Investigating Corruption on Road Projects through Clean Construction Practices

Indonesia is one of the world's fastest growing economies in the world. The backbone of this economic progress is driven by infrastructure development, in which consists of "hard infrastructure" (such as roads, railways, electricity supply) and "soft infrastructure" (such as human capital, social welfare, health care). These infrastructure projects are crucial to sustain Indonesia's long-term growth. However, investment in road construction is a top priority on government's agenda in order to accelerate economic growth and to facilitate the efficient movement of goods. Infrastructure comes in numerous forms and affects economic growth through many pathways that can be inferred from the fact that infrastructure development, especially new road construction can reduce the cost of production through improvements in connectivity and transportation networks,  improving access to key facilities and lowering the cost of bring production to market.

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Being the world's largest archipelago which stretches over 5,000 kilometers from east to west and is made up over 17,500 islands has made the development of an efficient national transport network a challenge. There are questions as to whether Indonesia can sustain its economic growth, while significant parts of Indonesia's inland areas and remote islands are still isolated geographically and economically that can remain their economic potential untapped. With the development of the transport network is being carried out in several phases under the National Long Term Development Plan (RPJP) 2005-2025 as well as being part of the Master Plan on ASEAN Connectivity by 2015. Indonesian government opens up the opportunities for infrastructure investment and private sector to get a greater potential benefit to Indonesia's long term economic growth. The majority of the investments under the development plan are expected to come from private sector investment, various levels of government, state-owned enterprises, donation contributors and foreign aid.

The best way to battle road project corruption is to have a good understanding how it occurs in the first place. Understanding the system and players are only part of the uphill struggle. In the construction industry, corruption can occur at any time; from the awarding of contracts though the planning, financing, designing, construction phases, and even during operation and maintenance of a completed project.  Learning how corruption arise in the first place, reporting ongoing corruption investigations and providing to the public with accurate information of the extent of the problem in road projects can help reduce corruption. For a country with limited financial resources, international assistance offers positive opportunities of a much more rapid development but it needs to be managed in an effective, efficient and orderly manner so that investment result in quality and sustainable infrastructure. Therefore, 'clean construction' practices through anti-corruption management systems can be an effective way to detect, investigate, and prevent corruption.

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Project Anti-Corruption System (PACS) for Clean Construction Practices

The Global Infrastructure Anti-Corruption Centre (GIACC) and Transparency International (UK) have published the Project Anti-Corruption System (PACS) which has been designed specifically for construction projects. PACS is a modular system which applies a variety of anti-corruption measures to all major project participants throughout their involvement in the project. These measures include independent monitoring, due diligence, contractual commitments, procurement requirements, government commitments, a corporate programme, rules for individuals, training, transparency, reporting and enforcement.

There is no single or simple method by which to fight or prevent corruption. The continuing prevalence of corruption in construction projects requires government, funders, and project owners to take preventive measures to limit corruption on a project-by-project basis. PACS is designed for this purpose. Implementation of PACS may be required by governments as a pre-requisite for project approval, by funders as part of the funding package, or by public or private sector project owners as a condition of participation in a project. The use of PACS will not only help governments, funders and project owners to ensure that projects are properly identified and executed, and that funds are properly spent. It will also demonstrate their commitment to the prevention of corruption. Contractors, consultants and suppliers are frequently the victims of corruption on a project. Their competitors may win the project through bribery. They may be subject to extortion and fraud during tender and execution. The implementation of PACS on a project will materially reduce this risk.

PACS recommends the following twelve anti-corruption measures (PACS Standards PS-1 to PS-12). These measures, if implemented effectively on construction projects, can materially help reduce corruption.

PS 1: Independent assessment

PS 2: Transparency

PS 3: Procurement

PS 4: Pre-contract disclosure

PS 5: Project anti-corruption commitments

PS 6: Funder anti-corruption commitments

PS 7: Government anti-corruption commitments

PS 8: Raising awareness

PS 9: Compliance

PS 10: Audit

PS 11: Reporting

PS 12: Enforcement

The PACS Templates are model agreements and tools which parties can use to assist them in implementing anti-corruption measures on projects.  They can be used in their existing form, or may be modified to suit the requirements of the country and project. These templates have been designed for major projects.

Template 1: Independent Assessor Agreement

Template 2: Anti-Corruption Agreement

Template 3: Notices of Breach

Template 4: Disclosure Form

Template 5: Disclosure Assessment Guide

Template 6: Anti-Corruption Rules for Individuals

Template 7: Benefits Register

Template 8: Anti-Corruption Training Manual

Template 9: Anti-Corruption Notice to Government

Template 10: Anti-Corruption Government Commitment

Transparency is included as one of its twelve recommended anti-corruption measures on construction projects. Transparency is an important anti-corruption tool by which all public sector projects should disclose project information to the public in order to prevent and reveal corruption at an early stage. Corruption can be eliminated in the construction sector if effective action is taken by all parties, including governments, funders, project owners, the companies supplying the work, equipment and services, and the associations and institutions which represent the companies and individuals operating in the sector. Action must be taken simultaneously on both the supply and demand sides.

While, private sector and foreign aid are responsible for funding the projects and ensure the sufficient steps are taken, to identify, detect, prevent and penalise corruption. As the provider of finance, funders and donors are in a strong position to require the implementation of anti-corruption management systems on projects as a condition of them lending or the provision of aid. It is an ethical necessity and is set for quality and safety management for a better bureaucracy and sufficient project implementation, which requires sufficient cooperation and communication between government, contractors, consultants, funders with regards to fight corruption.

Infrastructure is basically the base in which economic growth is built upon, and roads are the arteries of a nation's economy. Without a good road network, little can be done to develop trade, industry and tourism, to provide health and education, to provide services such as water and electricity, and to distribute aid. While there is significant corruption, the impact of corruption to the public is considerably more damaging, when roads are inadequate, unsafe or overpriced, it is the poor that are impacted the hardest.

Project Anti-Corruption System (PACS), http://www.anticorruptionforum.org.uk/acf/fs/resources/systems/

Preventing Corruption In Construction Projects,http://www.ethicsworld.org/publicsectorgovernance/publicprocurement.php

Project Anti-Corruption System (PACS), http://www.giaccentre.org/project_anti_corruption_system_home.php