Corruption, Financial Services, Latvia, Legislation, Markets and Companies, Shadow economy

In 2011, Latvian companies were ready to pay 6.6% on top of the prospective contract amount to win public procurement tenders, whereas last year the figure increased to 7.5%, according to a study on the shadow economy in the Baltic States presented at the Stockholm School of Economics in Riga last week.

Commenting the findings of the study, Corruption Prevention Bureau press officer Inta Saboha told LETA that public procurement tenders involved large amounts of money – and therefore high corruption risks. There are various reasons for this: historic traditions and people believing that they will not get anything if they do not give something for it, and public officials' willingness to accept bribes during public procurement tenders.

Saboha also emphasizes that many corruption cases go unnoticed to the authorities. "In cases where both parties are satisfied with the result and are have no interest in disclosing information about the fact, it is hard to fight corruption in that area," notes Saboha.

The Corruption Prevention Bureau believes that efficient external supervision and authorities' efforts are often not enough, businessmen's active involvement in the fight against corruption is necessary. There are several factors that contribute to the risk of corruption in public procurement tenders, for instance, insufficient supervision, increasing competition at a time of economic crisis, procurement experts working at one and the same institution for a long period of time, the confidentiality provision.

Unfortunately, the Corruption Prevention Bureau has observed that businessmen's tolerance of corruption is high. During the investigation in several criminal cases, the bureau established that businessmen were part of criminal schemes but did not report them to the authorities. The bureau hopes that amendments to the Criminal Law and Criminal Procedure Law, which came into effect on April 1, will make businessmen more cooperative with the authorities.