Rebuilding Trust aims to reassure clients of construction’s ethics in wake of OFT revelations
This week Building is launching the Rebuilding Trust campaign to help restore clients’ confidence in the construction industry after the findings of an Office of Fair Trading investigation into bid rigging.
Rebuilding Trust calls for companies to back a code of conduct banning anti-competitive practices and to suggest other commitments that should be made. The final document and a list of those signing up to it will be submitted to the OFT by the end of June.
The Construction Confederation is backing the campaign and considering launching a code of conduct. Stephen Ratcliffe, the confederation’s chief executive, said most companies aready had compliance policies, but added: “The industry needs to state loudly that its house is in order, so Building’s initiative is to be applauded.”
The OFT’s four-year inquiry into £3bn of contracts has resulted in 112 firms being accused of the anti-competitive practice of cover pricing. This occurs when a firm does not wish to take a job, but does not want to offend a client by refusing to bid. It therefore colludes to offer a bid that is too high to win.
It is understood that nine firms are alleged to have been involved in the more serious offence of compensation payments, in which losing bidders receive money.
The details of the OFT’s 1,755-page report are secret, but it is understood that one of the nine companies is Balfour Beatty’s subsidiary Mansell. Balfour Beatty and Mansell declined to comment, as did the OFT.
The 112 firms, including 24 listed ones, have until 30 June to respond to the allegations. The OFT will then decide which are guilty and the fines that should be levied on them. This can be as high as 10% of global turnover.
A 10% fine for the Balfour Beatty, the UK’s largest construction firm, would be £750m, based on its turnover in 2007. In the unlikely event that all the firms receive the maximum fine, the bill could come to more than £2bn.
Firms that help the OFT with its inquiries can expect to receive fines of 2-3% of turnover. Thirty-seven firms, including Balfour Beatty, Carillion and Morgan Sindall, have applied for leniency.
Since the OFT revealed the list, the firms named have divided their time between consulting lawyers and reassuring clients.