The purpose of this review is to provide examples and experience of how others in this sector have reduced the damaging impact of corruption. The sector-specific information is relevant for politicians, leaders, managers, civic groups, company executives and others. We hope it will bring both knowledge and inspiration.
Construction & Infrastructure experience
Read this whole review or jump to any section using the headings below and on the sidebar. Or download this sector review as a pdf document to read separately:
- Ministry-level corruption and reforms
- Project-level corruption and reforms
- Developing an overall approach
- Transnational construction initiatives
- Ask and Connect
- Additional reading & bibliography
The value of this sector is huge, with roughly half of all fixed capital investment by governments and Public-Private Partnerships being in the construction of public infrastructure. The volume is increasing every year. The value of losses through corruption is estimated at between 10 and 30% of this total, and others believe that a similar amount could be lost through mismanagement and inefficiency (Wells 2015, Matthews 2016). This means that by 2030, unless measures are introduced that effectively improve this situation, close to $6 trillion could be being lost annually through corruption, mismanagement and inefficiency. Losses on this scale cannot be tolerated in any sector, but losses in infrastructure investment have particular significance, because infrastructure underpins every aspect of economic growth and human development.
Engineering and construction is the sector with the most reported bribery and corruption in advanced economies globally – see the figure below from Price Waterhouse Coopers (2014)
Whether it be sub-standard cement used in construction of department stores in Korea or in housing projects in New York City, the examples are as regular in advanced economies as in poorer countries. It is also systemic rather than occasional. For example, in the UK, half of a sample of 701 UK construction professionals believe that corruption is common throughout the British construction industry (CIOB 2013). And 49% of executives from international engineering and construction companies report significant corruption in their industry in 2014, more than in any other industry sector (Price Waterhouse Coopers (2014) Fighting corruption and bribery in the construction industry). There has also long been organised crime involvement in construction in developed countries, from Japan to Canada (e.g. see Wells 2015)
We distinguish two levels of anti-corruption action: Ministry-level and Project-level
Level 1. Construction, Public Works and infrastructure is a complicated subject in government. It can be the responsibility of a Ministry in its own right, such as the Ministry of Public Works or Urban Development, or a Ministry dealing with Public-Private partnerships. It can be a major part of other ministries, such as within the Ministries of Transport or Energy. Alternatively, large projects might be separated out from government as Public-Private Partnerships or placed under the supervision of a national Major Projects Agency. There are many corruption issues arising at this ‘Ministry-level’.
Level 2. At the same time, individual projects can be enormous, sometimes larger than a whole country’s GDP, with immense complexities. There is thus another block of corruption issues at this ‘Project level’.
Terminology note: For brevity we often refer to this sector review as ‘Construction’ rather than the full title of ‘Construction, Public Works and Infrastructure’.
AUTHORS AND CONTRIBUTORS
The originating author of this sector review is Mark Pyman. Additional contributions have been made by Neill Stansbury; Peter Matthews; Hamish Goldie-Scott; and John Bray.
1. Ministry-level corruption and reform
At the policymaking and regulation level, there is great scope for constraining the corruption that can arise from uncontrolled projects and developments. The scope is greater early on rather than during later phases, such as at the tendering, construction or payment stages. The table below showing an overview of perceived corruption risks along the construction value chain illustrates this point of early intervention (Goldie Scott 2012):
Similarly, a 2016 analysis by the Hertie School of Governance in Germany concludes that the way in which infrastructure policy is governed has more impact in reducing corruption than ‘traditional’ measures such as tight regulation. They identify four key reasons for infrastructure corruption and poor infrastructure performance – Analytical Capacity, Delivery, Regulation and Coordination. They point most of all to insufficient coordination across government as the major reason for both poor efficiency and corruption.
1.1 Ministry-level corruption prevention
At the high level of decision making that is associated with policy on major public works and infrastructure projects, the corruption type itself is rather simple – collusion, favouritism and illicit influence in the decision making. The variation is not so much in the corruption type as in the different ways that the opportunity for corruption arise and are constrained and controlled, or not. Corrupt influence exists especially due to capture of the decision-making process by elites, to poor coordination across the many bodies involved, to the endless complexity of construction projects, and to biased intermediate-level decision making.
Reform measures that the Ministry can take to prevent or address these are:
- The government/agency makes a policy to commit to transparency throughout the whole construction cycle and establishes a team and structure to action this. This will include commitment to ‘open contracting’
- Creating clarity in the ministry organisational structures and processes and in relevant agencies
- Adopting integrity measures, such as formal codes of conduct, asset declarations, declarations of conflicts of interest, chances for concerned individuals to speak up safely
- Requiring clarity of the project delivery structures
- Insisting on strong independent scrutiny
- Active engagement with the construction industry and the related professional bodies
- Conducting special analyses of possible illicit influence.
At the same time, there is also a need for policy level responses to the lower level corruption, such as in permits and licenses, as these too can enable the growth of collusion and illicit influence.
1.2 Government commitment to open contracting
Many governments are moving to adopt ‘Open Government’ standards in respect of public procurement, and particularly in respect of construction. One major aspect of this is ‘Open Contracting’ where the government commits to much greater transparency in respect of all aspects of public infrastructure contracting. These organisations are discussed in the later section Transnational initiatives.
