By IPS Correspondents
BERLIN, Apr 6 2006 (IPS)

Transparency International has urged the European Commission to rigorously enforce a provision for blacklisting companies found guilty of corruption.

Such companies should be debarred from publicly funded contracts in the 25-nation European Union, says the Berlin-based civil society watchdog.

Transparency International (TI) has presented detailed recommendations in a letter to Siim Kallas, European Commission vice-president for administrative affairs, audit and anti-fraud. The European Commission is the executive arm of the European Union (EU)..

“A stronger, more transparent and harmonised European Commission debarment system will ensure that corrupt companies and greedy public officials do not sap EU resources,” TI said in a statement Thursday (Apr. 6).

Pleading for making the mechanisms to enforce such a debarment more transparent and standardised across EU departments, TI said it is vital that “member states bring their national debarment mechanisms into line with a common standard.”

A strong debarment system is critical “to prevent corrupt companies from enjoying the benefits of publicly funded contracts anywhere in the European Union, at any level,” TI Chair Huguette Labelle said in her letter to Kallas.

“Our ultimate goal here is to change behaviour, and above all, to increase the power of the debarment system to prevent further abuse,” said Labelle, a Canadian national who was elected TI Chair last November.

The EU has provisions for excluding companies from public tenders if they are found to have bribed someone. But enforcement is far from adequate. Also, the mechanisms remain shrouded in obscurity.

TI says the current framework does not apply to about 80 percent of the EU budget spent under member states’ management in “shared management schemes.”

Labelle said in her letter to Kallas that cases like the United Nations oil-for-food scandal underscore the importance of adequate corruption prevention in international organisations.. “The EU must do more to protect its financial interests and to safeguard taxpayer funds,” she said.

In the oil-for-food scandal companies are known to have bribed Iraqi officials to win UN-approved contracts, while the Iraqi government used its allowances to favour certain companies during the years of the sanctions on Iraq in the 1990s.

TI made several recommendations to Kallas. Among them:

– Lists and details of debarment mechanisms must be made public to maximise their preventive potential;

– Due process must be observed when companies are placed on or removed from debarment lists;

– Debarment must be automatic following a court conviction; in cases where there is no conviction but where corrupt behaviour can be verified, clear criteria must guide the debarment process;

– Options for centralising the debarment function in the European Commission must be explored to bring consistency and accountability to the system.

The recommendations originate from a roundtable organised last January by TI with the European Anti-Fraud Office in Brussels. The meeting was attended by EU officials, business leaders, and experts.

The objective of the roundtable was to explore ways to strengthen and expand the EU’s debarment system, taking into account the experience of international organisations like the World Bank, EU member states and Transparency International.

New initiatives are necessary because “corruption still takes place on a broad scale,” TI said in its note.

Some 60 percent of respondents to an earlier World Business Environment Survey (WBES) by the World Bank Institute indicated that a bribe above 5 percent of the value of the contract is typically needed in doing business with a government.

The survey covered more than 10,000 firms in 80 countries. It was based on face-to-face interviews with firm managers and owners in late 1999 and early 2000.

While admitting that debarment alone will not create clean markets, TI said it can be ”a highly effective complement to other preventive and repressive actions taken by governments and companies.”

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