When it comes to eradicating fraud and corruption in the infrastructure industry, it’s an issue that is too important to just leave to the auditors and accountants, says Anil Iyer.
The cost of fraud and corruption in our industry represents around 10% of a company’s revenue, according to the Chartered Institute of Loss Adjustors. This is clearly not an insignificant figure and if you look closely, there is no shortage of examples.
We have seen the collapse of a major organisation that has been attributed to aggressive accounting. We are seeing high-profile infrastructure projects with ever-escalating costs - it would be naïve to think they are all free of fraud. I am aware of medium-sized projects where costs have gone way over capital expenditure and the project team was too scared to inform management, so they cut corners and compromised on quality.
But are we reacting appropriately to such cases? Of course, investigations and audits are undertaken. Most companies have clear anti-fraud statements written into their business plans or values statements, supplemented with on-line modules. Professional institutions and business associations have codes of conduct which are monitored. So externally, we appear fine because we have compliance measures in place.
All these measures are very creditable and should continue. But if you ask an early career or middle management professional the question: “who should be detecting and dealing with fraud and corruption?”, a typical response is “we have accountants and lawyers who deal with that sort of thing”.
Ask the same question about quality management, health and safety, sustainability, diversity and inclusivity, digital transformation or mentoring - all subjects which are integral to our day-to-day business - and the answer will probably be “all of us”.
And there lies the crux of the issue. We tend to treat fraud and corruption as an area that only experts can handle. But are we fulfilling the requirements of our employment contract or code of conduct by simply referring the situation to a specialist team in our company or an external specialist? Or worse still, leaving it to a whistle-blower or letting the media pick up the story?
Anti-fraud experts acknowledge that most fraud and corruption is discovered by someone within an organisation who is not an accountant or auditor - and in most cases it will be their very first experience.
The majority of us wish to work in an ethically healthy workplace and don’t want to lose 10% of our company’s revenue. Consequently, as infrastructure professionals, we need to step up to the plate, take responsibility for our own projects and not leave it to the accountants and auditors to sort, after the event.
We should give fraud prevention the same prominence as health and safety, sustainability, and other non-technical issues for which we so proficiently take ownership. We should be self-policing, because in reality, anyone with the proper training can be a fraud detective.
Anil Iyer is a director of consultancy Kranial Solutions and a founder of new organisation B4 Investigate, which provides knowledge and tools to those who want to fight fraud and corruption.