PwC’s Global Economic Crimes Survey report has found that Public Sector corruption is still among the most disruptive economic crimes in East Africa. This is despite the efforts invested in building and strengthening accountability through investments in public finance management (PFM) and oversight institutions.
Public Sector corruption is still happening and seems to go undetected; meaning that despite the investments in oversight institutions, there is still room to do more. This includes strengthening areas where notable success has been achieved, such as the recovery of illicit wealth, and whistle-blower programs which facilitate tip-offs and continue to play an inordinately bigger role in fraud detection in East Africa at 17% as compared to 5% globally.
Oversight institutions include supreme audit institutions, asset recovery agencies, and investigative agencies including anti-corruption commissions. These institutions have attracted significant public and donor support, which has been fruitful as we have seen notable successes from them. This includes significant recoveries of unexplained wealth and/or convictions which act as good deterrents to would-be perpetrators of corruption. The gains on the accountability front do not however seem to be replicated in respect to the second factor of the corruption equation, which is monopoly/discretion. With stretched oversight institutions at the national level, monopoly of information/access as well as power/discretion of officers in key processes has created the opportunity for the various forms of economic crime, especially corruption, to materialize.
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For illustration purposes, PwC looks at Procurement fraud in Kenya and Uganda. The respective procurement authorities undertake quarterly market surveys and publish average prices of commonly procured items to guide public procurements. This has however not stopped public sector entities from procuring items at multiple times, sometimes more than tenfold, the average market price.
On Public Sector Corruption, the pertinent question is therefore: at whose discretion are such contracts executed? More fundamentally, the policies and procedures for fighting corruption appear to all be in place and the gap appears to be how we proactively deal with institutional (could be process-specific) “kingpins” who oversee the override of controls. We need to be able to define institution-specific corruption risks, develop mitigating measures, and monitor their implementation. Indeed, 58% of respondents in Eastern Africa and 67% globally indicated that they detected their most disruptive fraud through Corporate Controls.
Reduced accountability fosters public sector corruption, and in the vicious cycle, corruption waters down accountability systems, leading to eventual public resignation.
