Joint Committee on The Draft Corruption Bill Minutes of Evidence

Examination of Witness (Questions 130-139)


20 MAY 2003

  Q130  Chairman: Mr McKittrick, thank you very much for the written evidence that you sent us and also for coming today to elaborate on anything you want to add and answer questions which members of the Committee might want to put to you. You are President of the Institution of Structural Engineers.

  Mr McKittrick: That is correct.

  Q131  Chairman: What other positions do you hold?

  Mr McKittrick: I am a main Board director with an international firm of consulting civil and structural engineers and it is in that role that I understand what happens. I decided that this move of mine to try and start ridding the construction industry of corruption should happen under an umbrella of the professional bodies because then people may be prepared to stand up and be counted, whereas, as individual firms, they almost certainly would not want to do that.

  Q132  Chairman: Yes, you have made your position very clear in your statement. You say that corruption is the biggest evil in society, in the profession and in the industry at large and that your professional body should take it seriously. You also say that, "the World Bank has identified corruption as the single greatest obstacle to economic and social development." Obviously in your view there is a great deal of corruption. Is that mainly in British companies, is it mainly in this country or is it in British companies operating abroad?

  Mr McKittrick: It tends to be British companies operating abroad, operating for aid agencies, people like the World Bank, the Asian Development Bank, the African Development Bank and so forth, not, as far as I can see, with DfID, our own aid agency. As far as I can see, any jobs led by DfID do not have corruption in them. The jobs also led by the EU have corruption in them as well.

  Q133  Chairman: You mentioned them in your statement. What about the position of private industry in this country, operating only as structural engineers or builders in this country?

  Mr McKittrick: It depends how one defines corruption. For instance, if a contractor puts in a bid for work knowing that there is a flaw in the contract conditions and will be able to make money out of that in the future, one could say that is corruption, so it is a very wide word, a very grey area. When does one bottle of whisky becoming two become corruption? There is also the problem that many people have of entertainment. There is a different problem that I personally had a number of years ago on a public project where we managed with the contractor, and the client to settle the financial aspects of the job very quickly. That was for the benefit of government, for the benefit of the contractor, the benefit of everybody, but one can say, "No, no, you should have let that drag on for 10 years, have great amounts of litigation, bring in lawyers and spend huge amounts of money to settle it". Whether one defines that as corruption or not is difficult to say.

  Q134  Chairman: I think I would find it helpful, and I am sure other members of the committee would, if you would illustrate the sort of corruption which you say is rife, firstly, in companies operating outside England and, secondly, the sort of corruption which you regard as the most usual, most commonplace in companies operating only in this country.

  Mr McKittrick: Companies operating overseas are often bidding for work from aid agencies, so it may well be, for instance, that an aid agency either gives money to a country, let's say India, for example, or it is a loan to India which has to be repaid, and that may well be for a study to do with new ports in India, so there may be a three-year study to decide whether these ports should be privatised. There will be, say, a tender list of six consultants from around the world which will be bidding for that and normally there will only be one, possibly two, British consultants in the short-list. In order to try to win the work, one has got to associate normally with an Indian sub-consultant that you know from a network, and sometimes it is in a new part of India because the different states are quite different, so you know from a network the sort of sub-consultant you take on. That sub-consultant negotiates with you a fee for providing a service. The value one gets from that fee is not necessarily totally related to the amount of work they do and questions are not asked, so what generally happens is that the sub-consultant will use a certain amount of that money paid over to facilitate either winning the contract or, having won it, to "grease the wheels", as they say, to make sure that the money passes through quickly, and that is generally how it would happen. I think I quote in my evidence an Eastern bloc country where there was an aid project, around US$1 million, and the sub-consultant told the main consultant, "Provided you go in at US$996,000, the job is yours, but, by the way, 15 per cent of that has got to go straight to the minister for transport in that particular country", so it happens that way. Sometimes it is very explicit, sometimes it is not quite so explicit and sometimes it goes through the food chain.

  Q135  Chairman: Does this sort of corruption you are talking about mostly consist of cash passing from one hand to another or does it consist mainly of a quid pro quo arrangement with some other benefits or contracts?

  Mr McKittrick: The arrangement of other benefits is small fish compared to the cash. Often in some of the aid jobs there is technology transfer, and that is very good, and you bring teams of people from Vietnam, from India, from wherever over to the UK to enable them to pick up on that. The difficulty with that is that you start off thinking that you are only bringing the chief engineer, whoever, but his wife, his partner, his whoever comes too and of course it would be super to provide some ballet dresses for the kids when they go back to their own country, and all sorts of things can creep into this business of bringing people over for technology transfer, so there are many, many ways that it happens.

  Q136  Chairman: You said at one stage, "No questions asked", and I understand the context in which you said that, but suppose somebody knows that there is a bribery or corruption going on, but is not himself involved. In practical terms, in real terms, can he do anything about it in your industry?

  Mr McKittrick: Yes, he can say, "You are not going to bid". He can say, "You are not going to get involved in the work", and you then start to face a difficult situation. Do you shut down half of your business? Do you put staff out of work? These issues come forth and this is one of the reasons why I said that this thing cannot be only Britain, it cannot be only Europe, but it has to be worldwide because if we stop it, the Italians, the Germans, the French and the others will just carry on doing it and this is the problem that I face when I speak to people day in, day out. They say, "Forget it. Unless they all stop, there is no way", and that is one of the reasons, I think, that if we are ever going to make progress on this, there has to be an amnesty of some sort, like there has been with guns. People can put up their hands and say, "Okay, within three years, I"m going to be clean", and woe betide them if they are not clean. Without some form of amnesty and without being Europe and worldwide, I do not think there is a chance.

  Q137  Chairman: You stress very strongly in your statement as President the need for somebody to do something about this in the industry. Are there codes of practice in the industry?

  Mr McKittrick: Yes, there are. There are ethical codes.

  Q138  Chairman: Dealing with corruption?

  Mr McKittrick: Yes, there are indeed. There is a body called FIDIC, which is the world body of consulting engineering, and they have got a lovely code, in theory, but, in practice, it does not work. Now, only this day last week, we had in my institution a meeting of five or six fairly large professional institutions from the UK. I invited 21 or 22 of them and we managed to get five or six together. We had a meeting which was quite revealing and I am looking now probably to October time to try and have a conference of some sort which will then enjoin others because I hope by embarrassing those who did not turn up, they will turn up the next time and start to talk sense.

  Q139  Chairman: These codes and recommendations, are they effective? Are they enforced by companies?

  Mr McKittrick: Well, they are carrots, but there are no sticks.

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