Overseas Agents: Make Them Take the Integrity Pledge
Corruption flourishes in the world of construction and international development, but there also are prolific efforts to stamp it out. This past year, the International Federation of Consulting Engineers, or FIDIC, updated its anti-corruption measures for companies. In light of the problems involving overseas agents at engineer SNC-Lavalin, these measures are worth reviewing. Double-checking a firm's anti-corruption practices is a good idea any time, especially when it comes to agents who represent your company overseas.
The corruption solution that FIDIC has championed since the 1990s involves an integrity management system that has components on leadership, involvement of staff, adoption of a systems approach, documentation and training. According to FIDIC, such a system should involve a code of conduct, an integrity policy, appointment of an integrity management representative, an analysis of current practices, documentation and monitoring.
The FIDIC members who developed the system hope their clients will start asking whether firms are using an anti-corruption program in the same way clients regularly inquire about safety and quality programs. One positive sign, reported earlier this year by Jorge Diaz Padilla, a former FIDIC president and CEO of SYSTEC, a Mexico City-based consultant, is the result of a recent survey of government, business and citizens by the Humboldt-Viadrina School of Governance in Berlin. Respondents indicated that preferential treatment, such as "preferred supplier status," should be given to businesses that demonstrate that they stick to anti-corruption programs and principles.
One high-risk activity, says FIDIC, is the appointment of an agent or local representative in a foreign country. So, this year, the organization strengthened its model contract for overseas agents. One important idea in the model contract reported by Padilla is that engineers should have their overseas agents confirm in writing each year their personal compliance with anti-corruption policies.
Subclause 15.1 of the model agreement for agents requires them to promise not to engage in influence-trading or abuse of power—a pretty loosely defined standard—as well as the more concrete practices of bribery, extortion and fraud. While making agents promise to do the right thing is no guarantee they will stick with it, the practice does help to drive home the message and limit the liability of the agent's employer.
A firm may believe it's too much trouble to make foreign agents comply with an ethics code in countries where bribery is customary. Further, ethics programs are by nature troublesome and time-consuming. But FIDIC says smaller companies can adopt a scaled-down "lite" version of its integrity management system. Whether a firm is small or large, hiring an overseas agent should be regarded as a high-risk activity.