Diagnosing Corruption in Ethiopia - Ethiomedia

Construction Sector Corruption in Ethiopia 257
Table 6.6 Corruption Risks in Payment and Settlement of Certificates in the
Construction Sector in Ethiopia
Value chain stages
Corruption risks at
each stage of the
construction value chain
1. Policy making and regulation
2. Planning and budgeting
3. Management and performance
monitoring
4. Tendering and procurement
5. Construction and operations
6. Payment and settlement of
certificates
Perceived corruption risk at this stage
of the value chain
Now (international
comparison)
High Low
Med
Low
Trend (without
corrective measures)
High Medium
Med
Low
Facilitation payments are common but not
necessary, and they are generally small when
they do occur
Typical risks as experienced internationally
Three main categories of risk are typically related to the settlement of payment certificates:
(a) Because of the ease with which a client can fabricate a justification for refusing payment,
the withholding of payment can be used as a means of punishing companies that have
refused to honor understandings (whether formally agreed to or not) entered into at earlier
stages in the value chain. Such agreements typically entail the corrupt reallocation of an
agreed-on percentage of each payment received. (b) Individuals may seek to extract small
facilitation payments from those wishing to avoid undue administrative delays in payment.
(c) Often in parallel with one or both of the first two categories, the party to whom the
payment is due may be guilty of fraud for having submitted falsified documentation in
support of reported progress or associated claims. These risks can be particularly acute
when there is no realistic means of complaining, as typically occurs when one client
dominates the market or when there is no outside body to which a complainant can refer
the matter and expect a fair hearing.
The above three categories relate to clients, consultants, and contractors. Connected to
these are further forms of corruption related to legal advisers, including in dispute resolution.
Such advisers may be implicated in the submission of incorrect claims, concealment
of documents, the supply of false witness statements, bribery or blackmail of witnesses, or
excess billing, all of which contribute to overall levels of corruption in the project.
Indicators of such risks as perceived in Ethiopia
Specific General
• It is commonly (though not universally) reported • Difficult for public to obtain
that facilitation payments may be required to information
speed up settlement of certificates.
• Contractors sometimes curtail progress because
cash flow problems arise as a result of late payments.
Examples reported by stakeholders as having recently occurred in Ethiopiaa • Consultant or contractor perceives that payments are being withheld unfairly but has no
realistic means of complaining or appealing to an independent body.
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