Scottish Affairs Committee - Minutes of EvidenceHC 156

Oral Evidence

Taken before the Scottish Affairs Committee

on Tuesday 5 March 2013

Members present:

Mr Ian Davidson (Chair)

Graeme Morrice

Pamela Nash

Sir James Paice

Mr Alan Reid

Lindsay Roy

________________

Examination of Witness

Witness: Harvey Francis, Executive Vice-President, Human Resources, Communications and IT, Skanska UK, gave sworn evidence.

Q2046Chair: Gentlemen, welcome to this meeting of the Scottish Affairs Select Committee. As you will probably be aware, we started with an investigation of health and safety in Scotland and have now moved on to blacklisting, because it became clear that blacklisting was one of the issues affecting health and safety matters in Scotland, particularly in the construction industry.

First, I will ask you to introduce yourselves. I understand that Mr Francis has a statement that he then wishes to read out. In fact, the Clerk is just about to remind me, that before I ask you to do that, we want to put you under oath. (Harvey Francis and Simon Hall were sworn) Mr Francis is the witness; Mr Hall is here as an adviser, rather than as a witness. Mr Hall can whisper in Mr Francis’s ear, rather than slipping him notes, but, as was the case previously when people brought folk along, he is not here to give evidence himself.

Mr Francis, who are you and why are you here? Read us your three paragraphs.

Harvey Francis: Thank you, Chairman. My name is Harvey Francis. I am executive vice-president of human resources, communications and IT at Skanska UK plc. I am a director of that company. I sit on the board and on the executive management team. I am responsible for all human resources matters within Skanska UK plc and have been in post since September 2008. I joined Skanska from outside the construction industry a year before that, in October 2007.

Mats Williamson, the chief executive officer of Skanska UK plc at the time this issue came to light, in March 2009, had hoped to be able to join me before the Committee today. However, as I think the Committee is aware, regrettably he is unable to attend today. I will therefore deal with the points Mr Williamson was to cover.

I would like to make it clear that I have never personally used the Consulting Association. I was not personally involved in Skanska’s use of the Consulting Association, and I had not heard of the Consulting Association or what it did until Skanska was contacted by a journalist just prior to the Information Commissioner’s Office serving an enforcement notice on the Consulting Association in March 2009.

Q2047Chair: It may be worth while just now to clarify some points on the sub judice rule. In your statement, which has been circulated to members and will appear as part of the record, you mention that you want to have some reservations about what you say to us on some issues. I ask the Clerk to give us the legal advice that we have had about how this applies.

Eliot Wilson: I will simply say that the House’s sub judice resolution does not engage in this particular case, because you have not been formally named as defendants and the date for the court case has not yet been set down. It is also worth saying that anything you say to the Committee is, of course, protected by parliamentary privilege and cannot be used in a court.

Q2048Chair: To take account of the fact that you have some reservations about some matters being explained in full to us, we agreed before starting the meeting that some of your evidence could be taken in private at the end of the formal hearing, so that we would have another hearing. This time it would be in private. Obviously records would be taken, and we would want to use that as material we might build on, but it would not be publicly disclosed at this time. As I understand it, it remains the position of the parliamentary authorities that it is then up to us to decide when or whether we wish to use that evidence in any way.

I would like to start by clarifying a couple of points relating to what you have said to us today. You said that you joined Skanska in October 2007. In what post was that? Was that also in personnel?

Harvey Francis: Yes, it was. At the time, the organisation was split into two core halves: infrastructure, which looked after the civils businesses, and building, which looked after the core construction. I was hired as the HR director for the infrastructure side of the business. I also had responsibility for looking at the way HR was organised and structured, and moving to a different model of delivery.

Q2049Chair: So you had HR responsibilities from October 2007.

Harvey Francis: That is correct.

Q2050Chair: First, can I clarify the involvement of Skanska and its predecessor companies with the Economic League and the Consulting Association, as far as you are aware?

Harvey Francis: As far as we understand it, there was no link with the Economic League; certainly, our investigation has shown no links with that.

Q2051Chair: Does that apply to your predecessor companies? I refer to the companies you took over, Trafalgar House and Kvaerner.

Harvey Francis: That is not clear. I would need to come back to you on that one.

Q2052Chair: We take the view that you as a company inherited the assets but also the liabilities of any of the companies that you took over and that, therefore, the question of what part Skanska or its predecessors played in the Economic League and then the transition to the Consulting Association is relevant. Can you tell us about Skanska’s initial involvement with the Consulting Association?

Harvey Francis: Are you referring to Skanska or our predecessor companies?

Chair: Either/or-you tell us.

Harvey Francis: Okay. Would you mind if I take off my jacket?

Chair: No, but I think you should stop there.

Harvey Francis: I give you my assurance I shall.

We conducted a full investigation into our historical use. It is clear that Skanska and our predecessor companies did use the services of the Consulting Association for reference checking. They also used the news cuttings service and some of the industrial relations-type forums that were run.

Q2053Chair: So you were full and active members of the Consulting Association.

Harvey Francis: Yes.

Q2054Chair: You put information in and took information out.

Harvey Francis: Yes, the investigation indicates that we both put in and took out.

Q2055Lindsay Roy: What was the nature of the news cuttings service? What was the focus of the information?

Harvey Francis: I have never actually seen the cuttings. But from talking to the people who did receive them, I understand that it was pretty much as Ian Kerr outlined when he presented evidence to the Committee-just cuttings from extremist press and things of that kind. As I said, I have not actually seen the copies myself.

Q2056Lindsay Roy: So that did not come out in your investigation.

Harvey Francis: There were no hard copies, just people talking about the fact that the cuttings existed. When I talked to people, it did not seem that the cuttings were of any particular value or use. They were something that people read if and when they had time.

Q2057Lindsay Roy: During your investigation, how far did you probe into the nature of these cuttings?

Harvey Francis: Probably not hugely, because the primary focus of the investigation was very much on what was happening on the ground-our involvement in the referencing service, primarily. That is what we wanted to get under the skin of, so that we could decide what had happened, get the fullest account we could, and decide what steps we needed to put in place to ensure that it would not happen again.

Q2058Lindsay Roy: Would it be fair to say that that part of the investigation was not particularly robust?

Harvey Francis: I would not say it was not particularly robust. I guess it was viewed as of less consequence than the referencing service. That was a judgment call that I took.

Q2059Sir James Paice: Good afternoon. Can you clarify the other aspect of this-the fees that you paid? We understand that you paid £118,000 between 2005 and 2009. Have you been able to uncover any evidence of what services you were getting for those fees?

Harvey Francis: Yes, absolutely. There was the annual membership fee, which was somewhere in the order of £3,000 a year, I think. Then there was a payment made for each individual check that was done with the association.

Q2060Sir James Paice: On an individual basis.

Harvey Francis: Yes, on an individual basis.

Q2061Sir James Paice: So there were obviously a lot of people.

Harvey Francis: Yes, a lot of checks.

Q2062Sir James Paice: Do you have any idea of how many people were checked in that period?

Harvey Francis: It is difficult to tell for sure, because the records that exist are very patchy. We have not seen the database, so we do not know for sure, but extrapolating from the invoices, the number is around 66,000. That looks like a huge number-I am not sitting here trying to excuse that in any way-but by way of context, if you look at 2008, which was one of our peak years in terms of volume and large buildings, we had something like over 90,000 people working on our sites during that one year alone. You need to think about the cyclical nature of how the trades come on to projects and go off, and then the churn within that. I just wanted to explain by way of context why the number looks big, and is big.

Q2063Sir James Paice: Who in Skanska would actually authorise the expenditure on each of those requests for information and subsequent payment of the fee?

Harvey Francis: They were signed off within one of the human resources departments.

Q2064Sir James Paice: With reference to your own position, you have just said that there were two human resources departments at that stage, before the company merged the two-or were there more in sub-units?

Harvey Francis: There were two of what we call operational HR streams. It is also important to say, as a point of context to help the Committee understand, that back then Skanska was a very fragmented organisation. I think that is also indicative of its history in terms of acquisition and the way the different parts of the businesses have been bolted together. Certainly since 2008, when there was a brand new exec management team and a new CEO, we have been looking at how to create a much more cohesive organisation, to make sure that we have better governance, stronger ethics and all the kinds of things you would expect in a company of our standing.

Q2065Sir James Paice: When you say that an HR department would have authorised this expenditure, how many HR departments would there have been at that time?

