Business Corruption

According to the ACN Azerbaijan Monitoring Report 2006, the Azerbaijani public procurement system lacks transparency. Procurement notices can be found on the website of the State Agency on Procurement. However, obligatory publishing of tender proposals is allegedly not enforced, and a corruption case involving public procurement officials has yet been investigated. The ACN Azerbaijan Monitoring Report 2006 indicates that business representatives believe that many of the most valuable projects are not published at all.

Moreover, companies surveyed in the World Economic Forum Global Competitiveness Report 2011-2012 report that government officials often favour well-connected companies and individuals when awarding contracts. In general, the law on procurement is not very effective. For example, according to Global Integrity 2009, companies found guilty of major violations of procurement regulations are not blacklisted and can continue to participate in future procurement bids. Companies are recommended to use a specialised public procurement due diligence tool in order to mitigate the corruption risks associated with public procurement in Azerbaijan.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

According to Global Integrity 2009, Azerbaijan's increased oil revenue allows the government to spend huge resources on public investment projects with almost no accountability, which could potentially create opportunities for corruption in the area of government contracting. The implementation of these projects, their costs, and their supply contracts lack transparency. In addition, according to the report, public works contracts and subcontracting sometimes lack transparency and are awarded without relevant tenders, according to both Global Integrity 2009 and the US Department of State 2010. Also the US Department of State 2011 points out the financing of major projects from Azerbaijan's state budget lacks transparency, and contractors for lucrative state projects are not selected through tenders; they are appointed.

Also, an example of non-transparent practices within public procurement has been the government's purchase of city buses. Reportedly, these buses were bought by the Ministry of Transport from private companies without proper tender processes, according to Global Integrity 2009. Also, there was little transparency in relation to the costs of this purchase.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business leaders give the diversion of public funds to companies, individuals, or groups due to corruption a score of 2.8 on a 7-point scale (1 'very common' and 7 'never occurs').

- Business leaders give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 3.1 on a 7-point scale (1 'always show favouritism' and 7 'never show favouritism').

The World Bank & IFC: Enterprise Surveys 2009:
- 14.2% of the companies surveyed expect to give gifts to secure a government contract.

- The value of a gift expected to secure a government contract is 1.1% of the contract value.

EBRD & World Bank: BEEPS Azerbaijan 2008:
- The value of an unofficial payment made to secure a government contract typically constitutes around 2% of the contract value.