A recent article published by Global Financial Integrity highlights the problems faced by the Peruvian healthcare system during the Covid-19 pandemic and which, according to the article "was already in crisis due to the lack of adequate infrastructure and equipment, shortage of professionals, and bureaucratic procedures plagued by corruption".  It points out the role that corruption in the construction sector played in the crisis, with hospital infrastructure projects being delayed and companies that won major construction project bids being directly connected to those involved in high profile corruption cases.

It shines a light on the construction sector which has in the past been found to be one of the most corrupt industries by Transparency International.   Whilst many steps have been taken since then to try to help reduce corruption, there is still a steady stream of bribery and corruption cases being brought to courts globally which feature the construction sector and related procurement and bidding processes. For example, recently we have seen publicly-reported cases brought against individuals and companies  in Thailand, UK, Brazil, USA , India and China - the problem is global in nature.

For companies operating in the sector, the challenges are exacerbated by a number of factors including

• Supply chains can be complex so it is often difficult to understand ultimately with whom you are doing business
• Values  of projects can be high making it easier to hide payments and obscure the reasons for those payments
• Large infrastructure projects are often government driven or have a licensing or approval process that relies upon government. This can lead to interference by corrupt officials or those with close connections to the authorities.
• Conflicts of interests can flourish as relationships between parties involved in procurement, bidding and supply chains are often close and can stretch back generations.

There are however a number of pragmatic first steps that can be taken to help companies reduce the risk of being embroiled in a corruption scandal.

These include but are not limited to

1. Implement a robust training and awareness  program for all staff, role based where possible, covering anti-bribery and corruption policies and procedures, red flag indicators and guidance on what to do if they suspect bribery or corruption is occurring. Employees should also be made aware of the personal liabilities that  could apply to them.
2. A whistleblowing process should be put in place so that employees can report concerns anonymously, safe in the knowledge that they will not be identified.
3. There should be an adequate investigative capability so that whistleblowing disclosures can be followed up, and be seen to be followed up, effectively and diligently.
4. Technology should be used to help identify red flags in procurement  and finance systems. 
5. Supplier due diligence should be conducted to identify potential risks in the supply chain. This due diligence should be refreshed on an event driven and periodic basis.

These steps shouldn't be viewed in isolation. For them to really add value they should form part of a comprehensive suite of anti-bribery and corruption controls - however they are a good starting point.

If you'd like some help to think about anti-corruption training, supply chain due diligence, whistleblowing or controls please contact Neal Ysart, Lead Regulatory & Investigations Advisor  at neal.ysart@clydeco.com   /  Tel: +971 55 138 9250  or your usual Clyde & Co point of contact.