Ring any bells?

What did you see when you looked at the corporate hospitality scene on the previous page? An opportunity for relationship-building. Or a chance for a potential supplier to influence a decision-maker?

Groundbreaking research by the CIOB into the ethics of various practices and their prevalence has paved the way for a full-scale examination and debate on the way the UK construction industry does business. The results show that while the vast majority of respondents believe that practices such as cover pricing, bribery and collusion between bidders are corrupt, there are realities to face up to.

Respondents were asked to rate a range of situations as very corrupt, moderately corrupt, not very corrupt or not at all corrupt. The fact that many respondents chose the moderately corrupt and not very corrupt options reflects the environment which many people have to work in. People know that these practices go on, and some have to take part in them to survive commercially.

“The majority of respondents recognised what corruption was and how it can manifest itself, but what is concerning is the level of tolerance to particular corrupt practices,” says Michael Brown, deputy chief executive of the CIOB.

Neill Stansbury, of anti-corruption body Transparency International, praised the CIOB for bringing the issues out into the open.

And he urged bosses to make a stand: “The message to company MDs from this is that there is a problem, it’s bigger than you realise. You have to act.”

My company director asked me to forge and sign daywork sheets to bump up and deliberately overprice variations

The online survey on the CIOB website attracted a huge number of responses, more than 1,400, which demonstrates the level of interest in this subject from construction professionals. A total of 40% of respondents were directors or senior managers, 41% were middle or junior managers, while 42% said they worked in companies employing more than 500 people.

As well as asking people to comment on how corrupt they thought certain practices were, the survey asked for views on how common various practices were. Bearing in mind these reflect people’s perceptions and not necessarily their experience, the biggest concern highlighted was the employment of illegal workers. 30% thought this was very common, 46% thought it was moderately common.

When asked how common corruption was at various stages of a project, roughly 40% thought it was moderately common and 40% thought it was not very common. This coincided with people’s overall view of how common corruption in the UK is: 8% said extremely common, 43% said fairly common, 41% said not very common, 8% said not common at all.

Degrees of corruption

When asked directly about involvement in corruption, 18% said they had been offered a bribe once, 23% said more than once, 59% never. 34% had come across cartel activity.

Only 11% were aware of corruption in relation to the procurement or supply of materials.

Incentives are being given to individuals at all levels within our company, from corporate football matches and horse races to weekends being paid for by a particular subcontractor

We have printed here a selection of the results which deal with “degrees of corruption”. The survey asked people to comment on cover pricing, bribery to obtain planning permission, employment of illegal workers, concealment of bribes, collusion between bidders, bribery to obtain a contract, leaking of information to a preferred bidder, fraudulent timesheets, fraudulent invoices, false claims, false extra cost and bribery to win a maintenance bid. In each case around 20%, sometimes more, opted for the not very corrupt or not at all corrupt options.

So what about adding false extra cost as in scenario 2 on the previous page? Respondents rated this as very corrupt and moderately corrupt at 42% and 39% respectively. People felt similarly about leaking information to bidders. As for cover pricing, the results indicate that people are reasonably tolerant of this practice, with 45% of people saying it was moderately corrupt and 32% saying it was not very corrupt.

The results on bribery to obtain planning permission make interesting reading. While 56% say that this is very corrupt, it is a tad concerning that 7% – that’s 98 respondents – deem it not at all corrupt. Perhaps these people are thinking of section 106-type negotiations, highlighted by Ian Abley in his column on page 14.

The survey also asked people to comment how common they thought several potentially corrupt practices were and asked people how common they were in various project phases. And it asked people to estimate how much corruption cost their company. The results, although not revealed here, will be available on the CIOB website from late October.

Lawyer and arbitrator Tony Bingham can see why there might be “confusion”. For example, in relation to our inflated claims scenario, he says: “The argument could be: ‘I know you have got a vicious QS who believes my account is there for the purposes of negotiation. Do I therefore have the intention to deprive the other party of his property?’” Intention, or “mens-rea” in legal terms, is a crucial thing.

But he is clear where he would place his ticks. “It’s very straight forward. There’s no such thing as a halfway house,” he says. “There was a survey which asked: ‘Is a husband entitled to beat his wife in England?’ Quite a lot of people said yes. This survey reminds me of that.

I was offered a bribe by the co-client of a project to issue a practical completion certificate early. This would have released money from the funding bank

“There’s quite a lot of people who think it’s quite in order to produce a final account which is deliberately inflated.

“A lot of people think it’s in order to deliberately under pay. Both are in breach of the Theft Act, both the 1978 and 1968 acts.”

The CIOB has already demonstrated its commitment to tackling the issue of fraud. In June this year it signed up to construction’s Anti-Corruption Forum, led by Transparency International. This alliance of professional institutions, business associations and companies aims to work together to eliminate corruption.

The institute is also working on a project to review the way it promotes ethical behaviour, looking at best practice across the industry. And it plans to follow up this research with more industry-wide research with bodies including the Office of Fair Trading, Transparency International and the Construction Industry Council.

Nearly 70% of those surveyed think that the industry should be doing more.

Chief executive Chris Blythe called upon the other professional institutions to carry out similar surveys to help highlight the issue of sharp practices.

Constant overclaims by contractors make life challenging and difficult. The Contractors used are the best locally at what they do and if ditched, quality would suffer

If you’re really in doubt as to whether an act is corrupt, visit the Transparency International website. There you will find an Anti Corruption Code which lists almost 50 activities and explains why they are against the law.

Hospitality headache

Stansbury reports that the guidance is now being used in litigation. Lawyers on the receiving end of a fraudulent claim are sending the guide with reference to the relevant section.

So what about our hospitality scenario? Isn’t it labouring the point to suggest that a couple of beers with a supplier is corrupt?

Well the reason that we chose this scenario as one of the three to illustrate was that the problem with hospitality was raised most frequently in the comments section at the end of the survey, which all made interesting reading (you can see a few on these pages). One respondent commented: “Brown envelopes no longer exist, rather paid for trips/events, even video cameras which can be written off for tax purposes. All of which are used to sway decisions when awarding contracts.”

Stansbury says that some common sense has to be applied to hospitality: “Taking someone out to Pret A Manger for a sandwich and a coffee these days could influence no one. If you take people to the Ryder cup and stay in a five-star hotel for a week, that’s different.”

He suggests that managers should set precise guidelines, for example on the maximum price of a meal or gift which can be accepted, and everything should be declared. On a project the record of hospitality given and received should be open to everybody.

Stansbury’s advice is: “The simplest thing is to reject it.”