Colombia may have lost more than $4.1 billion in royalty payments since 2017 because of irregularities in the outsourcing of development projects, the director of the National Planning Department (DNP) said Monday.
According to DNP director Alexander Lopez, an internal investigation found irregularities in 4,562 of 19,393 development projects approved by his department since 2017.
The irregularities could mean that regional and local entities lost more than 24% of the $17 billion (COP68.54 trillion) in royalties they received in return for allowing oil and mining projects in their territories.
The DNP discovered the irregularities by verifying the status of projects that had either been reported as finished or in progress.
DNP officials found that 2,468 of 12,106 projects were falsely reported as completed. Of the 6,631 projects that were supposed to be in progress, 2,094 were effectively suspended.
The problem with outsourcing
The DNP investigation revealed systemic problems with the government’s royalty program.
In order to be able to receive royalty payments, 1,714 local and regional public entities registered in the DNP’s system.
The DNP subsequently approved 19,393 development projects and made the corresponding payments to these so-called “executing entities.”
In order to effectively execute the approved projects, the executing entities made 138,862 deals with government contractors, which is where money began disappearing.
According to Lopez, only 8% of these contracts were granted as the result of transparent bidding processes. In 31% of the cases, the executing entities used their discretionary powers.
To make things worse, the government contractors were responsible for reporting progress to the DNP without any verification or oversight.
Consequently, Lopez said, the DNP ended up making royalty payments for projects that were never or partially executed.
The Meta debacle
For example, the DNP approved a project to upgrade the 10.9 kilometer road between Chafurray and Tierra Grata, two hamlets in the central Meta province, in 2021.
The DNP subsequently sent $12.2 million (COP49 billion) to the Meta Infrastructure Agency, which had hired two consortiums to effectively execute the project.
The Meta Infrastructure Agency reported to he DNP that it had spent 66.13% of the budget.
The companies hired to upgrade the dirt road reported to the DNP that they had executed more than 61% of the project.
When verifying the alleged progress, however, DNP officials found that the road was exactly as it was before.
According to Lopez, government watchdogs received 174 complaints about alleged irregularities in the execution of 55 Meta Infrastructure Agency projects with a total value of $298 million.
Investigations?
The DNP chief urged the prosecution, the Inspector General’s Office and the Comptroller General’s Office to look into the irregularities, and prosecute alleged cases of corruption.
Lopez also vowed to improve the DNP’s administration to improve the monitoring of spending of royalty payments.