A survey by the Chartered Institute of Building reveals that many in construction have a shockingly complacent attitude to corruption – and don’t even realise that certain practices are criminal
There was an eye-catching headline in the press last month: “Building industry admits it is corrupt”. This followed the publication of the results of a recent survey by the Chartered Institute of Building (CIOB).
The survey found that 4% of respondents considered bribery to obtain a contract was not corrupt. Of the 96% who agreed that this practice was corrupt, 57% thought it was “very” corrupt, 18% thought it was “moderately” corrupt, and the other 21% thought it was “not very” corrupt. Which begs the question: what did the 39% of the respondents who replied that bribery to obtain a contract was “moderately” or “not very” corrupt, mean?
It should be noted that the CIOB deliberately did not define what “corrupt” meant in the questionnaire. For our purposes we will assume that it refers to criminal activities relating to bribery, deception and fraud.
Did the respondents who stated that bribery was “not very” or “moderately” corrupt really mean: “this is sharp practice that is an undesirable part of doing business today”. If so, then the results are indeed stunning. It means many in the industry are under an alarming misconception.
Bribery is a common law and a statutory offence under the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906, the Prevention of Corruption Act 1916 and the Anti-terrorism, Crime and Security Act 2001.
If you adopt the same interpretation of what “not very” or “moderately” corrupt means, and apply it to other questions in the survey, it would mean that 60% would not consider collusion between bidders for market sharing purposes illegal and 46% would not consider fraudulent invoices as criminal behaviour. Yet collusion between bidders for market sharing purpose constitutes the common law offence of conspiracy to defraud. It is also an offence under the Enterprise Act 2002.
Fraudulent invoices fall under false accounting; it is not necessary to establish that a deception has taken place, or that any payment has been received as a result of these false documents. If the document is acted upon, this would fall within the offence of obtaining property by deception or obtaining a money transfer by deception.
The Corruption Bill, which was to receive its second
hearing last month, has been dropped
In addition, parties agreeing to act together to commit certain offences may be guilty of conspiracy; and anyone who aids, abets, counsels or procures the commission of any of the above offences, including lawyers, will commit the statutory offence of aiding and abetting. That the conduct in question was a prevalent or normal part of carrying out business is not a defence.
In short, if our speculation as to what the respondents probably meant when they said an activity was “moderately” or “not very” corrupt is correct, then there is indeed a cause for concern, for individuals are clearly failing to appreciate that certain behaviour is criminal and that they may be subject to prosecution for it.
The survey also discloses that 41% of the respondents have been offered a bribe or an incentive to engage in a corrupt practice at least once, and 34% have come across cartel activity. These findings confirm that corruption in construction is alive and well.
What is the answer? The Corruption Bill, which would have tidied up the existing patchwork of statutory offences and provided a comprehensive code, was to receive its second hearing last month, but has been dropped. With or without further legislation, there seems to be an increasing clamour for an ethical construction industry, with transparent accounting.
The government’s role in promoting this objective is pivotal. But its approach to “facilitation payments” is not reassuring. It has said “we do not envisage any circumstances in which the making of a small ‘facilitation’ payment, extorted by a foreign official in countries where this is normal practice, would of itself give rise to a prosecution in the UK”.
It seems, at least in relation to facilitation payments, a firm commitment to an ethical code of practice is somewhat lacking.
Chris Hill is a partner at Norton Rose. The article was co-written by Mary Greenhow, senior associate