All 2 entries tagged Gift;

Corrupt Lives? 3: John Poulson

Those accused of corruption often try to justify their actions in a way that gives them some legitimacy, even if their claims are repudiated by others. Their justifications raise fundamental questions about the motives that lead people to acts of corruption and whether these are solely rooted in self-interest, or might be based on grounds of promoting the public good. Who is more corrupt: those who increase public costs by inefficiency, incompetence, and bureaucratic obstructionism, or those who ride roughshod over bureaucratic norms in order to get things done that benefit the public? And what, in this entrepreneurial context, is the distinction between a gift and a bribe? These are some of the ethical questions raised by the case of John Poulson. This blog will first set briefly set out what he was accused of, and the consequences of the allegations, before focusing on the fascinating justifications Poulson made for his behaviour.

The early 1970s witnessed a string of corruption investigations into the network of councillors, civil servants and politicians linked to John Poulson, an architect and businessman with one of the largest practices in the world. Poulson had systematically built up close relationships with officials who then either brought him work or smoothed his path to bidding for contracts. He flourished in the post-war period when the country needed new hospitals, schools, libraries, swimming pools, civic buildings and homes.

Pontefract library, built by Poulson in the 1970s, still in use (wiki image, creative commons licence).

He built these at a lower cost, and more quickly, than other practices. In the three years between 1959 and 1962 his companies grossed nearly £1m; and at its height he employed 750 people. But revelations that emerged in court and in inquiries led to twenty-one convictions for corruption, including nine councillors, four officials from nationalised industries, three civil servants and three MPs were criticised in a House of Commons select committee report. One of them, Reggie Maudling, the serving Home Secretary who had been a leadership contender for the Tories, was forced to resign his office (though not his seat at Westminster). They were mostly accused of accepting bribes from Poulson whom the judge described as ‘an incalculably evil man’.

There are many striking aspects of the Poulson case: it was the first corruption scandal to be the subject of intensive TV interest; it involved people from both the left and right of the political spectrum; it linked domestic and post-colonial fields; it exposed differences in the law governing local and national politics; and it focused a spotlight on the potential of PR firms to use shady practices in commerce and politics. But the focus here will be on the ways in which Poulson sought to explain his behaviour. I have previously written an article about this in relation to pre-modern corruption cases and many of the arguments used earlier can be found in this much more recent example too, showing how enduring certain mentalities and ideas seem to be across time; but Poulson also extended these in interesting ways that reflected the context of post-war Britain. Indeed, his autobiography, published after his release from his seven-year prison sentence, is one long exercise in self-justification – though the book opens with a denial of this. ‘I seek no self-justification on my own account, but there are those who are more familiar with wrong-doing than ever I was.’ From the start, then, he represents himself as someone who had things done to him by other people, people who he trusted and let him down.

The front cover of Poulson's autobiography

One curious aspect of his case is that he was a devout Methodist whose religious convictions may ironically have increased, rather than curbed, his tendency to his ‘excessive … generosity’. He relates how he read the Bible to his invalid mother who one day took his hand and told him ‘with deep sincerity “John, always remember that the Lord loveth a cheerful giver”. It was to be a maxim I practised and firmly believed in throughout my life’. Religion extolled ‘Christian generosity’. ‘The Good Samaritan in me has much to answer for’, he thought. Other aspects of his upbringing reinforced this notion from a more secular point of view. His grandfather, a local politician who had a ‘formative influence’ on him, ‘was open-handed and generous to an extreme, and in a way which was far more acceptable in his day than it was to be in mine’. Poulson was, this suggests, caught out by moving ethical goalposts; and underlying both religious and familial pressures was an outmoded notion of friendship. His grandfather had set friendship ‘on its highest plane, one from which any sincere demand had to be met wherever possible’.

