Cartels and Corruption

The BBC’s File on Four programme broadcast a story this week in which they revealed evidence of widespread corruption in the building trade.  Rigged bids for contracts with, among others, the NHS and local authorities may have cost millions (further information is at: http://news.bbc.co.uk/1/hi/programmes/file_on_4/6284126.stm).  The story is worth listening to and a full transcript will follow.  Basically, companies colluded to fix an inflated cost for contracts where one ‘competitior’ submitted a high false bid, not wanting the contract, and allowing the other ‘competitor’ to submit a bid only slightly less than the inflated price.

There are a number of interesting aspects to this story.  First, this is an old story.  In the 1970s, major investigations considered corrupt practices in contracting arising, particularly, in the house building business around a certain John Poulson.  Two government commissions were formed to look at improving standards in public life.  And it is the same sort of thing that was going on in the 1980s as Compulsory Competitive Tendering came into the public sector.  Despite all the efforts, all the auditing and so forth, the problems remain.

Perhaps more surprising was the reaction of the authorities who were the victims of these cartels.  Their responses are defensive, downplaying the significance etc.  But why?  Some of it is down to incompetence at the local authority level and a degree of ignorance about how to tender effectively.  The Local Government Task Force, promoting ‘constructing excellence’, down played the seriousness of the issue.  Their spokesman did not like the use of language like ‘cheating’ or ‘pulling the wool over their eyes’.  As if that were harsh!  Indeed, the spokesman even suggested that it would be inappropriate to comment on what were the decisions of democratically elected authorities representing the wishes of the local people.  Bizarre.

Best of all, one trade association, while condemining the practice and having said that it would put a stop to it (we were not told how), explained that everyone else was doing it.  That old excuse.

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