Saudi defence contracts in other jurisdictions such as the US and UK (the al-Yamamah Arms scandal, the Litton Industries investigation and the United Technologies Corporation cases are some notable examples). However, in November 2017, the crown prince and minister of defence launched a wide-ranging anti-corruption drive, arresting high-profile Saudi businessmen, royals and government officials. These included high-ranking military personnel, most notably Prince Miteb bin Abdullah, the erstwhile head of the Saudi Arabian National Guard. Charges against Miteb included embezzlement, from awarding fake defence contracts to his firms and inflating defence contracts in which he was involved. For example, he allegedly was supplying bulletproof clothing to the Ministry of Defence and the Ministry of Interior that was overpriced by 10 times their actual price (3), (4).

The crackdown was spearheaded by an anti-corruption committee formed, and led by Crown Prince Mohammed bin Salman, which had authority to investigate, arrest, issue travel bans, and freeze the assets of those it found to be corrupt (4). The committee included heads of several Saudi government bodies, such as the Control and Investigation Board, the National Anti-Corruption Commission, the General Auditing Bureau, the Presidency of State Security, and the attorney general at the Public Prosecutor’s Office (5).

This sub-indicator is scored Not Applicable because procurement officials have no authority to exclude companies or individuals implicated in bribery or corruption related offences.

Sources report, there are rare cases when the government publishes information about corruption cases, which are abridged and undetailed, leaving room for speculation and misinformation (1), (2). The Saudi government published few details about the investigation into Miteb, and other government officials arrested as part of the sweep. International press sources reported that Miteb paid a US $1 billion settlement relating to the charges against him (3). The anti-corruption crackdown has largely been characterized in the international press and by human rights groups as arbitrary and void of due process (4). As noted, the anti-corruption committee established in November 2017 that investigates these historical corruption claims, is headed by Mohammed bin Salman. A large number of analysts, foreign government officials, and critics have suggested that the anti-corruption drive, rather than being impartial, was driven by the crown prince’s efforts to marginalize potential rivals, centralize his power, and secure funds for his wide-ranging reform program for Saudi Arabia (5), (6).

The Public Procurement Law (PPL) requires bidders to prove that they or their legal representatives have not been convicted for organised crime, commercial criminal offences, offering or receiving bribe, fraud or criminal offences against environment [1], which means that they can be excluded from tender if they do not provide the requested evidence. Until the amendments of 2015, the PPL also instructed contracting authorities to reject a bid if they had evidence that the bidder had previously acted contrary to anti-corruption provisions of this law, violated competition, supplied false information in a bid, unjustifiably refused to sign a public procurement contract after it had been awarded to it or refused to supply evidence and collateral to which it had previously committed in its bid [2]. All these actions qualify bidders/suppliers for a so-called negative reference [3]. Before the amendments in 2015, the PPL demanded that contracting authorities submit negative references to the Public Procurement Office [4]. However, in the aforementioned amendments, this provision was deleted [5]. Moreover, contracting authorities are now not obliged to reject bids with negative references, as the PPL now only states that they ʻmayʼ do so [6].
The PPL also defines a list of minor offences for which bidders/suppliers could suffer fines ranging from 100,000 to 1,000,000 dinars (approximately EUR 850-8500). These include the professional engagement of persons formerly employed with contractors (following Article 25 of PPL) and engaging a subcontractor who was not previously mentioned in a bid and the public procurement contract [7].

Proceedings against suppliers for minor offences defined in the PPL can be initiated by the Public Procurement Office, State Audit Institution, or ʻanother authorised bodyʼ or ex officio. The Commission for Protection of Rights in Public Procurement Procedures conducts minor offence proceedings in the first case. The PPL explicitly states that members of the Commission who decided on requests for protection of rights in the same procurement procedure may not participate in the Commission’s panel leading the minor offence proceeding. The Commission’s decisions may be challenged by an appeal to the Higher Misdemeanor Court [1]. There is no evidence of undue political influence in the minor offence proceedings so far. However, there seems to be confusion about the use of the mechanism in practice. The last publicly available annual report on the Commission’s work (2015) states that in that year the Commission received 44 requests to initiate a minor offence proceeding, six of which were rejected because the requests had been submitted by actors which were not authorised to initiate proceedings under the PPL. In the 38 remaining cases, the Commission was, at the time the annual report was published, still considering ʻwhether the procedural conditions for its further actions had been fulfilledʼ [2]. This mechanism may have become more efficient since then. According to data available at the website of the Commission for Protection of Rights in Public Procurement Procedures, this body issued 13 fines in the period 2016-2017 [3], none of these cases involved the Ministry of Defence as a contracting authority.

No fines have been issued by the Commission for Protection of Rights in Public Procurement Procedures to MoD bidders so far. As the list of negative references is not publicly available, it is not possible to monitor if bidders with negative references are awarded contracts. The MoD did not reject any bid due to negative references from January 2015 to March 2018 [1].

There are clear guidelines and grounds for debarment from government contracts, which include issues like providing false information and corruption [1]. Sanctions include financial penalties and prison terms [2].

There is no evidence that undue political influence has been exerted on past investigations. The Auditor-General’s Office (AGO) is an external government agency that has demonstrated its ability to remain fair and impartial in the course of its work [1, 2].

Generally, sanctions are taken against corrupt contractors found guilty of corruption, and they also are liable for debarment and court prosecution.[1].
However, in cases of big, key, multibranch defence suppliers the willingness of the government to enforce debarment regulations may be limited, as it would paralyze the defence acquisition system.
For example, concerns have been raised following the government’s approval of the marine division of state-linked ST Engineering, which was involved with a graft scandal concerning S$24.6 million in bribes paid between 2000 and 2011 that saw seven senior executives convicted in 2017 [2]. ST Engineering secured a S$316 million shipbuilding and maintenance contract from the Police Coast Guard in November 2018, which is at odds with stated policy [3].

In the above case, those who have been found guilty have already been sentenced with various fines and jail terms, while other contracts with ST Marine were considered legitimate by the government and thus not affected.