Example: Mexico and adoption of the Open Contracting data standard
Mexico is one of the countries making active progress against corruption in general, and especially in relation to infrastructure. Here is part of a speech from the Mexican Minister of Public Administration, Arely Gomez Gonzalez, launching a World Economic Forum initiative on tackling corruption in infrastructure and construction in March 2017: ‘For the past four years, Mexico has been in a process of social, cultural and economic transformation introduced by 11 structural reforms that are redefining the relationship of citizens to their government, aiming to find new ways of addressing old problems to promote growth, development and well-being for Mexicans. Paramount to this process has been the creation of the National Anti-Corruption System (NAS), which has initiated a new legal framework to prevent, detect and prosecute corruption…. as a crucial element of Mexico’s anti- corruption agenda, we are promoting the implementation of the Open Contracting Data Standard (OCDS) in the largest public infrastructure project of this administration and the fifth largest in the world – the New Mexico City Airport. The OCDS increases transparency and guarantees the effective allocation of public spending by opening the data of the entire contracting process (planning, tendering, allocation and execution). And to take this effort further, we have amended the norms that regulate public procurement by making implementation of the OCDS a norm for all contracts in COMPRANET, the electronic contracting system of the federal government. At the international level, Mexico has launched the Contracting 5 (C5) initiative, together with the Governments of Colombia, France, the United Kingdom and Ukraine, to promote the exchange of best practices in the implementation of the OCDS. Mexico will chair this initiative during its first year.’
Improved public procurement, including for construction, has seen huge advances in anti-corruption and transparency in the last ten years, from electronic procurement in multiple countries (See here for one of many such initiatives in Korea) across to radical reform in conflict countries (See here for Afghanistan’s National Procurement Authority example, which includes re-review of numerous construction tenders). The Open Contracting Partnership has numerous further examples.
1.3 Creating clarity in ministry organisation structure & process
In some countries, a significant part of the construction and public works corruption problems lie with Ministry officials, both low level ones and at the most senior levels. Ministries can easily become corrupted in whole or in part, or, at the least, tolerant of dubious behaviour. In countries with high and endemic levels of corruption, this problem may reach the point where the Ministry is ‘captured’ by corrupt interests.
If the problem is deep rooted, changing the mandate and structure of the Ministry and its related agencies might be necessary. Two current examples are from Afghanistan, a country that is recognised as deeply corrupt, but at the same time is making huge efforts against corruption.
Example: Afghanistan and the National Procurement Council
Afghanistan has had chronic corruption problems with its public procurement system. Through this system passed all the major public works and construction contracts, and this was well recognised as the epicentre of large-scale elite corruption. After a brief review of alternatives in 2016, the Afghan government decided on a radical reform based on a single regulatory body and a centralized procurement system. At the apex of this system is the National Procurement Commission (NPC). The NPC is chaired by the President of Afghanistan, with membership of the Chief Executive Officer, the Second Vice President, and the Ministers of Finance, Justice and Economy, together with the President’s Senior Advisor on Infrastructure Affairs. Also in attendance as observers are civil society, SIGAR (the US watchdog on US spending in Afghanistan), and NATO’s Resolute Support Mission. Under the NPC is the National Procurement Authority (NPA), located within the Administrative Office of the President. The NPA is the “engine” of the procurement system; its team (currently around 280 staffers) links with the Procurement Departments in every Ministry, which are responsible for the administering the tender process.
The NPA and the Ministry procurement teams go through a back-and-forth process (with strictly controlled time allowances for each iteration) in order to get each tender to the point where the NPA agrees that the contract can be put up to NPC for approval. The NPC’s members (including the President himself) then personally review each contract and collectively decide whether to approve or reject them at a weekly meeting (which usually lasts for 2-3 hours); the NPC approves typically about 10 contracts per meeting. All the decisions of the NPC are made public. The NPC has reviewed some 3,000 contracts, worth nearly $6 billion, and approved most but not all of them. 88% of the contracts have been won through open tendering, 10% through restricted bidding, and 2% through single source. 145 fraudulent companies have been debarred.
This structure is remarkable for several reasons. Running a disciplined tender approval process is very hard work, even in sophisticated modern corporations. Keeping to a tight timetable requires immense discipline. It is remarkable that Afghanistan’s whole government procurement machine—above the threshold level—is running through this system, particularly given the enormous commitment of time by the senior leadership. These leaders are also facing significant pushback from those whose interests are threatened by the creation of such a large “Island of Integrity”; indeed, accusations of corruption being flung back at the NPC and NPA in an attempt to undermine them. Moreover, a very different work culture is needed to run such a system. This is most noticeable in the NPA, which has harnessed the aspirations of young generation to work with increased efficiency and transparency to make a difference. For more info, read this 2018 blog from Pyman and Kaakar.
1.4 Requiring transparency of decision-making at senior levels
Confidence is built from knowing that it is possible for the senior decision-making process and results to be scrutinised by others. One such example was given above, where the President plus relevant Ministers, plus outside stakeholders all participate in real time in the decision-making on each of the large procurements. They all have opportunities to ask questions.
1.5 Establishing a formal integrity framework
Integrity approaches are a known part of the ways to constrain corruption – by improving the behaviour of staff rather than by compliance. In most national anti-corruption strategies, efforts to build integrity across the public sector are part of the mix of measures.
In respect of public works and infrastructure, OECD have been putting effort into elaborating this approach. The OECD 2016 report Integrity framework for public infrastructure is a contribution to developing policy and regulatory guidance for controlling integrity and corruption in construction. The table above is taken from that report. It shows policy responses both to promote integrity and to constrain corruption opportunities.
