Corruption in construction carries heavy cost worldwide

Transparency International has issued a disturbing report about the extent of corruption in the construction industry worldwide and its effect on the poorest economies.
In its Global Corruption Report 2005 released in London on March 16, the non-governmental organization said that the scale of corruption is magnified by the size and scope of the construction sector, estimated globally at US $3,200 billion per year. It estimates 10% of that sum is lost due to corruption and bribery practices.
Transparency International Chair Peter Eigen said, “Corrupt contracting processes leave developing countries saddled with sub-standard infrastructure and excessive debt…. Corruption steers money away from health and education programs towards large capital-intensive infrastructure projects.
The organization launched its “Minimum Standards for Public Contracting” and called on governments and other public authorities to ensure that contracts are subject to open competitive bidding. IT also urged the private sector to do more to curb bribery. “Companies from OECD countries must fulfil their obligations under the OECD Anti-Bribery Convention and stop paying bribes at home and abroad,” Eigen said.
The report detailed a number of case studies where corruption had played a role in bringing about disastrous environmental consequences. One it cited was the Bataan nuclear power plant in the Philippines, built at a cost of more than US $2 billion. The contractor, Westinghouse, has admitted paying US $17 million in commissions to a friend of former president Marcos. The reactor sits on an active fault line, creating a major risk of nuclear contamination if the power plant ever becomes operational.
Another case study was the Bujagali dam in Uganda, which is currently being investigated for corruption by the World Bank and four different governments after a British subsidiary of the Norwegian construction company, Veidekke, admitted paying a bribe to a senior Ugandan civil servant. The cumulative environmental impacts of Bujagali and other dams on the Nile have never been assessed.
Responding to the report, the American Society of Civil Engineers (ASCE) is partnering with Transparency International and other engineering societies such as the International Federation of Consulting Engineers (FIDIC) to fight corruption in the engineering and construction industry.
ASCE President William P. Henry said, “Engineers have an ethical obligation to take a stand against corruption in all its forms. As a direct result, with the additional financial resources available, sustainable development and the welfare of the world’s population can improve and a better quality of life for people everywhere can be achieved.”
ASCE has already established a Task Committee on Global Principles for Professional Conduct. The task force has written a draft report now being reviewed by engineering societies around the world. It builds on a daylong session held with the World Bank, Transparency International, FIDIC, the World Federation of Engineering and other organizations in Baltimore last October. ACEC hopes to release a final report at its annual meeting next October in Los Angeles.
To see Transparency International’s Global Corruption Report 2005, see www.transparency.org