Member Login Menu

Engineers Must Actively Fight Corruption

May 1, 2018

"ZERO TOLERANCE" means more than simply a passive resistance to corruption but instead signifies an active commitment to combat corruption wherever it occurs.

Situation

In December 2016, the U.S. Department of Justice (DOJ) announced that it had reached a plea agreement with Brazilian-based engineering and construction conglomerate Odebrecht S.A. Under this agreement, Odebrecht and its petrochemical subsidiary, Braskem, pleaded guilty to one count of violating the U.S. Foreign Corrupt Practices Act and were ordered to pay a criminal fine of up to $4.5 billion, in what has been described as the largest global corruption scandal in modern history.

Founded in 1944, Odebrecht had grown from its Brazilian roots to become one of the biggest construction firms in Latin America, operating in more than 27 countries and in a variety of different engineering-related industries. But dating at least as far back as 2001, members of Odebrecht's leadership had also sought to ensure the firm's ongoing success by making corrupt payments to foreign officials, political parties, and political candidates in exchange for work.

What may initially have been a simple scheme of spreading cash around to local politicians soon evolved in size and sophistication. In 2006, Odebrecht established within its organizational structure a stand-alone division named the Division of Structured Operations. Labeled by the news media as a "Department of Bribery," this division featured an off-book accounting and communications system by which conspirators could distribute illegal payments and administer the scheme by use of secure emails, code names, and passwords. Payments were disguised by bouncing through shell corporations or banks with favorable rules on customer secrecy; in 2010, Odebrecht even purchased a majority ownership of an Antiguan bank to facilitate its money-laundering efforts.

Meanwhile, Braskem was paying bribes to Brazilian political officials and to an executive of Brazil's state-owned oil company, Petrobras, in exchange for a lucrative jointventure agreement and other benefits. Braskem initially financed these payments with money from Odebrecht's Division of Structured Operations but later developed its own secret fund by generating fictitious invoices from nonexistent agents, vendors, and customers, then diverting money from its legitimate accounts toward payment of those invoices.

In total, the DOJ report concluded that some $788 million in bribes was paid over the course of the scheme, resulting in more than $3 billion in profits to the Odebrecht conglomerate. The scheme extended to projects in numerous countries and reached political officials at the highest levels. The former vice president of Ecuador, Jorge Glas, received a six-year prison sentence for accepting bribes from Odebrecht, and the former president of Brazil, Luiz Inácio Lula da Silva, was convicted on corruption charges and is currently serving a 12-year sentence. Additionally, allegations of being tied to the scheme played a role in Pedro Pablo Kuczynski's recent resignation as president of Peru. As investigations into Odebrecht's activities continue, it is likely that the list of current and former world leaders facing criminal sanctions as a result of this scandal will continue to grow.

Within Odebrecht itself, numerous executives have offered testimony in exchange for reduced sentences, including its former CEO, Marcelo Odebrecht, who served just 2½ years of his 19-year sentence for money laundering and bribery. The conglomerate itself has negotiated a lesser criminal fine of $2.6 billion, including reparations of $2.39 billion to Brazil, $93 million to the United States, and $116 million to Switzerland.


Question

What does ASCE's Code of Ethics have to say about corruption, and what role can ASCE members play in combatting it?

Discussion

Loosely defined as the dishonest or unlawful use of public authority to derive a private benefit, corruption is a widespread and often systemic problem with enormous detrimental impacts on infrastructure development and the global economy as a whole. The World Bank once estimated that $1 trillion is lost annually to corruption, while the International Monetary Fund has set the annual figure at $1.5 to $2 trillion, even without considering the less direct costs of weakened economic growth and greater poverty.

Yet, while unlawful payments have been proscribed in the Code since the early 1960s, and abuse of an employed position for private gain was first addressed in 1976, it is only for the past decade that ASCE's code has contained language that explicitly addresses the problem of corruption. In 2006, ASCE's Board of Direction added a specific focus to Fundamental Canon 6's general emphasis on integrity; the revised canon as it stands today reads: "Engineers shall act in such a manner as to uphold and enhance the honor, integrity, and dignity of the engineering profession and shall act with zero tolerance for bribery, fraud, and corruption."

While the clear purpose of the new language is to set an exacting standard for engineers who encounter corrupt activity, what exactly is meant by "zero tolerance?"

One answer may be found in the guidelines adopted to support Canon 6; engineers must "not knowingly engage in business or professional practices of a fraudulent, dishonest, or unethical nature," be "scrupulously honest in their control and spending of monies," and "strive for transparency in the procurement and execution of projects." In addition, the guidelines call for special vigilance in regions "where payments of gratuities or bribes are institutionalized practice," and they recommend the use of certifications in contracts to specify zero tolerance for corrupt conduct.

Though canon 6 and its guidelines offer a good road map for an engineer's personal actions, it is an obvious truth that not all people in the global engineering and construction arena are governed by the same ethical principles, and indeed, cases such as the Odebrecht scandal demonstrate how widespread and deeply entrenched the roots of global corruption may be. While any engineer who refuses to take part in a corrupt scheme is making an admirable choice from a legal and an ethical perspective, this action alone may do little to address the scheme itself.

For that reason, it may be argued that "zero tolerance" means more than simply a passive resistance to corruption but instead signifies an active commitment to combat corruption wherever it occurs. The Engineer's Charter, an ethical pledge adopted by ASCE in 2005, represents a call to action for engineers seeking to play a more significant role in combatting corruption. The Charter calls upon engineers not only to refrain from corrupt conduct themselves but also to "refuse to condone or ignore corruption, bribery, or extortion." Its signatories pledge to take direct action against corruption by urging other societies, institutions, and companies to develop and enforce ethical codes, and by reporting infractions of these principles "by any participant in the engineering and construction process."

Additionally, the signatories agree to be vocal advocates in the fight against corruption by demanding transparency in dealings with private and public decision makers and by working to build support for these principles with professionals and the public at large. To date, the Engineer's Charter has been signed by nearly 400 engineering professionals representing 60 different countries. Individuals wishing to join them in this pledge may do so by visiting: www.asce.org/ethics .

--TARA HOKE


Tara Hoke is ASCE's general counsel and a contributing editor to Civil Engineering.

© ASCE,  Civil Engineering , May 2018


Members who have ethics questions or would like to file a complaint with the Committee on Professional Conduct may call ASCE's hotline at (703) 295-6151 or (800) 548-ASCE (2723), extension 6151. The attorneys staffing this line can provide advice on how to handle an ethics issue or file a complaint. Please note that individual facts and circumstances vary from case to case, that some details may have been altered for purposes of illustration or confidentiality, and that the general summary information contained in these case studies is not to be construed as a precedent binding upon the Society .