Economic crime hits 40% of firms working overseas

Contractors working in central and eastern Europe have been warned to be more vigilant after a report revealed almost half of firms working in the region had been asked to pay bribes.

The PricewaterhouseCoopers report on fraud in global construction, which surveyed more than 300 companies working in 40 countries, revealed that more than 40% of firms had been victims of economic crime in the last two years.

The crimes include theft, embezzlement, corruption, bribery, money laundering and intellectual property infringement. PwC said that one-quarter of those surveyed had been approached to pay a bribe and added that the problem was particularly prevalent in central and eastern Europe, where 41% of respondents said they had been asked to pay a bribe.

The report added that 37% of firms believed they had experienced business setbacks due to corruption by competitors. The average financial loss due to economic crime per construction company was £1.5m, up sharply from 2005, when the figure was around £600,000.

Jonathan Hook, global engineering and construction leader at PricewaterhouseCoopers said: “As construction groups become more global and expand into new markets, such as central and eastern Europe, they need to be even more vigilant as to what is happening in overseas locations and be wary of the reputational damage that can occur when bribery and corruption issues emerge.”

Hook said that although criminal charges were pressed in almost half of all cases, one-fifth of construction firms chose not to pursue wrongdoers.

He said: “Groups need to invest more in preventative measures and demonstrate a zero-tolerance culture.” Hook added the risk of firms becoming victims of fraud will increase as the industry heads into an economic downturn.

Commenting on the report, a spokesman for the Construction Confederation said: “Economic crime is clearly a concern for UK contractors operating overseas and we recommend firms follow the guides and advice offered by the Anti-Corruption Forum which helps to highlight actions which can be taken to reduce the risk of corruption on construction projects.”