Procurement: A call for transparency

By Tunku Abdul Aziz

JULY 2 — Public procurement is the single most important source of corruption in any country, including ours. This crucial process remains a great mystery to the public at large because it is shrouded in secrecy.

The mystery is heightened by the Official Secrets Act (OSA). The OSA has become a permanent fixture in many jurisdictions, and the Malaysian government is not about to toss it out of the window any time soon. The OSA hides a multitude of sins and it is an impediment to transparency.

The government finds comfort and safety by hiding all of its more questionable and corrupt actions that cannot stand close scrutiny behind the OSA. As we know, without transparency, there is no accountability.

Unethical public officials, including senior politicians whose numbers are growing according to independent surveys, stand to gain from a corrupt procurement system. They are not slow to create the entirely spurious impression that Malaysia operates a fair system, as good as any in the world, and they say that it should be left alone. Why, they point out, change a winning formula? But, is it really? In theory, yes, but the practice is an entirely different matter. The procurement system in Malaysia is more honoured in the breach than in the observance.

Today, more than at any time in the history of modern governance, ethics has taken centre stage whenever public policy issues are discussed. Many organisations the world over are constantly grappling with the mounting problems of unethical public behaviour, particularly in the procurement process.

Institutions are expending time, energy and resources to develop and promote a common understanding of what constitutes ethical conduct in the work environment. Ethics holds the key to good governance, and an ethical procurement regime cannot take root unless the system that underpins it is supported by individuals who accept the notion of public duty in the public interest.

From my perspective as an anti-corruption activist, the starting point for an ethical procurement regime is good governance, with all that this implies. What this means in effect is that given the right climate, strong political will and principled leadership it should lead to greater transparency and accountability in official business transactions.

On the premise that a system is only as good as the people who operate and manage it, their selection and training is crucially important. A procedure must be developed to weed out the obvious misfits by probing rigorously a candidate’s personal history, his social life and his general understanding of, and attitude to, ethical standards of public service.

Standards determine an organisation’s ethical culture. They are particularly important because they set the tone of the organisation. They define staff behaviour at work, prevent abuses, and serve to remind them as public servants that they have an obligation to exercise the power entrusted to them with the utmost circumspection for the benefit of those for whom, and to whom, they are accountable.

Their decisions must be motivated solely by considerations of public interest, and their actions must be open to public scrutiny. Unethical public service behaviour is always traceable to institutional failures. It makes enormous sense for organisations to set high, but realistic standards.

To ensure the integrity of the procurement process, and the accountability of staff members directly engaged in procurement activities, all procurement officers shall be required to submit a financial disclosure statement on first appointment and thereafter annually in respect of themselves, their spouses and dependent children. A ‘zero tolerance’ policy should be adopted and rigorously enforced.

The United Nations Organisation is at the forefront in the fight for ethical conduct in public procurement, and in 2006 set out a requirement for staff engaged in procurement activities to sign the Declaration of Ethical Responsibilities at the time of recruitment.

Public service is awash with conflict of interest situations that public servants have to be constantly aware of, but often fail to recognise not because they are inherently dishonest but because they really cannot see them and, therefore, fail recognise the danger signs. It is important that as much professional advice be available to all public servants engaged in procurement services. The United Nations Declaration of Ethical Responsibilities is a good example of an attempt to define the standards of conduct demanded, and expected of those engaged in public procurement.

The operating principles embodied in the UN Declaration of Ethical Responsibilities serve two complementary purposes which are to promote efficiency, and discourage corrupt practices. Clearly, corruption, for obvious reasons must be kept out of the procurement system, and experience shows that this can be achieved if there is a desire and a will to do so. In the fight against unethical public behaviour, political will is crucial for success. In Malaysia, this is apparently lacking, a carry over from the Mahathir years.

The notion that corrupt practices can be contained by relying solely on self-regulation is a fallacy. Similarly, experience has shown that depending entirely on legal sanctions will not do the trick either. We have to establish whether a particular ethical problem is institutional or is it attributable to human weakness? If the problems are institutional, punishing individuals without first addressing an institution’s internal weaknesses such as the systems and procedures in place is not going to make any difference to corruption in procurement. That having said, the guilty must be made to face the music, the more discordant the better.

All that notwithstanding, there is a need for a sound and consistent legal framework that sets out the basic principles and practices that have to be observed in public procurement. This can take many forms according to Jeremy Pope of Transparency International fame. There is growing awareness he says of the advantages of a unified Procurement Code incorporating the usual basic principles and supplemented with detailed rules and regulations within the purchasing organisations. Many countries are consolidating existing laws into such a code. A Procurement Code must be predicated on open and transparent procedures and practices for conducting the procurement process.

These are not questions of morality. They relate to principled governance and are intended to assist those responsible for public procurement to shift their focus from the narrow mechanical aspects of procurement and concentrate on broader procurement implications. Public procurement as stated at the beginning of this article remains the biggest and most vulnerable underbelly of corruption.

In the end, in the context of integrity in public procurement, we are not talking about systems and mechanisms per se, important though they may be in themselves, but, more to the point, we are talking about the people recruited and entrusted to operate them. If they are ethically deficient to begin with, then ethics in procurement will be given the run around. It is for this reason that the “right” people must be appointed to serve in key functions, preferably based on an integrity test as a minimum requirement. There is, of course no guarantee any test invented so far will haul in a good catch, but a systematic approach to recruitment will help minimise an outbreak of ethical disasters later on.

