Egyptian Public Procurement

Companies in Egypt face a high risk of corruption in the procurement sector. Businesses believe that public funds are often diverted to individuals and companies due to corruption and perceive favoritism to be widespread among procurement officials ( GCR 2015-2016 ). Egypt receives a medium score on compliance regarding transparency, efficiency and uniformity indicators, and a low score on compliance with competition and integrity indicators in the public procurement sector ( PPSA 2013 ). Low participation in tenders is a serious issue for Egypt, and this is mainly due to the low trust of businesses in the transparent execution of procurement processes. Indeed, procurement laws are not effectively implemented and evidence suggests that contracting entities apply only minimal standards of transparency in the procurement process, further heightening the risks of corruption in the sector (PPSA 2013). Companies convicted of corrupt practices are excluded from future bidding. The Government Procurement Portal (in Arabic) reduces direct contact between businesses and public officials and is the first of its kind in the region.

In one corruption case, the French power and transportation company Alstom was fined over USD 772 million to settle its case involving bribes to government officials in several countries, including Egypt, up to USD 75 million, in addition to the falsification of books and records involving power, grid and transportation projects in Egypt, among other countries. The company reportedly employed middlemen to carry out the operations and to bribe officials. One of these middlemen, Asem Elgawahry (the general manager of an entity working on behalf of the state-owned Egyptian Electricity Holding Company), was sentenced in late 2014 to 42 months in prison and ordered to forfeit more than USD 5.2 million in proceeds for fraud, conspiring to launder money, tax fraud and accepting kickbacks from Alstom (Department of Justice, Nov. 2015). Companies are recommended to use a specialized public procurement due diligence tool to help mitigate corruption risks associated with public procurement in Egypt.