Suppliers and their directors that have been convicted of corruption under the Prevention and Combating of Corrupt Activities Act, No 12 of 2004 [1] can be added by the court during sentencing to the National Treasury Restricted Suppliers List, and excluded from future tenders [2].

There is a very low conviction rate under the Prevention and Combating of Corrupt Activities Act, with only 135 convictions were secured out of 1959 cases in the past four years. This has been attributed to poor institutional capacity within the pertinent investigative agencies [1].

A conviction under the Prevention and Combating of Corrupt Activities Act can result in severe fines, imprisonment of company directors, and exclusion from future tenders [1]. The 2020 Restricted Suppliers Database shows that both companies and officials have been sanctioned for offences including collusion and fraud, breaches of contract, collusive bidding, conflicts of interest, and fraud and corruption. It is not clear from this database however, whether additional sanctions beyond debarment were been applied.[2]

Procurement officials and authorities can terminate a contract with a supplier found to be corrupt by cancelling its qualification as a defence contractor under the terms of Article 48 of the Defence Acquisition Programme Act. [1]

The South Korean government has made significant efforts to tackle corruption within defence procurement since several allegations of corruption emerged in 2015. [1] The Defence Procurement Investigation Department, specialised in investigating corruption cases related to defence procurement, was established under the Seoul District Prosecutor’s Office in 2016. All the cases involving defence procurement are investigated and prosecuted by the Defence Procurement Investigation Department. [2] In a recent case in January 2019, prosecutors arrested a defence supplier on the charge of forging documents to exaggerate the original price of defence supplies. [3]

As mentioned above, if corrupt activities of suppliers are detected, they can be prosecuted through formal processes. There is legislation that restricts corrupt suppliers from participating in bidding for up to 2 years, based on Article 27 of Act on Contracts to Which the State is a Party. Suppliers involved in corrupt activities will be punished with a fine which is equivalent to 10% of the value of the contract involved in the violation. [1] In addition, significant fines and imprisonment can be applied based on the Criminal Act. [2] There is evidence showing the enforcement of sanctions. In December 2019, a defence supplier providing loudspeakers to the South Korean military was sentenced to three years in prison for obtaining illegal information on a bid through an intermediary. [3] In May 2020, multiple suppliers providing products for the South Korean military cafeteria were sanctioned by the authorities for bribing military officers to win a bid. [4]

The Public Procurement and Disposal of Assets legislation provides for the exclusion of companies and their officials for fraudulent behaviour [1] [2]. Procurement officials are specifically mandated to exclude suppliers from the procurement process for reasons of fraudulent or corrupt practices or unfair competitive advantage or conflict of interest [3].

With specific reference to the defence sector, news of contractors being sued by the defence ministry do not exist in the public domain. As such, this indicator is marked ‘Not Enough Information’.

In general, in South Sudan, the corrupt activities of suppliers/contractors for departments other than defence, receive “show” investigations. Committees will be formed and publicly announced. But the outcome of the investigations is never made public. For instance, in June 2019, an investigation committee was formed to probe the activities of former oil minister, Ezekiel Lol, with respect to “pre-sale process, off-take, sale, payments and taxes” in coordination with the auditor general to reconcile payments and liabilities against the government.” [1]. More than a year later, the outcome of that investigation is yet to be made public. The Procurement Act came into being in April last year. But the fact that the investigation does not refer to the Act is troubling. In conclusion, there may have been investigations regarding defence contractors, but these have never been made public, possibly because of the obsession with treating anything defence-related as a national security issue. Given the record of the government in other sectors, one would not be totally off-point to surmise that processes to probe contractors in the defence sector suffer the same fate as similar processes in other sectors.

The procurement act outlines the range of actions in the rubric for score 4, including barring any contractor from bidding for future contracts for “a period to be determined by the Authority on a case by case basis [1].” Section 82 spells out heavy fines, amounting to $10,000 (U.S) but not exceeding $20,000 (U.S). [2]. Nevertheless, there is little to no evidence to suggest that sanctions have been applied to errant members of the defence establishment as outlined in the Procurement Act. In 2015, two army generals were “suspended” for alleged corrupt practices and subjected to an investigation [3]. The outcome of the investigation was not revealed to the public.

Article 12 of Law 24/2011 prohibits contracts with people who have been formally convicted of different crimes or formally sanctioned as a consequence of a major infraction of professional duties. This includes, among others, illegal financing of political parties, corruption in business, influence peddling, bribery, fraud, crimes against the Public Treasury and Social Security, prevarication, embezzlement, prohibited negotiations for officials, money laundering, crimes related to spatial planning and urban planning, etc. [1]. However, a significant number of contracts may be excluded, as stated in Article 7 of Law 24/2011. Investigation and prosecution are not motives for exclusion, only conviction by final judicial decisions (“condenadas mediante sentencia firme”). There is no knowledge of any relevant military company being convicted and excluded from bidding [2].

Article 57 of Law 24/2011 describes the legal consequences of the declaration of nullity in contracts. Sanctions include the imposition of fines for an amount that may not be less than 59% or exceed 20% of the contract award price (depending on the reiteration, the percentage of the contract that has been executed or the damage caused to public interests or, “in such a way that these are effective, proportionate and dissuasive”); or the proportionate reduction in the duration of the contract [1]. However, no information is available about how the Ministry of Defence sanctions suppliers due to corruption, bribery, or related offences.

There is not enough information to score this indicator. Legal expert Ricardo Agud Spillard states that “there is no awareness in the arms sector about the need to anticipate the corporate risks of its activity, much less the possibility of committing the crimes provided for in the Penal Code for legal persons” [1]. He also says that “from what is published on their web pages, none of the international companies related to the arms sector seems to have adapted their codes or policies or have created Organisation and Control Models in the terms set forth in the Spanish Penal Code.” This also applies to the state-owned Navantia, and “as for Spanish private companies, and again based on the information published on their web pages, there is still no awareness regarding the need for prevention in regulatory compliance, and much less, in the establishment of organisation and control models and in the prevention of criminal risks. Of all the organisations analysed, only the SENER GROUP has, according to its website, in addition to a Code of Conduct and a complaints channel, a Model for the Prevention and Detection of Criminal Crimes” [1, 2]. All this may be considered as an indicator that the industry is not concerned about the applicability of the Spanish Penal Code, meaning that the risk perceived of criminal prosecution is low.

