Corrupt procurement an issue for Greece and Turkey

Did you know that Greece had the highest defence expenditure in Europe (in terms of economic output) over the last decade?  Its military expenditure stood at around 4% of GDP in 2009, around the time its own debt crisis started. One of the reasons for that may well have been corruption in defence procurement, more of which is now being exposed. Last week, as Reuters reports,

“Antonis Kantas, deputy armaments chief at the defense ministry between 1997 and 2002, was arrested and charged this month after investigating judges found he had 13.7 million euros of unaccounted-for money in a Singapore bank”.

Kantas has actually returned 7 million Euros of his ill-gotten gains to the state, the Greek finance ministry announced, and his lawyers are suggesting the rest will follow. Kantas is the first official to openly admit taking bribes from foreign companies, apparently including those from Germany, Sweden, France, Russia, Brazil and Sweden.  A former defense minister and Kantas's immediate superior have already been convicted for money laundering.

Meanwhile, in neighbouring Turkey, there is a full-blown political crisis, with the Prime Minister Recep Tayyip Erdoğan accused by his rivals of involvement in a widespread web of corruption. His response has been to fire various people involved in the investigation, and threaten reprisals again those involved.

But the accusations are getting closer to him personally now – as the Huffington Post says, they now include  “Erdoğan's son, who allegedly acquired a shipping line and has profited from shady real estate deals in Istanbul. It is also alleged that a medical services company linked to Erdoğan's wife has profited from deals with the Health Ministry”.

The alleged corruption include government property being sold off cheaply to certain  individuals, a lack of transparency over land development, as well as favouritism in the award of contracts. And it is having a real effect in the country, with the Turkish Stock Market down some 15% in dollar terms through December.

So procurement is in the frame again here as a route for corrupt creation of wealth – not surprisingly, as that is where so much government money goes! Wherever there is the opportunity for corruption and fraud, it will happen. And don’t think that (whichever country you’re in) it ‘couldn’t happen here’ – it could, and probably does already, albeit maybe at a lower level than we see in these countries.

Which is why all organisations, not just public sector actually, need strong procurement processes and controls, the right culture, and appropriate checks and balances. Ultimately, potential fraudsters need to know that it is difficult to achieve their aims and that even if they were successful, there is a high chance of being caught.

Those conditions don‘t seem to have been in place in Greece or Turkey, and we can see the results now.

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