final report - igi cameroon€¦ · within the framework of the national anti-corruption strategy...
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International Governance Institute’s Focal Integrity Team for Cameroon…building integrity in acquiring and exercisingpublic duty in Cameroon… www.fitcameroon.org
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FINAL REPORTSTUDY OF FRAUD AND CORRUPTION IN THE PUBLIC PROCUREMENT
PROCESS OF THE MINISTRY OF PUBLIC CONTRACTS FOR THE SOUTHWEST REGION
Executed byThe National Anti-Corruption Commission’s (CONAC) Coalition against
Corruption for the South West Region (CNLCC/SWR)
Under the distinguished cooperation and collaboration of the Regional Delegate for MINMAP (left) the Chiefof Antenna ARMP South West Region (right). Championing a new course for efficiency in the delivery and
regulation of public contracts in the South West Region
Prepared By
Stephen Nkem AsekTel: 33-32-3095
January 2014
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Our Mission in Cameroon
‘Changing the culture of communities so as to make corruptionunacceptable, influencing those seeking public office to exercise goodgovernance and educating the people in participating and maintaining
public accountability’.***
***
An innovation in the fight against corruption in the public serviceImplemented under the Supervision of the Executive Secretary of the National Anti-
Corruption Strategy of Cameroon
Mr. Alfred EtomNational Anti-Corruption Commission Cameroon
(CONAC)
***
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Executive Summary
To achieve and consolidate a steady development process in Cameroon, there is animperative for all actors involved in fostering the development program in Cameroon tooccasional review and assure the alignment of their activities and operations with thegovernment’s long and short term vision.
The vision for the next 25-35 years in Cameroon places its emergence as a democraticand unified country in diversity as its top priority. The realisation of this aspirationwould not be visibly traced without a prosperous economy with strong infrastructuresand good governance. Thus a prosperous economy with strong infrastructures impliesbringing corruption to a minimal level where industrial development and servicedelivery are not hindered by unethical behaviour, misuse of public power for privateadvantage and abuse of entrusted authority for illicit gain.
Within the framework of the National Anti-Corruption Strategy of Cameroon, whereinthe National Anti-Corruption Commission places emphasis in the fight againstcorruption and fraud in the public procurement process in Cameroon; and in a bid tostrengthen its campaign to combat public contract fraud within the Ministry of PublicContracts; a regional campaign to gather perception of public contractors, civil societyorganisations, members of staff of the regional delegation of the Ministry of PublicContracts (MINMAP), the Ministry of the Economy, Planning and Regional Development(MINEPAT) and the Agency for the Regulation of Public Contracts (ARMP) on publiccontract corruption and dishonesty for the 2013 financial year within the Ministry ofPublic Contracts in the South West Region was conducted.
Purpose of the study
The main purpose of the survey or study was to collect feedback from stakeholders inthe public procurement process in the South West Region on their perception ofcorruption and dishonesty in the public contract process. The results of the study orfeedback will be used to assist both the National Anti-Corruption Commission (CONAC)and the Ministry of Public Contracts in Cameroon in the review and elaboration ofmeasures and oversight activities to curb fraud, bribery, dishonesty, use of publicauthority for private illicit gain, kickbacks and other corrupt practices in the publiccontract award process in the South West Region.
Activities initiated
The activities conducted for the purpose of this survey or study was three (3) fold:
1. The administration of questionnaires to contractors, leaders of civil societyorganisations, staffs of ARMP, MINEPAT and MINMAP on their perception ofcorruption and dishonesty observed during the 2013 financial year within theMinistry of Public Contracts in the South West Region.
2. The collection and gathering of quantitative data for analysis from the RegionalDelegation of the Ministry of the Economy, Planning and Regional Development(MINEPAT) and the Agency for the Regulation of Public Contracts (ARMP) on thePublic Procurement System. The data collected was based on informationcovering:
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The number of public contracts available for bidding and their financialvalue for the 2010, 2011, 2012, 2013 financial years
Records of irregularities which involved cases of bribery, collusivepractices and fraudulent presentation of misleading financialinformation by contractors
Extension of bids closing dates with and without justifications Records of grievances and complaint filed by contractors for the 2010,
2011, 2012, 2013 financial years. These complains covered issuesrelating to availability of information, tender evaluation procedures, bidsopening and closing dates
Records of response to public contract fraud problems by ARMP, suchas number of suspected fraud cases investigated and those referred tocourt for trial
Records of sanctions for misappropriated behaviour, covering number ofcontractors and procurement officials sanctioned.