Poulson claimed that he too prized friendship, and the generosity that underpinned it, above all else. His shower of gifts – money, cars, loans, houses, holidays, and clothes (amounting to £334,722 over eight years) – was, he suggested, entirely innocent. He had ‘no thought of advantage’ when he gave them. ‘I merely followed my grandfather’s dictum by giving where it would bring maximum pleasure and by letting others share what I had and they lacked’ (except that often they didn’t lack for much!). ‘It never entered my head that personal generosity could come under censure.’ The prosecution alleged that Poulson had ‘exceeded all bounds of normal generosity in making gifts, loans and payments to a number of officials and civil servants’; but that was, Poulson thought, because he had a different sense of ‘normal generosity’, not that he was corrupt. ‘Of course, if generosity is a crime, I was guilty of it’; but that was his only true crime. ‘Such gifts by a businessman to any politician or public official can be made to look sinister (as I well know) even when motivated merely by friendship and received without the slightest intention of corruption’. Poulson was ‘a man who has paid the price for misdeeds which I swear were committed largely in innocence of their criminality’.

Poulson also argued that he had acted in the public good. The country, after the ravages of war, desperately needed the buildings he constructed – there was a need for speed and efficiency. But these were impeded by other architects and vested interests, who were wedded to old, inefficient ways of working and were upset by his success and by an official bureaucracy that was ‘like a blanket of fog’. This meant using unconventional means and innovation in providing an ‘all-in-one’ service that catered for all aspects of a job and high-pressure sales techniques. He believed that his ‘search for better, quicker, cheaper and more time-saving methods of building would help Britain as well as myself. This was why I championed industrialised building techniques when others in Britain were clinging to traditional construction in brick and stone’.

Patients and school-pupils, as well as the public purse, thus benefited from his unorthodox methods, he claimed. ‘Hospitals, I maintained, could be built for less, and in a shorter time, than contemporary designers believed possible. But a thicket of dead wood had to be pruned away first’. Sick people needed hospitals but ‘the officials who order these things, drawing their salaries from the public purse, are all too often incapable of decision …[or] of processing their designs either efficiently or economically’. Similarly, he ‘deeply believed’ in the need for better educational facilities (he ‘was convinced that if only the British people were better educated, everything else would follow naturally: a better life for all’) but, he said, the same could not be said of officials: ‘I am today bitterly aware that many of these people are guilty of far greater inefficiency and wastage than those who, like me, have paid the price for so called “crimes”. I am not saying that there was corruption in their field’ but inefficiency was everywhere and it was also costly to the public – ‘my complaint is that too many are Jacks-in-office, with little or no understanding of how best to serve the community’. Similarly, his overseas firm, Construction Promotion, was designed ‘to help put a better face on the world’ and to deliver development at the lowest price: ‘we in Britain were meant to be helping these countries to get on their feet, yet we were asking them to pay through the soles of their boots for the privilege’. His mistake was ‘to try to do too much too fast’ for his vision of Britain and the world.

Poulson had an almost religious, or deeply egotistical, sense of mission and zeal against bureaucratic inefficiency and expense that was hurting the public. ‘I wanted to be a Messiah. I felt I could lead everybody, through efficiency and honesty, towards the promised land’. His sins were ‘primarily those of seeing only virtue in doing what has to be done in order to gain one’s objective. Such unorthodoxy, I have learned at bitter cost, has no place in a hypocritical society which demands scapegoats for its sins’. ‘I not only succeeded where others did not – an inexcusable fault – but I took short-cuts to the power and position which, for more than ten years, my organisation occupied in the world. Against me were ranged the biggest guns of my own profession’ including the Royal Institute of British Architects (to which he belonged, though he never formally qualified as an architect). He was frustrated by ‘the lethargic dreamland of our contemporary planners and authorities’ and sought ways round the obstacles. He was accused of many things in his life ‘but never of wasting public money to such an extent’ as the officials nominally serving the public. He worked with others, like T Dan Smith in Newcastle, who shared his drive to replace ’the shaming ghettoes of Victorian industrial life with clear, modern blocks and fine open landscapes.’ Taking officials on holidays thus got things done: ‘More could be accomplished, I found, sitting in a deck-chair, relaxed by sea and sunshine, than in any busy office’, though these holidays were later held against him as bribes. Such ‘refreshment’ was necessary ‘to win friends and influence those people’ who kept his organisation on the massive projects they were carrying out, and were ‘essential to produce a climate in which we could work most efficiently and effectively.’

