Case Examples of Hidden Interests

West Africa, Road Project

The Director of a road rehabilitation project instructed an international firm competing for the construction supervision contract to include a certain local subcontractor in its proposal, and to allocate 10% of its bid price to it. The subcontractor was to provide labor to assist in land surveys. The project official assured the international firm that it would win the contract if it agreed to use the specified contractor.

The international firm complied, won the contract, and was only mildly surprised to discover that the local subcontractor was owned by the Project Director. It was more disturbed, however, to learn that the sub-contractor’s employees, for which they were paying exorbitant fees, were fulltime project staff.  The subcontractor provided no actual services and the employees received only their project salaries.

Central Asia, Various Projects

Similarly to the West African case above, in at least two cases in Central Asia, local project and government officials set up side companies that “employed” (without paying) the salaried staff they supervised. The officials then recommended or insisted that international firms hire the companies as subcontractors for 10% of the contract value.

In other cases in the region local project staff purchased project vehicles, computers and office equipment through front companies they controlled and resold them to the project at several times their actual value. In one case, the project officials purchased printers for their retail price of US$400 and resold them to the project for US$8,000.  In another case the officials delivered used and inoperable computers and vehicles.