Use of Integrity Pacts
Could you give me information about experiences using project
integrity pacts? My sense is that integrity pacts have mainly
been used in large-scale procurement projects, not as part
of the day-to-day interaction between public officials and
the public. My agency supports a reform process where a Trust
Fund (TF) for applications is being set up. There has been
discussions on how, as a measure to prevent corruption, to
avoid bribes being paid in order to receive favourable treatment
for an application to the TF. I would appreciate your views
and experiences with these kind of pacts (including at the
local level and small scale business).
Purpose As part of our bilateral programme,
we work actively to find practical anti-corruption measures
from the outset. My experience is that many times the existing
regulation needs to be spelled out in order to make parties
aware of their rights and obligations.
Content
Part I describes the use and design of
Integrity Pacts.
Part II sets out examples of the uses
of Integrity Pacts.
The questioner asks the U4 Helpdesk for views on, and experiences
of, the use of integrity pacts (IPs) in the implementation
of projects and programmes, including in structures similar to a Trust
Fund as well as at the local level and small scale business level.
The IP is a tool that was developed by Transparency International
(TI) and for that reason the sources that we draw upon for this answer
are those of TI. Part I describes the wide applicability and
flexibility of IPs and offers comments on how IPs might be designed
to accommodate the features particular to a Trust Fund. Part II
gives examples of the range of projects in which integrity pacts have
been used. Part III offers some comments on the experience
of using integrity pacts, including Lessons Learned.
Integrity Pacts are relevant not only for large scale contracts but
for all types of contracts and also for all types of companies. The
experience of TI national chapters (NCs) has been that IPs work
best when used in combination with other tools or activities,
for example other private sector tools such as codes of conduct
or activities such as Public Hearings. On the TI
Integrity Pact webpage, you will find a brief description of the
TI Integrity Pact, a fuller, more detailed description in "The
Integrity Pact - The Concept, the Model and the Present Applications:
A Status Report" as of 31 December 2002 (the "IP Status
Report 2002"), as well as a database of TI NC activities in public
contracting. NB: the IP Status Report 2002 is not updated. We recommend
it as a useful source for information but stress that it is best to
get in touch with the contacts listed in the database, or indeed TI
directly, for more up-to-date information.
Essential Elements:
The essential elements of an IP are
* a pact (contract) between a government office inviting public tenders
for any type of contracts related to goods and services (the principal)
and the bidders;
* Independent monitoring of the IP;
* an undertaking by the principal that its officials will not demand
or accept any bribes, gifts etc., with appropriate disciplinary or
criminal sanctions in case of violation;
* a statement by each bidder that it has not paid, and will not pay,
any bribes "in order to obtain or retain this contract"
* an undertaking by each bidder to disclose all payments made
in connection with the contract in question to anybody (including
agents and other middlemen as well as family members etc.)
* the explicit acceptance by each bidder that the no-bribery commitment
and the disclosure obligation as well as the corresponding sanctions
remain in force for the winning bidder until the contract has been
fully executed;
* bidders are advised to have a company Code of Conduct (clearly
rejecting the use of bribes and other unethical behaviour) and a Compliance
Program for the implementation of the Code of Conduct throughout
the company;
* the use of arbitration as conflict resolution mechanism
and the instance to impose sanctions.
* a pre-announced set of sanctions for any violation by a
bidder of its commitments or undertakings, including (some or all):
denial or loss of contract,
forfeiture of the bid security and performance bond,
liability for damages to the principal and the competing bidders,
and
debarment of the violator by the principal for an appropriate period
of time.
A maximum of transparency all along the various steps leading
to the Contract and throughout its implementation is the basis for
the successful design, setup and implementation of an IP. Such transparency,
in turn, calls for extensive and easy public access to all the relevant
information including design, justification of contracting, pre-selection
and selection of consultants, bidding documents, preselection of contractors,
bidding procedures, bid evaluation, contracting, contract implementation
and supervision.
It is highly desirable that there be a forum in which representatives
of civil society can discuss the official steps taken in the context
of the Contract. At the present time, the Internet provides a nearly
ideal platform. Public hearings are also an effective tool.
