PROCUREMENT The crucial role of upstream phase grants to local governments and clientelism Sorin Ioni ţă Sorinionitaexpertforumro EFOR June 2014 Sources of corrupt practices ID: 788870
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PREVENTING FRAUD AND CORRUPTION IN PUBLIC PROCUREMENTThe crucial role of “upstream phase”: grants to local governments and clientelismSorin IoniţăSorin.ionita@expertforum.roEFOR, June 2014
Slide2Sources of corrupt practices
Petty corruption (administrative) the most dangerous in NMSInstead, it is Grand Corruption / State capture which is the problem Main sources / policy domains, interlinked:The public procurement proper (PP)Inter-governmental financial transfers (IGFT, center LGs), esp investmentsState owned enterprises (SOEs)2
Slide3Sources of corrupt practices
3State (central)State (intermed, regional)State (local)Private actors (companies)State (SOEs)2
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Slide4PP: the broader view
The view of PP should be broader, for purposes of monitoring:IGFTs for investments (step 1) should be transparent, predictable, competitiveNational IGFT were expected to adopt best practices from EU fundsIf IGFT is opaque, discretionary and possibly corrupt, it is likely that step 2 (PP) will be likewise, too4
Slide5Step 1 (IGFT) – analysis
We measured discretionary allocations central government County Councils Local Governments: mostly investment instruments, but not only6 types of grants = substantial sums; in the peak year 2008 they were 80% of the total own revenues in LGs (tiers I+II); and 70% of total sub-national capital spendingAll sums from national budget; no EU grant5
Slide6Financial transfers
Emergency fund of the government (2004-2011): various destinationsFunds for county and rural roads (2005-2011): mainly spent by countiesEnvironmental fund (2008-2011): water-sewage systems, parksFunds for schools (2007-2010, MinEd): investments, maintenance, but also current arrears6
Slide7Financial transfers
HG 577 / 1997 (2004-2011, MDRT): rural roads, water systems in ruralOG 7 / 2006 (2007-2011, SGG): water-sewage, bridges (small), rural sport facilitiesLack of sectorial coordination (water, roads) ministerial rivalries7
Slide8Discretionary IGFTs: volume
8PSD, NăstasePNL+PDL+UDMR, Tăriceanu
PNL+PSD+UDMR, T
ă
riceanu
PDL+PSD Boc
PDL+UDMR Boc
Slide9Discretionary IGFTs: clientelism
9PSD, NăstasePNL+PDL+UDMR, Tăriceanu
PNL+PSD+UDMR, T
ă
riceanu
PDL+PSD Boc
PDL+UDMR Boc
Slide10The clientelism index
10Discretionary transfers increased after formulas were introduced (and enforced) for shared taxes, after 2005 i.e. clientelism shifted from one mechanism to anotherThe peak of clientelism = during the economic boom (2007-08); public budgets increasing fast bad governance (!)Discretionary transfers political migration of mayors, with a twist: “independent” mayors were most privileged
Slide11The clientelism index
11Additional indicators of clientelism in could be built (contractors profit rates; energy)Similar indicators of clientelism in other countries needed early warning instrumentRo utterly failed to transfer best practices from EU funds to national investm fundsThe situation got worse in 2012-2013: less transparency, unpublished allocations
Slide12Discretionary IGFTs: clientelism
12Interactive map of allocations, the 6 instruments, 2004-2011http://expertforum.ro