FIDIC and Integrity: A Status Report

In an effort to maintain the health of the consulting engineering industry, for many years FIDIC has been actively developing tools and policies that address corruption.

In 1996 FIDIC issued a policy statement as a first step toward exploring ways to protect the consulting industry from corruption. This policy statement concludes that corruption is basically wrong because it undermines the values of society, breeds cynicism, and demeans the individuals involved. It involves more than stealing funds, it amounts to stealing trust. A formal effort to identify specific courses of action that could lead to reduced corruption in consulting engineering began in 1998. This led to the proposal to develop a practical tool, namely a comprehensive Business Integrity Management System (BIMS) for consulting firms. In recognition of the multifaceted nature of corruption, in 2007 a parallel Government Procurement Integrity Management System (GPIMS) was developed for organizations that procured consulting services.

Recently, FIDIC has been involved in redefining what it means to incorporate integrity and sustainability as part of its definition of quality service.

Recognizing the importance of a united perspective in bringing corruption under control, FIDIC has been interfacing with the Multilateral Development Banks (MDBs), with multinational associations of contractors, and with organizations such as Transparency International, the Organization for Economic Cooperation and Development and the United Nations, in its efforts to promote improved conditions of integrity on an international basis.

Recently, FIDIC conducted a one-day workshop in Washington, D.C., with invited members of the major MDBs on the issue of integrity management. At this event, FIDIC sought to encourage the banks to adopt a broader perspective, including prevention, as well as prosecution, in their efforts to encourage integrity. The banks are developing “red flag tools” so that in-country bank staff can more readily identify signs of corruption on projects. In FIDIC’s opinion, this effort could be further developed as a tool to prevent corruption in the first place. FIDIC has indicated that it would welcome the opportunity to work with the banks on such a program.

Long-term discussions with the Confederation of International Contractor’s Associations have been leading toward a joint policy statement on corruption and FIDIC recently provided information on its activities and systems to the European International Contractors to assist in the formulation of that group’s anticorruption activities. Finally, FIDIC has enjoyed a longer term supportive role with Transparency International in its efforts to combat corruption.

To date only about 100 companies have installed BIMS in their organizations and the number of new organizations considering such a move has dropped to a mere trickle. In spite of a promising interest in becoming a test case in one government department, no organizations have stepped forward to become a test case for GPIMS.

Even though most consulting firms are “doing their best” to define and implement anticorruption policies, many lack consistency in the day-to-day implementation of such policies and fail to obtain systematic feedback, which may improve their integrity management process. But while companies establish their own procedures to assure integrity and fight corruption, they are not following a BIMS roadmap. In a recent survey of the industry, several reasons for this situation became apparent:

In summary, the systems are available, they are not being broadly implemented, and progress to stamp out corruption is not being made. What is required to make progress in this endeavor?

The voice of civil society is certainly growing louder in its demands to governments and industry for transparency and integrity, but there also has to be demand for integrity on the part of client groups. In the same way that the CEO of a company has to be seen to value integrity to convince the ordinary staff member that this is an attribute of the firm and departure from expected behavior is not acceptable, clients need to use every opportunity to demonstrate adherence to these values and critical interest in the steps taken by their service suppliers to control their operations.

It is not just the direct client who should have an interest in this but also the banks who fund the projects that the client will carry out. The FIDIC will continue to talk to client groups to encourage this attitude. Leadership in this area is difficult. Consulting firms who complain about demands for bribes run the risk of losing projects at a minimum and more often than not, losing all ability to offer services in the region. Banks are concerned that if they make the conditions for loans too onerous, they will not be competitive in relation to other banks that have no such demands. Governments—particularly developing country governments—claim that they cannot afford to pay living wages, and there are certainly lots of examples of crusaders in those governments who paid with their lives for their zeal in rooting out corruption.

Nevertheless leadership is required if we are to make progress. For that purpose, FIDIC has decided to conduct an industry survey of perception among member firms about the relative corruption taking place in different parts of the world and to publish the results of the survey.

Finally, level playing fields are important. Entire consulting firms are now blacklisted and banned from further projects for a period of time for the errors of individual staff members. This would be a more palatable approach if entire government departments were similarly blacklisted and banned from development loans for the actions of individual employees.

FIDIC has been energetically promoting integrity for a long time, and its systems have been developed and in place within the industry for a number of years. There is evidence to support the idea that a formal and systematic approach towards the management of integrity works better than sporadic efforts developed by individual companies, yet the idea has been slow to achieve success in the consulting industry. Combating corruption requires a concerted effort by everyone that is involved in projects—clients, contractors, government procurement groups, and funding agencies alike—in helping to prevent, and not just to punish. The industry cannot solve the problem single-handedly.

This paper is based on the work developed by the FIDIC Integrity Management Task Force, chaired by Felipe Ochoa, and the Joint Working Group on Integrity, created under FIDIC’s leadership, with participation by the World Bank, the Inter American Development Bank, and the Pan American Federation of Consultants.