3. The organisation of a workshop with public contractors in the South WestRegion under the supervision of the service of the Governor of the South WestRegion, and with technical assistance from the Agency for the Regulations ofPublic Contracts (ARMP); the workshop was set out to review contractor’sperception of public contract fraud in the South West Region and to engagethem in a deliberation to identify fault lines, services concern with malpracticesand fraud, the cost of bribery and fraud in doing public contract business aswell as a recommendation of measures to help improve the public contractprocess in the South West Region for the 2014 financial/project year.
The study was commissioned and financed by IGI-FITCAM members and implementedby the Focal Integrity Team for Cameroon under the banner of the National Anti-Corruption Coalition against Corruption (CNLCC).
The major areas in which contractors highlighted and scored an increasing rate ofpublic contract fraud, lack of transparency and dishonesty includes
the bid evaluation phase of South West for the 2013 financial year. the bid screening procedure the subjective interpretation of objective laws in practice
While on a positive note, public contract workers believe that the government’s anti-fraud campaign helped to reduce fraud in general in the Ministry of Public Contracts.Below is the full report of the assessment for the 2013 financial year on public contractaward process in the South West Region. I also take this opportunity to gratefullyappreciate the openness and support of the delegates of MINMAP and ARMP towardsthis exercise.
Stephen Nkem AsekCountry Director IGI-FITCAM
Representative CNLCC/CONAC/SWRAnti-Corruption Unit/MINMAP
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Corruption Assessment of the Public Contract System
The above chart clearly shows that the overwhelming majority of public contract workersbelieve that the public contract award process in Cameroon is generally corrupt with a totalof 91% agreeing to this fact. The perception of corruption in the contract award process wasfurther examined from the previous years to present. The chart below gives insight on therates at which corruption and fraud in the procurement process increased or decreased inthe South West Region.
Strongly Agree44%
Agree47%
Disagree3%
Strongly Disagree0%
I don't know6%
The public contract award process inCameroon is corrupt. To what extent do you
agree or disagree?
HighlyIncreased
45%
Increased39%
Moderate3%
Low0%
Very Low2%
I don't know11%
How did you perceive the level of publiccontract fraud in Cameroon in 2010-
Increasing or Decreasing ?
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The overwhelming majority of public contractors believe that public contract fraud in Cameroon hadan increase rate of 84% in 2010.
Public Contract fraud was perceived to be at 82% for the 2011 year, registering a fall of 2% in fraudand corruption perceived in the contract award process. The rate of those that perceived theprocess as moderate equally increased from 3% to 11% in testament for that year.
The perceptions seem to have drop in 2012 while the ratio that also considered the fraud problem tobe moderate in 2012 also increased to 21%. Public contractors perceived and rated public contractfraud to be at 72% for the 2012 year compared to 2010 and 2011 where the rate of corruption andfraud in the process in the South West Region was perceived and rated at 84% and 82% respectively.
HighlyIncreased
36%
Increased46%
Moderate11%
Low0%Very Low
0%
I don't know7%
What was your perception of the level ofpublic contract fraud in 2011-Increasing or
Decreasing?
Highly Increased36%
Increased36%
Moderate21%
Low0%
Very Low0%
I don't know7%
What was your perception of the level ofpublic contract fraud in 2012?
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For the current year 2013 public contracts in the South West Region scored the rate of corruptionand fraud in the procurement system at 63%. The perception of fraud and corruption in theprocurement process is considered lowered than previous years with a fall of about 9%. Though upto 11% and 19% of contractors still believe corruption and fraud is present in the system theyhowever factored their perception of corruption and fraud as being low and moderate. In responseto what might have accounted for this slight decrease in their perception 55% of public contractworkers believe that the government’s anti-fraud campaign helped to reduce the fraud
The above chart shows the difference in perceptions of fraud in the award of publiccontracts between 2010 and 2013. Contractors seem to perceive slightly less fraud in 2013
Very High26%
High37%
Moderate11%
Low19%
Very Low2%
I don't know5%
What was your perception of the level ofpublic contract fraud in 2013?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Very High High Moderate Low Very Low I don't know
Perception of Fraud in 2010 & 2013
2010
2013
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than in 2010, with 84% saying they perceived fraud to be high or very high in 2010, whereasin 2013, this number had reduced to 63%. A significant percentage still perceives high levelsof fraud, but the above comparison suggests that public contract workers believeimprovements have been made.