1.6 Requiring clarity of delivery structure modality
OECD also gives guidance in their integrity framework on the benefits of different sorts of delivery structures for major government infrastructure projects. From the OECD (2016) report, p180:
‘Infrastructure projects constitute a major mandate of governments in the delivery of key public services and have high and direct implications on a country’s economic capacity, human development, social inclusion and environmental sustainability. once a project is planned and financing schemes have been defined, it is critical that governments deliver infrastructure projects in a cost- efficient way that is trusted by users and citizens to fulfil their mandate.’
Decisions on how to deliver infrastructure projects involve a close assessment and careful balancing between risk allocation and value for money. the choice of a delivery modality is often criticised for being based on habit rather than on project and market characteristics. Some 15 OECD countries responding to the survey (54%) do not have a specific entity in charge of developing policies for infrastructure projects, including choosing delivery modes. this could hinder the application of a consistent methodology in choosing delivery modes for infrastructure projects. Some 13 OECD countries (46%) have a dedicated entity (or entities) for developing policies for infrastructure projects. these entities are mostly dedicated units in central government. Greece has put in place a dedicated sectoral unit. In Denmark, the central purchasing body is in charge of developing policies for infrastructure projects.’
Example: Australia. The 2016 analysis by the Hertie School of Governance in Germany quotes the positive experience of Australia, who set up ‘Infrastructure Australia’ as a cross government agency to better coordinate government infrastructure planning (p46).
1.7 Carrying out analyses of regulatory impact
The World Economic Forum has many good observations about how nations can strengthen themselves by way of policy measures in the infrastructure sector. Below, in an example from Mexico, is a policy-maker’s approach to different ways of controlling corruption in permits and licenses (WEF, 2017).
1.8 Active engagement with the construction industry
There is also much to be learnt from talking to the executives of the large construction and infrastructure companies. The Price Waterhouse Coopers 2014 report finds that 70% of all corruption related to their projects is caused by insiders within their companies; most of them senior management.
In cases where companies have been exposed in large corruption scandals, one of the industry responses, in mitigation, is to establish an advisory council of worthy people to advise the company on how to behave better in future, such as in these examples are from Airbus in Europe and Odebrecht in Brazil. There is no known evidence, however, on whether such councils are effective or perform merely as a whitewash.
1.9 Attention to Public-Private Partnerships
Public-Private Partnerships (PPP) are a major feature of infrastructure projects, and likely to get larger still in view of the current gap in infrastructure investment. The World Bank has a whole toolkit on PPPs, giving detailed guidance on how to do them well and effectively. COST is also involved, having just started a project on PPPs in Honduras, in cooperation with the World Bank. This support extends to multiple subsidiary tools, for example:
- Assistance on laws and regulations via the PPP Infrastructure resource centre (PPPIRC)
- An International Infrastructure Support System (IISS) that is being developed by the Sustainable Infrastructure Foundation in association with a number of multilateral development banks. The IISS is an online project preparation platform that provides resources to improve project preparation and encourage collaboration between investors and government. It will be accessible to investors and the public and is intended to provide a high-quality, consistent and systematic approach to early-stage project development.
1.10 Involving civil society in project oversight
The immense complexity of major construction projects prompted many authorities to look at additional oversight of the specific projects by civil society bodies as an additional check on corruption risk. Examples include the new Berlin airport in 2005 (See Olaya 2010, pages 120-125) and hydroelectric power plants in Mexico (See Olaya 2010, pp 110-119).
1.11 International aid-funded projects
One of the biggest funders of infrastructure projects in the developing countries are the Development Agencies. They have long had an interest in how to develop such projects to minimise corruption: one such example How to reduce corruption in infrastructure sectors, written for the UK Development Agency DFID (Hawkins, 2013). Other Aid agencies also have extensive knowledge of corruption issues in public works and construction, such as USAID.
There is also a lot of knowledge on how and why construction projects went wrong. The diagram below, for example, shows an analysis of time and cost overruns for seven developing countries plus the UK. This shows the average time and cost overruns on a sample of 145 public sector construction projects in eight countries (Construction Sector Transparency Briefing Note 5 from CoST).
1.12 Other reform approaches
There are other approaches that you can take to shape the construction and public works environment. The actual reform measure in each case will be specific to your local context. You can read about different reform approaches that you can take and see how/whether they apply in your environment in other sector reviews.
2. Project level corruption and reform
Individual construction projects can be enormous, having budgets the same magnitude as a nation’s total annual spending, involving many thousands of sub-contractors. Each one, singly, therefore warrants dedicated attention to the corruption risks. One such example was the new airport in Berlin, Germany, which was cancelled due to corruption concerns and, when restarted in 2005, accompanied by an ‘Integrity Pact as an additional way to limit the corruption risk.
The excellent Global Infrastructure Anti-Corruption Centre identifies 13 features that make construction projects particularly prone to corruption. Besides the large size of the projects, they note Uniqueness – No two construction projects are the same, making comparisons difficult and providing opportunities to inflate costs and conceal bribes; Complex transaction chains – The delivery of infrastructure involves many professional disciplines and tradespeople and numerous contractual relationships that make control measures difficult to implement; the fact that Work is concealed – Materials and workmanship are often hidden, e.g. steel reinforcing is cast in concrete, masonry is covered with plaster and cables and pipes enclosed in service ducts; and Official bureaucracy – numerous approvals are required from government in the form of licenses and permits at various stages of the delivery cycle, each one providing an opportunity for bribery.
