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Corruption survey Feature

the industry

THOSE WITH A SENSITIVE disposition turn the page now. A new survey carried out by the CIOB asking construction professionals about corruption in the sector makes for uncomfortable reading. Very uncomfortable, in fact. The resulting report, Corruption in the

UK Construction Industry 2013, reveals that of the 700 professionals who responded to the online questionnaire, nearly half (48%) perceive that corruption in the industry is either fairly common or extremely common. And more than one in three (35%) said they had been offered a bribe or incentive on at least one occasion. Despite tougher new legislation in the

form of the Bribery Act 2010, one in five believes the level of fraud and corruption has increased in the construction industry in the last five years, driven by recession. Almost a third have come across cartel activity in the UK construction industry on at least one occasion. Of those, 29% have witnessed it over the last 12 months. Moreover, despite the scandal over the

exposure of cover pricing in the sector following an investigation by the Office of Fair Trading in 2009, one in five said cover pricing wasn’t corrupt. The CIOB carried out the survey to get

a picture of whether corruption — defined in its broadest sense — is perceived to be a problem within the UK construction industry, what practices are deemed to be corrupt, and which parts of the

Job level Other 3%

Student 1% Supervisor 2%

Retired 2%

Middle/junior management 31%

Clerical/administrative 1%

construction process may be susceptible to corruption. It also sought to gauge awareness of anti-corruption legislation and training, as well as gathering views on whether industry and government are doing enough to tackle corruption and how attitudes have changed since the first survey in 2006. Overall, very little has changed. The

perception of how widespread corruption was had fallen by just 2%. Michael Brown, CIOB deputy chief

executive, says: “Our findings reveal that little progress has been made since our first piece of research. What we have found is that cultural practices and the consequences of the recession have placed a greater strain on companies to sometimes engage in adverse practices as a survival mechanism.” Those in the sector who have been

given a sneak preview said they found the results surprisingly bleak. The CIOB itself is offering a note of caution too. As Brown points out, the respondents were self-selecting, and those who have seen corruption at first hand are perhaps more likely to have responded to the survey, skewing the figures. Respondents were certainly very

experienced. Nearly half (45%) described themselves as senior managers or directors with 42% working in large companies with more than 500 employees and 36% described

How common do you think corruption is within the UK construction industry?

Don’t know 5%

Consultant 14%

Not common at all 10%

Extremely common 10%

● Read about

new changes to whistleblowing laws, page 32

Why do you think that corruption is either fairly or extremely common in the construction industry?

Don’t know 1% Other 5%

"There will be enormous interest in this report from the police because any research on corruption is rare.” Graham Hand, Anti-Corruption Forum

themselves as working in contracting or construction management. Another issue that has to be borne in mind in analysing the results is that corruption is loosely defined — it could mean anything from colluding to fix prices, inflating invoices for work or materials, bribes for winning contracts or stealing materials from sites. Also, as the results show, essentially

what is corrupt to one person might be considered common and acceptable practice to another, such as cover pricing, which some respondents might not see as corrupt because there is no money changing hands and it part of a culture of the industry. This subjectivity in defining corruption means the survey can only be a guide to the scale of the problem — but could mean the results cannot be considered absolute, and that fraudulent practices could be higher. For example, 6% thought that production of fraudulent invoices wasn’t corrupt, with a similar number saying that billing for unperformed work wasn’t either.

Pre-qualification risk What is undisputed, though, is the huge opportunity for corruption to flourish in construction because of its size, culture and its fragmented nature. Most of the work is subcontracted, supply chains are long and there are often many companies competing for high-value contracts. Almost half of respondents perceived

that the whole construction process is susceptible to corruption (43%) although the pre-qualification and tendering phase is particularly at risk, according to 35%. Indeed, as the report points out,

Lack of enforcement of anti-corruption and anti- bribery policies 17%

Director/senior management 45%

Educationalist 1%

Fairly common 38%

Not very common 37%

Lack of training of anti- corruption, bribery and fraud policies 5%

Lack of anti-corruption, bribery and fraud policies 8%

Long supply chains 13%

Cultural reasons 27%

Economic reasons 23%

Transparency International’s 2011 Bribe Payers Index report indicates that the construction industry is the most corrupt sector around the world. The results indicate that respondents

feel corruption is more likely to occur on an individual rather than a corporate level. 30% also suggest that corruption is most likely to occur at senior management level. But while there is ample scope for

> conStruction manager | OCTOBER 2013 | 15