MONEY AND POLITICS the links between public procurement

MONEY AND POLITICS the links between public procurement and political parties LIST OF POTENTIAL FRAUD INDICATORS AND PATTERNS

FRAUD/ CLIENTELISTIC MECHANISMS

GENERAL CONCLUSIONS • Three most important types of mechanisms through which politicans abuse public resources: public procurement, state owned companies, discretionary allocations of funds • Politicians keep the money for their personal use; or give a rather small fraction to the party • Money is more important than the party adversities

• National funds are more vulnerable to less scrutiny and less institutional capacity; EU money are at risk too, in spite of heavy bureaucracy • Big companies get money due to capacity and resources; they had political support to get here (“the first million”) • A significant number of companies (>75%) in top 20 -30 profit (works contracts) are politically connected or have criminal record

GENERAL MECHANISMS OF CORRUPTION IN PROCUREMENT • Specifications tailor-made for certain companies • Conflict of interests in the evaluation of bids • Collusive bidding • Unclear selection or evaluation criteria • Involvement of bidders in the design of specifications • Abuse of negotiated procedures • Abuse of emergency grounds to justify use of noncompetitive or fast-track procedures • Amendments of the contract terms after conclusion of the contract

• Systematic contracting for feasibility studies (copy paste studies for same price) + additional costs • Consultancy with overpriced fees or services that are not performed in reality • Big difference between the estimated value and the final value of the contract; over-evaluated contracts • Concentration of winners. Example: 4 -5 firms out of 60 -70 get 50 -60% of the funds (see PNDL, http: //expertforum. ro/en/clientelism-map)

FRAUD MECHANISMS – extracted from convictions • Preferential allocation of funds (Reserve Fund, PNDL etc) for same colour local administrations > dependency to the center • Manipulation of legislation in order to create exceptions or more rights for some contracting authorities (see OUG 6 and 9/2017) • Determining of the local decision-makers by a political leader to bring votes in exchange for approving funds

• paying a commission/bribe (typically 10 -20%) of the contract to the contracting authority to win the procurement procedure or to approve payments for works already executed by companies • the use of false or overrated consultancy contracts to mask the illegal campaign funding • using false documents to get EU funds/ changing the destination of the funds

• obtaining funds in situations of conflict of interests – the decision-maker is the shareholder, administrator or is controlling the firm in any other form and uses the public office to get contracts for the company – potential conflict of interests: the existence of companies whose owners work/ed in public institutions such as CNADNR or MDRAP

• Politicians soliciting from companies various products or services for electoral campaigns / companies offering products or services • obtaining funds illegally under the pretext of organizing events, by paying participation fees that are used the pay for political campaigns See detailed infographics with the mechanisms described: http: //expertforum. ro/banipolitica/

PATTERNS

• Total political donations of app. 59 mln. EUR / almost 80% came from individuals • 1724 companies that donated 2006 -2015 • more than 600 companies had contracts with the state / 303 from EU funds

Partidul Mișcarea Populară 1% Sorin Mircea Oprescu 3% Total donations to parties, companies and individuals, 2006 -2015 Partidul Conservator 2% PNTCD [PERCENTAGE] Uniunea Democrată Maghiară Din România 4% Alianța Politică Partidul Social Democrat + Partidul Conservator 5% Partidul Noua Generație -Creștin Democrat 5% Uniunea Social Partidul Liberală Național Liberal 7% 9% UNPR [PERCENTAGE] Partidul Democrat Liberal 36% Partidul Social Democrat 22%

CONNECTIONS BETWEEN PROCUREMENT AND POLITICAL PARTIES Analysis of data shows that the development of some of the major companies is due to political support. The rise and fall of the company is directly connected to the rise and fall of the party in which a stakeholder is part of or supporter. You can find some examples in the following slides and in this infographic http: //expertforum. ro/banipolitica/

Typologies of anomalies in procurement * The space betwee nlogos show the governing period of that specific party

ASESOFT INTERNATIONAL / TEAMNET> Companies controlled by Sebastian Ghiță, former PSD MP (2012 -2016). Both donated to PDL in 2009. * The space betwee nlogos show the governing period of that specific party Source: termene. ro, modified

TEHNOLOGICA RADION THEODOR BERNA, former advisor of mayor Traian Băsescu (PD)

DELTA ACM 93 Ionel Pirpiliu, brother of PDL deputy Ștefan Pirpiliu Florin Diaconu, close to former PDL deputy Silviu Prigoană

TEL DRUM Connection to PSD President, Liviu Dragnea, according to press/DNA 50% of all contracts are signed with CJ Teleorman

UTI GRUP Tiberiu Urdăreanu (UNPR), member of leadership since 2012 Sentenced for bribery for a contract (10%) dissolved UNPR > USL G. Oprea - vice PM

Resources http: //expertforum. ro/banipolitica - infographics (RO) http: //www. expertforum. ro/en/clientelism-map - Map of Clientelism – allocation of funds and procurement http: //expertforum. ro/en/money-and-politics-the-links-between-publicprocurement-and-political-parties/ - EFOR policy brief # 61, Money and Politics – the links between public procurement and political parties http: //expertforum. ro/en/annual-report-2018/ - EFOR ANNUAL REPORT: The bazaar governance Contact: septimius. parvu@expertforum. ro