Integrity Pact case studies in Berlin and Riga: bringing corruption to light

Summary

Integrity Pacts applied to the Berlin-Brandenburg airport in Germany and the Riga Tram in Latvia are two cases where they were unable to prevent corruption, but were instrumental in revealing fraud or other irregularities in the public works at issue. 

In both cases, the civil society monitor issued statements detailing the reasons why they no longer had confidence in the integrity of the projects. These cases underscore that while Integrity Pacts cannot provide a total guarantee against the occurrence of corruption, they still can play important roles in shining a light to the public about the misuse of funds.

Berlin-Brandenburg Airport

The German federal and local governments in Berlin and Brandenburg agreed shortly after German reunification in 1990 to build a major new airport in Berlin. A company owned by the three public authorities, then known as Flughafen Berlin-Schoenefeld GmBH (FBS), was formed to take the project forward. The project was riddled with scandals and delays for over a decade. In 2004, the Berlin mayor instructed FBS to ask Transparency International’s national chapter in Germany for advice on integrity tools. TI-Germany suggested an Integrity Pact. 

In 2005, FBS agreed to implement an Integrity Pact to oversee procurement related to the airport project. An independent monitor was appointed by FBS from a shortlist of candidates developed by TI-Germany. The expert was a well-respected retired procurement official from Berlin. He was paid by FBS through a process that was designed to preserve his independence. TI-Germany continued to advise on the Integrity Pact and related procurement, but did not have a formal contractual role.

TI-Germany advised on the development of the text of the Integrity Pact. Signing it was mandatory, both for the FBS as the contracting authority and for all bidders. Signature of the IP at the tender phase committed the winning bidder to continue to meet its obligations in the contract implementation phase. The text included sanctions provisions, but no specific dispute resolution mechanisms. 

Despite some initial reluctance, FBS came to see benefits that the independent monitor brought to resolving certain claims that arose. By 2013, however, continued delays and reports of corruption and irregularities appeared. TI-Germany and the independent monitor raised questions to FBS and offered recommendations for greater transparency and resolution of the complaints. FBS failed to provide adequate responses to TI-Germany’s satisfaction.

In light of FBS’s lack of cooperation, TI-Germany issued a press release in March 2015 announcing that it would cease its collaboration. The airport has continued to experience delays and controversy and has not yet opened, almost two decades after reunification.

Riga Tram System

Delna, Transparency International’s chapter in Latvia, signed an agreement with the municipal-owned Riga Tram Authority in 2016 to serve as the civil society monitor overseeing an Integrity Pact for upgrades to the Riga Tram System. This was one of the pilots of the Civil Control Mechanism for Safeguarding EU funds project. The European Commission was providing significant structural funds to Latvia for this project. Delna worked closely with engineering and legal procurement experts to advise them in the monitoring process.

From the start, Delna’s monitoring uncovered numerous irregularities with the initial tender. As a result of the monitoring reports, the 2016 tender was cancelled and a negotiated procedure opened in 2017 that changed the technical specifications. Delna monitored and provided recommendations to this negotiation. The tender was relaunched in 2017 and concluded in 2018. Delna uncovered allegations of fraud with respect to one of the bids and raised its concerns to the authorities, but no actions were taken and the tender was considered final.

In April 2018, the contracting authority launched a second tender for low-floor trams. Delna continued monitoring and again identified potentially restrictive tender specifications that hampered fair competition and suggested other irregularities.

Delna’s independent monitor raised these concerns to the authorities. Latvia's Central Finance and Contracting Agency (CFCA) commissioned a further independent audit of the Riga Tram Authority’s procurement that confirmed corruption risks in the procedures. As a result, in August 2019, the CFCA terminated its agreement with the Riga Tram Authority and suspended the tram procurement project. It ordered the Riga Tram Authority to repay EUR 451,304 in spent funds.

Delna issued a final report on its monitoring and observations with respect to the Riga Tram project. Delna considers that the Integrity Pact played an important role in providing an independent monitor sufficient access to information that allowed it to uncover numerous instances of fraud. While the tram project’s cancellation and delay is a setback to Riga residents, the Integrity Pact nevertheless contributed to saving taxpayers’ money from fuelling corruption at the local and European levels.

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