Cases of corruption have been reported in the media (see previous sections). However, statistics on the number of prosecutions on corruption are unknown. When asked about the number of cases of sanctions to companies and/or exclusion from future contracts as a consequence of contract violations, corrupt practices, or measures that affect free competition (such as collusion) in recent years, the representative of the Ministry of Defence did not answer the question, and declined to do so when the question was asked again [3]. When questions on the number and type of judicial cases directly related to corruption involving the Ministry of Defence were submitted to the Ministry of Justice through the Spanish Portal of Transparency, the official answer was that “the required information refers to activities of judicial bodies that are not subject to Administrative Law, but to Procedural Law. Consequently, this Justice Transparency Information Unit considers that it incurs in the preceding exposition and resolves its inadmissibility as the provisions of the aforementioned Law are not applicable to activities subject to Procedural Law”, and referred to statistical data from the General Council of the Judiciary or the National Institute of Statistics [4]. However, the information needed could not be found on these sites. Due to the lack of information available, it has not been possible to determine the level of undue influence in the decision making process.

The number of cases about corruption that are publicly known is small. However, their high relevance and the wider implications of the cases known may be an indicator that these are not the only examples of corruption within the Armed Forces. For instance, in 2019 the former head of the Purchasing Strategies Area in the Contracting Modernisation Programme of the Ministry of Defence and another high ranking officer assigned to the Directorate of Economic Affairs of the Army, both lieutenant colonels (OF-4), were accused of providing privileged information to contractors in exchange for the payment of cash consideration, gifts, invitations to meals or shows, or the hiring of their respective descendants. They were convicted to two years in prison. Three entrepreneurs were also convicted and prohibited from contracting with the Public Administration [1]. In another example, the heads of contracting units and comptrolling bodies were convicted for dividing the amount of the awards and resorting to the negotiated tender without advertising in exchange for an “exorbitant profit” for the entrepreneur, which he shared 50% with the soldiers. When open competition was unavoidable, the military manipulated the technical specifications to overvalue aspects that were previously known to the businessman [2]. Interestingly, in all these cases, the convictions were not enough to expel any of them from the Armed Forces. In the last example, the court recognised that the case was initiated by a complaint from the employer, and that without his testimony it would not have been possible to prove beyond irregularities in hiring [3]. However, in another case, the detention of two OF-4 officials accused of corruption in contracts arrived as a consequence of an internal audit by the Ministry of Defence [4]. All in all, these cases are anecdotical in the media, and the frequency and relevance of cases of corruption and the application of sanctions are unknown.

When asked about the number of cases where companies were sanctioned and/or excluded from future contracts as a consequence of contract violations, corrupt practices, or measures that affect free competition (such as collusion) in recent years, the official response by a representative of the Ministry of Defence was to not answer the question, and they declined to do so again when that question was asked again [5]. When asked through the Portal of Transparency about the number of sanctions given to companies, including exclusions for future contracts, related to corruption practices or collusion in the last three years, the Ministry of Defence answered that “the requested information is available” in the Official Registry of Bidders and Classified State Companies (ROLECE), in section “companies in a situation to contract”, with no further explanation [6]. However, on the ROLECE’s site, this information was not available [7, 8]. When asked, the responsible person from the ROLECE confirmed that the only information available on contracting bodies is whether a specific firm’s name was in the list of companies that can be contracted. No one has access to any other information, including whether that company was not on the list because of not having registered, or if it was because they had been prohibited from contracting. No information will ever be provided about the reasons why a company is prohibited from contracting [9]. When questions on the number and type of judicial cases directly related to corruption involving the Ministry of Defence were submitted to the Ministry of Justice through the Spanish Portal of Transparency, the official answer was that “the required information refers to activities of judicial bodies that are not subject to Administrative Law, but to Procedural Law. Consequently, this Justice Transparency Information Unit considers that it incurs in the preceding exposition and resolves its inadmissibility as the provisions of the aforementioned Law are not applicable to activities subject to Procedural Law”, and referred to statistical data from the General Council of the Judiciary or the National Institute of Statistics [10]. However, the information needed could not be found on these sites.

The Public Procurement, Contracting and Disposal of Assets Act of the Republic of Sudan, 2010, allows for the termination of a contract and/or the imposition of fines, criminal penalties and temporary disbarment on suppliers. However, no evidence could be found of these statutes being used to impose penalties [1]. As explained by two independent experts on Sudan’s defence sector [2,3], procurement officials in the official Ministry of Defence and Ministry of Interior channels do not, in practice, facilitate procurement processes for Sudan’s defence forces (transactions are completed directly with individual defence force components), so they have no de facto authority to exclude companies or individuals from competition for any reason.

Since procurement officials in defence sector ministries do not have any practical visibility into or authority over defence sector procurements [1,2], these transactions are not subject to official investigation or prosecution, even in the face of clear evidence that bribery or other forms of corruption have occurred. This indicator is scored ‘Not Applicable’, given that procurement officials have no authority to exclude companies implicated in corruption-related offences.

Since procurement officials in defence sector ministries have no practical visibility into or authority over defence sector procurements [1,2], they are not able to apply sanctions – and in the event that the corrupt practices of a supplier benefit a senior official, the latter would be unlikely to flag the corrupt company for sanctions.

There is clear legislation and implementing guidelines empowering procurement officials to exclude companies and senior company officials where there is a evidence of bribery and corruption related offences. The Swedish legal system has been historically based on the concept of ‘individual guilt’, implying that only individuals, rather than judicial entities (such as companies) can commit crimes. However, in 1986, a ‘punitive sanctions legislation’ for individuals within judicial entities was introduced in the Penal Code [1], meaning that crimes within business activities could be charged with a ‘corporate fine’. In 2006 the legislation was updated, specifying that this fine could be up to SEK 10 million [2]. If a supplier, whether the individual or the entity they are representing, is convicted for crimes that in any ways involve corruption, the company must be excluded according to the Act on Defence and Sensitive Security Procurement [3].