Given its dismal record in public procurement activities, the government must give practical effect to the public concerns about the entire procurement regime as developed and applied in Malaysia. It is important for the government to adopt international best procurement practices and close windows of opportunity for corruption to infect the system.

Acknowledgement: I have, in the preparation of this article, relied heavily on Jeremy Pope’s invaluable Source Book 2000 ‘Confronting Corruption: The Elements of a National Integrity System’ – fast becoming a classic in its own right. I am equally indebted to Prof. Charles Samford of Griffith University, Queensland, one of Australia’s leading ethicists for his most generous and helpful guidance, as always.

  1. #1 by Joshua on Friday, 3 July 2009 - 10:05 am

    What procurement for m;sia when tainted with massive corruption-wise in a rotten sucking sytem.

    Malaysian economy to shrink by 4-5% in decade’s biggest fall : PM

    M’sia’s FDI plummets

    Thursday, 02 July 2009 17:57
    (The Straits Times) – FOREIGN investment in Malaysia has plummeted this year, Trade Minister Mustapa Mohamed said on Thursday after the government announced liberalisation measures aimed at luring investors.

    ‘Foreign direct investment for 2008 was RM46 billion (S$18.8 billion) and for January to May this year we have only seen RM4.2 billion,’ Mr Mustapa told reporters. RM507 billions RM350 billions RM347 billions
    and these

    It is important that the allegation be cleared by the Malaysia Anti Corruption Commission and the Bank Negara and the Treasury as external debts via private arrangement is hardship for the people.
    Full details of this massive alleged US$50 billions (RM175b) private loans by ASASATU TECHNOLOGY SDN BHD on behalf of the Federal Government for 9 Malaysia Plan are available in the Internet. Was this loan guaranteed by Bank Negara?
    Surat dari Pejabat Menteri Kewangan kepada Dato Zamani Abdul Ghani, Timbalan Gabenor BNM. Surat 1 – muka 1 muka 2
    Surat dari ASASATU Sdn Bhd kepada Menteri Kewangan. Surat 2 – muka 1 muka 2;
    Surat dari Project Equity Services Group Kepada Gabenor Bank Negara Malaysia.Surat 3-muka1 muka 2;

  2. #2 by OrangRojak on Friday, 3 July 2009 - 10:15 am

    ‘…weed out the obvious misfits by probing rigorously a candidate’s personal history, his social life and his general understanding…’

    ‘If they are ethically deficient … ‘

    … round ’em up, put ’em in a shed and gas them?

    Lovely article, but I think there are easier ways to help public servants behave ethically. Malaysia is in the unfortunate position of its public opinion being largely dictated by the government itself, through its stranglehold on the media. If the government merely permitted dissenting voices to be heard, there would be a never-ending queue of people wanting to ‘help the government be better’, through critical comment, letters, satire, music, (teeshirts!) and documentaries.

    I think we’re already experiencing ‘government-led ethical enforcement’. You want more?

  3. #3 by boh-liao on Friday, 3 July 2009 - 1:52 pm

    When a public official, in charge of procurement n tender,
    publicly played poker with a number of businessmen
    and won all the time
    so that his capital increased from RM500 to RM500,000
    Is this corruption or excellent skill in poker?
    What about winnings from a game of golf, bowling, etc?

  4. #4 by limkamput on Friday, 3 July 2009 - 2:14 pm

    //We have to establish whether a particular ethical problem is institutional or is it attributable to human weakness?// Tunku

    Hmmm, I wish things are that simple, i.e. we can attribute ethical problems to either institution or individual.

    I think you have forgotten that it is individuals that make up the institutions. Corrupt individuals will make sure that systems and procedures put in place are ineffective. Corrupt individuals will make sure that even if the systems and procedures have discovered some unethical behaviour, nothing much will come out of it. Has PKFZ not taught us enough? Did we not have the oversights of Board of PKA, MOT, MOF and the Cabinet? At the end of the day, the more elaborate the system and procedure, the easier is for the corrupted to confuse and attribute blames to others than to themselves.

    I think your paper is too “in the cloud”. It has too many ideal state statements but too few practical advices on how to mitigate corruption. Honestly I don’t think UN is a good example for you to quote. Yes, UN can declare lots of things, but I think it is also highly corrupted and ineffective in its dealings. It is an institution staffed by a group of international civil servants enjoying good life at the expense of many countries’ poor. I must say the IMF and the World Bank also fall into this category. To begin with, how about cutting the size of UN, IMF and WB by half, and the money saved returned to the poorest countries. Please don’t say i know nothing of these institutions.

  5. #5 by Joshua on Friday, 3 July 2009 - 3:01 pm

    you may have problem in the earlier post.

    Surat dari ASASATU Sdn Bhd kepada Menteri Kewangan. Surat 2 – muka 1 muka 2;
    Surat dari Project Equity Services Group Kepada Gabenor Bank Negara Malaysia.Surat 3-muka1 muka


    pw:225 pulaski

  6. #7 by Joshua on Friday, 3 July 2009 - 3:04 pm

  7. #8 by TomThumb on Friday, 3 July 2009 - 9:51 pm

    “Please don’t say i know nothing of these institutions.” limkamputt

    certain things need not be said.

  8. #9 by johnnypok on Monday, 6 July 2009 - 1:35 am

    How come TDM can live so long and still not yet struck dead by lightning?

    How come Najib is still mentally ok after poketing 500 million commissions?

    The former is an Indian while the later worship Inidan God.

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