Introduction
The construction industry, often regarded as the backbone of economic development, is paradoxically one of the sectors most vulnerable to corruption and bribery. Despite various policies, codes of conduct, and public declarations of integrity, corruption often persists, undermining project quality, safety, timelines, and public trust. But why does corruption continue to fester, and why do conventional methods often fail to curb it?
A) Why Corruption and Bribery Persist in Construction
1. Complex Supply Chains and Multiple Layers
Construction projects involve numerous stakeholders, clients, consultants, contractors, subcontractors, suppliers, and regulators. This multilayered structure creates opportunities for bribes and kickbacks at many points, from procurement and tender evaluations to approvals and inspections.
2. Large Capital Involvement
Projects involve significant sums of money, making them attractive targets for unethical behaviour. A small percentage of a multi-million-dollar contract in the form of a bribe may seem negligible to perpetrators but can have massive consequences on project outcomes.
3. Lack of Transparency
Poor documentation, verbal agreements, and vague decision-making criteria allow corrupt practices to go unnoticed. Many construction companies lack robust systems for recording or tracking transactions in a transparent and auditable way.
4. Culture of Silence and Normalization
In some organizations or regions, bribery is seen as a "cost of doing business." When corruption becomes normalized, reporting mechanisms become weak, and whistleblowers are reluctant to come forward for fear of retaliation or career sabotage.
5. Ineffective Enforcement and Monitoring
Internal audits or ethics committees often lack the independence, authority, or resources to investigate wrongdoing thoroughly. Additionally, some investigations are symbolic rather than substantive, giving the appearance of action without impact.
B) Why It Doesn’t Work in the Long Run
Corruption and bribery may offer short-term gains, but they inevitably compromise:
Corruption is not sustainable. Eventually, it corrodes the ethical foundation of the organization, leads to internal disputes, and attracts regulatory scrutiny. In many cases, companies suffer long-term reputational and financial damage.
C) What Should Be Done to Minimize the Problem
1. Tone from the Top (A Strict One)
Leadership must take a firm stance against corruption. Ethical behaviour should be modelled by top management and incorporated into performance KPIs.
2. Institutionalize Policies
Robust anti-bribery and corruption policies must be formalized, communicated clearly, and integrated into day-to-day operations. They should define:
a) What constitutes bribery?
b) Prohibited behaviours
c) Reporting mechanisms
d) Penalties for non-compliance
3. Employee Training and Awareness
Staff at all levels, including field workers, must receive regular training on recognizing and responding to bribery attempts. Scenario-based sessions can help build moral reasoning and resilience.
4. Implement Whistleblower Protection
Safe and anonymous channels for reporting wrongdoing must be established and maintained, with guarantees of no retaliation.
5. Procurement Transparency
Tender processes, supplier evaluations, and contractor selections must be governed by clear, transparent, and auditable criteria. Digital tools and e-procurement systems can reduce manipulation.
D) Is ABMS Certification the Answer?
Yes but with a caveat.
1) What is ABMS (Anti-Bribery Management System)?
ABMS, particularly ISO 37001, is an international standard that specifies requirements and provides guidance for establishing, implementing, maintaining, reviewing, and improving an anti-bribery management system. It can be applied in public, private, or non-profit sectors.
2) Why ABMS Helps?
- It introduces a structured approach to identifying bribery risks,
- It enhances governance, accountability, and control,
- It increases investor and client confidence,
- It protects the organization from legal consequences by demonstrating due diligence.
However, certification is not a silver bullet. It must be supported by strong internal commitment and follow-through mechanisms.
3) Proactive Risk Assessment
Before corruption occurs, identify where it is most likely to happen.
A strong ABMS starts with assessing risks based on:
- Geographical and political exposure,
- Project scale and budget size,
- Third-party and subcontractor involvement,
- Previous incidents or audit findings
Purpose:
- To prioritize resources and controls where risks are highest,
- To inform policies, procurement strategies, and contract terms,
- To prepare preventive measures before issues arise
Risk assessments should be:
- Conducted regularly (at least annually or when entering a new market/project),
- Reviewed during key project lifecycle phases (design, procurement, execution, closing),
- Aligned with ISO 37001 and enterprise risk management (ERM) frameworks
3) I'm certified!! What Next?
1. Continuous Monitoring
- Internal Audits: Conducted periodically to assess adherence to anti-bribery controls,
- External Audits: Annual or bi-annual reviews by certification bodies,
- Compliance Reviews: Spot checks, data analysis, and third-party interviews.
2. Determining the Root Cause
When a potential bribery incident or control failure is detected, organizations must conduct a root cause analysis to determine:
- What went wrong
- Why it happened
- Where the system, process, or culture failed
This step ensures that the issue is addressed not just superficially but at its core preventing recurrence.
3. Corrective and Preventive Actions
Non-compliances must trigger documented investigations, root cause analysis, and corrective action plans.
4. Stakeholder Engagement
Suppliers and subcontractors must be made aware of the company’s anti-bribery stance and policies. Contracts should include integrity clauses with consequences for violations.
5. Periodic Risk Assessment
Bribery risks must be reassessed based on changes in geography, regulatory environment, project size, or political climate.
6. Ongoing Training
Training is not a one-off event. Refreshers, updates, and role-specific modules must be incorporated into annual plans.