The above chart shows that 59% of Contractors believe that officials demand or acceptbribes often or very often. Only 3% believe that this happens rarely and 0% said that it neverhappens. There is need therefore for measures to be implemented to reduce the possibilityof procurement officials demanding for bribe from contractors.
Never0%
Rarely3%
Sometimes32%
Often28%
Very Often29%
Don't know8%
In your opinion, how likely is it for officialsinvolved with public procurement to demand
or accept bribes?
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The public contract workers asked the above question, were divided on whether theybelieve that you can only win a bid by paying a bribe. Therefore 51% agreed, whereas 39%disagreed. 10% said they didn’t know.
The above chart shows that public contract workers believe that the bid evaluation stage ismost prone to fraud with 43% of interviewees choosing this stage. This should be stronglynoted by CONAC and the MINMAP; thus more effective and robust measures should beinstituted to curb significantly the high rate of corruption which is reported to occur in the
Strongly Agree21%
Agree30%
Disagree33%
Strongly Disagree6%
I don't know10%
In Cameroon, you can only win a bid forgovernment contract when you pay a bribeto a public procurement official. To what
extent do you agree or disagree?
12%
25%
43%
8%12%
0%
What stage of the public procurementprocess is most prone to fraud?
Project selection & specification Project bidding
Bid evaluation Project execution
Project monitoring & evaluation Payment
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bid evaluation process of the procurement process in the South West Region.
The above chart shows that public contract workers believe that bribery (79%) is the mostcommon way contractors influence the public bidding process. The report also indicatesthat public contractors play a significant and equal role in promoting fraud and corruption inthe procurement process in the contract award process in the region.
79%
8%
13%
What is the most common way in whichcontractors influence the public contract
bidding process?
Bribery
Formation of cartels
I don't know
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The most likely cause of corruptionand fraud in the public procurementprocess is lack of transparency in thebid screening procedure. 42% ofContractors surveyed chose thisoption. This is therefore a critical areaneeded much regulatory attention andoversight.
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There were 3 responses to the above question about how officials influence the biddingprocess. The most commonly noted by Contractors were:
1. Public Procurement Officials providing inside information to preferred contractors(29%)
2. Public Procurement Officials accepting bids ahead of the specified submission date(25%) and
3. Public Procurement Officials awarding contracts to their own companies or ones inwhich they hold shares (22%).
Overall, a large portion of Contractors surveyed indicated the aspect of Public ProcurementOfficials providing inside information to preferred contractors to be one of the top ways inwhich procurement officials influence the bidding process.
25%
29%12%
3%0%
7%
2%
22%
What is the most common way in which public procurementofficials influence the bidding process?
Tailoring bids to suit a preferredcontractor
Providing inside information topreferred contractors
Releasing bidding information topreferred contractors before bidrelease date
Accepting bids after the deadlinespecified in the tender document
Accepting bids ahead of thespecified submission date
Extension of bids opening datewithout justification
Contracts awarded to businessesthat did not bid for the contract
Procurement officials awardingcontracts to their own companiesor ones in which they hold shares
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The above chart shows that 63% of public contract workers believe that the government iscommitted to fighting against public contract fraud. However, 31% disagree with this.
Opinion was divided on whether the government is providing enough information about theproblem of public contract fraud. However a large portion of Contractors who responded tothis (53% ) disagreed with the fact that government was providing enough informationabout the problem of public contract fraud, while 44% agreed.
Stronglydisagree
17%
Disagree14%
Undecided6%
Agree52%
StronlyAgree11%
The government is committed in fightingagainst public contract fraud?
Strongly disagree12%
Disagree41%
Undecided3%
Agree41%
Strongly Agree3%
The government is providing enoughinformation about the problem of public
contract fraud to the public?
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55% of public contract workers believe that the government’s anti-fraud campaign helpedto reduce fraud. However, 36% disagreed with this. The government’s anti-fraud campaignshould be intensified as it is perceived in playing a small but increasing role in curbing fraudand corruption in the procurement process in the SWR.
A 70% majority of public contract workers believe that government department andagencies can effectively deal with the problem of contract fraud in Cameroon.
