Text size:

  • Small
  • Normal
  • Large
A report by consultancy Grant Thornton says fraud and corruption in the global building industry must be eradicated to keep the sector growing. Paulo Vecina /The National
A report by consultancy Grant Thornton says fraud and corruption in the global building industry must be eradicated to keep the sector growing. Paulo Vecina /The National

Call to root out fraud and corruption in global construction industry

The 'Time for a new direction: fighting fraud in Real Estate and Construction' report, published by business consultancy Grant Thornton, calls for urgent action on the issue.

DUBAI // The UAE can learn lessons from a report into fraud and corruption in the global building industry. The report says it must be eradicated to keep the sector growing.

Time for a New Direction: Fighting Fraud in Real Estate and Construction, published by consultancy Grant Thornton, calls for urgent action on a problem that is estimated to cost companies from 5 to 10 per cent of revenues, or about US$1 trillion (Dh3.67tn) worldwide.

“More companies need to recognise that fraud and corruption has a real cost,” said Danny McLaughlin, partner and head of the fraud and forensic division at Grant Thornton UAE.

“Corruption and the payment of commissions is often seen as the cost of doing business. This does not have to be the case.”

Grant Thornton said the UAE is not exempt from fraud threats. It is a pervasive issue and can cost business greatly.

With Dubai making a strong case to host Expo 2020 and Qatar preparing for the Fifa World Cup in 2022, there has been a resurgence in building in the GCC.

The report followed research in Australia, Canada, India, the US and the UK. It said fraud and corruption posed significant threats to building companies’ finances and reputations, and could hinder growth.

It also recommended measures to tackle the problem.

Building companies should ensure they are up to date with information technology.

Frauds should be prosecuted as a deterrent and companies should introduce an internal process to find the best way of dealing with the problem.

“In business, information technology and the internet offer both threats and opportunities,” Mr McLaughlin said.

“Better access to information and data offers great improvements in efficiency and obtaining value for money, but fraudsters can also misuse such technology.

“From a business perspective, the use of data analytics can help not only to identify and thereby prevent fraud, but also allows companies, particularly in the construction sector, to spot poor procurement or contracting practices.”

The report says with the building industry continuing to recover from the global financial crisis, incidence of fraud will also increase.

Companies became more diligent with their finances during the downturn but this level of prudence is now more difficult and arguably less of a priority, said Grant Thornton.

“As a first step, boards should get the subject of fraud on their agenda and board members and non-execs should take real ownership of the issue,” Mr McLaughlin said.

nhanif@thenational.ae

Back to the top

More articles


Editor's Picks

 An Egyptian Orthodox Christian priest give communion during the Palm Sunday service inCairo, Egypt. Mohamed El-Shahed / AFP

Region in focus - April 18, 2014

The best images of the last seven days from around the Gulf and across the Middle East.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

Video: Local reactions to a national fishing ban

A federal fishing ban has been imposed by the UAE federal government, but local authorities are taking diiferent approaches to implementing the ban. Two fishermen tell two very different sides of the story. Produced by Paul O'Driscoll

 Hamburg players leave the field after the match against Borussia Moenchengladbach on March 30, 2014. AFP

Hamburg the dinosaur’s time may be up in Bundesliga

Ever-present for 51 years in the German top-flight, Hamburg face the prospect of relegation, writes Ian Hawkey.

 The new Bentley GT Speed convertible on display at a press event of the New York International Auto Show. Jason Szenes / EPA

In pictures: Hot cars at New York International Auto Show

With more than 1 million visitors annually, the New York International Auto Show is one of the most important shows for the US car industry. Here are some of the vehicles to be shown in this year’s edition.

 The cast of Fast & Furious 7, including Michelle Rodriguez and Vin Diesel, centre, on set at Emirates Palace in Abu Dhabi. Jeffrey E Biteng / The National

Fast & Furious 7 filming in full swing at Emirates Palace

Filming for Fast & Furious 7 has started and we have the first photos of the cast and crew on set at Emirates Palace hotel this morning. Visitors staying at Emirates Palace say they have been kept away from certain areas in the grounds.

Events

To add your event to The National listings, click here

Get the most from The National