Harvey Francis: There were about 12 operating units, so every operating unit would have had a small HR team. There were then two HR directors and a third HR director who ran all the industrial relations and those kinds of specialist topics.

Q2066Sir James Paice: Would the decision of an HR team to seek information about an individual have had to be referred to one of the two operational HR directors?

Harvey Francis: No, not in terms of the usage. Would it help for me to explain how it worked?

Sir James Paice: Yes, please.

Harvey Francis: Essentially, once the decision had been taken to use the service on a project, the pre-induction questionnaire that people wanting access to our sites would fill in was collated on to a template, as we understand it, which was faxed over to the Consulting Association. If a flag appeared against any one of those names, a phone call would come through, which would be dealt with by one of the senior HR team. Then a decision would be taken on what to do-on whether to grant or to deny access.

Q2067Sir James Paice: When you say that it would be dealt with by one of the senior HR team, do you mean within the 10 or 12 units you talked about or at a level higher than that? I am trying to clarify how high up the structure people knew that this was going on.

Harvey Francis: It would have been one of the HR directors.

Q2068Sir James Paice: One of the two.

Harvey Francis: No-the third HR director, who looked after the industrial relations side of things.

Q2069Chair: I am sorry, can I clarify who that was?

Harvey Francis: I can share the name with you, but one of the things that I would rather do is take corporate responsibility for this.

Q2070Chair: No. I think the way this works is that we ask you questions, you are on oath, and you answer. We have asked you for the name of the individual.

Harvey Francis: Apologies, Chairman. It was Stephen Quant.

Q2071Sir James Paice: What exactly was his role?

Harvey Francis: He was director of industrial relations.

Q2072Sir James Paice: Was that on the same tier as you were when you first joined?

Harvey Francis: Yes. We were all part of what was called the HR directors group.

Q2073Sir James Paice: You said that in 2007-08, when you were one of them, before you took on overall responsibility, you had no knowledge that Mr Quant was using this service.

Harvey Francis: That is correct.

Q2074Sir James Paice: It never came up at any meeting or anything like that.

Harvey Francis: No.

Q2075Sir James Paice: So the decision by an individual unit-I think I am using your words-to use the service on a particular project would have been taken by Mr Quant or by one of the HR team in that unit.

Harvey Francis: Yes.

Q2076Sir James Paice: Okay. Have you any idea of how many of the many different units that there were then used the service?

Harvey Francis: Yes. Not all of them did. Primarily, the units that used it were the ones working on large jobs, on what we deemed to be high-profile and high-risk jobs-the big building jobs, if you like, such as education, defence and hospitals.

Q2077Sir James Paice: I have one final question, which relates to your introductory statement. You said that you "had not heard of the Consulting Association…until Skanska was contacted by a journalist just prior to the Information Commissioner’s Office serving an enforcement notice". Can you clarify what you mean by "just prior to"?

Harvey Francis: I think it was The Guardian that ran the story on a Friday. I think we took a telephone call through our communications team on the Wednesday or Thursday giving us advance notice that the story was going to run and asking whether Skanska wanted to comment. That was the point at which I became aware of it.

Q2078Sir James Paice: By that stage, Mr Quant had left the organisation.

Harvey Francis: No; Mr Quant was still in the organisation.

Q2079Sir James Paice: He was still in post then.

Harvey Francis: Yes.

Q2080Sir James Paice: But they came to you because by then you had overall responsibility.

Harvey Francis: Yes; I was the exec VP for HR.

Q2081Sir James Paice: At that point, you were senior to Mr Quant, who operated under you.

Harvey Francis: Yes.

Q2082Lindsay Roy: Mr Francis, why do you think a fax and not an e-mail facility was used? Was it because it could not be tracked so readily?

Harvey Francis: I can’t say with certainty. I don’t think it is a question that we asked in the investigation, which was focused more on the information rather than necessarily on the method of transmission.

Q2083Chair: Are you aware that Ian Kerr told us that they were sent in that form so that they could be destroyed at the end of the day and left no trace?

Harvey Francis: I watched part of the video evidence that Mr Kerr gave. I don’t remember that particular point.

Q2084Pamela Nash: Are there guidelines from your company to human resources at the moment on what they should and should not take into consideration when they employ new staff?

Harvey Francis: Yes, there are. The other point of distinction I would draw here is that many of the people who, we understand from the investigation, were checked were not actually people Skanska was going to employ. They were subcontract workers we were looking to have placed on our sites. The employment processes are a little different from the access procedures for subcontract workers.

Q2085Pamela Nash: Can you be clear on why there was that differentiation? Why was the service not used for your own workers? Why was it used only for subcontractors?

Harvey Francis: As we understand it, primarily because the supply chains in some of the areas where we were working on some of the projects were unknown. Again, because we have not seen the database, we do not have the picture of who was and was not checked, but we understand that the majority of people who were checked were subcontract workers looking to gain access, rather than people looking to gain employment. The way our business model works is that we do more project and programme management, so we don’t have that many trades directly employed. Most of them come through our subcontract operators.

Q2086Chair: Can I clarify this procedure for checking the names of subcontractors? Your unit would send off to the Consulting Association, as well as the names of people you were thinking of employing, the names of a string of people who were employed by a subcontractor. I am sorry, but Hansard does not record nodding.

Harvey Francis: I am sorry-yes.

Q2087Chair: If the Consulting Association had a reference to one of the subcontractor’s staff, what happened then?

Harvey Francis: Then a review would be undertaken by the senior HR person reviewing the case. A decision would then be made around the nature of the entry-as we understand it, the amount of time that had passed. Then a decision would be made on whether or not to allow access.

Q2088Chair: Presumably, there were cases where you refused to allow subcontractors’ staff on to your sites, which could very well result not in you yourselves sacking them but in the subcontractor doing so.

Harvey Francis: Hypothetically, yes, I guess. Having said that, because of the disparate nature of the way the organisation worked and the fact that not every part of Skanska used the service, it is quite conceivable that someone might not be granted access to one our sites but might move half a mile and get access.

Q2089Chair: To another of your sites.

Harvey Francis: To another of our sites that was not using the service.

Chair: This is the sort of argument that we have heard from people before-that it was always possible for somebody to go and get a job elsewhere, and therefore they were not being stopped from getting employment altogether, as they could go and work in another location.

Q2090Lindsay Roy: How was that information communicated to the owner of the subcontracting company? Were they told that they had to remove that person from the site, or that, if they did not, the subcontract would be terminated?

Harvey Francis: No. We understand that typically-bearing in mind that these checks were made before someone was granted access to the site-a phone call would be made to the person providing the labour through the subcontractor to advise them that that person was not being granted access to the site.

Q2091Chair: Was any explanation given?

Harvey Francis: I am not sure.

Q2092Chair: Did you ask anybody?

Harvey Francis: Whether an explanation was given?

Chair: Yes. You are pretty high powered in Skanska. You have run an investigation. I am seeking to clarify whether that is one of the points that was raised.

Harvey Francis: I cannot recall. What I can do is re-read the report and make a representation back to the Committee.

Q2093Chair: Rather than you reading the report and commenting on it to us, why don’t you just let us have a copy of the report? That would be helpful and would give us an indication of the entire range of investigations you undertook. Is that acceptable?

Harvey Francis: I am being advised that that document is legally privileged. Maybe we need to pick that up.

Chair: Can I clarify the point with the Clerk? Shall we take that in closed session at the end?

Harvey Francis: Yes, let’s do that.

Q2094Lindsay Roy: Can I suggest to you gently that the report would appear not to be particularly robust, because you are very vague about e-mailing, news cuttings and explanations of why people were not engaged?

Harvey Francis: I think the primary focus of the investigation was to understand what was happening, the extent to which we had used the service and, therefore, what we needed to do, going forward, to change the culture. That is the approach that we decided to take in terms of how we dealt with this. We did look at all those areas, but I guess that in any investigation there are always themes that emerge that appear to be more important than others.

Q2095Pamela Nash: I want to return to company guidelines on employment of staff. Just to be clear, there are not guidelines when you are looking at staff who are coming from subcontractors.

Harvey Francis: Yes, there are guidelines.

Q2096Pamela Nash: Are they different from the guidelines for direct employment?

Harvey Francis: Yes, they are.

Q2097Pamela Nash: Have they changed? When were they last updated?

Harvey Francis: In the last-

Pamela Nash: I am interested in whether they are different from 2009.

Harvey Francis: In the last couple of years. Yes, absolutely; we have done an awful lot of work since then around training, processes, procedures and culture-all those things-as a result of this.

