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$lltrE+trilrtix$tEliminating Corruption in Our Engineering/Construction Industry 1o5

MnaRTEN DE JoNG, Wr l l l eu P . HExnv , P .E . , D .WRE, AND Nn t l r , STaNSBURy

Combating Corruption in the Construction and Engineering Sector:The Role of Transparency International tL2

C H e x o R A S H E K H A R K n T S H N A N

{Jnited Kingdom Anticorruption Forum 1r.s

N n r l l S T I N S B U R Y

The Clobal Infrastructure Anticorruption Centre 11e

C e r H e R r N E S T I N S B U R Y

Partnering Against Corruption Initiative Leads Industry Battle Against Corruption L2s

L E e T a S H J I A N

FIDIC and Integrity: A Status Report L2s

J . M . Bovo , PH .D . , exo J . D . P ,q ,p ILLA , PH .D .

The World Justice Project L2s

Wr l l r a ,u H . Nsu rona

Fighting Corruption in the Australian Construction Industry:The National Code of Practice 131

ROI r . n H InTLEY, ATp .ASCE

Pan American Federation of Engineering Societies 13G

clnuolo DALL'AcguR )ntents cont inue on back cover

ASCE:;T,if,"!";tr::::

Addressing Cornrption in OurE ngr-e erin g/ Con s Lr-t;rction

IndrrstryW I I , L I A M P . H n N R Y . P . 8 . . D . W R E

hen Idecidedto seek

"1henomi-nation

for president+lat of ASCE n 2W2, Iknew I had to dr,ampion aprogram *ratwould benefit all our members. I foundloa of ideas, some tm small to be ofwidespread gmd and others too rvrtowto help the variety of activities in whichcivil engineers parucipate. ftill otherswere impractical. For enample, I didntthink we had the political clout to bestrccessfi.rl in lobbying for a secretary ofinfrastrucn:re in the U.S. president'sebinet. (Thir idea might get a betterreceptiontoday.)

N(rhile searching for the right prugram, I read a brief flyer put out by theCivil Engineering Reseanch Fotrndationentided, 'The Funrre of the Design andC-orntruction Industry-r$There r$Till

You be in 10 Years?" and found twoforecass that caught my eye:

o The first forecast, by the United Na-tions in 1998, predicted that by20Lr, 80 percent of the moneyslrnt on infrastnrcnrre in the woddwould be spent in the derrclopingcountries.

. The second foreost, by A.T Kear-ney, Inc., predicted that by 2020,two-thirds of the major cities in theworld would be in the dorelopingcounuies.

A linle reflection on these forecasa ledme to two conclusions:

o The dweloping countries do nothave the engineering and construc-

tion capabilities to perform the fore-cast volume of work.

. To get all that work done, we willsee the global practice of engineeringand construction at a scale ne\rcr seenbefore.

\Vhat did this mern for the civil engi-neers in the United States?

If the U.S. engineering communitywzrs to be a leading participarrt in theupcoming global work, somethingwould have to be done to "lerrcl the play-ing field." Although briberyand comrpdon occur in €very country in the wodd,they rr. more cofiunon in many of thedeveloping countries. For U.S. engineersto be able to fully participate in globalinfrastrucnrre dwelopment, comrptionhad to be addressed and eliminarcd fromthe engineering/construction in&stry. Ihad found aprcgram ftat would benefitASCE members: address comrption inthe engineering/construction industry.It was consistent with our requircmentto hold paramount the safety, health,and welfare of the public beouse comrption kills pmple, leads to unsustainableprojects, and adversely impacts the poor-est and neediest members ofsociety.

In looking at what others were doingto address comrption, I discovered amultitude of strong programs akeadyunderway. The major constnrctors,through the'World Economic Forum,had begun their Parmership againstC-omrption Initiative. The corsultingengineering firrns, through their globalassociation, Intemational Fedenation ofC-onsulting Engineers, had developed aBusiness Integrity l{anagement Pro

$ram for their member fiflrs. The\7orld Bank had aablished an institu-tional integrity *tinity, headed by *

from Europe, to uncoverand prmecute bribery, kiclcbacks, andother coffupt activities on projecs theyfunded. Timsparency Intemational hadbegun rating the openness of thedecision-making processes in countries,believing that the morc open the prucess, the lower the likelihmd that cor-ruptioncouldukeplace.

