Build Magazine August 2015

Build Magazine 16 hen taken together with the com- plex and fragmented contractual nature of construction projects (reliant as they usually are on third party contractors and consultants), the prospect of regular interaction with govern- ment officials and the global reach and active enforcement of anti-corruption legislation, the construction industry can present a daunting corruption risk profile. Examined here are the reasons why why both companies and individuals should be alive to corruption risks as well as what those risks look like in practice and the pro-active steps available to identify, mitigate and manage those risks. Criminal exposure A failure to properly identify and mitigate corruption risk brings with it the potential for criminal investigation and prosecution of both a construction company and its individual managers and directors. Paying and receiving bribes (in both the private and public sector) and bribing foreign public officials are illegal under the Bribery Act 2010 (the “Bribery Act”). Significantly, section 7 of the Bribery Act also provides that a company can be held liable for bribery, wherever in the world it takes place, that is com- mitted by associated persons acting on its behalf (e.g. third party contrac- tors), even where the company had no awareness of the bribery. The only defence is for a company to show that it had adequate procedures in place to prevent bribery being committed by those third parties associated with it. The consequences of a successful criminal prosecution can be dramatic and may include: • the imposition of unlimited fines; • imprisonment; • director disqualification; • the confiscation of assets; • debarment from participating in, or tendering for, government con- tracts; • a diversion of management and board time; and • reputational damage and adverse media attention. These risks are real. The UK Serious Fraud Office and the US Department of Justice have both successfully prosecuted, and levied huge fines on, household names in the construction sector, including, amongst others: Balfour Beatty plc; AMEC plc; Mabey & Johnson Ltd; Technip and M.W. Kellogg Limited. Corruption Risk in the Construction Industry Corruption risk within the construction industry is high. A 2013 survey from the Chartered Institute of Building found that 49% of the construction professionals surveyed believed corruption to be common within the UK construction industry. These findings reinforced Transparency International’s (the leading global anti-corruption organisation) 2011 Bribe Payer’s Index which ranked the construction sector as having the highest propensity, out of 19 industry sectors, to pay bribes abroad. W