Misuse of key positions of authority

Discretionary power can be misused for personal gain.

Risk type: Practice

Risk driver: Internal

DESCRIPTION

Corruption thrives in situations where important decisions (high volume of money, long-term contracts, or concessions, etc.) are being made by individuals or small groups of individuals with a lot of discretionary power (and no clear guidelines and decision-making criteria). In such situations, colleagues, the public, and oversight bodies have no power to question these decisions.¹

High-level managers like CEOs, managing directors, or permanent secretaries often have access to the water sector organization’s resources and can take decisions fairly independently. With weak organizational governance and a lack of oversight through a supervisory board or the regulator, higher-level managers can misuse their position to embezzle funds, grant preferential treatment to relatives and friends, or pursue private interests through unethical decisions.

In organizations where corruption is rampant at the decision-making level, the day-to-day behaviour of staff is also affected. Managers are in a particularly strong position to either encourage or minimize corrupt conduct. Unattractive employment conditions or inadequate selection procedures may result in a lack of manager commitment and capacities.

RED FLAGS

• The lifestyles of staff in key positions change – spending patterns do not match their income.
• Staff are informed only after important decisions are made.
• Several relatives of staff in key positions are employed by the organization or work as contractors for the organization.
• Some staff can take important decisions without having to consult with colleagues.
• There are insufficient or non-existent internal procedures concerning the documentation of decisions, and/or a weak culture of internal control.

KEY GUIDING DOCUMENTS

UNDP, 2011, Fighting corruption in the water sector, United Nations Development Programme (UNDP)

Nordmann, D., 2012, Deepening Governance in Water and Sanitation Services, A discussion paper for Water Services Regulatory Board (WASREB)

TARGETED EXAMPLES

Interference of Board of Directors in utility operations²

Target group: Utilities

Location: Kenya

[The following risks and issues were identified regarding the interference of the Board of Directors in utility operations.] Directors pursue private interests in influencing operational decisions. In one case, the Board of Directors put pressure on the management to permit an ally to plant maize in a treatment plant area, arguing this would not interfere with the operation of the treatment plant. In another case, a director demanded that the technical manager reconnect a commercial customer due to vested interests and relationships.

FULL REFERENCES

1. UNDP, 2011, Fighting corruption in the water sector, United Nations Development Programme (UNDP)
2. Nordmann, D., 2012, Deepening Governance in Water and Sanitation Services, A discussion paper for Water Services Regulatory Board (WASREB)