Q69.

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

69a. Sanctions

Score

SCORE: 0/100

Assessor Explanation

Assessor Sources

69b. Undue influence

Score

SCORE: NA/100

Assessor Explanation

Assessor Sources

69c. Application of sanctions

Score

SCORE: NA/100

Assessor Explanation

Assessor Sources

Compare scores by country

Please view this page on a larger screen for the full stats.

Relevant comparisons

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).

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.

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 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.

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).

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].

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.

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).

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 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.

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).

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 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]

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).

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).

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).

Country Sort by Country 69a. Sanctions Sort By Subindicator 69b. Undue influence Sort By Subindicator 69c. Application of sanctions Sort By Subindicator
Algeria 100 / 100 50 / 100 0 / 100
Angola 100 / 100 50 / 100 0 / 100
Burkina Faso 100 / 100 25 / 100 25 / 100
Cameroon 0 / 100 NA NA
Cote d'Ivoire 100 / 100 100 / 100 100 / 100
Egypt 0 / 100 NA NA
Ghana 100 / 100 50 / 100 0 / 100
Jordan 0 / 100 NA NA
Kuwait 0 / 100 NA NA
Lebanon 100 / 100 0 / 100 0 / 100
Mali 50 / 100 25 / 100 25 / 100
Morocco 0 / 100 NA NA
Niger 100 / 100 0 / 100 0 / 100
Nigeria NEI 50 / 100 0 / 100
Oman 0 / 100 NA NA
Palestine 100 / 100 50 / 100 25 / 100
Qatar 0 / 100 NA NA
Saudi Arabia 0 / 100 NA NA
Tunisia 100 / 100 75 / 100 50 / 100
United Arab Emirates 0 / 100 NA NA

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

Transparency International Defence & Security is a global programme of Transparency International based within Transparency International UK.

Privacy Policy

UK Charity Number 1112842

All rights reserved Transparency International Defence & Security 2020