Corruption rife in construction industry around world, survey suggests

A survey of 321 engineering and construction companies by PricewaterhouseCoopers found that globally 25% of them had been asked to pay a bribe. Furthermore 39% of them reported suffering business setbacks due to corrupt competitors.

The worst corruption was in Central and Eastern Europe, where 41% of the respondent companies had been asked to pay a bribe.

The survey contacted 321 engineering and construction companies in 40 countries. The survey is PriceWaterhouseCooper’s 4th biennial Global Economic Crime Survey, Engineering and Construction.

Michael Clifford of PricewaterhouseCoopers Canada said, “The nature of the construction industry provides a number of opportunities for corruption and bribery. And, it can be amplified by a lack of transparency or governance of the processes established to judge and report on the levels of performance and value for money actually achieved. Vigilance in combating economic crime is necessary.”

Clifford’s suggestions for combating fraud within a company? “A proactive internal audit staff with field experience can perform a number of focused procedures to scan for fraud, including validating the existence and quality of suppliers and subcontractors, researching anomalies in disbursements, looking for opportunities for kickbacks, particularly in respect to change orders and sub-contractor liability evaluation, and testing the integrity and security of IT applications.”

The report also noted that construction sites are vulnerable to theft, with 27% reporting such instances, compared to 24% in 2005.

“Construction sites provide enterprising fraudsters with multitudes of options for misappropriating assets,” said Clifford, “from diverting a truck-load of concrete, to substituting inferior materials or falsifying their quality…” 
See www.pwc.com for more details.