Tuesday, April 19, 2011

Seven tricks of highly effective corruption - India

Seven tricks of highly effective corruption

As Anna Hazare and his ever-growing army of corruption busters get down to the task of developing what they think is the most lethal weapon, an all-new Lok Pal, against bribery, ET on Sunday decided to size up the strength of their enemy: the system that creates and protects corruption.

At the heart of this system is a convenient game of musical chairs played by industry and government. Each blames the other for corrupting it, and yet neither side stops. When a case of graft is exposed, e.g. the 2G scam, its beneficiaries proclaim themselves to be the victim. And then it is back to business as usual. The growth in corruption has kept pace with the record growth in the Indian economy, bigger the size of cake, thicker the slice of graft.

It also has more players because of the rise of regional parties in national affairs. But what has not changed are the tricks of the trade. They have only been revised and improved to fund the amplifying cost of politics and rising levels of greed. We present the seven tricks of highly effective corruption, a real-life example of each and a possible fix.

Trick 1: Keep it to friends

Example: The bidding rules for a government contract to build a convention centre in Mumbai are framed such that only one favoured firm, a Delhi-based realty company, is eligible.

What gets rigged: The final lineup of candidates. The aim is to ensure only one or two favoured firms make it to the final selection round. There are two ways to rig this process. One way is to tweak the eligibility criteria of who is allowed to bid by either defining the norms in suspiciously precise terms, or by being bafflingly vague. The other way is more brazen: an applicant is briefed in advance about the specifications of the tender.
How it gets rigged:

There are many ways to be precise or vague. For example, a government tender inviting bids for a big urban convention centre can have a clause specifying that only bidders with prior and proven experience of building convention centres can apply.

This sounds okay. But as close observers of the government system know, the clause is dodgy because a reputed builder needn't have specific experience in building convention centres to build one for the government, a convention centre is not a nuclear plant, let's put it that way. With a clause like this, it is easy to ensure only a few bidders, or sometimes even one bidder, is eligible.

Or, let's take a government contract for a technical service, for example, related to mobile telephony . There will be a pre-qualification round, that is, a screening process.

The criteria in that round can specify nothing more than general attributes: technical strength, track record, experience. Plus, there may not be any weights specified for these attributes. This is where huge discretion is possible. The meet-the-applicant beforehand method happens mostly with PSU work contracts. PSU management is often 'informed' that the tender should suit the favoured applicant. Railways and oil sector PSUs are the big focus of this kind of transaction.

The Fix: Bidding process must be transparent. The government has appointed a committee to review public procurement norms, to be headed by Vinod Dhall, ex-head of the competition commission.

For the tricks from 2 to 7, please cut and paste the link below, to your Internet browser & read:


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