In line with the Penal Code [1] and Act on Defence and Sensitive Security Procurement [2], cases are investigated or prosecuted through formal processes. The Swedish Competition Authority has noted no cases of third-party interference, such as undue political influence, during the studied time period [3].

No cases of such sanctions could be found in practice; however, there is a strong process in place through the Act on Defence and Sensitive Security Procurement [1] and Penal Code [2]. An offence can regularly result in a range of sanctions, including prosecution, exclusion from current and future competitions, and heavy fines. If a supplier, whether the individual or the entity they are representing, is convicted for crimes that in any ways involve corruption, the company must be excluded according to the Act on Defence and Sensitive Security Procurement [1]. The ‘punitive sanctions legislation’ for individuals within judicial entities in the Penal Code [2] makes it clear that crimes within business activities could be charged with a ‘corporate fine’ of up to SEK 10 million [3].

Civil and military penal law have clear provisions concerning corruption. These provisions do also apply to public procurement [1, 2]. The new Federal Law on Public Procurement (BöB), which came into force on 1 January 2021, empowers the contracting authority to exclude a tenderer, delete it from a list or revoke a contract where it is found that the entity “has violated anti-corruption provisions” (Article 44, 1e) [3]. The revised BöB also makes reference to corruption prevention as one of the goals of the law (Article 2d). Article 45 defines sanctions for violations and singles out corruption as the one case when a supplier will be excluded from all federal contractors [3].

There is not enough information to score this indicator because until 1 January 2021, procurement officials did not have the authority to exclude companies based on corruption-related offences. Civil and military penal law has clear provisions concerning corruption and does also apply to public procurement [1, 2]. The new Federal Law on Public Procurement (BöB), which came into force on 1 January 2021, empowers the contracting authority to exclude a tenderer, delete it from a list or revoke a contract where it is found that the entity “has violated anti-corruption provisions” (Article 44, 1e) [3]. The revised BöB also makes reference to corruption prevention as one of the goals of the law (Article 2d). Article 45 defines sanctions for violations and singles out corruption as the one case when a supplier will be excluded from all federal contractors [3]. However, due to the reporting period for this index, there is not enough time to gauge its implementation to determine whether cases are appropriately investigated. Switzerland has an independent judiciary. It ranks eighth out of 137 countries for judicial independence in the World Economic Forum’s Global Competitiveness Index [4]. Although there seem to be no recent cases of corruption, suppliers are monitored and subject to inspections [5].

There is not enough information to score this indicator. Title 19 Article 322 of the Swiss Criminal Code foresees penalties for active and passive bribery of Swiss government with financial penalties or imprisonment of up to five years [1]. The military’s penal code, the Militärstrafgesetz contains corruption specific rules on active and passive bribery as well as on unfaithful business management (Section 9) [2]. The revised BöB, which came into force on 1 January 2021, contains sanctions for corruption-related offences including exclusion [3]. Article 45 defines sanctions for violations and singles out corruption as the one case when a supplier will be excluded from all federal contractors [3]. There is also a five per cent fine on the value of the contract if a supplier does not honour the terms of the contract [5]. However, there is a lack of data to assess the law’s application due to the short timeframe since it came into force.

The “Government Procurement Act” has clear regulations to expel suppliers with records of wrongdoing or of undertaking bad practices from further bidding processes [1]. Sanctions are devised to prohibit bidders with records of corrupt activities from further armament procurements. However, experts have speculated that a bidder with bribery records will win the MND’s project for procuring marine assault crafts [2].

Once a case concerning wrongdoing enters the formal judicial process, it will follow formal processes without undue political influence, since any attempts of political influence are at high risk of backfiring [1, 2].

Sanctions set out in the “Government Procurement Act” and the “Anti-corruption Act”, include expulsion from further government procurement, fine, or imprisonment [1, 2, 3, 4]. Sanctions are designed to exclude bidders with bribery records from current and future competitions.
However, experts have suggested that a bidder with bribery records will manage to win the MND’s project for procuring marine assault crafts [5].
The owner of a company involved in corruption was given a 1 year 8 months prison sentence, probation for 3 years, a fine of 200,000 NT dollars, and deprivation of civil rights for 2 years in 2014. After completing the sentence, Yu Xin-gone was protected by the “Rehabilitation Protection Act” and acts as managerial personnel of a company under the “Company Act”.[6,7,8].

The Public Procurement Act 2011 provides for the blacklisting of firms for ten years, as well as the blacklisting of individual directors for the same period. This can be due to corrupt practices, misrepresentation of qualifications, and breach of contract. [1]

It can be assumed that undue influence is brought to bear in both the revelation of cases, and how they are dealt with. An example is the case of Lugumi Enterprises, revealed by the Controller and Auditor General in 2017 to have failed to deliver on the supply of fingerprint equipment. [1] While the owner of the firm, Said Lugumi, is in dispute about monies owed to the Tanzania Revenue Authority, [2] and while the Prevention and Combating of Corruption Bureau investigated the deals, [2] no evidence was identified of criminal proceedings having been started against him.

A blacklist of firms is maintained by the Public Procurement Regulatory Authority though at the time of writing it was not accessible. [1] It is not clear if lists of directors associated with such firms are maintained and made easily available to all Procurement Entities.

According to the Public Procurement and Supplies Administration Act B.E. 2560 (2017), Section 120, any state official found to be involved in bribery or corruption offences shall be subject to imprisonment for a term of between one and ten years or to a fine of between 20,000 and 200,000 baht or to both. Any person, including private-sector actors such as companies, who is an instigator or an aider and abettor of the offence shall be subject to the same penalty. However, the Act does not provide specific details about corruption offences in government-to-government procurement [1].