7. Simulated Case Studies
Disclaimer
The following case studies are simulated scenarios developed for educational and illustrative purposes only. Any resemblance to actual persons, organizations, projects, or events, past or present is purely coincidental. These examples are intended to highlight common risk patterns and responses related to corruption and bribery in the construction industry.
1. Complex Supply Chains and Multiple Layers
Case Study: “The Subcontractor Shuffle”
In a government hospital project, the main contractor appointed a series of shell subcontractors linked to one of their project managers. Work was routinely re-subcontracted, causing miscommunication and poor supervision. Despite obvious issues with safety and workmanship, payments were approved because the internal quality assurance engineer was being paid under the table to look the other way.
Impact:
- Cracked floor tiles, unstable door frames,
- Overruns in both time and cost,
- Regulatory red flags due to inconsistent records,
2. Large Capital Involvement Attracts Bribery
Case Study: “The Inflated Bridge”
A regional bridge project had a budget of RM180 million. The tender was awarded to a contractor who promised a “token of appreciation” to several selection committee members. The bid was 12% higher than the lowest technically qualified bidder.
Impact:
- Auditor-General’s Office flagged the discrepancy,
- Public outcry led to suspension of the project,
- Contractor blacklisted; government agency reputation damaged
3. Lack of Transparency
Case Study: “Verbal Approvals Only”
In a mixed-use development, approvals for site variation orders were made verbally. The contractor quietly paid off the site engineer and billed for over RM5 million in undocumented extras. There were no audit trails, only WhatsApp messages.
Impact:
- Internal audit found no written approvals,
- Project Director was reassigned pending investigation,
- Clients demanded full refund and compliance audit
4. Culture of Silence
Case Study: “Keep Quiet or Quit”
A junior site supervisor discovered that electrical wiring was being sub standardly installed due to a cost-cutting deal between the M&E subcontractor and the main contractor. When he raised concerns, he was told to “keep quiet or leave.”
Impact:
- Supervisor resigned and anonymously reported it,
- After media exposure, the project was delayed 8 months,
- The contractor was sued for negligence after a small fire broke out during testing
5. Ineffective Enforcement and Monitoring
Case Study: “The Fake Audit”
An in-house compliance officer completed a “paper audit” for an ISO-required annual review. The checklist was pre-filled, and interviews were skipped. Meanwhile, bribes were actively flowing in the materials procurement division.
Impact:
- Whistleblower reported it to the certification body,
- ISO certification was suspended,
- Clients froze all pending payments until re-audit
6. Leadership with No Ethical Stance
Case Study: “The Director’s Deal”
A construction firm’s Managing Director openly told staff to “play the game” when dealing with authorities and clients. Kickbacks became normalized, with staff accepting “entertainment allowances” from suppliers to push certain products.
Impact:
- Junior engineer leaked documents to media,
- Several public clients cut ties,
- Key staff left, citing toxic leadership and legal risks
7. Failure to Institutionalize Policies
Case Study: “Policy? What Policy?”
Despite having an Anti-Corruption Policy document, it was never socialized, trained, or enforced. A site agent accepted RM10K to expedite inspection sign-offs, causing later structural issues in a residential block.
Impact:
- Building owners filed lawsuits,
- Company settled with RM4 million payout,
- Insurance provider declined coverage due to internal failure
8. Weak Whistleblower Protection
Case Study: “Whistleblower Retaliation”
A procurement assistant exposed an inflated invoice scheme and was subsequently transferred to a remote site without internet access. The company later claimed it was part of “routine rotation.”
Impact:
- The whistleblower filed a complaint with MACC,
- The company was investigated and fined,
- ABMS certification was denied for “failure to uphold whistleblower protection”
9. Lack of Transparent Procurement
Case Study: “The ‘Preferred’ Vendor”
One supplier continued to win supply contracts despite higher pricing and poor delivery. A forensic procurement review later revealed that the vendor had been entertaining project staff with trips and gifts.
Impact:
- Vendor contract cancelled,
- Procurement team reshuffled,
- Company committed to e-tendering platform rollout
10. ABMS Introduced - But No Follow-Through
Case Study: “Certified but Corrupt”
A civil engineering firm achieved ISO 37001 (ABMS) certification but treated it as a checkbox exercise. No internal audits were performed, and training was skipped to “save time.” Bribery quietly continued under the surface.
Impact:
- Internal whistleblower triggered a surprise audit,
- Certification body withdrew ISO status,
- Client dropped the firm from shortlist for a major rail project
11. Effective Post-Certification Monitoring (Positive Example)
Case Study: “The Turnaround”
A Malaysian construction company faced multiple bribery allegations in the past. After serious reflection, it implemented ISO 37001, conducted quarterly audits, established an ethics hotline, and rotated procurement staff every 12 months.
Impact:
- Staff confidence and client trust increased,
- No bribery cases reported in 3 years,
- Successfully won government contracts due to enhanced reputation
E) WHAT THESE CASES TEACH US?
Each case reflects a broader principle:
- Without systems, corruption thrives,
- Without culture, systems fail,
- With both, trust and performance grow.
Implementing ABMS is a powerful step, but true transformation lies in consistency, integrity, and leadership accountability.
F) CONCLUSION
Corruption and bribery in the construction sector are deeply entrenched but not insurmountable. While external forces such as enforcement and regulation play a role, the real change must start from within through leadership, policies, culture, and systems. ABMS certification provides a powerful framework, but it is the continuous commitment to ethical behaviour and accountability that will define long-term success. In the end, integrity isn't just good ethics, it's good business.
