Examination of Witnesses (Questions 440
- 450)
TUESDAY 9 JANUARY 2001
MR DAVID
PHILLIPS, MR
IAN WHITE,
DR REG
HINKLEY, MR
MIKE WELTON,
MR STEPHEN
WILLIAMS AND
MR JOHN
BRAY
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.
Chairman
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.
Chairman
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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