Business

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Kingdom of Bahrain Ministry of Works and
Housing Seminar on Anti-Corruption and
Integrity Management, June 2004
Business Integrity Management System (BIMS)
Dr. Jorge Díaz Padilla Vice President, FIDIC
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The FIDIC Vision

• To be the recognized global voice for the
  consulting engineering industry.

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The FIDIC Mission

• To improve the business climate and promote
  the interests of consulting engineering firms,
  globally and locally, consistent with the
  responsibility to provide quality services for
  the benefit of society and the environment.

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The founding of FIDIC

• FIDIC was founded in July 1913 as the result of
  an invitation by Belgian and French engineers to
  attend le Premier Congress International des
  Ingénieurs-conseils et Ingénieurs-experts.

Participants to the 1913 Congress in Ghent,
Belgium
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The founding of FIDIC

• The first FIDIC Congress convened representatives
  of seven countries.
• However, the real founders of FIDIC were the
  National Associations of Belgium, France and
  Switzerland.

The first FIDIC logo With Objectivity and
Integrity
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The FIDIC consulting engineer circa (1914)

• .. is he who possessing technical scientific
  knowledge and practical experience exercises the
  profession with full impartiality on behalf of
  his client and does not receive any remuneration
  except from the said client.

• One year later, in the programme of its 2nd
  Congress in Bern, Switzerland, FIDIC included
  the discussion of measures to combat extortion
  and corruption.

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FIDIC in numbers (2003)

• 64 National Associations
• 30 thousand consulting firms
• Staff of 1 million
• Fees of 100 billion USD per year

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The FIDIC Strategic Objectives

• Representivity
• Image
• Business Practices
• Globalisation
• Integrity
• Sustainability
• Quality

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The global market

• The global market is about
• change!

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The global market

• What is the global market looking for?
• quality
• integrity
• responsiveness
• innovation

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Quality

• Well tell you what we want and we will hold you
  responsible to deliver a project that meets all
  of our expectations. You will be held totally
  responsible for the performance of the facility.
• Procter Gamble

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Integrity

• To operate successfully in an increasingly
  globalised world, while subjected to the
  competitive pressures of a free market, a firms
  procedures will have to conform to generally
  accepted best practices. In particular, ethical
  behaviour toward all the firms stakeholders
  clients, suppliers, owners, employees and society
  in general must be key and visible.
• FIDIC Integrity Management Task Force

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Responsiveness

• As a reaction to globalisation and the speed of
  communications, small and medium size firms
  should utilise quality and integrity as
  competitive advantages. Because of their size,
  these firms are generally more flexible than its
  bigger competitors and may react more rapidly to
  meet clients needs.

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Innovation

• Managers must convert societys needs into
  opportunities for profitable business. That too
  is a definition of innovation.
• Peter Drucker

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Seminar on Anti-Corruption and Integrity
Management, Bahrain

• Business Integrity Management System,
• BIMS

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Corruption
. is defined by Transparency International
as The abuse of power to achieve a personal
gain.
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Types of corrupt behaviour

• Bribery
• Extortion
• Fraud
• Collusion

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Change in world attitude

• A dramatic attitude change has occurred since the
  mid nineties, when it became evident that
  corruption is extremely harmful to development.

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FIDIC tools for integrity management

• Code of Ethics
• Policy on Business Integrity
• Policy on Conflict of Interest
• Representatives Agreement
• Business Integrity Management System

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Business integrity means safe business
As a fundamental issue of best practices and
capacity building, FIDIC has proposed the
development of a system for managing integrity.
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The concept of integrity management
The integrity management concept calls for an
internal system of the consulting firm, designed
as an effective tool to prevent corrupt behavior
and to encourage integrity.
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FIDIC recommends that
Member firms must have a commitment to integrity
through the implementation of a Business
Integrity Management System (BIMS) involving all
levels of management and every employee.
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BIMS development and implementation (I)

• Principles of integrity management
• Leadership
• Involvement of staff
• A process approach
• A systems approach
• A document process

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BIMS development and implementation (II)

• Formulation of a Code of Conduct (Appendix D)
• Formulation of a Business Integrity Policy
  (Appendix C)
• Appointment of a BIMS representative

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BIMS development and implementation (III)

• Identification of critical processes for
  integrity compliance
• - size and structure of the firm
• - type of clients
• - nature of consulting services

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BIMS critical processes (illustration)

• High Risk Representation Agreements
• All in countries with TI CPI lt 7.0
• High Risk Sub-consultant Agreements
• All in countries with TI CPI lt 7.0
• Depends on red flags during due diligence
• Likely direct interaction with government clients
  
• Critical Projects
• New government or private clients
• Over 2,000 m-hours
• Sub-consultants involved

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BIMS development and implementation (IV)

• Design of integrity assurance procedures
• - marketing of services
• - bidding processes
• - project execution
• - collection of fees

