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‘G-to-G’ procurement myth

/ 12:04 AM August 21, 2015

I am disturbed by the notion being bruited about that a government-to-government (G-to-G) contract for the procurement of anything, be it rice or weapons system, is free from fraud. This notion is a myth.

If you examine the long and tedious process of procurement whether the sale is government to government or direct from the manufacturer, you will find that in both cases there is the opportunity for fraud to be committed. I will even say that a G-to-G contract can be more expensive than a direct buy because another bureaucratic layer is added to the process. And if that government layer is corrupt, then the purchase price may rise. Further, because a G-to-G contract seemingly makes the procurement fraud-free, it can make the process even more corrupt.

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The basis for the claim that a G-to-G transaction is free of fraud is the idea that the check for the payment of the purchased commodity ends up with the treasury of the recipient government. But it does not, as the manufacturer or supplier will have to be paid, and once paid, the money trail can go on its merry way.

However, if the commodity being bought is owned by the foreign government itself, then, yes, the money trail ends with the government and there is no mechanism for that money to go elsewhere. In this case, the transaction can be free of fraud.

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This is not to say or imply that the G-to-G purchases made by the Philippine government have been attended by fraud. All I am saying is that the notion of a G-to-G purchase as free of graft is a myth. I think that transparency and accountability remain to be the best weapons against corruption.

—ANTONIO E. SOTELO, retired lieutenant general, Armed Forces of the Philippines, [email protected]

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