Q2098Pamela Nash: Is there anything in those that says that it is not acceptable for someone to be denied employment because of trade union membership or the fact that they may have reported fears about health and safety in the workplace?

Harvey Francis: We have a code of conduct on which we have trained very heavily. The issues of both health and safety and trade union membership are contained in that. In fact, we have very good relationships with the unions. One of the first things I did when this was brought to my attention was call UCATT to talk to it, because obviously we were very concerned. We struck up a relationship and a discussion with Alan Ritchie, who was the general secretary of UCATT, and had full and frank discussions. Mats Williamson and I actually met Alan, and Jim Kennedy, to try to talk face to face.

Q2099Chair: That is right. In my understanding, the first time that you met Mr Ritchie and Jim Kennedy, both of whom have obviously been in contact with the Committee, you indicated that there was no evidence that Skanska had been involved with the Consulting Association. Only at a subsequent meeting, when evidence was provided to you by the union that Stephen Quant, in particular, was involved, were you prepared to concede the point.

Harvey Francis: No, that is not correct. When we met UCATT we talked about the investigation, which was ongoing. We shared openly and candidly what we had found. At that point, the investigation indicated that, although we had received information, we had not actually contributed information. I think that, when Jim Kennedy came before the Committee, he said that when we subsequently found out we did not inform the Information Commissioner’s Office. That is not true, because we then received one piece of information that indicated that we had supplied information to the Consulting Association, and we wrote to the Information Commissioner’s Office to let it know that that was a piece of information that we had.

Chair: From the records that I have seen, you seem to have been the biggest single contributor of names to the Consulting Association lists. Maybe we can come back to the detail of that in a moment.

Q2100Pamela Nash: Just to finish that line of questioning, have the guidelines on these issues in the code of conduct been changed as a result of the Consulting Association being raided in 2009, or were your own code of conduct and regulations being broken if your staff were using the Consulting Association blacklist?

Harvey Francis: The code of conduct calls for the highest ethical behaviour. It also talks about the commitment to health and safety, the commitment to employee relations and the commitment to the employees’ right to join or form trade unions; so that is all in there. As I said, I haven’t seen the database, so I can’t comment on what information Skanska did or did not contribute. The guidelines that we have set out are that any references taken are in writing. We have done an awful lot of training with all the HR teams around how references are to be done. One of our policies says that no line manager is to take or give references; all of it needs to be done through the HR department. In that way, we believe that we can exercise more control.

Q2101Pamela Nash: Finally, did you uncover any evidence that references had been sought from the Consulting Association when people were being made redundant, rather than just for employment at the start of a contract?

Harvey Francis: When people were made redundant? I am sorry, but I am not sure that I fully understand the question.

Q2102Pamela Nash: You said yourself that there was a peak of employment by your company in 2008, so obviously people have been made redundant since then. Has there ever been a case where references have been sought, or people have been moved up the list of those being made redundant for trade union membership, or because they are health and safety reporters?

Harvey Francis: I see what you mean. No, there was nothing in the investigation; it was all about before somebody joined or required access to the site.

Q2103Chair: Can I come back to this question of the money for a moment? These seem to be fairly substantial sums. According to the figures I have seen, you were checking roughly 40 people, on average, every day, spread over the whole year; if you were only working a five-day week it would be more. I am not clear about how many of your units were undertaking this exercise and how exactly it was paid for. What was the mechanism by which a unit that had had, say, 50 names checked ensured that those involved got paid? Were they paid from the local unit, or did it have to be done centrally?

Harvey Francis: As far as I understand, the invoice came in centrally and money was then charged to individual cost codes.

Q2104Chair: Right; so it all depended on the Consulting Association sending in the invoice. It covered it, rather than the local unit notifying headquarters that this was a bill that was to be paid.

Harvey Francis: Yes, as I understand it.

Q2105Chair: How were these invoices authorised by Skanska centrally? Was it simply by Stephen Quant, or whoever was in his position?

Harvey Francis: Yes.

Q2106Chair: And nobody else knew.

Harvey Francis: The invoices were signed off and paid through the internal accounting system.

Q2107Chair: But nobody else knew what they were for, presumably, apart from this one individual.

Harvey Francis: No, it appears not, because they were just signed off as another invoice, which would have been passed to the finance department, which would just have paid it, once it had an authorised signature on it.

Q2108Chair: Are you saying to us that nobody else in the company knew about the payment? You were a senior personnel figure in the company from October 2007, and the raid did not take place until March 2009. While you were there, thousands of people were being checked. You are telling us that you were not aware of any of this.

Harvey Francis: That is right.

Q2109Chair: And you were a senior member of the HR management team. I am sorry, but nodding does not get picked up.

Harvey Francis: Yes. That is right-I was not aware.

Q2110Chair: You can understand why we are slightly sceptical, can you not? These were substantial sums of money. It was clearly a policy to undertake such widespread checking, yet you, who were one of the top three HR professionals in the company and later became the top HR professional-even, in fact, when you were the top HR professional in the company-knew nothing about this.

Harvey Francis: No. All I can tell you is the way it is, which is that I was not aware. In fairness, prior to my promotion and joining the exec team, the bulk of my time was spent on the HR organisation redesign. Obviously, I was looking after the infrastructure businesses as well, but, as I said, it was very decentralised. That is the whole context for this: the organisation was very decentralised. I know that may sound slightly absurd now. That is the reason for some of the steps that we have taken to try to bring the company together more.

Q2111Chair: I was getting the impression that it was extremely centralised, in the sense that one individual in the centre seems to have been running all this. How many of your units-I think you said that there were 12-were using the Consulting Association and paying money?

Harvey Francis: Seven or eight.

Q2112Chair: So two thirds of the units were utilising the Consulting Association and you, who were the head of HR, knew nothing about it.

Harvey Francis: That is correct.

Q2113Chair: Right. Were the people in the units who authorised the checks doing this on their own, or had they been advised to do so?

Harvey Francis: They were advised to do so.

Q2114Chair: By whom? By the bad boy?

Harvey Francis: I am not sure who you are referring to as the bad boy.

Q2115Chair: Stephen Quant. He seems to be the bad boy at the centre of this. He seems to be the one who ran all this, with nobody else knowing anything about it. Is that a fair assumption for me to make?

Harvey Francis: As we understand it, Stephen Quant was certainly the person who was the primary contact and organised how it all worked.

Q2116Mr Reid: What happened when Mr Quant went on holiday or was off sick? If invoices came in or checks had to be made, how was that dealt with in his absence?

Harvey Francis: He had a consultant working with him-somebody who was not an employee of the company but worked on a consultancy basis.

Q2117Mr Reid: That individual would carry out Mr Quant’s duties when he was not available.

Harvey Francis: Yes.

Q2118Chair: Who was that?

Harvey Francis: John Dickinson.

Q2119Chair: Coming back to authorising the spending within the individual units, what was the process by which somebody who was working on, say, a PFI unit that was starting up from scratch knew that that was something that they were meant to do-to have names sent off to this place in the west midlands and then get told what to do with the results that came back? Presumably you discovered what the process was. Somebody must have told them that.

Harvey Francis: Yes; there would have been a discussion at the project start-up.

Q2120Chair: Between whom and whom?

Harvey Francis: Between the HR manager and Mr Quant.

Q2121Chair: So the HR manager on every project would be told by Mr Quant that this was the procedure.

Harvey Francis: Yes.

Q2122Chair: You indicated to us earlier that you had large numbers of projects, so presumably you must have had large numbers of HR managers who came and went and knew that this was the procedure.

Harvey Francis: We did not have HR managers on each of the projects. We had HR managers in each of the operating units from which the projects were run.

Q2123Chair: So how many people altogether would know that this procedure was operating?

Harvey Francis: There was one nominated HR contact in each of the operating units.

Q2124Chair: So only 12 people knew.

Harvey Francis: Yes, 12 plus Mr Quant.

Q2125Chair: Thirteen. Clarify for me exactly what the process was for submitting names to the Consulting Association. Presumably the HR managers did not deal themselves with every application for employment for every single site. Were all the names passed to them from the local areas? Clarify that for us.

Harvey Francis: That is right. They were sent in from the project to a co-ordination point. An administrator would then, under instruction, just fax the list. That is how it worked.

Q2126Chair: How were the people at the grass roots then told who they could and could not employ?

Harvey Francis: As I said, if a notification came back that there was a potential issue, once the decision was taken, Mr Quant would be the one who dealt with that.

