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International Construction Law Review

PARLIAMENTARY INQUIRY ON FRAUD AND CORRUPTION IN THE NETHERLANDS: “CONSTRUCTION INDUSTRY OUT OF THE SHADOWS”

ARENT VAN WASSENAER

Partner, Norton Rose, Amsterdam

On 12 December 2002, the Parliamentary Inquiry Commission on the Construction Industry presented its findings under the ominous title Construction Industry out of the Shadows after 10 months of industrious research and much-publicised hearings. The report itself consists of 401 pages and is accompanied by almost 3,000 pages of specialised reports and reports of hearing 67 witnesses.
Parliament ordered this Parliamentary Inquiry Commission to be set up because on 9 November 2001, Dutch television broadcast a documentary in which it became apparent that the Dutch construction industry was still reverting to price-rigging and cartels when it came to tendering for public infrastructure works. In this documentary (hereafter known as the “Zembla report”), a former manager of a major Dutch construction firm was interviewed. Not only did he admit that he had been personally involved in numerous cases of bid-rigging, but he also exposed the “shadow administration” which allegedly had been used by his former employer to keep track of hundreds of transactions with competing contractors and which set forth their mutual obligations as to their mutual accounts, following such tenders, in the form of a general ledger. Although it must be noted that this “whistle-blower” was somewhat disgruntled as he had rowed with his former employer and left, and therefore his description of the dealings within his former employer might have been overshadowed by resentment, the general opinion of law enforcers and other authorities was that perhaps this man told at least part of the truth.
Historically, the Dutch construction industry, and the Dutch Government, had for many years legally embraced a system in which contractors, who were members of their industry sector organisations, were obliged to attend pre-tender meetings in which they revealed their bidding prices to each other. Their organisations, under their very special regulations, calculated internal margins which then were added to the net bidding prices. These margins were meant to cover the costs related to calculating the bids. All contractors attending these meetings were then required to submit their tenders including these margins. The lowest tenderer, under the industry rules, was exclusively authorised to negotiate with the employer. After the
[2003
The International Construction Law Review

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