Tuesday, 29 September 2009

Big building firms collude to con councils

News that big building firms have worked together to con councils and other public bodies in England is a matter for real concern.

Construction workers' unions demanded "zero tolerance" for lawless bosses on Tuesday after building firms were exposed ripping off taxpayers' cash in a massive price-fixing scam.

The Office of Fair Trading (OFT) revealed that huge construction firms Balfour Beatty, Carillion and Connaught were among the 103 companies that were found to have colluded with each other in a virtual cartel to illegally "rig bids" on building contracts.

The price-fixing scam meant that firms inflated the cost of the contracts, which included construction work on schools, hospitals and social housing, through a practice known as "cover pricing."

Executives would collude with each other to make high and unattractive bids for the work to ensure that contracts were given to their co-conspirators - some of whom then passed backhanders worth as much as £60,000 to the losing bidder as "compensation."

OFT investigator Stephen Blake suggested that the 100 firms caught so far - to be fined almost £130 million between them - were just the tip of the iceberg.

Mr Blake confessed: "To find that this illegal activity was endemic within the industry came as a surprise to us and the evidence suggests the practice was much more widespread."

But industry bosses' union UK Construction Group director Stephen Radcliffe mocked the government's investigation, boasting that "everybody knows, including the OFT, cover pricing was widespread - it is hardly the crime of the century.

"And it is perverse and unfair to impose disproportionate penalties on a small number of contractors," he protested.

This latest scandal to hit construction bosses comes after executives at many of the same firms exposed by the OFT were also found to have been blacklisting union activists.

Building workers' union UCATT leader Alan Ritchie pointed out: "It is ironic that bosses have received multimillion-pound fines for cover pricing, while they were let off with a slap on the wrist following the blacklisting scandal, which has ruined workers' lives.

"It is clear that construction companies can't be trusted to run their affairs properly and can't be trusted to police themselves and these scandals demonstrate that a zero-tolerance approach must now be taken to ensure that companies follow the law," he insisted.

"Because, if companies are prepared to corrupt the bidding process for public-sector contracts, what else are they prepared to sanction in the quest for profits?" Mr Ritchie (pictured) asked.


Any company caught and fined for such activity should be banned from working for local authorities and their fines handed directly to the councils that lost money.

The scale of the scandal means that every council - including those in Wales - needs to look again at its costs, especially in these times of belt tightening.

1 comment:

Pelagius said...

You are right. This is a huge story. I've thought for years that systematic corruption is not confined to 'foreigners' nor is it an 'overseas' matter. Electoral fraud too.

The slow and weak response of British institutions says a lot. Media reporting is limited. Imagine if it was an EU story.

Local government needs to wake up too. How many councillors monitor and/or approve contractor lists or monitor contract performance? Has this ever been discussed in the National Assembly? And how much is made public? The usual excuse, of course, is 'client confidentiality'. Don't believe a word of that.