Payments to contractors delayed, reduced or refused

Project officers might disturb the transfer of payments for personal gain.

Risk type: Practice

Risk driver: Internal

DESCRIPTION

[ithoughts_tooltip_glossary-glossary]Project officers[/ithoughts_tooltip_glossary-glossary] may knowingly and illicitly delay or refuse payments due to the contractor to extort a facilitation payment. They may also bribe the consultant to delay the issuance of a certificate for payment because they do not have sufficient funds at the time the claim for payment is received. In some cases, a project officer or consultant asks for a fee from the contractor to ensure that certificates for payment are paid quickly. In the short run, this will delay the completion of projects. And in the long run it hurts the reputation of the project owner and creates additional costs, as contractors will expect delays and may incorporate them into their next bid.

RED FLAGS

• Contractors complain about delayed or outstanding payments or certificates for payment.
• The contractor is asked to pay a fee in order to receive a certificate for payment.

KEY GUIDING DOCUMENTS

Stansbury, C. and Stansbury, N., 2008, Examples of Corruption in Infrastructure, Global Infrastructure Anti-Corruption Centre (GIACC)

GENERAL EXAMPLES

Refusal to issue final certificate¹

Location: n.a.

A contractor has properly completed the works and is entitled to receive a final certificate. The engineer appointed by the project owner refuses to issue the final certificate to the contractor unless the contractor pays him 5% of the final certificate value.

Delayed issue of certificates for payment¹

Location: n.a.

The project owner offers the architect a future appointment on another project if the architect delays the issue of payment certificates which are is due to the contractor. The architect agrees.

FULL REFERENCES

1. Stansbury, C. and Stansbury, N., 2008, Examples of Corruption in Infrastructure, Global Infrastructure Anti-Corruption Centre (GIACC)