Topic Guide: Corruption in Water and Sanitation Sector

Corruption can distort the allocation of resources, with rent-seeking behaviour resulting in the promotion of inappropriate projects and high-cost infrastructure investment instead of lower cost and more efficient solutions. Fraud, falsification of accounts and embezzlement can also affect water management budgets and divert funds for a water supply network into the pockets of corrupt actors.  

The sector is also characterised by high-risk procurement, with various forms of bribery in relation to licensing, procurement and construction. Water infrastructure and water treatment services tend to involve heavy and long-term investments for storage, extraction, treatment and conveyance of water, with highly lucrative contracts and a relatively small number of service providers and public officials involved. This can create rent-seeking opportunities and provide fertile ground for bribery, extortion and collusion in the awarding of contracts. Bribery, collusion or bid rigging in the water sector are widespread in both the developed and developing countries, and involve both international and national actors.[1] A well-documented example of corruption in the water sector occurred in the Lesotho Highlands Water Project, where the chief executive of the project was found guilty of taking US$6 million in bribes from 12 multinational construction firms and consortiums and sentenced 15 years in prison in 2002.[2]

Beyond the tendering process, costly infrastructure projects like hydroelectric dams and dykes are particularly prone to corruption, as construction companies may seek to lobby, bribe or influence decision makers to amend the terms of the contact, change infrastructure locations or use substandard material and equipment to cut costs and maximise the profitability. Beyond the negative impact on the quality and sustainability of the physical infrastructure, these kinds of corruption risks can cripple a project’s economic viability.

The process of conducting environmental impact assessments (EIAs) to ensure that such large-scale projects will have minimal disruptive impact on local ecosystems and communities can also be corrupted. In India, for example, EIAs are commissioned to private consultants and funded by the very companies seeking licences. In the mining sector (which also impacts the water table), this has meant that fewer than 3 per cent of EIA applications are refused.[3] “Prior and informed consent” mechanisms, by which local communities are supposed to agree to an infrastructure project, can also be manipulated and communities offered cash, jobs or other benefits to agree to the project.

Corruption can also affect the management of human resources, as the water sector offers many possibilities for personal enrichment and extortion. In some countries, cronyism, nepotism, political patronage and bribery often drive appointments, promotion and transfers to lucrative positions within water-related public bodies.