However, access to legitimately proprietary information should
remain restricted. There, if necessary, a representative of civil
society could be granted the same access as the Authority. But the
right of this representative to refer publicly to the proprietary
aspects should be strictly specified in close relation to the danger,
the suspicion, and the degree of substantiation of corrupt practices.
Considerations when Adapting to Trust Fund
structures
An IP is applied mainly to public contracting processes, but nevertheless
it is applicable to other situations where there is a competition
for public funds One can draw parallels between the use of the IP
in public procurement processes and in the questioner's example of
a Trust Fund. For example, in a way similar to companies bidding in
public procurement processes, applicants to a Trust Fund have to fulfil
certain requirements in competing for the funds (n.b. if there is
no competition for public funds you do not need an IP). Of course
in order to adapt the IP for a Trust Fund application, more emphasis
must be put on the particular characteristics of a Trust Fund applicant,
as opposed to a typical bidder, in the relevant clauses of the pact.
Another feature to consider is that, in a typical IP all bidders
sign simultaneously in order that each bidder feels bound to the
others and cognises that failure to uphold the IP results in the loss
of the level playing field of no-bribes, which ultimately benefits
all the bidders. In other words the gains that each individual achieves
by establishing a common position on bribe-taking-and-giving persuade
each individual bidder to uphold the pact. Thought would need to be
given to how individual applicants, in signing a no-bribe pact individually
(i.e. not simultaneously with other applicants), could be compelled
to cognise the benefits for all applicants, including themselves,
in refraining from bribe-making. It may be more appropriate to
include an integrity clause to be signed by applicants, rather
than using an IP. Other aspects of the essential elements listed above
must be considered for their relevance to the Trust Fund, for example
the conflict resolution device is probably not necessary. Special
features may need to be introduced relevant to the Trust Fund circumstances.
Please note that the most essential elements to have are a commitment
from everyone to uphold the IP and independent monitoring of the IP.
The database sets out the experiences of TI NCs with IPs, and IP related
activities, including monitoring transparency in public contracting
through public hearings. The best examples are cases from Argentina,
Colombia, Peru and Ecuador. In many cases details of whom to contact
for further information are included. What follows is a short list of
IP uses which illustrates the wide range of applications. In order to
address the concerns of the query, we start with examples, in Section
A, that illustrate how IPs can be adapted to projects other than public
contracting, then in section B examples are given of IP application
to traditional public contracting processes.
A) Adaptation to other Types of Projects/Situations
In Argentina in 2003, the Ministry of Education, Science and
Technology (MEST) asked Poder Ciudadano (PC), TI's national chapter
in Argentina, to assist in the procurement process of more than three
million textbooks. The request was due to complaints about the selection
process in the initial phase of the textbook purchase. An agreement
was subsequently signed between MEST and PC to introduce transparency
measures, including open debates about terms of reference, conflict
of interest guidelines and the signature of an IP. On 10 October 2003,
the MEST and 48 publishing companies signed an IP that established
new ground rules with the aim of eliminating any incentives or opportunities
for bribery in the public contracting process. The IP is aimed at
lending credibility to the process in the eyes of the public by creating
trust between bidders and government; discouraging corrupt practices
by assuring bidders that others would also not undertake them; and
by reducing the discretion of public officials responsible for decisions
related to public contracting processes. Overall, the IP helps to
create a level playing-field and introduces transparency to the process.
For more information please refer to the TI publication "Stealing
the Future: Corruption in the Classroom" ToolKit (2005) where
you can download the relevant chapter on "Argentina, Procurement:
a Textbook case".
In Indonesia the TI NC, TI-Indonesia, was instrumental in applying
an IP to a local government, the District of Kabupaten Solok. The
"Pakta
Integritas Kabupaten Solok" (PIKS) was designed as a pact
between three key actors: the public and the private sectors as well
as civil society. It was not just focused on a single contracting
process but applied to the whole local government setting, thus it
was a more comprehensive IP, similar to the concept of Islands of
Integrity (an explanation and a good example of an Island of Integrity
concept is found in Colombia. We have attached a document (translated
into English) that explains this concept "Ficha Tecnica Islas
Integridad"). In Indonesia, there were elements which differed
from the original IP model, because the process was not only valid
for officials (and enterprises) involved in contracting, but extended
to all civil servants under the jurisdiction of the Kabupaten
government. Thus, it was also a pact to elevate the working moral
of all civil servants. A system of incentives, as well as disincentives
within the public sector was created. Initially, civil servants receive
incentives for their pledge to be "clean and incorrupt".