All thae worthwhile activities werefor companies, agencies, and oryania-tions. ASCE is a sociery of individualmembers. ASCE and thesocieties around the wodd ttrat arc popu-lated by individr:als were not activdaddrasing comrption. Therefore, Iesublished a program for engineeringsocieties, and their individual members,to join in the batle against comrption inourindtstry.

C-omrption occurs when rvro indi-viduals make one bad decision. The rolettrat ASCE and other engineering societ-ies could fill is to the ethicaldecision-making abilities of members.That's whar we set out to do.

The first step, in 2W+, wrs to con-vene a global task force of ASCEmembers--the Tiuk Committee onGlobal Principals for Professional C-on-duct (GPPCI<haited by Bob Crist.Bob was well aware ofthe issue ftom hiswork solving proiect problems aroundthe world. Mike &nio was the ASCEstaffcontact. The anide on GPPC tellswhattheyhavedone.

The anticomrption theme is catch-ing on all over the world. A member ofGPPC from Spain, Jce Medim, aspresident of the W'orld Federation ofEngineering Organizations, began theAnticomrption Task Group in that glo-bal organization in October 2005. In

Leadership and Management in Engineer ing

J U L Y 2 O O 9 Leac le rsh i . J t anc l Management i n Eng ineer ing

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Elirninatin gConruptiora inOtrr Eragiraeerin g/ConstructioraIndustryMnnnrrN DE Joxc;'wrnrnnn p filnxRvo p.E.;

AND NnTTr- STINSBURY

ABSTRACT: The public uorksle_ngineering/construction sector has been iclentified as tlrcmost corrupt sector in the usorld. For a long time the industry had no concerted plan toattack -the problem, but in the late 1990s ieueral eaents happered that haue giie, rise tothe industry's mostJ'ar-reaching ffirt to address corruption'. Eflbrts are undeT*oy byusorld goaernments, engineering/construction organizations, oid indiuicluals to combatcorruption and conduct business in an honest, transparent, anc{ fair manner. In this ar-ticle ute discuss the magnitude of corcuption in the inclustry, desiribe the rnost comntontwr.t of corcuption, i/enttfy actions.being taken to eliminate corruption in the industry,and erplain ushat indiuiduals can do to iddr"tt the problem.

e are all proud of ourengineering/construction in-dustry's role in shaping ourwodd. Our water and waste-water systems have donemore to lmprove public

health *ran all the hmpitals in the world. Our rmds andbridges, raihuds, trarsit systen$, airpora, and ports movep*pL to and from their house and job6, and move goodsfrom producen ro con$rmers. The buildings uie produce pruvide houses, stores, manufrcuring, energy (refineries, pov/erplrom), education (schmls), and health care (hospir"fr).Uf. ^we know it would not enist without engineers, constructors,

material suppliers, equipment suppliers, lenders, and ownerswho plan, design, construct, operare and maintain our builtenvironment.

Yet, despite all of the gmd that rhe engineering/construcdon indtrstry has done, our industry still receivesnotoriety for comrption. The public workvengineering/construction secror has been identified as the mct comrpt inthe world (Transpanency Intemational zoos). For a long .i-.,the industry had no concerted plan to attack the problem.some govemmena had enacted legislation to outlaw overseasbribery-+he Foreign C-omrpt Practices Act in the UnitedStates is an exampl+$ut enforcement had been sporry. How-ever, in thelate-1990s several wenahappened thatgaverise to

Leadership and Management in Engineer ing Jur ,Y 2009

the industry s mct fir-reaching effon to addressInthispaper,we:

. Identrfy the magnitude of the problem;o Define and give oramples of the most cofilmon qpes of

comtption;. Identfy some major playen in the engineering/

construction indutry who are taking action to eliminatecoffuprion in the industry;

. Explain what individuals can do to address the problem;and

. Explore available data regarding how successfirl the effonsafe.

It is our intent for erieryone i.rle engineering/constructionindmtry to understand *rat:

o Comrption exists;o Comrption is a serious problem;. illegal and unethical activities have been carded out by

the f,rll specrum of panies to corstruction work;. The forms of comrption are varied;o C-omrpt acts occur when rwo or more people make bad

decisions; and. The cost of comrpdon goes beyond money-corruption

kills.

