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More Disclosure, Less Graft

CoST -- the Construction Sector Transparency Initiative --- has a simple aim: to disclose in real-time critical information about public-sector construction projects. Why? To prevent corruption, which can't live in the sunshine.

One of CoST's backers is the World Bank. Another is the U.K.'s Department for International Development, which provided a £4.4 million grant for a two-year pilot program that started in May 2008. It's being run by PricewaterhouseCoopers (UK), with help from the London-based civil society group Engineers Against Poverty, the U.K. Institute of Civil Engineers, and TIRI, an anti-corruption NGO. Some of the countries giving CoST a try are Vietnam, Tanzania, Zambia, the Philippines, Ethiopia and Malawi.

When governments enroll a project in CoST, important things happen. First, the sponsoring agency consents to a rigorous series of external audits. It also commits to disclose to the public information directed at some basic questions: how did the idea for the project originate and does it make sense ("do we need a bridge that doesn't go anywhere?"); who evaluated the project to make sure it can do what it's supposed to; and what's changed since the original tender, like the scope and price?

The idea is to let the public compare what was planned to what was delivered, and to ask hard questions at each stage. That accountability, CoST says, should "reduce wasted opportunities and expenditure." We agree.

It sounds a bit fuzzy but it's not. The CoST oversight team assembled for each project shows up with management go-bys -- templates, forms and schedules that identify the critical information to be disclosed, and how and when to do that. And CoST helps clients collect feedback and put it to use.

The way CoST sees it, public disclosure is one of the best anti-corruption tools. It's simple and cheap, and it produces lots of winners. Government sponsors, for example, have a better chance of getting what they pay for. Construction companies are more likely to keep their noses clean and reputations intact. They also enjoy a more level playing field. Civil society groups and the citizens they represent are happy to see more integrity in government. And lenders are reassured about the credit-worthiness of the project, knowing it's transparent.

CoST's website is here. Before navigating that way, though, be warned. The text sounds like a grant proposal, and probably is. The jargon has all the charm of a tax law. Too bad, because the ideas behind CoST are good ones and deserve a warm-blooded presentation. Let's hope for a make-over sometime soon so the message isn't lost.

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From Frederic Bourke's trial. In a story on Bloomberg's subscription news wire, David Glovin reports Friday's testimony, and it wasn't good for Bourke. Glovin's lead: Connecticut entrepreneur Frederic Bourke twice asked whether accused con man Viktor Kozeny should pay more in bribes so the government of Azerbaijan would sell its state oil company, a witness testified.

The witness, Thomas Farrell, was one of Kozeny's top aides in Azerbaijan. Bourke, he said, asked, "Has Viktor given them enough money??? Farrell said he responded, ?I think so. They seem happy.??

Frederic Bourke, 63, co-founder of handbag-maker Dooney & Bourke, is on trial in federal court in Manhattan for violating the Foreign Corrupt Practices Act, money laundering and lying to federal investigators. Prosecutors allege he invested with Kozeny in a 1998 privatization deal in Azerbaijan, knowing Kozeny planned to bribe the country's leaders. Bourke faces 30 years in prison if convicted. Kozeny himself has also been charged but he's a fugitive living in the Bahamas. The trial is expected to last a month or more.

Read David Glovin's prior reports on the trial for Bloomberg here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.
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Full post as published by The FCPA Blog on June 07, 2009 (boomark / email).