Business Corruption

According to the World Bank & IFC Enterprise Surveys 2009, more than half of the surveyed companies stated that they expect to give gifts in order to secure a government contract. Companies looking to get government contracts in Benin should be aware that many observers find public procurement and contracting to be one of the most corrupt sectors in Benin. Companies are recommended to use a specialised public procurement due diligence tool in order to mitigate the corruption risks associated with public procurement in Benin.

Global Integrity 2006 notes that in spite of the government's emphasis on competitive bidding, there have been cases in which high-ranking officials with special interests have intervened in order to change decisions and give post-award contracts to other companies. This was the case when the Minister of Environment, Housing and City Planning challenged the decision of the selection committee to award a contract for a feasibility study of a development project in Djougou to a company (BIM) and not to a company (SERAU SEM) in which he is a shareholder. Beninese civil society, led by FONAC, publicly protested, and the contract was at last awarded to BIM. Read more on USAID.

According to a 2009 news article by AllAfrica, in the past 20 years Benin has received USD 87 million for water sector reform from different donors. However, the time it takes from receiving of donor funds to the projects getting started is very slow. Contracts for water sector reforms are susceptible to corruption, causing the cost of project management contracts to rise. According to Jean Michel Klican, assistant director of SONEB, the amount of money that is lost to corruption is so huge that it cannot even be quantified.

See more information on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

Generally, public procurement and contracting in Benin is permeated by corrupt practices, such as contract tampering, tampering with specifications, and over-invoicing.

In 2005, a US military communications company, Titan, was sentenced to pay USD 28.5 million in fines for breaches of the US Foreign Corrupt Practices Act. Between 1999 and 2001, Titan allegedly paid a total of USD 3.5 million to former President Kérékou's business advisor in an order to pave the way for the company's telecommunications project in the country. Moreover, in 2001, Titan is said to have funnelled USD 2 million into former President Kérékou's re-election campaign, since the former President's support was thought to be critical to the company's project in Benin. The former CEO of Titan Africa, Inc., Steven Lynwood Head pleaded guilty to falsifying financial records and was sentenced to 6 months in prison. The USD 28.5 million fine was then the biggest fine imposed on a company under the FCPA.

According to the US Department of State 2010, the government dismissed the former minister of finance and economy as well as several officials in charge of public procurement and requested disciplinary actions against them following a July 2009 State Office report which revealed that they were involved in corrupt practices including illegal rewarding of public contracts, misappropriation of public funds related to the renovation of two conference centres for the CEN-SAD summit.

See more information on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 2.5 on a 7-point scale (1 being 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials when deciding companies and contracts a score of 2.8 on a 7-point scale (1 being 'always show favouritism' and 7 'never show favouritism').

The World Bank & IFC: Enterprise Surveys 2009:
- 59% of the surveyed companies report that they expect to give gifts in order to secure a government contract.

- The average value of a gift expected to secure a government contract is a little less than 5% of the value of the contract.

The World Bank & African Development Bank 2007 (in French):
- 81% of business managers perceive corruption to occur very often in the public procurement process.