The cost of corruption in relation to any project is the total loss and damage that is caused by all corrupt activity on or in connection with the project. When assessing such loss and damage, one needs to consider, as far as possible:
What types of corrupt activities may cause loss and damage?
Loss and damage may arise from a wide variety of corrupt activities which may take place on or in connection with a project. These activities may include bribery, extortion, fraud, cartels, abuse of power, embezzlement, and money laundering. The individuals who carry out these corrupt activities may include government officials, and officers and employees of the project owner, project funders, tenderers, contractors, consultants, sub-contractors and suppliers. They may be acting either on their own behalf or on behalf of their organisations. Corrupt activities may take place at any time during the course of the project, from the point where the project is being selected right through all phases of financing, design, tendering, execution, maintenance, operation, and dispute resolution.
What types of loss and damage may be caused by corrupt activity?
The types of loss and damage that may be caused include financial loss, damage to property, environmental damage, loss of quality of life, personal injury and death. Within these categories, there are various sub-categories. So, for example, financial loss may arise from inflation of project price, increased maintenance and repair costs, damage to reputation, and legal fees. These types of loss and damage will vary according to the individual stakeholder.
- Theft of funds: Funds intended for spending on specific projects may be misappropriated before ever reaching the intended project. This can occur where there are inadequate controls to ensure that funding is used for the intended purpose.
- Increased price of projects: Corruption may result in an inflated project price being paid by the project owner. Corruption in the tender stage for one or more project contracts may result in the corrupt winning contractor including the cost of the bribe in the contract price and/or additionally inflating the contract price because it knows that there is no genuine competition.
- Increased maintenance, repair and replacement costs: Corruption may result in the final product (for example, the completed road, hospital or dam) being dangerous or inadequate for the intended purpose. This may be due to the corrupt supply of defective works, services and/or materials which have either been concealed from the certifier or been corruptly approved by him, or it may be due to the incompetence of the contractor who won the contract through bribery. These defects may necessitate increased maintenance and repair works. Alternatively, where corruption has resulted in a project which is unsuitable for the intended purpose, a replacement project may be required. The cost of such corruption is the amount by which maintenance, repair and replacement costs are increased as a result of corruption, plus loss of use of the project.
- Cost of bribes paid by the private sector project owner: A private sector project owner may choose or feel compelled to pay bribes to a government official in a number of situations including: to obtain consent to proceed with a project, to obtain the necessary planning permits, to reduce the stringency of environmental, social or health and safety conditions, to improve revenues from any purchase or use of its product, to reduce taxes payable on the project. However, to the extent this is not possible, then the cost of the bribes will be a cost of corruption for the project owner.
- Reduced operating profits: A defective project may prevent the project from operating, or from operating to full capacity.
- A defective power station may be unable to provide electricity and so will be unable to collect electricity tariffs until the defects are remedied. The cost of such corruption is the financial loss suffered as a result of the reduced operation.
Let’s recognize these signs and speak up about corruption. There were scandals that took away from the needy and benefited the greedy. It happened in SA with State corruption from the top. Greed made people steal during the pandemic with many PPE corruption. Let us protect our home and hold our leaders accountable in Lesotho. Lets remember the words of our National Anthem “ Lesotho fats’e la bo ntat’a rona…”
BY ABUBACAR JABBIE