MncrurruDp oF THE pRonr,nnrIndeed, is a movement whose time has come.According to an estimate by the $Zodd Bank Institute, thecost of represenrs five 1rrcent of the worldeconomy---{r more rhan $1.5 trillion a ye:t (Woru BankInsdute 2OO4). \?ith all the situations needing attention inour wodd, it is vital that we understand the magnitude of

in the engineering/construction industry ro assessthe priority we should place on eliminating it. To do thar,we need to understand the size of our industry and the nega-tive impact of comrption. How big is our industry world-wide? The size is measured in trillions ofdollars and is abourone-third the size of the U.S. economy. k is larger than Ja-pn's economy and nearly rwice the size of Germany'seconomy. The industry is truly big business.

No one knows the true cost of . Howwer, anestimate for the industry's loss to comrption is 10 percent or$>OO billion per year. To put *rat number in perspective,think back to when the U.S. C.ongress passed the new Trans-portation Bill, SAFETEA-LU. After more than a year of de-bate, the bill covercd #286 billion over six years, or M7.7billion per year. So, globally, the engineering/constructionindustry losses to corruption could be over eilht times theamount of money the U.S. governmenr spends on transpor-tation annually. These numbers show that comrption is of amagnitude that simply cannor be ignored.

Numbers tell pan of the story but not all of it. Emergingtrends are also major considerations. Two forecasts havestrong implications for the potentid for comrption in thefuture. The fint forecast is ftat by 2015-+ix years fromnow-80 percent of the money slrnt on infrastrucnue inthe wodd will be spenr in developing countries. Accordingto the United Nations, nvothirds of the major cities in theworld will be in those developing countries by 2020.

Sfhar does this lerrcl of activity in the developing coun-tries tell us? The first thing that comes to mind is ftat thcecountries do not have the engineering planning and design,construction and materials, ild supply firrnsneeded to produce that volume ofwork. So, we can elq)ecr rosee global consonia b.i.g formed for projects. New firmswill work in these countries, and new working relationshipswill be forgud. Each area will have its own way of doingbusiness, and there will be lots to leam about how things aredone. These kinds of uncertainties ofFer great potential forcoffupt actions.

The second thirg *lat comes to mind is ftat there isoften a high level ofcomrption in developing countries in allbusiness activities---not just the engineering/corstnrction in-d*try Tiansparency Intemational, the wodds largest non-govemmental anticom4ption organization, with chapten in90 countries, regularly publishes a Corruption perceptionsIndex which rates the perceived lwel of comrption in coun-tries. The dweloping countries consistently rate lowest,which indicates a high likelihmd of comrption.

$7hen you lmk at the magnitude of the engineering/construction industry the funds potentially lost to corruption, and the forecass of wherc major activities will be, youget a picture that can be interpreted as a possible growthscerurio for comrption in the industry Comrption is cur-rently a major problem with the potential to ger muchwo$e.

ConRuprloN Krr,r,sAlthough the above figures illustrate the enormiry of thefin;ancial loss caused by comrption, they do not illustnate thehuman cost. By diverdng r€sorrrces from inoculation prograrns, medicines, hospiuJs, and water and food supplyprojects, people die from preventable disease and hunger. Inaddition, comrption results in projecrs *lat are built to un-saG designs or that use dangerous construction methods,

, or marerials. Quite srmply, comrption kills. Cor-ruption kills not only because money intended for the poorends up in the pockea of comrpt officials, but because thebribes set in motion a chain of harmfirl eventHhe selecdonof unqualified contractors; the grcss inflation of costs; thefailure to complete work; the delivery of substa'dard goods,or too often, of nothing at all-*lat hamper dwelopmentand add to unproductive debt. In frct, comrption and its

Leadership and Management in Engineer ing

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progeny of fraud, waste, abuse, and neglect are nov/ widelyacknowledged to be the single grsrest impediment to thedwelopment of imponerished counuies.

Jusr Wnnr Is ConnuPTIoN?C-omrption, according to Vebstds Dinionary, is the i-puir-ment of integrity, vim;e, or moral principle. It can also be anindtrcement to do wrong by improper or unlauful means. Inthe engineering/construction industry comrption can takeseveral forms depending on who is involved:

. Govemment official,o Osmer,o Funder, \. Engineeto Constnrctor,. Iv{aterial zupplier,o Equipment supplier,. Iender, and. Regulatory/permitting agency.

One point to always k .p itr mind: cornrption takes twoindividuals agreelng to ,rct together in a comrpt manner.Comrption occuls when individuals make bad decisions.

