With increasing digitalisation, organisations in all areas of activity need to adopt new approaches to anti-corruption and risk management, as well as to comply with new national and international regulations.
These challenges are even more acute for public institutions. In this article, we look at the fight against corruption in the public sector.
CORRUPTION: WHAT ARE THE RISKS FOR THE PUBLIC SECTOR?
“Every year, $1 trillion is paid in bribes and $2.6 trillion are stolen through corruption – a sum equivalent to more than 5% of global GDP.” (UN)
Corruption is a global phenomenon, but it also has a major impact on a country’s economic and social development, as well as on the legitimacy of the state, by causing:
– erosion of trust in public institutions and the state,
– reduced effectiveness of public policies,
– unequal distribution of goods and services,
– undermining of electoral processes,
– an increase in cases of tax evasion &
– waste of taxpayers’ money.
THE SAPIN II LAW TO FIGHT AGAINST CORRUPTION
According to the International Monetary Fund, political will, institutions and fiscal policies can overcome corruption. In France, in 2016, the law n° 2016-1691, known as Sapin II, was introduced with the aim to deeply reform the legal framework relating to transparency, the fight against corruption and the modernisation of economic life. In particular, it requires the entities concerned to adopt internal mechanisms for the prevention of corruption and fraud.
Under Article 3 of the Sapin II law, the public sector, i.e. public organisations and their operators, are obliged to implement “anti-corruption mechanisms” to prevent, detect and resolve probity breaches.
This regulatory framework provides for a set of measures which are divided into 3 levels:
- – Level I: during the entry and validation of entries
- – Level II: the accounting system and risk mapping
- – Level III: internal audit on governance and the organisation implemented to ensure controls
CREATION OF THE AFA
In addition to the establishment of an anti-corruption mechanism, the Sapin II law instituted the creation of an anti-corruption authority, the Agence française anticorruption (AFA). Its mission is to help competent authorities and individuals to prevent and detect corruption. It thus fights against breaches of probity which include the following acts:
- corruption;
- influence peddling;
- bribery;
- illegal taking of interest;
- misappropriation of public funds &
- favouritism.
THE PUBLIC SECTOR AND ANTI-CORRUPTION: THE AFA’S VIEW
In 2018, the AFA published a national survey on the prevention of corruption in the public service. The respondents were mainly from municipalities, “départements”, regions and their establishments, including public-funded inter-municipal cooperation institutions and public housing boards and local publicly-owned companies.
The agency pointed out that measures to prevent probity breaches in the local and territorial public sector and ministries are still limited to the largest organisations and are sometimes insufficient. For example, municipalities, which are mostly small, “have fewer internal controls and audits” than other local authorities, the agency noted.
In 2021, the AFA conducted a second survey, Prevention and Detection of Corruption in Local Governments and Public Entities, which provides a new assessment of the deployment of anti-corruption measures and procedures in the local public sector. This report also measures the achievements since 2018.
THE MAIN FINDINGS OF THE REPORT
- 43.3% of “départements” have reportedly been confronted with one or more cases of corruption in the last five years. In 2018, only 12.1% claimed to have been aware of such cases in their community.
- 76.9% of respondents initiate a disciplinary procedure in case of corruption, compared to 32.1% in 2018. Most of these procedures result in a disciplinary sanction and criminal proceedings are initiated for 61.5% of respondents.
- 26.0% of respondents report that they have an anti-corruption plan or, in the absence of a formal plan, that they are implementing anti-corruption policies. In 2018, the share was only 7.3%.
- 68.2% of public housing offices consider themselves to be at risk and almost a quarter of other entities consider themselves to be at risk.
- 59.3% of large municipalities responding to the survey consider public procurement to be a sector at risk of corruption.
THE AFA’s CONCLUSIONS
In light of the survey results, the AFA notes that there has been real progress in the knowledge of risks and tools developed by the French anti-corruption framework (the Sapin II law, the AFA’s recommendations and practical guides, etc.) to help local public actors prevent and detect breaches of probity risks. Nevertheless, it stresses that there is still room for improvement, particularly with regard to the appropriation of practices and tools that are still recent, such as internal alerts and integrity assessment of third parties. Similarly, some legislative or regulatory measures that predate the Sapin Law have not been implemented, it says.
The agency also indicates that nearly half of the respondents cite insufficient resources as a reason for not deploying an anti-corruption system. Also, more than 40% of them believe that “the risks are low or under control” and 15% that there is “no legal obligation” to do so. For these reasons, the AFA is in favour of legislative change.
“These findings underline, with regard to the weaknesses still identified in this survey, the need to explain the concepts used and to develop practical tools to help implement the main measures making up an anti-corruption system. The aim is to make these measures more accessible to entities with fewer human resources and expertise.” (AFA)
It should also be noted that despite the promulgation of the Sapin II law, the AFA and a number of observers indicate that the public sphere is still lagging behind in the development of its anti-corruption system compared to private operators, who are already engaged in compliance procedures.
Fighting corruption: the AFA’s proposals
Instead of isolated and scattered measures, which “lack coherence and suffer from their lack of complementarity”, the AFA proposes that public organisations adopt an anti-corruption framework (see table below). It is based on three pillars, as opposed to eight in the previous study. They are the commitment of the governing body, the mapping of the risks of corruption and the management of risks.
The third pillar, risk management, in fact groups together all the other measures stipulated by the Sapin II law. This pillar therefore provides for the deployment of internal measures to limit the risks identified. It is structured around three main areas, namely risk prevention, detection and resolution.
As regards the phase of detecting facts, the AFA goes further and advises public actors, as well as private companies, to set up:
- An alert system to enable reports of unethical conduct or situations to be collected;
- an accounting control system to prevent registers and accounts from being used to conceal acts of corruption in particular
- an internal control and evaluation system for the measures and procedures making up the anti-corruption system.
KANTIK SUPPORTS PUBLIC SECTOR ACTORS
Using regulatory constraints to transform them into opportunities is a part of Inferensia’s strategic positioning. Our Kantik platform, which is equipped with an internal control system to ensure the prevention and detection of accounting anomalies within organisations, is now officially referenced by the Union des groupements d’achats publics (Ugap).
Ugap is a public organisation dedicated to public bodies and private organisations with a public service mission. It provides and facilitates public merchandising services. Thanks to UGAP certification, Kantik can assist public operators in their anti-corruption efforts.
SOURCES
National Assembly: Law 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of economic life
French anti-corruption agency. Survey on the prevention of corruption in local public services. Analysis report. November 2018.
French anti-corruption agency. Prevention and detection of breaches of probity in the local public sector. April 2022.
French anti-corruption agency. “Second national survey on the prevention of corruption in the local public sector.” French Anti-Corruption Agency, April 2022.
Vitor Gaspar, Paolo Mauro and Paulo Medas. Combating government corruption. Blog. IMF, April 2019.
Ministry of Justice. “France’s new anti-corruption strategy.” Ministry of Justice, June 2021.