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Corruption Warning Signs Is your Project at Risk?

Corruption Warning Signs Is your Project at Risk?. World Bank Fiduciary Forum March 2008 Snezena Mitrovic, Ahmadou Moustapha Ndiaye & Diomedes Berroa. What Warning Signals are about. Information or action That could point out to potential fraud or corruption

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Corruption Warning Signs Is your Project at Risk?

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  1. Corruption Warning SignsIs your Project at Risk? World Bank Fiduciary Forum March 2008 Snezena Mitrovic, Ahmadou Moustapha Ndiaye & Diomedes Berroa

  2. What Warning Signals are about Information or action • That could point out to potential fraud or corruption • That should trigger measures to prevent or detect fraud or corruption

  3. About the toolkit • Support the implementation of the Bank’s GAC strategy • Region’s responsibility to provide appropriate guidance • Quick reference • Collection of real-life experiences within and outside the Bank • Not a comprehensive list • Generally requires further investigation to establish the case

  4. Sensitive areas • Project preparation • Project implementation • Procurement process • Financial management

  5. Corruption & Procurement Procurement is notthe cause of corruption;BUT corruption could pervert procurement outcomes.

  6. Project Environment: C = M + D - A • Questionable selection of components & implementation arrangements • Manipulation of studies • Market distortion • Low transparency & harmful discretional power • Limited oversight (civil society) • Inadequate mechanisms for identifying & mitigating irregular schemes • Impunity

  7. Procurement process • Excessive recourse to emergency procedures • Technical specifications tailored to particular suppliers • Contracts with unusual payment patterns • Time for submitting bids • Limited access to information • Inadequate oversight mechanisms

  8. Financial Management Focus Revisiting the concept of week capacity in the context of poor financial management conditions • Enabling factor for F&C • Deliberate efforts to undermine F&C prevention actions Excessive influence over the formulation of the project budget

  9. Financial Management Focus (cont.) Attention to the budget execution stage where resources actually flow and assets change hands Poor accounting and reporting can in many instances be a deliberate attempt to conceal corrupt activities Weaknesses in the overall internal control, internal audit, and external audit

  10. Second look Warning signs of fraud and corruption in projects may warrant a “second look” … ….. But better safe than sorry • Think about interim conservative measures depending on the seriousness of the allegations • Propose institutional strengthening actions including strengthening of control framework.

  11. Second look (cont.) • Review and revise the financial management and procurement arrangements and processes. • Review and revise audit terms of reference and other ex-post instruments.

  12. The “S” Approach • “S” Assessment • Portfolio Procurement Review • Fiduciary assessment beyond PIUs • Risk base approach mitigation measures • Web-base procurement information • CS oversight • Price monitoring mechanism • Mainstreaming PIUs • “S” Supervision • PFR • Market structure • PR?

  13. Challenges • Skills/management of resources • Coordination/ organization • Clarity/ roles • Ownership (internal/ external) • Managing expectations • Budget

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