Combatting Corruption

As much as 400 billion dollars, or 10% of annual spending on engineering and construction worldwide, is thought to be lost to corruption. Internationally, publicly-funded construction projects, including roads, are among the most corrupt of all sectors, sharing the podium with defence and the oil industry.  In  many developing countries, even when no wrongdoing can be detected, 20% to 40% of the value of a construction project can still be lost through bribery and fraud. Economic and social costs are higher still. Planning decisions are skewed, quality compromised, maintenance neglected, and economic viability undermined. The result is wasted investment, increased indebtedness and continued suffering of the most vulnerable.

Up to ten years ago corruption was widely accepted as being a regrettable but inevitable feature of international development. Western companies using (often through third parties) corrupt practices were unlikely to be penalised by their own governments. Sometimes they were even offered tax incentives to offset the cost of bribes. Officials within many host governments saw international development projects as their major source of funds for political and personal gain, while staff in international financial institutions at worst participated in, and at best turned a blind eye to, corrupt practices. It was even argued that corruption was necessary in order to oil the wheels of economic development. Those speaking out against corruption were generally the poor themselves, with little voice and less influence.

In the face of increased scrutiny, it eventually proved impossible to go on defending this position. Since the mid-1990s we have become aware that corruption is not only bad for the poor, but bad for development in general, bad for government, bad for peace, and bad for business. The 1997 OECD Convention on Combatting Bribery of Foreign Public Officials marked the starting point of a process that has now transformed the international legal position, to the point that there remains almost no jurisdiction in which bribery, fraud or other forms of corruption are viewed as acceptable. The UN Convention against Corruption, which entered into force in 2005, provides the basis for international cooperation on issues of prevention, criminalisation, and asset recovery. In Africa a specific focus on combatting corruption forms a key component of the Peer Review Mechanism formulated under NEPAD, the New Partnership for Africa’s Development.

Corruption still remains a major problem in road construction and maintenance, with globalisation having perhaps exacerbated the problem. Though bribery, intimidation and fraud remain rife within the sector, they hide themselves beneath a veneer of apparent compliance using closely specified procurement and financial management procedures.

In contrast to the necessary, but in themselves inadequate, regulatory approaches favoured by donors, we now have sources of practical guidance and tools to reduce the risk of corruption. Most of these build on the growing convergence of views between the private sector, civil society, and host governments. Some of the best initiatives have been developed jointly by civil society and the private sector, and include the Principles for Countering Bribery, of Transparency International (TI), and the UN Global Compact,  Specific tools developed for the construction sector include the FIDIC Business Integrity Management System (designed for engineering consultants),and various practical tools developed by Transparency International to fight corruption at the project or programme level.

This page has been prepared with support, in a personal capacity, from Hamish Goldie-Scot, member of the UK Anti-Corruption Forum.