This new Act demonstrates that these criminal penalties have been extended to those in the private sector who pay bribes, which means that not only public-sector recipients of bribes but also the payers could be found guilty. The new procurement law elevates the penalty for private-sector supporters of corruption from two thirds to 100%, the same as for public-sector offenders [2]. Under the 2015 amendments to the OACC, a company can be criminally liable for corruption if the actual bribe-giver is related to the organisation or committed the offence for the company’s benefit and if the company failed to implement proper internal measures to prevent the bribe. In the same manner, a company can also be liable for corruption related to government procurement under the Submission of Bids Act if it gains an advantage in a bid with a state agency through instigation, collusion or coercion. Nonetheless, the laws do not clearly state that procurement officials have the authority to exclude companies and senior company officials where there is a conviction or reasonable evidence of bribery and corruption-related offences [3].

Since the military coup in 2014, there have been very few prosecutions in cases involving military officials and big corporations, regardless of the existence of evidence. For instance, according to the Anti-Corruption Organization of Thailand, the Charoen Pokphand Group (CPG) was the first private entity who was able to submit the bidding documents after the deadline and still win the bid. This shows the unfair considerations of the Committee for Public Procurement and the signs of corruption in the public sector, as the company was not prosecuted [1,2]. It should be noted that the five elite companies, including the Charoen Pokphand (CP) Group, ThaiBev, King Power Group, Boonrawd Brewery and Central Group, gained power and profits during coup-maker Prayut’s first five-year term (2014-2019), monopolising the country’s economy and gaining more and more political influence throughout the entire period [3].

Under the NCPO regime and the pro-junta government, corruption in the granting of concessions is fairly common, especially among private companies who supply products or services or conduct construction projects for the public sector [1]. The Director of the Foreign Affairs Office, NACC, noted that in order to win bids for major projects, 57% of the companies were required to commit corruption offences [2].

As corruption between the public and private sectors is widespread, offences rarely result in sanctions. For example, the case of Ratchaphak Park project was deemed ‘corruption-free’ by the State Audit Office, even though there was evidence of corruption attempts and the project’s procurement details were not disclosed, which is against the Official Information Act. Another case is the collection of military foundry kickbacks. Although the media and the public requested the disclosure of procurement details, which could have led to sanctions, the military and the Committee for Procurement did not respond with clear evidence, in spite of the regulations in the Official Information Act [3].

According to our resources, there is clear and well-defined published legislation (Penal Code Article 82) with regards to sanctions against corruption activities within the procurement process of military expenditure as well as civil expenditures(1,2,3). If it is established that the tenderer proposed to award the market is guilty, directly or indirectly, of corruption or engaged in fraudulent, collusive or coercive behaviour to obtain this market, then actions are as follows:
– If a contract has been awarded to the tenderer due to fraudulent maneuvers, the market is cancelled
– The tenderer may be temporarily excluded or permanently from participation in procurement procedures by the decision of HAICOP
– The tenderer is subject to the penalties laid down by the current regulations (4) Any contract obtained or renewed through practices fraudulent acts or acts of wrongdoing is considered void (5). Article 178 of Decree n°1039-2014, dated 13 March 2014, organising public procurement, gives the possibility to temporarily or even permanently exclude companies convicted of corruption in procurement (6). Corrupt activities are also severely punished according to articles 82 to 94 of the Penal Code (1). A list of excluded companies mentioning the reason for exclusion is published online (7).

According to our resources, there is clear evidence that corruption cases are being investigated, however, there might be political influence on the procedures of trial, but so far there is no clear evidence of such undue influence made public (1,2). Evidence shows that some cases are being investigated. Annual reports of the Anti-corruption Authority show that the Ministry of Defence transmitted to the justice a case of corruption in procurement (3). No evidence of undue influence could be found (4). However, INLUCC’s 2017 report mentions that it was INLUCC who initiated investigations in an alleged case of corruption related to the import of military shoes (5).

According to our sources, there are cases of persecution, but there are no follow ups from the media or the justice department on the outcomes of these persecutions, but once they are persecuted, there are sanctions if they found guilty(1,2). Offences sometimes result in prosecution, the Anti-corruption Authority report for the year 2017 shows that the Ministry of Defence transmitted to the justice a case of corruption in procurement (3). One case is not enough evidence to establish that all offences can result in prosecution and no cases of companies excluded could be found (4).

As emphasised before, Article 58 of the Law on Public Procurement, entitled ‘Prohibition from Participation in Tenders’, regulates corruption and integrity-related issues in public procurement [1]. The article empowers procurement officials/authorities to exclude the firms with records of integrity related issues, and/or ongoing trials and investigations about corruption, including in the contracting of defence goods provided they are done through public tenders [1]. According to the article, the procurement officials/authorities are primarily responsible for excluding processes. There is no evidence of similar procedures for non-competitive or confidential procurement.

It should also be noted that this law does not include a specific section about punishment for corruption. Corruption is a crime in Turkey and is only combated through the general provisions of Article 252 of the Turkish Criminal Code [2]. No specific legislation exists to combat corruption in the defence/security sector.

Article 17 of the Law on Public Procurement prohibits all forms of corruption, collusion and bribery in tender processes. According to this article, tenderers who violate the law through corruption or integrity-related issues shall be excluded from the tender by the tender board and the board shall report this offence to the public prosecutor in charge as a possible violation of Article 252 of the Turkish Criminal Code [1]. Then the legal process starts for the corrupt (and therefore criminal) activity of the tenderer.

As seen in the Law on Public Procurement, the tender boards are, in legislative terms, very strong decision-making bodies, with the authority to process a written complaint and even to exclude tenderers who do not meet the requirements of the tender [1].

However, Interviewee 4 suggested that when a firm makes a complaint about corrupt activities, the entire outcome is determined by whether or not it has political backing. He emphasised that if a firm has full political backing from the presidential palace, it can evade all legal and administrative investigations [2]. Interviewees 5 and 6 confirmed this assertion [3,4]. Unfortunately, there is no open-source content available on online sources published in the past two years to confirm this suggestion.

