How to Prevent Corruption? (“Svájci retesz” – der Schweizerкод для вставки
1 How to Prevent Corruption? (вЂњSvГЎjci reteszвЂќ вЂ“ der Schweizer Riegel ) The Swiss Contribution is a government financed program in the amount of over 25 billion HUF that aims at reducing economic and social disparities in Hungary and between Hungary and the European Union. In December 2007 the respective bilateral Agreement was signed between the two countries at ministerial level. As of mid-June of this year all funds were committed and almost 40 projects approved. All projects will have to be completed by 2017. Spending tax payerвЂ™s money (Swiss and Hungarian with co-financing of at least 15%) entails a great responsibility. Therefore, the Swiss Contribution Office (SCO), located at the Swiss Embassy in Budapest since almost five years, has worked on different levels to ensure the efficient and effective use of the funds which is as much in the interest of the Swiss then Hungarian authorities. Like in other fields of life, it is better to prevent a problem than to feel sorry afterwards. Let me outline the complementary measures on the Swiss and Hungarian side, involving also the NGO sector. A transparent process starts with the preparation of an open call for proposal. In cooperation with the National Development Agency (NDA) in charge of implementing the Swiss Contribution Program, Switzerland was involved in defining the eligibility criteria to select projects. Based on analysis, the goal was not to be too broad (and end up with too many applications) nor too strict to allow enough competition. Niches and criteria were defined complementary to EU funds (e.g. in health an integrated approach focusing on prevention or twinning projects between Hungarian and Swiss towns) and consulted publicly. Switzerland also participated as an observer in the Hungarian Screening Committee selecting the proposals offered for funding. In total there were ten open calls for proposals with about 100 applications. I was pleased to see that the Committee meetings were held professionally, with discussions on substance. Checking the project budgets is another key area where the SCO worked also with own experts to assess how realistic budgets were (among other questions such as relevance of a project etc.). If budgets seemed inflated, there were discussions with the applicants. Without a proper justification budgets were cut. Once a project got approved, all documents signed (project implementation agreement and tender documentation) had to contain an integrity clause to prevent corruption. As we know public procurement is where things become sensible, and not just in Hungary but everywhere in the world! Switzerland is involved in the entire process from the preparation of the tender documentation (for higher amounts a non-objection is needed) to the award of the contract through observer status in all tender meetings. In reviewing the tender documents Switzerland pays attention to basic principles such as transparency, equal and fair treatment for all tenderers, strengthening competition and costeffective use of public resources while respecting the national laws. In this respect, Switzerland attaches importance that price is not the only criteria but that aspects of quality, life cycle costs, guarantee and sustainability are also taken into account. It is positive to note that while the standard practice in Hungary seems to be price criteria only, the Executing Agencies implementing the projects did welcome to broaden the sets of selection criteria to select the most-economic offer at the end. In case of public tenders Switzerland requests the English translation of the official tender evaluation reports for information purposes вЂ“ at the latest 30 calendar days after the contract has been awarded. The SCO also embarked on a pilot project called integrity pact. The goal of the pact is to reduce any chances of corrupt practices during procurement through a binding agreement between the agency and bidders for specific contracts. Originally an innovative tool developed by Transparency International in the nineties in the area of public procurement it has been applied worldwide with encouraging results including in Germany, Italy and Latvia. Our aim has been to see how it could be used in a publicly financed infrastructure project in Hungary, if it would be useful and could serve as basis for replication. In consultation with all parties (NDA, Transparency International Hungary, Swiss Authorities) the Г“zd water plant rehabilitation project was selected in which among others old asbestos pipes will be replaced вЂ“ something that could not be funded by EU sources. The main reason was the complexity and volume of the project (approx. budget 2 billion HUF). At the same time the participation in such an integrity pact was highly welcomed by the former and present mayor. Furthermore, we are pleased to involve a municipality in one of our target regions (North and East Hungary). Transparency International Hungary plays an advisory role, while the SCO recruited an independent monitor expert. Following the planning phase, the integrity pact will be also applied in the construction phase. The integrity pact will be signed by the Г“zd municipality and bidders in which both sides promise that they will not accept bribes during the procurement process and respectively that they will not offer bribes. The winning bidder will sign an integrity pact with Г“zd on a mandatory basis; this will be part of the construction contract. The entire process is accompanied by the monitor expert who plays an active role to ensure a transparent process. The public will be also able to track the 1 Wortspiel auf Ungarisch: Der Korruption einen Riegel schieben. public procurement process visually on the project webpage; Transparency International Hungary developed an innovative software for this purpose. Our preliminary experience shows that the integrity pact as implemented under the Swiss Contribution Program adds to some complexity as more stakeholders are involved than in a regular, only municipality financed project. Also, the integrity pact needs to be compatible with the public procurement act вЂ“ which it is. At the same time contracting so far has been on track with no appeals. Regular reports by the project executing agencies - that serve as a basis for reimbursement by the Swiss party - and monitoring visits provide other possibilities to detect irregularities. Within the Swiss Contribution a project is audited every two years вЂ“ with the exception of smaller sized projects вЂ“ and a final audit is carried out as well. The comparable projects financed by the European Union are mainly checked on a random basis only. Audits can also be conducted on procurement practices and procedures. In general, Switzerland or any mandated third party acting on its behalf is entitled to have a look at, monitor, review, audit and evaluate all activities and procedures related to the implementation of projects financed under the Swiss Contribution. Last but not least, the SCO, in cooperation with the Corvinus University, Transparency International and the NDA published in 2009 - and in an updated form 2010 - a brochure in Hungarian on how to prevent corruption. The short but practical brochure informing about the legal environment, providing a self-assessment and contact details in case needed was very well received by academia, chambers of commerce, the executing agencies and other circles. It can be downloaded from several websites, including the SCOвЂ™s and the State Audit OfficeвЂ™s (http://integritas.asz.hu/Korrupcios_irodalom). Besides the specific measures within the Swiss Contribution Program, the NDA have their own mechanisms in place to fight corruption (e.g. since 2007 the Anti-lop project has provided opportunity for anyone to report abuses or illegalities and to get informed about the corrective measures taken). Also specific irregularity guidelines are being prepared for the Swiss Contribution Program. In case of irregularities, Switzerland is entitled to stop reimbursement immediately. Thanks to the complex approach applied, this could be prevented so far. More information on the Swiss Contribution to Hungary can be found on: www.svajcihozzajarulas.hu Article written by Liliana de SГЎ Kirchknopf, Head Swiss Contribution Office, Swiss Embassy, published in Hungarian in the weekly FigyelЕ‘, 4 October 2012.