When Tight Control Fails: A Study of Bribery In Public Procurement In Slovakia

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Abstract

Mainstream research argues for tight control of public procurement as a key tool for reducing manipulation in Central and Eastern European countries. In this paper we show that tight control could be a doubled edged sword and can lead to adverse effect for countries that suffer systematic corruption. We evaluate the case of Slovakia which ranks 60th in the corruption perception index (CPI) and during the last two decades has only improved its ranking by 3 positions. The same pessimistic results come from the ranking provided in the World Bank Governance Indicators, where Slovakia ranks 64.64 percentile for corruption. The paper explains that it is a result of the structure of the Slovak procurement control system, which is very formal. The design of the control mechanisms focus on financial inputs and formal compliance with laws, but do not assess benefits in terms of value for money or positive impacts on society. This fact creates a paradoxical situation where effective public projects are often assessed by the control authorities as suspicious only because they do not meet formal requirements.

 

The problem is that the existing formal structure leads to persistent, intertemporal bribery in public procurement. It most often occurs when a control body uses the formal breach of grant rules as a pretext for demanding bribes. This paper offers an exploratory blueprint for the analysis of the problem with a targeted qualitative case study method. It examines three case studies, each from a different municipality and with a different type of public procurement project, all funded by European Union subsidies. The method of analysis is semi-structured interviews with key informants, process tracing, and documentary analysis. Our results show that the current control system, which focuses primarily on formal compliance rather than outputs and outcomes, combined with the low integrity of control bodies, creates opportunities for corruption and leads to sub-optimal allocation of resources. This fact is a function of the country’s culture of political appointment of management in public procurement.

Author

• Michal Plaček, Independent
  Presenting Author