LONDON (TrustLaw) – Building an extensive network of roads can help boost nations’ economic growth, but road projects in both developed and developing countries are frequently rife with corruption and collusion, a Wednesday report from the World Bank said.
The report from the World Bank’s Integrity Vice-Presidency (INT) drew on its own investigations into misconduct in World Bank-funded projects in order to examine how corruption, collusion and fraud can be reduced on road projects in general worldwide.
“Corruption in the roads sector is a problem for both developed and developing countries, yet the economic and social loss is more profound for poor communities in developing countries,” said Robert Zoellick, President of the World Bank said in a statement released with the report – Curbing Fraud, Corruption and Collusion in the Road Sector.
“Well-planned, properly-maintained and safe roads are critical for economic growth and overcoming poverty. Fighting collusion and corruption in tendering and execution of roads sector is a priority for achieving sustainable investments for our clients,” he added.
The report identified collusion between firms bidding on a project as one of the most common forms of corruption in road-building projects, and urged countries to ensure they had laws that were capable of penalizing bid-rigging.
“Countries that have been able to deal with collusion effectively have confronted cartels and other corruption trends that have plagued the sector,” said Leonard McCarthy, World Bank Integrity Vice President.
“It takes political will, a well-informed and credible capacity to prevent risk and detect red flags early on in the tendering process in addition to enforcement when corruption is detected,” he said.
Between 2000 and 2010, the World Bank lent almost $56 billion towards 540 road-building projects. About a quarter of those projects attracted one or more allegations of fraud, collusion or corruption in either the bidding process or in the implementation of the contract. Subsequent investigations by the INT found misconduct in 29 cases arising from 25 separate road-building projects.
The report emphasised the fact that road projects greatly benefit the poor, citing increases in labour productivity, agricultural productivity and school attendance in countries where new roads were built. When roads are inadequate, unsafe or overpriced, it is the poor that are impacted the hardest, the report said.