The e-mail that Leandro A. sent to an employee on December 15, 2009 is surprisingly clear: no jargon or misunderstandings, no agreed language or symbols for insiders. Leandro, director of the consulting firm 97S & F, asks for help to get a contract with the Bilbao City Council. “We need to make three different proposals to be awarded. We have to make ours beautiful and well ... And another two for coverage. We will use [consulting] Deloitte and another company. First put, in the proposed format, the hours document. Then you have to imagine two other losing proposals, I think I'll explain myself ”.
Leandro explains himself wonderfully. The employee, who complies with the same diligence, later writes to a colleague of Regio, another consultant: "We send the proposals with minimal content for corporate image, because for the negotiated proposals that give the hit must be presented."
These and hundreds of other emails are part of an investigation by the National Commission of Markets and Competition (CNMC) that has discovered that, for at least a decade, a good handful of service consultants have functioned as a cartel to distribute the awarding of contracts with the administrations and leaving other competitors out of the game.
Although very active in the plot, 97S & F and Regio are in the tail of the sector and therefore face small sanctions. Three of the big companies, however, are one step away from disbursing millions of dollars for practices that threaten the free market: Deloitte (17.2 million), PwC (10.4 million) and KPMG (10.2 million). Competition has proposed sanctions totaling 47 million euros against a total of 22 consultants for "very serious" infringement. The proposed sanction of the supervisor - companies can present allegations - also proposes that they are prohibited from contracting with the public administration, although it does not detail for how long.
Maintain "high prices"
The firms did each other favors by submitting mock bids that allowed them to win management contracts without worrying about rivals. In addition to "manipulating the tenders in a sustained way over time", they managed to "keep prices high in an anticompetitive way."
"Offer of coverage". The expression, an open secret in the world of consulting, is the one that is repeated the most in emails and the one that gives the key to the mechanism of fraud. The companies offered or requested, depending on the case, false offers from friendly consultants for minor or negotiated public contracts without advertising, in which the concurrence of more than one offer is necessary.
The company that aspired to the contest "offered to prepare the offer of its competitors, who would only have to stamp their signature and letterhead and send it" to the City Council or Government on duty, according to the report prepared by Competition, which EL PAÍS has accessed. The fictitious offers were generally "easier" than the winning one, and had to be priced higher.
It was a back and forth path, a "chain of favors" that began at least in 2008 and did not end until 2018, after the first inspections by control bodies. The managers had begun to notice that someone was looking at their necks and they took action: they changed the names of the files, they used Gmail instead of corporate email ... Leandro A., again, expresses it better than anyone else in another mail, this one from 2014: “I have been looking at the proposal and, as it is, I will not send it. It should be noted that we are really going for the contest. From now on, the coverage must be done very well, as if we were going to win ”.
Managers "aware"
The report notes that managers were "aware of the illegality" of their practices. And it relies on emails as explicit as this one from a Hydra partner sent to Regio in October 2016, about a contract with the Balearic Government. In this case, Hydra was the stone guest. "Hey, tell me, I've been invited to the Balearic Islands and it seems to be your thing. Enlighten me, master and commander , that later you are going to have to come and find me in the teal ” . Not jail for now, but the directors will also have to face the payment of significant penalties when the resolution is final.
Competition has detected two lattices operating in parallel. One, in the "north" area of Spain, which includes awards in the Basque Country, Cantabria, Navarra, La Rioja, Asturias, Galicia and Castilla y León. The investigation includes PwC and Deloitte in that plot. Another of the companies, Red2Red, boasts in an email of its power: "They respect the little fiefdom of Cantabria, which is Ours." Those responsible for PA Consulting broke the silence to reduce the amount of penalties and admitted that the coverage offers were a "common practice" known in the sector.
Contract won
The second network operated throughout the territory. Other firms, also sanctioned, participated in a "specific" way in both. The system was “permeable”, and the choice of one or another company sometimes depended on the personal relationships of the managers, or the strategic (and physical) proximity of the companies.
The manipulation of the bids reached the point that a company (Uliker) requested support for a contract that had already been won beforehand. “Egunon, Xabier, how are you? (...) I called you because I wanted to ask you for an offer of coverage. It is for a business we are already working on ”, a manager requested PA Consulting, who had also provided support for KPMG in Asturias. The today for me, tomorrow for you worked, and so PA asked KPMG in March 2018, their collaboration for a tender of the Provincial Council of Bizkaia. PwC, for its part, requested assistance from the cartel to access bids from the Ministry of Justice and the General Council of the Judiciary.
Consultant emails, key evidence
- “We have a very good relationship with Deloitte, we cover each other in public tenders,” says a 97S & F executive.
- "They respect the small fiefdom of Cantabria, which they know is ours", says a person in charge of Red2Red.
- "I'm going to need you to give me cover. You just have to present a budget, you don't need a proposal, ”writes a manager to Deloitte.
- "I wanted to ask you for an offer of coverage for a business in which we are already working," writes an executive of Uliker.
- "Tell me, that they have invited me to a contract in the Balearic Islands (...) That later you will have to come and look for me in the trullo", explains a Hydra partner.
- "I have convinced him to let me look for the coverage companies, if he did not see me sweating until the award and lowering the price to make sure," says an employee of 97S & F.
