CCAC releases “Investigation report on the granting of public car park management service by the Transport Bureau”

The Commission Against Corruption (hereinafter referred to as the “CCAC”) releases the “Investigation report on the granting of public car park management service by the Transport Bureau”. It is pointed out that in the course of the outsourcing of public car park management services, the Transport Bureau (hereinafter referred to as the “DSAT”) often replaced the statutory “operation contract” by the “short-term management services contract” and “split” the management service, so that the amount of grant was under MOP750,000 and the contract execution period was less than six months to avoid the statutory stipulation of open tendering and signing of notarial contracts. In addition, there was a lack of proper supervision of the DSAT regarding the parking income to be turned over by the management companies, which was a serious violation of the fiscal disciplines of the public departments. The CCAC considers that the problems revealed in the report reflected the defects and loopholes in the internal monitoring mechanism and the financial operation of the DSAT. The leadership of the DSAT should review comprehensively the problems in the granting of public car park management services and rectify them as soon as possible. In April last year, the CCAC cracked down a case in which the chief and his subordinates of the Transportation Management Division of the DSAT colluded with the management companies and took advantages of their positions to manipulate the granting of service contracts of public car park management and from which illicit advantages were received. The sum involved totaling nearly MOP67 million and the illicit profit was about MOP19 million. During the process of the criminal investigation of the case, the CCAC found that in addition to the subjective criminal intent of the persons involved to achieve the purpose of the crime through various means, the DSAT had serious defects in the outsourcing process and internal supervision mechanism of public car park management services, resulting in the failure of timely detection and curbing of the illegal acts, thus objectively served a pampering and facilitating effect on the occurrence of the case. Thus, investigation on the relevant issues is commenced. According to the Regulations of Public Car Park Services, the Public Administration shall, through open tendering for the “operation contract”, outsource the management of a public car park to a private entity. Under an “operation contract”, the management company that operates the car park shall be self-financing and bear all the costs for running the car park, including the expenses on purchasing equipment. All the revenue shall go to the management company after an amount of it is paid to the Public Administration as “pecuniary returns”. However, the CCAC found that the DSAT that played the supervisory role did not adopt the “operation contract” without providing sufficient justifications. Instead, it repeatedly signed the “short-term management services contracts” with management companies according to Decree Law no. 122/84/M, where the management services of the car parks were outsourced to the management companies, which in return received a certain amount of service fee. The DSAT was also found to have constantly split the orders of the management services. Since 2003, 39 of the 46 public car parks in total have signed 341 “short-term management services contracts”. The CCAC considered that such practice by the DSAT obviously evaded the signing of “operation contract” and the stipulations that open tendering shall be called for the contract involving more than MOP750,000 and that a notarial contract shall be signed for a service to be run for more than six months. Such practice has violated the “principle of legality” and impaired the dignity and authoritativeness of the law. Moreover, the existing statutory systems and procedures were totally ignored and finally they were made used by criminals as means of manipulating the grant of car park management service contracts for the purpose of gaining illicit advantages. The CCAC also found that when the DSAT purchased the equipment or repair services of car parks, it always “passed the buck” to the management companies to submit quotations from other professional companies. The DSAT exempted the procedure of price inquiries without stating the reasons and directly granted the projects to the management companies which did not have the conditions of providing relevant equipment or works. Moreover, the DSAT failed to effectively supervise the parking income that the car park management companies should pay to the government and the truthfulness and accuracy of the amounts of the payments it had received. For some of the companies which always delayed the payments of parking income, the DSAT did not take effective measures to dun for the payments. It even paid those companies the management service fees promptly and suggested granting the new contracts to them. Such practices have seriously contradicted the fiscal disciplines of public departments, causing a huge risk to public funds. The DSAT’s failure to supervise the management companies was firstly caused by the defects of the internal supervision mechanism. In fact, there is a complete and strict procedure to monitor the accounts of public departments. It is impossible for a division to manipulate the accounts. The DSAT’s negligence to the defaulted payments reflected that there were serious loopholes existing in its internal financial operation. The CCAC pointed out that in the case involving the chief of the DSAT, the evasion of the use of open tendering procedures and the use of “written price inquiries” and even “direct grant” to particular companies to manipulate the management services of some of the public car parks had become the tools of obtaining illicit benefits. Although criminal sanctions were imposed on the person involved in the case due to his illicit acts, the chief of the Transportation Management Division only possessed the right of suggestion while the superiors and leaders of the division had the responsibilities and competence to review and approve the work. It is worth the DSAT and its supervisory body to seriously study whether the case involved the default and defect of supervision of the concerned leaders and superiors. The CCAC believed that the although the problems found in the investigation was about the procedure of outsourcing public car park management service and the internal supervision mechanism of the DSAT, the issues that they reflected, including not following the law strictly and even deliberately evaded the law or statutory procedures, lax or formalistic internal supervision, were not unique in the procedures of procurement or service outsourcing run by public departments. A large part of the problems existing in the procedures of procurement or service outsourcing run by public departments do not constitute administrative illegality or misfeasance and even crimes such as corruption. Therefore, it is difficult for the supervisory entities including the Commission of Audit and the CCAC to stage a direct intervention. However, if these issues are not redressed promptly, they will give rise to corruption crimes. The CCAC pointed out that evasion of statutory systems or procedures with unreasonable excuse not only exists in the DSAT but also in other public departments. In particular, the practice of “splitting” an order of purchasing a complex or constant service into several contracts in order to evade the statutory requirements for open tendering or signing of notarial contract is not rarely seen. The reason for most of the cases that the public departments choose to evade the requirements for open tendering or signing notarial contracts in procurement procedures is to simplify the procedure and save time. However, violation of the “principle of legality” shall not be the cost for boosting administrative efficiency. Weakening the openness and transparency of procurement procedure not only makes it difficult for the Public Administration to choose the service of the best quality at reasonable price but also increases the risk of occurrence of corruption and power abuse. The public departments shall strictly follow the provisions about open tendering or signing of notarial contracts under the prerequisite that there is no revision of the current law, while the Public Administration shall make adjustments to Decree Law no. 122/84/M and other related regulations according to the reality and social development in order to strengthen the relevant monitoring and rectification systems as well as simplify public procurement procedures. The CCAC deemed that when a public department procures goods or services directly from a supplier, it must state the reasons why the procedure of “written price inquiries” cannot be carried out or why the exemption of the inquiry process of price comparison among the suppliers can be more beneficial to the public interests of the Macao SAR. It could not give some dubious reasons or simply cite a certain paragraph or article from the law, otherwise, it is in violation of the provisions of the law. During the procurement procedures, the public departments must be cautious with the adoption of such special, exceptional regime of “direct grant”, sufficient reasons must be stated so that it would not be used as a means of seeking unlawful advantages. The CCAC finally pointed out in the report that the leadership of public department shall strictly examine whether the suggestions made by their subordinates accord with the law instead of accepting all of them without any evaluation. They shall always be clearly aware of their responsibilities for the operation of the personnel, finance and administration of the whole department. For the irregular and even illegal acts existing in the department, they shall not turn a blind eye to them without any worries for the reason that they do not seek any illicit advantages from them, because lack of effective management and supervision will objectively give rise to crimes including corruption. The full text of the report is downloadable from the CCAC’s website.