In an essay in the Global Corruption Report 2005 on earthquake victims and corrupt, shoddy construction, James Lewis writes that in the past 15 years, earthquakes have claimed nearly three quarters of a million casualties, most of which were a direct result of substandard building practices. And while the precise extent of the role of corruption is difficult to ascertain, we can be sure that a significant number of dead and wounded can be attributed to a lethal “marriage of corrupt contractors and corrupt building inspectors.”

In 2002 Transparency International published its first Bribe Payers Index, ranking the countries whose companies most frequently pay bribes and listing the industry sectors that are most severely tainted by corruption. At the top of the list of industries is the construction and engineering sector, scoring more poorly than both the arms industry and the oil and gas sector. For this reason, as well as because of the industry’s scale and its importance to development, the Global Corruption Report 2005 focuses on the construction sector.

Corruption in procurement plagues both developed and developing countries. When the size of a bribe takes precedence over value for money, the results are shoddy construction and poor infrastructure management. Corruption wastes money, bankrupts countries, and costs lives. It is difficult to ascertain just how much money is being wasted. Estimates of the amount lost due to bribery in government procurement put the figure at at least US$ 400 billion per year worldwide. The real cost would also have to take into consideration the cost of maintaining badly constructed buildings, environmental damage and the precarious conditions for people who live in buildings that inspectors have been bribed to approve, even though they fail to comply with safety standards.

Although not confined to any region of the world, the effects of corruption in the construction sector are more onerous in countries that are poor, where a higher proportion of government procurement budgets are targeted for infrastructure. Corruption in large-scale public projects is a daunting obstacle to sustainable development. Corrupt contracting processes leave developing countries saddled with sub-standard infrastructure and excessive debt. This is not only because of the money lost to corruption during the bidding or construction of the project, but also because the very motivation for the project is often to net bribes rather than address a genuine need. The Global Corruption Report 2005 report features many examples of expensive projects that were mothballed as soon as they were completed.

It is important not to merely describe problems, but to come up with solutions. Lessons must be drawn from the colossal corruption cases in the Philippines, Germany, Uganda and Lesotho. The unfolding scandal surrounding the UN-sponsored oil-for-food programme in Iraq highlights the urgent need for strict conflict-of-interest rules and transparent and open bidding processes. Funds being poured into countries under reconstruction, such as Iraq, must be safeguarded against corruption. Transparency must also be the watchword as donors pledge massive sums to reconstruct the countries affected by the Asian tsunami.

Companies and governments both share the responsibility to eliminate corruption in the construction sector. Companies based in OECD countries must fulfil their obligations under the OECD Anti-Bribery Convention and stop paying bribes at home and abroad. With the spread of anti-bribery legislation, corporate governance and anti-corruption compliance codes, there can be no tolerance for managers paying bribes. A promising sign is the addition of anti-corruption as the tenth principle of the UN Global Compact, signed by close to 2,000 international companies. Similarly encouraging is the endorsement of a public anti-corruption pledge by 63 companies from the energy, metals and mining, and engineering and construction sectors at the World Economic Forum in Davos in January 2005. The challenge for companies now is to enforce tough new anti-bribery policies.

When public money is at stake there is an even greater imperative to ensure that it is not squandered by corrupt contractors and officials. TI’s Minimum Standards for Public Contracting provide a blueprint for cleaning up the bidding and selection processes for public projects, which governments cannot afford to ignore. Bidding must be competitive and transparent, and preventive mechanisms need to be introduced, including decent pay and supervision for government staff involved in procurement.

Clean, fair and efficient construction is essential in building stable and safe environments for future generations. We believe that the Global Corruption Report 2005 is an important piece of research in this field. It is a call for a world built, not on bribes, but on fairness and honesty.