Source: https://ti-defence.org/gdi/countries/niger/?risk=procurement&single-question=7264
Timestamp: 2020-01-27 12:15:28
Document Index: 270927010

Matched Legal Cases: ['Art. 13', 'Art. 128', 'Art. 11', 'Art. 183', 'Art. 184', 'Art. 8']

73a. Policies
The government imposes no restrictions on the use of agents and intermediaries, nor has it publicly committed to doing so.
There are no controls over the use of agents and intermediaries, but the government has clearly indicated that it intends to rectify this issue.
There are some controls over the use of agents and intermediaries, but no clear policy.
The use of agents and intermediaries is regulated by a strict and clear policy, but this policy does not include all the requirements laid out in score 4.
The use of agents and intermediaries is either prohibited by law or regulated by a strict and clear policy which requires as a minimum that anti-corruption clauses are included in contracts with agents, companies register agents and declare all forms of remuneration, agents receive payments into local accounts and company contracts outline the right to audit agent financial accounts by government agencies.
There is no indication that the government imposes any restrictions over the use of agents or intermediaries. No relevant provisions were found in the legislation covering public procurement (1,2).
73b. Enforcement
Sanctions are not generally applied when policies and laws on the use of agents are violated.
Sanctions are sometimes applied when policies and laws on the use of agents are violated.
Sanctions are usually applied when policies and laws on the use of agents are violated.
There is no indication that the government imposes any restrictions over the use of agents or intermediaries. No relevant provisions were found in the legislation covering public procurement (1,2). Therefore this indicator has been marked Not Applicable.
The 2016 Public Procurement Law does not provide for any regulations or restrictions of intermediaries or agents in the procurement cycle (1). The country’s last assessment (2) mentioned Law No. 88-29 of July 19, 1988, on state monopolies on foreign trade, which prohibits the use of intermediaries in contracts related to imports. Art. 13 of the law mentions that it is punishable under Art. 128, 242, 243, 423 of the Penal Code; referring to the Penal Code that was valid in 1988 (3). In the Penal Code of 2015, the articles are partly abrogated or do not address the issue. No explicit punishments for intermediates in public procurement could be found in the law (4). There are reports of intermediates involved in corruption cases linked to the state energy company Sonatrach (5) and the cross-country highway (6). There is no evidence that the government is committed to imposing restrictions.
This sub-indicator has been marked Not Applicable because there is no evidence that the government controls the company’s use of agents and intermediaries in the procurement cycle, for example, in the Public Procurement Law of 2016 (1), or the Penal Code (2).
The Public Procurement Law stipulates that foreign companies seeking government contracts must have a legal presence in Angola or a legally recognized representative. The public procurement law extends authority to such agents and intermediaries. The 2014 Anti Money Laundering Law also establishes strict rules for anybody who acts as an agent or intermediary in a corrupt transaction (1), (2).
The use of third parties and intermediaries to secure procurement contracts by-passing the law have been common and are rarely sanctioned.
For example, in 2017, Halliburton paid US$29.2 million in 2017 to settle charges by the US Securities and Exchange Commission of violating the Foreign Corrupt Practices Act in Angola. The company had engaged a third party with ties to an Angolan official to secure a contract with the state-owned company Sonangol. In June 2018, a Spanish court charged three companies and 27 company officials with corrupt practices in connection with procurement contracts with the Angolan police in 2008. In either case, there is no evidence of any sanctions taken against Angolan officials and intermediaries in Angola so far (1), (2).
ControlRisk (2016) writes, “the compliance risks associated with third parties have always been important because so many international corruption cases involve bribes paid by intermediaries, such as commercial agents” (1). The outcome of the 2015-2016 survey highlights that 65% of the respondents say ‘high’ or ‘very high’ to corruption risks associated with intermediaries, with some of them thinking that this percentage could be higher (1). Law N° 039 (2016), and Decree N° 0049 (2017) do not allude to the way companies use their agents or intermediaries in the procurement processes. They do not address how bidding or contracting companies use their agents and intermediaries in the procurement processes (2), (3). However, they both provide sanctions in case these agents and intermediaries are involved in offences to the procurement process, without any regard to their status within the bidding or contracting companies. Yet, there is no evidence of the existence of policies addressing such a case either. Given the fact that there is evidence that the use of agents and intermediaries increases the risk of corruption (4), this use may be regulated in the near future.
