Select Committee on International Development Minutes of Evidence

Examination of Witnesses (Questions 440 - 450)



  440. Is that true in Balfour Beatty?
  (Mr Welton) In our case I think we would be somewhat more defensive than some of my colleagues on the panel. Generally speaking, we would walk away from a country. One way that we have found to conduct positive investment in a country is to carefully select a partner in that country that has already been seen to operate in their own country in a way that is consistent with our ethical policy and to work with that company in that country, and we have done that successfully in a number of cases. These have got to be countries where we can operate generally but we have found it most useful to operate with a company of high ethical standards, and that has been done beneficially.

  441. Is that true in Unilever's case too?
  (Mr Williams) I would say so. The corruption index is obviously relevant to the ability to invest. As I have said before, we have been a global business for more years than most.

  442. Yes.
  (Mr Williams) And we have longstanding operations there. Again, avoiding sanctimony, the reputation for being—I do not know what is the right word to choose—a straight dealer is something that has built up over a long period of time. The question of getting into countries is something we face less often than most because we are in most of them already.

  443. So you know what is going on already.
  (Mr Phillips) Firstly, when we subcontract or enter into a joint venture it is very clear in the contract that we specify our or their ethical standards, if they are higher, and occasionally we have learned from other parties and improved our own standards. We say we do not pay bribes or we will not engage in a corrupt practice and we will disassociate ourselves and terminate an arrangement if we suspect any contractor, joint venturer, does. Obviously we do not cover quite as many countries as some of the other members of the panel but where we operate, and particularly the type of work for which we bid, including the agencies for whom we will work, is very much conditioned by our view on how transparent the process is.

  Mr Robathan: I have one last question I was asked to ask and it is an interesting one for you all but perhaps Mr Bray might like to comment after everyone else. If it is such a big issue for private investors, the question of corruption is such a big issue for private investors, why do you think there are not more anti-corruption pacts and coalitions amongst the private sector? Would that not be an answer because then you operate on a level playing field?
  (Mr Phillips) To the degree possible companies go elsewhere or if they are big enough I think can isolate themselves or insulate themselves from the worst excesses.


  444. BP cannot go elsewhere, you go where the oil is, do you not?
  (Dr Hinkley) I do not know the answer to this question. What I would say is that certainly in our consciousness, issues of social responsibility these days have a much greater profile than they would have done in the past. This is an evolving story of which we are increasingly conscious, and it is not just in this area, but in those of health and safety, our attitudes to employees etc. I think we would say this is an important part of the context in which companies like ours are going to operate in future. Therefore we would expect to see real dynamics here.

Mr Robathan

  445. You could get rid of facilitation payments.
  (Dr Hinkley) I do not know quite what the future of facilitation payments will be.

  446. Good.
  (Dr Hinkley) There is no doubt that through joint operations and through transparency of codes and practice, there is the greater chance to mitigate these sorts of issues and mitigate the risks associated with them. I think that is the context in which we are operating. These things do have a much higher profile. In companies like ours, not just we as an institution but all our staff are much more conscious of these things than they would have been in the past.


  447. Balfour Beatty, I imagine you have to go where the dam is to be built or the road constructed?
  (Mr Welton) No we have perhaps a freer choice than some of my colleagues here such as BP, we can go away. We can go to countries where there are massive opportunities and these are not problems. Certainly over the last number of years we have taken those decisions progressively. It is not very helpful to developing countries, I freely admit that. It is not socially very helpful but it is a commercial necessity. It is something we have actively pursued over the last five years. Most of our international business is now in places where we can operate quite freely in the US and in mainland Europe. Going on briefly to the point about integrity pacts. I think they are an excellent idea but compliance is a secondary point to that. It is exactly the same as EU countries saying they are going to do something and going and doing something completely different. One has to feel that the other members of the integrity pact are going to act in the way that you are going to which is a second issue.

Ann Clwyd

  448. Are you planning to go away from the Ilisu Dam in Turkey?
  (Mr Welton) I am not sure it is in the Committee's interest for me to answer that point. I am prepared to answer that separately if you wish. It would take a long time.

  449. Is the answer yes or no?
  (Mr Welton) Conditional upon the Turkish Government complying with the requirements that the Export Credit Agencies have put upon it.

Mr Robathan

  450. Mr Bray, could you answer?
  (Mr Bray) I do think that collective initiatives by industry groups are part of the answer along with other groups. Within the oil sector there is in fact an initiative, probably at the moment rather low key but a lawyer from Canadian Oxidental is trying to put together such an initiative. That is the positive news. Negative news, why does it not happen more? One is that companies are reluctant to be seen to be telling governments what to do, they do not want to get on soapboxes. The other is the prisoners' dilemma. They are worried that if a few companies are in such pacts, and some companies are not, the other companies will undercut them. Perhaps a final point, in a separate area, the State Department and the FCO have been leading an initiative with companies, including oil companies, and mining companies, in relation to human right security. That is also a joint initiative with government, companies and NGOs. That is an interesting model which might be applied in other areas.

  Chairman: We must conclude now, reluctantly. First of all, I must thank you all very much indeed for coming here this morning to give us your view on this difficult subject which is something which, as Dr Hinkley was saying, is becoming more and more a question which has to be addressed by international businesses and indeed by national governments. Thank you very much indeed. Could I ask the public and indeed the other witnesses to withdraw whilst we go into private session briefly with Mr Welton so he can tell us a little more, which he could not do before. Thank you very much.

  Qq. 451-460 were heard in private and not reported to the House at the request of the witnesses and with the agreement of the Committee.

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