The extra‐legal governance of corruption: Tracing the organization of corruption in public procurement

Abstract

This article traces the organization of corruption in public procurement, by theoretically and empirically assessing the contribution of extra‐legal governance organizations (EGO) to supporting it. Theoretically, we explore the governance role played by organized criminal groups in corruption networks, facilitating corrupt transactions by lowering search costs, bargaining costs, and enforcement cots. Empirically, the analysis exploits a rare empirical setup of proven cases of both EGO presence and absence in contract awards by Italian municipalities. We use traditional regression and supervised machine‐learning methods for identifying and validating proxy indicators for EGO presence in public procurement such as single bidding or municipal spending concentration. Internal validity of our models is very high, 85% of unseen contracts are correctly classified. External validity is moderate, our predicted EGO presence score correlates with established indicators of organized criminality across the whole of Italy and Europe with a linear correlation coefficient of about 0.4.

Factors Influencing Procurement Officers’ Preference for PPP Procurement Model: An Empirical Analysis of China

“…The prevention of corruption is widely recognized as an important value of procurement law ( Caillaud and Lambert-Mogiliansky, 2020 ; Xiao, 2020 ; Fazekas et al, 2021 ). It has influenced the design of procurement law, especially the traditional procurement law.…”

Corruption spreads: understanding interorganizational corruption contagion in municipal governments

“…The dissolution of municipal councils for mafia infiltration is an extraordinary administrative IJPSM 37,1 measure regulated by the Italian law. It is implemented when there is a concrete clue that the activity of a municipality is driven by the interests of the mafia clans (Fazekas et al, 2022).…”

Validating Corruption Risk Measures: A Key Step to Monitoring SDG Progress

“…The indicator can be useful to assess possible "moral hazard" behaviours during contract execution, as it happens when companies apply very high discounts in the awarding phase and then recover them during the execution phase. Even though unexpected circumstances could lead to legitimate increases of execution costs, the literature (ANAC, 2023;Fazekas et al, 2022;OLAF, 2013OLAF, , 2017 agrees that variants may hide connivance between companies and contracting authorities to artificially increase contract costs.…”

“…When computed for the single administration, it is obtained by averaging the deviations over the contracts managed by the contracting body. Similarly to the previous, this indicator is intended to assess opportunistic company behaviours indulged by contracting authorities, even though, again, time deviations may be justified by legitimate suspensions (ANAC, 2023;Decarolis et al, 2019;Fazekas et al, 2022;Fazekas & Kocsis, 2020).…”