Chandrashekhar Krishnan Interview
Tackling corruption in construction Transparency International was founded in 1993 to bring together governments, civil society, businesses and the media to promote transparency and anti-corruption in elections, public administration, procurement and business. Chandrashekhar Krishnan has been executive director of Transparency International UK since 2004 and is a member of the expert advisory panel of the UK’s United Nations Association. He spoke to Abigail Tomkins about how corruption is affecting the UK construction industry and the benefits of combatting it.
How does a global organisation like Transparency International begin to tackle corruption? TI divides its work between a coalition of national chapters. It’s the only way an organisation like TI can function effectively; my concerns in the UK will be fairly different to those of my colleagues in Bangladesh. Over 16 years TI has grown to have a presence in over 100 countries in all parts of the world, and all those countries are facing different challenges. Our programmes are dictated by our national circumstances but we adopt a common vision, a common set of principles and a common framework. How does TI define corruption? Corruption is the abuse of entrusted power for private gain. Our definition goes beyond the legal boundaries of corruption and covers both the public and private sectors. How much of an issue is corruption in construction compared with the other sectors TI looks at? We focus a lot of our work on the construction industry. Our bribe payers index, the most recent of which was published in 2008, revealed construction to be the most corrupt sector in the world. It’s not surprising when you stop to consider that it’s a three trillion dollar industry. The sums involved in major infrastructure projects are large. They’re complex. There are lots of players involved; project owners, governments, contractors, subcontractors, financing organisations... You can see how there are opportunities for corrupt behaviour. How does the UK construction industry compare with other countries? When we compare the UK to its peers — the US, Germany and so on — I think we’re neither better nor worse. The UK construction sector is not immune to 18 CES March 2010
corruption risks. At a general level, the problem in the UK is that we don’t have a good track record of prosecuting foreign bribery. Today, the number of criminal and civil cases that have been brought on foreign bribery is five. That’s five cases since 1999 when the UK ratified the OECD’s anti-bribery convention. If you look at the USA, it has 120 cases. Germany has 110. The UK has a lot of catching up to do. There’s no doubt corruption is an issue in the UK. If we look at last year’s Office of Fair Trading case where 103 firms were fined, one of the issues there was bid rigging — we consider that to be corrupt behaviour. Looking further back, in 2006 a survey from the Chartered Institute of Building found 51% of respondents thought corruption was fairly or extremely common in the UK construction sector. 41% of them had been offered a bribe. We don’t know how many accepted! But it’s important to realise we are seeing change. There are some good things happening. More and more companies are beginning to recognise the importance of having anti-bribery systems in place. Corruption can be very harmful to a business’s reputation and its finances. Ultimately, it’s in the best interest of all companies to compete on the basis of the quality of their products and services.
41% had been offered a bribe. We don’t know how many accepted! In 2008, the OECD was “disappointed and seriously concerned” about the lack of implementation of its anti-bribery convention in the UK. Will the Bribery Bill help the situation? We’ve been pressing for a modern, effective anti-bribery law for more than ten years now. The various delays to this have meant that the UK’s reputation has suffered. The country’s been perceived as not taking seriously the need to prosecute people and businesses for bribery. The OECD report was unprecedented.
The OECD Anti-Bribery Convention The Organisation for Economic Co-operation and Development (OECD) was established in 1961 to bring together governments committed to democracy and financial stability through market economy. It currently has 30 members; Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom and the United States. Its anti-bribery convention was created in 1997 to establish legally binding standards to criminalise bribery of foreign public officials in international business transactions. All 30 member countries have signed up to abide by the convention and eight non-member countries have also signed up to its accord; Argentina, Brazil, Bulgaria, Chile, Estonia, Israel, Slovenia and South Africa. Regular monitoring of countries takes place to ensure compliance and they must do all they can to retain the “unwavering support” of the OECD and its working group on bribery.
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