Cyprus Mail

Six months on law to ban crooked contractors yet to be implemented

Work being carried out by SAPA

Some six months after it was passed a law barring crooked contractors from bidding for public projects has yet to be implemented.

The reason, apparently, is that the government has not managed to find people to staff the review committee which by law has the final say in disqualifying companies from public procurements.

The law, passed in April just before the House dissolved for the parliamentary elections, stipulated the establishment of a review committee.

The accompanying regulations stipulated that the five members of the committee must be former Supreme Court judges or former presidents or senior judges of district courts.

The committee would be chaired by a retired Supreme court judge.

But in the six months since the government has been unable to find the required persons.

It is understood that the problem is that not enough retired judges have come forward for the job, a paying position, even though there is no shortage of them.

As a result, the ministry of finance is currently amending the regulations. The members of the review committee will be three, not five. The criteria for the judges have been relaxed, so that the positions are open to judges other than those previously serving on the Supreme Court or as presidents of district courts.

If that doesn’t work either then the Treasury – which is working on amending the regulations – may propose that the review committee comprise of government technocrats not judges.

The amended regulations have been forwarded to parliament.

In the meantime, without a review committee to issue rulings, the law is more or less rendered moot – meaning that culpable contractors are still allowed to bid for public tenders.

This could lead to a peculiar situation. Since crooked contractors are not automatically barred from bidding – precisely because the review committee does not exist yet – a company previously implicated in corrupt practices is still entitled to bid for a public contract.

What may happen is that a contracting authority, say a municipality, will look at the contractor’s soiled track record and decide to ban that contractor – but only for the tender in question.

And in another twist, because the contractor has been allowed to bid in the first place, they are likewise afforded the right to appeal against their elimination with the Tenders Review Authority, which would have to hear the case.

Conversely, were a review committee in place, it would have been handing down blanket prohibitions, preventing blacklisted contractors from bidding at all.

As daily Politis reports, the whole matter might have slipped under the radar were it not for a discussion taking place on October 13 at the House watchdog committee.

There MPs were discussing a government bill concerning adjustments to tender procedures for transport, postal and energy-related projects.

Because of the related nature of the discussion, lawmakers discovered then that the review committee blacklisting contractors had yet to be established.

MPs warned the government that unless it fixed the problem, they would filibuster the new government legislation relating to tender procedures.

Under the blacklisting law, companies which have been proven in court to have bribed their way into securing public contracts, or whose cadres have admitted to as much without being indicted, are prohibited from bidding for any and all public tenders for a period of up to five years.

The legislation is designed to blacklist not only companies but also their senior directors. This is to stop businessmen from gaming the system by merely dissolving a company and reconstituting a new one.

However the law is not retroactive. But where tenders are still open and a decision is pending, authorities are able to exclude bidding companies from that tender as well as future competitions.

Officials from at least five companies have admitted to bribing public functionaries in the ongoing Paphos Sewerage Board (SAPA) trial. A succession of company directors have testified in court that they gave kickbacks to officials but argued they were being blackmailed into doing so.

Several businessmen and their companies will evade prosecution in the SAPA case as they turned state witness. However, they and their companies are subject to blacklisting where future public tenders are concerned.

The sewerage scam saddled Paphos municipality, and subsequently the taxpayer, with extra costs due to often-unnecessary additional work on the project. The project came in at some €40m over budget.

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