Because there are no controls over the use of agents and intermediaries, this indicator has been marked Not Applicable.
The activities of agents and intermediaries are not regulated in Cameroon. Based on the Procurement Code and as stated by Decree No. 2018/366 of 20 June 2018, the purchase of defence and security items is enacted outside the regular procurement processes (Articles 4 and 71) [1]. This makes procurement of defence and security items highly secretive and confidential [1] [2].
Because there are no restrictions on the use of agents and intermediaries, this indicator has been marked Not Applicable.
The confidential nature through which defence and security items are procured makes it difficult to decipher whether the government has a strong influence and control over a company’s use of go-betweens when it comes to the procurement of defence and security-related items [1] [2] [3].
The behaviour of “private agents” (agents privés) can be sanctioned by the ANRMP during the procurement cycle, as per Articles 11, 183 and 184 of the 2009 Code of Public Procurement. However, despite these nominal controls, there are no clear and detailed government restrictions on the use of agents and intermediaries by bidding companies. The 2009 Code of Public Procurement refers to “private agents” in Articles 11, 183 and 184. Private agents are subject to the same penalties as public officials for having favoured the awarding of a public contract, as per Article 11. For other violations of the Code, private agents can be temporarily or permanently excluded from public tenders, as per Article 183. If the private agents are found guilty of irregularities, fraud or corrupt acts, they can be subject to monetary fines and criminal convictions, as laid out in Article 184 (1). Given that the role of “private agents” working on behalf of bidding companies is at least acknowledged and subject to controls by 3 provisions in the 2009 Code of Public Procurement. But the controls are restricted to sanctions without spelling out the scope of work that private agents can carry out in procurement.
Articles referenced in the above paragraphs:
Art. 11 – Approval of public contracts
Public contracts must be approved and notified before the execution begins.
Any contract awarded in violation of Articles 43 and 45 of the present Code is null and void… Civil servants, public officials or private agents of the persons referred to in Article 2 above, who by their acts, acts or omissions have favored the award or performance of such a contract are punishable by the penalties provided for in Article 183 below and by the laws in force (1).
Art. 183 – Contracts approved, executed, controlled, or settled in violation of this Code
Without prejudice to legal sanctions, public servants, public or private agents working on behalf of the legal persons referred to in Article 2 shall be temporarily or permanently excluded from participation in any public procurement procedure, depending on the seriousness of the offense committed… (1).
Art. 184 – Irregularities, acts of corruption and fraudulent practices
In addition to the penalties provided for in Article 183 above, the civil servants, public or private agents referred to in Article 2 of this Code, who are found guilty of irregularities, fraudulent practices or acts of corruption committed within the framework of the public procurement procedure, are punishable with monetary, disciplinary and criminal sanctions (1).
Though there are some government controls over private agents (agents privés) in the procurement cycle, there was no mention in the ANRMP’s 2017 Annual Report on Public Tender Audits (Rapport De L’Audit Des Marched Publics De La Gestion 2017) about any decisions regarding a bidding company’s misuse of private agents or intermediaries (1). There is also no mention of the role of private agents in the 2017 Open Contract Scoping Study for Côte d’Ivoire (2). Of the 17 ANRMP decisions uploaded to the roster of redlisted companies (Liste Rouge) on the ANRMP website, none are linked to the Ministry of Defence because public procurement for items requiring strict confidentiality are exempted from the provisions in the 2009 Code of Public Procurement (Art. 8). However, this does not necessarily imply that a company/supplier to another government ministry was not sanctioned for the misuse of private agents (3). In general, there is heightened control over the procurement cycle in Côte d’Ivoire since the creation of the ANRMP in 2009.
