Wen Jiabao

Draft regulations take aim at corruption in tendering

PUBLISHED : Friday, 02 December, 2011, 12:00am
UPDATED : Friday, 02 December, 2011, 12:00am


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New draft regulations aimed at combating corruption in tendering for projects have been approved at State Council meetings chaired by Premier Wen Jiabao.

The draft regulations were aimed at 'current acute problems', such as projects being given to predetermined parties without a legitimate tendering process, or officials abusing their power in the tendering process, said a document that was published on China's government website yesterday.

Under the new regulations, all projects where the government has a controlling stake must be put up for public tender, unless granted special government exemption. The new regulations forbid using unreasonable criteria to disqualify bidders or make it easier for some bidders to qualify for projects. The regulations seek to prevent collusion between bidders and project owners through the exchange of money or power.

The State Council called for increased safeguards against officials using their position to illegally interfere in tendering for projects. The regulations call for tougher penalties for collusion and fraud in tendering, including the nullification of irregular tenders, confiscation of illegal gains, fines and disqualification from future projects for a set period.

'What Wen said moves China towards international best practice. If it's open tender, there is less scope for corruption,' said Richard di Bona, who runs a Hong Kong transport consultancy.

'The Chinese government acknowledges corruption is endangering political stability and economic growth, and has been pursuing an anti-corruption campaign to curb the persistent problem. The construction sector is notoriously corrupt,' the Business Anti-Corruption Portal wrote.

'Sectors heavily regulated by the government, such as banking, finance and construction, are most susceptible to corruption.'

The Business Anti-Corruption Portal is a website funded by Austria, Denmark, Germany, Holland, Norway, Sweden and Britain to advise medium-sized enterprises.

In April, the central government announced it had discovered 244,400 problems in 384,500 government-funded construction projects, and punished 11,273 people.

For example, in some high-speed railway projects, well-connected companies that lacked the technical capability were awarded contracts, which they subcontracted to other firms with the requisite technical ability, Di Bona said.

'The new measures are reasonable. In China, the rules are well written on paper, but it's all about how they carry them out,' said Professor Raymond So Wai-man, dean of the business school at Hang Seng Management College.

The regulations would give the Chinese government teeth to punish officials for corruption in tendering, So said. 'Wen is taking measures to make people understand the government is trying to do something to correct misbehaviour.'

China's railway sector was dominated by a few big state-owned firms, which was not conducive to competition even with new regulations promoting fair bidding, said a Hong Kong transport professor. Other measures were needed, such as raising the salaries of officials in China - which were much lower than those in Hong Kong - said the professor, who declined to be named.