Corruption in awarding water contracts (TI, 2008)
Water agencies often award high-budget contracts to private companies to operate and maintain public water and wastewater systems. Larger contracts have longer durations and involve more complex provisions, making the tailoring of contracts to preferred suppliers harder to detect. Such contracts are often awarded within the space of soft budget constraints. The possibility of drawing on public subsidies or adjusting user fees emancipates company managers from strictly commercial cost pressures and provides them with additional discretion in designing and awarding contracts.
As many well-documented cases show, the temptation to engage in corrupt practices within those contexts is very strong. Not only are industrialized countries not immune from these problems, but many of the more notorious corruption cases have occurred in Europe and the United States. In Milan, for example, an executive of a private water company was imprisoned in 2001 for planning to bribe local politicians with US$2.9 million to win a US$145 million wastewater treatment contract. The city council president was also convicted and jailed (Sohail & Cavill, 2007, as summarized in TI, 2008).