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WORLD: Iraq and Tsunami Regions 'Corruption Prone'

Reconstruction in Iraq has been riddled with corruption while regions stricken by the Asian tsunami disaster are also highly vulnerable to the fraud, according to Transparency International, a global watchdog.

The Autralian
March 17th, 2005

POST-WAR reconstruction in Iraq has been riddled with corruption while regions stricken by the Asian tsunami disaster are also highly vulnerable to the fraud that plagues large-scale building projects around the world, a global watchdog reported today.

Launching its 2005 corruption report, Transparency International said many major building projects would never have passed the planning stage without bribes changing hands.

Peter Eigen, the chairman of Transparency International, said corruption in construction projects "plagues both developed and developing countries".

"Funds being poured into rebuilding countries such as Iraq must be safeguarded against corruption," he said in a statement ahead of the official launch in London.

"Transparency must also be the watchword as donors pledge massive sums for reconstruction in the countries affected by the Asian tsunami last December.

"When the size of a bribe takes precedence over value for money, the results are shoddy construction and poor infrastructure management.

"Corruption wastes money, bankrupts countries and costs lives," Mr Eigen said.

The study said that if urgent measures were not taken, Iraq was in danger of becoming "the biggest corruption scandal in history".

The Iraqi government, coalition forces and foreign donors must take "a much more aggressive approach" towards corruption, it said.

Foreign governments should apply strict anti-corruption guidelines to companies operating in Iraq, and in the push towards privatisation it should be remembered that "markets need strong institutions to avoid giving way to a form of capitalism dependent on personal connections".

At the press conference to launch the report, Mr Eigen said the rebuilding in the areas affected by December's tsunami provided "a climate that is irresistible for corruption".

He noted however that Transparency was pleased to see that the United Nations was trying to ensure transparency in the distribution of the hundreds of millions of dollars pledged for the crisis-hit area.

Transparency said that while some projects get off the drawing board only as a result of corruption, sleaze also tainted the awarding of construction contracts and the operation and maintenance of projects.

Among six "monuments of corruption", it cited the Bataan nuclear power plant in the Philippines, built at a cost of more than $US2 billion (1.49 billion euros) on an active fault line.

Transparency said the contractor had admitted paying $US17 million in "commissions" to a friend of former president Ferdinand Marcos. The reactor is yet to go into operation.

Another example is the reservoir of the Bakun dam in Sarawak, Malaysia, which will flood hundreds of square kilometres of tropical rain forest. Transparency said the mandate to develop the project was awarded to a timber contractor and friend of Sarawak's governor.

Transparency also picked out an incinerator project in Cologne, Gemany, a water project in Lesotho, the Bujagali dam in Uganda and the Yacyreta hydropower project on the border of Argentina and Paraguay.

The body said the construction sector was especially prone to corruption for a number of reasons, including the fierce competition for "make or break" contracts and the many levels of official approval and permits that leave the process open to abuse at a number of stages.

There is also the unique nature of many projects, making it hard to compare pricing, the opportunites for the projects to overrun budgets and deadlines, and the fact that sub-standard work can be covered with concrete before it is spotted.

To coincide with the report, Transparency also set out its Minimum Standards for Public Contracting, which call on public contracting authorities to ensure that contracts are awarded only after an open and competitive bidding process.

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