Diagnosing Corruption in Ethiopia - Ethiomedia

Construction Sector Corruption in Ethiopia 243
understand construction-related corruption. In some cases they are
prone to political interference. It is not unusual for allegations of corruption
to be leveled against the very people who are seeking to
improve transparency in the sector.
Direct warning signs. Direct warning signs do not necessarily mean that
corruption is occurring but would tend to arise if corruption was affecting
the sector. These signs include the following:
Poor-quality construction. If a bribe has been paid to win a construction
contract, the bribe payer will seek to recoup that cost. This may be
achieved by intimidating or simply bribing the supervising engineer to
turn a blind eye to fraudulent activity. A typical scenario would be to
claim full payment for substandard or incomplete work while also having
that work certified as meeting the specification. The consequences
may not come to light for many years and may be difficult to attribute
to corrupt practices. Where such corruption results eventually in structural
failure, the impact on users of that infrastructure can in extreme
cases be fatal.
Inflated costs. When corruption results in an uncorrected loss of quality,
the result can be an apparent reduction in costs, reflecting the reduced
value of the asset. But corruption can also result in cost inflation in
many ways:
º If the original bid has been rigged (readily achievable unless specific
safeguards are in place to ensure genuine competition), the unit rates
used by all the bidders may be inflated to include a provision for payment
of kickbacks. Such a scheme commonly includes a combination
of collusion between bidders, intimidation of other possible bidders
to deter them from competing, and manipulation of the procurement
process.
º Alternatively, the original bid may be competitive, but the contract
value is repeatedly increased through a succession of claims and variations,
some or all of which may be spurious, and achieved through
collusion with the supervisor or client.
º There may also be collusion between the contractor and the supervisor
in increasing the final measurement of some high-rate items.
º Inflated costs can arise as a result of any barrier to market entry,
whether intended or not. Such barriers include poor client reputation;
unfair contract conditions; and discretionary access to professional