T Dan Smith(Wiki image, creative commons licence)

Poulson’s ‘corruption’ was thus, in his eyes, no more than an entrepreneurial, innovative drive for efficiency and economy coming up hard against sclerotic forms of private and public service that hindered rather than promoted the public good. But his views ‘led me to make enemies among senior officials in many of our nationalised fields’ – enemies who were out to get him and bring him down. ‘I had to face the fact that “somebody up there” did not like me.’ Yet Poulson saw himself as on the side of the people: he had never embezzled any money from a client, public or private, so the public had never been hurt.

In any case, local planning departments were corrupt and everyone was profiting from kickbacks from the building boom: ‘it was an everyday method by which all manner of professionals up and down the country were making their personal fortunes’. Indeed, ‘there are well-worn double standards employed in official circles. It is only foolish enthusiast like me who go to the wall for the sins of others and the stupidity of oversight’. The court trying him had been anxious ‘to find a scapegoat for the sins of the many.’

This sense of victimhood comes across strongly in the autobiography. His ‘crime’ was over-trusting people, like Smith, who betrayed the trust by giving out ‘bribes and persuaders’. Poulson claims he was personally careless about money and so didn’t know what was really going on. Similarly he says that he knew nothing about the civil service code that made his gifts to officials corrupt ones. ‘At the time, I had no idea of the strict regulations applied to these matters’ as set out in the ‘Estacode’. ‘Why, one wonders, are they not made known to every professional body, every business contractor, operating at the direction of local authorities and government offices?’ Reggie Maudling was another who had abused this trust. ‘In hindsight, I have to face the fact that I was again being taken for a ride, and this time by a master operator’ but, he concluded, ‘that I and my trust were so frequently betrayed was not, I still believe, a failing in me’. Indeed, Poulson thought the establishment came down on him so hard in order to protect Maudling and the precarious Tory government – a not entirely fanciful point of view. Poulson’s trial was, from his point of view, ‘a farce; they were out to get me … I was their scapegoat’. Indeed, he saw himself as a ‘political prisoner’.

As a result, even after his conviction Poulson did not think he was really doing wrong by his ‘open-handed attitude’: ‘It was only the recondite rules of his service which argued that, in official eyes, they were corrupt and improper.’ The rules around what constituted corruption made, he says, ‘diaphanous distinctions’ between licit and illicit behaviour; ‘I still cannot claim an accurate knowledge of where the line runs’. He himself had never taken a bribe and he thought badly of, and dealt harshly with, any employee who did. He was guilty only of stupidity and ‘most unselfish and sincere acts of Christian charity’. This echoes an exchange during his trial. PROSECUTION: 'Do you think you have the capacity to recognize corruption when it stares you in the face?' POULSON: 'It only takes place when there are two parties. I do not believe there has been in this case. We are talking about something which I do not comprehend.'

What do we make of Poulson’s case?

It is possible, as sociologists Steven Chibnall and Peter Saunders do, to see Poulson and his network as operating in an alternative sub-culture with its own set of ethical rules that differed to that of the wider world, something that became visible only when the law intervened and challenged ‘their privately normalized behaviour’. Sub-groups can indeed operate ‘situational morality’ and there was certainly group-think in Poulson’s network. It is also important that corruption has to be understood not just in relation to the formal categorisation by law but also to ‘less rigorous, privately-normalized classificatory schema’.