The engineering/constnrction indtstry has many forms of. The main ones are kickbad<s and bribery front

, bid rigging and collusion, frauri., and conflicts ofinteret. Govemment and project officials en divert fundsfrom projeca by demanding kickbacls from contractors inexchange for the award of a contract, the pa.yment of in-voice, or the approral of contract amendments or other ser-vices. This is the mmt common way to steal because it isersy to accomplish, hard to detect, and very lucnative. Forenample, a 10 percent kickback demand on a $50 millionrmd rehabilitation prcject would yield $5 million (untaxed).And this is ftom just one project; many comrpt officialsmmage many projects.

It is not uncornmon for comrpt project staffor owne$ tosecretly set up frcnt companie that do business with theproiect, usually at inflated prices for poor quality services. Attimes, project staffconvert proiect funds and assets direcdy totheir own use. Thee ffarmftions are relativd small com-parcd to thce dacribed above, and include such unimagi-native but remunerative oftnses as:

. Embezzling funds direcdy from project accounts;r Converting vehides and computers to personal trse;o trsing proiect firnds to pay for vacations, buy cars, or build

houses; or. Selling gmds intended for the prciect, such as medicines,

food, or construction materials, for personalprofit Gthuputhrough their front compania), and so on.

C-omrpt conilurto$ can ddtaud projecs (to recover thecosts of their bribes and inflate profits) by overcharging for

goods and services, drarging for goods and services that arenever deliverad, substituting less expensive and lower quatirymaterials for thoe called for in the contmct, or billing lesser-paid employea at higher iates on conffurts.

Kickbacks and bribery are the two side of the same cor-nrptive coin. Kickbad<s (known also as exonion) are askedfot by someone in apoition ofpower ftom someone seekinga favorable decision by the pe$on in power. Bribes are offeredto a decision maker by someone seeJcing a favorable decision.Kickbad<s can be sought by owners from engineers or con-strrrctors, by engineen ftom potential zubcontractors, by con-stnrdors from potential subcontractors or material suppliers,by material or equipment suppliers from potential subcon-trzrctors, or by regulatory/permitting agencies from engi-neels, constructors, materials or equipment suppliers. Bribesoccrr in the oppcite direction. Kickbad<s and bribes resultin firnds earrnarked for projects going into the pockes ofindividuals. \$7hen kid<b,acks and bribes replace quality inselection ptocesses, prcject quality and reliability are lowered.The end result is tfff the people who need and are relyingon the proiect will be the ones who suffer.

The flow of kid<back or bribe funds en be quite com-plex. Gsh paymens leave no trail6r auditors. Intemationalbank tnanGrs can be difficult to trzrce. In some countries, it isimpossible to establish ownership of bank accounts or assets.Forged documents may be used to crsre seemingly legiti-mate paper tnails. In some cases, middlemen are used tofaclttate the transfer of funds. It is often difficult to decipherlegitimate business relationships with middlemen from ille-gitimate ones. One overarching amribute of kicJcback/briberyschemes is a strong conspiracy of silence among the panici-pans. For all these reasons, kid<back/bribery sdremes haveflourished for centuries, and continue to do so today.

Front are often newly established entities.They do not show a history of succesful work. Often, theywill offer diveme, disconneced services. The above could alsodacribe a legitimate joint venture company formed for aproject. One big difference between the front company andthe legitimate joint venture lies in the ownership records.The ftont company has few records of ownership; the joint

venture is frrlly tnansparcnt on ownership. The reason for fewrecords is that the orvners do not want to be

known. They may be high-ranking govemment officialswho would receive profits from the front company. Ownerscould also be officials in the project implementadon unitwho will ltave a voice in awarding work to the firrnt com-pany. A front company often acts as the "lo@l agent" for aprciect, not urs one of the key producers of the work.

Bid rigging and collusion are other coffupt activities thatcan take avaiety of forms. Owners'personnel can participateby setting very short bid periods so only firrns they havenotified ilLdly about the upcoming bid have sufficienttime to prepare a sound bid. Owners' lrrsonnel can also

Leadership and Management in Engineer ing lEE JuLy 2009

exclude qualified firms from bid lists and only allow 'fa-

vor€d" firms to comlrte.Contracton may engage in collusion by making agree-

ments on who will get er,ch of aseries ofpr,ojects. In this way,the "deignated winner" can submit an artificially high bid,while the othen submit even higher ones. There can also becollusion between owner's and contmctor's personnel. For er<-ample, a frvored conffzrtor may be asked to submit an afti-ficrally low bid to assur€ *rat it will get the project. Duringthe course of the work, the oumer's staffwill allow contractmodifications and drange orders *nt naise the contractorsre\zenue,lower the contractor's cost, or both. Bid rigging andcollusion may also be part ofQrSer coffuption schemes.

