May 30, 2023

Corruption in the construction sector – how to ensure compliance

News Article

Corruption poses a threat to businesses across all industry sectors but construction has long been acknowledged as being especially susceptible.

The construction sector consistently receives unfavourable rankings in corruption indexes, and sadly UK construction businesses, regardless of their size, are not immune.

According to a survey conducted by the Chartered Institute of Building, nearly half of the professionals interviewed expressed the belief that corruption is prevalent within the UK construction industry.

Here, Adam Davis, a Supervising Department Director with Palmers and Head of our Construction Law team, explains why the sector has experienced more than its fair share of issues and how businesses can avoid being caught up allegations of corruption:

Why is construction vulnerable to corruption?

The susceptibility to corruption is particularly high in the construction industry due to the often-complex nature of the projects and the multiple stakeholders that are involved.

Construction projects can usually be of high value which brings with it a natural element of risk and is also much easier to hide costs.

Common forms of corruption in this sector include bribery, bid-rigging, collusion, and kickbacks. Ultimately, any form of corruption will have long-lasting, damaging consequences.

It can cause delays to projects, inflated costs, substandard project execution, and a lack of fair competition. If not kept in check, corruption could eventually see public trust in the sector crumble completely.

The below information should help you in the battle to prevent corruption and help keep the construction industry as a whole on a fair footing, as well as avoid any penalties for liability.

Adhering to current legislation

The Bribery Act 2010 has in place a strict legal framework that carries a liability regime and severe penalties for misconduct.

The Act requires companies to assess risks of corruption within its supply chain, implement control measures and update policies and procedures when necessary.

Under the legislation, a company can be criminally liable if a person under its employment bribes another person so that they can obtain or retain business for the company.

The penalties for this offence can be severe. However, your company can provide a solid defence if it can show that it was adhering to the legislation and had adequate procedures set in place to prevent such criminal activity.

Anti-corruption training

Training sessions for employees including workshops and online courses and programmes are an effective tool to prevent corruption in the construction sector.

More employees that are knowledgeable in anti-corruption measures will increase the likelihood of whistleblowing, or better still, act as a deterrent to stop would-be perpetrators from committing any form of criminal activity.

Due diligence

Background checks and extensive due diligence can be carried out on any employee or contractor.

This can be more pertinent for construction projects where companies feel there is more risk involved, such as a high-value contract or if the project is taking place in an area where known corruption has occurred previously.

Using Building Information Modelling (BIM)

Building Information Modelling (BIM) uses technology to create a coordinated digital description of every aspect of a built asset. BIM is handy for creating and managing information on a construction project and provides transparency throughout.

This transparency is a useful tool when it comes to dealing with corruption. All aspects of the project can be viewed at any point, meaning there is also greater accountability for any actions that may not seem legitimate.

Tackling corruption in the construction sector requires all stakeholders to pull together.

By adhering to legal frameworks, promoting transparency, and taking advantage of the technology available, the construction sector can work towards eliminating corruption.

This will ultimately lead to a more resilient, efficient, and trustworthy construction industry that benefits the UK economy.

Need more advice on corruption in the construction industry? Contact us today.