Guidance

G1:  Why have transparency on projects?

Corruption on infrastructure projects can include bribery, extortion, fraud, collusion, embezzlement, money-laundering, or any similar activity.  It can take place during all the different phases of an infrastructure project, including project selection, planning, design, land acquisition, procurement, project execution, and operation and maintenance.  It can involve any of the project participants, including government, project owner, contractor, consulting engineer, joint venture partner, agent, funder, sub-contractor and supplier.  It can take place at all links of the contractual chain, from the smallest sub-contract or supply contract at the bottom of the contractual chain, right the way up to main contractor, funder, project owner, and government level. 

In view of its complexity, corruption on infrastructure projects is difficult to prevent and to detect. 

Secrecy and concealment of information encourage corrupt activity and also make it more difficult to detect.  Greater transparency on public sector projects will materially help to reduce corruption as project information will be made widely available, and will therefore be subject to greater independent scrutiny.  As a result, it will increase the likelihood that corruption will be discovered, and will discourage corrupt activity because the potential perpetrators will be aware that there is a greater chance that any corruption will be discovered.

Greater transparency will also help to reassure the public that the project is being conducted properly.

Therefore, PACS Standard 15 requires, in the case of any Project which is wholly or partly owned, funded or guaranteed by the public sector, that there should be prompt and comprehensive disclosure by the Project Owner on a public website of information in relation to the project.

G2:  What transparency is currently provided?

In most countries, there is currently very little information provided to the public regarding individual projects.  In some cases, there may be information on the objective of the project, the estimated cost and the selected contractor(s).  However, there is usually little information regarding the details of the project selection process; method of project funding; project design; procurement process; terms of contract(s); original contract price, programme and specification; final contract price, programme and specification; variations and claims paid; and the final overall project cost with a detailed explanation of the reasons for any escalation.  

G3:  Does freedom of information legislation provide sufficient transparency?

No, it usually does not.  Freedom of information legislation varies from country to country, but it normally permits members of the public to be provided with information only if a specific request has been made for this information.  Consequently, it results in piecemeal disclosure of some information only to those members of the public that have made the request.  It may also result in disclosure being slow, and information emerging too late to be of any use.  It also means that a member of the public will need to know that a document actually exists before it can be requested.  In many cases, requests for disclosure can be refused on varied grounds, and the documents disclosed may have content redacted. This does not constitute adequate transparency.

G4:  Who should be responsible for setting up and operating the transparency process?

The Project Owner is likely to be the most appropriate party to be responsible for disclosing the information in relation to a particular Project.  This would involve ensuring that the relevant mechanism is set up for making the disclosures on an appropriate public website, and for ensuring that other Project participants are contractually bound to co-operate in providing necessary information for disclosure (see PACS Standard 4). 

G5:  Who will pay for transparency to be provided on individual projects?

As PACS Standard 15 requires that the Project Owner should be responsible for disclosure on its Projects, the Project Owner is likely to bear the cost.  The cost is unlikely to be unmanageable.  Virtually all Project data is produced, copied and transmitted between Project participants electronically, and it is not particularly difficult or expensive to load this data onto a website.  Alternatively, the cost of the publication could be borne by the government, as the disclosure is in relation to public sector projects.

G6:  Which projects should be required to provide transparency?

Ideally, there should be disclosure to the public in relation to all public sector projects. This would, however, result in disclosure for a very large number of projects, and this may be unmanageable and disproportionate if full disclosure on low value projects was required.  

The process could be kept within manageable proportions by ensuring that the degree of information disclosed for each project is proportionate to the size, value and importance of the project. This would involve setting project cost thresholds, and then setting levels of disclosure that should be made within those thresholds.  Small projects may require a limited amount of disclosure.  Large projects should require full disclosure.

PACS is designed to apply to large projects over a reasonable value threshold, and therefore the disclosure required by PACS is full disclosure.

G7:  How can project thresholds be determined?

