Mekong Utility Watch

Corruption study: Projects lost 10-20%

The Nation
September 20, 2002

Politicians, businessmen and bureaucrats conspired to skim off 10 to 20 per cent of the value of the Klong Dan wastewater treatment Bangpakong Dam and Nong Ngu Hao Airport projects, according to the results of a study released yesterday.

The study, which scrutinised suspected corruption in the three projects, was conducted by Dr Pasuk Pongpaijit, Dr Sangki Piriyaransan, Dr Nuannoi Trirat and other experts. It was supported financially by the National Counter Corruption Commission (NCCC), said NCCC
commissioner Prasit Damrongchai.

The researchers called for an end to government-drafted contracts for turnkey projects, saying they invited corruption and cost the state hugely in terms of compensation paid to the private sector.

The researchers found that politicians, businessmen and bureaucrats colluded to take advantage of the three projects in many ways. For example, high-ranking officials would have shares in construction companies, or would set up the companies without being identified as being among the founders.

These construction companies would buy their way through the bidding process by “buying” either the director-general of a department within a ministry or a high-ranking official at a state enterprise.

The three parties also co-established construction companies, advisory companies, construction material supply companies and property companies to carry out bidding and sell land to government agencies.

Collusion by the three parties led to corruption since the bureaucrats and politicians found loopholes in the law to avoid being punished.

The researchers found that although turnkey projects (where project owners design and construct a project before turning it over to the government) can be completed quickly, corruption is endemic in such projects as they lack detailed plans in the initial phases. This leaves loopholes in contracts for private companies to seek compensation from the state.

Selecting advisory companies is another important step in the process that is vulnerable to corruption because these companies appraise prices and designs for the projects. Politicians also help expand the scope of corruption by approving more funds, or changing the project
sites without referring to feasibility studies or conducting environmental impact  assessments (EIAs).

Categories: Mekong Utility Watch

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