Report: Public Procurement in Lebanon – A Gateway to Malpractice

As Lebanon seeks support to rehabilitate Beirut after the Aug. 4 port explosion, the country’s outdated and opaque public procurement system has rightly come under fire as a key enabler of corruption and waste.

There is an opportunity, however, to regain international trust but most importantly citizens’ trust by radically reforming the laws, procedures and practices around procurement. In short, state institutions must be empowered to play the oversight and control roles that were originally envisaged for them.

In our new report, “Public procurement in Lebanon: a gateway to malpractice,” we show how the current laws are tailor-made to protect the vested interests of corrupt officials who constitute the biggest risk for good governance, integrity and rule of law.

Major gaps, overlaps, inconsistencies and weaknesses exist in the roles and powers of the institutions responsible for ensuring that public funds are spent effectively and transparently. This must change.

  • The Central Tender Board is meant to act as the main procurement agency, but its feedback on bids and tenders is non-binding, it is bypassed easily and is undermined by the existence of rival procurement systems in other governmental institutions.
  • Central Inspection does not have the authority to audit all public institutions in full. Successive Cabinets have left it underfunded and understaffed, depriving the country’s prime oversight body of clout.
  • The Court of Accounts is tasked with overseeing the management of public funds but not all public bodies are subject to its oversight. Its role also overlaps with the Finance Ministry in control over proposed and past expenditure, and the punishments it is able to impose are weak and can be overruled by Cabinet.
  • Municipalities and Unions of Municipalities are governed by different legal frameworks. The different accounting principles they apply make the procurement landscape unnecessarily complicated.
  • The Public Accounting Law undermines competition by allowing excessive recourse to murky mutual agreements and bid slicing, which leads to the bypassing of the Central Tender Board.
  • Overwhelming confessional and political dynamics have weakened Parliament’s oversight function, while political allegiances, coupled with corruption and personal interests, have pushed government after government to allow mutual agreements to pass unchallenged.
  • The State Council is supposed to handle complaints about public procurement but the majority of the administrative courts where those complaints would be handled have not been created. The Justice Minister may also intervene in the appointment of its members, hindering its independence.

Our report contains detailed recommendations to fix these weaknesses and clean up Lebanon’s procurement system.

We welcome the inclusion of public procurement reform in French President Emmanuel Macron’s proposed roadmap for lawmakers and the incoming government, which calls on Parliament to prepare, adopt and implement a bill on the matter with urgency.

Good progress is already being made on that front, with the Institute of Finance’s draft procurement law currently under discussion in parliamentary sub-committees. It is vital to keep the pressure on now to make sure this world-class bill passes in Parliament’s general assembly without amendments that water it down.

iPLAN: A Revolutionary Tool for Revolutionary Times

The Interactive Platform for Legal Assessment and Navigation (iPlan) was also developed under the same project to complement the research on procurement oversight. It is a state-of-the-art technology that puts the entire Lebanese procurement system at users’ fingertips.

It offers a clear and accurate depiction of how different entities procure goods and services by using flowcharts and other visual tools to guide users smoothly through an otherwise complex and obscure web of processes.

All relevant laws and regulations related to procurement are compiled within the application for ease of reference.

Our work developing iPlan contributes to the fight against the widespread unavailability of public information and lack of transparency that mires Lebanon’s public institutions. As such, iPlan also includes accounting laws.

With iPlan, users can thus understand how public funds are spent, how they are authorised and by whom.

These projects were funded by the World Bank and implemented in collaboration with the Bassel Fleihan Institute of Finance (IoF).