2.1 Project-level corruption typology
FOCUS on the specific corruption issues - Guidance summary
The corruption challenge needs first to be focused – disaggregated – into specific issues. Our experience is that there are 20-40 different issues in each sector, recognisable to those working in it. They can then be organised into an easily comprehensible format – a typology. The reforming group uses the one-page typology as the starting point for discussion and for analysing them: their scale, importance, context, avoidability and solubility. You can use this as the basis for building a shared understanding of the impact of the corruption.
Start by disaggregating the different corruption types that you are faced with. You can do this in the following way:
- Looking this review at the typology of the different corruption issues in your sector. Use this as the basis of your identification of the corruption issues in your situation. If you find that the typology is not really suitable, then make your own one, by analogy with the ones you see in the CurbingCorruption site.
- Gather data on the impact of these issues on your activities/outputs/policies/operations.
- Decide if it would help to do a formal analysis of the corruption situation. There are two analyses you can consider. 1) Analysing the issues and the levels of corruption risk. This takes time but gives you a thorough baseline for your reforms. It also serves to show the level of danger and damage from corruption to staff and to the public. 2) An analysis of the economic and political pressures, including the levels of support and opposition that you can expect. This is called a ‘political economy analysis’.
- Prepare for the later step in which you develop your Approach by thinking about which the best ‘entry points’ are likely to be – certain corruption issues, regardless of scale, merit being tackled first because they are the most likely to build constructive momentum and/or enable further reform.
- Use this Focus knowledge to build up a shared understanding among your team/your colleagues/ your collaborators about what they corruption issues are and how they are impacting your operations. Everyone has a different view of what corruption is, so you use this analysis to bring everyone to the same understanding of them.
- Draw on the international experience of tackling corruption in your sector – details can be found later in the review
You can read more guidance on FOCUS here.
At the early stage of a project – the concept and appraisal phase – the corruption opportunities are for politicians, senior officials or major companies to acquire public resources via political influence, collusion or similar. Such large-scale corruption takes place during the early stages of the project cycle, particularly during project identification, project preparation and procurement, where the financial rewards for a one-off act of corruption are potentially highest. Examples of these forms of corruption include selection of high value uneconomical projects (to allow for kickbacks and political patronage, designs that favour particular firms, and kickbacks for contract award.
At the project design, tender and construction phases, more operational forms of corruption are the norm, where payments are extracted by public officials from the users of a service or offered by a company to speed up or overcome an administrative or legal procedure during the later stages of the project cycle. Fees are paid to secure routine services such as provision of electricity or access to clean water. For a company, such corruption can include a fee to get an invoice paid, to certify completion of the works or obtaining customs clearance for equipment and materials.
A good template typology for construction projects comes from the Anti-Corruption Resource Centre U4 in Norway (2015), with the corruption issues listed according to the stage of contracting, as in the table reproduced below:
Example: Canada and collusion in the construction industry. Collusion among clients, consultants, and contractors is in fact believed to be widespread in the construction industry in many parts of the world, including in highly developed countries. Evidence is difficult to obtain, but the work of the Charbonneau Commission in Quebec (2017) is throwing a bright light on the corrupt relationships among the actors in public construction. The Commission’s findings … revealed complex webs of collusion, as well as highly sophisticated stratagems for the extraction of funds from public construction projects. Politicians, high level public officials, consultants, and contractors are all involved.’ (Wells (2015) Corruption in the construction of public infrastructure).
Example: UK and collusion in the construction industry. The UK has been relatively open about corruption in its construction industry, as already mentioned, and the review by the Construction Industry Board (2013) is worth reading. Harvey (2014) comments that ‘Corruption in the construction industry is deep-rooted and the UK’s example at confronting the problem is admirable.’ For example, an investigation by the UK Office of Fair Trading in 2008 uncovered widespread collusion amongst companies bidding for government contracts (Matthews 2016). Such findings have led to a move away from competitive tendering based on lowest price and towards a greater focus on quality and collaborative working arrangements.
Another typology comes from Stansbury at the Global Infrastructure Anti-Corruption centre (GIACC).
2.2 Project-level guidance
Specific Reform Measures - guidance summary
Reform measures will always be specific to the particular circumstances. Nonetheless, in order to get ideas and insights, it helps to learn about reforms employed elsewhere and to have a mental model of the type of what sorts of reforms are possible. We recommend you consider each of these eight categories of specific reform approaches:
- Functional approaches: improving institutions, public financial management, systems and controls
- People-centred approaches: building networks and coalitions of supporters
- Monitoring approaches: strengthen oversight groups and their independence
- Justice & rule-of-law approaches: prosecuting, raising confidence, improving laws
- Transparency approaches: making visible what others wish to keep hidden
- Integrity approaches: motivating, instilling pride and commitment
- Civil society and media: creating space for external voices
- Incentives and nudge approaches: aligning stakeholders, economics and behavioural knowledge
Talking through with colleagues and stakeholders how each of them might work in your environment enables you to ‘circle around’ the problem, looking at different ways and combinations to tackle it. One feasible option might, for example, consist of some institutional improvement projects, plus strengthening integrity among staff, plus strengthened sanctions and discipline.
You can read more guidance on Specific Reform Measures here.
