Huge sums of money pledged for Asian tsunami reconstruction projects and rebuilding Iraq could be squandered unless adequate safeguards against corruption are put in place, a report said yesterday.
Launching the report compiled by anti-corruption watchdog Transparency International, the group's chairman Peter Eigen said the scandal surrounding the UN's oil-for-food program in Iraq highlighted the need for strict conflict of interest rules and transparent and open bidding processes.
The Global Corruption Report, which examined corruption in post-conflict zones and construction industries, said corruption wastes money, bankrupts countries and costs lives. It said there was an urgent need for governments to ensure transparency and for multinational companies to stop giving bribes.
Eigen said the report suggested that, with much of the anticipated expenditure on building and procurement in Iraq not yet spent, urgent steps were needed to ensure the reconstruction process did not "become the biggest corruption scandal in history."
"Corruption in procurement plagues both developed and developing countries. When the size of a bribe takes precedence over value for money, the results are shoddy construction and poor infrastructure management," Eigen said. "Funds being poured into rebuilding countries such as Iraq must be safeguarded against corruption."
The report said the credibility of the international community in curbing corruption in Iraq had been dented by the financial scandal surrounding the prewar oil-for-food program and secrecy about the allocation of lucrative contracts by the US government since the fall of Saddam Hussein.
It said reconstruction contracts had been bundled so that smaller companies could not compete and many lucrative deals had gone to companies such as Haliburton and Bechtel with close links to individuals in the US government.
Eigen said "transparency must also be the watchword as donors pledge massive sums for reconstruction in the countries affected by the Asian tsunami."
He said corrupt contracting processes would leave developing countries with substandard infrastructure and excessive debt.
Damage caused by natural disasters was magnified in places where inspectors had been bribed to ignore building and planning regulations and could result in disastrous environmental consequences, Eigen said.
The report identified the Yacyreta dam in Argentina, the Baatan nuclear power plant in the Philippines and the Bujagali dam in Uganda as examples of projects which had been subject to allegations of improper diversion of money.
The corruption report also warned on the scope for corruption of projects funded by multilateral development banks. It said while development banks have begun to blacklist companies involved in corrupt behavior, there was still a need to improve transparency and provide safe channels for whistle blowers. It recommended companies adopt anti-corruption policies and ensure contracts are subject to open and competitive bidding.
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