Why is bribery and corruption such a challenge in the sector?

In addition to the bribery and corruption risks prevalent in all industries, companies in the sector face a number of specific risks due to the following factors:

  • Obtaining planning permission and licenses is a lengthy process and can be open to abuse.
  • Funding by government, public or private partnerships or by donor agencies in developing economies requires many interactions with government officials.
  • The use of subcontractors and consultants or agents is prevalent, increasing the risk of third parties making or soliciting bribes. In our recent 12th Global Fraud Survey, respondents from the construction and infrastructure sector were more likely than
    average to see bribery as common practice in their sector.
  • Joint ventures are commonly used; indeed, in some jurisdictions it is necessary to have a local partner either as a result of legal requirements or from a commercial perspective.
  • Negotiations concerning additions to specifications and cost overruns are critical to determining the profitability of a contract. These negotiations offer opportunities for consultants or clients to attempt to leverage payments or other benefits.
  • Many contracts are large, and decision-making power can sometimes be concentrated in the hands of a small number of politically exposed persons (PEPs).
  • Organized crime networks exploit labor-intensive sectors such as construction and infrastructure. .
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