(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 project anti-corruption commitments on public sector projects.
See sample Anti-Corruption Agreement.
For sample Notices of Breach which may be served by the independent assessor on a party who is in breach of its anti-corruption commitments.
Anti-corruption commitments will serve a number of purposes:
This PACS Standard recommends detailed anti-corruption commitments for the following reasons:
First, a number of these commitments are designed to give the parties guidance as to the types of activities that are prohibited and also to help them understand that corruption can occur in a number of ways and affect a wide range of activities. For example, individuals may not be aware that the following could give rise to criminal liability:
These sorts of activities are expressly prohibited by this PACS Standard (clauses 7 to 14 above).
Second, clause 15 above is designed to ensure that each party is contractually obliged to comply with anti-corruption measures which apply to the project.
Third, clause 16 above is designed to highlight the serious penalties for involvement in corruption. It refers to contractual penalties which can be enforced by the parties, and to the criminal penalties that will apply.
Fourth, clause 17 above is designed to ensure that the major contractors exchange similar anti-corruption commitments with their sub-contractors, agents and related companies.
It is of course possible to reduce the number of anti-corruption commitments given. However, this will also reduce their impact and effectiveness.
Corrupt activity may be carried out by any project participant and at any stage of the project. However, it would not be practicable to require detailed anti-corruption commitments to be given by all project participants no matter how small their involvement in the project may be. Consequently, it will be a matter of judgement for the party who is requiring this PACS Standard to be implemented as to which project participants provide anti-corruption commitments.
It is recommended that these commitments should be exchanged, where appropriate, between:
If any of the above are joint ventures, then each joint venture partner should provide the commitments.
Project funders and the project owner should also exchange anti-corruption commitments. This is dealt with in PS 6 Funder Commitments.
These commitments should cover the full extent of the party’s involvement in the project. Consequently, in the case of tenderers and the project owner, these commitments should be exchanged at the earliest opportunity during the procurement process. (Each major contractor should do the same with its major sub-contractors.)
These commitments should be expressed so as to apply for the duration of that party’s involvement in the project. So, for example, if a tenderer gives these commitments during the procurement process, then if the tenderer is selected as the winning contractor, these commitments should continue to apply for the duration of the project execution phase. Similarly, the commitments given by the project owner to that tenderer should also continue to apply.
There will be no certainty that parties will comply with these commitments. There is always the risk that these commitments will be used simply to give the impression that anti-corruption measures are being taken.
However, compliance by the parties with these commitments is helped by the following factors:
The term “tenderer” is used as a collective term to refer, where appropriate, to any party which is applying to pre-qualify for, or which is tendering for, or which is a nomination candidate for, a project contract.
It would be unduly onerous, and not cost effective, to require anti-corruption commitments to be exchanged with tenderers for all project contracts. Consequently, it is recommended that the project owner should exchange commitments with tenderers for major contracts. The selection of the size of contract which would qualify as a major contract is a decision for the party imposing this PACS Standard, who should assess the corruption risk of a particular contract.
“Joint venture” means any joint venture, consortium, partnership or similar arrangement in relation to the project.
The decision of what would constitute a principal shareholding in a company for the purposes of the anti-corruption commitments is a decision for the project owner. The commitment should be in relation to any shareholder who could have a significant interest in the outcome of the tender or project. It is suggested that any individual or entity which owns or controls more than 10% of the shares or voting rights in a company is a principal shareholder.
“Senior manager” means a person with supervisory responsibility in respect of the project, including, for example, a person with responsibility for contract, project, financial, procurement, commercial or technical management.
“Senior officer” means:
“Claim” means any claim, set-off or counterclaim in relation to the project including any application or claim for payment, variation, extension of time, damages, delay and disruption, prolongation or defects.
A contract between two parties cannot generally impose criminal penalties. However, reference to criminal penalties is used to draw the parties’ attention to the fact that there are severe criminal penalties for corruption under the general law. This will help to focus the parties’ minds on the issue of corruption and to deter them from involvement in corruption.
It would be unduly onerous, and not cost effective, to require anti-corruption commitments to be exchanged by major contractors with all their sub-contractors. Consequently, it is recommended that the each major contractor should exchange commitments with its “major sub-contractors”. The selection of the size of contract which would qualify as a major sub-contract is a decision for the party imposing this PACS Standard, who should assess the corruption risk of a particular sub-contract.
“Agent” means any company, entity or individual which acts as agent, intermediary or representative in relation to the award of a project contract.
A “related company” means a company which is involved in the project and which is related to another company as follows:
Updated on 10th April 2020