According to an RTI source, the ANRMP has imposed sanctions on 36 companies found guilty of irregularities, fraud and corrupt practices since 2014. This may have included sanctions on companies that misused their private agents in violation of the Code (4). The RTI source reported that ANRMP Chief Executive Non Karna Coulibaly told reporters in Yamoussoukro that the democratization of the debates over public tenders and the birth of a culture of complaint in the procurement process had ended the era of impunity that existed previously and had allowed for fraud and corruption. Coulibaly added that the ANRMP audits had also contributed to lower levels of corruption in procurement (4). The ANRMP has been proactive about imposing sanctions on those who violate the 2009 Code of Public Procurement. But no evidence of ANRMP decision against a bidding company due to the misuse of a private agent.
The use of agents and intermediaries in defence procurement is generally banned in Egypt (1), However, despite the ban on the use of commercial agents, the use of Egyptian “consultants or representatives” may be allowed (2). According to our interviews, there is some governmental control over the use of agents and intermediaries.
Since defence procurement is often single-sourced and secret, it is impossible to know whether the ban on commercial agents is effectively enforced. There is evidence to suggest that “informal” agents have been used and paid bribes or facilitation payments to influence procurement decisions, such as in the case of the Mercedes deal or the case of the Military Aircraft depot case (1).
The government does not have a publicly published policy that directly deals with the use of agents and intermediaries in the procurement cycle, although intermediaries are sometimes employed (1), (2).
Because the government does not have a relevant policy on the use of agents and intermediaries in the procurement cycle, this indicator is marked Not Applicable.
Procurement laws in Jordan do not include any policies about the use of agents and intermediaries in the procurement cycle. However, both also allow the use of ‘consultants’ and ‘experts’ during the procurement process, when needed, which imply that a third party is regulated, yet not in detail [1]. There are also no restrictions on what qualifies as a need to consult a third party during the procurement cycle [2,3].
This sub-indicator has been marked as Not Applicable, as defence institutions in Jordan do not have restrictions on the use of agents and intermediaries.
There appears to be no restrictions on the use of intermediaries and agents in the procurement cycle, and there appears to be no will to change this.
For starters, the procurement of “defence materials,” which covers the vast majority of all defence and security expenditure, is shielded from public view and the Government’s own Doing Business booklet says that the internal laws that regulate these processes are “flexible” (1).
This, analysts and activists say (2, 3, 4, 5, and 6), suggests that the process is deeply flawed, and that the role agents play are unregulated — we know that the use of agents is not prohibited because the few laws that discuss security expenditures, like Law no. 25 of 1996, say that officials and companies must simply state the name of the person who represents the known or unknown agents behind the deal in Kuwait along with the amount of money or nature of goods or services they received as a reward.
The fact that the security agencies have made a point of not discussing these aspects of deals with SAB auditors and even lawmakers at times (as is made evident by the kind of basic questions they ask in Parliament sometimes previously mentioned) suggests that this problem, along with others, is present.
This sub-indicator has been marked Not Applicable because there appear to be no restrictions on the use of agents and intermediaries in the procurement cycle. Moreover, auditors and activists do not know what, if any, sanctions can be imposed to punish this practice, which appears to be legal in Kuwait (1, 2, 3 and 4). So they naturally could not comment on how frequently these sanctions would be applied, assuming they exist in the first place.
Article 13 of Decree no. 11574 indicates that agents or company representatives are not allowed to represent more than one bidder per bid in the defence sector(1). Furthermore, the decree requires companies to register agents (2), but it does not require them to set a contract with an agent that includes an anti-corruption clause and declare all forms of remuneration (3).
It is unclear if sanctions are applied when policies and laws on the use of agents are violated due to the lack of publicized information from the LAF (1). However, according to an interviewee, laws, rules, and procedures are firmly applied (2).
The public procurement code (Code des Marchés Publics et des Délégations de Service Public) regulates the use of agents or intermediaries in procurement processes, albeit to a fairly limited degree.¹
Article 29, which is dedicated to mitigating the risks of corruption, stipulates that:
– inform the contracting authority of any payment, advantage or privilege accorded to the benefit of any person, acting as an intermediary or an agent, to recompense them for any service provided”.¹
Meanwhile, article 20 states that “any person who personally or via an intermediary in the form of their spouse, parents or children, notably in the capacity of director, associate or employee at a company that is bidding for a contract from a tender board on which he or she is participating, must declare this interest, withdraw from the board and not participate in any aspect of the tender process”.¹
Articles 127 and 128 state that entities found guilty of acts of corruption via intermediaries can have their contracts confiscated and be banned from competing for public contracts for a variable period of time, the length of which is determined by the seriousness of the offence(s) committed.¹ Such bans can extend to companies holding a majority share in firms that contravene the rules and for companies in which the offending entity retains a majority stake.¹ The procurement code underlines that any sanctions issued under the code are not prejudicial to any legal prosecution that may follow.