There is a great deal of guidance available to both governments and to companies for controlling construction corruption at the project level. The most focused resource is the Global Infrastructure Anti-Corruption Centre (GIACC). Most commercial consultancies also provide guidance. Here are two examples:
3. Develop the overall approach
Political & Tactical Approaches - Guidance summary
This is the political, judgemental, tactical part of the strategy formulation exercise. It starts with how to shape the overall approach. Would it be most effective to mainstream the anti-corruption improvements within a larger improvement initiative? Or to adopt an incremental approach, keeping the anti-corruption measures below the political radar? Or tackle just one vital aspect of the corruption problem so as to concentrate effort and have a visible result? Would the organisation’s output be better if the overall anti-corruption approach was framed as integrity-building, as confidence-building, or directly as confronting corruption? The actionable reform approach will be more political, more contextual and more time-bound than individual measures; how to build support, how to spread the benefits, how to bring opponents on board or how to outflank them.
We suggest that you – in collaboration with those who might also own the reforms with you – start out by examining these eight possible approaches: Broad approach; Narrow approach; Low-profile approach; Rapid & radical approach; Signature-issue approach; Bundling approach; Keeping-up-hope approach.
Issues to consider include:
- Thinking through objectives and what impact you really want to achieve
- Challenging yourselves by considering strategic opposites and different entry points
- Flexibility – preparing yourselves to be wrong
- People, politics and skill – where and how to build support
- Implementation – setting up a sound programme
- Maximising supportive structures across government & stakeholders.
- Choices in very high corruption environments
You can read more guidance on Political & Tactical Approaches here.
How you develop your approach for tackling corruption in construction projects depends whether you are working at ministry level or working on a construction project.
For example, your strategic objective in a public works ministry could be to raise the trust of the public in the construction of public infrastructure, or to ensure that all construction professionals and officials operate to high ethical standards, or to reduce the average cost of all Ministry-sponsored construction.
However, at ministry-level, there is no published overall strategy that we are aware of (although we understand that Afghanistan Ministry of Public Works has recently set out one, as at mid 2018).
At project-level, your strategy objective might be to eliminate bribery in all the aspects of project design and construction, or to stop price inflation due to collusion among construction companies and the sub-contractors, or to enable all professionals involved in the project to safely report corruption by, without fear for their job or family. Most of the sources quoted in the previous section also give guidance at the more strategic level.
4. Transnational construction initiatives
Transnational initiatives - Guidance summary
Review what international sector efforts are active in tackling corruption in your sector. They may be sources of knowledge, ideas, support and assistance in the development of your initiative. Sector-specific organisations include:
- Professional sector associations (many have an ‘anti-corruption working group’ or similar forum);
- Initiatives and programmes targeted on building integrity, raising transparency and reducing corruption in the sector;
- Multilateral organisations associated with the sector (e.g. World Health Organisation). They too may have anti-corruption knowledge and capability.
Non-sector-specific organisations also have sector knowledge. These include:
- Multilateral economic organisations such as World Economic Forum, IMF and OECD; among these,
- OECD has a large group focused on public integrity and anti-corruption.
- There are multiple stand-alone initiatives focused on issues such as beneficial ownership transparency, or access to information.
- Multilateral development organisations, like the World Bank, UNDP and U4, can hold valuable sector knowledge and expertise, whether or not you are based in a developing country.
4.1 Global Infrastructure Anti-Corruption Centre (GIACC)
GIACC is a long-established UK-based centre run by two construction lawyers, Neill Stansbury and Catherine Stansbury. They have a huge database of supportive material and templates that you can pick up and use. Since its launch in 2008, the GIACC Resource Centre has been visited on-line by organisations and individuals from 190 countries. You can contact them here.
They publish a set of twelve anti-corruption standards for construction projects, each containing detailed guidance:
- PS 1: Independent assessment: An independent assessor should be appointed whose duty is, for the duration of the project, to monitor and assess the project for corruption and report.
- PS 2: Transparency: The government or project owner should disclose project information to the public on a website on a regular basis and in an easily accessible and comprehensible form.
- PS 3: Procurement: The project owner should implement fair and transparent procurement procedures which do not provide an improper benefit or advantage to any individual or organisation.
- PS 4: Pre-contract disclosure: At tender stage, the project owner and each tenderer for a major contract should provide each other with relevant information which could reveal a risk of corruption
- PS 5: Project anti-corruption commitments: The project owner and each major project participant should provide anti-corruption contractual commitments which expressly cover the main types of corruption, and which oblige them to implement anti-corruption measures.
- PS 6: Funder anti-corruption commitments: The project owner and each project funder should provide anti-corruption contractual commitments to each other which expressly cover the main types of corruption, and which oblige them to implement anti-corruption measures.
- PS 7: Government anti-corruption commitments: Relevant government departments should take steps to minimise extortion by their officers in the issuing of permits, licences and approvals. They should appoint a senior officer to whom complaints of bribery and extortion can be made.
- PS 8: Raising awareness: Major project participants should raise awareness among their staff by posting up anti-corruption rules at all project and site offices and providing anti-corruption training.
- PS 9: Compliance: Major project participants should appoint a compliance manager who will ensure compliance by the company and its management and staff with their anti-corruption commitments.
- PS 10: Audit: Financial audits should be carried out to ensure that all payments by the project owner have been properly made to legitimate organisations for legitimate services. Technical audits should be carried out to ensure that the project design, specification and construction accord with good practice
- PS 11: Reporting: Safe and effective systems should be established by which corruption on the project can be reported by the public, by project staff, and by the independent assessor.
- PS 12: Enforcement: Enforcement measures for breach of anti-corruption commitments should include civil enforcement (e.g. disqualification from tender, termination of contracts, damages and dismissal). The risk of criminal enforcement (e.g. imprisonment) should be highlighted.
