Public procurement contracts often have been a breeding ground for corruption. The losing end of a government bid is never where a company wants to find itself, but the defeat is worse when there’s credible suspicion that the winner paid bribes to obtain special treatment in the tender process.
We were reminded of this last year when Mexico canceled a winning bid for a bullet train after lawmakers accused government procurement officers of improperly favoring China Railway Construction Corp. (CRCC). All 15 firms that initially had shown interest in the tender process eventually pulled out among rising suspicions of illegality. Following news that a Mexican company associated with CRCC owns a $7 million mansion apparently reserved for the presidential family, CRCC shares fell 4.94 percent and 5.76 percent on the Shanghai and Hong Kong stock exchanges, respectively.
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