Directors of construction firms will have to radically change the way they organise their businesses or face the prospect of prison, according to lawyers, after the Government hurried a Bribery Bill through the Commons this
Lawyers warned that provisions in the new legislation would punish directors for failing to put proper processes in place to prevent corruption at all levels.
A PricewaterhouseCoopers report into crime in the engineering and construction sector this week found that corruption in the industry was a “perennial problem”.
Neill Blundell, head of the fraud group at law firm Eversheds, said bosses could easily find themselves facing prosecution under the new crime of failure to prevent bribery, which carries with it the prospect of tough fines and up to 10 years in prison.
“These are serious laws with tough penalties and businesses need to take steps to minimise their risk by showing that they have actively taken steps to prevent bribery.
“This includes delivering training on ethical business practice from board level down, and ensuring that there is a policy in place that is communicated throughout the organisation.
“While companies will never be able to stop certain individuals from engaging in dishonest practices, they have to demonstrate that they have taken steps to stamp out bribery and corruption.”
A senior accountant at one major contractor told Construction News that bribes and corruption were endemic in the industry. “Classically, if a job is subcontracted that contractor will be forced to buy steel from a certain firm at a certain price, and the main contractor takes a kickback on that,” he said.
“Or sometimes contractors have to pay a bribe to physically get on the site in the first place.”
PwC partner Will Kenyon said the Serious Fraud Office was likely to see the ‘failure to prevent’ provision as the easiest route to conviction. “They can get a failure to prevent bribery conviction without actually having to get a conviction for the primary case of bribery,” he said.
“So the SFO is going to be reaching for that charge as the weapon of choice.”
However, a director of one major steel contractor said the Bill was fixing a problem that hasn’t existed for more than a decade. He said: “In the past, I have been told by one of the major contractor groups that it would be £25,000 just to get on the tender list. But that was 15 years ago and something as brazen as that doesn’t exist anymore.”
According to PwC’s Global Economic Crime Survey, underlying factors causing corruption in the industry included large contracts with small margins, and a belief that competitors were using bribes to win business.