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Construction Sector Corruption in Ethiopia 241
corruption cannot be “solved” by looking at the problem from a single
perspective.
Corruption in Construction
International Perspective
As previously noted, the public works and construction sector is consistently
considered to be one of the three most corrupt of all sectors,
alongside defense and the extractive industries. Globally, it has been
estimated that corruption accounts for at least 10 percent of turnover
in the construction sector, or well over US$1 billion per day (ASCE
2005).
Both the problem and its effects are most acute in developing countries,
where construction sector corruption can account for leakages of
20 percent or more (Campos and Pradhan 2007, 159). In many countries,
construction-related corruption underpins what is often an opaque
approach to funding the political process and is related to other forms of
crime. As a result of corruption, project planning is distorted, construction
quality undermined, maintenance neglected, and professional standards
compromised.
In the roads sector, the classic pattern of corruption in many countries
is that the consultant pays a percentage of consultancy costs in bribes,
while the contractor pays a higher percentage of the (much higher) construction
costs, generally in return for preferential treatment during the
procurement process. Through various forms of fraud, including attempts
by the contractor to recover his outlay, vested interests then divert a further
proportion of construction costs. The result can be that, even when
proper procurement procedures have apparently been followed and when all
financial audits appear to be in order, it is quite possible for as much as
25 percent of the project resources to have been lost in corruption. A
postconstruction technical audit may be able to identify some of the
fraudulent activities such as the use of substandard materials, but otherwise
most of the corruption cannot necessarily readily be detected.
In the past, some donors and many governments have turned a blind
eye to, or even encouraged, such corruption. Since the late 1990s, however,
a consensus has emerged that corruption not only harms the poor
but is also bad for business, for national development, and for international
security. The growing influence of international instruments such
as the United Nations Convention against Corruption reflects this consensus.
Some responsible international companies have now reformed