I’ve often seen corruption in fictive accounts of the construction industry and I’ve heard of actual cases several times but I wonder if the general impression I have is inaccurate, accurate or accurate but only for the past.
Is the construction industry particularly prone to corruption? If so, why? Is it chiefly government construction that’s prone or is private construction as well?
What forms does construction industry corruption take?
What means have been most effective in reducing corruption in the construction industry?
There is corruption in the industry-mostly in large cities (like NYC). Many of the construction worker’s unions are mob controlled…and they use their muscle to fix prices, extort bribes, and steal money (using no show jobs). Its basically an operating tax to do business.
Also, I’d like to clarify: are we talking about construction in the US? Or worldwide? Because corruption levels are going to vary wildly… for example I think it’s obvious from the damage in Haiti during the recent earthquake that their construction industry was extremely corrupt.
A friend of mine helped handle a case against a group of concrete ready-mix companies in Indiana several years ago. The companies had colluded to raise prices for concrete in the area. The case was a big deal, with significant jail time and fines for certain individuals, and very large fines for the companies involved. IIRC, the case was brought to officials’ attention by an informant - the owner of one concrete company who was approached by conspirators and decided that he could not, in good conscience, participate in their price-fixing scheme.
Just google for the construction corruption probe being held in Quebec over the last few months - 2.5% of every contract kicked back through the system, independent contractors it was “suggested” they stop bidding if they did not cooperate, 2 mayors resigned, one city engineer showed up to the enquiry with $100,000 cash to return, a part of the money he received, recently released (from USA) Mafia boss forced to testify in Quebec…
How cite does this need to be?
My brother in law who grew up there said it was common knowledge that without the right bribes, you spent years trying to get your renovations approved in NYC.
Where there’s a river of money flowing by and the people handing it out are not the ones who own it, everyone is going to try to dip their cup into the flow. That’s how Wall Street works, that’s how the mafia works, that’s how the recording industry and Hollywood work, that’s how government consulting works.
I’ll be the contrary voice I suppose. I work for a contractor in NJ who mostly does work for state agencies (DOT, NJ Transit, Port Authority, etc), occasionally for local municipalities, and rarely for private companies.
As always you need to define what you consider to be corruption. Basically I’m going to consider it to be when there’s some sort of collusion between a government official and a private company or person. So things like lobbying, earmarks, “Buy America” clauses, minority business requirements or other political shenanigans I’m ignoring. Or even things like flat out fraud I’m excluding which while illegal doesn’t involve any government wrong doing.
In my experience at the state level there is little if any outright corruption. The amount of oversight and documentation required, especially if federal money is involved, is enormous. Other than certain emergency work, nearly all state level work is done through public bid openings where the lowest bidder is awarded the contract. There is no leeway for an agency to give the work to a preferred contractor.
At lower levels of government, county and especially municipal levels, there is more opportunity for shady dealings to occur. One there is less oversight and two, since the sums are generally smaller so long as people don’t get stupid greedy, there is less chance to get caught. While in theory bid openings are required and should operate the same way they do at the state level they don’t. I’ve seen bids get thrown out and rebid 4 or 5 times until the “right” contractor won the project. Or the method of determining the low bidder is not finalized until after the bid is submitted. Things like “total package” rather than just low price are used to determine the winner.
In any case I think the perception that the construction industry is corrupt to the bone is overblown. I’m not naïve enough to think there is none. But I think the salacious stories and TV and movie portrayals blow things a bit out of proportion. Just my 2 cents for what it’s worth.
The late John Gotti (who headed the Gambino crime family in NYC) had hand picked underlings in all of the NYC construction unions. If a non-union contractor attempted to take a job, bad things happened to their equipment, permitting, etc.
I worked in NYC construction for about a year (WTC cleanup). Initially, there was no perceptible corruption - everyone involved seemed to be pretty strongly motivated for the right reasons. But, as time went on, there were some shenanigans.
The point when it became first apparent was when Bechtel was slated to take over management of the whole cleanup (allegedly with considerable pressure on the city from the Administration). NYC being a union town, there was considerable concern among the construction crews that they would bring in scabs to save money. I don’t know how many of my crew warned me not to show up if Bechtel took over (and at least one cop). Fortunately, there was a last minute reversal and Bovis Lend-Lease took over as the prime (Bovis has a heavy presence in NYC and is experienced in working with the unions).
Among the subs, however, there were some issues. Asking a bunch of rival companies to work together isn’t always a recipe for success. I was involved, for example, in an investigation that involved a rival paving company dumping asphalt in our trucks and claiming it as WTC debris. Photos and all, the whole investigation was quickly closed without further inquiry (I had photos of what was happening, taken by myself and the Teamsters I was supervising). There were allegations that there was a connection between the Mayor and the other company, but I have nothing solid to point to. I do know that, shortly thereafter, one of the guys who provided me with information and may have spoken to the Dept. of Investigation had an “unfortunate accident” and was badly hurt. Witnesses say he was pushed.
I think this is an idiosyncratic definition at best. The vast majority of construction contracts occur in private industry so government officials have no role except to issue permits and approvals. The constraints that have been put into governmental contracts exist because corruption was so endemic in the past, as a matter of fact. That has consequences as well. I’ve heard of cases in which contractors simply refuse to bid on government contracts because of the paperwork. But if you took every government bidding process out of the conversation there would effectively be no change in the answer.
I will agree that overall corruption is much lower across the board, even in private arrangements. Prosecutors have been at war with the mob since the end of WWII and have been amazingly successful. The ability to launder money through legitimate businesses has also been greatly reduced.
I disagree. I don’t think that there’s any question that in the past construction work was heavily controlled by the mobs, especially in the New York/New Jersey area which is where the stereotypical images come from. Everything you’ve ever heard was true and probably more so. Today, not so much.