Finally, all tpes of conflics- of interest are forms of cor-ruption. C-onflicts of interest can range from per seconflicts-where a person has a direct personal stake in theoutcome----{o more camouflaged ones where friends and/orfrmily members receive the unwarranted rewards. The wayto minimize conflicts of interest is to require disclosures ofallreal and porcntial conflicts by

"ll parties----ownen, potential

conffactors (engineers or constructors, suppliers, mdlenden!--+o a project prior to the start of prccurement ac-tivities.

During the progress of a project, ot a series of projeca,there are often red fus that may indicate cornrption:

Recurring use of one company (prime conffactor, subcon-ffzrctor, suppliea agent);A clce, personat (nonbusiness) datiornhip amongprcject panies;The terms of reference in contracts are vague or incom-plete;Firms use false qualifications or show resurnes of qualifiedpmple but use other lasquatified staffon the project;Different firms use the same address or phone number;A firrn does business uing avairery of names; andOne firm does many diverse tasks.

C-omrption exists. \U7e can take the tack that that's theway the world is or we can act now and act together toeliminate corruption in our indtrstry. The choice is ous!

CURRnNT ACTIoNSAfany members of the engineering/construction indutryhave decided to act. A big step is to improve the opnnessand trarnpa"tency of the decision-making prccesses from prc-crrement to performance of the work by ull parties involvedin a project (owner; engineers, both tead and subcontracors;constructors, both prime and subcontractors; material andequipment suppliers; fundem; lenders; and regulators).

The key members of the engineering/coriitruction indus-try who have current action progams are govefirments (whomay be ov/ne$ or regularors), engineers, constnrctof;s, lend-ers, evaluators, and prcfessional organizztions.

Gove,rnrnerrts

Govemments around the world are tightening their Lgtrl"-tion against corruption. Examples include the United Na-tions C,onvention against C-omrption; the Organization forEconomic C-mperation and Development (OECD) Conven-tion on C-ombating Bribery; the Inter-American Conventionagainst C-omrption; two C-ouncil of Europe C-onventions onC-omrption; two European Union C,onventions; the AfricanUnion Convention on Preventing and C-ombating Co^r1>tion; and the Asian Development Bank (AOB)/OECD AntiC.omrption Action Plan for Asia and the Pacific. The mctsignificant convention, due to both its scope and geographicreach, is the United Nations Cpnvention which has beensigned by I4O countries. It came into force in December2005 and requires:

o The , implementation, or maintenance of ef-fective, coordinated anticomrption policies;

o The esublishment of transparent, competitive, and objec-tive procurement systems and public finance prccedures;

o The criminalization of bribery, trading in influence, em-bezzlement, abtrse of power, illicit enrichment, moneylaundering, and frlse zrccounting (applicable to both pub-lic and private sector);The establishment of independent and adequately re-sourced entities to fight coffuption; andIntemational cooperation and extradition.

In order to comply with the obligations rmposed by thaeconventions, rnany countries had to change their antibriberylaws. In panicular, all OECD countries were required by theOECD Cmvention to ensure that their laws made it a crime,prosecutable in the home country for their companies andnationals to pay a bribe overssrs. All OECD countries havenow changed their law in this rcgard. Prwiously, an indi-vidual who paid a bribe overseas may have been confidentthat they would never be prosecuted. The colrntry in whichthe bribe was pard may Lnve had an ineffecdvesystem, and the individual's home country may have had nojurisdiction over an act that took place oveneas. Now *lathas changed. A person may be both in the coun-try in which the bribe is paid, and in their home country.

Intemarional antimoney-laundering regulations havebeen tightened, and bank secrccy laws have been relaxed. Asa result, there is an increrased likelihood that the payers andrecipients ofcomrptpayments will be identified. In addition,convention obligations require countries to cooperate in theidentification and recovery of comrptly obtained assets.

ldany govefirments are also aware *lat efbctive anticor-ruption action needs more than medy rigting a conventionor changing the law. InJuly 200r, the world's eight largesteconomies issued a G8 which committed theGB nations to "Reduce bribery by the private sector by tig-

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JuLy 2009 f [ f l Leaclership and Management in Engineer ing

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orously enforcing laws against the bribery of foreign publicofficials, induding prmecuting those engaged in bribery;strengthening antibrib.ry tuq,rirements 6r those applyr4gfor expon credits and credit grraranrces, and continuing oursupport forpeer rwiew, in line with the OECD Convention;encouraging to adopt antibribery compliance prugmms and rcpon solicitations of bribery; and by committinlgto coopemrc with Afrien governmens to ensure the prm-ecution of thce engaged in bribery and bribe solicietion."

