**16. Corruption in infrastructure and construction**

Corruption in the infrastructure and construction industry has led to challenges that include poor-quality, inappropriate project choice, excessive time, high prices, excessive cost overruns, low returns and inadequate maintenance.

#### *Corruption: Drivers, Modes and Consequences DOI: http://dx.doi.org/10.5772/intechopen.106826*

Kenny [23] states that financial losses through corruption will always have disproportionately high economic consequences on the nation to which Wells [24] affirms that over 20% of construction costs could be going into bribery. Corruption in the construction-infrastructure sector occurs at any of the following stages: project appraisal; project selection, design and budgeting; tender for construction; implementation; evaluation and audit [25].

Corruption thrives where governance is weak as we have noted with the many findings by Alkins [21] during the relaxed procurement procedures in the health sector during the COVID-19 pandemic. The project preparation stage can be riddled with corrupt activities including state capture. Failures of due diligence checks at this stage can lead to failure of all subsequent stages of the project. It is common that weaknesses in the project proposal stage are difficult to distinguish if they are part of corruption or are genuinely due to other factors such as lack of capacity, negligence or mismanagement.

#### **16.1 Project development and initial screening**

Politicians, companies or individuals may redirect part or whole of projects so that they serve the interests of a political sector or the politician per se. The contractors in this case have nothing to lose as the sponsor or the government will pay the real amount plus an inflationary amount. It is this inflated amount that will be shared by the corrupt handlers. In some cases, communities are faced with situations where a decision has to be made to maintain aspects of the extant project or to embark on a completely new project. Straightforward persons would choose a project on a cost-benefit analysis that values the Economic Return Ratio. Corrupt individuals would not worry about the ERR of the project but about the possibility to exploit for maximum self-gain. In some cases, in order to net a project, corrupt individuals can deliberately declare a lower cost of the project so that it is approved [25]. At implementation, cheap material, underpaid labour, etc., are used to reduce the overall project cost. The result is that the project will fail to last and soon the community will be seated with a white elephant or a dead horse. Poorly constructed projects will soon be a risk to users or will confer huge recurrent maintenance costs. Impressionist and visibility-seeking individuals are most affected by the desire to get anything to show to their constituencies.

#### **16.2 Project selection and detailed design**

At the stage of project selection, contractors and sponsors may structure the bid document enough to exclude other bidders. This can be by (a) inclusion of details which the selection committee will give excessive credit to and therefore rate the bidder very high while they know they are not necessary or (b) refuse as unnecessary details that they know are important. Their motive is simply to discredit bidders with these 'extra' items as unduly expensive when they are 'not necessary'. Once the bidder they want has won the project in the case of scenario (a) above, the extra details will not be implemented into the project. In scenario (b) above the costing of the project will be revised to accommodate the necessary features that were previously refused as unnecessary. In scenario (a), the strategy is winning the project by **detail** and in scenario (b), the strategy is winning the contract by **cost.**

The deliberate exclusion of some cost elements to get the project approved and then raise these elements at a later stage as project modification exemplifies corruption by manipulation, a kind of 'foot on the door' crookery. In some cases, corruption can be affected by inflating every price and supporting the fake prices through fake quotations and documentations. All monies paid above the actual cost of the project find its way into the hands of corrupt individuals.

#### **17. Corruption in waste disposal**

Waste trafficking has been growing over the years. In all cases, the waste, including dangerous waste, is trafficked from rich countries to the poorer countries or those not so poor but with officials who are very corrupt. Waste treatment needs technology, manpower and treatment budgets, and these vary from one country to the other. Some countries have laws that are silent on waste management, others are more lenient, yet others are so strict that the management of waste disposal becomes fairly expensive. The current trend, among cost-benefit analysis, is that developed countries would make a saving by shipping their wastes to accepting 'poor' countries for a fee. The corruption lies in the deal involving kickbacks to officials in the accepting country, non-disclosure of all contents of the received waste, and the disregard of the knock-on effects of the waste on the local population.

Much waste, including nuclear, is accepted to be dumped in coastal areas near poor countries. The poor men of these countries normally go offshore in their fishing boats. They are unaware of the dangers of their being around waters where such waste has been dumped. They are ignorant of the danger of the consumption of sea life that has fed on part of the dumped waste. On land, it is the poor who rush for such sea-life food because that is relatively cheap, and it is generally a new culture to promote the nearest stall. This multiplies the danger of risky food to the population (a kind of multiplier of risk effect).