Project thresholds should be set according to estimated project cost.  The estimated project cost will need to be used because transparency should be provided at the outset of the project and, at that stage, only the estimated cost will be available. 

Project costs thresholds are likely to differ from country to country due to the wide variation in national wealth and project costs.   Consequently, setting these thresholds will be a matter for the relevant organisation (e.g. government or regulator) that is requiring transparency to be provided.

G8:  What sort of information should be disclosed?

As stated in G1 above, corruption can take place in any project phase, can involve any of the project participants, and can involve different types of corruption. 

Such corruption may result in:

• theft of public funds
• contracts being placed with organisations which are corruptly linked to public officials
• infrastructure which is over-priced, dangerous or in breach of environmental or other regulations
• infrastructure which has gone ahead as a result of corruption in project approvals. 

Consequently, there should be disclosure of key information in relation to all project phases, and all key project participants.

In order to keep the disclosures manageable, reasonable and proportionate, PACS  Standard 15 recommends specific categories of disclosure in relation to major decisions, Major Project Contracts, Major Project Sub-contracts, and smaller Project Contracts as listed in paragraphs 1 to 15 of PACS Standard 15.  The extent of required disclosure is more limited in the case of smaller Project Contracts.

Some examples of the benefits of disclosure of this information are as follows:

• In the project selection phase, a project may have been selected wholly or partly for a corrupt reason (e.g. a road which is unnecessary for the public, but which benefits corrupt public officials or contractors).  Disclosure of the feasibility and cost-benefit studies may reveal suspicious circumstances:
  
  • the reasons for selection may be patently false, or inadequate
  • the studies may be carried out by a consultant with a vested interest in the project
  • there may be no such studies.
• Planning permission may have been obtained through corruption.  Disclosure of planning applications and approvals may help to reveal this (e.g. the planning permission was granted in breach of planning regulations).
• There may be corruption in the provision of funding.  For example, a bank employee may wish to enhance her/his performance bonus based on volume of loans granted, and so may turn a blind eye to the corrupt nature of the project which is to be funded.  Disclosure of the funder’s feasibility study may help to identify whether it is reasonable that the bank is funding the project.
• There may be corruption in the terms of funding.  For example, a bank may have bribed a representative of the project owner to secure an unduly high rate of interest on the loan.  This may be revealed by disclosure of the funding agreement.
• The project may be over-designed in order to enable a larger bribe for a corrupt public official and to enable the chosen contractor to secure a higher profit (e.g. a road which is wider than necessary, or has thicker layers of aggregate than necessary).  Disclosure of the project design may help to reveal this.
• Disclosure of the tender procedures, the identity of the tenderers, key aspects of the tender submissions, the evaluation criteria, and evaluation report may help to reveal any corruption in the tender process (e.g. if the offer by the winning tenderer is obviously less favourable to the project owner than a losing tenderer’s offer).
• Disclosure of the contract terms, including price, programme, specification and contractor, may disclose whether the contract terms are corrupt.  For example, whether the price is unduly high, whether the programme is unduly generous, whether the specification has been varied following contract award in order improperly to benefit the selected contractor, and whether terms for valuation of variations and claims are unduly generous.
• Disclosure of payments, programme, variations, claims submitted, claims paid and final contract price may help to reveal whether there has been corruption in amounts paid by the project owner to the contractor, or in the refusal of the project owner to pay the contractor sums which are due.
• Disclosure of the identity, ownership and terms of appointment of agents, and major sub-contractors, consultants and suppliers may help to reveal whether their appointment is suspicious (e.g. they are connected to public officials, they have been debarred from tendering due to previous criminal conviction, their scope of work is suspicious, or their remuneration is disproportionate to the supposed legitimate services that they are providing).

G9:  When should the provision of transparency commence and terminate on a project?

Disclosure of information should be provided for the duration of the Project.  Disclosure should if possible commence when the Project is being considered for selection (as the whole purpose of the Project, or selection of Project type or location can be corrupt), and should only terminate once the Project is complete (as corruption can continue right the way through construction, operation and maintenance).