Strongly Disagree6%
Disagree30%
Undecided9%
Agree50%
Strongly Agree5%
The government's anti-fraud campaignhelped to reduce fraud?
Strongly disagree6%
Disagree18%
Undecided6%
Agree59%
StronglyAgree11%
Government department and agencies caneffectively deal with problem of public
contract fraud in Cameroon?
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The above chart shows that the main reason public contract workers believe thatprocurement laws are ineffective is that objective laws are interpreted subjectively inpractice (30%). There is need therefore for more clarity on what each clauses of theprocurement law mean with much effort directed towards minimising ambiguity in what aparticular clause may refer to or mean.
30%
24%
20%
8%
18%
Which of the following is a reason whyprocurement laws are ineffective in stopping
public contract fraud?
Objective laws are interpretedsubjectively in practice
Outright disregard of laws
Inconsistencies and lack ofstandardisation of keydefinitions and terms
Subversion of procedures
Loopholes in procurement laws
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54% of public contract workers believe that Operation Sparrow Hawk is the most effectiveway of fighting public contract fraud in Cameroon. However, 43% believe there should bemore independence for NACC to initiate legal action against suspects.
11%
43%24%
18%
2% 2%
In your opinion, which of the followingwould be the most effective way of fighting
public contract fraud in Cameroon?
Operation Sparrow hawk as it is
Operation Sparrow hawk withmore independence for NACCto initiate legal action againstsuspects
Reformation of the publicprocurement system
A consistent enforcement ofexisting laws
Adopting e-procurement
Other
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A clear majority of 44% of public contract workers believe that investigation and arrest ofsuspects is the most effective way to combat public contract fraud.
44%
12%5%
14%
16%
7%
2%
Which of the following measures do youpercieve to be most effective in the fight
against public contract fraud?
Investigation and arrest ofsuspects
Asset recovery
Public sensitization
Sanctions on public officials
Enforcement of anti-corruptionlaws
Decentralization of publicprocurement
Voluntary repayment ofmisappropriated assets
Strongly disagree10%
Disagree19%
Undecided12%
Agree47%
Strongly agree12%
Violation of the public contract code attractsreasonable penalties to deter violators from
re-offending.
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A majority of 59% of public contract workers believe that violation of the public contractcode attracts reasonable penalties. However, a significant percentage of 29% disagree withthis.
9%
21%
20%20%
3%
7%
20%
In the contract specification and awardphases, which of the following is the mostcommon method of perpetrating fraud?
Collusion between contractors andlocal politicians
Collusion between contractors andprocurement officials responsiblefor project selectionCollusion between contractors andprocurement officials responsiblefor contract specificationCollusion between tenderevaluation committee members andcontractorsCollusion between contractorsbidding for government projects(formation of cartels) Collusion between projectinspectors and contractors
Misrepresentation of facts by thebidders in the tender responsedocument
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Public contract workers believe that the most common method of perpetrating fraud at thecontract execution and management phases is collusion between project contractors andinspectors, with 38% choosing this option.
9%
38%
27%
12%
14%
In the contract execution and managementphases, which of the following is the mostcommon method of perpetrating fraud?
Collusion between contractorsand local politicians
Collusion between projectcontractors and inspectors
Using materials of poorer qualityto that in the projectspecification
Billing for materials not used onthe project
Collusion between contractorsand government officialsresponsible for releasingpayment
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Records on Irregularities, financial values of contracts for bidding, as well ascases of fraud and corruption as well as complaints and grievances receivedby ARMP from contractors on the procurement process in the South WestRegion and sanctioned.
Source: ARMP and MINEPAT South West Regional Delegations
Records show that the number of contracts on government records available for bidding was at its highest in2011, and just a small increase in the year ended 2013 as far as the South West Region is concern.
2010 2011 2012 2013Number of Contracts Available
for Bidding 427 743 557 568
0
100
200
300
400
500
600
700
800
Number of Contracts Available for Bidding
2010 2011 2012 2013Financial Value of all Contracts
Available for Bidding 65.55 28.67 17.44 12.55
0
10
20
30
40
50
60
70
Billi
on C
FA
Financial Value of all Contracts Available forBidding
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The financial value of public contracts that were available for bidding was at its highest in 2010 andsurprisingly at its lowest for the 2013 financial year in the South West Region as seen from therecords registered at ARMP and MINEPAT for the 2010, 2011, 2012, 2013 project years.