Interviewees 5 and 6 suggested that, for those small tenders conducted by the Ministry of Defence under the category of ‘Urgent or Operational Needs’, the above-mentioned sanctions are mostly applied. However, both also claimed that, when it comes to the major defence procurement projects managed by the SSB, the application is not as likely [1,2]. Open-source research confirms this assertion because, despite the claims by the opposition about possible violations of defence procurement processes, such as the Altay tank project and the drone projects, there is not a single report mentioning the application of sanctions or the tender annulment of hotly debated projects in the past two years. [2] Unfortunately, there is no further open-source content available on online sources published in the past two years to confirm this suggestion.

There are statistics on the prohibition decisions and blacklist [3, 4]. For instance, according to the 2017 Public Procurement Authority Monitoring Report, 135,260 tenders were made and 20,161 of them were nullified afterwards [4, 5].

There is clear legislation and implementing guidelines empowering procurement officials to exclude companies and senior company officials where there is a conviction or credible evidence of bribery and corruption-related offences. Section 95 (1c-1g) [1] lays out the sanctions available to the procuring and disposing entity. In November 2020, the Public Procurement and Disposal of Public Assets Authority (PPDA) [2] suspended 43 providers from participating in public procurement and disposal of public assets proceedings. The Public Procurement and Disposal of Public Assets Authority received recommendations from different entities within local and central government(s) to suspend different companies from participating in public procurement and disposal of public assets proceedings for submitting various forged documents under several tenders. The PPDA investigated the matters and found that the firms breached the Code of Ethics of Providers. In accordance with Section 8(1)(f) and 94 of the PPDA Act, the board of directors considered the recommendations and resolved to suspend these providers. According to Gumisiriza & Mukobi [3] sub-clause 3.1 of the procurement guidelines, the PDE may terminate a contract any time if it finds its representatives or a provider engaged in corrupt practices during procurement or execution of that contract. Many public contracts discovered to have been secured through corruption both at central and local government levels have been annulled. However, in most cases, the usefulness of nullity of contract as a deterrent to corruption in Uganda remains ineffective because of political interference, collusion between corrupt government technocrats and companies to approve or conceal contracts that should be annulled, renegotiation of contracts, failure to recover the already spent public money once a contract has been annulled, and costly compensation.

Clearly investigations on some of these dubious suppliers take place and that is how some companies have been blacklisted, although no one was jailed. According to some MPs, corruption in defence is “an inside job” where “highly connected” individuals run the show [1, 2]. They are never prosecuted for their crimes, instead they keep winning tender after tender.

Apart from service providers being suspended from participating in public procurement and disposal of public assets proceedings, there are no stringent sanctions imposed on them. However, under Regulation 12 (4) of the PPDA Regulations [1], the suspension does not relieve the suspended service provider of responsibility or obligations under any existing contract placed prior to the suspension.

Classified procurement:
There is no clear legislation or implementing guidelines empowering procurement officials to exclude companies and senior company officials where there is a conviction or credible evidence of bribery and corruption-related offences. The law provides that business entities can become State Defence Order contractors if they are included in the register of manufacturers of products, works and services for defence purposes, and procurement of which constitute state secrets [1]. The procedure on how businesses shall be included in the register is provided by a separate CMU Resolution and provides a list of documents to be submitted to the Ministry of Economy to appear in the register [2]. This list does not have any requirements connected to anti-corruption or integrity. State customers are entitled to de-facto discretionary select contractors (amongst those who are in the register) [1].
Non-classified procurement:
The Law on Public Procurement provides in Article 17 how state customers can discriminate among suppliers [3]. In particular, suppliers can be discriminated if the customer has undeniable evidence that a supplier offered a bribe, if the supplier is included in the Uniform State Register of individuals who committed corruption or corruption-related offences, or if supplier`s official was brought to justice for a past violation in procurement, etc. [3].
Since the start of the Russian aggression in 2014 and the declaration of the “special period” [4, 5], one more piece of legislation came into force and provides additional regulations for defence procurement under this period (as well as for the period of ATO) [6]. These provisions include the possibility to include suppliers into “blacklists” [6, Section 8 of Article 4], but do not provide any additional requirements related to anti-corruption and integrity.

There is no strong evidence in particular cases; however, in general, investigation and prosecution systems are exposed to undue influence. Corruption cases (including those in defence procurement) can be investigated by different authorities including NABU, Security Service of Ukraine and the National Police. An investigation is carried out either by SAPO (for ANBU cases) or by the Prosecutor’s General Office (for all other cases). The Prosecutor’s General Office is strongly influenced by the President of Ukraine as is the Security Service of Ukraine [1, 2]. There are reasons to doubt SAPO’s effectiveness and independence as well since its head was recently suspected of certain illegalities [5]. For now, NABU can be seen as an independent authority tasked to combat corruption. Although it is unlikely that undue political influence happens in regards to all procurement disputes, and especially procurement disputes on low expected price tenders, the general system vulnerability and political bias decreases trust in the whole system and makes it possible to intervene in all of its activities.

The e-procurement system Prozzoro offers information that the MoD did not discriminate among suppliers (in regards to MoD public procurement) based on their integrity [1] as of May 2, 2018. Companies and the MoD have the right to resolve disputes in court [2, 3] and actively use it with mainly MoD initiating lawsuits [4, 5, 6, 7]. The MoD also uses its right to exclude companies from future competition [8, Section 8 of Article 4] and publishes corresponding “blacklist” [9]. There is also evidence that public authorities impose fines on corrupt suppliers or suppliers providing substandard goods and services [10, 11]. However, it is unlikely that the MoD will exclude some suppliers from providing goods or services under the State Defence Order since some of them have monopolies and their goods or services cannot be substituted quickly with others without a loss of quality or a significant increase of subsequent expenses.

Officials have no authority to impose sanctions to punish the corrupt activities of suppliers. As major suppliers are organized by private companies, which have political ties with the UAE leadership, there are no feasible sanction options against the suppliers. While there might be sanctions stipulated in contracts with suppliers, these contracts are not publicly available (1), (2), (3).