They also provide free on-line information, advice and tools, for both governments and companies, including:
- Corruption information: Detailed analysis of what is corruption, why corruption occurs, how corruption occurs, why avoid corruption, liability for corruption, and cost of corruption.
- Examples of corruption: Hypothetical examples of how different types of corruption take place through the project phases.
- Anti-corruption programmes for organisations, governments, funders, project owners and business associations/professional institutions.
- Project Anti-Corruption System (PACS): A set of measures designed to help prevent corruption on major projects. See the box below.
- Anti-corruption measures: Specific anti-corruption measures which an organisation can implement, either separately, or as part of an anti-corruption programme. See index on left of page to access these measures.
- Anti-corruption training: On-line anti-corruption training module (available in English, Spanish, French, German, Italian, Polish and Romanian). Anti-corruption training manual (available in English, Spanish and Chinese).
- Dealing with corruption: Advice on how organisations, individuals and the public can deal with corrupt situations.
- Informationon anti-corruption conventions, forums, indices and surveys, and initiatives.
4.2 CoST Infrastructure Transparency Initiative
CoST is a multi-stakeholder sector-specific initiative, currently with 15 participating nations. Launched in 2012, ‘CoST grew out of the lessons learnt from a three-year pilot programme which tested the viability of a new transparency and accountability process in eight countries. CoST promotes transparency by disclosing data from public infrastructure investment.’
The CoST initiative is gradually extending its footprint and now has four categories of activity:
- Disclosure of information (from relevant state procurement agencies, e.g. road, health). This consists of 40 data points of information over the lifecycle of the programme. It starts on a voluntary basis for nations, then sets up formal disclosure requirement. Guatemala has recently done this.
- Each CoST project works via ‘Multi-stakeholder working’ comprising representatives of government, the private sector and civil society.
- Assurance is the 3rd CoST can organise independent assurance of one or more national projects. CoST prefers that government do this role, e.g. through audit, but in general public trust is low, so this is not useful. CoST may therefore select a small sample of projects to monitor. For example, there are some 5000 projects within the CoST project in Guatemala).
- CoST achieves its impact by strengthening Social accountability. This often means working with existing institutions. For example, in Honduras there are hundreds of citizen monitoring groups at municipal level and CoST has been training them.
There is also a process under way to fully integrate – for Infrastructure Projects and Contracts – the CoST Infrastructure Disclosure Standard and the Open Contracting Data Standard for Infrastructure Projects (See Section 4.3 below).
Making use of CoST
If you are not a participating nation, you can already use some of their guidance and benefit from seeing some of their successes, as described on the CoST website. As a participating nation, they offer the valuable opportunity to bring additional anti-corruption expertise into your country and specific issues, and to lend extra weight to problems that may otherwise more easily defeat you.
For example, Ukraine is a participating nation and there the CoST team are taking the lead in encouraging the disclosure of more information relating to road construction. Such disclosure in the early years is subject to the whims of just a few individuals, and the involvement of an international group such as CoST can make more difference than local pressure only.
- They can access Ministers and the Cabinet of Ministers, if necessary, where there is resistance.
- They can also publicise obvious conflicts of interest, such as when quality control is not exercised by an independent agency, or when the road companies use Parliamentary connections to gain contracts.
- They can make arguments for new ways of working, such as helping associations of independent construction engineers develop independent control capabilities
In Honduras, they are developing such civil society monitoring capabilities by training and capacity building.
Bringing about change in a sector where the status quo has long favoured corrupt officials and contractors will still be very hard; but it will be easier together with an international entity like CoST than doing it alone. This is the big lesson of these international sector-specific groups.
4.3 Open Contracting Partnership (OCP)
The Open Contracting Partnership started in 2012, and in 2015 was spun out of the World Bank to become an independent programme. OCP has a well-practised methodology for how a Ministry, or a nation, can implement a policy of cleaner contracting. The technical basis for the guidance is a standard for open data, so that all parties can see the key data related to any contract. Country evidence so far includes Ukraine, Nigeria, Latin America and the UK. A secretariat is based in Washington, D.C. OCP are governed by an independent Advisory Board, made up of individuals from government, the private sector, civil society, the technology sector and development.
There is also a ‘subset’ of OCP, the ‘Contracting 5’ initiative. Colombia, France, Mexico, United Kingdom, and Ukraine officially launched the Contracting 5 (C5) initiative during the OGP Paris Summit in 2017.
You can contact them at firstname.lastname@example.org
4.4 Open Government Partnership (OGP)
OGP is broader than either construction or contracting: it is a multi-nation platform dedicated to enhancing cooperation between governments and civil society. OGP was launched in 2011 to provide an international platform for domestic reformers committed to making their governments more open, accountable, and responsive to citizens. Since then, OGP has grown from 8 countries to over 70 participating countries and 15 subnational governments. In all of these countries, government and civil society are working together to develop and implement ambitious open government reforms.
If your country is a member of OGP, then you should be able to harness resources from OGP, and to ensure that public works reform is contained within the ‘National Action Plan’ that your government will be implementing in respect of getting more benefits from civil society engagement. In general, OGP’s engagement on infrastructure transparency tends to run through COST and OCP, with which OGP has cooperation agreements. Read OGP’s website here.
