Capacity Building/Integrity Management

Presentors: Eigil Pedersen and Felipe Ochoa (FIDIC Executive Committee and Chairs of the FIDIC Capacity Building Task Force and Integrity Management Task Force)

REPORT OF DISCUSSION

Haque (Bangaladesh): Important to have  a simple form for registration. DACON is too complicated. ESP replied that the CBTF is working on a capacity benchmarking system.

Croce (Italy): Individuals are unsuccessful in bidding for small works projects. In general, only firms can bid. This holds back capacity building. ESP replied that an individual is often unable to provide sufficient strength in project and quality management, for example. FIDIC firmly believes that it is important to build up knowhow within firms. This is a fundamental strategy as articulated in the Task Force 21 report.

Bangaladesh: It is essential for capacity building that processes and structures are available that allow knowhow to be built up and kept in the country.

Abrol (India): India's experience may be useful to the Task Force. The experience is that registration without an adequate legal backing is useless. In the absence of a framework, an association must work to establish the industry's credibility. His association did this by  meeting with one of the largest clients (the railway operator). It had achieved partial success in assuring that to bid for work, a firm had to be a member of the association.

Zaheer (Pakistan): A major problem is that governments to do not set aside venture capital for engineering design firms. His country had therefore set up a "technology development revolving fund".

Batty (USA): Will companies be prepared to open up their accounts if this is needed for integrity management?

Adesina (Nigeria): The Task Force should be congratulated for a job well done. But there was no light at the end of the tunnel. Some 95% of consulting work in developing countries is done by developed countries, with 95% or revenues returning to the developed world. So if there is corruption its roots must lie in the developed countries. And if this is the case, how does one have reliable monitoring? Second, for there to be corruption there have to be both givers and takers. Developed country consultants are well placed to be givers. Third, governments and international consultants appear to be the culprits. FIDIC must address both.

Felipe Ochoa replied by saying that he was pleased that these issues had been raised, since they were precisely those that the Integrity Management System planned to tackle. Based on his experience in Mexico, he argued that the industry would be able to bring pressure on government if firms set up integrity management with Member Association support.

Abuttahir (Saudi Arabia): Asked which countries accept payments to local agents as being tax deductible. Felipe Ochoa indicated that the OECD was addressing this issue, and that little data was available.

Amirosoleymani (Iran): argued that corruption was more serious than many thought. FIDIC could not stand back, and if it did not regard corruption as being serious issue for the entire industry - both local and international -. it would be unable to help develop solutions. He felt, however, that there was a problem of definitions: what is considered corrupt in one part of the world is acceptable elsewhere. He argued that FIDIC should develop definitions.

Haque (Bangaladesh): agreed that  a good start had been made to tackling corruption. The problem was not going to go away by itself.  Corrution is difficult to stamp out because it is the project that pays so in a certain sense, no one gets hurt. There needs to be a strong legal framework  for anticorruption measures, as well as a global agreement. At the present time, the only credible world-wide organization that is active in the area is unable to audit disclosure. Moreover corruption leaves a trail so that fact that it often goes undetected means that nobody wants to find it. Organizations such as the World Bank and the European Commission know what is going on; but they do nothing, maybe because they want to be "well mannered". They also keep claiming that they have no resources to fight corruption. Finally, it might be useful to ask Member Associations for their experience.

Ozakaya (Turkey): Started with the positive aspects of the proposed IMS by saying that he was pleased it addressed concrete issues. However, he felt that bribery is seen is some countries as a means of wealth distribution. If one tackles it, one will come up against powerful interests. Consequently, corruption in the consulting industry should not be tackled in isolation, but as part of a much larger system. He also pointed out that the existence of corruption works against establishing sustainable development, because sustainability cannot be maintained in an irrational society. He was also concerned that the cost in lost opportunities would be high if the industry committed itself to fighting corruption. One immediate effect of implementing an integrity management system was that firms would leave associations. So it was important to create anticorruption initiatives that address both member and non-member firms.

Taylor (UK): The good news is that a global legal framework to fight corruption is being set up. The bad news is that the definition of corrupt practices remains unclear. He felt that much could be learnt from the accounting industry. It has several huge firms which lay down uniform global guidelines and standards. The consulting industry could also be subject to legislation similar to that which is applied to banks in the case of money laundering. He also pointed out that corruption does not imply that no one looses. On the contrary, it boosts margins if one hangs onto payments. He agreed to comment on the proposed integrity management system.

Eigil Pedersen summarised  the discussion of integrity management by pointing out that FIDIC's strategy was to tackle both the supply and demand sides in parallel. The aim was to take the initiative in order to bring pressure on the lending agencies and development banks to disclose information about spending. This implies focusing efforts on government and the banks.

In the case of capacity building, the main problem seemed to be a lack of awareness of the capacity available in developing countries. A main priority for FIDIC was to identify and quantify the resources available, and initiatives that would lead to measurable improvements.

Participants

• Aydin Ozakaya (Turkey)
• Freek Hasselaar (Netherlands)
• Tim Page (Canada)
• Matayas Borostyankoi (Hungary)
• Mark Griffiths (UK)
• Bob McGowan (UK)
• Peter Boswell (FIDIC)
• Joseph Folayan (Nigeria)
• Bendx Mugabe (Zimbabwe)
• Hussain Abuttahir (Saudi Arabia)
• Mahbub Haque (Bangladesh)
• Michael Aesina (Nigeria)
• Donat Bosco (Italy)
• Aristide Croce (Italy)
• Mario Cassano (Italy)
• Laiyong Zhang (China)
• Rafik Meghji (Tanzania)
• Graham Pirie (South Africa)
• Lei Xiaolan (China)
• Kok King Min (Singapore)
• Jorge Diaz-Padilla (Mexico)
• Paul Taylor (UK)
• Wadyono Suliantoro (Indonesia)
• Peter Batty (USA)
• Levi Zulu (Zambia)
• Fatma Cölasan Turkey)
• Ernst Hofmann (Switzerland)
• Shi Xianping (China)
• Melesio Guterrez Perez (Mexico)
• R.K. Abrol (India)
• Bayo Adeola (Nigeria)
• William Lewis (USA)
• Yoshitoshi Kobayashi (Japan)
• Xiaoke Shen (China)
• Jean Felix (France)
• Michel Janneteau (France)