Corrupt procurement: rethinking the roles of principals and agents

Public sector procurement is a multi billion dollar activity and requires the highest level of integrity. Even in countries that are relatively free of corruption, there exist many opportunities for corrupt behavior, and there are always individuals who seek out these opportunities. This paper uses a principal/agent analysis to note that when agents behave corruptly in procurement activities there is usually a clear remedy, but when principals behave corruptly the path forward is not clear at all, and leaves government quite vulnerable to loss and mistrust. This analysis of corrupt procurement through the lens of principals and agents examines some Australian cases but the themes are applicable across many countries.