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How to Prevent Corruption? (“Svájci retesz” – der Schweizer

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How to Prevent Corruption? (“Svájci retesz” – 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 payer’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 – 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 – 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
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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 – 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 – with the exception of smaller sized projects – 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 SCO’s and the State Audit Office’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.
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