However, beyond saying that candidates or contract holders must not seek to bribe public officials via intermediaries and must avoid conflict of interests via direct family members, there are no further controls imposed on the use of agents or intermediaries in the procurement process.
The Penal Code reinforces this message. Article 121 notes that anyone seeking to offer gifts, promises, threats, presents or any kind of benefits or favours, directly or via an intermediary, can face five to ten years imprisonment.²
The assessor found no evidence of policies that would directly apply also to the defence procurement cycle.
Cases of possible corruption involving intermediaries in defence contracts are seldom investigated and there have been no signs that the authorities are willing to or capable of prosecuting offenders. Indeed, there have been no such prosecutions since IBK became president in 2013.
The judicial system in Mali is unable to efficiently deliver prosecutions as a result of internal corruption. For example, in December 2013, judicial representatives threatened to hold an indefinite strike due to state interference in arrest warrants against judges accused of corruption.¹¹ The same month, four judges and a court clerk were arrested on suspicion of corruption.¹
A US State Department report also noted in 2013 that “corruption and limited resources affected the fairness of trials. Bribery and influence peddling were widespread in the courts … There were problems enforcing court orders. Sometimes judges were absent from their assigned areas for months at a time”.¹
The audit found that the government had spent 87.77 billion CFA (USD 163.44 million) on defence items that were not declared in the official budget.² ³ The report found that 18.59 billion CFA went towards the presidential jet, of which CFA1.4 billion were commissions and fees paid to a broker linked to the president’s friend, Michel Tomi.⁵ It is not clear what Tomi did to warrant the fee, nor is it clear whether his deployment as an intermediary was lawful or unlawful.
The public prosecutor launched an investigation into the affair, but as of April 2018, no charges had been brought against Tomi or any of the other individuals or companies implicated in the BVG’s report.⁶
Meanwhile, a further 69.18 billion CFA was spent on other military equipment, primarily transport vehicles.⁹ The BVG found that the MDAC had failed to respect the 2014 Finance Law requiring it to register these contracts and submit them as part of the annual budget. Many of the contracts were found to be heavily overpriced, strongly suggesting that these acquisitions involved substantial illicit activity.³ ⁴ ⁵ The Defence Minister responsible for signing these contracts, Soumeylou Boubeye Maïga, has since returned to government as Prime Minister.
Moreover, IBK’s special advisor, Sidi Mohamed Kagnassy, was reportedly Director General of Guo Star at the time of the deal (he denies this), indicating an obvious potential conflict of interest and a significant potential for collusion.⁹ Although Franchitti was the subject of a police investigation in France, there is no evidence that the Malian authorities have launched their own investigation into why Franchitti was allegedly seeking to give Soumeylou Boubeye Maïga EUR 10,000 in cash.
Similarly, there is no evidence to indicate that Kagnassy has been investigated by the Malian authorities for his role as intermediary between IBK and the MDAC and his own company, Guo Star.
The 2013 version of the Code of Public Procurement Contracts provides a legal framework for the use of agents and intermediaries, allowing subcontracting under a certain number of conditions (1). Subcontractors are not legally bound to the public body that subcontracts, but to the successful candidate, who takes all legal responsibility for the actions of the subcontractor.
Article 158 of the 2013 Code of Public Procurement Contracts is entirely devoted to subcontracting. It states that:
⁃ Subcontracting is a written contract in which the tenure holder entrusts the implementation of a part of his procurement contract to a third party.
⁃ The tenure holder is free to choose his subcontractors under the condition that he informs the contracting authority about the type of services he wants to subcontract, the identity and the address of the subcontractors as well as a certified copy of the aforementioned contract.
⁃ However, the contracting authority can specify that the tenure holder must subcontract with Moroccan companies (especially small ones).