Prmecution atrthorities in OECD countries are novr con-ducting a significant number of investiguions under thenew laws into alleged comrpt behavior. Although this hasresulted in few , t{e number is expected to in-crsue as a result of impoved reponing and increased inter-nadonal cooperation.

Debarment is becoming a more widely used govemmenttml. It is a qntem under which compnies or individualswho are fotrnd g"ilty of comrption are prwented fro- prt-ticipating in future pnrjeca owned or finded,by the debar-ring organization. trfany govemmens opemte a debarments5xstem. For example, as a rrsult of the European Union Pro-curement Directives 2M, all European Union memberstates were requi*d, by Jar;nnry 3I, 2C[f, to ensure thattheir laws provided for mandatory enchsion of a companyfrom public sector and utility conuzrts if the company, or isdirectors, or any other pe$on who has powe$ of representa-tion, decision, or control of the company, have been con-victed of comrption,.bribery fraud, money laundering, car-tels, and specified other offences.

In lvlay 2N6, an OECD antibribery working grcup,which comprises the enpon credit agencies of all OECDcountries, issu€d is "Action Statement on Bribery and Offi-cially Supponed Eapon Credits." This requira all OECDercpoft credit agencies to enhance their anticomrption ac-tions. Among the actions are requirements that enpon creditagencies:

o Encoura{p 4pplicarrs for enpon credits to dwelop, aq2ply,and document antibribery management con-trol sptems;

. Require applicants to provide undertakings that neitherthey, nor anyone acting on their beha$ has engaged, orwill engage in bribery;

. Verify whethet applicana 4ppear on a multilatenal devel-opment bank debarment list, or are being investigated, orhave been convicted of bribery;

. Require disclmure of agens and their commissions; and

. Obtain recourse from an applicant in the event of bribery.

Orgnlzatiors a

The consulting engineering community has also been activein developing and implementing anticomrption pro$ams.The Intemadonal Federation of C-onsulting Engineers

(FDIQ has derrcloped "Guidelines for Business Integritytrdanagement in the C-onsulting Industry." Thee guidelinashow how to darelop an integrity manaSement system basedon uniform, ffanspar€nt, and accounuble practices in a firm.

The constnrcors have also ulien bold steps against cor-ruption. The \forld Economic Forum (Wgf) Parmeringagainst C-omrption Initiative (pACt) was established by thecon$nrction section of \(fEE and has eryanded to indudenarural resources dwelopment finns. Over 130 major inter-national from the constnrcdon and engineering,oil and gas, and mining and minenal s€ctols, with combinedannual {€ventres in ences of US$)00 billion, and ftom over35 countrie, have commiaed not to tolerme bribery, and toimplement effective anticomrption procedures.

The major intemational lenders have also been active indweloping and implementing anticomrption programs. InFebruary 2W6, the Afriqn Dwelopment Bank, Asian De-velopment Bank, Inter-American Development Bank, Eurupean Investment Bank, Etuopean Bank for Reconstnrftionand Dwelopment, the Intemadonal Moneury Fund, and the'World

Bank agreed to standardize their definition of comrption, to improve the consistency of their invetigative nrlesand procedum, to strengthen information straring, and to,rssule that compliance and enforcement actions taken by oneinstitution are supponed by ull others. They also agraed towork together to develop concrete propcals to assist coun-uies in strenghening their czipcity to combat comrption,and to improve cooperation with civil society and otherstakeholders and instinrtions with the gml of enhancingffanspar€nq/ and accountability.

In addition, all multilatenal development banks operzrtedebarment systems. The best known is *r,at of the t$7orld

Bank, which has a large comrption investigation depart-ment, and which publishe a list of debarred individuals andorganizadons on is ITeb site.

