Director General’s speech > Workshop for Professionals of the Construction Sector > Thursday, 10th of November 2016 > ICAC Lecture Theatre
Mr Bunjun, Chairperson of the Construction Industry Anti-Corruption Committee
Mr Tahalooa, Member of the Procurement Policy Office
Mr. R. Bablee, Executive Director, Transparency Mauritius.
Professionals of the Construction sector
Ladies and Gentlemen
Good afternoon and welcome to this workshop organised by the ICAC in collaboration with the Construction Industry Anti-corruption Committee.
The main objectives are to enable professionals of the construction sector to recognise, resist, reject and report corruption; identify possible malpractices/corrupt practices prevalent in the construction industry and suggest ways and means of eliminating them.
As you are aware the ICAC is mandated to lead the national fight against corruption through a three-pronged strategy based on investigation, prevention and education, encompassing both the reactive and proactive modes.
Ladies and Gentlemen
The Construction Industry Anti-Corruption Committee (CIACC) was set up in 2014 under the aegis of the ICAC following a workshop for the business sector. The CIACC comprises stakeholders of the construction industry and aims at devising effective preventive strategies to eliminate corruption and/or the perception of corruption in the sector.
The Committee has come up with the following proposals that are being discussed:
• the review of private sector organisation’s Code of Conduct,
• corruption prevention measures in private sector organisations
• the adoption of the Integrity Pledge.
• empowerment of would-be professionals anti-corruption and related issues with the collaboration of tertiary education institutions.
Ladies and gentlemen
As you are aware, corruption in construction is not a problem unique to developing countries. Industrialised nations from Japan to the United States have faced continuing problems in this sector.
A recent study (quoted in K & L Gates “Biggest Risk of Corruption in The Construction Industry – The Global Picture, 2014) has predicted that global construction output will increase by more than 70%, to US$15 trillion per year worldwide, by 2025. The dominant sources of this growth will be three countries in particular, China, India and the U.S., with much of the remainder in the emerging markets.
Furthermore, according to the Global Corruption Report (2005), More than US $4 trillion is spent on government procurement annually worldwide. From the construction of dams and schools to the provision of waste disposal services, public works and construction are singled out by one survey after another as the sector most prone to corruption – in both the developing and the developed world.
According to a report published by K & L Gates “Biggest Risk of Corruption in The Construction Industry -The Global Picture, 2014” the most common risk areas for the construction sector have been identified as:
A. Permits, licences and the regulatory environment
C. Facilitation payments, tender process and interaction with government officials
D. Kickbacks to main and subcontractors
E. Cost-cutting on building materials
F. Third-party intermediaries and unlawful subcontracting
G. Cartel behaviour
Ladies and gentlemen, the question remains? What can we do?
Transparency International has pioneered the no-bribes Integrity Pact, which includes sanctions such as blacklisting if a bidder for a public contract breaches the no-bribes agreement. Now used in more than 20 countries around the world, the Integrity Pact is increasingly being used by multilateral development banks, a major breakthrough that will bring tremendous benefits to ordinary people in the developing world. On the other hand, Transparency International’s Minimum Standards for Public Contracting provide a framework for preventing and reducing corruption based on clear rules, transparency and effective control and auditing procedures throughout the contracting process. The standards focus on the public sector and cover the entire project cycle, including needs assessment, design, preparation and budgeting activities prior to the contracting process, the contracting process itself and contract implementation.
International financial institutions have also taken steps to implement reforms to prevent corruption. The World Bank, for example, has started to blacklist companies known to be corrupt. While this is significant progress, it is essential to ensure the adoption of debarment systems by all local and regional development banks. All national and international financial institutions have a special responsibility to carry out due diligence on projects and companies for which they provide funding.
As a vital activity for development and one that frequently falls victim to failures of governance, publicly-financed construction could benefit considerably from improved oversight. One tool to provide such oversight as advocated by the Construction Sector Transparency (CoST) Initiative uses transparency in contracting and implementation to improve the capacity of citizens and beneficiaries to ensure that they are getting what they paid for from projects and contracts. The CoST Initiative, building on the experience and success of countries such as Colombia in publishing contracting details, provides a model for improving transparency and oversight in the sector.
An effective fight against corruption within the construction sector requires a synergy of efforts from the Government, the private sector, company shareholders, professional bodies and civil society organisations in exposing and combating malpractices and corruption. There is a need for organisations in the construction sector to put in place a robust anti-corruption compliance framework comprising a risk assessment programme, development of a corporate anti-corruption policy, implementation of anti-corruption policies and controls and last but not the least implementation of anti-corruption financial controls.
Ladies and Gentlemen
Allow me to conclude by saying that as we look ahead, let us realise that we cannot afford to fail in the fight against corruption. Too much is at stake. Nor can we despair, for success is possible.
I thank you for your attention and wish you a fruitful workshop.