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Anti-corruption watchdog warns against no-bid contracts

The ACC recommended revision of public finance rules.



The Anti-Corruption Commission on Sunday advised the government to reverse changes made to the public finance rules by the previous administration to allow large-scale projects to be awarded without a competitive bidding process.

The cabinet was authorised in May 2015 to award ‘mega projects’ or projects carried out with concessional loans or foreign assistance to a party chosen by the president without going through the tender evaluation board, which was previously required to approve projects worth more than MVR1.5 million (US$97,300).

The amended rules also authorised the cabinet to award public services projects to national associations, state-owned enterprises and publicly listed companies with a portion of shares held by the government.

Since coming to power in November last year, the current administration has also awarded no-bid projects, notably a US$53 million contract signed with Dutch dredging company Boskalis to reclaim land for a new commercial seaport.

The ACC recommended repealing the no-bid provisions after conducting a corruption risk assessment, which found that avenues for graft offered by the revised public finance regulations remains open to abuse.

In some cases where no-bid projects were awarded to state-owned companies, the ACC found that third parties had been enlisted as subcontractors due to a lack of capacity. Such projects could have been carried out at a lower cost, the watchdog suggested.

The ACC advised revising the public finance rules to stipulate that large projects could only be awarded without bidding to 100 percent government-owned companies. Such no-bid contracts should only be signed through a transparent process after ensuring the market price, it added. If the no-bid exemption is to be kept in place, the ACC also advised adding a provision to prohibit sub-contracting to third parties.

In late October, the ACC launched a probe into no-bid contracts on the initiative of its new members,

At the time, the local chapter of Transparency International also warned that no-bid contracts “carry with them inherent risks, often leading to corruption and subversion of democratic and economic systems of the country.” The anti-corruption NGO called on the government “to remain committed to its Zero Tolerance for Corruption policy and to honour its obligations under UN Convention Against Corruption to ensure transparency and objective decision-making on public matters.”