Q2127Chair: Dealt with that? I am sorry, but I am not quite clear what the process was.

Harvey Francis: He made the decision and advised the site that that person would not be able to start.

Q2128Chair: So every site could have had somebody who had been told by Mr Quant that a particular individual or individuals were not to be employed.

Harvey Francis: Yes.

Q2129Chair: So they would all know that there was a process of blacklisting going on.

Harvey Francis: They knew that there was a process of checks being done, yes.

Q2130Chair: And that some people were then being refused employment.

Harvey Francis: Yes.

Q2131Chair: So all these people knew, but you did not. As far as you are aware, nobody else in the hierarchy of the company knew, either.

Harvey Francis: The board knew that we had a reference-checking process in place, to varying degrees of knowledge. It was not discussed at board level, nor was there a board instruction that it should be used, but various members of the board were aware that we did take references.

Q2132Chair: Yes, but this is a bit more than taking references, isn’t it? Taking references implies checking somebody’s professional credibility, work record and so on. This was blacklisting people for trade union activities and the like, was it not?

Harvey Francis: As I said, we have not seen the database. I don’t know what was contained on it. All I can tell you is that, from discussions with the board, they knew to varying degrees of knowledge that reference checking was carried out, but not the detail.

Q2133Mr Reid: Thank you for coming along, Mr Francis. You said earlier that, of the 12 units, seven or eight were operating the system of checks with the Consulting Association. Do you know why four or five chose not to and the other seven or eight chose to do so?

Harvey Francis: It was done primarily on assessment of risk, in terms of profile of the job and the risk of potential issues arising.

Q2134Mr Reid: What were the units that decided, on the basis of risk, that they would go through this reference-checking process? Do you have a list of which ones were actually involved?

Harvey Francis: Yes, we do.

Q2135Mr Reid: Can you tell us? Do you have it with you?

Harvey Francis: It was used in our central and regions, which is one of our construction units; in our mechanical, electrical and facilities businesses, which stopped checks in 2003 for employees but not for subcontractors; in our steel decking business, which we have now sold; in our piling and foundations business, which stopped in 2006; and in our ceilings business, which stopped in 1993. In civil engineering, it was not possible to get the date when it was stopped, but it had not been used in recent years. In our commercial building, our utilities, small civils and corporate, it was not used.

Q2136Mr Reid: Why were they assessed as being at risk and other areas as not being at risk?

Harvey Francis: It was because of the type of work being done and, I guess, local knowledge. In some cases, the HR manager in the unit said, despite being advised to use it, that they did not want to use it.

Q2137Mr Reid: What criteria would they use to assess that a particular unit was at risk?

Harvey Francis: High risk, high profile.

Q2138Mr Reid: High profile.

Harvey Francis: Yes. As I said, typically it was education projects, defence projects and schools projects.

Q2139Mr Reid: Why were high-profile projects seen to be more at risk?

Harvey Francis: I guess because of the potential for disruption.

Q2140Mr Reid: Were the checks made in order to identify people the HR manager thought were likely to be disruptive?

Harvey Francis: Yes-people with a history of health and safety breaches or drugs and alcohol abuse, and people seeking to step outside the agreed industrial relations frameworks that we put in on each project to provide assurances for people working on the project that things are run properly and that correct procedures are in place for bargaining, discussions, employee welfare and things like that.

Q2141Mr Reid: In what sort of format was the information when it came back from the Consulting Association? Was there a template, or was it just a free hand? What tended to come back?

Harvey Francis: As I said, I have not seen the database. I have seen one extract; that is all. It was just typed.

Q2142Mr Reid: Can you give an example of public sector projects that were deemed to be at high risk?

Harvey Francis: Yes: projects such as the Ministry of Defence building in Whitehall, RAF Wyton, some of the hospitals in the midlands-Coventry, Derby, Mansfield and Walsall-Barts and the London, Bristol schools, Dovegate prison, and a couple of the fire control centres.

Q2143Mr Reid: You mentioned people with drugs and alcohol problems and people who may have been guilty of health and safety breaches. Why do you think people with a history of, say, health and safety breaches are more likely to cause problems on a high-profile job than on a low-profile job?

Harvey Francis: I guess because of the disruption. We take health and safety very seriously and put a lot of steps in place to make sure that we provide best in class and best in industry from a safety standard-

Q2144Mr Reid: But you seem to be-sorry, carry on.

Harvey Francis: I was going to say that, if there is a health and safety breach and an issue, obviously that results in lost time. We also do not want to put people who work on our sites at unnecessary risk.

Q2145Mr Reid: What is puzzling me is why, if the project is high profile, you seem to think that the health and safety risk is different from that on a project that is low profile. I do not quite follow that.

Harvey Francis: I understand-apologies. I guess it is more about the financial penalties on some of the high-profile projects, through lost time.

Q2146Mr Reid: When you said high profile, I interpreted that as something that was likely to be in the public eye. Is that correct?

Harvey Francis: Yes.

Q2147Mr Reid: I am sorry, but I am still not clear about why a project that is in the public eye is more likely to have health and safety issues than a project that is not in the public eye.

Harvey Francis: What you allude to, quite correctly, is that the criteria were not black and white. All that I can share with you is the picture that we built through the investigation, through talking to the people who were involved. That was the consistent story coming through.

Q2148Chair: Before we move off one of the points that you made there, you seemed to say that in some circumstances the person on the site could decide not to use the services of the Consulting Association, even though they were briefed to do so by Stephen Quant or somebody else-if they felt that they had local knowledge, that it was not necessary, and so on. Is that correct? Have I understood that point correctly?

Harvey Francis: The point of decision seemed to be the local HR manager.

Q2149Chair: So this was not a complete company policy. The local HR manager could decide to use or not to use the service, as the case might be.

Harvey Francis: It might be helpful to understand that this was never written down as a policy. This was all done through verbal briefings, discussions and activities of that kind.

Q2150Chair: What causes me some confusion about this is that, shortly after all this broke, you were reported in People Management magazine in November 2009 as saying that your involvement with the Consulting Association was "to ensure the safety of people working on our sites" and not to blacklist people. I would have thought that, if that was why you were using it, you would have wanted to make it policy that it had to be used everywhere, and that health and safety was not simply a question that people could take or leave, as they saw fit.

Harvey Francis: I think we have already established that, because it was not a company policy, the decisions were taken on a more local basis. The company had and continues to have many things in place to assure the health and safety of people on site, but they do not include the kind of activities that the Consulting Association pursued.

Q2151Chair: In that case, it is difficult to see what the role of the Consulting Association was in those circumstances, isn’t it?

Harvey Francis: As I said, when we talked to people through the investigation, they said that it was about keeping people who had a history of breaches of that kind away from the site, so that we could continue to provide a safe, healthy, productive working environment for people who wanted to come and do a good day’s work for a good day’s pay.

Q2152Chair: You believed that, did you?

Harvey Francis: I had no reason not to believe it.

Q2153Chair: I have seen substantial numbers of the index cards and have quotes from them, some of which I will give you later. There were very few that said anything about drug or alcohol use. I can recall only one that said anything about alcohol and two that said anything about drugs-and that is out of over 3,000. To be fair, there were also a couple about metal theft, which I can see is a reprehensible practice but could be covered in other ways; there is no need for secrecy there. The vast majority of them were about things to do with trade union activities. Health and safety was often mentioned, but it was in the context of people raising complaints about health and safety. Companies were being warned that individuals were liable to raise health and safety concerns in a way that might be disruptive to the smooth running of the job. Your point about financial penalties through lost time is really at the centre of this, isn’t it? This was about weeding out people who might cause the company to incur financial penalties through lost time because of industrial disputes about health and safety or anything else, rather than any spurious attempt to make sure that nobody who used alcohol or drugs inappropriately got on to the site.

Harvey Francis: No, I do not think that is correct. Obviously there are financial penalties-I have mentioned that already-but health and safety is of absolute importance. I know it is going to sound like a cliché when I say it, but we do work safely or not at all. I have not seen the database, so I can’t make any comment on what we have or have not supplied, but I would be very surprised if any of our people had made entries about people raising safety concerns. We have in place, and have had in place for a while, things like a "near miss" card. If somebody sees something that could have been an accident but was not an accident, they can fill in one of these cards-

Q2154Chair: Fine, but you should do that anyway. For example, I think one of the entries is that your company blacklisted every electrician on the Jubilee line because there had been an industrial dispute there, and the names of all of them were submitted to the Consulting Association. As I understand it, you had electricians working on the Jubilee line, because they were signed off by an "SQ" and your code number was beside them. Those names-there were about 500 of them in total, which seem to be in addition to the 3,200-seem to have nothing at all to do with health and safety. The description beside their names was entirely to do with having participated in an industrial dispute.