#### **18. Corruption: human trafficking**

Human trafficking is generally done for body parts when the victims are later killed, or it is done for the victims' cheap labour or unpaid labour or sexual exploitation for little or no money or for criminal activities for very little commission. The people involved normally use deception to get their victims to agree to be moved from one place to another. They can also misrepresent facts or themselves to convince their victims. In the most heinous cases, an acquaintance, agent or relative can travel with the victim and pretend like they have both been kidnapped or abducted and then they are separated, and the agent gets 'freed'. Agents are generally used in this corrupt business.

In some cases, for human parts like medical purposes, the agent can pretend to be a for-job recruiter. To make the whole process cost-effective, they transport only victims who will meet the criteria. This requires the victim to have full medical examinations. Desperate for a job, victims go as far as borrowing money to pay for such medical examinations. They send the results to the agent. The agent will check if the victim will be the best fit. If victim is free of diseases and is of required blood-type, travel arrangements are accelerated before there can be a change of heart. The increasing population of diabetics, heart, kidney and liver patients particularly in the so-called developed nations are certain to increase human trafficking for parts internally from the poor in the home country, and externally from those seeking employment abroad.

Where the victims are trafficked for forced labour, they end up enslaved in construction, farms, domestic servitude, mines, gardens, fisheries, etc. Most are forced

#### *Corruption: Drivers, Modes and Consequences DOI: http://dx.doi.org/10.5772/intechopen.106826*

or circumstanced to marry or just have sexual intercourse among themselves. With brutal 'owners', they end up with the choice of having to abort or infanticide.

Human trafficking can be done too for criminal activities such as drug cultivation, theft, forced begging or selling of counterfeit goods. These criminal activities normally have targets. If targets are not met, punishments are meted on the individuals. Punishments can include performance of sexual acts on the boss including 'handjobs', 'sucking' and/or allowing to be penetrated.

Human trafficking by smuggling is generally the act of getting humans past someplace either because the smuggler knows the clandestine routes or can bribe past the securities. The smugglers are paid a fee from which they will also pay the securities that allow them to pass. Smugglers can make the journey artificially long so that they are able to demand more, they can tell their victims that luggage will sell them out to police and security so they must be thrown away. Meanwhile, the smugglers call on their friends with GPS to come and harvest the thrown away. Smugglers would take the harvests to their families or for sale.

Human trafficking can also be done for purposes of muthi rituals. In the most painful cases, the victim will get the required 'muthi part' removed from them while they are alive. It is argued that the felt pain make the ritual really work effectively. What a barbaric act! Corruption cannot be tolerated anymore, any further than what mankind has endured to date.

#### **19. Corruption: the consequences**

#### **19.1 Economic consequences of corruption**

Corruption breeds corruption (a multiplier effect?)

An economy can be devastated by rampant corruption involving embezzlement of huge sums of public funds, and the mismanagement, inequity, wastage and social decay that inevitably follow systemic corruption. Grand corruption has a tendency to systematically create suffering and multiplying forms of corruption. It is not uncommon that soon systemic corruption sinks portions of the formal economy into underground economy (black market). When a sizable chunk of the economy goes underground, it creates the risk of inaccurate perception and calculation of macroeconomic data. Macroeconomic data are normally calculated from the formal above-board economic sector. As corruption grinds, portions of the formal sector will sink underground and resurface at some point. Such scenarios create a real headache for economic analyses and policy formulation.

Economic analyses and policy formulation will become even harder without correct figures of the volumes of goods that are in- and out-bound through the corrupt routes of smuggling. The chain of uncertainty will impact the exchange rate. When the exchange rate has no hard data behind it and just vacillates to the whims of the currency peddlers on the black market, the official exchange rate will have its meaning eroded. The dominance of a parallel/black market renders the official exchange rate generally meaningless and symbolic as it does not stand on the shoulders of accurate figures of production inflow and outflow of goods across the national boundaries. The scenario of a strong black market creates uncertainty on prices of goods. As some goods become unavailable on the market while others have their prices inflating all too often, calculation of the consumer price index (CPI) becomes difficult, and the nation will again live with a symbolic value of CPI. Equally so the inflation rate

will be difficult to calculate to a precise figure. In conditions where the formal market is pressured by the informal sector and the black market every key macroeconomic indicator is distorted, proper economic accounting and macroeconomic management become difficult thus constraining modernization, economic development and the proliferation of a healthy functional market economy. It is not uncommon that with the deterioration of an economy quality of its exports falls as well and in a globalised and competitive economy the companies suffer modifications and terminations of international supplier contracts. As more important companies are removed from international supply chains markets dwindle and so do the national employment rates and suffering multiply among citizens.

