From Russia with uplift

The order came from Moscow via Amsterdam. But why did the customers want to pay £90,000 for a job th

The inquiry came in a telephone call from a chap called Nigel (definitely a chap, not a bloke) in London. He was offering what, for my small Midlands engineering company, was a big job: £40,000 at a guess, and enough to keep us busier than we had been for months.

I faxed a quotation to Nigel. He phoned the next day. "Liked your quote, Bill - you don't mind if I call you Bill? By the way, the plant will be located in Antwerp. Can you install it?" We could. "And could you double the storage capacity for future expansion?" You bet: by now the job would be worth more than £50,000.

Despite Nigel's languid accent and a certain mystery about the background, I was confident this job - for a chemical transfer and packaging plant - was going to happen. But I asked who would be placing the order, because you don't send a truckload of machinery overseas without making sure who's paying for it.

"The order will come from the warehouse company in Antwerp," said Nigel. "But the official inquiry you'll get from Russia - that's where the chemicals originate. You'll be getting a telephone call from Moscow asking if you're interested in the contract, and then a revised quotation will go to them, with a copy to my boss in Amsterdam."

Nigel paused. "Oh, by the way, there's just one more thing. We want you to add a commission for our Amsterdam office."

This was normal; there's usually somebody sitting on his backside collecting 10 per cent. But Nigel was thinking more on the lines of about £40,000. "It's what they call 'uplift'," he said.

I swallowed hard. Uplift? Eighty per cent?

"It's all right," said Nigel, "It's just paperwork, it won't affect the order; it's the way these things are done over there."

My first thought was that he was going to cheat his client; or perhaps the job was attracting European aid, so inflating the price would increase the grant. Or was it Antwerp that was going to be swindled?

At all events, £40,000 was going to wind up in somebody's back pocket, and my little engineering company (more importantly, its documentation) was going to play a crucial role in making it happen.

Yet when Moscow telephoned, there was no mention of commissions or "uplift", just a brief discussion of the contract specification and delivery requirements. So I sent a straightforward quotation with a 10 per cent margin for whoever turned out to be the fixer. Then I rang Nigel. "Moscow didn't say anything about uplift," I said, "so I just added 10 per cent."

"Oh dear, that could make things difficult." said Nigel. "Let's pretend you made a mistake and have another go at it."

So what was going on? I rang my local MEP's office. Could they find out if an EU grant was involved? All they had to do, surely, was to ring someone in Brussels and find out if anyone had applied for a grant towards a chemical packaging plant in Antwerp? They didn't know - could I call back later? Later, they were closed. Next time I rang, they were on holiday, then everyone was away on a course. Finally: "It's not something we can handle, really. Have you tried the Department of Trade and Industry? They have a Russia desk, you know."

The piping voice on the Russia desk sounded as if it had just left school. However, I asked if he could explain why a Moscow client would want an inflated quote for a job in Antwerp. "Dunno. I've never been asked that sort of question."

"Is there someone else I can speak to; an anti-sleaze desk, perhaps?" "Why not try the London Chamber of Commerce?" he suggested. "They probably know more about this sort of thing."

He gave me the number. A more worldly voice answered the phone and I outlined my query. There was a pause. "Your guess is as good as mine," he said. Then silence.

"Could they be getting European funding, perhaps?" I persisted. "Or are they trying to swindle someone down the line?" He didn't know. And he didn't know where to find out. And he'd never heard of any similar dealings with Russia or anywhere else. And if I didn't mind, he was rather busy. Besides, what was the problem, if I was going to get paid anyway?

"This sort of thing's really out of my field," he said. "Why not try the DTI? They've got a Russia desk, you know."

I rang a senior manager in one of the larger accounting firms. "It works like this," he breezed, and explained how by inflating the price of a legitimate contract through a third party, the end user can get his cash out of the country to buy other things like motor cars, holidays, liquor - all tax- and duty-free.

"And we help out with fictitious quotations and invoices to cover it up? Bit tough on everybody else, isn't it?" "Well, you asked me how it was done," he said.

By now, the job had developed a momentum of its own. Samples had been tested, drawings prepared, packaging designed, subcontractors approved. And Nigel was pressing me for the revised quotation. Like most engineers, we were desperate for orders, and up to now I'd managed to prevaricate by simply appearing naive, in the hope that I could land the fish on the bank, so to speak, before it pulled me into the water.

But the line was about to snap. I wrote to Moscow. I explained in robust terms that, although the contract itself was well within our competence, and would, if placed with us, receive our best attention, the "special" documentation was out of the question.

Amsterdam telephoned. Who did I think I was, to be dictating terms to one of the biggest traders in the business? Did I want the job or not? Was I so rich that I didn't need the work? "You don't look into my pocket," he said, "I don't look into yours, and we can do a very good business."

I was to confirm my acceptance of his arrangements, fax a "proper" quotation to him, and say nothing at all to Antwerp, Moscow or anyone else.

He hadn't seen my letter; when he did, it would be too late for me. The job was already dead. I expected, and received, no further calls.

The economies of the former Soviet Union are in chaos. Their infrastructures are crumbling, their industries antiquated, their public services chronically underfunded. Meanwhile, tax dodgers grow rich while the rest have barely enough to eat.

What Will Hutton has called a "tidal wave of corruption" is threatening the fragile stability of the newly independent states, and nobody in authority seems the slightest bit interested. You could hardly blame the citizens of these countries for developing a perception that a market economy is nothing more than a band-wagon of crooks, or, at best, some sort of Darwinian free-for-all in which only the ruthless survive. With people like my erstwhile clients around, and the complicit silence of our own institutions, such perceptions are unlikely to change.