Joint Committee on the Draft Corruption Bill Memoranda


Memorandum from Bob McKittrick, President of the Institution of Structural Engineers (DCB 4)

1.  INTRODUCTION

  1.1  My name is Bob McKittrick and I am the current President of the Institution of Structural Engineers (IStructE).

  1.2  The IStructE has about 21,000 members in 105 countries around the world. Corporate membership is achieved, normally following a university degree, by passing an examination of seven hours duration in the concepts, theory, detail and practice of structural engineering. Very high standards are maintained and the pass rate is normally between 30 and 40%.

  1.3  In my President's address at the beginning of October 2002, I said the following:

I have intentionally left the trickiest one to the end and that is corruption. This to me is the biggest evil in society, our profession and industry at large and one which we as a professional body should take very seriously. Albert Camus, the twentieth century French existentialist and writer, said "integrity needs no rules". Whilst I agree with his theory, the practice is somewhat different.

Many people wish to avoid talking about the subject and others simply do not want to know, and yet one search engine alone on the Internet throws up 2.4 million references to corruption so someone somewhere wants to talk about it. Those of you who work solely in the UK are probably astonished that I am even referring to this topic but there will be others from the larger firms who work overseas, both for private clients as well as funding agencies, who know exactly what I am talking about and you are probably wishing that I had finished my address with the previous topic. Well, life is not that easy and as it said on a wayside pulpit outside our church many years ago "if you do not stand for something you might fall for anything".

The major funding agencies such as the World Bank, the Asian Development Bank and others claim to be taking a much tougher line on corruption and "the World Bank has identified corruption as the single greatest obstacle to economic and social development. It undermines development by distorting the rule of law and weakening the institutional foundation on which economic growth depends."

So why do I raise corruption here? It is because I consider that the Council of this Institution should get together with the Councils of the other major institutions to pledge our support for trying to rid the world of corruption. Maybe we need to declare an amnesty and start afresh at the end of it. Maybe we need to brainstorm the whole issue, but I firmly believe that we need to start and we need to start now.

  1.4  My personal position is as a Main Board Director and Divisional Chairman of an international firm of consulting engineers. I am 58 years of age and have been employed in consultancy since graduating from University in 1967.

2.  GENERAL COMMENTS

  2.1  The amount of time given for submission of written evidence (four weeks including the Easter weekend) is very short for what is an extremely serious issue. The evidence may not therefore be as useful as it should be.

  2.2  I understood that the Government was committed to the use of layman's language in the writing of new laws so as to reduce the need for ongoing interpretation of words, sentences and paragraphs. It is, therefore, extremely disappointing to see that it has been found necessary to produce 11 pages of Explanatory Notes relating to a Bill which runs to only 12 pages, excluding the contents pages. The wording of the Bill needs to be clear, simple and unambiguous, otherwise it will not have the desired effect.

  2.3  As part of my drive to start to try to outlaw corruption in the construction industry, I have been trying to organise a conference to discuss the issue. I have invited the Presidents and Secretaries from 23 major professional institutions. All have expressed an interest, but in the event most have been unable to attend. This is very disappointing but I will continue to strive for a conference.

3.  SPECIFIC COMMENTS ON THE BILL

  3.1  These comments relate to consultancy commissions in countries outside the UK where the fees are paid directly by funding agencies such as the World Bank, Asian Development Bank, European Commission etc. The comments also relate to the governments of countries that receive loans from these agencies and then pay consultants directly before drawing down the loans. The Department for International Development has been excluded from the list as there is no direct evidence of corruption in their projects.

  3.2  Clauses 1, 2 and 3 are perfectly clear.

  3.3  Clause 4(1)(a) gives an example of doing something which confers an advantage but does not give an example of omitting to do something. An example here would help to clarify this clause. Examples of this nature throughout the Bill would be a major advantage in helping people understand the Bill.

  Clause 4(2) as written is too vague and unclear. It needs the example, or similar, given in the explanatory notes.

  3.4  Clauses 5(1) and 5(2) are clear but again Clause 5(3) is too vague and unclear.

  3.5  Clauses 6 and 7 and the Explanatory Notes to these clauses, are unclear. Without adequate clarity they will simply be ignored and hence an offence will not be reported.

  3.6  Clause 8(1) is clear but again Clause 8(2) is too vague and unclear.

  3.7  Clauses 9 and 10 are clear.

  3.8  Clause 11 is a problem. Consider the situation where a consultancy submits a fee bid to a funding agency, or to a country in receipt of a loan from a funding agency, for a commission. In order to have a chance of winning the work, the consultancy invariably uses, as a sub-consultant for some of the work, a firm from the country receiving the aid or loan. The sub-consultant normally specifies how much of the overall fee it wants for its input. The output provided by the sub-consultant is often of a value much lower than their proportion of the fee with some of the remainder being used to bribe the client. The main consultant does not generally query this practice.

  A perfect example of this occurred a few years ago when, in a tender known personally to me, a sub-consultant told the main consultant that they would win the job provided the fee bid was US$ 950,000 and provided 15% of this was paid through them directly to the Minister for Transport of the client. This was in a former Eastern European country.

  I do not think that the sub-consultant would be considered as an Agent under the proposed Bill.

  3.9  I have no further comments under this section.

4.  IS THE DRAFT BILL WORKABLE?

  4.1  I do not consider that the proposed new Corruption Bill will have any effect on the current practices of corruption that take place in consultancy outside of the UK. My reason for this is that, because of the way in which the Draft Bill is written, I do not believe that the drafters of the Bill understand the workings of corruption. Until they understand the workings they will be unable to draft a meaningful Bill.

  4.2  In addition, it is stated in the Press Notice dated 26 March 2003 that one of the themes on which the Joint Committee expects to concentrate its inquiry is the treatment of "facilitation payments" I can find no reference to such payments in either the Draft Bill or the Explanatory Notes.

  However, included in the Anti-terrorism, Crime and Security Act 2001 was new UK legislation on bribery and corruption. This came into force on 14 February 2002 to deter UK companies and nationals from committing acts of bribery overseas.

  Under Frequently Asked Questions No 5 on the Trade Partners UK website the following is quoted:

. . . we do not think it appropriate to make an exemption for "facilitation payments". However, 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. . .

  This statement to me is intolerable. What is "small"? A payment of 1% may be considered to be small, but it certainly is not small if it is 1% of a project worth £5,000,000. What is "normal practice" and who will define "normal"?

  Facilitation payments must be outlawed.

  4.3  My final point is that many people to whom I speak say that if they stop offering payments on overseas work they will simply lose work as the remainder of the EC States will simply carry on as before. It is vital, therefore, that the UK Government enjoins the rest of Europe, and hopefully the rest of the World, in this drive to outlaw corruption.

April 2003




 
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