Governments are not known for their speed or agility, but tied up in what many perceive as red tape and bureaucracy are measures that prevent corruption and ensure the proper use of public funds. COVID-19 has hit all aspects of life hard, prompting governments to act quickly to put together support mechanisms for businesses, individuals, and supply chains. But with our attention focused on meeting urgent needs as a priority, we run the risk of trading anti-corruption measures for efficiency.

The reality is that corruption and integrity issues actually increase during a crisis, when using resources effectively is more important than ever.

Sole sourced procurement and rushed decision-making processes have been commonly adopted by governments around the world in response to the Coronavirus. Understandably, governments have done whatever was required to obtain supplies and protective equipment, and to keep businesses afloat.

Given the rising death toll and overwhelmed health systems, transparency and due process have often given way to ensure speedy procurement. As with past pandemics and natural disasters, profiteering has reared its ugly head, with reports of price gouging for basic supplies, diversion of funds intended to fend off starvation among vulnerable populations, and contracts awarded to organisations with unreliable backgrounds and a limited ability to deliver.

Programs designed to help businesses and their employees stay afloat have also been subject to abuse. In April, large and even publicly traded companies managed to obtain funding in the first round of the U.S. government’s small business relief program funds, while thousands of small businesses were unable to access desperately needed support to prevent mass redundancies. While new guidance for the next round has now been issued to prevent further abuse by effectively excluding publicly-traded companies (which have access to capital markets), the original loophole demonstrates how important it is that support be designed to protect pay checks rather than profits.

Making Healthcare Less Effective

Corruption has a long history of undermining healthcare delivery and systems in the developing world. During crises, even small bribes can diminish the effectiveness of containment efforts, such as during the Ebola crisis in Sierra Leone when people paid soldiers to leave containment areas in order to bury their dead in a traditional way. Bribery as a way to cross borders that have been closed to contain COVID-19 has already been reported.

During the Ebola crisis in Liberia, the pervasive lack of trust in Government, partly resulting from corruption, and poor health care data infrastructure contributed to citizens’ dismissal of the government’s health warnings. In the years since Ebola, trust in government in many countries has further declined. This, combined with inadequate medical equipment and poor service delivery, both exacerbated by corruption, could prolong the health, economic and humanitarian effects of the COVID-19 crisis.

Any time there is disruption, criminals take advantage of the chaos. Numerous cases of fraud and abuse have been noted globally – from protective equipment being sold by fraudsters with no intent to deliver the goods; to poor quality masks procured from organised criminal groups with political links; to disappearance of procured medical equipment. Investigative journalists, such as the OCCRP consortium, and civil society investigations are particularly important to document and expose abuse.

Exacerbating Effects on the Vulnerable

Previous health crises have also shown that the most vulnerable can lose access to necessary healthcare during shocks, even when emergency measures are in place. During the Ebola crisis, government officials misappropriated donor funding (including Sierra Leone’s chief medical officer), leaving medical personnel to illegally charge for medicine and healthcare services while officials enjoyed expensive homes and cars that could not be accounted for by their salaries. The Red Cross counted USD 5 million of losses during the Ebola epidemic in West Africa, after auditors uncovered salaries for non-existent workers, counterfeit customs bills and over-priced supplies.

The Ebola outbreak also highlighted how corruption can increase the risks for medical workers by delaying the delivery of or providing low-quality protective equipment. In Sierra Leone, frontline medical workers staged protests over on-going underpayment of their already modest salaries.

The Benefits of Starting Early

With these examples in mind, can we afford to side-line anti-corruption in the current crisis?

Real-time tracking could reduce the incentives for individuals and companies to engage in corruption. Spot checks and trend analysis of receipts and money trails can be effective deterrents, as individuals will know they’ll be held to account. The IMF’s managing director Kristalina Georgieva has asked recipients of its USD 1 trillion to “spend what you can but keep the receipts”.

By cutting off avenues that allow corrupt behaviour to fester unimpeded, mechanisms to thwart corruption ensure the funding goes to where it is intended. They can also reveal the flaws in systems, allowing for earlier course correction. Corrective measures during the crisis can include stopping funding for severely underperforming contracts, along with open book requirements, transparency, claw backs and audit rights post-crisis.

Some countries have taken the present opportunity to introduce or bring forward much-needed improvements, such as digitising systems to enable remote access. Digitisation can reduce corruption by improving the traceability of fund movements and the ability of authorities to more effectively investigate abuse. Many developing countries’ law enforcement agencies continue to work with paper, which is easily misplaced and can hinder the progress of particularly complex cases in normal times. During lockdowns, this over-reliance is further exacerbated when investigators might not have access to their offices and archives while criminals continue to innovate digitally. Appropriate safeguards for digital work and tools, however, need to be put in place to avoid the leakage of sensitive data. Other issues raised have included the risks of data anonymisation, biases included in algorithm design, and the new solutions’ sustainability.

While rapid action is needed, relegating anti-corruption and integrity considerations to a later stage of the COVID-19 response risks undermining crucial healthcare, economic support, and recovery work, especially in countries where corruption is rife. Donors are uniquely placed to support accountability initiatives that ensure both donor and state funds are spent for the benefit of entire societies, and the most vulnerable in particular.

Contact info@thepalladiumgroup.com to learn more.