Given the global nature of supply chains for the construction industry the potential for economic loss due to fraud or corruption is considerable. The Transparency International’s Bribe Payers Index report from 2011 indicates that the construction industry is the most corrupt sector around the world.
The complex, fragmented and cyclical nature of the industry coupled with tight profit margins for construction contractors and reduced workloads during economic uncertainty creates an environment for corruption. It can take many shapes and forms within the industry with cases of bribery to obtain planning permission, the overstating of budgets, the manipulation of payment applications, and collusion to share and divide the market. With this repertoire of issues, it is unsurprising that corruption continues to be prevalent in today’s economic climate.
We still see corrupt practices flourishing within the construction industry and there has been little progress in tackling corruption since our research into the issue and the introduction of the Bribery Act 2010.
Due to harsh economic conditions over the past five years, the construction industry has seen a reduction in workload and tender margins being squeezed. These conditions have caused some firms, including sole traders into grey or illegal areas in order to stay afloat during poor economic conditions.
Our membership is an influential community and as members of the CIOB they subscribe to a set of values and behaviours. The integrity dimension of membership is an important lever in combating crime, corruption and fraud in the industry. More needs to be done to reduce corruption within construction, making it fairer for both businesses’ clients and consumers. We encourage the industry to implement better anti-corruption practices and for the government and agencies to deliver a more coordinated response to the problem.
There are many law enforcement agencies and other public authorities involved in fighting serious crime, fraud and corrupt activity. The Serious Fraud Office (SFO) and the National Crime Agency (NCA) both provide guidance and procedures for reporting crime and we encourage members to take these steps under our public interest mandate.
We have policy positions that cover a wide range of key issues affecting the construction industry.