BID rigging, especially in the public sector, is a serious problem that refuses to go away.
The latest is the disclosure on Tuesday by the Malaysia Competition Commission (MyCC) of seven firms linked to bid rigging involving Defence Ministry (Mindef) projects worth RM20.8 million.
This is just a slice of the national pie of public procurement. In 2020, the MyCC estimated public procurement to be 32 per cent of the country's gross domestic product. With the 2024 Budget and 2023 Budget turning in all-time highs of RM393.8 billion and RM388.1 billion, respectively, the potential exposure to bid rigging must be humongous.
To MyCC chief executive officer Iskandar Ismail, bid rigging is merely anti-competitive behaviour. He is right. After all, that is what MyCC's remit is. But we say there is more. Buried somewhere in the bid rigging lie manipulation of the procurement process and other fraudulent practices.
Put differently, there is a case to be made for corruption. Senior lawyer Mohamed Haniff Khatri Abdulla agrees. Corruption is more than receiving bribes. If abuse of power is corruption, abuse of process must certainly be.
Perhaps not as yet in the case of the seven firms linked to bid rigging announced on Tuesday, but the Malaysian Anti-Corruption Commission must investigate if corrupt practices were involved in the Mindef projects. It is difficult to imagine such bid rigging without Mindef officers being in cahoots with the firms.
A clearer case for investigation by MACC are the seven companies which had paid the fines imposed by the MyCC following investigations in June 2022. They were part of the 500 companies investigated in June last year for the bid rigging of contracts worth RM2 billion. For some of these companies, bid rigging is just market manipulation, a creative fiddling of the procurement process. But it is more than that. It is a fraudulent practice that is tantamount to corruption. Not just MyCC should be after such companies, but MACC as well.
Bid rigging brings many dangers. Three will serve the purpose. Firstly, it causes huge financial loss for the government. A project that may have cost RM500 million may end up costing RM700 million because of bid rigging, the extra RM200 million to be shared with corrupt civil servants and corporate officers. But this example is just one.
The 2023 Budget allocated RM99 billion for development expenditure and the 2024 Budget, RM90 billion for the same. Imagine the scale of loss to the government if bid rigging is not punished. A big hole in the government coffers is a huge hole in the pockets of taxpayers. A government in financial distress will cause similar torment to the people by imposing new direct or indirect taxes.
Secondly, corruption in procurement, especially in public works and infrastructure, is likely to cause harm to the public. Death and injuries are not unknown when cheap and low-quality materials are used or unqualified companies are awarded projects. We may delude ourselves by saying that such things only happen in Mexico or Myanmar.
Episodic action by authorities against corrupt public servants and corporate officers will only encourage their impunity. The MACC must go for the jugular.
Finally, widespread corruption in the public sector makes government policy outcomes less than desirable. Or worse, unachievable.