Private Eye's diagram of Poulson's corrupt network [Private Eye Guide to the Poulson Case (1974)]

Chibnall and Saunders identified a number of key strands to Poulson’s justifications: first, if everybody was doing it, it cannot be wrong; second, that public service was not incompatible with private gain; third, that he and Smith saw their behaviour as ‘foolish, naive, or indiscreet, rather than as illegal and corrupt’; and fourth, that business involved forms of institutionalised friendship that some could see as corrupt but which were necessary to get things done. Poulson and Smith thus had a different concept of morality to those prosecuting them. Whereas the latter saw the gifts as bribes, Poulson commented ‘As far as I was concerned, a gift was a gift.’ The Poulson affair thus highlighted the ‘the existence of two distinct realities, two separate conceptual machineries, which, in the course of routine events, remain “worlds apart”’.

There is a great deal of truth in this analysis. However, there were differences between how Smith and Poulson operated (Smith was much more knowing and worldly-wise, but also probably more animated than Poulson by a desire to improve conditions for working people) that may suggest tensions within the sub-group. Nor was the mentality of the sub-group totally divorced from the establishment: one member of the commission reviewing their cases, Audrey Ward-Jackson (a senior civil servant with a background in planning and local government), wondered aloud whether in some parts of the country it had become impossible for businessmen to get things done ‘unless they grease someone’s palm?’

Moreover, Poulson’s public interest defence is important. His morality was not entirely separate from the world because he saw himself as acting to improve the world. He saw himself as not guilty of corruption not because he didn’t understand what corruption was but because he believed that the methods he deployed were a) innocent generosity and b) much less costly to the public and delivered greater benefits to the community than the officials and professionals who he saw as leeching off the state and pursuing their vested interests. He had an alternative view of what constituted corruption rather than lacking one entirely. This was more than the idea, put forward by Samuel Huntington and others, that corruption can oil the machine, particularly at times of transition; it was a counter-claim about what corruption was, based on shared agreement against private interests pillaging the public purse but differing about who the robbers were and how to achieve efficiency that worked for the public good.

Poulson’s position shows that ‘corruption’ has to be seen as a deeply complex problem, since the public good argument makes it the stuff of politics rather than, or as much as, morality. When Poulson said he was a political prisoner it was not just because he was the fall-guy for a government worried about one of its ministerial stars but may also have been because the architect/businessman had a politically charged notion of how to achieve the common good, an approach that rode roughshod over vested interests in its pursuit of capitalistic efficiency and/or lifting places out of poverty by stretching the normal processes of local and national government until they delivered progress. Poulson and his friends (from both the left and right) offered different ways of thinking about serving the public interest

The Poulson scandal led to the establishment in 1974 of a Royal Commission on Standards of Conduct in Public Life, which reported in 1976. But it was a missed opportunity. With a staff of just three, it gathered no detailed evidence; argued against the need for new legislation on misconduct in public office; endorsed the view that standards were generally high; did not think it was necessary to set up a permanent body to review standards in public life; and its remit precluded consideration of the practices of private enterprise (something two of its members lamented in addenda to the report). A register of interests for MPs was established in 1974 but until 1995 there was no requirement to disclose the amounts of remuneration; and it was not until the Nolan committee (set up in the wake of yet another scandal) in 1994 that a much more wide-ranging set of recommendations were offered and a clearly stated set of ethical principles that still apply today.

Further reading: John Poulson, The Price: The Autobiography of John Poulson, Architect (1981); Peter Jones From Virtue to Venality: Corruption in the City(2013), chapter 4; Jones, ‘Re-thinking Corruption in Post-1950 Urban Britain: the Poulson Affair, 1972–1976’, Urban History, 39:3 (2012), 510-528; Raymond Fitzwalter and David Taylor, Web of Corruption: The Story of J.G.L. Poulson and T. Dan Smith(1981); Steven Chibnall and Peter Saunders, ‘Worlds Apart: Notes on the Social Reality of Corruption’, British Journal of Sociology 28:2 (I977) – I am grateful to Mark Philp for this reference; Michael Pinto-Duschinsky, ‘Corruption In Britain’, Political Studies, 25 (1977): 274-284; Private Eye: A Guide to the Poulson Case, special issue (1974).

