Examination of Witness (Questions 130-139)|
20 MAY 2003
Q130 Chairman: Mr McKittrick, thank
you very much for the written evidence that you sent us and also
for coming today to elaborate on anything you want to add and
answer questions which members of the Committee might want to
put to you. You are President of the Institution of Structural
Mr McKittrick: That is correct.
Q131 Chairman: What other positions
do you hold?
Mr McKittrick: I am a main Board
director with an international firm of consulting civil and structural
engineers and it is in that role that I understand what happens.
I decided that this move of mine to try and start ridding the
construction industry of corruption should happen under an umbrella
of the professional bodies because then people may be prepared
to stand up and be counted, whereas, as individual firms, they
almost certainly would not want to do that.
Q132 Chairman: Yes, you have made
your position very clear in your statement. You say that corruption
is the biggest evil in society, in the profession and in the industry
at large and that your professional body should take it seriously.
You also say that, "the World Bank has identified corruption
as the single greatest obstacle to economic and social development."
Obviously in your view there is a great deal of corruption. Is
that mainly in British companies, is it mainly in this country
or is it in British companies operating abroad?
Mr McKittrick: It tends to be
British companies operating abroad, operating for aid agencies,
people like the World Bank, the Asian Development Bank, the African
Development Bank and so forth, not, as far as I can see, with
DfID, our own aid agency. As far as I can see, any jobs led by
DfID do not have corruption in them. The jobs also led by the
EU have corruption in them as well.
Q133 Chairman: You mentioned them
in your statement. What about the position of private industry
in this country, operating only as structural engineers or builders
in this country?
Mr McKittrick: It depends how
one defines corruption. For instance, if a contractor puts in
a bid for work knowing that there is a flaw in the contract conditions
and will be able to make money out of that in the future, one
could say that is corruption, so it is a very wide word, a very
grey area. When does one bottle of whisky becoming two become
corruption? There is also the problem that many people have of
entertainment. There is a different problem that I personally
had a number of years ago on a public project where we managed
with the contractor, and the client to settle the financial aspects
of the job very quickly. That was for the benefit of government,
for the benefit of the contractor, the benefit of everybody, but
one can say, "No, no, you should have let that drag on for
10 years, have great amounts of litigation, bring in lawyers and
spend huge amounts of money to settle it". Whether one defines
that as corruption or not is difficult to say.
Q134 Chairman: I think I would find
it helpful, and I am sure other members of the committee would,
if you would illustrate the sort of corruption which you say is
rife, firstly, in companies operating outside England and, secondly,
the sort of corruption which you regard as the most usual, most
commonplace in companies operating only in this country.
Mr McKittrick: Companies operating
overseas are often bidding for work from aid agencies, so it may
well be, for instance, that an aid agency either gives money to
a country, let's say India, for example, or it is a loan to India
which has to be repaid, and that may well be for a study to do
with new ports in India, so there may be a three-year study to
decide whether these ports should be privatised. There will be,
say, a tender list of six consultants from around the world which
will be bidding for that and normally there will only be one,
possibly two, British consultants in the short-list. In order
to try to win the work, one has got to associate normally with
an Indian sub-consultant that you know from a network, and sometimes
it is in a new part of India because the different states are
quite different, so you know from a network the sort of sub-consultant
you take on. That sub-consultant negotiates with you a fee for
providing a service. The value one gets from that fee is not necessarily
totally related to the amount of work they do and questions are
not asked, so what generally happens is that the sub-consultant
will use a certain amount of that money paid over to facilitate
either winning the contract or, having won it, to "grease
the wheels", as they say, to make sure that the money passes
through quickly, and that is generally how it would happen. I
think I quote in my evidence an Eastern bloc country where there
was an aid project, around US$1 million, and the sub-consultant
told the main consultant, "Provided you go in at US$996,000,
the job is yours, but, by the way, 15 per cent of that has got
to go straight to the minister for transport in that particular
country", so it happens that way. Sometimes it is very explicit,
sometimes it is not quite so explicit and sometimes it goes through
the food chain.
Q135 Chairman: Does this sort of
corruption you are talking about mostly consist of cash passing
from one hand to another or does it consist mainly of a quid
pro quo arrangement with some other benefits or contracts?
Mr McKittrick: The arrangement
of other benefits is small fish compared to the cash. Often in
some of the aid jobs there is technology transfer, and that is
very good, and you bring teams of people from Vietnam, from India,
from wherever over to the UK to enable them to pick up on that.
The difficulty with that is that you start off thinking that you
are only bringing the chief engineer, whoever, but his wife, his
partner, his whoever comes too and of course it would be super
to provide some ballet dresses for the kids when they go back
to their own country, and all sorts of things can creep into this
business of bringing people over for technology transfer, so there
are many, many ways that it happens.
Q136 Chairman: You said at one stage,
"No questions asked", and I understand the context in
which you said that, but suppose somebody knows that there is
a bribery or corruption going on, but is not himself involved.
In practical terms, in real terms, can he do anything about it
in your industry?
Mr McKittrick: Yes, he can say,
"You are not going to bid". He can say, "You are
not going to get involved in the work", and you then start
to face a difficult situation. Do you shut down half of your business?
Do you put staff out of work? These issues come forth and this
is one of the reasons why I said that this thing cannot be only
Britain, it cannot be only Europe, but it has to be worldwide
because if we stop it, the Italians, the Germans, the French and
the others will just carry on doing it and this is the problem
that I face when I speak to people day in, day out. They say,
"Forget it. Unless they all stop, there is no way",
and that is one of the reasons, I think, that if we are ever going
to make progress on this, there has to be an amnesty of some sort,
like there has been with guns. People can put up their hands and
say, "Okay, within three years, I"m going to be clean",
and woe betide them if they are not clean. Without some form of
amnesty and without being Europe and worldwide, I do not think
there is a chance.
Q137 Chairman: You stress very strongly
in your statement as President the need for somebody to do something
about this in the industry. Are there codes of practice in the
Mr McKittrick: Yes, there are.
There are ethical codes.
Q138 Chairman: Dealing with corruption?
Mr McKittrick: Yes, there are
indeed. There is a body called FIDIC, which is the world body
of consulting engineering, and they have got a lovely code, in
theory, but, in practice, it does not work. Now, only this day
last week, we had in my institution a meeting of five or six fairly
large professional institutions from the UK. I invited 21 or 22
of them and we managed to get five or six together. We had a meeting
which was quite revealing and I am looking now probably to October
time to try and have a conference of some sort which will then
enjoin others because I hope by embarrassing those who did not
turn up, they will turn up the next time and start to talk sense.
Q139 Chairman: These codes and recommendations,
are they effective? Are they enforced by companies?
Mr McKittrick: Well, they are
carrots, but there are no sticks.