Commission, 2014). Transparency International estimates that of the US$9.5 trillion spent
globally on government procurement about $2 trillion “disappears”(Transparency
International,2014, p. 4 and 8).
Numerous reports producedby leading global agencies focus on the risks and challenges
of corruption in procurement and many produce excellent lists of “red ﬂags”which signify
which processes may be problematic, and propose solutions to counter the red ﬂags that
may appear (Asian Development Bank, 2008;IBAC, 2015;OECD,2009, 2016;
PricewaterhouseCoopers,2013;Transparency International,2006, 2014;UNDP,2017;United
Building on these foundations this paper reports on 42 actual cases and proposes a
framework by which to analyze corruption in procurement and suggests some
organizationalresponses to the issue under examination.
Procurement in our world
For the purposes of this paper,corruption can be described as a process where peopletrade
their entrusted authority for personal gain. Public sector corruption occurs when the
personal interests of political leaders or ofﬁcials override the public interest. Where this
occurs there areserious implications for public administration.
Corruption in procurement operates on several levels. There is what is known as grand
corruption where the major decisions about procurement are politically motivated and
reﬂect the kleptocratic designs of political leaders and their cronies. At another level, there
are bureaucratic players who seek advantage of their positions to enrich themselves by
manipulating the purchase of goods and services for their agencies. This is done through
bribery, secretcommissions, various frauds and distortion of procurementprocesses.
In essence, there is corruption in setting the purchasing agendas on a grand scale, and
then there is the manipulation of agency processes. The corruption literature refers to the
principal/agent model (Klitgaard, 1988;Rose-Ackerman and Palifka, 2016;Yukins, 2011)
and sometimes it is the principal who is corrupt, and sometimes the agent. This paper will
focus on the latter, butwe must note some features of the former.
Noting that grand corruption is often institutionalized, recurrent, and mobilizes
considerable collective resources, Fazekas et al. (2013, pp. 6-7) point out that research into
grand corruption has remainedunderdeveloped because of lack of data. Where corruptionis
common at a national level it tends to disturb market mechanisms and impede economic
development. Corruptionin public procurement usually means purchases are made fromthe
best briber, rather than the best quality(Søreide, 2002).
Evidence assembled by Tanzi and Davoodi (1998) shows that corruption can reduce
growth by increasing public investment while reducing its productivity and reducing the
quality of the existing infrastructure –deteriorating infrastructure increases the costs of
doing business through congestion,power outages, accidents, and leads to lower output and
growth. They point out that the writing of contracts for complex projects is difﬁcult, and
inevitably, many areas of uncertainty and eventual disagreement will need to be resolved
through negotiation –a strategicallyplaced high-level ofﬁcial can manipulate the processes
to select a particular project.“Ribbon-cutting ceremonies marking the opening of investment
projects –such as roads, dams, irrigationcanals, power plants, ports, airports, schools, and
hospitals –are every politicians dream [...] .however, corrupt politicians appear to choose
investment projects not on the basis of their intrinsic economic worth, but on the
opportunity forbribes and kickbacks these projects present.”(p.1).
Søreide (2002) paints a dismal picture. She claims that rent-seeking involves decisions that are
made in favor of the most successful briber or the one with the best governmental connections;