Mark Knights : 08 Apr 2023 17:29 |  Tags: Bribe; Friend; Gift; Interest; John Justification Life; Poulson; Public |  Comments (0) |  Close comments |  Report a problem

GSK's Fine for Corruption

On 19 Sept 2014 the British pharmaceutical giant GSK was fined almost £300m by a Chinese court for bribery of non-government personnel (ie doctors) to use its products. This is the largest fine levied on a company in China. The head of the company’s China operations, Mark Reilly, was given a three year suspended prison sentence. The Chinese authorities alleged that bribery was ‘a core part of the activities of the company. To boost their share prices and sales, the company performed illegal actions’ [ http://www.theguardian.com/business/2013/jul/15/glaxosmithkline-china-bribery-allegations ]

The story of British companies being accused of bribery in Asia is nevertheless not a new one. In the eighteenth century members of the East India Company were also accused of corruption. Merchants returning to Britain having made a quick fortune in India were known as ‘nabobs’, an anglicisation of ‘nawab’, meaning prince. In 1787 one of the nabobs, Warren Hastings, who was called ‘the Captain of Iniquity’ by leading prosecutor Edmund Burke, was indicted by the British Parliament for bribery and corruption. The trial lasted seven years.

The charges against Hastings were, like the ones against GSK, designed to show that corruption was a core part of the East India Company’s activities. He was accused of accepting bribes or ‘presents’ from Indian princes; of handing out corrupt contracts (including for opium, which was sold to China); and of selling offices. In many ways Hastings personified a wider problem of endemic corruption in the East India Company. Like GSK, the Company’s share price was affected by its fortunes in Asia, and Hastings did all he could to promote the Company’s as well as his own interests.

Yet in 1795, in contrast to the recent verdict in China, Hastings was found ‘not guilty’ of the charges against him. In the eighteenth century, the dividing line between a ‘present’ and a bribe was an ambiguous one – this problem was all too apparent in Britain but was magnified in an India context because of a culture of gift-giving. Fostering a good economic network by cultivating social interactions was part of the merchants’ lives, creating muddy lines between personal interests and the interests of the company.

The eighteenth century East India men thought that a present was not necessarily a bribe that distorted how they behaved. George Vansittart, for example, wrote that ‘some presents I have certainly received but you will never hear of my bargaining for them or being influenced by them’ and he thought the same could be said of Hastings: ‘I would not say that Mr Hastings never has received presents but I think I can safely answer for his never having placed his private interest in competition with the publick advantage’. Another nabob was even more defiant: Richard Barwell protested in 1775: ‘I do not pretend …to say I never received a present, but I am certain I can defy any person to charge such to me as a crime’. This old notion of the defensibility of presents – that gifts did not necessarily corrupt - may still persist today.

One other thought is provoked by the GSK affair. The prosecution for bribery was, as GSK’s statement makes clear, ‘of non-government personnel’ (though how far Chinese doctors were non-governmental remains unclear). A common definition of bribery, used by the World Bank and others, is ‘the abuse of public office for private gain’. Here, however, the abuse seems to have been by a commercial company, and the Chinese state has gone after the corrupter rather than corrupted. In other words, the case challenges the economists’ definition of what corruption is and who should be prosecuted for it.

Image caption: Hastings was also accused of offering ‘presents’ to the royal court in order to secure favour during his prosecution for corruption.

Mark Knights : 02 Oct 2014 08:32 |  Tags: Barwell; Burke; China Company; Definition; East Gift; Hastings; India Present; Vansittart; |  Comments (0) |  Close comments |  Report a problem