#### **19.2 Corruption worsens inequality**

In distorted economies, the well-connected and privileged dominate both the formal and the underground economies, channelling goods from their formal into the underground economic activities, eventually making themselves the 'economy' through a ruthless monopolistic practice. The corrupt thus collect abnormally high profits and have the power to cartel goods off the market and return them at will at cut-throat prices. Inequality increases, the poor get poorer and anger runs in everyone with likely serious political consequences.

Examples of such inequalities include children of the rich having pocket money that surpasses the teacher's salary, and the total budget for dog-feed in an affluent community surpassing the budget of a school in a community overlooking their own. The rich increase their imports of luxury goods right to perfumes, while the majority suffer and cannot afford a pack of painkillers for the headache.

#### **19.3 Corruption raises investment costs, risks and uncertainty and reduces incentive to invest**

Corruption has adverse impact on private investment, both domestic and foreign. Refer to the example above where a social and public investment in the form of a unique school was going to benefit generations of pupils was denied by a corrupt individual whose own kids are either failures or are in similarly good schools elsewhere. Systemic corruption multiplies situations where bribes have to be paid before any investment takes place and upon entering into negotiations for the registration and establishment of a business. The investor is followed with further demands for bribes at setting up the business and again at procurement of leases for land and buildings; permission to engage in activities such as production, transport, storage, marketing, distribution, import and export; obtaining connections for water, gas, electricity, and telephone; having access to telex, fax and e-mail facilities and so on; which can involve payment of substantial bribes at various stages and may require the services of agents with specialised expertise on how to get around complex rules and procedures to acquire these things.

More often than not the agents and intermediaries are equally or even more corrupt. They normally play on the technique of 'we are almost there, this is the last step'. On fair analysis, intermediaries worsen the losses. Supposedly the business is finally on its feet, the corrupt officials will still demand monthly *thank you***.** Councillors, local politicians and other kinds of 'powerful' may require that the business **'just help***s***'** with corporate social responsibility issues like contributions to schools, charities and even birthday parties of their nominees.

### **19.4 Brain drains and destruction of future manpower resources**

As corruption bites, those who have skills will tend to emigrate to countries where they can make a better living with their skills. For those skilled staying behind, instead of engaging in formal economic activities, they waste their spirit and effort in rent-seeking black market economic activities. Corruption tends not to value the plight of the poor. Talented businesspeople, industrialists, entrepreneurs and managers represent a scarce and valuable resource, and every country should be valuing them enormously. Businesspeople waste hours in queues caused by dishonesty and unpredictable behaviours of the corrupt in society. One strategy used by bribeseeking officials is to pretend as if 'things are so difficult here' and as if they are doing you a favour by doing what they should and are paid to do. Imagine an applicant for a simple service had to wait 7 months for a document to have two signatures from two persons who are in the same building on the same floor and three doors apart. This waiting cost R700000–00 (USD\$47000). In corrupt societies, enormous time is lost in waiting for appointments, engaging in discussions and sitting in negotiations and meetings that are non-beneficial as they seem to worsen investment prospects, political and economic instability. The private sector generally feels that in the majority of cases officials in the public sector have the 'prey attitude' towards them. Their tricks in tactical solicitations of bribes are difficult to interpret as they often play out as incompetence and being out of pace with the fast-moving world.

#### **19.5 Without fair foreign direct investment modernisation slows**

Foreign investors are more concerned about the prospects of making some profit in the countries they invest in. Investors tend to hold back where the conditions do not seem to be encouraging. Discouraging conditions, therefore, limit foreign direct investment (FDI) to exploitation of natural resources and investments in short-term and quick-yielding, quick-closing deals that do not embed into the recipient country's uncertain economy. These FDI do not improve skills level, technology co-efficiency or industrialisation levels of the recipient country. As financial and economic discipline of the country erodes, the attractiveness of a country to foreign investors fades thus keeping investment low.