4.5 United Nations Development programme (UNDP)
UNDP is well aware of the importance of tackling corruption in construction. For example after the ‘Agenda 2030’ was adopted in New York at the end of 2015: ‘Given the magnitude of potential losses to corruption in the infrastructure sector, mounting to trillions of dollars annually on a global scale, clean construction is also of paramount importance for achieving Goal 16 on building peaceful, just and inclusive societies. …We will fail on both these aspirations if we remain unable to substantively reduce all forms of corruption…Increased transparency and accountability in the construction sector is thus a sine qua non for a successful outcome of the 2030 development agenda’.
Example: Mongolia and UNDP engagement on construction corruption. Construction companies face corruption risks throughout all steps of construction from submission of building permit requests until the State Committee endorses that building meets all technical requirements and standards. Corruption costs affect both small and large construction companies alike, and as a result increases the price paid by consumers. So, what are specific corruption risks at each of these stages and how can we address them? This was the main theme of the discussion held at the Chamber of Commerce and Industry of Mongolia on 23 November 2015 among construction companies, professional associations, and relevant government agencies. See Mongolia.
4.6 U4 Anti-Corruption Resource Centre, Norway
U4 is a resource centre set up by Development Agencies to do independent research on corruption issues in developing countries. As they say in their website We share research and evidence to help international development actors get sustainable results. You can contact them at email@example.com.
U4 has a 2015 guide on how to oversee and/or monitor corruption risks in large infrastructure projects, ‘Corruption in the construction of public infrastructure. Critical issues in project preparation’. The diagram below, for example, shows their representation of how a government can obtain assurance about integrity at the project preparation phase.
5. Ask and Connect
Contacting others really helps because corruption is a tough problem, with no ‘manual’ of how to go about tackling it. It is not just a ‘nice thing’ to do.
We find that others working in their sector round the world – whether it be a very public sector like health or a more private sector one like telecommunications – are open to being contacted and happy to respond. People everywhere really hate corruption, and this is why you’ll find lots of support for your reform ideas.
Professionals in each sector know that much of the corruption reform available guidance is generic, in reports or in the form of technical advice from institutions. They’ll be happy to get down to sector level actions, where the real impact of corruption issues is usually seen.
Here’s what we suggest:
- Ask us. We may be able to offer ideas and/or point you to relevant examples. Just contact us directly at firstname.lastname@example.org
- Get in touch with the people at the transnational organisations outlined in Section 4 of each of the sector reviews. Ask them for their help and input.
- Ask other readers and followers of CurbingCorruption: Use the Twitter and Linkedin buttons below or on the top of the home page.
- Contact the authors of any of the articles and references that we cite. Our experience is that they are happy to respond to questions.
Contacting others also has a second benefit. Most of us who are involved in efforts against corruption, whatever their country or sector, are nervous of whether our anti-corruption ideas are plausible. Officials are aware they have no deep knowledge of how to tackle corruption and have less time to spend on this than they would like; so they are lacking in confidence. The best way to gain confidence is to talk with other people who also understand the problems in your sector.
Reading and bibliography
In this review, we have assembled all the useful guidance that we know of, together with country experiences in construction, infrastructure and public works anti-corruption reform. Read it first. The following are also very informative:
- Matthews, Petter (2016) This is why construction is so corrupt. World Economic Forum.
- World Economic Forum (2017) Partnering Against Corruption Initiative: Building foundations for trust and integrity – infrastructure and urban development. A good discussion of progress being made by Mexico
- OECD (2016) Integrity framework for public infrastructure.
- Price Waterhouse Coopers (2014) Fighting corruption and bribery in the construction industry.
These websites have useful material, especially GIACC for addressing corruption at project level:
Global Infrastructure Anti-Corruption Centre (GIACC)
Construction Industry Transparency Initiative (COST)
Open Contracting Partnership (OCP)
Construction, Public Works & Infrastructure: Full Bibliography
Basel Institute of Governance; Collective Action Initiative.https://www.collective-action.com/initiatives/list?title=&field_collective_action_type_value=All&field_sector_tid=51&field_main_country_iso2=All
Carraro, Beatrice (2017) GenieBelt. https://geniebelt.com/blog/construction-prone-corruption
Charbonneau Commission, Quebec (2017) Commission of inquiry on the awarding and management of public contracts in the construction industry.https://www.toronto.ca/legdocs/mmis/2017/gm/bgrd/backgroundfile-106799.pdf
Construction industry of Great Britain (CIOB) (2013) A report exploring corruption in the UK Construction industry. Sept 2013. https://www.ciob.org/sites/default/files/CIOB%20research%20-%20Corruption%20in%20the%20UK%20Construction%20Industry%20September%202013.pdf
Construction Industry Transparency Initiative (CoST) http://www.constructiontransparency.org/the-initiative/objectives?forumboardid=3&forumtopicid=3