Source: ARMP and MINEPAT South West Regional Delegations
The records of irregularities in the South West Region was at its highest in 2013, considering thosekept on record
As far as cases of fraudulent misrepresentations by contractors were concern 12 cases wererecorded for the 2013 financial year as per ARMP source.
2010 2012 2013Record of Irregularities 14 36 44
0
5
10
15
20
25
30
35
40
45
50
Record of Irregularities
2010 2011 2012Cases of Fraudulent
Misrepresentation byContractors
16 18 12
02468
101214161820
Cases of Fraudulent Misrepresentation byContractors
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Source: ARMP and MINEPAT South West Regional Delegations
Although up to 8 cases of bids extension was recorded none was without justification compared toprevious years 2011 and 2012 where up to 5 and 3 cases were recorded respectively withoutjustification.
The chart above shows records of complaints about availability of information, tender evaluationprocedure, bidding results, opening and closing dates respectively; up to 14 cases of complaintswere registered about availability of information.7 about the tender evaluation procedure and up to14 complaining about the bids results. Bids opening and closing dates had 2 and 0 cases respectivelyfor the 2013 project year.
2010 2011 2012 2013Extension with Justification 5 3 10 8Extension without Justification 5 3
0
2
4
6
8
10
12
Extension of Bid Closing Date
0
2
4
6
8
10
12
14
16
2011 2012 2013
Records of Complaints/Grievances
Complaints about Availability ofInformation
Complaints about TenderEvaluation Procedures
Complaints about BiddingResults
Complaints about Bid OpeningDates
Complaints about Bid ClosingDates
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Source: ARMP and MINEPAT South West Regional Delegations
For 2013, up to 3 suspected fraud cases have been investigated and 1 referred to court for trial.
Source: ARMP and MINEPAT South West Regional Delegations
Annexes
Annex 1. Recommendations from Contractors at the end of the Workshop to the President of theNational Anti-Corruption Commission and the Minister of State at the Presidency in charge of PublicContracts towards improving the performance of the public procurement process.
2012 2013Number of Suspected Fraud
Cases Investigated 2 3
Number of Cases Referred toCourt for Trial 1 1
0
0.5
1
1.5
2
2.5
3
3.5
Response to Public Contracts Fraud Problem
2011 2012 2013Number of Contractors
Sanctioned 2 1 1
Number of ProcurementOfficials Sanctioned 4 2
00.5
11.5
22.5
33.5
44.5
Sanctions for Inappropriate Behaviour
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Contractors:1. Recommend an increase in the percentage of women to senior positions as far as the public
procurement process is concern at the Ministry of Public Contracts2. Recommend respect for career profile and experience before making appointment decisions
on public procurement officials3. Recommend that technical studies which are conducted need to be objective and should be
carried out with strict respect to the socio–economic realities of the places and environmentwhere the project will be implemented.
4. Recommend that Government should respect and complete the project life cycle5. Recommend the guarantee by Government of continuity in the running of government
business even after new officials are appointed6. Recommend the assurance and actual decentralization of projects and their management7. Recommend anonymity in the presentation of tender files/documents (no tender document
should carry the name of a contractor). Again specifications should be made on the type ofpaging, font size, tables and figures required during submission
8. Recommend the creation by Government of development banks to accompanydevelopment
9. Recommend that the budgetary time table be adjusted to June (Back to the old system)10. Recommend a strict review of the classification of contractors with respect to various
contracts11. Recommend for annual review meetings like this organised by FITCAM and CNLCC/CONAC
(on Perception on Public Contract Fraud) in each region with public contractors on atrimester
12. Recommend the enforcement of the rule for all business men in the public contract field orcontractors to show proof or ownership of a regular and registered office, side plan, taxpayers etc. This step will assist in witting out public contractors that are not credible fromthe sector
13. Finally the regular training of contractors and other official actors of the Public Contractsystem by ARMP
14. Another proposal was the creation by contractors of a union that will monitor the activitiesand interest of their group.
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Annex 2.Summary Records on Irregularities, financial values of contracts for bidding, as well as cases offraud and corruption as well as complaints and grievances received from ARMP
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Annex 3.Public Radio Announcement inviting public contractors for the workshop (December 23th, 2013)