Corruption is one of the top impediments to conducting business in advanced and emerging market economies, as measured in the World Economic Forum Global Competitiveness Report 2015-2016. The infrastructure and urban development industries (IU) are some of the most exposed sectors with opportunities for unethical practice from project appraisal through to auditing.
For the infrastructure and urban development industries, mitigating corruption risk through more transparent processes and enhancing efficiency are mutually beneficial to all stakeholders. They can lead to lower transaction costs and faster project delivery as well as more equitable access to quality services and products for citizens and taxpayers.
In 2014, members of the World Economic Forum’s Partnering Against Corruption Initiative (PACI) launched a deep-dive into the infrastructure and urban development industries (IU) to explore specific issues, challenges and opportunities confronting the sector. The three-year phased project is concluding in 2017 and has identified key areas of improvement for the industry from different regions of the world.
Launched in 2004, PACI is one of the Forum’s most prominent cross-industry collaborative efforts. PACI members have created a highly visible and dynamic agenda-setting anti-corruption platform, working together across industries, and with the support of international organizations and governments around the world. The PACI Vanguard community is comprised of CEOs who are signatories to PACI and want to be at the forefront of business-driven global, regional and industry anti-corruption efforts.
Phase I: Building Foundations against Corruption (2014-2015):
The first phase of the project has focused on value chains, identifying corruption risks and determining corrupt practices in the project lifecycle. From this, a set of collective actions could be developed to address the highest priority corruption risk areas.
Phase 1 successfully concluded an analysis of corruption in the industry. The task force recommendations outline the need for collective action on permits and licences and increased interaction between the industry and government. The first phase exhibited special cases of corruption in the report Learnings from the Field and identified sub-national corruption issues as specifically important to the industry.
Phase II: Building Foundations for Transparency (2015-2016):
In response to the findings of the first phase, the second phase of the project launched a country-level pilot in India to establish a dialogue between business and local public officials on potential transparency-enhancing process changes in permits and licences, land acquisition and procurement.
While corruption is considered one of the greatest obstacles to economic and social development, transparency is seen as the key factor to establish systematic conditions conducive to economic growth and an important anti-corruption tool. Transparency results in more accessible markets, lower risks for investors and greater ease of doing business.
The role of technology in transaction processes is identified by stakeholders as increasingly important to provide smarter urban governance, which is an integral part in the development of the cities of tomorrow. Integrating technology in this cross-industry effort to find best solutions thus becomes critical to the success of the project. A primary outcome of the project was the development of a front end diagnostic tool, which provided information, an interactive platform and indices on corruption for the State of Maharashtra in India.
Phase III: Building Foundations for Trust & Integrity (2016-2017):
Phase I and Phase II identified a common challenge within IU and across engaged industries. The lack of trust between business and institutions subverted collective action effort. Through building greater trust and integrity in institutions, the third phase of the project, Building Foundations for Trust & Integrity identifies key risk areas, designs and replicates innovative tools to tackle corruption and create behavioural change. This will involve a replication of the workshops and diagnostic tool with a regional focus on Mexico and other countries where there has been interest from both business and government around the creation of digital solutions to enhance trust and integrity and catalyse change. To create economic value there is a need to build stronger dialogue between business and public institutions.
Fostering local dialogue for building trust and integrity:
The steering committee, represented by global companies and an advisory committee, consisting of experts in accountability, transparency and governance, will initiate a dialogue with national policy-makers and public officials of Mexico to discuss specific needs on a city/state level and to develop behavioural and technological solutions to build trust and integrity in business and institutions. As solutions with a high potential impact are identified, an implementation strategy will be developed and preparations initiated for pilot test within a state in Mexico.
Knowledge development and diagnostic toolkit:
Experts from the advisory committee aim to develop technological solutions to rebuild integrity and trust in business and institutions. For example, an online educational platform directed at building the capacity of practitioners to operate in a culture of integrity will be created. The diagnostic tool will be replicated and help dismantle and identify sub-issues within key risk areas and assess where opportunities can be unlocked through process improvement.
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