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BIMS components
Monitoring
Firms rep
Corrective actions
Code of C. Int. Policy
Service delivery
BIMS implem.
Firms operations
BIMS planning
BIMS records
Critical processes
Procedures Manual
Review
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Integrity Review Checklist (illustration)
YES
NO
Marketing Disclosure of firms integrity
policy - Evidence of formal delivery to client
of company brochures stating the existence of
BIMS - Integrity policy disclosure as part of the
project proposal Potential conflicts of
interest - Evidence of having analyzed potential
conflict of interest - Evidence of following
management procedure in case of potential
conflict
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Integrity Review Checklist (illustration)
YES
NO
Contracting Bidding process - Proposal reflects
actual firm experience - Resumes of experts
reflect real experience - Evidence that the
firm did not engage in collusion with other
participants - Evidence that the firm did not
have unfair competitive advantages over
competition
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Integrity Review Checklist (illustration)
YES
NO
Contracting Terms of Contract - Terms of
contract reflect the scope offered in the
original proposal - Evidence of justifiable
reasons in case of changes in terms of
contract - Evidence of actions taken in case of
irregular practices initiated by
client - Evidence of actions taken in case of
suspected wrongdoing by associates or
subcontractors - Project managers signed
assertion and evidence of firms integrity
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Integrity Review Checklist (illustration)
YES
NO

• Project Execution
• Adequate Work Team
• - Evidence of adequate personnel levels and
  expertise
• - Existence of detailed terms of reference and
  contracts for associates and subcontractors
• Contract Modifications
• - In case of contract modifications, evidence
  that adjustments were indicated and justifiable

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Integrity Review Checklist (illustration)
YES
NO
Project Execution Consultant/Client Integrity
Relationships - Evidence of no extortion
attempts by client employees during
execution - Concrete preventive or corrective
measures if attempted - Project Managers
signed written assertion and evidence of firms
integrity during process
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(No Transcript)
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Contents of the Blue Book (I)

• 1. Introduction
• 1.1 Background
• 1.2 FIDICS initiative
• 1.3 Why firms should adopt a BIMS
• 1.4 The Business Integrity management concept
• 2. Business integrity management in consulting
• 2.1 FIDIC and business integrity management
• 2.2 Business integrity means safe business
• 2.3 The FIDIC policy
• 2.4 The principles of business integrity
  management
• 3. Developing a BIMS
• 3.1 Introduction
• 3.2 A business integrity management
  system for consulting firms
• 3.3 Monitoring the business integrity
  management process
• 3.4 Reviewing the business integrity
  management system

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Contents of the Blue Book (II)

• Appendix A Definitions
• Appendix B FIDIC Code of Ethics
• Appendix C FIDIC policy statement on business
  integrity
• Appendix D Model code of conduct for consulting
  firms
• Appendix E Business integrity management
  checklist
• Appendix F Further reading
• Appendix C Integrity management org

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FIDIC contact details
Email address fidic_at_fidic.org Websitewww.fidic.o
rg FIDIC World Trade Center II P.O. Box
311 CH-1215 Geneva 15 Switzerland Tel 41 22
799 4900 Fax [phone]
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Consulting Engineering - FIDIC
The consulting industry remains largely
responsible for the planning, design,
construction inspection and management of the
infrastructure needed to meet the worlds
ever-increasing demand for food, water,
sanitation, shelter, health services,
transportation and energy. It tackles on a daily
basis the problems on how to improve peoples
lives while preserving natural resources in a
world with growing population. Thank you
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Seminar on Anti-Corruption and Integrity
Management, Bahrain

• Business Integrity Management System,
• BIMS

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Cases and dilemmas servicesincluded in a
proposal

• In a CE proposal it is stated that the client
  will get three paid trips to the CE offices and
  will be provided with 5 PCs. The TOR do not
  explicitly mention these items

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Cases and dilemmas services included in the
proposal

• Is it acceptable to have these statements in the
  proposal?

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Cases and dilemmas servicesincluded in a
proposal

• After the job is completed the PCs are left with
  the persons who worked with these equipments
  during the execution of the project

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Cases and dilemmas services included in the
proposal

• Is it acceptable to leave the PCs with them?

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Cases and dilemmas engaging a representative

• The scope of the reps agreement refers to
  general market intelligence, specific logistic
  support and staff recruitment. He is rewarded for
  operational costs a fee of 3 of CEs fee of
  projects awarded

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Cases and dilemmas engaging a representative

• Is this agreement acceptable?

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Cases and dilemmas engaging a representative

• CE wins a contract for capacity building services
  of gov. staff engaged in rural sanitation. At the
  same time the rep grows his business by
  representing a pump manufacturer

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Cases and dilemmas engaging a representative

• Is it acceptable to continue with the agreement?

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Cases and dilemmas no payment for extra work

• The payment for some agreed extra work causes
  trouble to the client who asks the CE to waive
  the fee

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Cases and dilemmas no payment for
extra work

• Should the CE accept not to get payment for the
  extra work in order to keep a good relationship
  with the client?

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Cases and dilemmas no payment for extra work

• The CE decides to refuse to withdraw the fee note
  and the client approaches the CE telling him that
  he will lose his job if this is not done

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Cases and dilemmas no payment for
extra work

• Does this new information change the situation?

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Cases and dilemmas suspicion of bribing

• A CE employee suspects that a contractor is
  bribing the client. Suspicion is based in several
  change orders being accepted by the client at
  extraordinary high prices.

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Cases and dilemmas suspicion of
bribing

• Should the CE inform the clients organisation?

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Cases and dilemmas suspicion of
bribing

• Does it make any difference if a CE employee has
  been present when the contractor and the client
  have discussed fraudulent operations?

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Cases and dilemmas sub-consultant nominated by
client

• The TOR and the contract identifies a nominated
  sub-c for data collection services and a fixed
  payment. After kick off it becomes clear that the
  sub-c has a family relationship with the Director
  of the executing agency

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Cases and dilemmas sub- consultant nominated by
client

• Is it acceptable to pay the sub-consultant for
  work that he performs?