If there are issues which are of public interest (for example, court or arbitration judgements relating to project disputes, or criminal convictions of individuals or organisations consequent on their actions in relation to the Project), then information relating to these issues should be disclosed even if this takes place after Project completion.

G10:  At what intervals should the disclosures be made during a project?

This will depend on the size and timescale of the Project.  Disclosures should be made as soon as reasonably possible and so as to enable preventive action to be taken, or remedial action to be taken where the corruption has already occurred.  Where possible, disclosure should be linked to key stages of the Project so that material information relating to a particular stage is disclosed at regular intervals during that stage or, if the stage is short, on completion of that stage.  

G11:  What method should be used to disclose the information?

The information should be disclosed on a freely available and easy to use public website.

G12:  Who are the Major Suppliers and Major Sub-suppliers, and how can they be required to provide the necessary information for disclosure, and to agree to its disclosure to the public?

The Major Suppliers and Major Sub-suppliers are the Project participants (contractor, consultant, supplier, agent or funder) whose role in the Project could result in significant corruption due to the high value of their Project Contracts.  The Project Owner can set the threshold at which a participant becomes a Major Supplier or Major Sub-supplier for the purposes of full disclosure.  The PACS Standards, in the Definitions section, suggest that a Major Supplier or Major Sub-supplier is one which has a Project Contract with a value in excess of the equivalent of US$1 million.  This includes participants which have a contract with the Project Owner, and participants which have a contract of this size down the contractual structure.  For example, the Project Owner could place a contract with a contractor for $5 million, and the contractor could then place a contract with a sub-contractor for $1.5 million (in which case both the contractor and the sub-contractor will need to provide full disclosure for publication on the Project website). 

Each Major Supplier and Major Sub-supplier should agree to a contractual obligation that they:

• will provide the necessary information to the Project Owner for disclosure
• agree to the disclosure of such information to the public.

This contractual obligation is contained in PACS Standard 4.

G13:  How can the accuracy of the disclosed information be assured?

The first priority of transparency is to publish the information, promptly and in full, to the public.  Disclosure of information on a website is relatively cheap and easy.  Most contract information is now prepared and kept in electronic form and can be downloaded onto a website.

The second priority is to ensure as far as possible that the published information is accurate. To have someone independent verify the accuracy of all the recommended information in paragraphs 1 to 15 of PACS Standard 15 is likely to be too difficult and expensive.   If publication had to await its verification, then this may slow down or restrict the provision of information, and therefore defeat the purpose of full and prompt publication.

It is therefore suggested that the best compromise solution is to publish all information promptly and in full, without need for prior independent verification.  The accuracy of the disclosed information could then be challenged and verified in the following ways:

• The independent monitor appointed under PACS Standard 11 should check by way of sample the information published on the Project website, and assess as far as reasonable that it is accurate.  The independent monitor should be an appropriately qualified professional.  She/he will probably be monitoring the Project full time, or on a significant part time basis, so should able to recognise and analyse the information disclosed.  The monitor should be able to quickly identify obvious disclosure errors (e.g. in contract terms, contract parties, price, programme and scope of work). 
• Other Project participants may see the information on the website, and may realise from their knowledge of the Project that it appears to be inaccurate, and may report this under the Project reporting system (see PACS Standard 13).
• A member of the public who is experienced in projects of this type may believe that there is an error and may report this under the Project reporting system (see PACS Standard 13).

If the error is reported and is not rectified, and suggests corruption, the error can further be reported by other Project participants or the public to the press, or to the law enforcement authorities.

G14:  Will the project information which is disclosed be too complicated for the public to understand?

Some of the information disclosed may be difficult to understand for some members of the public.  However, the public is made up of a wide range of people with diverse interests and skills.  It will include engineers, contractors, lawyers, accountants, and members of the public who may be directly affected by the particular Project.  Therefore, the Project information disclosed will be capable of being understood by those with the relevant skills. 