Harvey Francis: That is news to me, Mr Chairman. I find it difficult to comment without-it’s a new piece of information, which I can’t comment on.

Q2155Chair: You seem to be amazingly high up in the organisation to be constantly getting new pieces of information. You did not notice anything when all this was going on, and you are only hearing things now. I am genuinely surprised to hear that you have only seen, I think, one card-because these have been circulating quite widely in quite a lot of the press. I do not know who you are paying for your briefings, but I suspect that you are not getting the sort of briefings you deserve in these circumstances.

Harvey Francis: Actually, I do not want to see the cards.

Q2156Chair: No, but surely you should have had a briefing about what exactly had been going on on your watch.

Harvey Francis: We have in our possession a small number of these cards-one that was provided to us as an example and a further two that were provided to us through employment tribunal claims. We have taken the decision to lock down access to those cards. We would have destroyed them, had it not been for the fact that obviously we need to retain these documents.

Q2157Pamela Nash: We have been here for 50 minutes now, and your response to many of the questions that have been put to you is that you can’t comment because you haven’t seen the cards. I am pretty horrified that you just said that you don’t want to see them. I can understand why you want to limit their circulation, because one of the reasons we are having this inquiry is that the information on those cards is damaging, but I can’t see any reason why you should not look at those cards. If you are responsible for human resources for your company, and the information that is on thousands of those cards, why do you not want to see them?

Harvey Francis: On the Chairman’s point, I have been briefed on the nature of the generic content of those cards, but the work that we have done has been focused very much on making sure that this could not happen again. We deeply regret what happened in the past; there is no excuse for what happened. What we have tried to do is put absolutely all our efforts into making sure that this could never happen again. That has been the focus.

Q2158Pamela Nash: I congratulate you on that effort-but that does not mean that the many people who were denied a job, or the health and safety implications for your sites, should be ignored.

Harvey Francis: But we have not seen the database extracts.

Q2159Pamela Nash: Exactly, so why don’t you look at them? Why don’t you request to see them?

Harvey Francis: My understanding was that we could not request to see them.

Q2160Pamela Nash: But just a few moments ago you said you did not want to.

Harvey Francis: I do not particularly want to see them personally, but I am pretty sure that we asked the Information Commissioner whether-

Chair: That is right. The Information Commissioner will not hand over the entire set of cards. However, quite a lot of them have come out as a result of industrial tribunals or something else, and could be considered to be in the public domain. A reasonable bit of digging would quite easily have given you access to a substantial number of them. You would have been able to see the pattern, and then you would accept that the suggestion that this is all about health and safety breaches and so on, or about alcohol and drugs, is simply an untenable defence. Perhaps that is why you have not made yourself aware of them.

Q2161Lindsay Roy: As HR director, can you tell us about Skanska’s track record on health and safety, and whether there is a differential between big projects and small projects? Have you done any kind of analysis?

Harvey Francis: I do not have that here, but we do have that kind of analysis. Certainly, our health and safety stats compared with the industry are more favourable. I go out on site quite often, as do most of my colleagues. One of the things we always do is talk to the workers and ask them what the standards are like on Skanska sites compared with other sites they work on. Categorically and almost without exception, they always say that standards on a Skanska site are higher than those anywhere else. When we talked to UCATT when this broke, UCATT said, "We have no issue with Skanska. You run good sites, with very high standards on your sites." That is why I was trying to explain earlier some of the things that we had in place, such as the near miss cards. We pay £1 to Mencap for everybody who fills in one of those cards. We do global safety stand-downs if there has been a fatality anywhere in the world on our sites. To me, those do not sound like the actions of a company that would blacklist people for raising concerns that we ourselves raise. Actually, I was on a site 18 months ago where I did not think the standards were right, and I stopped the job. All I can tell you is the experiences I have, the experiences I see and what came from the investigation. That is why if, as you tell me, we have put somebody on to the database for raising legitimate health and safety concerns, I would be very surprised and disgusted.

Q2162Lindsay Roy: Given your statement earlier, it would be helpful if you could differentiate health and safety on the bigger projects from health and safety on the smaller projects. If you have that evidence, could you submit it to the Committee?

Harvey Francis: I am sure we can do that.

Q2163Mr Reid: When Skanska was contributing to the Consulting Association, did any members of Skanska or any of its subsidiaries attend meetings of the Consulting Association?

Harvey Francis: Yes; there are some records that indicate that people did attend some of the meetings.

Q2164Mr Reid: You say "some of the meetings". Was it on a regular basis, or just a one-off?

Harvey Francis: It was regular. I think some of the committees met a couple of times a year. Usually Skanska would have somebody at one of those meetings.

Q2165Mr Reid: Are there any records of what the Skanska reps raised at these meetings, or reports back on what was discussed there?

Harvey Francis: I think we have at least one set of minutes, but they were quite short.

Q2166Mr Reid: Can you summarise for us what was in the short report?

Chair: You could just let us have a copy, if that is acceptable to you.

Harvey Francis: Yes, of course. That might be easier.

Q2167Mr Reid: What benefits were perceived within Skanska from being a member of the Consulting Association, other than using it for referencing?

Harvey Francis: I think that the perceived benefit of using the Consulting Association was for the referencing service. Again, that is why we focused our investigation more on our use of the referencing element of it, rather than the press clippings and the other forums.

Q2168Mr Reid: You referred to it as a referencing service. Would you say calling it a blacklisting organisation was a fair comment?

Harvey Francis: I can see why people would call it a blacklisting organisation. You end up in all kinds of points of technicality.

Q2169Mr Reid: There is now a legal definition.

Harvey Francis: Absolutely; there is now.

Mr Reid: There was no law against blacklisting at that time. Is it your view as an HR professional that, if the Consulting Association were operating today, it would be in breach of the current blacklisting regulations?

Harvey Francis: Yes, absolutely. I can give the Committee my assurance that, had I found out about it before the Information Commissioner, I would have stopped it. When it was brought to our and my attention, I intuitively knew that it was the wrong thing to do-but also the wrong thing to do morally, almost irrespective of what the law says. If information is being held that people do not know about and decisions are being taken, it is absolutely wrong and indefensible.

Q2170Chair: Lots of people in your company were doing that, though. Do they not have the same moral standards as you?

Harvey Francis: The practice had been going on for a long time; it dates back to 1993. During that period of time, we have also seen changes in data protection law. Certainly, everybody we have spoken to says, "Actually, with the benefit of hindsight, maybe we should have asked more questions," but everybody also says, "We didn’t believe that we were acting unlawfully." I guess the point is that nobody stopped to question what they were doing, which is often the case when something becomes what you do. Maybe you do not ask enough questions about why you are doing it and whether you should be doing it.

Chair: Alan, have you finished with the point about meetings?

Mr Reid: Yes.

Q2171Chair: Can I come back to the question of meetings? You have minutes of one meeting. I have seen minutes of a meeting where a Skanska representative or representatives were present, at which the police’s anti-subversion unit, NETCU, was holding a discussion and there was a dialogue about exchanging information and so on, and about warnings being given about this, that and the other. That does not seem to fit well with the points you were making to us earlier about this being an anti-alcohol and anti-drug crusade. Surely somebody from your company who was there at that meeting must have realised that this perhaps went slightly wider than the parameters that you have indicated. Did they not report back?

Harvey Francis: Again, I do not have any knowledge of that, so it is not really possible for me to comment on what thoughts and decision processes the people there were using.

Q2172Chair: I just find it difficult to believe that people were going along to these meetings and not realising that this was a blacklisting organisation. I find it inconceivable that the discussions did not touch on that at some point and, therefore, that there was not wide knowledge of this within sections of your company. I just do not buy-I do not think any of us do-the single bad apple, rogue elephant, bad boy or what have you. There seems to have been a culture within the company at that time that allowed this to continue. I find it very difficult to understand why somebody in such an important position as you did not know anything at all about it.

