By Dennis Brand
Dennis Brand looks at how the construction industry can avoid becoming entangled in issues of corruption.
Recently in the UAE there have been several reports in the media of senior personnel in a number of companies who are being investigated for corruption or worse.
No doubt this being part of the government's continuing initiative and resolve to fight corruption and punish those that are guilty of it. The World Bank has estimated that bribery costs the world approximately US $1 trillion each year. Such a sum can only adversely affect the economic growth of developing countries, which can ill afford such cost.
The Emirate of Dubai has set up the Dubai Ethics Centre in order to train employees to be able to guard against and be aware of all forms of corruption. On a Federal basis, the UAE in 2006 signed the United Nations Convention Against Corruption.
Moreover, the UAE has continued to support the Organisation for Economic Co-operation and Development (OECD) in its initiative to combat corruption and in April 2007 announced that the UAE was joining forces with the OECD to strengthen tax co-operation between the countries of the Middle East and Middle East and North Africa (MENA) and between those countries and the OECD countries.
It is therefore not surprising that with these actions and initiatives the World Bank reported in July 2007 that the UAE scored 83.5% in its World Wide Government Indicators, the highest score not only in the GCC countries but also within MENA.
Corruption might be defined as "one party providing inducements to another party to get them to do, or refrain from doing, some act differently from what they would otherwise have done."
In the construction and engineering industry this does not have to be the type or magnitude of corruption which grabs headlines but could be far more modest yet still effective and worse, still corruption.
Examples of these could be putting someone on a bid list who might otherwise have not been included. Leaving someone off a bid list who in other circumstances should properly have been included.
Providing details with budgets, which to potential bidders can be information that is invaluable in the bidding process as well as during the negotiation stage. Giving price details of other bidders, giving an obvious unfair advantage to the recipient and making a nonsense of the bidding process.
Frequently contracts are awarded on a lowest price basis, but even if they are not, the bid which is lower than those of other bidders will give the bidder an advantage over the others.
One area in the construction and engineering industry that features high on the list of likely areas of corruption is the awarding of contracts. It does not have to be a major contract, it could be any contract including a supply contract or services contract, and of any value.
The acceptance of a requested variation or claim can for a contractor or supplier make the difference between loss and profit, and sometimes considerable profit if accepted.
Corruption does not necessarily flow from the contractor or supplier it could also be directed against the consultant in order that the consultant rejects the request for variation or claims, in which case the contractor or supplier loses but the employer gains.
Dennis Brand is senior legal advisor with HBJ Gateley Wareing. Email: Dbrand@hbj-gw.com Tel: +971 4 321 9999.