Building Foundations Against Corruption Recommendations on Anti-Corruption in the Infrastructure & Urban Development Industries

Industry Agenda in collaboration with DeloittePrepared by the Project Task Force of the Infrastructure & Urban Development Industries in collaboration with the Partnering Against Corruption Initiative (PACI) Building Foundations Against CorruptionRecommendations on Anti-Corruption in the Infrastructure & Urban Development IndustriesJanuary 2015 World Economic Forum91-93 route de la CapiteCH-1223 Cologny/GenevaSwitzerlandTel.: +41 (0)22 869 1212Fax: +41 (0)22 786 2744Email: contact@weforum.orgwww.weforum.orgWorld Economic Forum® © 2015 – All rights reserved.No part of this publication may be reproduced orTransmitted in any form or by any means, includingPhotocopying and recording, or by any informationStorage and retrieval system.REF 090115 3Recommendations on Anti-Corruption in the Infrastructure & Urban Development IndustriesContents4 Foreword by the World Economic Forum5 Foreword by the Project Champions6 Contributors 7 Recommendations of the Task Force 10 Contact Information 4Building Foundations Against Corruption Foreword by the World Economic ForumIn many countries, corruption is among the greatest barriers to economic and social development. Although bribery and other forms of corruption are risks in almost every industry sector, companies operating in the engineering, construction and real estate industries face unique challenges due to the nature of their business. Among others, factors such as operations in countries that lack transparent business practices; the enormous amounts of money at stake in large-scale projects; the complex procurement processes; and difficult-to-control supply chains make transparency a key business risk for the industry. The Trace International Global Enforcement Report 2012 estimates that 10% of all global enforcement activity since the introduction of the US Foreign Corrupt Practices Act in 1977 has related to the engineering, construction and real estate industries. Given the growing worldwide demand for infrastructure and real estate projects and the economic value generated by such projects, the engagement of the engineering, construction and real estate industries in the fight against corruption is clearly of the highest importance. This collaborative project between the Infrastructure & Urban Development community and the Partnering Against Corruption Initiative (PACI) of the World Economic Forum seeks to further industry-wide engagement on anti-corruption solutions in a way that will mutually benefit both businesses and public organizations. The overall goal is to level the playing field. Commenced in 2014 at the World Economic Forum Annual Meeting, the project brings together leading infrastructure, real estate, construction and service business. It aims to achieve chief executive officer level commitment to collaborate with interested governments in developing a framework for open and more transparent practices. It endeavours to develop industry recommendations that support anti-corruption strategies to increase customer and shareholder value. It also seeks to foster dialogue with governments, including authorities on a local level, as many infrastructure projects are related to local administrations. To date, this project has generated three key outcomes: – An industry survey on corruption risks was completed by 50 of the world’s leading real estate, construction, engineering, consulting and service providers. – Stakeholders at risk and the key corruption risks during the life cycle of an industry capital project were identified.– Industry cases on corruption were collected, to illustrate what actually happens in the field. The insights generated in the projects were condensed into recommendations to the industry and distributed among the members of the Project Task Force.All outcomes are available on the Forum’s online collaboration tool TopLink, and a summary can be found on the homepage of the Forum’s Infrastructure & Urban Development Industries website (http://www.weforum.org/industry-partners/groups/iu-infrastructure-urban-development). The Task Force has decided to continue this collective action project in 2015 and has identified corruption in permitting and licensing as a key risk area. The project will identify concrete corruption issues in permitting and licensing and come up with solid mitigation strategies. This project would not have been possible without the collaboration of various stakeholders. The contributions and support of the Project Champions and their companies are gratefully acknowledged. Many thanks are expressed to the Advisory Expert Committee and the Project Sponsor, Deloitte. Finally, grateful recognition is extended to the Forum for enabling this project. Pedro Rodrigues de AlmeidaDirectorHead of Infrastructure and Urban Development IndustriesElaine DezenskiSenior DirectorHead of Partnering Against Corruption Initiative 5Recommendations on Anti-Corruption in the Infrastructure & Urban Development Industrie