Harvey Francis: We are certainly not claiming the rotten apple defence here at all. We are standing up to this as a company. We are sorry for what we did and our involvement in it, for sure, and have taken great steps. I think you are right-the culture was not right. The work that we have done over the last four or five years has been focused on making sure that we have the right culture. We have published a number of ethical dilemmas and get each of our management teams to discuss and debate an ethical dilemma three or four times a year at management meetings. We are doing everything that we can to try to raise our ethical standards to be as robust and strong as they can be. In relation to your point about my not knowing, I empower my team, I trust my team, and I have people who run the specialisms. In fairness, it is not a question I ever thought I would need to ask. You have used the term blacklisting; when I came into a company, I would never have expected any kind of covert referencing service, blacklisting, or whatever you want to call it, to be in operation. It is not the sort of question that I would ever really have thought to ask.

Q2173Chair: You must have had a very sheltered background, not to realise, first, that these things went on, and secondly, that they went on in the construction industry. It has been common knowledge in the construction industry for years and years; it’s just that people were never able to prove it before.

Harvey Francis: As I said, I had been in the industry for 10 months when I was appointed to this job. I can honestly say that I was not aware of this. I guess it is the Committee’s prerogative whether to believe me.

Chair: You are on oath. We understand that.

Q2174Mr Reid: In your inquiries, did you find out whether Skanska or any of the subsidiaries were using any other reference organisations similar to the Consulting Association?

Harvey Francis: We asked the question and were told no, the Consulting Association was the only thing of its kind being used.

Q2175Chair: What about Caprim?

Harvey Francis: I had never heard of Caprim until you started your investigations. We have done some internal checks to check that we did not use Caprim, and we have not used it.

Q2176Chair: But, based on what we have seen so far, your companies could be using all sorts of things and you would not know about it.

Harvey Francis: No. For Caprim we ran a check through all the companies that we have paid, through our finance systems, as well as the interviews that we did, just as a double check to make sure. Those checks came back negative.

Q2177Graeme Morrice: When the Consulting Association was raided by the Information Commissioner back in 2009 and your company’s involvement came to light, I believe your company gave a commitment to carry out an internal investigation.

Harvey Francis: That is correct.

Q2178Graeme Morrice: Can I confirm that one was carried out and ask what the outcome of that internal investigation was?

Harvey Francis: It was. We conducted the investigation and discussed it as an exec management team. It was impossible, I think, to get the absolute facts, because we were relying on people’s memories and building a picture from discussion, bearing in mind that there was not much that existed in terms of records, so we decided that we would not take the scapegoating and retrospective penalisation route. What we would do, as I have already said, was make sure that we put in place all the steps that we would need to satisfy ourselves, first, that it could never happen again, and secondly, that we were operating to the highest standards. That was very much the focus. We trained all our HR people in data protection. I wrote to all the managing directors about this personally to say that under no circumstances must anything like this ever be used in future.

Q2179Graeme Morrice: So it was a case of mea culpa.

Harvey Francis: We were honest about our usage, yes.

Q2180Graeme Morrice: So you accepted that there were wrongs that were undertaken. Earlier you said that it was "morally" wrong. Would you accept that?

Harvey Francis: Absolutely.

Q2181Graeme Morrice: Back in 2009, when you met the trade union representatives from UCATT whom you mentioned, you said that your company had used the services of the Consulting Association only "to ensure safe sites". What did you mean by that? I think the Chairman alluded to this earlier. I would be grateful if you could expand on what you meant by that.

Harvey Francis: Again, based on the people we talked to in the investigation, it was about people with breaches of health and safety, drug and alcohol issues, troublemaking and people trying to act outside the established protocols that we have in place relating to how we run the sites and deal from a trade union and industrial relations perspective.

Q2182Graeme Morrice: We discussed that earlier. Earlier there was reference to Stephen Quant being, it was suggested, a bad boy in this regard. When did he leave your company? What were the circumstances surrounding his departure?

Harvey Francis: Stephen retired towards the end of 2009.

Q2183Graeme Morrice: Was that an early retirement?

Harvey Francis: Yes, it was.

Q2184Chair: As I understand it, he finished with you on a Friday and started with somebody else on the Monday. Can you clarify whether or not the company had any involvement in that change of employment?

Harvey Francis: As I said, Stephen retired. We do not talk about the employment relationships between us and any of our employees outside the organisation, because we also have a duty of confidentiality to them.

Chair: Fine. Maybe we will have that at the end of the session as well.

Q2185Graeme Morrice: Why did you think Skanska was not issued with an enforcement notice by the ICO after the raids on the Consulting Association?

Harvey Francis: I guess that the Information Commissioner is the only person who can fully explain that. I would hope that it was because of the full co-operation, transparency and candidness with which we shared information. As the investigation proceeded, we were in regular contact with the Information Commission and were as transparent and open as we could be on everything that we found.

Q2186Graeme Morrice: Did you plead mitigation?

Harvey Francis: No, absolutely not. All we did was talk about the investigation and what we had found. I am guessing that the Information Commissioner made his own judgment about what he wanted to do and the approach he wanted to take.

Q2187Chair: Can I clarify things? When the Information Commissioner sent out his letters, you responded to those.

Harvey Francis: Yes, absolutely.

Q2188Chair: Some people did not. I just wanted to be clear that you did.

Harvey Francis: We responded very quickly to say that we had acknowledged it, and what we were doing. We kept the Information Commissioner apprised throughout the investigation. As I said, when we had a second piece of information, which was that it appeared that we had contributed, we wrote to the Information Commissioner and told him that had happened.

Q2189Graeme Morrice: Earlier you said that you met union representatives back in April 2009 and told them that you had not supplied any information on employees to the Consulting Association. Later you said that that was not the case-that you discovered that you had. You mentioned earlier that, as a consequence of that, you informed the ICO. What was the change of circumstances? How did you discover that you had indeed supplied that information?

Harvey Francis: It was related to the final Consulting Association invoice that had come in. We took a decision that we would not pay it. I received a call from my counterpart at McAlpine asking me to pay the final invoice. I informed him that we would not be paying it and he sent me a copy of the constitution, on the grounds that that was the reason we should pay the outstanding invoice. It was literally a three or four-minute call. I think I said to him that my understanding was that we had not supplied any information, and he said, "I don’t think that’s correct." Completely unsolicited, he sent me one extract just to demonstrate that we probably had.

Q2190Lindsay Roy: You have spoken a lot about the internal investigation. Was it really robust? Earlier you said that it had brought about a change in culture. How do you know? It is easy to say that there is a change in culture. What indicators are there to illustrate that change in culture?

Harvey Francis: We have changed the structure. We have quite a number of people in new posts, including the exec team, only two of whom were part of the old board. The way we run the company, the kind of meetings we have, the ethos and all of those things are very different.

Q2191Lindsay Roy: Can you tell us what is different?

Harvey Francis: Primarily around structure, we have moved away from a board to an executive team and a senior team, so there is much closer working. The senior team is much less fragmented, meets much more quickly and is much closer. We have different ways of forecasting and reporting. We have done lots of work around things like diversity and inclusion. We have done data protection training for HR, have issued guidelines to managers and have made more information more available to more people. I would say that we generally have more discussions. Earlier I used the example of the ethical dilemmas. We re-rolled out code of conduct training to every employee, and these ethical dilemmas formed part of that. What we are trying to do is to encourage people in the organisation to talk about things that historically they may have found uncomfortable, because the senior team believes that, through getting people comfortable with talking about things that historically might be uncomfortable, you build understanding and people are much more likely to speak up when there is an issue. We have also implemented the new whistleblower hotline, which is run by an external company. Anybody who has a discomfort with something that is going on rings this, is given a reference and can call back at any time to see what progress has been made on it. We also take out any identifying features of the things that are reported through the whistleblower hotline and publish them back on to our company intranet for anybody to see. If anybody is concerned that if they speak up either something bad will happen or nothing will happen, we are trying to give people the reassurance by publishing these things that, if they report something, we will look into it and take the necessary action.

Q2192Graeme Morrice: Are your employees using the whistleblower service?

Harvey Francis: Yes.

Q2193Graeme Morrice: Are employees of subcontractors also using it?

Harvey Francis: Yes, absolutely. It is available to anybody working on our sites. We also implemented an ethics committee; I sit as part of that. Its purpose is twofold-to guide the organisation on how we maintain the focus on the code of conduct and business ethics, but also to provide a channel. If line management is unable to resolve an issue to do with business hospitality, commercial ethics or whatever else, it has this kind of sideways route for raising issues with the ethics committee and we will provide guidance. Once we have provided that guidance, we will publish it back online. We have built up quite a bank of things people can look at to get a sense, ethically, of where the organisation is going.

