Why is construction so vulnerable to corruption, and how can we tackle it?

Corruption is a risk for businesses of all shapes and sizes, but those operating within construction may be particularly vulnerable. The construction industry consistently ranks high in corruption indexes, and UK organisations aren’t immune.

In fact, a survey by the Chartered Institute of Building found that almost half of the professionals they spoke to believe that corruption is common in UK construction[1].

In the current economic climate of tight tender margins and reduced workloads, the risk of corruption may be even higher, as some contractors may engage in practices they wouldn’t usually consider in an effort to survive.

However, any organisation that is found to be engaging in corrupt practices risks huge reputational damage and severe penalties. So it’s important for construction companies to ensure they’re doing all they can to eradicate corruption not only within their own organisation, but also their supply chain.

Why is corruption so prevalent in construction?

Unfortunately, the nature of construction work and the way the industry operates leaves construction organisations vulnerable to corruption.

No two construction projects are ever the same, which makes it difficult to compare costs, and budgets for large projects can be vast, which makes it easier to inflate costs and conceal bribes. It’s also not always easy to prove the work that has been done – labour costs are variable, and materials can be hidden (e.g. masonry is covered with plaster, and steel reinforcements are typically cast in concrete).

The bureaucracy involved in construction can expose organisations to corruption, as projects usually require numerous licences and permits, with each one providing an opportunity for bribery. Sub-contracting can also contribute to the issue, as the complex chains of transactions between different organisations can make control measures difficult to implement and increase the opportunities for bribery.

What can we do to stamp out corruption?

While the nature of construction work may make construction organisations more susceptible to corruption, this doesn’t mean that there’s nothing you can do to prevent it from happening within your organisation or supply chain. Here are some of our top tips for protecting your business from corruption:

Encourage openness

Those at the top of your organisation may be responsible for ensuring their staff aren’t engaging in corruption, but it’s unlikely that they know what everyone is doing at all times. Therefore, it’s important to open up the lines of communication within your organisation, so employees can report any concerns they may have.

Putting a clear whistle-blowing policy in place is a good first step, but you must also work to create a culture that encourages your workers to speak up when they see corrupt practices occurring. If they’re scared of reprisal or think that no action will be taken even if they do report a concern, your whistle-blowing policy will be ineffective. Make sure that leaders within your organisation encourage workers to discuss any concerns they have, and take action on any reports of potential corruption.

Provide regular training

One of the key issues around corruption is perception – what one person sees as corrupt, another person may see as acceptable. This was evident in the CIOB’s survey, as when asked whether gifts and corporate hospitality constitute bribery, 67% of respondents said yes, while 27% said no.

Training is key to ensure that there are no ‘grey areas’ in your workers’ minds – they need to have a full understanding of what constitutes corruption so that they can recognise wrong practices and prevent them. You should ensure training is relevant to your organisation and workers’ roles, and that it covers the consequences of corrupt behaviour for both organisations and individuals.

Check your supply chain

Working with suppliers opens your organisation up to an increased level of risk, as if any of them are implicated in corrupt practices then your business will also suffer. When assessing any potential supplier, you should ask to see their anti-corruption policies and procedures at the pre-qualification stage, so your organisation is protected from the start.

At Constructionline, we carry out prequalification checks on all of our supplier members, and provide you with the detailed information you need to make a well-informed decision. So you can easily check whether a potential supplier holds any anti-bribery certifications (e.g. ISO 37001) certifications, for example, or whether anyone within their organisation has any connections or interest within your business. This way, you can build a supply chain that is aligned with your own high standards.

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[1] https://www.fraudadvisorypanel.org/wp-content/uploads/2019/07/Hidden-in-plain-sight-Jul19-WEB.pdf

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