Campaigners maintain construction is rotten to the core, but can a new integrity pact clean it up? Olufunmi Majekodunmi reports on an industry that seems reluctant to fiddle too much with the status quo

Here’s a distinction that the industry may not be so proud of: it’s more corrupt than any other sector in the world. The survey carried out by anti-corruption body Transparency International (TI) showed that it even scoops the arms, oil and gas industries.

Reasons vary for this dubious honour. The sector has a history of turning a blind eye to abuses, from bribery to fraud, because it’s just too tempting, according to Professor John Uff, barrister and president of the Society of Construction Arbitrators. “The stakes are higher, the likelihood of detection lower and the rewards greater,” he says.

No one can put a finger on how widespread corruption is. You’re hardly going to shout from the rooftops if you’re doing it, or even witnessing it. But it’s clear that something fishy is going on. Last month the Office of Fair Trading raided 22 firms in South Yorkshire and the East Midlands, the latest push in its campaign against price-rigging cartels in This Great Industry of Ours.

Ignorance is no excuse

The penalties for being involved either directly or indirectly in corruption are serious. Individuals could lose their professional status or jobs, be fined or face jail. Pleading ignorance is not usually a good defence and that is why the UK division of TI and the UK Society of Construction Law (SCL) have joined forces to stamp it out.

How? They want the industry as a whole to heed an anti-corruption code, and they’ve set their sights on professional bodies and trade associations.

More than 30 such bodies, including the CIOB, will have now received a guidance document outlining this code. The aim is to alert chartered professionals what constitutes a criminal offence. The code explains the different forms of corruption and offers guidance on how to stay on the right side of the law.

The reformers, led by Neill Stansbury of IT(UK), say they are following the lead of a number of construction companies who’ve already faced up to the issue by formulating a common stance toward it. They believe you can’t clean up construction without the support of the professional institutions. But will they get on board? The CIOB has reacted sympathetically so far.

The last thing I want to hear is members getting done. We’d be failing them if we allowed that to happen.

Chris Blyth, CIOB

“The last thing I want to hear is members getting done,” says chief executive Chris Blythe. “We’d be failing them if we allowed that to happen.”

The CIOB, like most professional associations, already has a code of conduct, but Blythe wonders whether it needs to be more explicit on corruption. Blythe happens to be writing a paper on corruption and ethical practice aimed at stimulating debate on this topic that will be discussed further at a CIOB board meeting.

Professional conduct

The Institute of Civil Engineers is also making positive noises. Paul Taylor, secretary to the professional conduct panel, says it takes corruption very seriously and welcomes any guidance on this matter.

But it’s not so easy to get the industry to adopt a code. TI attempted to do it earlier this year and met resistance, which is why the code has been rebranded as a guidance document. Richard Brindley, director of practice at the RIBA, was among those expressing scepticism.

“Developers, contractors and subcontractors are not members of professions. How do you police this if you do not have a professional body to give it teeth?” he said.

Uff says it is too early to predict whether the industry will ever adopt a code, but he believes they are making progress. Companies and professional bodies must be determined to take action. Meanwhile, the campaign of persuasion continues.

How to clean up

Companies should:

  • Implement an internal anti-corruption code of conduct and management programme. This should outlaw any employees from engaging in any form of corruption and extend this message to associated companies, partners, subcontractors and suppliers
  • Enter a sector integrity pact, an agreement between companies to act with integrity when they compete against each other
  • Enter a project integrity pact, covering pre-qualification and tendering, with the client, designer and all bidding companies
  • Report corrupt practices to the authorities, and to trade or professional associations. Corruption will only cease if companies are willing to do so

    Professional associations should:

  • Increase awareness of corruption and its consequences through training and publicity
  • Adopt and publicise a written code of conduct which expressly excludes corrupt practices
  • Discipline members who do not comply with the code of conduct (including fines, suspension and striking off)
  • Report members who have engaged in corrupt practices to the authorities

    • Is this corrupt?

    You may be committing an offence without realising it. Take these two scenarios as outlined by anti-corruption body Transparency International (UK) and see if you can spot the offences.

    1. A client offers an architect a future appointment on another project, if the architect delays the issue of payment certificates which are due to the contractor. The architect agrees. Answer: Possible offences include bribery and conspiracy to defraud.

    2. A client places a contract with a contractor. At the time of placing the contract the client intends, in order to increase the profitability of the project for the client, to refuse to pay the contractor the retention of 10% upon completion of the project and to concoct artificial counterclaims to set-off against the retention. Answer: the client is actually obtaining services by deception.

    Corruption costs lives

    Corruption doesn’t just line the pockets of political and business elites, it leaves ordinary people without essential services, such as life-saving medicines, and deprives them of access to sanitation and housing. In short, corruption costs lives.

    From the Lesotho Highlands Water Project to post-conflict reconstruction in Iraq, transparency in public contracting is arguably the single most important factor in determining the success of donor support in sustainable development. Corrupt contracting processes leave developing countries saddled with sub-standard infrastructure and excessive debt.

    However ingrained corruption seems, it can be beaten. Transparency International has pioneered the no-bribes Integrity Pact, which includes sanctions such as blacklisting if a bidder for a public contract breaches the no bribes agreement. It is now used in more than 20 countries around the world.

    The Integrity Pact is increasingly being used by multilateral development banks, a major breakthrough that will bring tremendous benefits to ordinary people in the developing world.

    In September 2004, the World Bank announced a decision to require companies bidding on large Bank financed projects to certify that they: “have taken steps to ensure that no person action for [them] or on [their] behalf will engage in bribery.”

    This breakthrough is evidence of the increasing impact of the anti-corruption movement in shaping the global agenda. These and other initiatives are essential if we are to build a world free of bribes.

    This extract is taken from Transparency InternationaI’s Global Corruption Report 2005, Corruption in Construction and Post-conflict Reconstruction.
    www.transparency.org

    Source

    Construction Manager