Q2194Graeme Morrice: Are there employee and trade union representatives involved in the ethics committee?

Harvey Francis: No. One of the things that we have talked about, although I am not sure where we are in the process, is actually appointing somebody from one of our operating units-from an operative side-to the ethics committee, because we identified it as a gap the last time we met.

Q2195Chair: I wonder whether I can pick up one point arising from that. You emphasised that when all of this was discovered, the emphasis was on moving forward rather than retrospective penalties and so on. Does that mean that nobody at all got any sort of detriment for the activities that they undertook while they were employed by you and working to, as it were, and in co-operation with, the Consulting Association?

Harvey Francis: That is correct.

Q2196Chair: So nobody has been sacked, dismissed or received any penalties whatsoever for these things that you have conceded were morally wrong.

Harvey Francis: That is right. What we were told all the way through the investigation was that nobody had stopped to question the lawfulness or legality of what was being done. What had and had not been breached is certainly a moot point in terms of the enforcement, or lack of enforcement, by the ICO. I think the point was made earlier that blacklisting was a bit of a hole in terms of the legislation that, thankfully and fortunately, has now been closed. So we decided-we still think it was the right thing to do-to make the focus of this moving forward, to make sure that it could never happen again.

Q2197Chair: What about the people who were adversely affected by what you did? There was no opportunity for them to move forward at the time when you refused to employ them.

Harvey Francis: There are routes of redress subsequently. There was the opportunity to raise an issue through an employment tribunal.

Q2198Chair: But many of those people were caught by you on the subcontractors rule, rather than being employed directly by you. There is no response for them to you on that.

Harvey Francis: Of course, the opportunity now exists through a class action for anybody who feels that we have deprived them of opportunities to-

Q2199Chair: That is right, but I understand that you are going to resist that. Part of the reason why we are going to have a closed session later is that you may be involved in that class action, and you are actually going to defend it. You are actually going to resist people’s claims that you were part of a conspiracy to deprive them of employment. That is not entirely consistent, is it, with your position that this is a morally abhorrent practice?

Harvey Francis: If the results of our actions in terms of providing information deprived people of the opportunity to work, we would look at any claim that was made to us on an individual basis to assess its validity.

Q2200Chair: I will let in my colleague in a moment. Earlier I mentioned one of the things that I saw when I was at the Consulting Association. Again, I am sworn to secrecy to some extent, but here is a quote: "The following list believed to have been employed in JLE"-the Jubilee line extension-"from 1995 to 1997. Source-". It then gives Skanska’s code number and a reference that identifies an individual. The quote continues, "This list has everyone employed on the JLE". There is another entry that I came across, which was common to a whole host of people. It said, "worked on the Jubilee line extension, allowed himself to be drawn along with the course of events at JLE. Not in front line of action." That sounds not too bad, but when I examined the card, on 15 further occasions, right up until September 2008, it was marked "Company has not furthered". You put people’s names on there at the time of the Jubilee line extension in 1997. A decade later, people were still being refused employment on the grounds that they were simply named as one of those who were employed on that site at that time. Does that provide you with the sort of evidence that would allow you to consider compensation to an individual who was involved in that way?

Harvey Francis: As I said, if somebody, whoever that refers to, can demonstrate that our actions prejudiced them from getting work and they have suffered loss as a result, we would look at it-absolutely.

Q2201Chair: Would you not defend that by saying that they could have gone and got work somewhere else?

Harvey Francis: I guess it depends on whether they did suffer loss.

Q2202Chair: I understand that. Proving loss after a substantial period of time will obviously be extremely difficult. I remember two of the witnesses who were in front of us, both from Dundee. One of them almost ended up in tears because he was outlining that being on a blacklist had meant that he had had to travel the country and had been away from his wife and family for a substantial period of time. His wife had now died, and they had actually spent most of their married life apart because of the blacklist. He would not necessarily be able to demonstrate financial loss, because he had ended up getting work somewhere else in the country, but clearly he had suffered enormous emotional loss. Under the sort of criteria you are spelling out, that would not be covered, would it?

Harvey Francis: As I said, we would need to look at each case on its merits. It is new information to me; I cannot comment without seeing the details.

Q2203Chair: Can I come back to you on another point? It relates to the closure of the Consulting Association. We met Ian Kerr and took evidence from him. He indicated that he felt rather as if he had been hung out to dry at the end, because all the companies that had been using his services had simply deserted him in his hour of need, and it looked rather as if he would have to pay the £5,000 fine himself. All the closure costs had to be met by somebody; if McAlpine had not stepped in, he might have ended up being personally liable. Surely in those circumstances you had a moral responsibility, having done something wrong, at least to clean up your mess afterwards.

Harvey Francis: It is an interesting point. I think it is one of those almost impossible questions to answer.

Q2204Chair: Why is it impossible to answer? I think it is straightforward.

Harvey Francis: We took the view that our participation and involvement in the Consulting Association was wrong. It therefore seemed wrong then to pay more money for something that-

Q2205Chair: To close it down.

Harvey Francis: Yes.

Q2206Chair: The same argument could apply to all those cases in which individuals have been damaged, unless you are paying money into a pot for compensation. Presumably you would not want to be involved with any of them any more. Can I turn to what you said about the question of subcontractors and the way in which you vetted them? If I remember correctly, you were the main contractor at the King’s Mill hospital site in Mansfield.

Harvey Francis: That is correct.

Q2207Chair: You will be aware of the debate and discussion that came up there about Lithuanian workers being grossly underpaid-some of them getting less than £100 a week and some being paid rates like 70p an hour by the time various deductions had been made. Given that you have said that you regarded yourselves as having responsibility for all your subcontractors to keep troublemakers off the site, why did you not have the same commitment to those sorts of workers in these circumstances?

Harvey Francis: We did. As soon as we became aware of it, we actually went up, dealt with the subcontractor and made very clear that, if it was not addressed, its contract would be terminated. We now conduct regular industrial relations audits on these contracts. We have somebody who goes into the site, looks at the audits, checks the payroll and looks at the payslips to make sure that everything is in order, because we believe that that is the right thing to do to stop these kinds of things happening again.

Q2208Chair: Is it true that, until you as a company were caught using the Consulting Association, you denied on every possible occasion that you were involved in any such activity?

Harvey Francis: That we denied it beforehand?

Chair: Yes.

Harvey Francis: On which occasions do you think that we denied that?

Chair: I understand that you were asked, for example, in relation to the Olympics, whether you were a company that was involved in blacklisting in any shape or form. You gave assurances then, but at the same time you were actually involved in blacklisting on other sites. I am not certain whether you were involved directly in blacklisting on the Olympics site-maybe you can tell us that-but it seems that, on every occasion when you were asked something like that, you did not admit it until you were caught.

Harvey Francis: I was not aware of a question being asked beforehand. Certainly, we were asked about it directly recently by the ODA.

Q2209Chair: That is right. You responded by saying that you did not do any of that, it was entirely contrary to your values and all the rest of it, yet at the time when the media centre, in particular, was being started, you were the biggest single user of the Consulting Association. Given the description that you gave us earlier of the sort of jobs you might use the Consulting Association for, it seems unlikely-looking at it, as we do, from the outside-that you would not have used the Consulting Association there as well.

Harvey Francis: Before we gave an answer to that request, we did another investigation focused purely on the three projects that we had in the Olympic park. We talked to the operations managers and the HR managers, and the response came back that categorical assurances were given that the Consulting Association was not used for the Olympics.

Q2210Chair: In that case, why not? If it was your normal practice on big projects to use the Consulting Association, why was it not used for the Olympics?

Harvey Francis: I think some of it was about timing. I cannot remember exactly when we started the work on the media centre-and we were not the primary contractor for the media centre-so I will have to check the timing, but we were given categorical assurances that it was not used. That is the basis on which we made the representation back to Dennis Hone.

Q2211Chair: Can I try to clarify one or two loose ends? Am I correct in thinking that all paperwork and the like on your involvement with the Consulting Association has now been destroyed?

Harvey Francis: We have a very, very limited number of documents-a small handful; I think it is about four documents-that appear to show correspondence between the two parties.

Q2212Chair: What about invoices, bills and things like that? Presumably these would be allocated to individual projects, wouldn’t they?

Harvey Francis: That is right. We obviously have the invoices.

Q2213Chair: So you have all those.

Harvey Francis: Yes, we do.

