Purchases in Regions: Possible Corruption Schemes

Kazakhstan continues to actively combat corruption and violations of legislation in the field of public procurement, but "Old Kazakhstan" resists change. Despite the efforts made, incidents still occur that raise doubts about the transparency and fairness of tenders. One such example is the cancellation of a purchase for the construction of the main step-down station in the Pavlodar region. Its cost is more than seven billion tenge. An Orda correspondent has looked into the matter.

According to the information received, the Pavlodar Region Public Procurement Department suddenly canceled the tender without any valid reasons or legal grounds. The person in charge indicated that the cancellation was due to an amount adjustment. This may be a violation of the current rules and regulations requiring justification for each cancellation.

"Special Procedure"

Reclassification of purchases as so-called "secret purchases" or "purchases with a special procedure complicates the situation. The Ministry of Finance approved new regulations for public procurement with a special procedure in 2023. These standards apply to goods, works, and services related to public order and national security, as well as those involving state secrets or official information.

Public procurement can be carried out in two ways: competition or from a single source. In the case of a competition, information about the purchase is not posted on the web portal. The entire process also includes many stages, such as forming a commission, checking suppliers, and summarizing the results. In the case of a single-source purchase, the client justifies this method, sends invitations to suppliers, and considers their proposals. 

An important point is contract enforcement. The supplier must secure 3% of the total contract amount and, if necessary, provide a payment in advance. These measures are aimed at protecting the state's interests and preventing cases where contractors do not fulfill their obligations.

However, this change became a legal loophole. This practice is often used to hide abuses and avoid inspections by the public and independent experts. Ideally, in order to use the special procurement procedure, the information on them should be classified as state secrets or information of limited distribution. The construction of engineering and communications infrastructure, including substations, does not fall under such categories.

According to experts from the Internal State Audit Committee, territorial departments are also involved in this corruption scheme. 

Tender participants, on the other hand, claim that similar schemes are widely used in various regions of Kazakhstan, including Turkestan, Atyrau, and Pavlodar.

An analysis of the documents shows that the Pavlodar Region Public Procurement Department could have canceled the procurement for the construction of the substation to hold the auction again, this time using the special procedure. This assumption can be made by carefully studying the protocols and other official documents.

   

Legal and Ethical Aspects

If the tenders were indeed canceled only to be held again, this violates the current legislation on public procurement. It requires that all purchases be conducted on a general basis and with transparency and competitiveness. The use of a special procedure for such tenders may undermine trust in government agencies and create fertile ground for corruption schemes.

Corruption and violations of the law become possible when procurements not containing state secrets and not qualified as classified information are carried out under the guise of secrets. Examples from the Pavlodar region demonstrate how tender organizers can use fictitious grounds to cancel the initial procurement to be able to conduct it again in circumvention of the law.

To combat such schemes, it is necessary to bolster control over the conduct of public procurement and ensure its full transparency. This includes the mandatory justification of all tender cancellations and the transfer of purchases to the category of secret ones with public access to such justifications. Only in this way will it be possible to create a fair and transparent public procurement system for the interests of society and not corrupt officials.

The Ministry of Finance of the Republic of Kazakhstan, law enforcement agencies, and public organizations should take note of such cases and act to prevent possible corruption in the public procurement system.

Original Author: Damira Augambaeva

DISCLAIMER: This is a translated piece. The text has been modified, the content is the same. For accuracy, please refer to the original article posted on 25/07/24 in Russian.