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Opinion | Wednesday, 12 May 2010 Issue. 163

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Corruption and the private sector

The saga of the BWSC tender has confirmed what we always knew: that we have no means to fight corruption. We also learnt that there is commission involved in tenders, and that this commission is hardly ever mentioned in the tendering procedure. We also learnt that if you want to remain in the good books of the government you have to obey or else be damned.
It is a shame how the Chamber of Commerce and the Small Businesses Chamber (GRTU) are taking this very lightly when businesses around the world are uniting to work against corruption in all its forms, including extortion and bribery. On June 24 2004, during the UN Global Compact Leaders Summit, this principle was included in the compact sending a strong worldwide signal that the private sector shares responsibility for the challenges of eliminating corruption.
In the United Kingdom, for example, an alliance of UK business associations, professional institutions, civil society organisations and companies with interests in the domestic and international infrastructure, construction and engineering sectors have formed the UK Anti- Corruption Forum. The Forum’s objective is to help create a business environment that is free from corruption.
In Malta it seems that businessmen remain silent for fear of being blacklisted or simply because they know they cannot beat the system. If they lost one tender today, they are in for another one tomorrow. In fact no such mention of any anti-corruption action or actions is mentioned by these associations in public because behind closed doors we all have eyes and ears to tell us what the feeling is.
The Subic Bay News reported on 29 November 2009 that the Danish company Burmeister & Wain Scandinavian Contractor (BWSC) is no stranger to controversy and has been involved in a number of bribery cases in the tendering process for power stations in various countries around the globe.
In a ongoing due diligence before awarding a contract in 1999, internal documents revealed $90,000 were paid in bribes to Felicito Paymo, a high ranking oficial in the Philippines, concerning the Subic Bay power project. These ‘payments’ were approved by BSWC director, Soren barkholt and Paymo had held the position of head of the Subic Bay Metropolitan Authority.
There is no doubt that corruption is now recognised as one of the world’s greatest challenges and the impact on the private sector is also considerable – it impedes economic growth, distorts competition and represents serious legal and reputational risks. Corruption is also very costly for business, with the extra financial burden estimated to add 10% or more to the costs of doing business in many parts of the workd.
The World Bank has stated that “bribery has become a $1 trillion industry”. There is now clear evidence that in many countries corruption adds upwards of 10% to the cost of doing business and that corruption adds as much as 25% to the cost of public procurement. This obviously undermines business performance and diverts public resources form legitimate sustainable development.
It is high time that the business community takes the initiative to combat corruption in all its forms and to play its part in making corruption unacceptable. It is no excuse that that is the system and that unless you go with the trend you have no chance of winning a tender. The businessmen must understand that by engaging in corrupt practices, company managers expose themselves to blackmail and consequently the security of staff, plant and other assets are put at risk.
The business community knows that as a result of corruption, financial resources that were intended for local development may end up in forieng bank accounts instead of being used for local purchasing and the stimulation of local economies. At the same time it distorts competition and creates gross inefficiencies in both the public and private sectors. In most cases when corruption occurs, the services or products being purchased are inferior to what had expected or contracted for.
In the meantime how can we trace where the four million euros commission given to Joseph Mizzi? We expect the Commissioner of Inland Revenue to confirm that such an amount is declared in Mr Mizzi’s bank return, and the local banks to inform us that such money went into his account. I know that there are bank accounts overseas but the work was done in Malta and the commission paid must be subject to Maltese tax laws.
Tracing the commission paid is one of the greatest headaches to anybody fighting corruption. This commission is not BWSC money, but it is out money because I am sure that we are ultimately paying for it from our taxes. It stands to reason that we must be informed and assured that that money was paid according to law and declared for all intents and purposes.
We cannot but deplore how the government, instead of defending the righteous, opted to defend those who made it a point that by hook or by crook the tender is given to BWSC even sacrificing a general election defeat. I cannot understand how any government can take this responsibility for a foreign company which does not stand a chance of giving it any vote in the next general elections! It is true that the Maltese subcontractors do have votes but still, I hope that the Prime Minister made his calculations well when it decided to defend BWSC at all costs both in and outside Parliament.
This is a crucial time for the Maltese businessmen: they have to decide whether to go with the trend or set up their anti-corruption forum. If they still feel that there is no need for such forum in this country, than I am afraid to say that they do not know what they are saying!


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