Q2214Chair: So you would be able to give us a list of all the projects on which you paid money to have people vetted.

Harvey Francis: Yes.

Q2215Chair: Do you agree to do so?

Harvey Francis: Yes.

Q2216Chair: Fine. Thank you very much. Can I clarify one point about Stephen Quant’s chairmanship of the Consulting Association? Chairman of the Consulting Association seems a fairly significant role. Did nobody else in the company know anything about this?

Harvey Francis: No, not to our knowledge.

Q2217Chair: So you could go off and become the chairman of all sorts of clandestine organisations-or any organisation you liked-and the company would not bat an eyelid.

Harvey Francis: I guess I would go back to what I have said before. Back then, because of the slightly more fragmented nature of the company, it was much easier for those things to happen. It is certainly less likely that that would happen now.

Q2218Chair: Basically, do you accept that, along with McAlpine, Skanska was the main driving force behind the Consulting Association? You were the biggest user, you provided the chairman for a couple of years and you fed in information on as many individual employees as, if not more than, almost anybody else. Do you accept that you bear a heavy burden of responsibility for that?

Harvey Francis: I think all I can answer is to the fact that the records indicate that we were one of the highest users. I have no facts to support the suggestion that we were a driving force. We were a user, for sure. I guess whether we were a driving force is a question that I cannot answer, because I do not have the facts to enable me to form a view.

Q2219Chair: But having the chairman of the organisation would tend to give an indication of a leading role, wouldn’t it? You did have the chair for a couple of years.

Harvey Francis: My understanding was that, because it was an unincorporated trade association, the chair rotated. We took it for a while and McAlpine had it for a while.

Chair: Right. Are there any other questions?

Q2220Pamela Nash: In response to Mr Roy’s question about what Skanska has done since to prevent this from happening again, you went into quite a lot of detail about health and safety measures and reporting measures that have been put in place. Can you tell us a bit more about your role now, and what you have put in place to ensure that if there were blacklisting you would be made aware of it? Many times in the session today you have said that you were not aware of what was going on at the time. Are you confident now that if any employee of Skanska were using a blacklist you would know about it?

Harvey Francis: Yes, I am sure. The reason I can give you that assurance is that communication and connectivity around the organisation are better. I think the other things that we have put in place help us to give that assurance. There are a couple of other things that I forgot to mention. We have established joint consultative committees on some of the projects and some of the sites. We also have a European works council, on which a couple of our trade union representatives sit. So we have a much more open and transparent culture in the organisation. I would say that that has been one of the most significant bits of work that the exec team have done, to really drive those changes through. Certainly, if you look at the results of our employee survey, all those key indices around staff engagement, culture and whether you have a great boss-so leadership skills-are increasing year on year. We have done a lot of work to educate and professionalise, if you like, our line managers to make sure that they are good line managers and know how they should behave. We have invested a lot of time and effort in all of those things.

Q2221Pamela Nash: Finally, the Chair asked you about the action that you took against your own staff. You were clear that no action has been taken against Skanska staff for using blacklists. There is evidence available of what information was recorded, and of the Consulting Association information that was put in by your company. You referred to the code of conduct, which states very clearly your commitment to health and safety. Do you not think that that would be enough to allow you to discipline members of staff who were using the blacklist?

Harvey Francis: I guess we would need to look at the evidence contained there and take a decision. Employment law is a very involved and complex area, so we would have to look at it and take a decision as a company on whether we felt there was enough, and whether it would be right to take any action, given the time that has elapsed.

Q2222Pamela Nash: So will you go away and look at all the evidence that is available to you?

Harvey Francis: I guess it depends on what you mean by the evidence that is available to us.

Pamela Nash: Everything that is available publicly and within your own company.

Harvey Francis: Yes, we would take a look at that-absolutely.

Chair: Graeme has a question on the back of that.

Q2223Graeme Morrice: It is on the back of what Pamela was asking. We discussed earlier the fact that there was an internal investigation. Obviously you came across a lot of wrongdoing, but you decided to draw a line and move on-to paraphrase, in effect, what you said. You may not want to name names, but you must have come across some employees at the time who were involved in this kind of activity. Are these people still employed with the company, or have they left the organisation over the last number of years?

Harvey Francis: Some are still with us and some have left.

Q2224Graeme Morrice: Were there any particular reasons why those who left did so? Did they leave for their own reasons, or were they encouraged to leave because of what had happened?

Harvey Francis: No, it is just the general kind of ebb and flow of natural attrition, retirements and early retirements-the usual kind of comings and goings with any function or team.

Q2225Mr Reid: What procedures do you have these days for deciding which potential employees, either of you or of your subcontractors, are suitable to be allowed on to your sites?

Harvey Francis: It is done on the required skills.

Q2226Mr Reid: Do you check people’s backgrounds? You mentioned drugs, alcoholism, breaches of health and safety and potential disruption. Do you do any checks like that at all now?

Harvey Francis: No.

Q2227Mr Reid: Do you ask for references?

Harvey Francis: We ask for references for people we are going to employ, but not for subcontractors.

Q2228Mr Reid: For subcontractors, you leave it purely to the subcontractor to decide.

Harvey Francis: Yes, that is right.

Q2229Mr Reid: Do you have any evidence of whether blacklisting is still going on in the construction industry?

Harvey Francis: There is nothing that leads me to think it is.

Q2230Chair: Could I follow up on one point that Alan made about subcontractors? Many of the self-employed work on building sites. Is there no process by which you would vet any of those? Would you leave that to the subcontractor? Presumably you have some staff who are self-employed working with you directly, do you not?

Harvey Francis: Yes, we do. That is correct.

Q2231Chair: What is the vetting procedure for those people?

Harvey Francis: Basically, if a reference is taken up, it is from a previous employer. Obviously, we also do right to work in the UK checks with the Border Agency.

Q2232Chair: I have a couple of points of clarification. In the past, you would have checked self-employed people through the Consulting Association as well, because they would have been included in those who were coming on to your sites.

Harvey Francis: Yes. The investigation indicates that it was primarily subcontractors but that some people we employed directly would also potentially have been checked.

Q2233Chair: The final point that I have is about such checks in Sweden. You are a Swedish company. Do you undertake any checks in Sweden similar to those undertaken by the Consulting Association, or does the parent company do it anywhere else abroad?

Harvey Francis: No, I have no reason to think it does. I would say the reaction in Sweden was even stronger than the reaction in the UK in terms of both the media and the Swedish unions. Obviously, Skanska AB, the parent company, was very concerned. I went over to address the European works council and talked to it about the situation in terms of how we had been involved and the steps that we had put it in place, to give it the assurance that this could never happen again.

Q2234Chair: Many of these things about the company’s culture, the structures and so on were in place while you were involved with the Consulting Association. What sort of guarantee is there that a European works council would be able to stop it in another offshoot of Skanska, if it were kept in the dark?

Harvey Francis: I think the difference is the work we have done around structure, culture and organisation-around the way the organisation works. That is what gives me the reassurance that some of these things would never happen again. The previous organisation to 2008 was very siloed. Lots of the things that we have put in place-such as the creation of a senior management team, which is essentially the exec team plus the managing directors of the operating units, which meets much more frequently, has a much more common agenda and has common bonus measures so that everybody stands or loses by the same kind of things-are very structural things hard-wired into the organisation to make sure that change happens and is sustainable.

Q2235Chair: Finally, we always give people the opportunity to answer any questions that you wish we had asked but we have not-anything that you think we should have given you the opportunity to raise that has not come up. Are there any additional points that you want to draw to our attention?

Harvey Francis: No. I guess the only point that I would like to make is that the company is truly sorry for its involvement. I hope you have got the sense that I have been trying not to explain away what we did, but purely to provide some rationalisation in terms of how it happened and the changes that we have put in place to make sure that the company is a very different company now from what it was a few years ago. I guess that is what I have been trying to convey to the Committee.

Q2236Chair: Notwithstanding where you are now, do you accept that the company did a large number of very bad things to a considerable number of people, that it has suffered no penalty whatsoever, and that it has made no recompense whatsoever to anybody who was affected?

Harvey Francis: Because I have not seen the information, all I can do is put my hand up absolutely to the fact that we did checks and appear to have provided information. Anything else would be, to a degree, guesswork on my part about the contents of some of that. I take the Committee’s point about some of the information that is publicly available, which we will have a look at.

Chair: Unless there are any other points, we will now go into closed session for a moment. I ask the appropriate members of the public and staff to leave.

Prepared 15th April 2013