This sub-indicator is marked Not Applicable as officials have no authority to impose sanctions to punish the corrupt activities of suppliers.

There is no way to know if there have been any investigations. According to many sources, it has not happened (an investigation on a large scale or with senior officers). Consequently, there is a complete failure to investigate or prosecute parties, even in the face of clear evidence (1), (2), (3).

This sub-indicator is marked Not Applicable as officials have no authority to impose sanctions to punish the corrupt activities of supplies.

According to our sources, offences do not result in sanctions. Most procurements are organized and fulfilled by private third party companies (1), (2), (3).

The grounds for exclusion of bidders from public procurement procedures are set out in The Public contracts Regulations 2015 [1]. Bidders should be excluded where they have established by verification or are otherwise aware that the bidder has been convicted of certain offences in UK national law (Regulation 57). These include offences relating to bribery, corruption, conspiracy, fraud and money laundering. Guidance issues by the Government Commercial Function [2] contains clear implementing guidelines in this regard.
Moreover, under the UK Bribery Act, individuals found guilty of a bribery-related offence under section 1, 2 or 6 of the Act are liable to imprisonment for a maximum of 10 years and/or financial penalties [3].

Cases are investigated and prosecuted through formal processes, and there is no public evidence to indicate any potential undue influence [1, 2]. It can be assumed, however, that even if such undue influence were to exist, it would be difficult to capture it within this assessment.

There have been concerns expressed over the application of sanctions when it comes to corrupt activities of a supplier [1, 2]. According to the Centre for the Study of Corruption: “[w]ith Government departments often highly dependent on a few large strategic suppliers, there are real risks of moral hazard, where suppliers behave badly because they know the government won’t act” [1]. Looking at the record of application of sanctions, this claim seems to be confirmed. For example, when the MoD made 44 allegations of corruption on defence contracts in 2016, no companies had been excluded from bidding [2]. Another report mentions that “[t]he UK currently has the ability to debar companies that have engaged in corruption from public procurement, but there is little evidence that this happens in practice. In fact, research done at Corruption Watch shows that companies do not even need to declare a conviction under the ‘Failure to Prevent’ provisions of the Bribery Act to procurement authorities” [3].

Under the FAR Subpart 3.7, ‘Voiding and Rescinding Contracts’, the heads of executive agencies are empowered to declare void and rescind contracts if there has been a conviction and sentence for bribery, conflicts of interest or any other violation of Chapter 11, Title 18 of the U.S. Code [1]. If the contractor has been convicted for an offence relating to the disclosure of bid or proposal information, the federal agency can consider a rescission of the contract. Following a final conviction for violation of Chapter 11 Title 18 (18 USC 201-224), the agency should also consider initiating debarment proceedings [2].

There is no evidence of undue political influence. The cases outlined in the DoD IG Semiannual Reports to Congress suggest that the formal process is followed [1,2].

The DoD IG Semiannual Report to Congress contains a section on DCIS investigations, under which public corruption and procurement fraud fall, and this includes details on recent debarments. For example, in 2020, two former Army colonels were convicted of bribery in procurement and debarred from government contracts, imprisoned and fined [1]. The most recent report contains two cases of corrupt activities resulting in debarments and other sanctions. The previous report, for the first half of FY 2020, contained three such cases [2]. These reports also include details of debarment and sanctions relating to corruption fraud in contingency operations. According to Neil Gordon, enforcement is inconsistent: ‘Too often, the big players are given a slap on the wrist. Suspensions and debarments are more likely to be imposed on individuals and small companies’ [3]. This is further supported by the Federal Contractor Misconduct Database (FCMD), which shows two cases of whistleblower retaliation by Raytheon and one by Lockheed Martin, in which Raytheon was fined little over $1 million and has not yet been charged for a case from 2017, and Lockheed Martin made an undisclosed settlement [4,5,6]. Other examples of corrupt actions being weakly sanctioned include a case involving improper billing by Boeing, in which Boeing employees over-billed the Army; Boeing received a fine of just under $4.4 million [7]. Given the fact that, in FY 2019 alone, the three companies in question received a total of $93.105 billion in contract awards, these fines seem small [8].

Article 155 of the Public Procurement Law (LCP) [1] lists behaviours for which contractors could be punished. These include the receipt of bribes, the provision of false information for the purpose of obtaining the contract, influence-peddling, and the payment of commissions. These, together with other behaviours that relate more to breaches of contractual obligations, could lead to the initiation of administrative proceedings and sanctions.

In the event of any of these behaviours, the contracting unit and the Defence Sector Procurement Committee (CCSD) could unilaterally terminate the contract while initiating the administrative process before the Office of the Comptroller General of the Republic (CGR) [2]. If it considers that offences involving administrative responsibility indeed took place, it may disqualify companies from contracting with the state for up to four years, which is the period established by law for fraduluent and bad faith practices [1]. While the law includes penalties for certain behaviours associated with corruption, it is not exhaustive in its description of other practices that could also relate to corruption.

There is no evidence of investigations or administrative proceedings against companies that provide goods and services to the state. In recent years the CGR has investigated and imposed sanctions on leaders and representatives of political parties other than the governing party [1, 2, 3]; however, in terms of monitoring companies that contract with the state, specifically with the defence sector, no investigation processes have been made public. The latter situation is compounded by acknowledgement on the part of the former Comptroller General of high levels of corruption in public procurement [4], without this leading to any actions seeking to resolve the situation.

Moreover, in the face of evidence of corruption practices in contracts with Russian companies – both non-compliance and corruption practices have been denounced – the Venezuelan authorities have not initiated judicial proceedings or made any pronouncements on the matter [5].

There has been no evidence in recent years of the opening of administrative proceedings for cases of corruption in defence sector contracting, even where there is evidence of contracts involving corruption-related practices. The last available information showing the opening of an administrative proceeding in which sanctions were imposed relates to a case during the Chávez administration, in which the purchase of equipment for defence sector officials was found to have been overpriced [1].

