Corruption risks during the pandemic

Latin America often tops the rankings of regions with higher rates of perceived corruption. It is estimated that corruption costs the region 220,000 million dollars a year, equivalent to Peru's GDP or Germany's international reserves. 

Given these precedents, managing a global pandemic has been a challenge. Countries were forced to sharply increase their spending in several areas, including health issues. The WHO estimates that 89 million medical masks, 76 million test gloves and 1.6 million protective goggles are required monthly on a global basis.

It is additionally estimated that contracts with a strong element of public funding have been signed for Covid-19 vaccines alone — amounting to more than $9 billion from governments and more than $2 billion from charities. According to UNICEF the price per vaccine dose ranges between USD 2 and USD 40, which shows that opportunities for corruption are opening up with such obvious overpricing.

It is clear that the pandemic represents a great management challenge for the governments in the region, and that the health emergency itself also generates ample opportunities for corruption.

In this regard, governments need to efficiently serve the population while guaranteeing transparency in public purchasing and contracting processes, both in terms of health and emergency services as well as economic recovery.

At this time cases of irregularities have been appearing, such as the arbitrary vaccination of important authorities in the region or the artificial pricing of medical supplies. But there has also been a greater demand for transparency about purchase prices or key input supplies to combat the pandemic.  For example, in Colombia a high court recently ordered the government to hand over information from contracts related to the purchase of vaccines.

Although there are still no figures on whether corruption has increased with the pandemic, the overall cost of corruption is estimated to be $2.6 trillion, or 5% of global GDP.

According to ECLAC, this is more than double what is required to provide an emergency basic income to all people in Latin America and the Caribbean living in poverty today.

The efforts to combat corruption during the pandemic have also been noteworthy. Data-driven technologies have been used to provide more publicity and transparency for emergency public purchasing processes.

These include real-time, results-based cost allocation and tracking mechanisms to algorithms that automatically send calls to propose emergency bids to registered suppliers as a result of the pandemic.

The availability of open data, a necessary input for both civil society and control institutions to have more effective anti-corruption mechanisms in Latin America, remains a challenge to overcome.

In any case, this has not stopped several countries from starting to use data analytics, machine learning and artificial intelligence to combat corruption, in what represents another example of the potential of digitalization.

One of the areas where progress is being made is the digitization of public purchasing processes and in the design of mechanisms for contracting and publishing information in line with amicable and publicly accepted standards.

In Brazil for example with the ALICE application and in Colombia with the OCEANO application, the control authorities are able to track corruption risks in real time on a mass basis using the information published by public purchasing agencies.

"Latin America continues to need historic reforms to quell corruption, most of which are related to the Lima agreement of 2018. Institutional anti-corruption adjustments are needed, such as the regulation of conflict of interest, lobbying, the adoption of a whistleblower protection regime, the in-depth implementation of anti-money laundering mechanisms as well as anti-bribery conventions, and the simplification of processes for recovering ill-gotten assetss," says Camilo Cetina, chief executive of CAF.

Other countries have also made progress in making their corruption control mechanisms more sophisticated. Paraguay, for example, has released an electronic portal where Covid-related expenses and operations are published. Ecuador made commitments to the open government alliance to make its electronic public purchasing platform more open and transactional. And Colombia established mechanisms based on price framework agreements to ensure a transparent supply of goods related to the pandemic.

Additionally, Open Goverment Partnership (OGP) offers information on more than a hundred digital initiatives that make government attention and management of the pandemic more visible.

, According to studies available from the OECD or the World Bank, Cetina states that corruption is one of the main elements that deteriorates trust between citizens and governments; and that it needs to be restored in order to enforce the law and the public provisions needed to contain the pandemic.

The integrity agenda is not only important during the pandemic, but will be critical to recovery as an essential part of reactivation programs.

In this regard, the digital transformation of governments is also an opportunity to fight corruption, especially through data transparency, reduced discretion and process simplification.