⁃ Subcontractors must fill the conditions required for contestants in article 24.
⁃ The contracting authority can reject the subcontractors within 15 days if they do not qualify for the conditions stated in article 24.
⁃ The tenure holder is held personally responsible for all obligations towards the contracting authority, workers and third parties.
⁃ The contracting authority does not have any legal link with the tenure holder’s subcontractors.
⁃ Subcontracting cannot account for more than 50% of the contract or concern the main activity of the contract.
⁃ The special prescription book must specify which activities constitute the main activity as well as the services that cannot be subcontracted.
Both interviewees confirmed that restrictions were in place in theory and in practice in procurement contracts linked to the public sector in general, without particular mention to the military sector (2)(3). There is no anti-corruption clause required.
No evidence of cases involving recent (less than 3 years) violations of policies and laws on the use of agents and subsequent sanctions was found in the local or international press (1-10). Therefore it is not possible to verify that sanctions are regularly enforced: absence of cases might indicate either an absence of violations of policies and laws, or a politically-motivated decision not to implement sanctions. Yet, no evidence of recent alleged violations were found.
There are no public policies on the use of agents. The government is often reluctant to acknowledge the use of such intermediaries. In discussions with a source at the MOD, it was highlighted that intermediaries are not currently used, though that might have not been the case in the past. The recent example of the TUCANO fighter plan purchase which was a government to government transaction with no middlemen involved illustrated the point (1). The privileging of military procurement and its subjection to confidentiality has been highlighted as a reason why defence procurements often have complications, are inefficient, and prone to corruption scandals. Section 16 of PPA 2007 sets out fundamental principles of procurement including that all procurement should be conducted in a manner that is transparent, timely and equitable for ensuring accountability and conformity with the provisions of the PPA 2007. Defence and security contracts are expressly excluded under Section 15(2) PPA 2007. The Act itself does not expressly preclude the use of intermediaries (2).
The FGN rarely acknowledges the official use of intermediaries. The high cost of the Tucano purchase was “most likely through intermediaries in which case 95 percent of the deal is backed by corrupt practices which makes it so expensive” (1). The media reported that intermediaries were used in the Tucano deal, which would explain the high cost of the aircraft (1). The FGN insists it is a government to government transaction with no intermediaries used; however, it fails to explain the inflated cost of the contract when compared with the unit cost per plane. There are reasonable grounds to doubt whether it is a government to government transaction, given the requirements that the U.S. requires. “The propeller-driven plane with reconnaissance, surveillance and attack capabilities, is made by Brazil’s Embraer. A second production line is in Florida, in a partnership between Embraer and privately held Sierra Nevada Corp of Sparks, Nevada” (2).
The use of intermediary agents is permitted, but there are some forms of control over them. This means that in many cases, the use of a third agent can be prohibited based on the type of purchases and the contractors (1). The Oman Authority of Partnership for Development (PFD) recognises foreign companies sub-contracting to local businesses as part of the In-Country Value thus reducing PFD offset obligations (2). Oman has legislation addressing agency and distribution agreements, the Law of Commercial Agents (RD 26/77) with amendments RD 73/96, RD 66/2005 and RD 34/2014 stipulates that any Omani company intending to act as an agent to foreign companies must be established under Omani law as a commercial agency business (3). Agents are liable for penalty payments in cases of non-compliance with the Law of Commercial Agents (3). The details of the law focus upon Omani ownership of agencies (at least 51%), registration and termination, no clear policy is set out how and under what jurisdiction defence-related procurement cycles fall under (4). The legislation in place offers some controls over the use of agents and intermediaries but lacks clear policy relating to defence-related procurement cycles.
The use of agents is permitted; however, there are conditions and restrictions based on the purchases and the contractor. According to our source, when the contract is violated, there are sanctions in almost all cases (1).
It is difficult to assess or validate its existence as there is no information concerning the use of agents and intermediaries. As the vast majority of procurements and purchases are national, and they are usually small in amounts, no third parties (intermediaries) or agents would be involved in that type of process. However, some contractors may hire other sub-contractors (1).
