Barratt Developments Fraud – Certainly Was a “Different Procurement Process”

As the old expression says, “where there’s muck, there’s brass”. In other words, there is money to be made in dirty, unpleasant jobs. But we might reverse it and say “where there’s brass, there’s muck”. So wherever there is money, there is probably something mucky (dirty)  going on – the opportunity of wealth almost always leads to people who will try and extract their share of it through means that are non-legitimate or “dirty”.

Why did the Olympics become so corrupt? Because there was and is just so much money flowing through the system, the same as in soccer now with agents, “bungs” to managers and so on.  Why has the finance sector seen so many issues, from Ponzi schemes to the RBS scandal over treatment of small business customers? Because just so much money flows through the system.

And that is why “procurement” is so vulnerable to fraud and corruption, and in many of the world’s most corrupt countries, government procurement is probably the primary route for evil and greedy people to extract money from the state and their fellow citizens. It’s because that is where the money is.

But it is not just dodgy developing world countries where this is an issue of course. Recently Alastair Baird, London regional managing director for Barratt Developments (a major UK housebuilder and a FTSE 100 firm) was arrested after the firm gave the police the results of an internal investigation.  As The Guardian reported:

Barratt Developments, one of Britain’s biggest housebuilders, is engulfed in a corruption scandal after one of its top executives was arrested on suspicion of bribery following an investigation into the awarding of contracts to suppliers.

The firms has appointed an “accounting firm” to review contracting processes (bolting the stable door … there’s another apposite saying) and has now adopted “additional controls”.  But the element of the report that most struck us was this:

The company said its London business had a different procurement process from the rest of the company because of the “non-standard and one-off nature of London construction projects."

That reason sounds like total post-event-rationalisation nonsense to us. Far more likely it had a different procurement process because somebody in London didn’t want the standard process and policy to apply for reasons of their own. And how did the Barratt CPO feel about these different processes? Was he happy about that?

The property and construction world has always had a bad reputation for probity, but again that is probably just because it is such a huge sector, and perhaps because also because of a legacy of cash payments and complex multi-tier supply chains. It has certainly cleaned up its act in recent years, but we will follow the progress of this case with interest.

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