In addition to applying criminal and disciplinary sanctions in case
of a violation of rules, they can be punished for absence during working
hours through disincentives consisting of a reduction of the incentives.
At the same time, there are also incentives for the private sector
in the form of a "priority list for clean vendors". The
system of sanctions for both sides does not differ very much from
the one designed in the original IP.
In Peru the TI NC, Proética, added devices to IPs in
order to introduce access to information features to local government,
for example the requirement that local governments publish calendars
of their activities or salaries of public officials. See the website
of the TI NC in Peru, Proética,
which includes a link to the calendar
of activities of various regions, for instance the region of Lambayeque.
B) Implementing IPs in Contracting Processes In Argentina in 2004, Poder Ciudadano (the TI NC in Argentina)
was instrumental in achieving the signing of an IP between the Municipality
of Morón and four bidders for a garbage collection service
contracting process with an estimated contract award value of
about US$ 48 million during the first four years, with the option
of extension. A Public Hearing on the bidding contract was held and
led to a significant rewriting of the documents, which were published
on the internet with information on what had been changed (and not
changed) as a result of the Public Hearing. The IP was signed on a
voluntary basis by all four pre-qualified bidders (one international,
three local). It contained all the important features of the IP including
a commitment by the bidders not to bribe or collude, to disclose all
payments, to report any violations during the bidding process and
during contract execution. The IP required full transparency of the
documents and public disclosure of the award and the major elements
of the evaluation and reasons for selecting the successful bidder.
Heavy sanctions were to follow comprising damages payable to the municipality
in the amount of 10% of the contract value, and company blacklisting
for 5 years. Conflict resolution was provided through national arbitration.
The IP also contained corresponding obligations on the governor/mayor
of Morón, on behalf of all the city officials, not to demand
or accept any bribes and to prevent the extortion and acceptance of
bribes by other officials, as well as sanctions against any officials
violating their commitment. Civil society involvement was also provided
for by the IP, through the participation of Poder Ciudadano in monitoring
bid evaluation, the award decision process, and the implementation
of the contract.
In Colombia, TICOL (the local TI NC) has successfully applied,
and continues to apply, the IP procedure to many projects at the national,
provincial and municipal level. One successful application of the
IP in Colombia was in a telecommunications project ("Compartel"
project: further details are given in Annex 1.2 of the IP Status Report
2002). An IP was signed by 18 senior officials, including the Vice-President
of Colombia and the Minister of Communications, in which they pledged
to comply with all the relevant laws, not to solicit or accept any
bribes and to report any offers of bribes. In addition IPs were signed
by the bidders as well as Colombian citizens accountable for the program
design and awarding process. A "Declaration by Colombian Citizens
accountable for the Compartel Program Design and awarding Process"
outlined the commitments of the signatories' vis-à-vis ensuring
that the programme met the highest standards of integrity. The signatories
included TICOL, the National University and the Vice-presidency of
Colombia.
In Ecuador, TI Ecuador has been successful in having IPs signed
by participants in various bidding processes. The Database sets out
some information on IPs that were signed in privatisation processes
concerning telecommunications and electricity as well as in a hydroelectric
project.
In Mexico, TI Mexico has been instrumental in ensuring several
IPs have been applied to contracting processes in different sectors.
The Database lists details of these projects and provides details
of whom to contact for more information.
TI has undertaken several exercises to draw lessons from the experiences
of the NCs in implementing IPs. At the TI Annual Members Meeting in
2005 the NCs met to discuss their experiences. A document is forthcoming
(please contact TI again directly if you are interested in this when
it is published) on the experiences of and Lessons Learned about IPs.
In short, the main Lessons Learned are that
* Independent monitoring is essential
* There must be a clear system of sanctions
* Signature by all participants is essential: signature
to the IP is a condition for entry into the contracting process
or competition for public funds.
