A booming construction sector, driven by rapid growth in developing countries and in extractive industries, makes this a critical time to root out corruption in the industry, says Construction Sector Transparency Initiative
WASHINGTON (Thomson Reuters Foundation) – An initiative to tackle corruption in publicly financed construction projects is looking to get a boost from G8 leaders over their efforts to reform the industry, a senior official said.
Launched last year after a pilot in eight countries, the Construction Sector Transparency Initiative (CoST) aims to get countries to make infrastructure contracts public and work on commonly agreed standards of accountability over how taxpayers' dollars are spent in building projects.
CoST estimates that upwards of $4 trillion annually is lost through mismanagement, inefficiency and corruption in public construction - on average 10 to 30 percent of a project's value.
Not only are billions of dollars lost, but corruption and mismanagement lead to shoddy buildings and infrastructure which undermines development and puts lives at risk, campaigners say.
CoST Chairman Christiaan Poortman said the group aims to add five to six countries each year to the voluntary initiative which already counts Britain, Ethiopia, Guatemala, Malawi, Philippines, Tanzabia, Vietnam and Zambia as members.
South Africa, Uganda, Ghana, Botswana, Ukraine and El Salvador have applied to join the initiative, and Mexico has expressed interest too, Poortman said.
He cited the boom in extractive industries as one factor that is putting more pressure on governments to pay attention to the construction sector, another booming industry.
Oil and gas discoveries in Ghana, Uganda, Mozambique, Tanzania, Kenya and other African countries will bring with it large building projects to extract the resources. Revenues from natural resources, both licit and illicit, are then frequently channelled back into construction projects.
"This moment could be a critical time in their development," Poortman told the Thomson Reuters Foundation in an interview.
"Like the Extractive Industries Transparency Initiative (EITI), there is a groundswell of support for openness, and you have countries – Brazil, Indonesia, Mexico – that are pushing for this. They understand it is a critical period in time," he said.
The EITI is a coalition of governments, companies and civil society groups seeking to improve transparency in the oil, gas and mining industries.
Poortman cited the cancellation of the Belize Bridge contract in Guatemala - based on a CoST report of inappropriate contracting procedures - as proof of CoST's success in tackling corruption and saving money.
MORE FUNDS NEEDED
To expand its efforts, CoST needs more funding, Poortman said. The initiative has an annual operating budget of about $3 million and needs an estimated $4-5 million to process applications from countries that want to join.
Poortman said he was meeting with government and industry officials in the hope they will strengthen their support of the project at a summit of the G8 group of rich nations in Northern Ireland next month.
Prospects look good. British Prime Minister David Cameron already has made stamping out bribery and corruption a priority for his presidency this year of the G8.
"In our partnership with less development and emerging economies, I believe we must put a new and practical emphasis on transparency, accountability and open government," he said in a letter to G8 leaders earlier this year.
Corruption and poor business practices too often hold back development and discourage other countries from trading with them, he said. "We need to look at how to enhance transparency – including through the Construction Sector Transparency Initiative and new ideas like a Global Land Transparency Partnership," Cameron wrote.
Full recognition by the G8 that CoST is a worthwhile initiative would add momentum and translate into more support for its work, Poortman said.
The initiative addresses issues such as publicising tenders for construction contracts and criteria for a transparent and fair bidding and decisionmaking process. It also requires that the final terms of the contracts are made public once awarded.
The idea is to create a level playing field so that every company has a fair chance at bidding for a contract. Civil society groups can help monitor performance.
Among its private sector supporters are seven companies including Skansa AB, and Balfour Beatty, and industry groups the European International Contractors and International Federation of Consulting Engineers.
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