Currently, there are no known open court cases or sanctions imposed for conduct associated with corruption [2]. One example of shortcomings in the investigation and effective imposition of sanctions is the case where Venezuela contracted with a Russian company for the construction of a rifle factory. Not only was this contract breached, but corrupt practices were proven and were sanctioned by the Russian justice system, without the Venezuelan authorities making any pronouncements or taking any action [3].

The Public Procurement and Disposal Act empowers procurement officers/authorities to disqualify bidders if they have previously been implicated in acts of bribery or corruption or collusion or any form of dishonesty or corrupt related convictions, or if they false and misleading information in the bid [1, 2].

Cases of corruption by suppliers are generally investigated and prosecuted through formal processes [1]. However, in some instances, the investigations and prosecutions are viewed by anti-corruption groups as being superficial, especially if the cases involve high profile individuals or companies who are also politically connected and influential [2].

There is some evidence that companies accused of misconduct or corrupt activities can be blacklisted from future procurement processes/contracts. [1, 2]. However, there is no evidence or records that show that this has happened in the defence sector [3]. Given this, the indicator is not scored and is marked “Not Enough Information.”

Country Sort by Country 69a. Sanctions Sort By Subindicator 69b. Undue influence Sort By Subindicator 69c. Application of sanctions Sort By Subindicator
Albania 100 / 100 50 / 100 0 / 100
Algeria 100 / 100 50 / 100 0 / 100
Angola 100 / 100 50 / 100 0 / 100
Argentina 100 / 100 50 / 100 0 / 100
Armenia 100 / 100 75 / 100 100 / 100
Australia 50 / 100 75 / 100 25 / 100
Azerbaijan 50 / 100 0 / 100 0 / 100
Bahrain 0 / 100 NA NA
Bangladesh 50 / 100 NEI NEI
Belgium 75 / 100 100 / 100 NEI
Bosnia and Herzegovina 100 / 100 0 / 100 NEI
Botswana 100 / 100 50 / 100 NEI
Brazil 50 / 100 75 / 100 75 / 100
Burkina Faso 100 / 100 25 / 100 25 / 100
Cameroon 0 / 100 NA NA
Canada 100 / 100 75 / 100 100 / 100
Chile 75 / 100 NEI NEI
China 100 / 100 50 / 100 25 / 100
Colombia 50 / 100 50 / 100 100 / 100
Cote d'Ivoire 100 / 100 100 / 100 100 / 100
Denmark 100 / 100 100 / 100 100 / 100
Egypt 0 / 100 NA NA
Estonia 100 / 100 100 / 100 100 / 100
Finland 100 / 100 100 / 100 NEI
France 75 / 100 100 / 100 75 / 100
Germany 100 / 100 75 / 100 75 / 100
Ghana 100 / 100 50 / 100 0 / 100
Greece 100 / 100 75 / 100 100 / 100
Hungary 100 / 100 50 / 100 50 / 100
India 50 / 100 75 / 100 100 / 100
Indonesia 100 / 100 75 / 100 75 / 100
Iran 0 / 100 NA NA
Iraq 25 / 100 50 / 100 0 / 100
Israel 100 / 100 75 / 100 50 / 100
Italy 100 / 100 75 / 100 100 / 100
Japan 100 / 100 100 / 100 100 / 100
Jordan 0 / 100 NA NA
Kenya 75 / 100 NEI 50 / 100
Kosovo 100 / 100 75 / 100 25 / 100
Kuwait 0 / 100 NA NA
Latvia 100 / 100 100 / 100 NEI
Lebanon 100 / 100 0 / 100 0 / 100
Lithuania 50 / 100 100 / 100 75 / 100
Malaysia 25 / 100 75 / 100 50 / 100
Mali 50 / 100 25 / 100 25 / 100
Mexico 50 / 100 0 / 100 75 / 100
Montenegro 75 / 100 0 / 100 0 / 100
Morocco 0 / 100 NA NA
Myanmar 0 / 100 NA NA
Netherlands 100 / 100 50 / 100 NEI
New Zealand 100 / 100 100 / 100 NEI
Niger 100 / 100 0 / 100 0 / 100
Nigeria NEI 50 / 100 0 / 100
North Macedonia 50 / 100 75 / 100 100 / 100
Norway 100 / 100 100 / 100 100 / 100
Oman 0 / 100 NA NA
Palestine 100 / 100 50 / 100 25 / 100
Philippines 100 / 100 50 / 100 0 / 100
Poland 100 / 100 75 / 100 25 / 100
Portugal 50 / 100 100 / 100 75 / 100
Qatar 0 / 100 NA NA
Russia 100 / 100 75 / 100 75 / 100
Saudi Arabia 0 / 100 NA NA
Serbia 50 / 100 100 / 100 0 / 100
Singapore 100 / 100 100 / 100 75 / 100
South Africa 75 / 100 25 / 100 75 / 100
South Korea 100 / 100 100 / 100 100 / 100
South Sudan 100 / 100 NEI 0 / 100
Spain 50 / 100 NEI 50 / 100
Sudan 0 / 100 NA 0 / 100
Sweden 100 / 100 100 / 100 100 / 100
Switzerland 50 / 100 NEI NEI
Taiwan 100 / 100 100 / 100 75 / 100
Tanzania 100 / 100 25 / 100 0 / 100
Thailand 50 / 100 0 / 100 0 / 100
Tunisia 100 / 100 75 / 100 50 / 100
Turkey 50 / 100 25 / 100 25 / 100
Uganda 100 / 100 25 / 100 50 / 100
Ukraine 50 / 100 25 / 100 75 / 100
United Arab Emirates 0 / 100 NA NA
United Kingdom 100 / 100 100 / 100 25 / 100
United States 100 / 100 100 / 100 75 / 100
Venezuela 50 / 100 0 / 100 0 / 100
Zimbabwe 100 / 100 75 / 100 NEI

With thanks for support from the UK Foreign, Commonwealth and Development Office (FCDO) and the Dutch Ministry of Foreign Affairs who have contributed to the Government Defence Integrity Index.

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