Fraud commonplace in construction sector: report
A report says that the global cost of fraud and corruption in the sector could be in tune of $860 bn at present, and could rise to $1.5 tn by 2025
New Delhi: Fraud in the construction business, according to a report by Grant Thornton, “is commonplace and in some cases endemic across Australia, Canada, India, the UK and the US ”.
The report says that the global cost of fraud and corruption could be in tune of $860 billion at present, and could rise to $1.5 trillion by 2025.
According to the Association of Certified Fraud Examiners 3.4% of all reported fraud cases, over a two-year period up to December 2011, were attributable to the construction industry.
Major frauds in construction industry include billing fraud, bid rigging, money laundering or tax avoidance, theft or substitution of materials, bribery or corruption, false representation (of documents, figures, certificates), change order manipulation and fictious vendors.
In India, bid rigging, bribery and money laundering are most rampant, while false representation, bid rigging and change order manipulation are prominent in the UK. Billing frauds constitute biggest portion of all frauds committed in construction industry for the US.
The report said that since a construction project has large number of stakeholders, the likelihood of a fraud being committed is that much higher, but risk of an insider committing fraud is the highest.
“The greatest threat of fraud comes from within—from employees and senior management,” said David Malamed, Fraud expert Grant Thornton Canada in the report.
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First Published:15 Nov 2013, 11:41 PM IST
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