This indicator is marked Not Applicable because there is no explicit policy of sanctions against the contractors or sub-contractors in general (1). As contractors and purchases politically influenced, sanctions may never exist. Political influence means that the agencies prefer a Fatah member rather than other companies. According to Hadil Kazaz (2), in a report published by Aman (2), conflict of interest and tribalism is connected in all political, social and economic life and embedded within the PA institutions.
There is a law that manages and restricts the work of agents and intermediaries. Law No. 8 (2002) on Organization of Business of Commercial Agents, also applies to the MoD. [1] However, there are no clear policies in many aspects of the law that concern the armed forces and MoD. [2]
Saudi law previously prohibited the use of agents and intermediaries in dfence procurement via the Royal Decree M/S (1978 – commonly known as the Service Agents Law) and the Council of Ministers Resolution No 1275 (1975) (1). Three months after passing the latter, Crown Prince Fahad bin Abdulaziz made a public announcement that there was “no objection” to arms manufacturers appointing Saudi agents “in the fields of maintenance, service and construction” (3). Moreover, the Service Agents Law was repeated in its entirety in 2001 (2).
This sub-indicator is scored Not applicable as it is widely known that despite the existence of vague regulations banning the use of foreign agents in defence procurement, these have been regularly flouted. Historically, the use of intermediaries in the procurement cycle was extremely common and considered a standard facet of the procurement process in Saudi Arabia. This can be demonstrated by the high-profile examples or prominent “fixers” or intermediaries on Saudi defence contracts, such as Adnan Khashoggi and Wafic Said, and more recently Salah Fustok, who respectively made fortunes out of commissions on defence and security deals (1), (2), (3). Historical US lawsuits and investigations show further than Saudi princes have also been accused of corruption and bribery while acting as intermediaries on defence deals during the 1980s and 1990s, notably Khalid and Bandar, the sons of the late Minister of Defence Sultan bin Abdulaziz (4).
That being said, military procurement procedures in Saudi Arabia appear to be undergoing a substantial change as part of Crown Prince Mohammed bin Salman’s broader reform programme. He has already consolidated his control over the various defence and military branches (5). These reforms include the goals of localising military production, as well as streamlining procurement processes and tackling inefficiency in the sector. As part of these plans, two new military industry bodies were created in the last year, Saudi Arabian Military Industries (SAMI), which will manage new local manufacturing projects, and the General Authority for Military Industries, set up as an industry regulator to handle the procurement and other regulatory functions (6), (7). Additionally, Mohammed bin Salman has been actively sidelining erstwhile key figures and “intermediaries” that were responsible for negotiating major contracts between the Saudi military and foreign companies, for example, Saudi businessmen Salah Fustok, who had a long-established relationship with French weapons manufacturers Thales and Nexter. The goal appears to be to abolish deal-making channels so that foreign companies will have to go through SAMI, which is chaired by Mohammed bin Salman (8), (9). However, it remains to be seen whether the role of intermediaries in Saudi defence procurement will be curtailed.
According to our sources, the use of agents and mediators in military expenditures is forbidden by law in Tunisia. This policy is applied to all military purchases (1,2). Bidders are obliged to provide a written engagement (honor declaration) to avoid illegal, corrupted and influential practices (3). The use of intermediaries is strictly forbidden and it is mentioned as an article in every concluded contract. Such practices may be sued in justice in addition to the dispositions of articles 177, 178, and 179 (4) (5).
According to our sources, sanctions are applied in cases of the use of agents and intermediaries. There are clear mechanisms on applying these sanctions(1,2). The Ministry of Defence affirms that these rules are strictly followed (3). No new reports could be found mentioning the use of agents and intermediaries in the procurement cycle (4).
This assessment has demonstrated that defence procurement in the UAE is excluded from the federal legislation, namely Resolution No. 32 of 2014, amended in Resolution No. 43 of 2016, which is concerned with procurement by the government, explicitly states it does not apply to the defence sector. Furthermore, there are no restrictions on the use of agents and intermediaries, nor has it publicly committed to doing so (1), (2), (3).
This sub-indicator has been marked as Not Applicable because the UAE government does not have direct control over defence contractors, as defence procurement is partially privatised, and thus an assessment of the enforcement of governmental policies that do not apply to defence procurement is irrelevant (1), (2), (3).