Ernst &Young (2014) Managing bribery and construction risks. The real estate, construction and infrastructure industry.http://www.ey.com/Publication/vwLUAssets/Managing_bribery_and_corruption_risks_in_the_construction_and_infrastructure_industry/$FILE/Assurance_%20FIDS_sector_paper_Construction.pdf
Freedman, Lawrence (2013) Strategy: a history.Oxford University Press. https://global.oup.com/academic/product/strategy-9780199325153?cc=gb&lang=en
See review in: https://www.theguardian.com/books/2014/mar/07/strategy-history-lawrence-freedman-war
Gilbert, Alan (2011) Transparency and corruption in public contracting in Colombia. http://www.constructiontransparency.org/documentdownload.axd?documentresourceid=38
Global Infrastructure Anti-Corruption Centre (GIACC) http://www.giaccentre.org
Goldie-Scot, Hamish (2012) Construction sector corruption in Ethiopia. In: Plummer, Janelle (Ed). Diagnosing corruption in Ethiopia. Perceptions, realities and the way forward for key sectors. World Bank. https://issuu.com/world.bank.publications/docs/9780821395318
Harvey, Sarah (2014) Corruption in Construction: Watching Brief launched on construction industry. http://www.harveylawrence.com/corruption-construction-watching-brief-launched-construction-industry/
Hertie School of Governance (2016) The governance report 2016: Infrastructure governance. https://www.hertie-school.org/en/governancereport/govreport-2016/
IMF (2017) Western corruption survey in IMF report. https://www.weforum.org/agenda/2017/12/international-monetary-fund-imf-tackles-corruption
Kenny, Charles (2007a) Construction, Corruption, and Developing Countries. Policy Research Working Paper; No. 4271. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/7451
Kenny, Charles (2007b) Publishing construction contracts and outcome details. World Bank. http://www.constructiontransparency.org/documentdownload.axd?documentresourceid=40
Kenney Charles (2006) Measuring and reducing the impact of corruption in infrastructure. World Bank. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.333.7681&rep=rep1&type=pdf
Khan, Mushtaq, Andreoni, Antonio, Roy, Pallavi (2016) Anti-corruption in adverse contexts: a strategic approach. SOAS Research Online. http://eprints.soas.ac.uk/23495/1/Anti-Corruption%20in%20Adverse%20Contexts%20%281%29.pdf
Matthews, Petter (2016) This is why corruption is so corrupt. World Economic Forum. https://www.weforum.org/agenda/2016/02/why-is-the-construction-industry-so-corrupt-and-what-can-we-do-about-it/
OECD (2016) Integrity framework for public infrastructure.https://www.oecd.org/corruption/ethics/Integrity-Framework-For-Public-Infrastructure-Brochure.pdf
Olaya, Juanita (2010) Integrity pacts in the water sector. An implementation guide for government officials. Water Integrity Network and Transparency International.
Open Contracting Partnership(OCP) https://www.open-contracting.org/wp-content/uploads/2016/05/OpenContracting-2pager-web.pdf
Procurement Watch Incorporated (2009) A study of anti-corruption initiatives in the Philippines’ construction sector. http://www.constructiontransparency.org/documentdownload.axd?documentresourceid=39
Price Waterhouse Coopers (2016) https://www.pwc.com/us/en/forensic-services/publications/assets/pwc-aba-corruption-and-public-works.pdf
Price Waterhouse Coopers (2014) Fighting corruption and bribery in the construction industry.https://www.pwc.com/gx/en/economic-crime-survey/assets/economic-crime-survey-2014-construction.pdf
Pyman, Mark, Eastwood, Sam, Hungerford, Jason, and Elliott, Jasmine (2018) Analysing the anti-corruption approaches of the 26 top-ranked countries: an opportunity for a new generation of strategies. Institute for Statecraft and Norton Rose Fulbright, March 2018.Available at:http://www.statecraft.org.uk/sites/default/files/documents/EMEA_2384_Bespoke%20brochure__Countries%20Curbing%20corruption%20final%20report_V3….pdf
Pyman, Mark, Eastwood, Sam, Hungerford, Jason, and Elliott, Jasmine (2017) Research comparing 41 national anti-corruption strategies. Insights and guidance for leaders. Institute for Statecraft and Norton Rose Fulbright. Available at: http://www.nortonrosefulbright.com/knowledge/publications/147479/countries-curbing-corruption
Pyman, Mark and Kaakar S (2018) Afghanistan’s Radical–and So-Far-Surprisingly Successful–Public Procurement Reforms. Global Anti-Corruption blog March 8, 2018. Accessed 23 Sept 2019 at https://globalanticorruptionblog.com/2018/03/08/guest-post-afghanistans-radical-and-so-far-surprisingly-successful-public-procurement-reforms/
Transparency International (2005) Global corruption report 2005: Corruption in construction and post-conflict reconstruction.https://www.transparency.org/whatwedo/publication/global_corruption_report_2005_corruption_in_construction_and_post_conflict
U4 (2015) Corruption in the construction of public infrastructure: critical issue sin project preparation. https://www.u4.no/publications/corruption-in-the-construction-of-public-infrastructure-critical-issues-in-project-preparation/
Weick, Carl (2001) Making sense of the organisation.Blackwell publishing. https://www.bookdepository.com/Making-Sense-Organization-Karl-E-Weick/9780631223191
Wells, Jill (2015) Corruption in the construction of public infrastructure: Critical issues in project preparation. U4. http://www.u4.no/publications/corruption-in-the-construction-of-public-infrastructure-critical-issues-in-project-preparation/
World Bank (2012) Public Works as a Safety Net: Design, Evidence, and Implementation. Published: November 2012, ISBN: 978-0-8213-8968-3, e-ISBN: 978-0-8213-9461-8. https://doi.org/10.1596/978-0-8213-8968-3
World Bank (2011) Curbing fraud, corruption and collusion in the roads sector. http://siteresources.worldbank.org/INTDOII/Resources/Roads_Paper_Final.pdf
World Bank (1997) Helping countries combat corruption: the role of the World Bank.http://www1.worldbank.org/publicsector/anticorrupt/corruptn/cor02.htm
World Economic Forum (2017) Partnering Against Corruption Initiative: Building foundations for trust and integrity – infrastructure and urban development http://www3.weforum.org/docs/WEF_PACI_IU_Report_2017.pdf.