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Beneficial ownership in Chile's public procurement reform

Contents

Key lessons

  • Legal and institutional strengthening, along with technical autonomy, are essential for implementing ambitious and sustainable reforms in public integrity. The reform not only expanded the legal framework but also granted ChileCompra new requirements and powers, such as the obligation to report irregularities to oversight bodies and the ability to request information directly from other public agencies. This has enhanced autonomous, empowered leadership willing to innovate, adapt, and develop a culture of transparency in agile policy implementation by sharing openly about challenges and seeking to understand them to guide avenues for improvement. This included the findings from the Observatory of ChileCompra.
  • Creating business incentives and simplifying information disclosure is more effective than relying solely on deterrent measures to ensure compliance. The obligation to disclose BO information was not imposed in isolation but rather as a requirement for operating on the national procurement platform, Mercado Público. The disclosure process was facilitated by prepopulating declarations through their connections with other governmental systems. This pragmatic approach led to high levels of compliance – 59% within just three months – without relying on costly enforcement mechanisms. This strategy enhanced regulatory efficiency while reducing the burden on suppliers and ChileCompra.
  • Preventive transparency and real-time monitoring are powerful tools for mitigating integrity risks, even in complex and open markets. Despite expanding the legal definition of “conflict of interest” – and thereby increasing the likelihood of detection – the number of cases identified by the Observatory of ChileCompra decreased by 69% since the beginning of the reform. This suggests that ensuring an agency with solid institutional powers and accountability culture can manage a system based on early alerts, automated analysis, and institutionalised follow-up can contribute to effectively shifting behaviour, even in fragmented markets like Chile’s, where more than 110,000 domestic and foreign suppliers operate annually. However, it would be worthwhile further investigating this trend, as another possible interpretation of this decline could be that the automated system is not as effective in detecting subtler and more complex conflicts of interest.