Addressing Infrastructure Corruption Today

Addressing Infrastructure Corruption Today

This December, on International Anti-Corruption Day, the members of the World Economic Forum’s Infrastructure and Urban Development Partners community delivered a strong statement on their commitment to fight corruption across the engineering, construction and real estate sector industries. The group pledges to build on the achievements of the World Economic Forum’s Partnering Against Corruption Initiative (PACI) to raise business standards and contribute to a more competitive, transparent, accountable and ethical business society in order to create a level playing field to improve the world.

In the 10 years since PACI’s launch, the number of companies that have signed on has increased exponentially, to include a number of names from different sectors. Colliers International was an inaugural member—the first professional services firm and the only commercial real estate firm to sign on. And in that time it has become increasingly clear that corruption is a global crisis that we must address—and overcome—in order for the majority of the world population to see benefit from the great progress and growth of wealth that the top-tier of earners have been able to achieve. In the 2014 Corruption Perceptions Index from Transparency International, which was just released, two-thirds of the countries graded scored dismally, with less than 50 out of 100 on a scale of anti-corruption.

According to the Organisation for Economic Co-operation and Development’s (OECD) very first Foreign Bribery report, released last week, two-thirds of all corruption was found in just four sectors; construction is one of those (the other three are: extractive, storage, and information and communication). This ties the construction sector as the second-most corrupt area of business. When corruption mars the process of construction—or ahead of it in the development chain, in engineering—it raises the prospects of very real danger for everyone involved due to compromised structures that have a higher risk of failure. We’ve seen the consequences of ethically questionable engineering and construction result in horrendous disasters that have meant serious destruction, economic damage—even, in some very dire cases, loss of life.

And though the damages may seem less tangible, real estate, too, is closely tied with corruption in many areas of the world, cited as a common means for hiding funds, dealing with shell companies and masking financial improprieties. It also affects living standards—resulting in higher prices for property purchase and rentals, which for many on the spectrum of low-to-middle-wage earners can be the difference between being able to afford safe shelter and not.

The goal of the WEF Infrastructure and Urban Development Partners is to create the conditions that will allow for corruption-free infrastructure, engineering, construction and real estate value chains. In order to achieve these important objectives, the partners have pledged to:

  1. Continue the Collective Action project and collaborate in building cross-industry and public-private coalitions to address corruption issues such as in permitting and licensing in selected key regions, contributing to creating a level playing field and ultimately improving their sectors’ competitiveness.
  2. Increase government interaction in key countries to address industry concerns such as public procurement and tendering, permitting and licensing, and reporting mechanisms as well as to promote mutual awareness creation in public and private institutions.
  3. Share insights on corruption risks and good practices more broadly, collaborate in building cross-industry and public-private coalitions with the real estate and construction industries, and enhance and evolve their internal compliance programs, practices and benchmarking to prevent and manage corruption risks.

The partners are calling on all infrastructure, engineering, construction and real estate stakeholders to join these efforts by:

  • Supporting collective action and dialogue in key regions and seeking collaboration and partnerships to drive corruption out of the system.
  • Supporting the PACI principles and becoming PACI signatories and engaged community members, participating in global and local initiatives.
  • Contributing to the PACI global transparency and anti-corruption agenda to advance a level playing field across industry sectors and communities.

Looking to the year ahead, stand up for what’s right and take action to break the corruption train.

Doug Frye is a Project Champion for the WEF Commitment to Action on Corruption. He is Global President and Chief Executive Officer of Colliers International, the first professional services firm and the first commercial real estate firm to sign the World Economic Forum’s Partnering Against Corruption Initiative three years ago.

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