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March 30th, 2016
Infrastructure • Justice

A Blueprint for Transparency: Integrity Pacts for Public Works

Corruption is a major problem in El Salvador, and all three presidents from the years 1999-2014 were charged with corrupt practices. It has also affected the country’s infrastructure projects, and was endemic in the Ministry of Public Works that oversaw them. In 2009, though, Gerson Martínez took over at the Ministry and introduced – with the help and backing of Transparency International and several other NGOs – integrity pacts with project contractors to clean up procurement and delivery.

The initiative

The government of Mauricio Funes sought to increase transparency and eliminate corruption, and this was one of the priorities for Gerson Martínez, who became minister of public works in 2009.

Working with NGOs and industry representatives, Martínez introduced ‘integrity pacts' and, in 2012, they became part of El Salvador's Open Government Partnership action plan. Integrity pacts are “ joint public commitments by governments and companies to refrain from corrupt contracting practices and make bidding and execution processes transparent”. The model was developed by Transparency International.

The government, and particularly the minister of public works, worked with two NGOs: the Fundación Nacional para el Desarrollo [National Foundation for Development] FUNDE) and Iniciativa Social para la Democracia (ISD), which were both  based in El Salvador, and the United States Agency for International Development (USAID) to develop and monitor the integrity pacts. FUNDE is the El Salvador chapter of Transparency International.

The pacts stipulate that companies bidding for government infrastructure projects have to commit publicly to transparency and are then monitored by the NGOs, who visit construction sites to talk to staff and the local community in order to check that the pacts are being adhered to. These external monitors also assess bid proposals and project progress documents.

The monitors' findings are then assessed by the government, and final reports are compiled and published on the NGOs' websites. Any major problems can be referred to prosecutors under El Salvador's anti-corruption laws.

The challenge

In 2009, El Salvador’s Ministry of Public Works had debts of US$43 million, 80 percent of its contracts were halted by lawsuits, and it was notorious for corruption, poor-quality construction and unfinished projects. For example, a six-lane highway project linking San Salvador, the capital, with the nearby municipality of Santa Tecla was started in 2005 during the government of Antonio Saca. “It was five-and-a-half years behind schedule by the time it opened and it cost almost four times the original budget of US$25.6 million.” [1] Many of the project’s problems stemmed from the corrupt practices of Ministry officials and this was indicative of a wider problem: the systemic corruption and the need for freedom of information, transparency, and open government.

The public impact

Martínez noted in July 2015 that the Ministry had not been involved in any lawsuits or paid any legal penalties since he took office in 2009.

As of August 2015, the Ministry of Public Works had signed 31 integrity pacts which covered five projects that were worth a total of US$62 million. Observers from FUNDE and ISD had uncovered no evidence of corruption in the public works projects they monitored.

Stakeholder engagement

The main stakeholders were the Salvadoran government, in particular the Ministry of Public Works, the NGOs - FUNDE, ISD, Transparency International and USAID - and the private sector organisations involved in the bidding process, independently or through one of their associations, the Salvadoran Chamber of Construction (CASALCO).

The Citizen's Observatory was established in 2009 with the support and participation of  the civil society group, FUNDE. From 2010 to 2014, the Ministry collaborated with civil society and the construction industry to apply integrity pacts to some of El Salvador's main infrastructure projects. The main stakeholders also created a strategic plan for the implementation of integrity plans, set the rules and contributed to the application of the international programme, the Construction Sector Transparency Initiative (CoST), to the formation of the  CoST El Salvador Multi-Stakeholder Group (MSG) at the end of 2013.

The consulting firm Casals & Associates provided funding for the national integrity plan programme by  as part of the USAID programme for strengthening democracy.

Political commitment

Upon taking office in 2009, the then president, Mauricio Funes, appointed Martínez as minister of public works with a brief to clean up the Ministry and the process of infrastructure procurement and monitoring.  He also created the Sub-Secretariat for Transparency and Anti-Corruption within the Office of the Presidency to develop and coordinate anti-corruption measures across government agencies. He took El Salvador into the Open Government Partnership in 2011, indicating his commitment to transparency.

Public confidence

“A poll [in 2010] by the Institute of Public Opinion at the Jesuit-run University of Central America in San Salvador revealed that more than 60% of the population believed delinquency had increased with the new government. And 59.3% ‘identified the issue of criminality as the main problem facing the country,' the poll said.” [2]

Funes himself faced three separate investigations into his assets, including a money-laundering case.

Clarity of objectives

The government’s broad objective was to identify and eliminate corruption in infrastructure projects. The specific objective was to achieve this through the medium of integrity pacts between the relevant Ministry and the project contractors, monitored by participating NGOs.

Strength of evidence

Shortly after taking office in 2009, Martínez contacted Transparency International in Berlin for advice on making his department's functions more open. He was put in contact with FUNDE and asked them for help in observing the Ministry's work.

He also took advice from USAID, which was setting up a new US$7.9-million project focusing on transparency. Transparency International's integrity pact model captured the interest of all the participants. The USAID project funded a series of training sessions and workshops for Ministry of Public Works staff and for construction companies, which helped explain concepts and build support.

“In August 2009, the ministry, CASALCO, and FUNDE agreed to form a Citizen Observatory, which would enable the NGO to monitor public works projects, but they had to decide how the observatory would work. To learn about monitoring tools, they sought international advice and support.” [3]

Management

The formulation of the integrity pact model was managed by Gerson Martínez with the assistance of the NGOs and the private sector stakeholders. The integrity pacts themselves, for each major infrastructure project were overseen by the Ministry of Public Works. The contractors’ progress was then monitored and reported on by the Salvadoran NGOs. Martínez and his team reviewed the reports and assigned various Ministry departments to respond. For technical issues, such as design flaws, members of the project’s technical team reviewed the monitors’ findings to see if they agreed.

Measurement

The ministry signed contracts with CASALCO, FUNDE and CoST to conduct reviews and monitor each major infrastructure project. “Although monitors conducted retrospective reviews of the bidding process to ensure compliance with legal standards and point out irregularities, they could not identify warning signs of corruption in real time or call for a bidder to be disqualified.” [4]

The monitoring had to be more robust in order to be effective. “In May 2013, the Ministry of Public Works sought to develop a more institutionalised monitoring system by joining the Construction Sector Transparency Initiative (CoST), an international programme that aimed to increase the availability of data on public works projects and facilitate citizen monitoring.” [5]

Alignment

The major actors were well aligned with the initiative, although the former president, Mauricio Funes, later faced charges of corruption,

The key aspect of the alignment of stakeholders was the identification of Transparency International's integrity pact model as the most appropriate to El Salvador's particular circumstances. “Of all the available options, ‘the one we thought would be most readily accepted by our stakeholders was the integrity pact,' [the former CASALCO president, Mario Rivera,] said.” [6]

The local NGOs, FUNDE and ISD, published their completed reports on their respective websites. If the findings were particularly noteworthy, they enlisted the media's help in publicising the situation and, if any illegal activities took place, these could be communicated to public prosecutors. “The ministry backed up its commitment by instituting a zero-tolerance policy on corruption, which obligated officials to report suspicious actions; creating disclosure guidelines; and firing a small group of staff that the ministry's internal investigations had implicated in corruption.” [7]

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