Project Anti-Corruption System Standards

PS 12: Enforcement

(Note:  Please refer to the Frequently Asked Questions (FAQs) at the end of this PACS Standard for further guidance on this Standard)

This PACS Standard makes the following recommendations in relation to enforcement.

  1. There should be appropriate penalties for corruption in relation to the project, as recommended below, and these should be enforced.
  2. Contractual remedies and penalties Major project participants should ensure that there are appropriate contractual remedies and penalties for corruption as follows:
    • Employment contracts:  Employment contracts should expressly entitle the employer to take appropriate disciplinary action against any personnel who are involved in corruption, and to remove such personnel from the project.
    • Tender conditions:  Tender conditions for major contracts and major sub-contracts should expressly entitle:
      • the organisation requesting the tenders to disqualify any tenderer who is found to have been involved in corruption in relation to a tender or contract award
      • any tenderer to withdraw from the tender process if corruption is found in the tender process and the tenderer was not involved in the corruption (in which case the tenderer should be entitled to withdraw without liability, and to the return of its tender bond or other payment security)
      • the innocent party to recover compensation for loss suffered as a result of corruption by the other party.
    • Contract provisions:  Project contracts should expressly entitle a party:
      • to terminate a contract, without penalty, in the event of material corruption by the other party
      • to recover compensation for loss suffered as a result of corruption by the other party.
  3. Criminal and other penalties:  Each major project participant should be informed in the tender conditions and in the project contract of the criminal and other penalties that may apply in relation to corruption on the project.

Frequently Asked Questions

FAQ (1):  Why is it important to have penalties for corruption, and to enforce these penalties? (clause 1 above)

Corruption will only be materially reduced if individuals believe that there is a real probability that corruption will be reported, investigated and penalised.  If there is no penalty, or if individuals are aware that penalties are not enforced, then there will be no effective deterrent. 

FAQ (2):  Why is it important to have express contractual penalties for corruption? (clause 2 above)

It is important to have express contractual penalties for corruption because:

  • it focuses attention on the issue of corruption
  • it enables an innocent party to take remedial action and receive compensation
  • if the criminal authorities fail to take criminal action, then at least there will be a contractual penalty against the offending party.

FAQ (3):  Why is it important for each major project participant to be informed in writing of the criminal and other penalties for corruption? (clause 3 above)

This is important because:

  • it focuses attention on the issue of corruption
  • it will remind parties of the severe criminal penalties (such as fines and imprisonment) and other penalties (such as debarment) that may apply
  • it will, therefore, stress the importance of ensuring compliance with their anti-corruption commitments.

FAQ (4):  Who are the “major project participants”? (clause 2 above)

These are the project participants whose role in the project could result in significant corruption.  Consequently, this is likely to include the project owner, project funders, major contractors, and major sub-contractors.  The decision as to who is a “major” contractor or sub-contractor will depend on the size of the project and the size of the relevant contract or sub-contract.

Updated on 10th April 2020