The \Uforld Bank has also dweloped its Voluntary Dis-clmure Program. This is a prog{ram that allows fiflns *rathave been involved in comrpt activities to confidentially de-scribe their activities in detail in orchange for lack of debar-ment. The prognam is in ia infincy, but holds promise as atool to combat

Our engineering/constnrction indr.rstry has drawn the at-tention of organizations ttrat evaluare how decisions are madein countries. Tiansparency Intemational (TI) is the leadingerraluator of our industry and has developed the "Business

Principle for C-ountering Bribery" and its accompanyingguidelines, implementation plan, and verification module.Trarsparenqr Intemational also publishes its C-omrpdon Per-cqrtions Inden and Bribe Payers'Indor, and works with oth-e$ to imprwe the eflbrts of all against comrption. For er<-ample, TI, the United Nations Global Compact 10thPrinciple, the Intemadonal Chamber of Cmmerce's C-om-mission on Anticomrption, ffid the STodd Economic Fo

Leadership and Management tn Engineering If9 JuLy 2009

rum's Partnering against C-omrption Initiarive have agreed to ,coordinate their efform to disseminate gmd practice and ,goid^.. materials and to suppoft each others'implementa-, ition and compliance tools. :

The Global Infrastnrcnue Anticomrption Crntre (GI- iACC) was launched in trfay 2008. lt publisha the GIACC iResource Crntre, which is a rU7eb rcsource that provides 6€e 'irccess to informadon, advice and tmls designed to help ismleholden undersund, prevent and identify comrption in ithe infrastrucnrre, construcdon and engineering sectors. :Since launch, the Reource Crntre has been visited by *S"- ,nizadons from over 125 counuies. (www.giaccentre."tg). iGIACC also has publshed the..{roject Anticomrption S1n- :tem" (PACS), which is a modular system designed specifi- ,olly 6t constnrction projects. Tkrcse modules include anti- icomrption commitments, independent monitoring, due idiligence, traosparency, and tnaining. i

Indviduals\We have discussed what companies and institutions are do- :ing to address comrption in the engineering/construction in- id*t y'. Recognizing ftat individuals making bad decisions is ithe rmt Gu.$e of the problem, the engineering societies iaround the wodd, whce members are individuals, not firms, :are also acting to fight comrption. Seneral have :dweloped model codes of condrrct and guidance to assist 'individual engineers improve their understanding of ethi@l :practices and the dannge and risks of comrption, and to ienhance their disciplinary procedum. i

The United Kingdom kstitution of Gvil Engineens has :published a revised Code of Professional C-onduct and ac-

Advice on Ethical C.onduct, which deal ex-pressly with the isue of comrption.

The Amerien Socrery of Gvil Engineen has worked asthe secreuriat for more ttnrr 100 engineering sociedes glo-bally to dwelop and disuibute "C-ombating Comrption inEngineering and Corstruction-An Engineer's Charter."This document prohibits comrption by engineen, and thesignatory organizations pledge they will work with otherintemational organizations to enadicate comrption.

ASCE has also amended their Code of Ethics, specificallyCannon 6 which sutes thac "Engineers shall act in such amarlner as to uphold and enhance the honor, integrity, anddig"ity of the profession and shall act with zero-tolerance fur bribery fraud, and cornrption."

C:non 6 also c lls for engineers to:

Not knowingly errrgage in btrsiness or professional prac-tices of a fraudulent, dishonest, or unethical nature;Be scrupulously honest in ttreir control and spending ofmonies, and promote effective use of rcsources throughopeo, honesq and impartial service with fidelfuy to thepublic, employers, associates, and clients;

. Act with zero-tolerance for bribery, fuud, and comrptionin all engineering or construction activities in which theyare engaged;

. Be especially vigilant in rnaintaining ethi@lbehavior where payments of gratuities are institutional-ized practices;

o Strive for transparency in the procuJement and enecutionof projects, including disclonrre of name, addresses, pur-pms, and fees or conrmissions paid for all agents hciltat-ing projects; and

o Encourage ttre use of cenifications spectrying zrlutolerance for bribery fraud, and cornrption in all contracts.

This language is much rnorc specific in ad&essing therole of the individual engineer when confronted with briberyfnaud, and comrption in our engineering/construcdon indus-try'.

It is now accepted that cmperative action is essential ifcornrption is to be prwented. Tackling comrption is not acompetitive issue. Everyone (4part from the comrpt) willbenefit if comrption is eradicated. A level playrng field willbe achieved, and companies will be able to compete and toperform firee ftom the risks, unfrimess, and uncertaintieswhich comrption imposa. Several cmpenative initiativeshave been atablished.

The \UTorld Federadon of Engineering Organizationsbtingt together rrational engineering organizations frommote *ran 90 nadons and repreents some 15,000,000 en-gineen from around the wodd. It has aublished an intema-tional Anticomrption Sunding Committee, with membersfrom each continent, to €r€e on appropriate anticomrptionactions.