G15:  Should the project information which is disclosed be simplified to enable it to be understood by all members of the public?

The risk of simplification is that much valuable information may be lost in the process.  It may also allow for important details to be concealed on the pretext that the intention was to simplify the material for disclosure. 

Simplification is also in itself an expensive process, as someone needs to be appointed to undertake the simplification.

The simplification process may also be time consuming, and therefore delay the publication of information, which may in turn prevent corruption being discovered in time to prevent it.

Prompt and full disclosure is therefore preferable, even if it is complicated.  There are likely to be sufficient members of the public with the expertise to be able to understand it.

G16:  Will some of the information to be disclosed be subject to commercial confidentiality concerns?

In most cases, there should not be significant commercial confidentiality concerns in relation to the Project information which is disclosed.  Where there are any confidentiality concerns, these will normally be overridden by the public interest.  A person having building works undertaken on her/his private home is entitled to see the full design and pricing of the works, as it is her/his money which is paying for the works.  Similarly, on a public sector project, it is the public’s money being used to pay for the project.  Therefore, the public should be entitled to see the same details in relation to the project which the private house owner would expect.

The claim of “confidentiality” is often falsely used as a convenient excuse by parties who do not want their activities to be disclosed.  If Suppliers do not wish to disclose their beneficial ownership, pricing, contract terms etc, then they should not undertake public sector work.

There may be some very limited cases where disclosure could be temporarily or permanently restricted.  For example:

• The contents of a tender are confidential prior to tender award, but should no longer be confidential after contract award.
• Some proprietary manufacturing processes may be confidential, in which case they could be eliminated from disclosure.

However, most information is not confidential.  In particular, details on the matters listed in paragraphs 1 to 15 of PACS Standard 15 are highly unlikely to be confidential.

G17:  What should happen if a member of the public believes that the disclosed information shows corruption?

This will depend on the circumstances of the case.  The member of the public may decide to report her/his suspicions to the Project Owner, using the Project reporting system (PACS Standard 13).  Alternatively, or in addition, the member of the public could report the suspicions direct to:

• the independent monitor
• the project funders
• the law enforcement body
• the media
• relevant local or international NGOs
• members of the construction industry who may be able to help interpret the data
• influential politicians or public figures.

Whether or not the member of the public reports to the above persons, or makes any report at all, will depend on her/his own perception of the reliability and integrity of those persons and of the risks she/he may be taking in making a report.

The person reporting should always take care not to make a report in such a way as to put herself/himself or another person in any danger, or to be liable for defamation.

G18:  Will the process of providing transparency be cost effective?

It is impossible to calculate with certainty whether or not the above recommended transparency will be cost effective.  Will it save more money in preventing or revealing corrupt practices than the cost of making the necessary disclosures?  As corruption is hidden, the actual cost of corruption cannot be calculated and nor, therefore, can one calculate the savings in corruption cost which may be achieved by requiring greater transparency. 

However, for the reasons stated in G1 above, and considering the examples given in G8 above, it is likely that greater transparency will be a significant corruption deterrent and will result in corruption being more easily exposed.    

Most Project data will already exist in electronic form, so it should be relatively quick and easy to load this onto a website.  In addition, once the technology is developed for providing transparency, and once disclosure becomes a matter of routine, the cost of the process should diminish.

it is therefore reasonable to assume that setting up the required website, and providing disclosure of material Project information on a regular basis, is likely to be a highly cost effective investment.

G19:  What is the likelihood of transparency resulting in the uncovering of corrupt activities?

There is no guarantee that public disclosure of Project information will uncover any or all corrupt activities.   Some bribes or corrupt activities may be too well hidden.  The particular disclosure process or material chosen for disclosure may be inadequate.  There may be insufficient scrutiny by the public.  The information disclosed may have been falsified.  However, the very fact that Project material is to be disclosed will be a major deterrent, and is therefore likely to result in a material reduction in corrupt activities.  There is also a significant chance that greater transparency will uncover any corrupt activities which take place.