The reconstruction of Iraq risks turning into the world's biggest corruption scandal, Transparency International said on Wednesday in a report focused on a world-wide problem of bribery in the building industry. "If urgent steps are not taken, Iraq will not become the shining beacon of democracy envisaged by the Bush administration, it will become the biggest corruption scandal in history," the independent anti-graft group wrote in its annual Global Corruption Report.
The 2005 report refers to the scandal-tainted UN oil-for-food programme and complaints of bribery affecting almost all Iraqi government operations.
It criticised the United States for its poor handling of procurement and said calls for rapid privatisation to reduce debts were misguided.
Corruption was likely to worsen as large-scale spending on building contracts and procurement got under way.
Peter Eigen, Transparency chairman, urged recipients of huge reconstruction aid, notably Iraq and the countries affected by the Asian tsunami, to be as open as possible about new building projects in a bid to stamp out graft.
"In these cases, the risk of corruption is particularly high if there is no specific effort to counter it," Eigen told Reuters.
Transparency wants much more rigorous systems in place for procurement, especially in Iraq, and launched a list of minimum standards for public contracting on Wednesday. However, Eigen recognises other priorities, such as security and flexibility.
"One has to be realistic. We understand the dilemmas. We are not fundamentalists," he said. "Certain things help. If there is very high form transparency it helps. You make it open and people understand that."
Eigen also said "generations of cronyism" in Indonesia, the worst hit tsunami country, would not be overturned at once.
Transparency reckons about $400 billion is paid to support corrupt deals, but Eigen said the real cost was far higher.
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