The United Kingdom Anticomrption Fonrm is an alli-ance of hsiness associations, pofessional institutions, ildorganizations in the United Kingdom with intercsa in thedometic and intemational infrastnrcarre, constnrcdon, ffid

sectors. It was founded in October 20M. Ismembers include the Association for C-onsultancy and Engi-neering, British E4penise, Chartered Institute of Building,Chanered Institute of Rrchasing and Supply, EngineenAgainst Poverq', Instinrtion of Civil Engineers, Institution ofMedranical Engineers, Institution of Strtrctunal Engineers,Royrl Institution of Ctranered Surveyors, and TiransparenqtIntemational (U.K.). These associations represenr over 1,000

and 350,000 industry professionals. The Fonrmalso indude numerous Wgr,medium, and smallas active mernbers. The purpoe of the Forum is to promoteindustry-led acdons which carr help eliminate comrption. InSeptember 2m5, the Forum pubtished its "Anticomrption

Action Statement," which calls on all thce with interests inthe inftastrucnrre, con$rucion, ffid s€ctors totake effecdve and cmrdinared action to reduce comrption, on

JuLy 2009 ff f l Leadership and Management in Engineering

both a domestic and intemational basis, and on both thesupply and demand sides.

CuRRnNr SrarusEach member of the engineeringkonstruction industry entake pcitive steps to redrrce comrption. \7e must all recog-nize fiat ignoring comrption is the sarne as condoning it. Asimple, five-part prcgfam will start pcitive action:

1. Educate all thce working in the profession on thetrue cct of comrption in theii country;Shine a bright spotlight on coffupt activities wher-e\rer you see them;&fake it socially unaccepbble to be involved in cor-nrption;Encourage organizations to implement anticom4>tionmanagement measurcs in their organizations and ontheir pmjecs; andEducate the nent generation of enginees, constnrc-tors, ownefs, govefirment leaders, material and equipment suppliers, and lenders on the tnre cmt ofcomrPtion.

Dapite the pcitive and signifient dranges that are oc-curring, there is still major comrption in many countries.The main problem is that rnany politiciars and governmentofficials (in Uottr dweloped and dweloping counuies) arethemselves comrpt. They control the decision-making pro-cess, and, firequendy, the pruectrtion authorities and cours.They grant themselve immunity against prosecution. Theyen, thercfore, effich themselves with impunity. trdany otherleaders who a"re not cofiupt take insufficient action to pre-vent comrption. It is difficult to achieve change at a workinglevel when leaders are corrupt, ffid litde action is taken toprosecute, or r€cover stolen assets. Junior officials, who arefrrequendy underpaid, their income with minorfacilitation paymenm, and see litde reason to change when

their leaders are stealing the income which could have in-creased their wages.

Horveve! in the engineering/constnrcdon industry realchange is uking place, and there is no going back. It isessential that all in the industry continue to lead change, andto put pres$trr on go\rernments, banls, and other partici-pants to play their pin. The aim is turofold: (t) to achieve alwel playing field where business can be undenaken in anhonest, ffzroslruent,andh:u mannet and (2) to ensure that,in the engineering/construcdon industry, comrption does notkilt.

RBTnRBNCESTransparency International. (ZOOS).'Tiansparency Inter-

national bribe payers' inden, 2n8." (hp//www.trarnparency.org/policy-raear&/zurvqn-indices/bpi/bpi-2oo8).

\U7orld Bank Institute. Qn4). (htp//web.worldbank.org/Tf BSITEIEXTERNAI^7 BI/EXT\ZBIC'OVAINTCOR"/0,,contentMDK:20787t 88-menuPK: 1 8577 8, -

pgePK64I6S445-prPK:&16309-theSitePK:I74O530,00.htmI).

llfaarten deJong is the director ofEthics and BusinessIntegrity Services in The Netherlands. He can bereached by e-mail at martendejong@ebi-sendces.nlVtlliam P. Henryis aretired waternesour€es enlgineerinSeq*fur, Wash. He is apast president of ASCE and pastchair of the American Association ofEr{gineering Societ-ies. He is a member of the arrticornrption standing com-mittee of the World Federation of Engineering Organi-zations and cochair of the Asian Civil EngineeringCoordinatirqg Council anticomrption committee. He canbe r€ached by e'mail at whenqpe@wavecable.qDm.Neill Stansbury is the cxoordiftrtor of the U.K. Anti-cornrption Forum. He can be reached by e-mail atneill.stansbury@giaccentne.org.

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Leadership and Management in Engineering ff I l JuLy 2009